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QUEST MEANS BUSINESS
Europe's Finance Ministers Agree to Blueprint to Build Banking Union; Fiscal Cliff Negotiations in the U.S. Continue
Aired December 4, 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, CNN HOST: Long time till Christmas, Sweden's finance minister tells me Europe won't rest until it reaches a deal on a banking union.
A scare for the city: London's mayor accuses Europe of trying to steal its financial crown.
And succession planning for the modern monarch: what the British Royal Family can learn from big business. I'm Richard Quest. I mean business.
QUEST: Good evening. Europe's finance ministers, they failed to agree a blueprint to build a banking union. There were talks in Brussels. They ended without a deal and ministers disagree on how much power to give the ECB and most crucially on the role of those countries that are not part of the Eurozone.
One of those countries is Sweden and the Swedish finance minister, Anders Borg, joined me on the line earlier from Brussels and told me now the road forward will be difficult. But he's not giving ground.
(BEGIN VIDEO CLIP)
ANDERS BORG, SWEDISH FINANCE MINISTER: Well, we're -- I shouldn't try to hide that this is a difficult situation. We have very fundamental issues that are not solved. There is no equal treatment from non-euro member states and member states in the current structure.
There is no firewall between monetary policy and supervision and that has to be dealt with. So we will negotiate again next week, but there -- the road forward will be difficult.
QUEST: And yet, once again, because of these difficulties, having set up the promise of banking union as being part of the solution to the Eurozone's problems, Europe's going to drop the ball.
BORG: Well, we will not allow ourselves to be prisoners of a timetable that somebody else have set. There are some fundamental issues of interest for us. We need to safeguard our banks and our taxpayers, and therefore, this is a tough negotiation. And we are ready to meet again if we not -- if we don't solve this next week.
We can meet any day ahead of the year end. So let's continue to negotiate, but we have set down our foot and we are not ready to compromise our fundamental principles.
QUEST: Do you believe treaty change will be needed? Because if that's the case, then we may as well all just pack up.
BORG: Well, I think everybody's trying to avoid a treaty change. It's extremely difficult for treaty changes and particularly if we cannot use the simplified process. So any solution inside of the treaty will be preferable. But there are also some very clear red lines here.
We need to have the ability to set our capital requirements for our banks. We need to see equal treatment between non-euro members and euro members. Otherwise, this will not be a well functioning banking union. We need to see a very clear firewall between monetary policy and supervision.
QUEST: In short, is -- are the gaps bridgeable or is this just going to descend into the typical Eurozone European mess?
BORG: Well, we will try our utmost to try to find a compromise. But I will not -- I will not try to hide the fact that there are very fundamental issues that are difficult to deal with. And the time is very, very short.
So we will meet again next week. We will try then and we are ready to continue to negotiate. And it's a long time to Christmas.
QUEST: Just two more questions: firstly, on the -- on the issue of the U.K., I realize you're not the U.K. finance minister, nor do you speak for him, but this onslaught against the city of London, which now seems to be waged by the Eurozone, wanting to take euro trading into the zone away from London, where do you stand on this?
BORG: Well, we believe that London is the financial center in Europe, and should be safeguarded as such. But it's also very, very important that the U.K. government is a constructive player and that they realize that if they want to safeguard their interests, they must be perceived as a part of solutions, not only corner solutions for themselves.
QUEST: Finally, since this might be the last time you and I speak in 2012, how would you grade yourselves and your fellow finance ministers and the union in dealing with the crisis this year? A, B, C, D, E or F for fail?
BORG: Well, it depends on which others we are grading. If we are looking at the U.S. with their huge fiscal cliff and Japan with their 250 percent debt we haven't done so badly. But obviously, I mean, we could -- we could probably strengthen our performance quite a lot.
(END VIDEO CLIP)
QUEST: Anders Borg, the Swedish finance minister. As we were talking there, London's position as the financial capital of Europe is under attack, according to the mayor of London, Boris Johnson.
Now the mayor is accusing France's top central banker of a naked attempt to steal London's crown. The governor of the Banque de France, Christian Noyer, said the Eurozone should seize control of its financial business. And Johnson called that a desperate move and laid into the Eurozone.
(BEGIN VIDEO CLIP)
BORIS JOHNSON, MAYOR OF LONDON: Whilst the predictions of the euro skeptics have turned out to be entirely correct, the euro is a calamitous project. Exactly as foretold, the one-size-fits-all monetary policy has become a lethal engine that simultaneously trebuchets German goods across the Eurozone while deepening the misery for the periphery countries whose unit labor costs make it hard for them to compete.
(END VIDEO CLIP)
QUEST: Now this is what it's all about. Noyer told the "Financial Times," the Eurozone's financial center shouldn't be, in his words, "offshore." That is a clear reference, of course, to the fact that London, as part of the U.K., is not part of the Eurozone.
He said, "We're not against some business being done in London, but the bulk of business should be under our control."
That's the governor of the Banque de France, Christian Noyer. You've heard, of course, what the mayor of London says.
So let's put this into perspective. How much trading, global foreign exchange trading, is actually done in London? As the numbers I'm going to show you, London dwarfs the other main financial capitals. That's not to say there aren't significant ones. But 38 percent of all foreign exchange, global foreign exchange, is done in London.
Now of that 38 percent -- if we take the totality of more than three- quarters of dollar trades. So clearly dollars are traded in London more than anywhere else. Euros are traded in London more than anywhere else. London remains the core of it.
New York has 18 percent of trades. New York, of course, has maybe a bigger bond market and equity markets, but when we're talking foreign exchange, it's not only 18 percent. But this is really the statistic that's interest.
Europe itself barely registers. Frankfurt is just 2 percent; Paris is 3 percent. So for all sorts of historical, geographical, logistical, financial, administrative -- for all sorts of reasons, London remains number one.
The former finance secretary of the U.K. is Alistair Darling, and he says there's no reason trades shouldn't continue to come through London.
(BEGIN VIDEO CLIP)
ALISTAIR DARLING, FORMER UK CHANCELLOR OF THE EXCHEQUER: I think you've got to remember that London is one of the major factors in the world. And it's not surprising that a lot of euros are traded through London.
Now I'm surprised at this thing from France. I remember when Michel Barnier, who is the French commissioner on the European Commission was appointed, he made the point that London was very much Europe's financial center and Europe should look at London as an asset for the whole of Europe, regardless of whether or not we were in the Eurozone or not.
So I think it's a sort of -- one of these rows that blows up from time to time. Frankly, people will trade euros where they want to trade euros. And there's no reason why they shouldn't do it through London.
QUEST: Do you see this as an attack? I mean, is it your gut feeling that basically what the others want to do is scupper London as the center for European finance -- or however (inaudible)?
DARLING: Well, look; there's always people around who are going to say we'd like some of London's business elsewhere. But I do think that, given that London is the major financial center and trading place for this time zone and, you know, if we include Europe in that, and I think it's a bit of a pointless argument, really.
But it does take me onto, I suppose, one of my concerns about the banking union, which I'm very much in favor of, because if you've got a common currency, you need to have a banking union. But I would be concerned if that banking union was used by anybody as a sort of measure that would enable protectionism to be put in place.
In other words, squeezing the non-banking union members of the European Union out of something that is legitimately part of a single market.
QUEST: On banking union, the talks have broken up. There will be more talks. The reality is, though, it is just about impossible for there to be a banking union that doesn't come at the expense, if you like, of the -- of the non-members, because by virtue of the fact it will be so big.
DARLING: Well, it's inevitable if you have a common currency with -- like the euro that you need to have a banking union. I mean, look at all the problems that the Eurozone has now with its banks in Spain, for example.
But what we need to ensure is bearing in mind that not all members of the European Union are in the Eurozone. And in cases like the U.K., it's unlikely there will ever be so, at least in the foreseeable future. There has to be some sort of way of reconciling what you need to make a banking union work. But at the same time, you don't have this bloc which outvotes the rest.
Now that's an issue that isn't just shared by us. Other countries like Sweden have got that concern as well. But if the European Union is going to operate properly with a single market, there's got to be recognition that while some people have a common currency, others are not in it. But we are entitled to have a single market.
Now I would worry if (inaudible) was an attempt made to roll back that single market, because that would simply, you know, call into question the whole thing in the first place.
(END VIDEO CLIP)
QUEST: That's Alistair Darling, the former U.K. finance secretary.
After the break, hurtling towards the fiscal cliff, where a compromise will avert a calamity. We'll look at the deals on the table -- and you realize calamity's on the way.
QUEST: There are 28 days left to steer the U.S. economy away from the fiscal cliff. The road to safety is gridlocked. Democrats and Republicans are both striking down each others' proposals with abuse and seemingly no end in sight.
Spending cuts, tax rises -- you know the deal for this cliff -- automatically enter on January 2013 unless that a way to trim the deficit is found.
Now it would seem the proposal is to see the top income tax. This is the core of what it's all about, the top income tax rate rise from 35 percent to 39.6 percent. President Obama says lawmakers need to find a balance, something that was lacking in the latest Republican proposal.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I think that we have the potential of getting a deal done. But it's going to require what I talked about during the campaign, which is a balanced, responsible approach to deficit reduction, that can help give businesses certainty and make sure that the country grows.
And unfortunately, the Speaker's proposal right now is still out of balance. You know, he talks, for example, about $800 billion worth of revenues, but he says he's going to do that by lowering rates. And when you look at the math, it doesn't work.
(END VIDEO CLIP)
QUEST: So this is all about the top rate of income tax, which currently in -- or will be, if these proposals go forward, 39.6 percent.
But now we need to compare it to other parts of the world and just see.
For example, the United Kingdom, where the current top rate of income tax is 50 percent, that's to go down after the budget that's already baked in; so 45 percent will be the new rate of top income tax.
In Germany, it's 45 percent, although there are other taxes that can boost that slightly higher.
Japan has 50 percent as well.
And Russia has a tax rate of 13 percent. But it's really important to note, in Russia, it is a flat tax at 13 percent with no deductions and there are various other sort of restrictions.
So 39.6 percent as against the major trading partners in the U.K., Germany and Japan, gives you an idea. And that's the new rate. These are existing, of course.
Maggie Lake is in New York.
This is -- the gridlock is extreme and yet -- well, with that in mind, it is just about impossible to see who's going to give ground.
MAGGIE LAKE, CNN CORRESPONDENT: Yes, it is. But we're nearing the point that they obviously have to. And I think there's a great deal of frustration, Richard. I mean, if this was the beginning of the process, then you can see both of them putting forward this kind of plan. But we are -- we are nearing a very serious deadline and it seems to be the same dance we've seen over and over again.
Listen, the Republicans, obviously, the numbers, the overall deficit numbers of both those plans are pretty similar, and I guess Republicans were thinking, you know, that would maybe hold some sway. But how they get there is so different.
And of course, a lot of it centers on this issue of tax. The Republicans' deficit reduction, much more about spending cuts and less about tax revenues. If we look at the details, I think we've got them.
(BEGIN VIDEO CLIP)
LAKE (voice-over): They are suggesting $800 billion in tax revenues, but all of that comes from tax reform. None of it comes from outright tax increases on those top earners, which is the real sticking point. And you can see a very big number for cuts in Medicare and that other $600 billion, that's other spending cuts. They're going to fiddle around with CPI. So the bulk of that 1.4 is spending cuts.
QUEST (voice-over): And the point, of course, is --
(END VIDEO CLIP)
QUEST: -- it's very questionable whether you can actually get a trillion or so over X number of years on the revenue raises by reducing deductions.
This is very complicated stuff. All we really need to concentrate on are these numbers, 39.6 percent versus 50 percent, 45 percent, 50 percent.
Maggie, we know Americans favor higher rates by and large, on the very wealthy. So why are Republicans being so obdurate about it?
LAKE: Yes. It's sort of baffling.
Really quickly, when you compare globally, Richard, remember we don't have a national health. The Medicare is for poor and elderly. We don't have national health in those taxes, so it's kind of apples and oranges.
But you're right. It's sort of hard for people to understand why the Republicans aren't coming around on this.
Listen, the Republicans deeply believe that if you increase taxes on the wealthy, it hurts the economy. It hurts spending, it hurts the small business owners who fall in that category. However, it's getting to be harder to defend that position, especially when you have CEOs like Fred Smith, who spoke to our colleague, Christine Romans, who say this. Have a listen.
(BEGIN VIDEO CLIP)
FRED SMITH, CEO, FEDEX: There's a lot of mythology in Washington, such as it's small business that creates all of the jobs in the United States. And if you raise the rates on the top 2 percent, you'll kill jobs.
The reality is, the vast majority of jobs in the United States are produced by capital investment in equipment and software that's not done by small business; it's done by big business. And the so-called gazelles, the emerging companies like the new fracking oil and gas operations.
(END VIDEO CLIP)
LAKE: Richard, if you want to hold out any hope that they will be able to come to some sort of deal, not only is public opinion against Republicans, but the business community seems to be lining up against them, too, which means trouble. That is their traditional core, Richard.
QUEST: Maggie Lake in New York, we've got 28 days, 28 days of watching this closely. Count them off on the fingers of both hands and feet.
The looming fiscal cliff investors are cautious on Wall Street. Those are the numbers there already. It's been a very -- I suppose the short answer was boring day on Wall Street. We've just been up and down a couple of points in either direction. It's hardly been scintillating. And it was flat in Europe.
I'm guessing the Christmas -- I've said this before and been proven dramatically wrong -- but I'm still going to go out on a limb -- I'm guessing the Christmas season is starting early. People are tired. There will be a bit of book squaring towards the end of the year, booking profits and the like, such as they are. Those are the markets.
Look at that, FTSE virtually unchanged; DAX is similar. Just almost no movement at all. Banking share, the biggest gainers Deutsche, Commerce around 1.5 percent; Credit Suisse was also again falling commodity shares. Those are the numbers at the moment.
So from equities to currencies and our "Currency Conundrum": when Australia made the transition to the decimal system, the dollar was not the original suggested name for the currency. Lovely. Was it the oz, the austral, the royal? The answer later in the program. These are the rates. The euro is up, so is the yen; the pound is flat. The rates, the break.
QUEST: America's key entry point for trade to and from Asia remains shut down and now a federal mediator's being brought in to attempt to end the week-long strike at the Ports of Los Angeles and Long Beach in California.
Clerks walked off the job; most longshoremen in those side-by-side ports refused to cross the picket line. And there's a lot at stake, possibly a billion dollars a day for the U.S. economy.
CNN's Miguel Marquez joins us now live from Wilmington in California.
We don't need to know the nitty-gritty itsy-bitsy of who did what. What I need to know is what's the effect? When does this seriously start to impact the U.S. economy and, crucially, California's economy, which is already in trouble?
MIGUEL MARQUEZ, CNN CORRESPONDENT: Yes, well, it'll impact a lot of truckers, people across the country waiting to offload the ships that are waiting here immediately. You know, a half -- nearly a half-trillion dollars in trade goes through the Ports of Los Angeles and Long Beach every year. It is -- they want it solved.
Federal mediators coming in from D.C.; there's deputies coming in from Minneapolis, both sides are still sitting in a building right behind me here. The mayor of Los Angeles is coming back tonight. They've been up all night long.
The mayor of Los Angeles was on an overseas trip; he got into LAX just up the way here. He came here and sat with them all night long. One of the labor people that I've been talking to says that they were miles away a couple of days ago. Now they're about a yard away.
What they are fighting over now is the future. They want the outsourcing from this facility to stop, those clerical workers -- there's only about 400 of them that are actually striking, but it's caused thousands to walk off the job and they won't cross those picket lines.
They want language in their contracts which they've been negotiating for 21/2 years at this point. They want language that says no more jobs outsourced from Long Beach/Los Angeles. They don't go to Texas; they don't go to Colorado; they don't go to Taiwan -- anywhere. They stay right here. That is going to be very, very difficult for those companies to agree to, Richard.
QUEST: How has -- this is perhaps an impossible question for you to answer.
How has a dispute over this taken on such enormous ramifications to where, frankly, the very economy and economic well-being of California, which is not in good shape, is going to be harmed?
MARQUEZ: Look, it's not critical at the -- at the moment. There's 11 ships that are berthed here, that they're waiting to be offloaded. There's another 10 or so that are out to sea, waiting to come in; 17, though, have been diverted to Mexico or farther up the U.S. coast. So those ships are getting -- the goods are getting off. They believe that they are going to have a deal very soon.
Yes, it does cost a lot for them to do this. But that language, this idea of not allowing outsourcing from this facility, that's the sticking point.
And it's not about -- at least the labor folks say -- it is not about what's happening about their pay; it's not about vacation. This is about the future and keeping jobs here. That is something that's very difficult for companies who want a free hand to move labor around and figure out how they're -- what's best for their company to agree to, Richard.
QUEST: Miguel Marquez, who is in California at the ports for us this evening. We thank you for that.
Onward with austerity, Britain's government is about to present its economic report card tomorrow. We'll tell you what to expect from the so- called autumn statement when the finance minister will have to admit he's missed his targets.
QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in just a moment. This is CNN and, on this network, the news always comes first.
(BEGIN VIDEO CLIP)
QUEST (voice-over): Live pictures, thousands of anti-government protesters taking to the streets in Cairo again today. Egyptian police have fired tear gas at them as they approach the presidential palace. And we're just hearing about new clashes outside the headquarters of the Muslim Brotherhood's Freedom and Justice Party.
One hundred fifty-five people have been killed across Syria today, including 30 who died in a shelling at a school. That's according to the opposition group. New video posted online shows people trying to put out a fire at a building in the city of Douma after it was hit by a rocket.
As expected, NATO has approved Turkey's request for Patriot missiles like these so that it can protect itself from any Syrian threat. NATO's secretary general says the deployment could happen within weeks. According to a statement from the alliance, "Repeated violations of Turkey's territory raise grave concern."
A blog started by John McAfee says the anti-virus software pioneer is now in Guatemala. The entry, which appears to have been written by McAfee himself says it was not easy to exit from Belize, where police want to question him for the shooting death of his neighbor. McAfee denies that he had anything to do with it.
A palace spokesman in the U.K. tells CNN that the Duchess of Cambridge is continuing to feel better. Prince William left the hospital where she's staying just a few hours ago. The duchess is suffering from acute morning sickness and is expected to remain in the Edward VII Hospital for several more days.
(END VIDEO CLIP)
QUEST: So the Duchess of Cambridge is in hospital with morning sickness. And the British people are about to get a dose of biliousness themselves as the government is set to announce more cuts to help fund $1 billion worth of investment in new infrastructure. The finance minister, known as the chancellor -- it's George Osborne -- is to give his autumn statement on the economy on Wednesday.
CNN's Jim Boulden now explains in the middle of a cold, hard winter, this will be another bitter pill to swallow.
(BEGIN VIDEO CLIP)
JIM BOULDEN, CNN CORRESPONDENT (voice-over): Britain's annual budget cycle has two traditions: in March, the finance minister holds up that red budget box. Inside are details of where the money will be spent and how revenue will be raised and, crucially, predictions how the economy will perform.
GEORGE OSBORNE, CHANCELLOR OF THE EXCHEQUER: A stronger Britain starts here.
BOULDEN (voice-over): Those annual predictions come home to roost each December in the second tradition, the autumn statement. George Osborne will go before Parliament on Wednesday lunchtime with an economic health check. He'll explain why government borrowing is higher than predicted in March, adding even more to the budget deficit while other governments are slashing theirs.
And he'll explain why the U.K. economy is growing slower than predicted, meaning tax receipts have not matched expectations.
He'll then explain how the government will fill that hole with more budget cuts in welfare and yet more tax increases.
Whatever the details, he'll blame the euro crisis, while the opposition will say again, "We told you so."
ED MILIBAND, BRITISH LABOUR PARTY LEADER: -- tax rates when we are asking others in our society on much lower income to make sacrifices.
BOULDEN (voice-over): Osborne will then reveal updated economic growth forecasts for 2013. The OECD says Britain will grow 0.9 percent. The Bank of England predicts 1 percent. The last government prediction was 2 percent. That will almost certainly be slashed in half on Wednesday.
But the IMF warns if more austerity is imposed now, in order to hit deficit targets, growth will slow even more.
But with unemployment continuing to fall, and the country officially out of its double-dip recession, Osborne may ignore ever-more public sector strikes and gamble there is wiggle room to slash more and keep austerity going for longer -- Jim Boulden, CNN, London.
(END VIDEO CLIP)
QUEST: Now I asked George Osborne's predecessor about the effects of any new government measures on low income families. I asked Alistair Darling if Britain's tax code was in need of an overhaul.
DARLING: Well, I -- you know, as far as we can see, the chancellor is not planning a radical change in the tax regime, although he may try and restrict tax relief for pension contributions. And certainly I know from my own experience, once you start coming down, you start hitting the incomes of people who are not bankers and who wouldn't regard themselves as being particularly rich.
Now the big problem that the chancellor's got to confront tomorrow is similar to finance ministers across Europe, and that is the complete absence of any growth, because if you don't get growth, you don't get the revenues to get your borrowing down and therefore your debt down. And it is that that I think his performance will be judged on.
It looks like he's going to miss both his targets that he set in 2010 to balance the books over a five-year period. That's proceeding to 2018 at the earliest now. And also to get debt down as a proportion of our national income. You know, with all the leaks they put out, it looks like that's at risk as well. But it's a lack of growth that is the problem.
(END VIDEO CLIP)
QUEST: On this program tomorrow night, we'll have the details of the autumn statement, how it will affect, of course, Britain's financial industry and, of course, put it into the wider context.
After the break, when you and I come back together, frustration for the U.S. defense industry, why it's scrambling to get Capitol Hill and the White House to back away from the fiscal cliff. It's QUEST MEANS BUSINESS. Good evening.
QUEST: U.S. military spending could be slashed by hundreds of billions of dollars if the U.S. goes over the fiscal cliff. That's what defense industry leaders are warning as they continue to -- as they continue to urge President Obama and Congress to find a speedy solution.
More than 130 executives signed a letter that encouraged lawmakers to avoid the automatic cuts. CNN's John Kolas (ph) now looks at what all this uncertainty means for one Florida family trying to make plans for the future.
(BEGIN VIDEO CLIP)
JEREMY CONNER, PROJECT MANAGER, PRIORIA ROBOTICS: You're going to play with me now.
JOHN KOLAS (PH), CNN CORRESPONDENT (voice-over): Jeremy Conner, married father of two.
CONNER: I've worked recently for a very large defense contractor and my wife works for that same defense contractor.
KOLAS (PH): He left that job after 18 years for more stability since the couple both worked in the same department.
CONNER: Discussion of the fiscal cliff just made sense for one of us to get out.
JEREMY'S WIFE: You know, we didn't know what it looked like down the road, if we were even going to have jobs at all.
KOLAS (PH): The Pentagon's budget for the next 10 years has already been slashed $500 billion and could face another half trillion in automatic cuts if Congress fails to compromise on a deficit reducing agreement by year's end.
LEON PANETTA, SECRETARY OF DEFENSE: We need stability. We want a strong national defense for this country. I need to have some stability, and that's what I'm asking the Congress to do: give me some stability with regards to the funding of the Defense Department for the future.
BRYAN DAFROTA, COFOUNDER AND CEO, PRIORIA ROBOTICS: The biggest effect caused by all of the, you know, government indecision, the inability to pass a budget (inaudible) sequestration is uncertainty.
KOLAS (PH): A small company of 40 employees, manufacturers drones, mounts it with cameras for the military and first responders.
DAFROTA: What do we do? Do we contract the business? Do we try to hold the business constant? Do we try to diversify into other market segments? Every small business in the country is asking those fundamental questions.
UNIDENTIFIED MALE: (Inaudible) since yesterday, it flew great. Want to see it?
Part of the reason I was brought in there was to diversify that type of work that they do. They want to look more at the commercial side as well.
KOLAS (PH): Despite the confidence with their jobs, the unknown is nerve-wracking.
STEVE WININGER, ELECTRONIC TECHNICIAN: With Christmas coming up and some other big decisions, as far as home and new vehicles and things like that, you know, we've -- we're definitely waiting until the new year. So we'll see how that cliff goes.
KOLAS (PH): Jeremy's glad with his decision to stabilize his family. He just wishes Congress would do the same for the country.
CONNER: It's like our 5-year old and our 3-year old at night. It seems a lot of times they'll just fight and fight and fight for the sake of fighting when all most of the people want is them to figure out how to make it work and get it done.
KOLAS (PH): John Kolas, CNN, Gainesville, Florida.
(END VIDEO CLIP)
QUEST: Now the weather forecast -- and there's some extremely dangerous weather. Jenny Harrison is at the World Weather Center for us this evening.
JENNY HARRISON, CNN METEOROLOGIST: Good evening to you, Richard. Yes, Typhoon Bopha, that, of course, is the (inaudible) you're referring to this super typhoon. It roared ashore into Mindanao the last few hours and, of course, has really wreaked havoc across the region. This is it now, continuing on its journey west-northwest.
Dozens of people have been reported dead so far and, unfortunately, it's quite likely that number will increase as the rain continues to go down, even though the winds have eased off. But even now, we've got winds sustained at about 160 kph, heading towards Palawan (ph).
As you can see, over the next 72 hours, this storm system is expected to maintain its typhoon status and that means the winds are going to fluctuate. But they could get up to about 180 kph before perhaps coming down a little bit again. But it is very rare that we see a typhoon certainly of this strength at across this particular area of the Philippines.
In fact, this is the second closest typhoon ever to the equator. It was back in 2001; that was Typhoon Vamai that was a little bit closer to it, strongest typhoon ever in recorded history to hit Mindanao and the first typhoon in December since 2008. So (inaudible) fairly unusual storm system on so many different levels.
This is the wind forecast. You can see not a great deal of weakening, as I say; if anything, it's been strengthening as it pushes again into the South China Sea. Already we've seen some tremendous amounts of rain. There is more in the forecast. But the really heavy amounts should ease eventually from the Philippines.
But just look at this in Davao. In three hours, nearly three times the December monthly average. So no wonder there's been flooding. But of course, also there's landslides and the mudslides.
Now the rain, of course, moving westward with the storm system, but producing some pretty high amounts as it does that. And we can still see locally some areas maybe picking up between 8 and 10 centimeters and, of course, across Palan (ph), we might even see as much as 25 centimeters in some locations.
And then to Europe, a very unsettled and a very wintry picture. Look at these temperatures. This is with the wind factored in, but it feels like -19 in Oslo right now, -5 across in Warsaw. (Inaudible) with all that snow, look at these pitched -- really steep pitched roofs, of course, across parts of mainland Europe because of all that snow.
That's in Germany, more of that again in the last few hours across pretty much all of Germany, from north to south and also across regions of the U.K., some sleet, some snow working its way southwards.
And we've got sort of three systems which are responsible, the one across central Europe; that will continue to feed in the cold air and in terms of what you can expect to come with it, well, there is the snow, as I say, becoming very widespread across some areas, particularly the Alps, but away from there as well. And then quickly looking at temperatures, 4 in London and 5 in Paris, Richard.
QUEST: Jenny Harrison at the World Weather Center, we'll be back with QUEST MEANS BUSINESS in a moment. Good evening.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The answer to today's "Currency Conundrum," when Australia made the transition to the decimal system, the dollar was not the original name suggested for the currency. What was it? The answer is the royal. After more than 1,000 submissions, the prime minister, Sir Robert Menzies, proposed the royal in 1963. Three years later, the dollar became the official name.
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QUEST: Europe's lawmakers are to hurry through changes to the order of the royal succession to ensure boys don't jump ahead of girls. We talked about it last night in the queue to the throne. It means regardless of gender, the Duke and Duchess of Cambridge's pending arrival will one day become the head of state.
Don't rush to buy the tea towels for their coronation just yet. It is quite likely that Baby Cambridge will not take up the job they were born to do before reaching the pension before anything else.
Look at this -- excuse me.
These are the major monarchs of the world's -- well, some of them -- and they are increasingly mature. Now in Saudi Arabia, so there's Abdullah bin Abdul al-Saud is 88; Queen Elizabeth, 86; in Thailand, the venerable king is 84, 85 on Wednesday. Japan's emperor, he is 78. Not much younger in Spain if Juan Carlos is 74. And in the Netherlands, Beatrix is also 74.
While we look at this, Mark Tepper is the president of Strategic Wealth Partners, which offers entrance and succession planning for businesses. And the truth is, Mark, if you were succession planning, where you've got to wait for the person ahead of you to -- putting it not unkindly -- drop dead, that's not really succession planning. That's just biding your time.
MARK TEPPER, PRESIDENT, STRATEGIC WEALTH PARTNERS: Correct, correct. Yes, I mean, succession planning really all amounts to, you know, trying to figure out first and foremost what that end game looks like and, secondly, trying to figure out how to make sure that those objectives really come to fruition.
So there has to be a really a well-conceived strategy, a well- conceived exit plan to make sure that the succession is a very successful one, whether it's, you know, an internal transfer to a relative or an external transfer when you're selling it to a third party.
QUEST: Right. These are your tips that you say you should plan ahead -- well, obviously, you've got to wait for the other person to drop dead. You align yourself with a good team -- that's your family. Prepare the financial plan -- that means making sure that your trusts are all right.
Internal/external succession, coup d'etat, not one for us; investment value -- Mark, if I take all these things, factor in for me, though, your succession planning and how you would do that vis a vis a monarchy, where you already know who's going to take over. But you may have many younger members of the family.
TEPPER: It's tough, because at that point, you really need to work with everyone to figure out what their -- what their goals are. I mean, who's going to fulfill what role and make sure that they're going to fit to the best of their ability within those roles, because you know, whether we're looking at, you know, a business or a family, you know, certain people have different skill sets.
And you want to make sure that, you know, as an example, if you're running a business and you're passing that business down to your son or your daughter, you want to make sure that they have the entrepreneurial mindset to carry on and do exactly what you had been doing throughout, you know, your time when you were in power.
TEPPER: So it's very important that you figure out who's good at what and you make sure that you fill them in in the right position.
QUEST: But what does happen is what we're now seeing with some of the royal families, where you not only have an heir, you have an heir and an heir and an heir and an heir, because you can get two or three generations in the line of succession, all of whom waiting, all of whom knowing they may be in their dotage and their pensions by the time -- look, that's no different to any other family business. What would your advice be?
TEPPER: The advice is to make sure it's equitable, you know, make sure that as you're -- as you're trying to define who gets what and who assumes what role, make sure that you're doing so in the fairest manner possible. I mean, you don't -- you don't want these people fighting over who gets what.
So I mean, it's really important that you talk, you sit down, you have a -- you know, whether it be a family planning meeting or whatnot, and you open up books and you say, hey, here's what's going on; here's what we need to do. And here's where I think you fit in.
QUEST: Mark Tepper, joining us from Ohio, thank you.
Elizabeth, Beatrix, Akihito, Juan Carlos, open the books and tell everybody what's going on. I'm sure they'll appreciate a bit of honesty -- @RichardQuest is where we can continue to enjoy and debate the issues of the day on this program. And we look forward to your contributions. And we will have a "Profitable Moment" which pulls together the strands of what has been a busy day in London.
QUEST: Tonight's "Profitable Moment," so the French central banker, Christian Noyer, believes London should be stripped of its role as the center for euro trading. He's called Europe's main financial center offshore. He wants euros to be traded mainly in Euroland and no doubt he will support a raft of reforms that will promote such a transfer of power.
Now look, this is very odd. It's downright bizarre. It's an attack, quite simply, on London as a financial center. And when you think about it, London has 38 percent of all global foreign exchange trading. France, 3 percent. And because most of this trading involves dollars, it's believed 35 percent of all dollar Forex (ph) is through London.
Now look, I don't hear Ben Bernanke in Washington worried about this. Nor do I hear Tim Geithner demanding London hand back dollar trading. The truth is, there are better ways to ensure proper protections for Eurozone liquidity than Noyer's noise, which, frankly, is sounding like protectionism, pure and simple.
And that is QUEST MEANS BUSINESS for tonight. I'm Richard Quest. As always, whatever you're up to in the hours ahead, I hope it's profitable. I'll have the news headlines next.
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QUEST (voice-over): Thousands of anti-government protesters have taken to the streets in Cairo -- these are live pictures. Egyptian police have fired tear gas at them as they approach the presidential palace. And we're just hearing about new clashes outside the headquarters of the Muslim Brotherhood's Freedom and Justice Party.
One hundred fifty-five people have been killed across Syria today, and that includes 30 who died in a shelling at a school, according to the opposition group. New video posted online shows people trying to put out a fire at a building in the city of Douma after it was hit by a rocket.
As expected, NATO has approved Turkey's request for Patriot missiles like these so that it can protect itself against Syrian threats. NATO's secretary general says the deployment could happen within weeks. According to a statement from the alliance, "Repeated violation of Turkey's territory raises grave concern."
A St. James' Palace spokesman tells CNN that the Duchess of Cambridge is continuing to feel better. Her husband, Prince William, left the hospital where the duchess is staying just a few hours ago. The duchess is suffering with acute morning sickness. She is expected to remain in hospital for several days.
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QUEST: You are up to date with the world's news headlines. Now we go to New York. "AMANPOUR" is live.