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QUEST MEANS BUSINESS
Deadly South Africa Mine Clashes; Lonmin Shares Fall; Facebook Falls Even Lower; US Markets Up; German Chancellor Angela Merkel Visits Canada; European Markets Gain; Euro, Pound, Yen Up Against Dollar; More On Mine Clashes; Standard Bank Profits
Aired August 16, 2012 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: Tonight, a report on multiple deaths in South Africa as that strike at a platinum mine turned deadly.
On our agenda tonight also, the Facebook IPO and now the social media company's stock falls even further. We will explain why.
And bipartisan problems. The economist Jeffrey Sachs warns both Republicans and Democrats are planning dangerous cuts.
It's the end of the week. I'm Richard Quest and I mean business.
Good evening. We start tonight with pictures from a news agency in South Africa that is reporting the deadly shootout between police and striking miners. And I need to warn you that some of you may find the following video disturbing.
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QUEST: According to CNN's affiliate network ETV, the police were trying to disperse striking workers at Marikana's Lonmin mine when the violence --
QUEST: -- at the scene counted 18 bodies. It's likely with that number it shall be the deadliest day yet of a strike that's already seen at least 9 people lose their lives.
Workers began striking last week and, since then, there's been sustained violence between the two rival union groups.
The line is owned by Lonmin. The company's chief executive, Ian Farmer, has been taken ill and is currently in hospital. According to the company, the illness is not related to today's incident.
Now, the chairman of Lonmin says South African police are responsible for the security situation at the mine. He said this evening, "We are treating developments around police operations this afternoon with the utmost seriousness. It goes without saying that we deeply regret the further loss of life in what was clearly a public order rather than a labor relations associated matter."
Nkepile Mabuse is following the story. She's in Johannesburg and joins me now. We'll take this -- if we may, quite carefully, Nkepile. Let's start, first of all: do we know or have we more information on the number of people who have been killed?
NKEPILE MABUSE, CNN INTERNATIONAL CORRESPONDENT: While we don't have official figures, Richard, we're expecting the police to hold a press conference in about 30 minutes' time. But look at that video. It does appear that excessive force was used.
But initial reports say that it was the miners that actually started shooting, using live ammunition in this clash with the police --
MABUSE: My understanding of what happened is that the police were actually trying to negotiate with the miners to disperse and lay down their arms. They're armed with machetes and traditional weapons and, police believe, with guns as well. And those negotiations failed.
The police used teargas and water canons, and initial reports are saying these miners retaliated with live ammunition and the result is what you see on your screens.
QUEST: Now the disputed -- yes, the dispute itself, the industrial dispute which is behind it is over what? And to what extent did that -- not that there's ever any excuse for this sort of violence -- but to what extent has this been such a bitter dispute that it escalated?
MABUSE: Look, Richard, it's quite a complex issue here. The bottom line is that these miners want more money. I was there at Lonmin. We were able to speak to some of them. They're earning between $300 and $600 US a month. They are demanding $1500 US a month, and they said to us yesterday, "We're not going back to work until we get the amount that we are demanding."
Now the management of the mine is saying, "No, we're locked in a two- year agreement We've already agreed to give you between 8 and 10 percent increases this October, and it's not time to negotiate."
But these miners, it's believed, belong to a newly formed union, and it appears that this union is trying to convince these miners that we can actually get you a better settlement than the National Union of Mine Workers got you last year.
So, the mine management believes this rivalry between the National Union of Mine Workers and this newly-formed union, AMCU, have a lot to do with this violence that we're seeing.
We saw something similar -- not on this scale, by any stretch of the imagination -- earlier this year at Impala Platinum Mine, where these two unions, these rival unions, were fighting over members. We saw three people killed there. The strike lasted for six weeks. And Impala Platinum recently said that its headline earnings are going to be down this year by nearly 50 percent.
And that -- I can say that Lonmin is also going to be getting a serious knock because of this lack of productivity. And of course the image that -- the images that are being seen all over the world of what's going on in the mines.
QUEST: Nkepile Mabuse in Johannesburg with that tonight. Come back when that press conference, Nkepile, the moment you have more to report, please come back straightaway and we'll talk to you then. Nkepile reporting for us tonight.
Now, nothing of course detracts in any way from the awfulness of the death toll in this. Lonmin, the company concerned, is one of the world's largest platinum producers. And whichever way this -- and however the blame finally ends up, the actual corporate share price was off more than nearly 7 percent on Thursday.
The company says, obviously, pardon the phrase, it'll miss production target for the year as a result. That's more a reflection on what's happening because of the strike rather than today's awful events.
We'll be back in just a moment. This is QUEST MEANS BUSINESS.
QUEST: Facebook's share prices fallen to an all-time low just as the owners of 271 million shares got their first chance to sell, and many will say it's because they got their first sign -- to sell. The share prices is $20.18. It's down just nearly 5 percent. It was trading as low as $19.69. So, a marginal recovery, but still down on the day.
Take a look at the picture of decline since the IPO back in May. It has been -- well, obviously, that was the very sharp, dramatic first couple of weeks. Then, a bit of pick-up, heading back towards $33. But you notice, they never got back to $39 or $38, the original IPO price, and now we're way down, well and truly under water.
The 270-odd million shares were acquired before Facebook came to the market. Now, the buyers had to agree -- these are investors, they're employees -- not to sell them for three months, in what's known as a lock- up period.
It's designed to prevent a flood of sales that drag the share price down early on. But as you can see, it didn't need a flood of sales. The company and the prospects did that on its own.
Poppy Harlow joins us now, live, from New York. It's not unusual for a share price to fall after a lock-up -- period expires. But they're not - - usually after a lock-up, those who owned the shares have got profits in the bank, so to speak, but not here.
POPPY HARLOW, CNN BUSINESS CORRESPONDENT: Right. That is the big question. If you look at tech IPOs of recent days -- recently, Linkedin, for example, that stock fell 7 percent the day the first lock-up ended. Groupon fell ten percent.
At the same time, the stocks were way up from their offering. When you look at Facebook, we're off some 45 percent since that offering price.
But here's the thing, Richard. All of the people that can sell some of those 271 million shares today are people that owned Facebook stock prior to the IPO, sold some at the IPO, and agreed to hang onto the rest for at least three months.
So, we don't know where they bought. If we're talking about a Peter Thiel, the billionaire, one of the first investors into Facebook, he arguably bought at a very low price, one would assume. If you talk about some of the other firms that got in early, they bought pretty low. If you talk about a nacelle partner or some of those --
HARLOW: -- that joined more recently, they may have bought at a higher price. That's what we don't know.
QUEST: So, whilst the Joe Schmoe that bought on the IPO and is now well and truly swimming underwater, this lot may actually have profits in the banks -- or in their back pocket -- sell and run.
HARLOW: Exactly. And that's likely what we're seeing happen. We're going to have to wait at least two days until we see the Form 4 filings to actually see what big firms are likely to see some of those big firms cashing out and taking some of those profits off the table, because this is their first opportunity to do so, Richard.
QUEST: Well, I guess we know what you'll be doing in the next few weeks with those Form 4, 5 filings, Poppy Harlow, who has her work cut out for her probably up towards Christmas.
The markets and how they are trading, up 88 points today. Clearly Facebook is -- or whatever's happening tech is, economically anyway, is not much of a concern, just gain of half a percentage point.
The German Chancellor Angela Merkel has called yet again for austerity among troubled European nations. Her comments came during a visit to Canada, where Mrs. Merkel met the prime minister, Stephen Harper. She called Canada's fiscal discipline an example for Europe to follow, and they discussed Canada's bid for a free trade pact with the European Union.
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STEPHEN HARPER, PRIME MINISTER OF CANADA: We remain firmly committed to concluding a Canada-European Union comprehensive economic and trade agreement. Your ongoing support has been vital to the great progress that has been made so far, and I know we will continue to work together to achieve this important milestone.
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): Once I come back -- go back to Germany, I will see to it that this negotiation -- these negotiations come to a speedy conclusion.
Because at a time where there is lack of growth in the world, we -- Canada and Germany -- are convinced that free trade is one of the best engines of growth that we can have. Protectionism is one of the greatest dangers to growth.
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QUEST: So, we're all concentrating on austerity, and they're concentrating on free trade agreements. Earlier, I spoke to Mercedes Stephenson from CTV News and I asked her, was Angela Merkel getting an ear bashing? Because after all, the Canadians have been very critical of the way Europe's handled the eurozone crisis.
MERCEDES STEPHENSON, CTV NEWS CORRESPONDENT: Well, it was really interesting, because they seemed to come out appearing to be very warm, on the same page, even though they do have vastly different opinions as to whether or not Canada should be contributing money to the IMF fund that could potentially bail out the eurozone.
And they came out and instead kind of switched it around and said that the free trade agreement that Canada is looking to sign with the European Union is the answer to many of the economic woes in terms of generating profits, productivity, jobs, and innovation. So, they managed to gloss over that one quite nicely.
QUEST: And yet, the Canadian finance minister on several occasions has told me Europe, get your act together and solve this problem. To your knowledge, was Mrs. Merkel able to assuage the fears of Prime Minister Harper that they are getting their act together?
STEPHENSON: Well, he did seem to indicate in his press conference that he was confident that the Europeans were capable of doing what needs to be done, but certainly, Canada has been very direct and very clear on what they want to see about this crisis.
In fact, just yesterday, Canada's finance minister, Jim Flaherty, came out and said that it is a European problem. He considers Europe to be a very wealthy continent and that Canadian resources would not go towards it. So, no shift here at all from the Canadian government.
But of course, they are also two like-minded conservatives, and while Germany has much more of a tie to Europe, clearly, given its key strategic location, they, too, expressed a desire towards austerity. And Stephen Harper seeming to come off fairly positively about his faith in the Europeans' ability to get things done.
QUEST: Finally, briefly -- it's a classic one, isn't it? End of the summer holidays, foreign leaders going on trips to visit each other, lot of good platitude, and you and I are wondering -- left wondering, was it worth it?
STEPHENSON: Well, I think it was definitely worth it for Stephen Harper, because he did have Merkel come out and say that when she returns to Germany, she will advocate for this European free trade agreement.
If Canada's able to secure that, it will be the largest free trade agreement that has been negotiated in over a generation. The only other one that comes close recently is NAFTA, and that was signed in 1988.
So, really, the best case scenario for Canada coming out of these meetings in terms of Germany, certainly a strong relationship, but no shift by the prime minister on the potential of sending Europe any money.
QUEST: Mercedes Stephenson talking to me from Ottawa.
European markets edged higher. They were all up with thin volumes, middle of the summer. And the DAX -- here's an interesting thing. Despite all the talk of what may be happening, if you look at the numbers, the DAX is the highest since April, the CAC is the highest since March, and the SMI the highest since May.
Also, there was a retail bright spot for the UK where sales were up 0.3 percent month-on-month. I think you have to take it with a pinch of salt, bearing in mind the Olympics and all the other festivities, like the Diamond Jubilee. It all gave a bit of a boost to retail sales.
Eurozone inflation's stable, 2.4 percent. That will be welcomed. It's still higher than the 2 percent that the ECB would like, but it's in the right direction.
The Currency Conundrum, now. Where did the oldest currency bills come from? Is it the Han Dynasty in China, the Sassanid Empire in Iran, or the Ottoman Empire? The answer after the show.
Never mind the oldest currency. The euro's climbed to a weekly high against the dollar. It's up two thirds of one percent. The yen's up and the pound is up by slightly more than a third of one percent. Those are the rates --
QUEST: -- and this is the break.
QUEST: To our top story, and the news agency in South Africa's reporting a very deadly shootout between police and striking miners. The police were trying to disperse the striking miners at Marikana's Lonmin mine, and the violence erupted.
A reporter's counted 18 bodies at the scene. On the line now, I'm joined by Taurai Maduna, a journalist with Eyewitness News. He joins -- joins me now from Rustenburg, South Africa. Taurai Maduna, what -- as best you can describe in the awfulness of what you saw, what happened?
TAURAI MADUNA, JOURNALIST, EYEWITNESS NEWS (via telephone): Well, it was an issue where the police said, "We are tired, we are fed up, it's time to get rid of the protesters." And this morning the provincial commissioner told the journalists that they are going to deal with the strike and it's going to end.
We waited and we waited, and shortly, just before 4:00 PM local time, the police started moving into the crowds. They brought in barbed wire to fence them off. They threw teargas. And the next thing, it was just firing. I just heard actual gunshots. And after that, the police called a cease-fire, and I saw a line run over.
QUEST: All right. So, you're standing -- we're looking at the pictures, and you were there at the time. Did it seem to you that the protesters and the strikers attacked or opened fire or in any way endangered the police, or did it seem that the police acted first?
MADUNA: It was not clear exactly who acted first, because there was just a lot of commotion and tear gas or dust all over. But what I -- all I heard was just gunshots, and the police were firing live ammunition. And after that time, we just saw police recovering some pistols on the ground. So, I would assume that maybe these pistols belong to the miners.
But at the press conference this morning, the police did confirm that when two police officers were killed, the striking miners took service pistols from this officer. So, I would assume that they were armed because they retrieved some guns.
QUEST: This strike -- and you've been obviously been covering it and you've been there -- this strike has been deadly for days. And I'm wondering, what do you think sparked off the police's decision today that they were -- they'd had enough and they were going to bring this to an end rather than just continue to sit it out?
MADUNA: Workers have been demanding that they want 12,500 rands from the management, from Lonmin. And they had union record -- union leaders coming to address them. And they said, "We want Lonmin to come here and speak to us."
And the unions went to Lonmin, Lonmin said, "No, we are not speaking to them." And when they heard that Lonmin is not coming, they said, "I tried. We are staying here. We are not going anywhere." And the police said, well, we can't go on like this. And then, it was just chaos.
QUEST: Finally -- it's always difficult to know in these situations, but as you've covered this dispute and as you've covered the violence during the week, did it seem to you that this was going to get worse, and it was -- the sort of events that we've seen was almost an inevitability?
MADUNA: Well, it was inevitable. Since Tuesday when the cops called in deployments, they have over 400 officers, but they have called in from other provinces. So, they had the water turned on, they had an army helicopter.
So, they had everything, and the way to protect, to deal with these people. But the mass order, they were tried, and we don't know exactly. We've seen protests, but we've never seen an institution where police start firing live ammunition.
And what we saw today, I've never witnessed that in the protests I've covered. Normally, police fire rubber bullets, they fire teargas and no other weapons are used, but today, I haven't seen anything like this ever since I've been covering protests here.
QUEST: All right. We thank you, Taurai Maduna, joining us on the line there from Rustenburg in South Africa.
One of the major banks in Africa is Standard Bank. Standard Bank today, and coincidentally posted a tale of its earnings report. The profits are up in hard and lean times. In fact, it was a 9 percent rise in first half profits in a difficult environment.
Let's talk straightaway to the chief executive of Standard Bank, Jacko Maree. Mr. Maree, I understand, of course, that you're not informed and you're not aware or -- in any way of the events that you just heard about that are being reported now from South Africa.
But as a bank doing business on the African continent, the sort of violence that we're reporting tonight must give you grave cause for concern, both as a bank and as a South African.
JACKO MAREE, CEO, STANDARD BANK: Of course. This is the sort of thing that I remember in the Apartheid days seeing on television. It's reminiscent of that. So, it's very disappointing and obviously a great human tragedy. It's sad and, I guess, time will tell exactly what happened. But devastating for us.
I don't think as a business, as a bank, individual incidents in a particular country at a particular point in time can really influence your long-term actions.
QUEST: No, quite. But thank you for addressing the point, which I think is important that we do, at least start there. Now we can talk a little bit more about the conditions that you refer to in your annual report.
It's interesting, because you are -- you're taking a global environment, which is very difficult, and Standard is still trying to expand. And you're meeting the headwinds as you're doing so, but you're still managing to make progress.
MAREE: Definitely. I think that we feel that we have some core competencies. We're strong in our home region and in sub-Saharan Africa, as well. We have strong links with China. And so, we're trying to capitalize on that.
And Africa is -- or sub-Saharan Africa is forecast by the IMF to be the second-fastest growing region in the world after Asia over the next few years.
So whilst there are headwinds from Europe, Africa is still doing pretty good growth rates, above 5 percent forecast for the next number of years. So, we should keep pushing ahead, we think.
QUEST: And you'll be sharing results. I had to ask you, finally, how many times over the last few weeks have you been sick and tired of pointing out the difference between Standard Bank and Standard Chartered Bank and having to point out that you're not one and the same.
I know we've been very careful on QUEST MEANS BUSINESS to make it clear, so it's true, isn't it?
MAREE: Well, I do say, I feel sorry for Standard Chartered. They were our parent company until 1987, so we have a common heritage. But they're going through a very difficult time. I think they're a first-class bank, but there's obviously been some major issues there.
And it's sobering, I think, for any banker, when you hear about -- call it failings in compliance and control procedures. It's sort of the stuff that nightmares are made of for its chief executive, that's for sure.
QUEST: Jacko Maree, I promise you at your next results when there won't be as much other news around, we will delve more deeply into your own balance sheet and discuss your prospects for growth, and it's good to have you on the program, as always, on QUEST MEANS BUSINESS. Many thanks.
Now, after the break, we're hoping to hear from the influential economist, Jeffrey Sachs. His view is, well, it doesn't matter which side of the political spectrum you're talking about, the Republicans or the Democrats, they're both dangerous when it comes to government.
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.
Ecuador and the U.K. are in a diplomatic standoff after Julian Assange was granted political asylum by the South American country's embassy. The WikiLeaks founder has been in the Ecuadorian embassy for two months now and it's in a bid to avoid extradition to Sweden, where he faces sexual assault charges.
Atika Shubert is outside the Ecuadorian embassy in central London for us tonight and joins me now.
Well, if this situation was complicated before, Atika, it is a downright diplomatic mine field now.
ATIKA SHUBERT, CNN CORRESPONDENT: It really is. As the tensions have ratcheted up, the options for Julian Assange and, in fact, for the U.K. and Ecuador seem to have narrowed considerably.
He now has been granted asylum, but he still remains inside the Ecuadoran embassy and Britain maintains that if he steps outside, he can and will be arrested. Had some very strong words from the British foreign minister, William Hague, today. Take a listen.
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WILLIAM HAGUE, BRITISH FOREIGN MINISTER: It's a matter of regret that instead of continuing these discussions they have, instead, decided to make today's announcement. It does not change the fundamentals of the case. We will not allow Mr. Assange safe passage out of the United Kingdom, nor is there any legal basis for us to do so.
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SHUBERT: Now it is still a standoff because as long as he is in the embassy, Britain's British police cannot go inside to arrest him. There is apparently a diplomacy act in Britain that says they can strip the embassy of its diplomatic status and eventually send police in. But that is a process that would take months and would obviously be contested by Ecuador, possibly other countries.
So whatever happens next, it's going to take a long time to resolve. And in the meantime, Julian Assange is making the Ecuadoran embassy his home.
QUEST: Atika Shubert, who's in London outside the embassy for us tonight.
As we've been reporting and you've been watching, a news agency in South Africa is reporting a deadly shootout between police and striking miners. Police were trying to disperse the miners at the American Lonmin Mine when the violence here erupted. The forces counted 18 bodies at the scene.
In the U.K. hacking case, well, phone hacking case, former "News of the World" editor Andy Colson has made his first appearance in court. Five other journalists were in court as well. They were ordered to have no contact with each other and they must notify the police if they have international travel plans. They'll be back in court next month.
And Birmingham Palace says England's Prince Philip is responding well to treatment for a bladder infection. The Queen's husband was taken to hospital on Wednesday when the infection returned. The palace did not say when he will be released, but he would remain in hospital for a few more days.
QUEST: In the United States, you don't need me to tell you the Republican presidential candidate, Mitt Romney, and his vice presidential pick, Paul Ryan, are touring the country and they are touting their economic plans.
Though Jeffrey Sachs says whether Republican or Democrat, both parties are dangerously focused on cutting down the size of government. Professor Sachs, of course, is the director of Columbia University's Earth Institute. I joined him earlier and asked him if the two parties were so similar as to make the election results irrelevant.
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JEFFREY SACHS, DIRECTOR, EARTH INSTITUTE: The fact of the matter is the American political system is resisting basic taxation right now, and the result is that both parties are putting forward budgets that really squeeze government to the point that it can barely function.
People don't feel this -- or may not understand it -- but even President Obama's budget for the outer years in areas like education, job training, job skills, infrastructure, it's being squeezed brutally. Now the other budget would do even more squeezing. So I don't want to say they're the same, but I do want to say America's in trouble on a bipartisan basis.
QUEST: But your argument in your article points to northern European countries as being able to have and to hold, if you like, all the things that you hold dear.
The only problem with your argument of education and health care and all the advantages of those northern countries, what we've now learned is it came at the expense of the periphery and of a poorly constructed monetary system.
SACHS: Not quite, Richard. You know, the periphery had a financial bubble like the United States did, like the U.K. did. They borrowed what they couldn't repay. They had a housing boom. They're in trouble. But the northern countries didn't do it to them, exactly.
My point is that if you pay your way so that you can make sure that there's decent schools, decent health care, decent education, you can actually get poverty rates down, unemployment low. That's what northern Europe has accomplished.
You know, southern Europe made a mess of itself, no doubt, as did the United States and actually the U.K. in this period. But my point is pay your way; you can have a decent society and we're not paying our way in the United States and we're ending up with kids who are not learning, we're not getting the kind of education, job skills, employment, global competitiveness that we need.
QUEST: What do you think is a fair rate for top tax?
SACHS: Well, right now in the U.S., we're collecting about 16 percent of national income. Traditionally, we've collected about 18 percent, but our population has gotten older; health care has gotten more expensive; education skills, infrastructure have gotten more expensive. So we probably need to be collecting 23 percent or so of our national income, which would still be low comparatively.
But then you back up and ask, well, how do you do that? That's the question you're asking. And there are a lot of ways that have to be done. We have to raise the top tax rates on the highest income earners, even above that 39 percent that we had last decade and -- or two decades ago now, under Clinton.
We need to get that rate probably into the 40s as the top tax rate. We need to clamp down on a hemorrhaging of corporate abuse right now. Look at all our countries have their companies parking the money in the Cayman Islands, in tax havens around the world.
The international tax system and it's across most countries right now, has become Swiss cheese. It's just filled with holes so that the money can go out to the tax havens. We are collecting the lowest rate of corporate tax as a share of national income in the United States that we have in decades, even though profits are booming, Richard. That's the problem.
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QUEST: That's Jeffrey Sachs talking to me earlier.
The weather forecast comes next.
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QUEST (voice-over): Now the answer to today's "Currency Conundrum," we asked where do the oldest currency bills come from? The most ancient known (inaudible) come from China, from the Han and Sang (ph) Dynasties. They're long since gone.
The earliest bills that haven't disintegrated are also from China, this time from the Ming Dynasty, between 1368 and 1399. And get one of those, and I suspect that you've probably got something worth more than the actual value when it was originally printed.
The weather now, Tom Sater's at the World Weather Center.
TOM SATER, AMS METEOROLOGIST: All right, Richard, we're going to fly around the world for all of the business men and women that need to hit the skies. It's not the friendliest right now. Under 300 kilometers south of Hong Kong is the fifth typhoon now that we've had this month. Already the outside feeder bands are affecting Hong Kong.
In fact, take a look at some of the winds we're already getting. In fact, you can see where Hong Kong is now. Keep in mind, it's over 300 kilometers where just under. We're looking at 136 kph winds. This is Ngong Ping, kind of a destination, a tourist spot. There are like ski lifts there. They're shut down, obviously.
But the airport, this is of concern now. Obviously it's like 2:40 in the morning there, but 65 kph winds. There are only, you know, right around sea level at 6 meters, we're getting wave heights from this storm that are over 71/2. This is a beast.
Take a look at how fast this system's moving, 26 kph. The faster they move, the more in wind damage they can produce. It's the slow-moving ones that really produce the heavy amounts of rain. But already gusts at 148 kph. It's going to make two landfalls, right around the noon hour, I think, it'll be making its way to around Guangdong Province, and then late Friday night, loses a little bit of its punch.
But then right around the Vietnam-China border, again, it'll be making landfall. But because it's a fast mover, we will see some power outages, already a signal 8 in Hong Kong for gale and storm force winds.
But again, it's not going to make a direct landfall in Hong Kong. It was Vicente -- remember, Vicente was closer to Hong Kong. That jumped from a category 1 typhoon to a category 4 only in one advisory posting. So the fifth one already this month.
Temperatures Friday, Taipei, Hong Kong 32; Tokyo as well, you've had your fair share of rain the last 24 hours. But here we go. These are forecasts now, Hong Kong, I think easily two-hour delays, if they're even up and running with this system that'll be skirting by the south of them. Notice Brisbane and Melbourne.
Now here's an area, if you're going to be flying in, you're going to want to keep your seat belts fastened, tray tables in the upright, locked position. This is some cold cumulus. If you are going to be there for your Friday, Saturday and Sunday. Besides the winds passing through with this frontal system, it's unseasonably cold.
Take a look at Friday's high, Sydney 17, Cameron (ph) 8. Then we go into Europe, and we do have another storm system, a surge of moisture will be moving in to around London the next few hours. But our storminess will be found in some areas Friday midday from northern Italy back to Croatia to around Macedonia.
The warmth, though, is a big story. So once you get through a little wave of rainfall overnight, we're looking at above average temperatures. Friday, Paris 31, that's just the beginning.
Let me take a look at any delays at all, be morning hours only, slight chances again. These are forecasts but the high temperature, when an average of 22 in London, and you're looking at 29 degrees, Richard, that's nice. Paris 35, enjoy your summer-like weekend.
QUEST: The one weekend that it's nice, and I'm going to be out of London. I'll be in New York. Tomorrow night I want a forecast for the weekend. We're filming in New York --
SATER: You got it.
QUEST: -- this weekend.
Thank you, Tom.
And that is QUEST MEANS BUSINESS for tonight, thanking you for your time and attention. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable. MARKETPLACE EUROPE is next.
JULIET MANN, CNN HOST: Welcome to MARKETPLACE EUROPE in Venice. I'm Juliet Mann.
Italy is the third largest economy in the Eurozone, but despite a series of austerity measures, it's languishing in recession. The economy's expected to contract further by at least 1 percent this year.
Italy's sinking under the weight of one of the highest levels of public debt in the Eurozone. We're here to find out if Italians' flair and style can help kickstart this economy.
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MANN (voice-over): Coming up, breathing new life into the global shoe industry. The company that's become the world's second biggest casual footwear brand in less than 20 years and gearing up for growth the Ducati way.
Our mission is to produce premium bags with sport attitude and with Italian style.
MANN (voice-over): The Venice Arsenale, once the largest shipyard in the world, was founded in the 12th century and is thought to be the world's first factory, employing 16,000 people, it was the center of the venetian economy, which is now dominated by tourism.
And the tourists have a lot of ground to cover, 150 canals are connected by more than 400 bridges and thousands of alleyways. I wonder how many of them are wearing Italy's number one shoe brand, GEOX.
MANN (voice-over): Perseco (ph) country in northern Italy, home to a third generation winemaker who now runs a multimillion dollar shoe empire.
MARIO MORETTI POLEGATO, CEO, GEOX: I walk in the Nevada desert and I used it, the sneaker shoes with the rubber bottom sole. And I suffer in my feet with my feet about the bruisability (ph). In my pocket, I have a pocketknife. I takes this knife; I cut a hole in the right and the left part of the sole. And I realized in the ventilation.
MANN (voice-over): Back home, Mario Polegato developed a shoe with holes in the soles that let air in and perspiration out. The design was patented and in 1995 GEOX was founded with five employees. Now they do business in 103 countries with around 1,200 dedicated stores and 30,000 employees around the world.
Each prototype is conceived, designed and made in Italy. But for a company that prides itself on fine attention to detail, GEOX outsources much of its manufacturing, mainly to Asia, to shorten delivery times.
POLEGATO: In every facility where we produce, we have the Italian technician shoemaker that control shoes by shoes, because in our strategy, quality is the first.
MANN (voice-over): Every fabric and glue is tested to destruction in this (inaudible) machines. And then they're road tested by people, putting their technology through its paces is crucial to the business, helping the company meet the specific needs of their various customers around the world.
POLEGATO: In the North Europe, in the Russian (inaudible), our best seller is the boot with a special waterproof system. In South Europe, we sell more this softer moccasin.
MANN (voice-over): But the economic crisis has affected sales in their core market. Their distribution network is clogged up with last year's stock and orders for next season are down.
POLEGATO: GEOX suffer about in some country like Italy, Spain, Portugal. Our strategy now is to invest more in some country where the economy grow. As a particular area, like to Hong Kong, China, is Europe included Russian, India, Turkey and our program now is to open 300 new GEOX store all in China.
MANN (voice-over): It's a familiar strategy for a firm with global ambition and money in the bank. They're billed as one of the best success stories in Italian industry. But economic uncertainty in Europe will keep GEOX on their toes to stay one step ahead of their competition.
(END VIDEO CLIP)
MANN: Coming up after the break, from one iconic Italian mode of transport to another, I speak to the boss of Ducati Motorcycles.
MANN: Welcome back to MARKETPLACE EUROPE. Italy is synonymous with style and design, from what they wear to how they get about. But even iconic Italian brands are looking to form stronger relationships with their European neighbors, pooling resources and finding synergies to maintain market share and stay competitive in a global marketplace.
MANN (voice-over): Ducati was established in 1926, and by the 1960s earned its place in motorcycling history, producing the fastest 250 cc road bike. It has an impressive record on the race track, winning 17 world superbike titles. Ducati bikes are sold in 80 countries. The company employs over 1,100 people and has recently been taken over by Audi for a reported $1.1 billion.
GABRIELE DEL TORCHIO, CEO, DUCATI MOTOR HOLDING: Nothing great the reward was done without passion. So passion is the best ingredient. And I have to tell you that passion is something that is really present here in Ducati. In myself, in all the people working in Ducati and our friends around the world.
MANN: You're a niche motorcycle player that is now part of a multinational massive car company. Aren't you worried that that might dilute your brand?
DEL TORCHIO: Being (inaudible) biking group of one of the largest investor group in the world is a clear demonstration that we are working and we are -- we are on the right path. Already they have far more resources than us. They are still the new materials and electronics, in engines. So all these (inaudible).
But one thing is clear and was part of the agreement that we had together with the Audi management, Ducati will stay as Ducati, no doubt on that there will be an Italian and Ducati style really mean exactly as it is today.
MANN: It's great to have a positive attitude, but these very tough economic times. There has to be something else that has helped you reach the heights you have and helped steer the company to growth.
DEL TORCHIO: This very added (inaudible) that's out of Europe is really suffering. But in the meantime, we decided that this crisis should be (inaudible) into opportunities for us. I believe that the basic element for success is to innovate the problem. I create my budget (inaudible) we spend more than ever in developing new product with a clear idea.
Second important element is about brand. You know, together with the product, the brand as a very important value for us. Italian style is reflected in our ingenuity and in our design. We are producing a way of life, a style of life, and that's very important for us. Nowadays, something like 86-87 percent of bikes are sold outside Italy.
And this (inaudible) nationalization is very important because 2011, despite the crisis, we sell (inaudible) -- we sell to Europe and some other European countries. It was the best year in our history.
MANN: What would you like to see the Italian government doing to help businesses, to help encourage more businesses to be made in Italy and be proud?
DEL TORCHIO: I believe that first of all they have to put their books and their account in order. We have too much deficit and this is the (inaudible). The only thing that I really ask is to have an efficient educational system in Italy, because we truly rely, we completely rely on the ability of our engineers to develop bikes.
And this is very important element, because the only way for the Italian companies to succeed and to maintain the ability to explore is, as I said, the beginning to innovation. This crisis has, first of all, enforced to the Italian company to become more international than before. And this is positive.
In the meantime, as soon as the internal matter will start to grow once again, we will have tremendous opportunities.
MANN: So investing in education is so important to you that you're taking it to high schools, haven't you?
DEL TORCHIO: Absolutely. We decided four years ago to establish a school inside, to open a school inside Ducati. Is what we call physique motorist (ph).
And this is our contribution to the Italian government, to improve interest among sciences and physics, because you know, Italy is a manufacturing country. And we desperately need to have good engineers. And we have to explain to the young generation that studying engineering is something very interesting, very fun and affordable.
MANN: How does your view on Europe's single currency changed during the economic crisis?
DEL TORCHIO: I remain confident that the euro will stay alive. In case of breakage of the euro system, everybody has to pay a big price, a big cost. Germany, France as well as other Europe countries. So it's not in the interest of anybody to do that.
Obviously, we had good (inaudible) in which the Italian companies were using the lira and through the devaluation of the lira, we became magically very competitive around the world. But is a shortcut. Is not the real solution and so I don't think that coming -- returning to a local currency is a solution.
(END VIDEO CLIP)
MANN: Gabriele del Torchio, the CEO of Ducati.
That's it for MARKETPLACE EUROPE in Venice. Arrivederci!