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QUEST MEANS BUSINESS
Draghi Downbeat on Growth; ECB, Bank of England Hold Interest Rates; European Stocks Mixed; Eurozone Jolts Germany; US Fiscal Cliff Looming; US Stocks Down; Change in Beijing; New Euro Notes; Spanish Debt Sale Completes 2012 Funding Target but Bond Yields Rise; Dollar Falling Against Yen; Eye on Namibia: Diamond Mining Industry
Aired November 8, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, HOST: A weak economy with risks ahead. The ECB warns of downsides.
America on the edge. The fiscal cliff looms and lawmakers are running out of time.
And a new generation of leaders prepare to take the reins of power in China.
I'm Max Foster. This is QUEST MEANS BUSINESS.
Hello to you. Done with helping Greece, doing nothing on rates, and doubtful we'll get -- we'll see any sign of improvement before the year's end. Mario Draghi's assessment of the eurozone economy is distinctly downbeat.
The head of the European Central Bank says activity is expected to remain weak both this year and next. Jim was watching the news conference which followed the ECB's monthly policy meeting, and there's a big market reaction to what he said yesterday, but not so much today. But important things.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Yes, important things. It's really important to notice that Mario Draghi has been asked a lot of things about so many areas, and he was asked about growth as well and he said that weak growth expected this year and next year in euro land.
He called the progress of growth "slow," and he said that Europe nonetheless, though, is more balanced than the US. Take a listen.
(BEGIN VIDEO CLIP)
MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: What I can say is that the -- both the euro area as a whole and the individual countries forming the euro area -- and I wouldn't have made this statement a year ago, by the way -- both of them have -- have a fundamental position which is way more balanced than the US, but also other countries, Japan, or the UK.
(END VIDEO CLIP)
BOULDEN: Now, you remember yesterday, Draghi warned of the European slowdown hurting Germany. That's, of course, what hurt the markets. And that's because the EU slashed forecast for German growth for 2013 down to just 0.8 percent. Half of the estimate before then.
Now, back to the ECB. No movements on interest rates, though analysts feel Draghi hinted to room for a rate cut next month. We'll see about that. He also reiterated that the bond-buying programs are ready to go, the so-called OMTs. That's if a country like Spain asks for any help.
He was asked whether he felt Spain should go for it. He wouldn't bite. He said it's there if they need it.
Also today, the Bank of England. It also held its rates, and no movement on so-called QE3, because there are a few members of the board who are worried about inflation from QE1 and 2. So, they held their fire at the BOE.
Markets were mixed on Thursday, though you'll notice Athens down 3.77 percent. Not a good day on the Athens General, Max.
FOSTER: Jim, thank you very much, indeed. Well, German exports dropped more than expected in September. It adds to the story, because European neighbors simply aren't buying. As Fred Pleitgen explains, many German companies already feeling the effects of Europe's slowdown.
FRED PLEITGEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): You'd be surprised how many parts in your car are taped in place these days. The Gustav Schamau company molds special industrial adhesives, and much of its production goes to the automobile industry.
But that industry is in trouble do to the euro crisis, and this firm near Berlin is feeling the pinch, the director tells me.
"The crisis is affecting us," he says. "We don't have cancellations yet, but companies are ordering smaller quantities. Of course, that is a problem."
The euro crisis has reached the continent's biggest and so far most resilient economy. Industrial giant Siemens just announced a 6 billion euro cost-cutting plan, saying layoffs could also be part of measures to make the company leaner.
Mercedes-Benz wants to save about 2 billion euros by the end of 2014, with demand in Europe in a slump.
And GM subsidiary Opel says it will have to slash thousands of jobs and possibly close plants. But those are just a few examples. Across the board, German exports saw a steep decline in September as has industrial production.
A prolonged economic downturn would also be a threat to Germany's role as a leader combating the eurozone's economic troubles. Chancellor Angela Merkel's rescue course for the euro has never been popular, especially among politicians in her own governing coalition. And experts say a weak German economy will make it even tough to lead, though in the end, the Germans might have little choice.
JAN U. HAGEN, ECONOMIST, ESMT-BERLIN: It might be a little bit tougher getting things through Parliament, but since we have this consensus that Germany is integrated into Europe, I think the political side will definitely not shy away from these rescue measures.
PLEITGEN (on camera): It's inevitable that the euro crisis will also hit companies like this one. The only way for mid-sized firms to thrive and to survive in the crisis is to keep innovating and find new markets for their products.
PLEITGEN (voice-over): Something the Gustav Schamau company managed to do in the past. The firm is almost 100 years old and used to produce string for packaging. Then one day, management decided tape would be the future, a decision that paid off. Soon, management might need to make further bold moves to remain profitable.
Fred Pleitgen, CNN, Werneuchen, Germany.
FOSTER: Well, the eurozone may be struggling, but Jim O'Neill from Goldman Sachs Asset Management told CNN's John Defterios it's the US, not Europe, that has him worried.
(BEGIN VIDEO CLIP)
JIM O'NEILL, CHAIRMAN, GOLDMAN SACHS ASSET MANAGEMENT: In a strange way, John, I think the US thing is now something I regard more as a risk because we're not quite sure how the politics will go.
I think the European mess has been such a mess for so long, I sort -- famous last words, but I sort of know that these guys will continue to sort of muddle through, at least until the German election.
(END VIDEO CLIP)
FOSTER: Well, Jeffrey Sachs is the director of Columbia University's Earth Institute. He joins us from New York, now. Thank you so much for joining us. Are you as pessimistic about --
JEFFREY SACHS, DIRECTOR, EARTH INSTITUTE, COLUMBIA UNIVERSITY: Pleasure.
FOSTER: -- the fiscal cliff?
SACHS: No, I'm not. I actually think this will be worked out. The US does need to make a fiscal adjustment to start with. We have a large budget deficit, still over a trillion dollars. The fact that taxes are going up at the end of this year and spending is going down is not an entirely terrible thing.
This fiscal cliff, I think, is a bit exaggerated. There's a lot of posturing. My guess is that they will find an agreement in Congress -- between Congress and the White House on how to find a way through this.
FOSTER: Have you got a sense of where the compromise might be, where there will be some movement?
SACHS: Well, you heard from Speaker Boehner yesterday that the Republican side is acknowledging that revenues need to go up. That certainly is the case. There's been a lot of discussion in recent weeks during the election campaign about closing loopholes, and I think that that certainly will be part of any solution.
The US can collect a lot more revenues from corporate income tax, if we stop the loopholes of these tax havens, siphoning off what should be revenues. Certainly on the personal income tax side, there are also loopholes that can be closed.
So, my guess is that there will be some compromise of loophole closing and, perhaps, a modest rate increases that will satisfy both sides in the end.
FOSTER: The concern is that the markets will be knocked sideways if it doesn't look like there is progress. It's not necessarily about the reality, is it, here? It's about how the markets lose confidence and that affects global markets and it affects everyone, doesn't it?
Is there a concern that politicians aren't going to be seen to be in control of this, and therefore it'll have a negative impact whatever the result in the end, actually?
SACHS: Certainly that is the case, and you were citing people who were saying just that. I don't mean to make invidious comparisons, but the eurozone situation's actually a lot more complicated than the US situation precisely because the eurozone does involve several countries and a very deep crisis in the south.
And I think that the US will be able to find its way through in a satisfactory way. I think that those who bet on disaster are going to find themselves on the wrong side of the bet.
FOSTER: And in terms of Europe, how concerned are Americans about the European situation? There does seem to be some progress, but obviously hearing Draghi again today being so negative, it's still very grim, isn't it?
SACHS: Well, it is very concerning, and I'd say even more than Mario Draghi's statements, the pictures coming out of Athens are absolutely frightening. This is no way to manage a crisis if the unemployment rate is driven up above 25 percent, and there's this mass social conflict and violence in the streets.
Everybody can do better than this. Greece is going to need more of its debt reduced. Everybody knows this that looks at the numbers. I hope that the European authorities are more serious in consequence in facing up to the realities of the data and of the economy, I should say.
FOSTER: And just a quick word on Obama. There's some criticism, wasn't there, during the campaign that he hasn't actually done that much with the economy, hasn't progressed massively? But do you think he will take more actions in his last term, because he does have that opportunity, in which case do you think the US economy will benefit from another Obama term?
SACHS: Well, I like the fact that in recent days, just before the election and since the election, he's talked again about the structural changes that the US needs. We can't solve our problems through short-term stimulus and Keynesian measures.
We need structural change, just like any other economy in the world, and I think President Obama recognizes that and we can get some leadership in the right direction. He found support from governors across the aisle, a political base for making some more fundamental changes in energy and infrastructure, especially in the wake of these hurricanes.
I think that we can get some forward movement on the deeper challenges that the US faces, so I'm optimistic going into the second term.
FOSTER: Good to hear. Jeffrey Sachs, thank you very much, indeed, for joining us from New York.
The Dow in New York has been drifting slightly lower with investors focusing on whether the US will actually tackle its fiscal problems. Stocks suffer their worst sell-off of the year on Wednesday. The Dow fell more than 2.25 percent. Currently down, though, less than 1 percent.
A once-in-a-decade metamorphosis is underway in China as the 18th National Congress continues. We'll look at what's ahead for this rising superpower.
FOSTER: The blueprints for China's next decade are being drawn up at the Communist Party's 18th National Congress in Beijing. More than 2,000 party decision makers are attending the event, which will see President Hu Jintao hand over power to his successor. The once-a-decade transition will likely see current vice president Xi Jinping appointed as the country's guiding voice.
Under president Hu's leadership, China has grown into an economic superpower whose might if fast approaching that of the United States. However, it has also been plagued with scandal and corruption that Hu says is putting the future of the state in jeopardy.
Kent Deng is a reader in economic history at the London School of Economics. He's also the author of "China's Political Economy in Modern Times." Thank you so much for joining us. Were you surprised by how outspoken Hu was in the end, actually?
KENT DENG, AUTHOR, "CHINA'S POLITICAL ECONOMY IN MODERN TIMES": Yes and no, because this is in the public domain. For example, the problem of (inaudible) of the party leadership, collecting their own (inaudible) if you like --
FOSTER: OK, we're going to come back to you, because we've got a microphone problem, I'm told. But stay there, we'll fix it --
FOSTER: -- we'll get back with you in just a moment.
FOSTER: The European Central Bank has launched a new range of bank notes, we can talk about that. They were unveiled in Frankfurt today with this rather flashy video. It's meant to introduce the new 5 euro notes, which will begin circulating in May.
After watching the video, one reporter at the press conference posed a Currency Conundrum of his own --
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Do you have any question at this stage? No questions? Yes, one.
UNIDENTIFIED MALE: (inaudible)
UNIDENTIFIED FEMALE: Oh, OK.
UNIDENTIFIED FEMALE: OK.
UNIDENTIFIED MALE: (inaudible)
UNIDENTIFIED FEMALE: Yes, sure.
UNIDENTIFIED MALE: What's the sense of this movie? It's just --
UNIDENTIFIED MALE: -- just --
(END VIDEO CLIP)
FOSTER: Well, if you are also wondering what went on there, what it all meant, do stay with us. We'll have the answer for you later in the show.
Spain has met its funding target for the year after selling $6 billion worth of debt. Demand was steady for the 3, 5, and 20-year bonds, and yet, borrowing costs are on the rise, 10-year yields are at their highest level since mid-October.
They're still working well below -- they're still well below the worrying 7 percent peaks reached earlier in the year, and spreads -- that's the gap between Spanish and German borrowing costs -- have been narrowing since the European Central Bank agreed to buy the struggling nation's bonds.
Now, Spain's economy minister says that's one reason why the country still hasn't asked for a bailout. Nick Parker caught up with Luis de Guindos at the G20 meeting in Mexico City.
LUIS DE GUINDOS, SPANISH ECONOMY MINISTER: You have seen that euro spreads of Spain have been narrowing over the last two months because of the decision taken by the ECB. We have a very positive assessment of the OMT program put forward by the ECB.
And now, what we are doing is to consider the elements that are implicated in these kinds of decisions. We'll do what is the best for the Spanish economy and also what is the best for the future of the eurozone.
But what I can tell you is that the perception of the Spanish parliament has about the OMT program, it's very positive. Within that, this step in the right direction, not only because it implies the possibility of buying bonds in the secondary market, but much more because it puts very clear that the solutions of the eurozone are fully engaged in dissipating and driving away all the doubts about the future of the euro. And that's right for the Spanish economy.
NICK PARKER, CNN INTERNATIONAL CORRESPONDENT: You said before that you pay more attention to bond yields and borrowing costs than rating agencies. How high would yields have to go before it becomes unsustainable and you think you have to seek a bailout?
DE GUINDOS: Well, I have to say that the Spanish treasury has covered almost 95 percent of regular requirements of the Spanish treasury. And so, now our situation is quite comfortable in terms of financing the treasury.
We have liquidity. Even the cost of issuing our debt this year has been reduced in comparison with that of last year. And so, we are not under any sort of pressure in that regard.
FOSTER: Well, to currencies now. The dollar is falling sharply against the Japanese yen this Thursday on worries about the possible US fiscal cliff. Right now, a dollar will buy around 79.5 yen, down two thirds of a percent since Wednesday. The dollar is holding steady against the euro.
FOSTER: All this week, we are focused on Namibia, taking a closer look at the country's economy and the industries it relies on. Located in the southwestern part of Africa, Namibia is home to the world's oldest desert.
In CNN's Eye On series, we take a look at the big business of beer in Namibia and its German influences. We explore how the country is trying to protect its fish stocks and make the industry a source of work for its vast pool of unemployed. We also look at how black farmers are faring as they look for their own piece of land in post-apartheid Namibia.
In today's report, we focus on the country's diamond mining industry.
ROBYN CURNOW, CNN INTERNATIONAL CORRESPONDENT (voice-over): The hidden structure of a pure gem, revealed by modern technology. Namibia produces some of the finest-quality diamonds in the world. The stones are washed from South Africa down the Orange River into the sea. Millions of years of tumbling through the water means that only the best survive.
Namdeb is the largest mining company in the country with a turnover of some $600 to $800 million dollars. Jointly owned by the Namibian government and De Beers, its CEO is Inge Zaamwani-Kamwi.
INGE ZAAMWANI-KAMWI, CEO, NAMDEB: There's a mixed production from both the land and the sea, and as you can see, they are sorting them into the different sizes, different quality.
CURNOW: But despite the high-quality of Namibian gems, global economic turmoil has taken the glitter off the diamond industry.
ZAAMWANI-KAMWI: We obviously are a product that is a luxury product. In 2008, 2009 global crisis, we have had to cut back our production by 50 percent. This year, of course, we are looking at producing in line with demand.
We know that we are producing for consumers that are out in the world, and when there's a slowdown, when the global economy is fragile as it is, people are thinking very carefully before they spend their hard-earned money and saving, so we have to be responsive, we have to be flexible, and to produce in line with demand.
CURNOW: The company's fortunes were hurt by a bitter one-month strike in 2011 over working conditions and housing, but profits have recovered.
It helps that Namibian gems are certified by the Kimberly Process as conflict-free and ethically produced. And ever since independence in 1990, the Namibian government has looked for ways to add value to the precious stones locally.
There are 13 factories in the country, cutting and polishing diamonds, accounting for some 1,200 skilled jobs.
BURHAN SEBER, CHAIRMAN, DIAMOND MANUFACTURERS ASSOCIATION OF NAMIBIA: Each company represents the number of factors that represent that initiation, starting off with local equity. These are not companies that are foreign companies. These are all Namibian companies with local shareholders.
These companies have brought in large amounts of investment. They have brought in foreign expatriates to bring the skill. They've transferred that skill, obviously. They've created a lot of jobs.
CURNOW: But amid slacker demand, many of these factories are struggling, and some traders are speculating in rough stones, driving their prices higher than cut and polished gemstones.
SEBER: Our employees are still by us. In this case, we have them half days here. After lunchtime, they leave. But we're on standby. The moment the market realigns itself to a viable level, naturally we would restart manufacturing immediately.
If this lasts, obviously the industry will be in more difficult. And I think the most susceptible parts of the industry will be manufacturing and producing countries.
CURNOW: The process is called beneficiation, refining the ore into the polished product. One of the industry's problems is that the costs are higher than in the growing and competitive markets of India and China, and productivity is lower. Namibians know, too, that diamonds aren't forever.
ZAAMWANI-KAMWI: We are mining a finite resource, and there will come a time when it will be depleted, but that time has not yet arrived. Mining still is the backbone of the economy, still a very significant player. But over time, I think there will be other beneficiation manufacturing, technology-led industries who overtake mining.
CURNOW: It's easy to be lured by the luster of diamonds, and they still make up nearly 10 percent of Namibia's output. But the watchword in Namibia is "diversify," because one day, those rough but precious stones will stop rolling down the Orange River.
Robyn Curnow, CNN, Namibia.
FOSTER: To see all of our stories from Namibia this week, you can visit cnn.com/eyeon.
FOSTER: Welcome back, I'm Max Foster, these are the main news headlines.
China's president has warned corruption could lead to the collapse of the Communist Party. The party is holding its national congress in Beijing to announce its first new leadership team in a decade. Vice President Xi Jinping is expected to succeed President Hu Jintao as head of the party.
Syrian president Bashar al-Assad is warning other nations against intervening in Syria. Speaking on Russian TV, Mr. al-Assad apparently ruled out leaving the country under any circumstances. His comments come as the Red Cross says it can no longer cope with the worsening situation in Syria.
In the past few minutes, Jared Lee Loughner has been sentenced to life in prison without the possibility of parole. He pleaded guilty to wounding former US congresswoman Gabrielle Giffords and murdering six others, as well as the attempted murders of others. He was confronted in court by the families of some of his victims.
Another story just in to CNN, we've learned that two Iranian fighter jets fired on a US predator drone in the Persian Gulf last week. This is according to US officials. The drone was flying in international airspace east of Kuwait and was unarmed. The Iranian jets did not manage to hit the drone.
FOSTER: We're returning now to the once-in-a-decade leadership transition in China. President Hu's 10-year term has seen rapid expansion of the economy there. Hu says scandal, though, and corruption is putting the future of the state at risk.
(BEGIN VIDEO CLIP)
HU JINTAO, CHINESE PRESIDENT (through translator): Combating corruption and promoting political integrity, which is a major political issue of great concern to the people, is a clear-cut and long-term political commitment of the party. If we fail to handle this issue well, it could prove fatal to the party and even cause the collapse of the party and the fall of the state.
(END VIDEO CLIP)
FOSTER: (Inaudible) economic history at the London School of Economics. He's also the author of "China's Political Economy in Modern Times."
And the structure of government looks like it's going to change. And (inaudible) as if there is some change in China right now. How would you define it?
KENT DENG, AUTHOR: Well, there has been a sort of a movement inside the party and outside to give people more voice. And changes have been experimented at the village level and also in the selection of new leaders.
Certainly, there are more degree of openness and degree of transparency. But it's not enough from our point of view to actually get the best, talented new leaders, because democracy is probably the best approach. Everybody understands it and everybody agrees with this. But the stake is just too high.
FOSTER: And they would argue, wouldn't they, that the look at the economic success of the country over the last 10 years under Hu and actually that's testament to how successful the system is.
DENG: Yes, in a way, it is part of China. On the one hand it is a booming economy and on the other hand, you have a very rigid party state system. How can this happen in the modern world?
Without a doubt that the party being the main drive of openness and market economy and GDP growth does deliver a great deal of growth. On the other hand, nobody can check on party's behavior. So this is the --
FOSTER: (Inaudible) comes in at that point, doesn't it?
FOSTER: And it is a big problem. How do you root it out without changing the system completely?
DENG: This is a dilemma facing the new leadership. It seems to me that Hu Jintao's appeal to the society and the party that corruption is a very dangerous to the security and also health of the economy of next 10 years of China. Certainly, it's quite timely, however, from, you know, office of point of view this may be a little bit too late, a little bit too late or too late.
FOSTER: OK, Kent, thank you very much indeed for joining us (inaudible).
(BEGIN VIDEO CLIP)
FOSTER (voice-over): It is time for the answer to today's "Currency Conundrum." (Inaudible) today (inaudible) earlier we asked you what this was all about, the video from the European Central Bank related to this new lineup of banknotes. Well, here's the answer from the ECB's vice president himself.
VITOR MANUEL RIBIERO CONSTANCIO, V.P., ECB: Today is just three features and that's what was shown in the film. The hologram, the watermark and five number changing color that you saw.
(END VIDEO CLIP)
FOSTER: That's it. Those features designed to cut down counterfeiting actually. You can see the new notes for yourself next year, starting with the 5 euro note, due to be released in May next year. We'll be back with after a break.
FOSTER: Jodie Foster, Bill Clinton, Barbra Streisand, all wear them. But you wouldn't know it -- hearing aids have become almost invisible. It's all because of CAMISHA technology. It's a process used in 95 percent of custom-made aids in -- on today's "Make, Create, Innovative." Nick Glass takes us through the evolution of the electric ear.
(BEGIN VIDEO CLIP)
NICK GLASS, CNN CORRESPONDENT: On a windy hillside near Copenhagen in Denmark is the headquarters of a company with a special mission: to make the best hearing aid in the world.
GLASS (voice-over): Made to measure, these are small, sensitive and more comfortable than ever. The process is called CAMISHA.
UNIDENTIFIED MALE: Which means Computer Aided Manufacturing of Individual Shells for Hearing Aids.
GLASS (voice-over): Widex's bulky first model in 1956 came with its own battery chest pack. Hearing aids have been shrinking ever since.
Digital technology made the machines almost vanish into the ear.
GLASS: How important do you think to the user is it that it is invisible?
UNIDENTIFIED MALE: It is extremely important. It's so clear that nobody wants to demonstrate or show their hearing loss.
GLASS (voice-over): Absolutely key to the CAMISHA process has been the invention of 3D printers. But how exactly does it work? First, a mold is made of my ear canal.
GLASS: Oh, that's quite curious.
GLASS (voice-over): Next, into a laser scanner, and we have the data needed for 3D printing. The printers are white, anonymous boxes, but peer in and watch what emerges from the pool of acrylic resin.
A laser gradually builds up the shapes layer by layer until they rise in a cluster like polyps on a coral reef.
GLASS: It's almost like seeing something from the sea bed, just rising up.
UNIDENTIFIED MALE: Yes, yes, just like (inaudible).
GLASS (voice-over): Every shell in this batch of 30 or so is different, a precise sculpture of someone's inner ear into which microcircuitry is inserted. Today, the CAMISHA process is used throughout the hearing industry for 95 percent of all ITE that's in the ear, hearing aids (inaudible) over its lifetime, the patent has been worth more than 10 million euros.
CAMISHA hearing aids are expensive. Prices range from about $1,000 to $3,000 per device. You can get a non-CAMISHA basic hearing aid for around a couple of hundred dollars.
GLASS: I know it's a business, but for you, is it more than a business? It affects people's lives.
RICHARD TOPHOLM, WIDEX: We get a lot of feedback like this that -- feedback from people who said I can't imagine why I waited five years to get one of these.
GLASS: That's moving.
TOPHOLM: It is. And it's motivating. People who sent a letter, saying they forgot the sound of some of the birds. They're walking in the forest, and they suddenly heard these birds again, and they hadn't heard them for 10 years, and they forgot they were still there.
GLASS: Background noise is a problem for absolutely all of us, but especially for hearing aid users. Now with this hearing aid plugged in and this remote, I can control the entire soundscape at home.
Just thumb this up to cut out all the other sounds and I'll listen only to the television coming directly into my hearing aid, into my earpiece. Exactly the same with the stereo. I can listen to the music, nothing else but the music, and it comes directly into my earpiece.
And when the phone goes, it overrides everything else.
GLASS (voice-over): More and more of us are going to suffer hearing loss. We're living longer. We tend to listen to music more often and more loudly. It's just as well that hearing aid technology is advancing so dramatically.
(END VIDEO CLIP)
FOSTER: Now you know. We're going to check in on the weather now. Jenny, you've been looking at the U.S. as well as Europe today.
JENNY HARRISON, CNN METEOROLOGIST: Yes, Max, of course, all about the storm that hit the U.S. and after 24 hours still not quite done, it has to be said. Look at this, the snow, the rain, the sleet in the last 12 hours. But clearing away steadily from New York, but continuing to impact Boston (inaudible) continue to work its way up the East Coast. But it's petering off as it does all that.
Now at the peak of the storm, wind gusts 122 kph in Massachusetts, in Cuttyhunk, 5 kph. The winds are easing off as well, but the snow, well, look at some of these snow totals, my goodness. In Connecticut a couple of big totals, 34 centimeters, over a foot of snow in just that 24 hours.
And even in New York City itself, 12 centimeters and that 12 centimeters, believe it or not, is more than the average total for November and December combined. So gives you an idea just how early in the year and how much snow actually came down.
Now on the upside of all of this, particularly for those in New York who still, of course, are without power, the temperatures over the next few days are going to climb again. So by the weekend, and Sunday should be even warmer than Saturday, back into double figures. And look at the overnight temperatures.
So back at to average, and it might even just get a little bit above average. So no longer those temperatures close to freezing and some good sunshine to go with it, the warm-up obviously over the next few days.
Now that is for the eastern side of the U.S., pretty good, pretty clear, some good sunshine. Look at the west. There's a huge winter storm pushing in there. The warnings are already in place. They're very widespread, as you can see, and there are blizzard warnings across the north as well.
And look at the amount of snow that's going to come down and, as I say, very widespread. So easy (inaudible) quarter of a meter in some areas in just the next couple of days. Temperatures certainly cooling off in that region. But as you can see across the south and even in the northeast temperatures are once again on the mild side, so 20 Atlanta, 11 in New York.
As for Europe, I'm afraid there's another big area of low pressure pushing in here, just beginning already in the last few hours to bring the rain showers into Scotland. But there's been some very good rain across into Spain and Portugal in the last 24 hours, I say a good amount.
As you can see the monthly average there just (inaudible) in southern Portugal, but even so, given how dry the ground is, how much the rain is needed, this hopefully is some good rain that is well received.
It's pushing across towards the central Med as we go through the first part of the weekend and there's that big system pushing into the northwest, quite blustery winds, too. You can see for the last few hours that there's been quite a few showers across much of Germany.
There's the next front coming in with that area of low pressure, blustery conditions across much of northern and western Europe over the next few days. There comes the rain and of course some snow to those high elevations. One or two delays at the main airports on Friday, some strong winds for the most part are causing those long delays.
You can see there are 45-minute delays, maybe some thunderstorms even further toward the east. And then temperatures, 11 Celsius in London. So just the same as New York, Max.
FOSTER: OK. Thank you very much, Jenny.
That is QUEST MEANS BUSINESS. Thank you very much for watching. I'm Max Foster in London. MARKETPLACE EUROPE is up next for you.
NINA DOS SANTOS, CNN HOST: Hello and welcome to Monaco on the French Riviera, and this is MARKETPLACE EUROPE and I'm Nina dos Santos. This tiny Mediterranean principality has been a playground for the rich and famous since the mid-19th century.
Living standards here are among the highest anywhere in the world, while unemployment is nonexistent . But with an economy heavily skewed towards banking and tourism, Monaco hasn't been completely immune to the Eurozone crisis. So how Europe's luxury brands managing to keep their heads above water during the downturn.
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): Coming up, battered by the winds of the economic crisis, is the tide finally turning for the multibillion-dollar marine leisure industry? And Chanel's president of fashion talks to Max Foster about the benefits of being a private company.
UNIDENTIFIED MALE: They give us the possibility to put more focus on the company 20 years from now.
(END VIDEO CLIP)
DOS SANTOS: Monaco is home to more millionaires per capita than anywhere else in the world. So it's hardly surprising that its harbor boasts some pretty big boats. In fact, super yachts like these were once considered to be the ultimate status symbol by the world's megarich. That was until the credit crunch hit. But now the market for new vessels, it seems, is starting to turn around.
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DOS SANTOS: Monaco, a playground for Europe's moneyed elite, famous for its sunshine and super yachts.
It's the calm waters of this Mediterranean principality (inaudible) turbulent environment for the world's marine leisure industry. Sales of yacht may be recovering; the prices are still taking a tumble. But one industry report recording reductions of up to 80 percent for (inaudible) hesitant buyers.
NICHOLAS EDMISTON, CHAIRMAN, EDMISTON YACHT BROKER: It's not so much that people need to borrow cash to buy a yacht. It's that they're just not in the mood for spending. What we've seen is reluctance from people to make a decision, even though they can afford it.
DOS SANTOS (voice-over): Add to that an austerity drive in the world's biggest economies and the order books for newly built boats are looking increasingly empty.
EDMISTON: (Inaudible) a big yacht, you're pretty miserable, because I think people think that it probably doesn't look good in their business environment or maybe they've got friends in business who are not doing so well, so maybe it doesn't look good for them to be particularly extravagant. That doesn't mean the sales are not taking place.
DOS SANTOS: Super yachts can vary in size from 30 meters in length all the way up to about 160 meters. And while the market for these kinds of vessels remains small, the boats have been getting quite a lot bigger. But that makes one of these a bit redundant.
EDMISTON: I think there are two areas in the world at the moment that provide most of the market for these very big yachts. One of the former Soviet Union countries, obviously Russia in particular, has its own; Ukraine and the other area is the Middle East.
DOS SANTOS (voice-over): Meanwhile, in western Europe, it'll take some time before the new build market recovers from the downturn. But the region is seeing an increased demand for secondhand boats.
MARK UPTON, DIRECTOR OF MANAGEMENT, YACHT ADVISORY: The used market is huge at the moment, because there are so many people who are trying to sell. The yacht is the first thing to go normally, because it is the last, you know, the very last word in luxury. So there's some incredible deals around.
DOS SANTOS (voice-over): And you don't have to own a yacht to feel part of the club. Chartering allows non-yacht owners to enjoy the high life without forking out millions a year for fuel, staff and maintenance. For owners, it's also an effective way to cover their costs.
UPTON: You could be looking up to 15 million a year quite easily with some of the very large yachts. But then it can go further than that. The average price of running a yacht -- so let's say a 40-meter yacht, so just kind of the starting area for a super yacht.
A 40-meter yacht would be in the 2 million to 3 million euros a year. It increases quite dramatically because your crew figures. The crew numbers are much higher. Your amounts of fuel, your maintenance schedules are much more intensive.
DOS SANTOS: So if we look at some of these yachts, how big would you say that was?
EDMISTON: She's about 46-47 meters from a top Dutch yard delivered within the last 18 months.
DOS SANTOS: How much does something like that cost?
EDMISTON: I think you're looking at around about 30 million euros.
DOS SANTOS (voice-over): Which means for those with money, the super yacht remains the ultimate accessory. But of course, these floating palaces come with a pretty high price tag to match.
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DOS SANTOS: From designer decks to designer dresses, coming up, I talk haute couture with the president of fashion at Chanel. That's after the break.
DOS SANTOS: Welcome back to MARKETPLACE EUROPE from Monaco. Monte Carlo's Golden Circle looks like a shop window for the world's leading luxury brands, but it is a mixed picture. Tiffany's and Burberry's both are deteriorating trading conditions recently, while on the other hand brands like (inaudible) and Prada are still registering healthy sales growth despite the economic downturn.
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DOS SANTOS (voice-over): French fashion house Chanel was founded in 1909 and is still privately owned. It's grown into a global brand for haute couture, ready-to-wear and luxury goods, including watches, bags and perfumes. The company has 180 boutiques around the world and employs nearly 1,300 people.
Karl Lagerfeld has been Chanel's chief designer since 1983 and has photographed over 100 people wearing Chanel's iconic little black jacket.
BRUNO PAVLOVSKY, PRESIDENT OF FASHION, CHANEL: The exhibition is quite special for Chanel because this exhibition is about the little black jacket, a famous icon of the (inaudible), designed a long, long time ago by (inaudible) Chanel and reinterpreted all the time by Mr. Lagerfeld. (Inaudible) have a lot of different jackets in our collection, but this one is very special.
FOSTER: The little black jacket's been around a long time, of course, which is the beauty of it. But your business is changing over time. In the last few years, the whole luxury sector has been through a bit of a transformation hasn't it. How would you describe the changes in the recent years?
PAVLOVSKY: I think that, you know and the good news that there (inaudible) more and more people interested in more and more customer (inaudible) in our boutique everywhere in the world.
And today, you know, the world is -- I don't want to say so small, but global, that we have people who are coming in in Shanghai (inaudible) in Paris or in London. And everything is going very fast. So you need -- you have to be able to give through your boutiques, through your collection a very strong (inaudible) message to your customers.
FOSTER: Some of your competitors have suffered by almost becoming a bit too mainstream down market, perhaps. How do you manage to keep the cachet of a brand which, as you say, is everywhere in the world?
PAVLOVSKY: We at Chanel have eight collection a year, two for couture, six for ready-to-wear, plus all accessories, which (inaudible) ready-to-wear. And that shows the capacity to give this expression, this creativity to Mr. Lagerfeld, to the design team. It's a good way to create all the time (inaudible) customers.
And those want to feel and to find everywhere in the world in every single boutique all these new products, OK, which are part of this (inaudible) of luxury. And to be able to come every two months with new products in the boutique, it's the best message you can give to your customers everywhere in the world.
FOSTER: You're, of course, a private company. Is that a big advantage to you, that you're not under pressure from the short-termism of shareholders?
PAVLOVSKY: It (inaudible) the pressure but we're (inaudible) the long term. OK? That's very important --
FOSTER: (Inaudible) allow you to do that, though, doesn't it?
PAVLOVSKY: Yes, they give us the possibility to put more focus on the company 20 years from now, and that's something very important. For us at Chanel, the most important is (inaudible) to this brand and to be able to think 20 years from now (inaudible) we'll stay and even increase the tackiness (ph) to our consumers.
FOSTER: You're, of course, very well known in the Western world. But it's the developing markets where you're doing particularly well as well, isn't it, places like China. And this is a different type of consumer there, isn't it. But how do you manage to segment the market when you're a global brand?
PAVLOVSKY: First, I say that, yes, we have a new countries in China is part of our new country. Even if we open our first boutique in China 10 years ago, I would (inaudible) this phenomenon is (inaudible) is that this consumer (inaudible) from the fashion world. They know everything. They know every detail.
And at the end of the day, what they want is simple (inaudible) in Paris or in London, OK. They want the best. They want the product which (inaudible) the best, the (inaudible). And that's something which is coming faster and faster, now with the digital world, everyone can access (inaudible) all details.
And they want to find in their countries a city exactly the same kind of product that what the one we can have in our flagship boutiques in Paris or in London.
FOSTER: In Shanghai, you could sell tons and tons of clothes, couldn't you, realistically. How --
FOSTER: But you can't just go out and --
PAVLOVSKY: (Inaudible) --
FOSTER: -- sell huge amounts. You've got to keep it exclusive.
PAVLOVSKY: (Inaudible). We have to keep it exclusive, and it is exclusive, you know. Just today, we have (inaudible) three boutiques in Shanghai, which is not that big --
FOSTER: -- deliberate to keep it exclusive (inaudible) --
PAVLOVSKY: (Inaudible), yes, and we try to get the best three boutiques in Shanghai instead of (inaudible) 10 boutiques. The number one, and we try to bring (inaudible) the best value of the (inaudible). And (inaudible) the idea is not to open lots of boutiques, not to be able to give (inaudible) the best values, the best (inaudible) to our consumers.
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DOS SANTOS: (Inaudible) Bruno Pavlovsky there.
Well, that's it for this luxurious edition of MARKETPLACE EUROPE from Monaco. Join us again next week if you can. But in the meantime, thanks for watching and goodbye.