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E.U. Gearing Up For Pivotal Month; Inspiration from the Iron Lady

Aired September 3, 2012 - 14:01:00   ET



NINA DOS SANTOS, CNN HOST: Get out the bazooka and buy those bonds. The head of the ECB says that there's been enough talking. What Europe needs now is action. As the ECB heads into crucial months, the former boss tells CNN that the bank should now speak with one voice.

And the price of power dressing, we look for inspiration at the Iron Lady. Hello, I'm Nina dos Santos in for Richard Quest, and this is QUEST MEANS BUSINESS.


DOS SANTOS: Good evening. Well, the summer holidays are over and European leaders are getting back to work. Let's hope that they're well rested, because September is shaping up to be another pivotal month for Europe.

Let's take a look at what's on the calendar these days. And in these busy people's diaries, first of all, if we start out with one of the big moments at the markets have been waiting for here, it is this event here on the 6th, which is the ECB's rate decision.

Not only will they be deciding on interest rates, but also potentially on a crucial plan to buy bonds in troubled European countries, something that the Germans as yet are very reluctant to do.

Well, speaking of Germany, what we're also seeing are September the 12th is the German constitutional court ruling on the fiscal pact and the legitimacy of the permanent and temporary bailout funds (inaudible) the so- called EFSF and ESMs. What we're going to be asking is do they conflict with German law? The outcome of that could be crucial to solving the Eurozone crisis.

Also the E.U. is supposed to outline banking proposals to bring in a Eurozone banking supervisor. This is all part of the so-called banking union for the single currency bloc, and that'll be another headache for Angela Merkel if that doesn't go through, either.

Well, September the 14th we'll find out whether all of the above has dictated the atmosphere of the Eurogroup meeting. That'll be taking place two days later. The foreign ministers of the Eurozone will be getting together in Cyprus for two days' worth of discussions.

Moving on, a day later, the Greek bailout terms will be in focus as the inspection of the country's reforms begins this week, look out for the inspectors' report to be released from mid-September onward.

So what about the state of Europe's economy, as these key decisions loom? Well, the latest data from the Eurozone manufacturing figures shows that output has been shrinking yet again for the month of August. This is for the 13th month in a row.

What I want to show you here is the purchasing managers' index. That's published by market, came in at this figure, 45.1. Any number, let me remind you, any number below the reading of 50 means that manufacturing is declining.

Even German manufacturing also went backwards for the months. And that suggests that Europe's largest economy is continuing to suffer from the recession among some of its smaller and big trading partners.

And also take a look at this. A separate survey in Germany itself said that people there don't seem to have much sympathy for struggling nations like for instance Greece. A poll conducted by the "Financial Times" (inaudible) but also found that take a look at that. Only about a quarter of the Germans think that Greece should actually stay inside the Eurozone.

Before these numbers came out, the Germans' foreign minister, Guido Westerwelle, speak to CNN's very own Anna Coren in Hong Kong. And she asked him how the E.U. constitution would help to address the debt crisis.


GUIDO WESTERWELLE, GERMAN FOREIGN MINISTER: We have to understand why, for example, we were too slowly at the very beginning of this debt crisis. We are -- we have been not flexible enough, not quick, fast, smart enough at the very beginning. And also we need more transparency and more democratic foundation that the people really follow this track and this reform course.

And this means we established a common currency. We established a monetary system. But there is still a leg of political union in the European Union. And so we have to draw the consequences and we will do so. It's doable. We will do so. And then, of course, this is the opportunity in the crisis.

ANNA COREN, CNN INTERNATIONAL CORRESPONDENT: So why do you think it would pass this time when it failed previously?

WESTERWELLE: Because there is a lot of pressure, internal pressure. We all understood that we have to become better. And an external pressure, because the world is seeking for European responsibility and leadership.


DOS SANTOS: So that is Guido Westerwelle there at the German foreign minister, speaking to CNN's Anna Coren.

Let's have a look at how the European markets closed. For the most part, as you can see, closing quite a bit higher. Some healthy gains in this first week of September.

What we're seeing here is an interesting picture because we're seeing hope that the kind of dismal economic figures that we're seeing, instead of pushing the markets down, might just push things up because they could encourage central banks to print more money and come out with more fiscal stimulus. At least that's what we're expecting, some say, for the ECB.

Now one vocal advocate for action is Angel Gurria. He's the head of the OECD, and he's urging the ECB to act swiftly at the moment. Earlier today, I asked Gurria what would happen if the central bank couldn't agree on its next move.


ANGEL GURRIA, SECRETARY-GENERAL, OECD: The problem is that you have these countries doing what they have to do, doing their homework, delivering on the policies and telling their people these are necessary in order to go beyond and go over the crisis and then the markets are penalizing them.

And the brothers and sisters of the European Union, the family is not helping them. There's, you know, we're very good at penalizing the ones that have the wrong policies. We're very bad at helping supporting and even protecting those countries that do well, that have the right policies, but that are being attacked by the market.

DOS SANTOS: If the ECB doesn't deliver, what's going to happen on the market?

GURRIA: Nina, there's nothing, you know, black or absolutely, you know, necessary for a big cataclysm to happen in September. We create the conditions and then we can also fix the situation. And we can create the better conditions.

And this is what we should do for this September. We should create the conditions. We should allow all our instruments to come out in full force and tell the markets we are here to support the countries that are performing.

DOS SANTOS: If we focus in on a poll that's just come out by the "Financial Times," saying that at least a quarter of Germans that they polled among their sample study said that more or less Greece was out of the Eurozone anyway. Will Greece exit this year? What'll be the ramifications of that? Because obviously they're asking for another couple of years. But will they get it?

GURRIA: Nina, Greece will not leave the euro. I see the euro going through this rough patch. I see the institutions strengthening, coming together and I see even some other countries coming into the euro in the future. That is not my concern.

The question is how to get there with the least possible pain and the least positive cost. This is what we're talking about. We know where we want to go and we have the institutions. We have the firepower. We have the balance sheet. We have, again, the bazooka, you know.

The question is why shouldn't we use it? This is what these institutions and this firepower was created for. This is the big point. We don't need anybody else's support. We don't need people to come in and ship money for the Europeans. Europe has it within itself, within its institutions. The question is use them to the fullest possible extent.


DOS SANTOS: The ECB's president is letting us know what he thinks should be done these days. Jean-Claude Trichet spoke to CNN's Jim Boulden, and he told him, quote, "Non-standard measures should not be overlooked at a time of crisis like this."


JEAN-CLAUDE TRICHET, FORMER PRESIDENT , EUROPEAN CENTRAL BANK: When you embark on non-standard measure and there are non-standard measure in Japan, they are non-standard from the U.S. There are non-standard measure in the U.K.

I mean, all the advanced economy have embarked on non-standard measure. It seems to me that it is justified if you are in a situation where obviously you have the markets that are not functioning correctly so you have to substitute or to counter markets that are not functioning correctly and are hampering the transmission of the monetary policy.

But it also gives time to the other partners which are not on either government, so they have policies but also the private sector. And the message of the central bank is -- and rightly so -- we are understanding that you are doing all what is necessary to get back to a normal situation and it is on that understanding that we are doing some non-standard measures.


TRICHET: But it should be exactly appropriate to the situation to be dysfunctioning of the markets. And of course, on the basis of the hard job being done by the other partners. Otherwise, it would only serve as permitting them not to correct the absurd policy that have been pursued in the past, of the imbalances that have to be corrected today.

BOULDEN: The last few weeks has been what looks to me and a lot of people as a lot of tension between those from the Bundesbank inside the ECB, and the decisions that seem to be getting made.

Do you see a rift inside the ECB now? And was there a lot of tension between the German members of the ECB and your team and others?

TRICHET: Well, first of all, in all decision-making bodies, on the central banks, you have pros and cons. As you know, it is published in the U.K. or in the U.S., Japan. And it's very, very often that decisions are taken by a majority and there is a minority. And minority has his own view. That's the way things are heard, I would say, constructed in most of these (inaudible).

Of course, in the case of the ECB, we have 17 countries. And the decision was taken at the very beginning that, of course, we would have discussions.

There would be majority, simple majority is the way the treaty has imagined to organize the sort of governance of the ECB. But it was decided at the very beginning that we would all speak with one voice, because precisely it is sufficient challenge to have to cope with 17 countries.

I personally regret that we could not stick to this one voice concept. But it is the case. I mean, I observed that. And I would say I'm sure that all members of the governing council are speaking with their own sincere analysis of the situation.

It is not necessarily abnormal that we have different views in -- as is the case in the U.S. or in the -- or in Japan. But I trust that all, of course, colleagues are loyal to the institution. We have a criteria to respect the treaty.

We have an exceptional situation. We have to stick to our mandate, which is the primary mandate of preserving price stability. This has been done remarkably well by the ECB in its first 13 and 14 years, the last 14 years remarkably well, better than in the past of any central bank, over the past, say, 40 years or 50 years. So we have to recognize that. This is a success of the central bank itself.

That being said, we are in situations that are absolutely exceptional at the global level, and of course at the European level.

BOULDEN: But as you said, we now see the crack. We don't hear one voice coming from the ECB anymore. That must be worrying to you.

TRICHET: Well, again, I've experienced that myself. And I have full respect for all my colleagues. I understand fully they all reasoning. I have to say that what I had observed in my time and I'm sure that it is still the case. They are loyal, all of them.

And I'm not speaking of any particular member of the governing council. I think it's loyalty to the institution, after all, all the democracies of Europe have decided apart from the U.K., or from Denmark, have decided that we will have ECB, the European Central Bank, and we would have a single currency. And that is what we are owed to do by democracies.

So loyalty to the institution seems to me absolutely essential. In fact, that each member of the governing council speaks itself in the governing council with his own views and his own ideas is something which is indisputable. I would hope that in a very difficult period, a crisis period, we remain at all as, I would say, cautious as possible.


DOS SANTOS: Jean-Claude Trichet there, the former head of the ECB. When we come back here on QUEST MEANS BUSINESS, we'll have the latest of the Spanish debt crisis. There's another reason to ask the government for help.



DOS SANTOS: Hello and welcome back.

Well, the Spanish region of Andalusia has asked for an advance from the Spanish government to help pay for its pressing bills. It says that it needs the treasury to bring forward an expected payment of more than $1 billion.

And in fact, as you can see here, Andalusia in the deep south of Spain is the country's most populous region, but it's also in debt to the tune of nearly $18 billion. What's more, its unemployment here in this region has soared to an official rate of more than 30 percent. Remember, the rest of Spain is 25 percent officially.

Well, some of the Spanish regions have asked for money as well, named Valencia, also Catalonia as well. And they've got even bigger debt than Andalusia. As you can see the likes of Catalonia standing up there at $53 billion and counting. What's more is that this debt has been increasing sharply since the year 2008. That was in a slump in the property market in Spain.

There are massive holes in the country's economy. The Spanish government is setting up a special liquidity fund for regions like these that are in financial trouble and so far Andalusia has said that it hasn't decided whether it will specifically ask for help from that fund for the moment. It does need a helping hand to solve those pressing issues of paying bills in the short term.

Let's get a little bit more on this story, which is a developing one. And we go over to CNN's Al Goodman, who's standing by to tell us all in Madrid.

So, Al, this situation seems to be getting worse and worse by the day. First of all, early last week we had Catalonia, then it was Valencia, could even be Castile-La Mancha soon. Who knows? How worrying is Andalusia?

AL GOODMAN, CNN INTERNATIONAL CORRESPONDENT: It's worrying because Andalusia has taken this medium step and has asked for tax funds from income tax and from sales tax that they say would normally be coming to Andalusia.

But months down the road, they want that money now. So that's where they're asking for their 1 billion euros, whereas these other regions that you're talking about -- Catalonia, that's the Barcelona area on the east coast, Valencia, they've asked for money from that -- from that liquidity fund that you just referred to.

Now that fund has 18 billion euros and just what Valencia and Catalonia and one other smaller region, Murcia, already about half of that 18 billion has been requested. Andalusia says it's considering, as you say, to possibly request -- and some experts say if Andalusia comes into that fund as well, that fund will be not enough, although the prime minister said recently that he thinks that it will be enough.

He's not worried and that fund was set up to deal with bond redemptions at the indebted regions have to pay before the end of the year.

One other figure, Nina, 145 billion is the deficit across the regions. Andalusia alone about 15 billion of that, about 10 percent of that, Nina.

DOS SANTOS: In fact, what a lot of people have been saying, Al, is that the regions of Spain represent the 17 countries in the Eurozone, one seems to be blowing up after the next. And this is fast becoming a national bailout, isn't it? Despite what's happening with the banks.

GOODMAN: Well, you're seeing the sign of basically it's the messages coming from the regions and up here in the capital in Madrid, that we can't wait any longer for the European bank bailout money to get here.

And another sign, the bank restructuring fund in Spain which has four troubled banks under its tutelage, agreed this day to pump 4.5 billion euros -- that's over $5 billion -- into troubled Bankia because they don't want to wait for the bank bailout money to come down from Europe. They need to guarantee the deposits and the chance for Bankia to have access to the financial markets.

All of that, the Bankia issue with the restructuring fund, the Andalusia regional thing, basically sends out a message that there's a sign here, there's a sign there that things cannot wait, despite the fine words from the leaders of the country, Nina.

DOS SANTOS: Yes, September is a month where everybody gets back to work after the holidays. I was in Spain myself up until yesterday. And I've got to say the feeling there, I was getting, was that people are going to have a really difficult September in Spain.

Is that the feeling in Madrid among the political and banking classes, that this is where really we've got to work out how it goes now?

GOODMAN: You're seeing that; I was in the northwest of Spain until just a few days ago, and you're seeing that in the northwest of Spain.

I was in the south of Spain just a few weeks ago, where there were huge protests and so you're getting a sense it's not just going to be a troubled September; it's going to be a very difficult autumn, right on through the board and the leaders here are clearly getting that message. There are two regional elections coming up in October.

In the northwest region of Galicia, where I just was, and in the northern Basque region, that will be a sort of a test of whether the national policies are being accepted by the people as those regional leaders stand two of those 17 regional governments stand for reelection here in October, Nina.

DOS SANTOS: Excellent point.

Al Goodman there at CNN in Madrid.

Thanks so much for bringing us the latest on what's going on in Spain.

Time now for a "Currency Conundrum" for you out there. Which is the biggest euro note in circulation? Is it A, a 50 euro note; B, 500 euro note or could it be C, a 1,000 euro note? We'll have the answer for that later on in the program.

Well, speaking of currencies, the pound is up again against the U.S. dollar, but the euro was down. Remember that everybody's keenly focused on that crucial ECB meeting to be taking place on September the 6th. We're back after this short break.



DOS SANTOS: (Inaudible) court has begun releasing 270 miners arrested during clashes with police at the Marikana platinum mine. Thirty-four miners were shot dead by police last month amid a strike over pay.

The miners arrested last week were initially charged with murdering their colleagues on the grounds that they were part of an armed mob that had provoked police to fire in self defense. Well, the charges were dropped after a public outcry. CNN's Nkepile Mabuse has been following the case throughout.


NKEPILE MABUSE, CNN INTERNATIONAL CORRESPONDENT: It is a process that we expect to continue into the night. The first group of miners have already been (inaudible) behind me, had their physical addresses verified and then they were let go, walked out of (inaudible) free men, many of them elated, singing songs of jubilation.

But there is (inaudible) how they were treated by the police in captivity (ph). Some complained that they were assaulted by the police. We've heard media reports of miners being tortured, (inaudible) being tortured allegedly out of them by the police.

The police watchdog, the independent police investigative directorate here in South Africa, is investigating all of those charges, once they managed to speak to some family members who were meeting their loved ones here and some pretty distraught family members who still do not know where their loved ones are.

The last time they saw them was when they left for that protest on the 16th of August, which ended in bloodshed -- Nkepile Mabuse, CNN, Marikana, South Africa.


DOS SANTOS: The Marikana mine is operated by Lonmin, the world's third largest producer of platinum. Its stock has fallen by more than 40 percent so far this year and it's down about 15 percent since that shooting took place on August the 16th.

But these shares have still recovered a little bit in today's session at the close of trade in London in fact. Lonmin stock was up nearly 11/2 percent at a price of 581 pence.

It's the Democrats' time in the spotlight this week as they gather for their convention. We take a look at the challenges for President Barack Obama as he tries to win four more years in the White House. You're looking at a live shot of the convention center as preparations get underway (inaudible).



DOS SANTOS: Hello and welcome back. I'm Nina dos Santos. These are the main news headlines this hour.


DOS SANTOS: Civil war continues to rage in Syria. Opposition activists say that at least 155 people have been killed this Monday. Dozens have said to have died in an airstrike north of Aleppo. This video is said to show that particular attack in progress. It's thought to have claimed many civilian victims.

An attack on U.S. interests in Pakistan, a suicide bomber rammed a car filled with explosives into a U.S. consulate vehicle in the city of Peshawar. Authorities say that two Pakistanis died in the blast and dozens were wounded. There's been no immediate claim of responsibility.

A South African court has freed the first of 270 miners who were charged over the deaths of 34 fellow workers last month. They were accused of murder even the police acknowledged firing the fatal bullets. Prosecutors provisionally withdrew the charges after a public outcry.

Paralympian Oscar Pistorius has apologized for accusing his fellow sprinter of using an unfair advantage. Minutes after Sunday's 200-meter final, the South African runner said that the winner, Alan Oliveira, was running on excessively long blades, giving him a longer stride. Despite apologizing, Pistorius said that there's still an issue.

Canadian police say that thieves have made off with a massive haul of maple syrup from a warehouse in Quebec.

Well, the theft was discovered when workers found empty barrels where there should have been full containers full of that maple syrup. Officials haven't announced just how much syrup was actually taken, but the entire contents of the warehouse were said to be worth around about $30 million U.S.


DOS SANTOS: U.S. Democrats are fine-tuning their speeches and getting ready to party. The Democratic National Convention begins in earnest on Tuesday. It's President Barack Obama's big chance to win over undecided voters and also, of course, to steal the spotlight from the Republicans.

Isha Sesay is covering the run up to it in Charlotte, North Carolina, and she joins us now live.

Isha, first of all, what kind of message did the Democrats want to get across?

ISHA SESAY, CNN INTERNATIONAL CORRESPONDENT: Well, Nina, it's pretty simple. The Democrats, during this week-long convention, will be looking to convey to the American people that they think middle America will be better under Barack Obama than they will be under Mitt Romney, his opponent, their basic argument being that President Barack Obama has the interest of the middle class at heart, as opposed to Mitt Romney, who they're billing as a champion for the rich, so to speak.

And they have a tall order here in Charlotte, because they've got to convince Americans that despite the high unemployment and the sluggish economy, they will be better off under him and not to switch sides.

You know, the problem the Democrats have been out in force, even on Sunday, number were on U.S. television, basically emphasizing that message, you know, White House senior adviser David Plouffe said on one of the U.S. networks yesterday that it was because of the great leadership of President Barack Obama that this country was able to stave off a great depression, and that the country is beginning to recover.

We shall see in November whether Americans are buying that argument, Nina.

DOS SANTOS: Yes, we certainly will. Time will tell, Isha.

One of the key issues here, of course, is the keynote speech. Who's going to be delivering it this time, because that'll be pivotal, won't it?

SESAY: Yes, no doubt about it. That keynote address is always important. You may remember that it was back in 2004 that a young Barack Obama burst onto the national stage and stole the spotlight and it was at that point really dubbed as a rising star of the party.

This year's convention it will be the San Antonio mayor, Julian Castro, who will be giving that keynote address on Tuesday. He's a very impressive character at 37 years old, is one of the youngest mayors of a big city here in the United States.

And in some ways his own personal narrative mirrors the president's. He was raised by a single mother. He's a graduate of Harvard Law. He's highly telegenic, highly intelligent and, Nina, people are definitely saying he's one to watch.

DOS SANTOS: Isha, here's another question for you. The economy, obviously, has been the main battleground, really. A lot of people have been saying, well, obviously, Barack Obama is leading on issues like immigration; he's leading on issues like getting ethnic minorities and the Hispanic vote on board. But when it comes to the economy, he really can't seem to win, can he?

SESAY: No, he can't, Nina. Unfortunately, when you look at his record, it's been a bad almost four years. I mean, there may be recovery underway, but it has been a slow one. It is not what the administration would have hoped for. Unemployment is high, above 8 percent. It is sluggish. Americans are feeling it in their pocketbooks.

And the economy will be issue number one in this election. So the president has a tall order. He's almost saying, you know, trust me; it hasn't worked to date, but I'm the man to carry this forward. So, you know, it's a difficult balancing act.

And also when he takes the stage on Thursday at the Bank of America Stadium, and he accepts the nomination, the question is, how does he -- how does he get that message across? Is he aspirational? We all remember that, back in 2008, he was so aspirational.

And those promises haven't really come to fruition. But he has a very careful juggling act to get across on people. Hope and change hasn't really borne fruit, but stick with me is what he's probably going to be going for on Thursday.

DOS SANTOS: OK, Isha Sesay, thanks so much for that.

Isha Sesay live at the Democratic convention as it gets underway -- or prepares to get underway there in Charlotte, North Carolina.

Well, before the convention actually starts, do join us for a CNN special presentation, "Obama Revealed: The Man, the President." It's an in-depth look at Barack Obama and what happened when lofty goals that the realities of Washington. That's early tomorrow morning for viewers in Europe. That's 1:00 am in London, 2:00 am in Berlin if you're watching from the European continent.

You can also follow developments at the convention any time by logging on to and having a look at our live blog on that site.

Well, on Thursday night, Barack Obama will accept the Democratic Party's nomination for U.S. president. That's a formality. What may be coming is one of the Democrats can actually fill the massive outdoor stadium where this event will be held. This is the Bank of America Stadium in Charlotte right now.

As you can see, these are live pictures we're showing you at the moment. It gives you just an idea of the size of this venue. And of course, they would need a full house, wouldn't they? Steve Kerrigan is the CEO of the Democratic National Convention committee and he joins us now live from Charlotte as well.

So, Steve, thanks so much for coming on QUEST MEANS BUSINESS. The first thing I would like you to address here is obviously when you chose Denver four years ago, that was credited with helping the Democratic Party to win the state of Colorado. North Carolina is a key state for you as well. Will this help you to clinch a victory there?

STEVE KERRIGAN, CEO, DNC: I think it -- I think -- yes. The bottom line is where you host a convention doesn't necessarily matter, but it's what you do with that convention and how you use the convention as a tool. You know, we chose to come here to North Carolina. I ran the site selection process.

We came here because of the potential electoral impact it could have. But really, it's the president's focus that he gave to us many, many months ago, a year and a half ago, really, to make this the most open and engaging accessible convention in history.

By doing that, by opening and closing our convention week with events that are open to the public, by having CarolinaFest that's going on right now with tens of thousands of families who are involved in our convention activities, our live streaming of all of our stuff, all of our efforts to engage people, that's what can impact an election, is by engaging people and telling them they want -- we want them to be heard and want them to participate in the convention.

DOS SANTOS: It certainly can. And I'll give you an opportunity to discuss all of those things perhaps in more than one answer.


DOS SANTOS: But it's going to be a tough sell, though, because in places like North Carolina, particularly Charlotte, the unemployment rate is quite a bit higher than the norm. The average in the state is 8.2 percent; over there, it's 9.4 percent. It's going to be difficult as a sell.

KERRIGAN: I think, you know, the campaign can comment on the specifics of the campaign and their messaging, but I know for a fact that the enthusiasm and energy and excitement of the people here in North Carolina, I mean, we had tens of thousands of people ask for community credentials to come to the president's speech on Thursday night at Bank of America Stadium.

And we had half-mile-long lines all across North Carolina for people who want to get that ticket and participate in this great historic moment . We have thousands of people particular in the 9-3-1 program, which allowed folks to do nine hours of service for the campaign.

So the enthusiasm is there and the president (inaudible) a message about how we're going to move our country in the right direction. And I think people are connecting with that and that's going to have a big impact.

DOS SANTOS: You've got thousands of delegates arriving, but you've got thousands of seats to fill, tens of thousands, in fact, if you take a look at that stadium there. It's almost the size of the Olympic Park here in London, which do the headlines a month or so ago. Are you going to be able to fill all those seats?


KERRIGAN: Our focus --

DOS SANTOS: (Inaudible)?

KERRIGAN: Our focus is -- the great part about Thursday is it's another opportunity to include tens of thousands of more people in our convention planning.

And so we actually expect 65,000 people to attend the event and witness the president accept our party's nomination. It's a huge crowd for us and it creates a great opportunity for tens of thousands of more people to participate in the convention and really have a chance to witness history first-hand.

DOS SANTOS: Steve Kerrigan, thanks so much for joining us there live from Charlotte, North Carolina. We really appreciate your time this afternoon.

Up next, the bailout correspondence Jean-Claude Trichet would rather keep confidential. Do stay with us for that.





DOS SANTOS (voice-over): Earlier today, I set to you a "Currency Conundrum" in the show. Here was the question for you: what was the highest value euro note in circulation? Is it currently a 50-euro note, a 500-euro note or a 1,000-euro note?

Well, here's the answer you've been waiting for. The answer is B, the 500-euro note. It's also specifically the largest note in circulation, too, which means you probably need a big wallet if you've got a couple of those hanging around in it.


DOS SANTOS: Ireland's finance minister says that its lawmakers -- it's up to its lawmakers -- sorry -- to decide whether to publish letters that the former ECB president sent to ministers in Dublin in late 2010.

"The Irish Times" says that Jean-Claude Trichet threatened to withdraw the ECB's support for Irish banks if the government itself refused to seek a bailout. Well, Irish officials had previously refused to publish these letters, but it looks like they're going to have to hand them over to a parliamentary inquiry into the financial crisis after all.

In a moment, we'll hear what Jean-Claude Trichet's response to that question was. But first, Constantin Gurdgiev is a finance professor at Trinity College, Dublin, and he joins me now live to discuss this matter via Skype.

Constantin, first of all, do you think we're going to see these letters being published? And if so, what are they likely to show?

CONSTANTIN GURDGIEV, PROFESSOR OF FINANCE, TRINITY COLLEGE, DUBLIN: I think sooner or later we're going to see those letters published. We know that (inaudible) letters have been published in the case of Italy. There are some other letters of similar nature relating to the likes (ph) of Portugal, which are not yet published. But sooner or later these things come to the forefront of the public attention.

In Ireland's case, this is very important. It is important from the point of view of the -- that Ireland has been advanced into the largest bank bailout in history of the developed world. It's 40 percent of the national GDP or gross domestic product (inaudible).

(Inaudible) know that primarily the bank bailout has gone to finance not the internal operations of (inaudible) banks, not the -- if you want write-down (ph) of the (inaudible) that they have issued, but rather to cover the bondholders who are international bondholders coming from Germany, France and the rest of the Eurozone as well as the United States.

And that is really a big issue. It is a big deal to force Ireland into the bailout and thereby loaded the cost of that bailout of the banks on the taxpayers. It did so in order to authorize (inaudible) other bondholders, other countries' bondholders.

DOS SANTOS: Hang on a second, though, because some people might say if they wanted to be devil's advocate, well, we all know that this goes on behind closed doors in front of the cameras, well, the politicians get together and say, each country, for reasons of sovereignty, have to be the first to ask.

But behind closed doors, they're getting their arm twisted, saying you need to ask for the money to reassure the market.

GURDGIEV: Well, of course. That's is an ongoing process. In the case of Ireland, it was very clear that it was a process which didn't start in October 2010 (inaudible) actual bailout was signed. But it's part of the (inaudible) in advance of that.

In fact, if you wanted the first (inaudible) government in dealing with the banking crisis, a guarantee which covers all of the banking liabilities, banking sector liabilities, and that was back in September 2008 issue (ph), that really started this process.

However, there is the culpability here on the shoulders of the ECB, which, for years, since 2008 forwards, through 2010 and even today, as of today is still living in denial as to the extent of the problem across the banking sector, across the Eurozone itself. And Ireland in particular.

And also the nature of the problem. We still continuously hear in the language that this is a liquidity issue; it's not a solvency issue. While really it is the banks which are insolvent.

DOS SANTOS: OK. Constantin Gurdgiev, we're going to have to leave it there, finance professor at Trinity College, Dublin. Thanks so much for explaining that so comprehensively.

Well, Jean-Claude Trichet was coy on the issue of these letters when he spoke to CNN. This was his response to Jim Boulden.


JEAN-CLAUDE TRICHET, FORMER PRESIDENT , EUROPEAN CENTRAL BANK: These are not the only messages, as you might know, that the ECB, through my voice message, was the position of the governing council, sent to all governments. We were very, very uneasy with the position of France, Italy and Germany in 2003-2004. And I was private, very, very strong of that and also public.

We had over -- I'm sorry. We had problems with a number of other countries and not only Ireland, but Greece, but (inaudible) and so forth, Italy, Spain. So the message of the central bank was always, please, by not behaving as promptly (ph) as possible, both as which as regards to the fiscal policy, but also the competitive indicators, I was circulating myself every month.

The evolution of the (inaudible) costs in all countries, member of (inaudible) since 2005 to draw the attention on the fact that it was extremely important to follow the evolution of the (inaudible) evolutions, you know, of the revenue, of cost and of prices, national indicators of prices in the various countries.

So all these messages we have probably (ph) sent to all countries and I think that there was no negotiation. It was a permanent flow of messages to the countries, and fortunately explains as demonstrated that these messages were useful.

BOULDEN: But would you say that Ireland -- some people in Ireland want to see these letters? They want to see the letters that you sent to their government? Would you agree to let them be released?

TRICHET: I mean, again, these are -- were messages and messages which were confidential at the time, I would say nothing but they were confidential at the moment that they were sent.

BOULDEN: But in your eyes, certainly Ireland needed a bailout, and it -- because the ECB was spending too much money, sending too much money to keep the banks in Ireland going?

TRICHET: I think that the overall sentiment of all the responsible persons in Ireland, those who had -- we were (inaudible) was that they really were needing some help in terms of help of the IMF and help of the other Europeans.

And of course, they also -- and this is something which was done in my opinion very well, they took very difficult and tough decisions and one of the remarkable things I can say on Ireland is that it is one of the countries which has really done the job to get back to competitiveness. And this is really unremarkable, but it called for a tough decision.


DOS SANTOS: (Inaudible) we'll speak to fashion expert about what power dressing means 30 years after the Iron Lady (inaudible).



DOS SANTOS: Love her or hate her, Margaret Thatcher was an icon of the 20th century and today some of her clothes sold for suitably iconic prices at the London auction house, Christie's.

Take, for instance, this item, this Mansfield (ph) suit, which dates back to 1972. It generated the most demand and sold for nearly $40,000, as you can see. Then this suit in dark blue wool, also from the 1970s, bidding for this went up to more than $21,000.

But what I also want to show you is that five other outfits all sold for about half that amount, about $10,000 apiece. That's way more than expected. And I'm going to leave you on my personal favorite, which I would be tempted to pay perhaps around $10,000 for, but it still holds today, doesn't it?

So these high prices tell us anything about power dressing in the modern world, well, I spoke to Hilary Alexander, who's the fashion editor of "The Daily Telegraph" newspaper, and I asked her if this is proof of Margaret Thatcher's role as a style icon.


HILARY ALEXANDER, FASHION EDITOR, "THE DAILY TELEGRAPH": I mean, she really was the woman who invented power dressing. And to me, I mean, she's -- she was "Dynasty" without all the glitz. And she had authority with her clothes. But she was also alluring.

DOS SANTOS: That's a key thing, really, authority, isn't it? They didn't call her "The Iron Lady" for nothing, no. How does one dress like an Iron Lady? Is it still important today?

ALEXANDER: I think, you know, if you're heading up a corporation or heading up a country, it's very important to dress for the role. But at the same time, if you're a woman, I think you've got to have that little element of femininity. And I think the way Maggie did it was with those soft bows, pearls, always a brooch and wonderful lipstick and hair. I mean, she was very, very, very groomed.

DOS SANTOS: She certainly was. And in fact, what we're seeing in some of the first ladies of the prime ministers of the U.K., also Barack Obama's wife, the first lady, Michelle Obama, sort of taking some tips from that, I'd say, wouldn't you? Are they the heirs, let's say, to the power dressing of Margaret Thatcher?

ALEXANDER: I think they are. They're the sort of 21st century power dressers. Once again, they're very conscious of grooming, hair and makeup, accessories. But I think in terms of the wardrobe, it's lots softer. It's a lot more laid back, in a sense, as you know, you see jeans, T-shirts.

You'll see sometime, for example, you know, in jeans, maybe, you know, dressed up with a smart blazer, or you know, simple dresses and flat shoes. I think it's a lot more sort of informal. But it doesn't lose, you know, that kind of slightly tailored, well dressed look.

DOS SANTOS: A well dressed look that means "I mean business," right?

ALEXANDER: Exactly. I mean business, you know, I'm in a position of power or I'm in the spotlight. I'm aware of what my role is, and it's very important, because I'm being photographed. I'm on television and I look good.

DOS SANTOS: Who else would you say power dresses?

ALEXANDER: I've been thinking about that. I think Hillary Clinton, along the way, I think she made some ghastly errors. She still occasionally turns up in really sort of unfortunate trouser suits, which aren't really that flattering.

But she's been getting better. I think she looks amazing. And then there's all those wonderful women in politics in France, split skirts, high heels, you know, incredible little black dresses at cocktail parties. I think they really have nailed it. But they add a lot more sex appeal.

DOS SANTOS: Sex appeal, not something that we hear often on business shows here on this network.

Here's an interesting one for you, Angela Merkel, the chancellor of Germany. Now she's been voted "Forbes'" most powerful woman of the year. Would you say that she's a power dresser?

ALEXANDER: I think she exudes power. But her clothes I don't think quite live up to the message. I think she could be a lot sharper, a lot more tailored. Sometimes her clothes look a little sort of saggy.


DOS SANTOS: Time now to go to somebody who dresses to impress, but also manages to dress for the weather as well. It's a killer combination (inaudible) Jennifer Delgado at the CNN International Weather Center with a look at your global weather forecast.

Take it away.

JENNIFER DELGADO, AMS METEOROLOGIST: Yes, it's certainly better than dressing saggy, I guess, so sort of. You don't want to be described as that. But let's start off talking about weather. And very quickly, we start off with Isaac. We're still dealing with remnants out there. Labor Day here in the U.S. is going to be wet one.

You can see some showers out there. Well, that, of course, is due to Isaac. And as we go through the next couple of days, really through Wednesday, we're looking at some very heavy rainfall, especially for areas including the northeast as well as down towards the south, as this boundary system is going to stall out.

But the rain and all that moisture from Isaac is really just going to squeeze out some heavier downpours as we talked about the rain last week for the Republican National Convention. Now of course, we have the Democratic National Convention.

We always try to be fair here, and it looks like a pretty good chance for rainfall to arrive, especially on Thursday, where U.S. President Barack Obama is expected to make his speech. And we're talking Thursday night. We have about a 50 percent chance of rainfall. And we have some breaking news coming in to us.

We have some video, a live shot of firefighters battling a blaze. This is in California. This is at the Angeles National Park, roughly about 12,000 visitors go there for the holidays. And apparently they have been evacuated, this fire moving to the north. We do know about 1,600 hectares have burned and they're still working to try to contain this fire very quickly.

As I take you over to our graphic here, severe weather will be the forecast for parts of the central Med. That's going to include Italy as well as for southern parts of France. We'll see the chance for some of these storms to produce some isolated tornadoes and strong winds as we go through Wednesday. Back over to you, Nina and your fine threads.

DOS SANTOS: Thanks so much, Jennifer Delgado there.

Now you're watching QUEST MEANS BUSINESS. After the break, we'll have a full roundup of the European markets and how they got off to the first start of the trading month of September.



DOS SANTOS: Stock markets in Europe finished this session higher. Hopes of further central bank action overshadowed some pretty dismal manufacturing figures across the Eurozone and also in China.

Well, Eurozone manufacturing -- excuse me -- contracted for the 13th straight month. We saw exports in Germany falling at the steepest rate in around about three years. When it comes to that, PMI or Purchasing Managers' Index figure, that was a ride downwards to 45.1 from 45.3. Remember that anything under 50 indicates contraction and we all have U.S. markets closed for the Labor Day holiday.

One last bit of news from the world of social media and economics this night. Jose, Manuel Barroso, yes, that's right, the president of the European Commission, has finally joined Twitter, and in his first tweet, he asked the people to join together to rebuild Europe. Well, he's now got already 81/2 thousands followers in just his first day.

But bring them on to me, because I wouldn't mind some more . Here's my Twitter handle, @NDosSantosCNN, as you can see, and you can also get in touch with Richard as well, his RQuest, as you can see there, at CNN.

That's it for this edition of QUEST MEANS BUSINESS. I'll have a quick check of the headlines after this break.


DOS SANTOS: Civil war continues to rage in Syria. Opposition activists say that at least 155 people have been killed this Monday. Dozens have said to have died in an airstrike north of Aleppo. This video in fact is said to show that attack in progress. CNN can't verify it, however, but they have heard that the raid is thought to have claimed many civilian victims.

There's been an attack on U.S. interests in Pakistan, a suicide bomber rammed a car filled with explosives into a U.S. consulate vehicle in the city of Peshawar. Authorities say that two Pakistanis died as a result of the blast and dozens were wounded. There's been no immediate claim of responsibility.

A South African court has freed the first miners who were arrested and charged over the deaths of 34 fellow workers just last month. Two hundred and 70 miners were initially accused of murder, even though police acknowledged firing the fatal bullets. Well, prosecutors provisionally withdrew the charges. That came after a public outcry.

That's a look at just some of the stories that we're watching for you here on CNN. "AMANPOUR" is next with Ali Velshi.