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QUEST MEANS BUSINESS
US Fiscal Cliff Talks; Japanese Election Landslide; European Reform Push; DAX Only European Index to Close Up; Dow Up; PIMCO CEO on Global Economic Picture; Protests in Tunisia; Arab Spring Aftermath; Yen Sliding; French Actor Gerard Depardieu Renounces French Citizenship
Aired December 17, 2012 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: Tonight, slowly does it. US fiscal cliff talks advance.
Tunisia in turmoil. Protesters throw rocks at the president.
And time to bid adieu to Depardieu. The actor vows to surrender his passport. It's a row over tax.
I'm Richard Quest, and I'm live in Abu Dhabi, where I mean business.
Good evening. The US fiscal cliff talks are finally getting constructive. Republicans in Congress are giving up the ghost on preventing a raise in taxes and now say they are ready to compromise. All this on a day when the world's most important economies are each working to fix three separate crises.
This is the way the world looks tonight in terms of the economy and the issues. And we start with the US fiscal cliff, and particularly the United States, where talks at the White House have no finished. There's no word on a deal, particularly on the speaker John Boehner's willingness to compromise on two key measures.
There's also these measures include the millionaires' tax rate and the raising of spending limits. That's a millionaire, and whether it's 37 to 39 percent.
But besides the United States, you've also got elections where there has been news, and they are over in the Far East Asia, at least from where we are at the moment, in Japan, which is a country amid economic struggle.
The Liberal Democrats have returned to power, and that probably means a stimulus package is on the way or in the pipeline. The new prime minister-in-waiting says change needs to happen, and it needs to happen fast.
(BEGIN VIDEO CLIP)
SHINZO ABE, JAPANESE LIBERAL DEMOCRATIC PARTY (through translator): We are starting from the bottom. It is not that we can bring a quick fix to the problems today or tomorrow, but we would like to tackle the issues in a speedy manner.
(END VIDEO CLIP)
QUEST: Now, as for the other part of the world, well, it's back to our old friend in Europe, where there has been reform on the agenda in the European Union. The crisis has been taking its toll, and the Italian president has warned the next government must push on with the relevant reforms.
Giorgio Napolitano says five years -- five years -- of reforms will be needed. All this at the same time as the ECB president, Mario Draghi, says the fiscal reforms will work. He was speaking before the European parliament.
(BEGIN VIDEO CLIP)
MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: Economic reforms bear fruit, even if in the short term the costs to individual citizens can be, and are, indeed, considerable. But the reforms are the right path. Governments should persevere.
(END VIDEO CLIP)
QUEST: Now, stocks here in Europe stuck close to the baseline on Monday. Take a look at the number, and you see IAG shares rose more than 3 percent. That's on news of a non-binding agreement with Ryanair, which should see Air Lingus' Heathrow slots sold to IAG. The deal depends on Ryanair successfully acquiring the Irish rival.
Now, you'll be aware, of course, that the European Commission and the competition authorities in the EU have still got something to say about that.
As for the DAX, the only major European index to close in the black, it's now ten points away from the near five-year high that it reached on Wednesday.
To the markets in the US that are open and doing business. The Dow Jones Industrials is open and the markets are higher at the moment. The US markets showing reasonably good gains, all things considered. The S&P is up some 10 points or so. The Dow up, now, 60 points, over 13,195 with robust -- with robust confidence, perhaps, at the start of a new week.
The chief executive of PIMCO is Mohamed El-Erian. He joins me from the company's headquarters in Newport Beach in California. From the sands of the West Coast of America to the sands of desert in Abu Dhabi.
Mohamed, if we look at this fiscal cliff, do you now believe that the market is pricing in a successful resolution, albeit short term?
MOHAMED EL-ERIAN, CEO, PIMCO: Yes, it is. I think the market is pricing in that we avoid the fiscal cliff, one, and two, that we avoid, if not through a grand bargain, but through the mini-bargains. That's what I think the market is pricing in right now.
QUEST: A grand bargain, a mini bargain. Let's just take Ben Bernanke's words last week: any form of slow decline down the cliff, he says, is damaging and the evidence is already being seen. Now, we know that it's just a couple of days, or weeks, before the cliff is supposed to be faced. Do you think we are seeing serious worries?
EL-ERIAN: Yes, we are. We're seeing serious worry in the real economy. So, we have evidence of businesses stepping back, not committing to long-term investments because they are worried as to what the regime, the fiscal regime, would look like.
I would stress one other thing, Richard. We tend to focus a lot on the "what" of the fiscal cliff: is it going to happen, is it not going to happen, how is it going to happen, how it's not going to happen? The "how" is as important.
Remember, there are a whole series of decisions that have to be taken by US politicians. The fiscal cliff is just one of them. So the hope is that the "how" is a building block to making other decisions that are critical to this economy and to the global economy.
QUEST: As we started this program, we were looking around the world, we had that Liberal Democrat -- the victory in the Japanese elections, the potential of a stimulus package, an economy that has been -- it preforms despite the government.
You factor in Europe as well. Frankly tonight, there's not a huge reason to look for optimism in the global growth for 2013.
EL-ERIAN: There isn't unless you assume, which we don't, that central bank can produce the immaculate recovery. Whether it's Japan, whether it's the UK, whether it's the US, all the burden is being placed on central banks.
We do not believe they have the tools to produce long-term growth and long-term employment, but the politicians are off-loading that responsibility to the central banks.
QUEST: With that thought on central banks, I have been reading a great deal since the Fed meeting last week. Many more people are now concerned that we could end up with the worst of both worlds: inflation and still not getting meaningful growth.
I hesitate to use the word "stagflation," because that does connote something different. But you get the idea. Inflation with this amount of monetary stimulus in the system without growth.
EL-ERIAN: Yes, you do. We've called it, and I'm going to use a wonkish term, calling the reverse Volcker moment. This will be looked at as the time in which the Fed said the employment target goes above the inflation target.
Now, that's important because it is injecting a ton of liquidity, another trillion dollars next year, into this economy. No one's quite sure what the long-term effect are going to be, but what we are sure of is that the risks of inflation are going up. Whatever they were before the Fed announcement, they're higher today.
QUEST: Mohamed El-Erian joining me from California this evening. Coming up -- we thank you, Mohamed. Good to see you as always.
Coming up in just a moment, it's an anniversary met with anger. The rallying cry of revolution is being heard again in Tunisia. And we'll look at why two years on on the eruption of the Arab Spring, unrest is growing in the fabled revolution. QUEST MEANS BUSINESS, we are in Abu Dhabi tonight.
QUEST: Two years after the start of the uprising in Tunisia, and thousands of people are protesting against that they fought for the right to elect. In Sidi Bouzid, the cradle of the Arab Spring uprisings, crowds threw stones at President Moncef Marzouki, angry that they're not seeing economic benefits from the revolution.
This was the day in 2010 when a market trader in Sidi Bouzid set himself alight in protest against police harassment.
(BEGIN VIDEO CLIP)
(END VIDEO CLIP)
QUEST: His actions stirred uprisings across the country, and across the Arab world. As momentum gathered force, the regimes of Tunisia, Egypt, and Libya, were all toppled. John Defterios joins me now. We talk about the Arab Spring.
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Yes.
QUEST: Politically, which seems to be somewhat of a mess at the moment. But economically, the benefits haven't flowed, either, despite numerous conferences and despite promises.
DEFTERIOS: Well, there's a direct link here, because in this transition, the political transition that is taking place, let's take Tunisia, for example. That's a moderate Islamic government.
But Mr. Marzouki found out the tough way, if you do not deliver economic reforms and, most importantly, jobs in this economy -- it's only small economy of 10 million people -- if you don't deliver the jobs, you're going to get frustration.
So, there's a huge gap right now, Richard, in terms of managing expectations. The expectations after the Arab Spring were very high, and they couldn't deliver in a two-year window.
QUEST: But the problem is, although this was a revolution for democracy, the market reforms that will bring a better standard of living have not yet been introduced.
DEFTERIOS: We have a huge problem, here. There is the oil exporters, like the Gulf States, like the UAE and Saudi Arabia, and the oil importers. The countries of the Arab Spring are the oil importers, and candidly, they cannot afford to push through the reforms right now.
They're trying to cut fuel subsidies and food subsidies, but the public got very used to it, Richard. And with oil at $100 a barrel, their import costs have gone through the roof. So, the political reforms took longer than expected to get the coalitions together.
Look at the constitution that's on the table right now in Egypt. It's not for all the Egyptian people. But the reality is, a budget deficit of 10 percent, youth unemployment well above 20 percent. So, it's a very difficult balancing act for the Morsi government to try to manage in leadership for the first time as Muslim government.
QUEST: Here I am in Abu Dhabi. I've got to pause for a moment. One's been on the road and sort of jumped from Dubai, Abu Dhabi, and Doha over the last few days, and that's why we are here, part of CNN Business Traveler, which you will see in the New Year. Got to plug my own program. If I don't, nobody else will.
DEFTERIOS: I guess so.
QUEST: John, the economies in this part of the world, the sheer amount of oil wealth that is underneath them, or fossil fuel wealth, are they spending it in terms of assisting other economies out of recession?
DEFTERIOS: Well, this is a very interesting point: 65 percent of the global reserves sit here right now. They're going to have quite a shock in four or five years if the oil and gas revolution that's taken place in America, probably Latin American and Africa in that window, is going to probably bring prices down $50 to $60 a barrel. So right now, huge reserve. This is a government, the UAE --
QUEST: And at $100, the money is just pouring in.
DEFTERIOS: Absolutely. But their budgets, right now, Richard, are spending at $80 to $100 a barrel, so the pressure is, they're spending a lot of money trying to finish that economic development.
Prior to the Arab Spring, the big play was the Gulf states were putting money into North Africa. That needs to happen again to get the stability of the Arab Spring countries -- and you have to watch Syria very carefully, now. The vice president was calling for a grand compromise going forward in Syria. You can't have peace in the Middle East and a rebuilding without Syria stabilized.
QUEST: John Defterios joining me here. And whilst John was just talking, and before we came on air, we were just saying, over here, of course, you were telling me that the development that we are seeing here in Abu Dhabi --
DEFTERIOS: It's extraordinary, it's --
QUEST: -- even in the last few months and few years, bits of buildings are being filled in.
DEFTERIOS: Yes, this is into a 2030 plan to build out the economy beyond oil. Just to give you a sense of what's going on very quickly, a port was launched last week, named after the president. A $7 billion port to compliment what's going on in Dubai at the same time.
QUEST: John Defterios joining me here in Abu Dhabi. Actually, that should be me joining you.
DEFTERIOS: We're glad to have you.
QUEST: Is that more suited --
DEFTERIOS: You should visit more often.
QUEST: I could get squatters' rights. Time now for tonight's Currency Conundrum. What added service do many Japanese ATM or cash points provide? Is the answer A, specially packaged cash to take to a wedding? A small biscuit with each transaction over 500 yen? They will clean your bank notes for you? We'll have the answer later for you in the program.
Tonight's currency rates: the yen is sliding after the win by Japan's conservative Lib Dem party. Its victory could signal more aggressive monetary easing. These are the rates --
QUEST: -- this is the break.
QUEST: The French actor Gerard Depardieu is renouncing his citizenship because he says he's tired of being taxed so highly. Depardieu is returning his passport and his social security card, which he claims he's never used.
It's an open letter to the French prime minister. The film star says --
QUEST: -- "I'm leaving because you consider the success, creativity, talent -- in fact, difference -- must be punished." Well, that's the end of his quote. The French labor minister says Depardieu needs to accept reality.
(BEGIN VIDEO CLIP)
MICHEL SAPIN, FRENCH LABOR MINISTER (through translator): He's earning a lot of money, and those who earn a lot of money should pay a lot of taxes. What could be more normal than that? He isn't used to a normal situation. It's a shame. Beyond the personality, beyond the talent, it shows a certain form of decline.
(END VIDEO CLIP)
QUEST: Depardieu has bought a house across the border in EU eurozone Belgium, and that should save him a considerable amount in taxes. Here are the numbers. Belgium's top tax rate is 50 percent, and it's anyone who makes more than $46,000. LVMH CEO Bernardo Bernard Arnault moved there. He specifically denies he did it for tax reasons.
The French top tax rate, 75 percent, which is the new socialist initiative. Depardieu claims he paid 85 percent of his total income in tax.
The United States, it is only 35 percent. Now, that will change, almost certainly, 37 or 39 percent, depending on the fiscal cliff negotiations. The Facebook co-founder, Eduardo Saverin renounced US citizenship to avoid taxes.
I asked you -- I asked you on @RichardQuest what you thought about that very question. @bluepopfizz says, "Is it the lower tax rate or statues of the little boys weeping?" @donemmy says, "If I were Greek, I would change as well." @kuttersmycket says, "And on we go." @JohnH_MEL says, "I would if I was made to pay 85 percent."
@RichardQuest, where you can join our discussion and debate on that particular one. Would you change citizenship to save tax? It's an impassioned debate that has brought so far little change.
After the break, the politics of American gun control. QUEST MEANS BUSINESS, we are in Abu Dhabi.
QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. This is CNN and, on this network, the news always comes first.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The grieving community of Newtown, Connecticut, is trying to endure another difficult day as the first funerals take place for the victims of Friday's school shooting. Two 6-year-old boys are being laid to rest, Jack Pinto and Noah Pozner.
The investigation is ongoing, but police aren't releasing many new details. (Inaudible) earlier that evidence was seized from the home where the gunman lived with his mother.
Syria's vice president is calling for an historic settlement of the country's civil war. In an interview with a Lebanese newspaper, he said a national unity government could be created. Rebel leaders say they would support that if he leads it. The Syrian opposition says at least 90 people have been killed across the country today.
At least 24 people have been killed in a day of deadly attacks across Iraq. A car bomb exploded outside a government building in Baghdad and a second went off during a car auction. To the north, five bombs went off in a small village. South of that, two car bombs killed at least five people, wounding 26 more -- 25 more. The U.N.'s condemned the latest violence.
The incoming Japanese prime minister, Shinzo Abe, says he'll make reviving the economy his top priority. Voters returned his Liberal Democratic Party to power in Sunday's parliamentary elections. Japan's outgoing prime minister pledged to resign as leader of the Democratic Party.
(END VIDEO CLIP)
QUEST: Pressure is building in Washington; the call is something must be done. They are, of course, talking about the U.S. gun laws. Efforts to revive a ban on assault weapons have failed since the last ban expired. That was in 2004. And the pro-gun lobby is a powerful force politically and economically.
According to the National Shooting Sports Foundation, the firearms industry contributed more than $30 billion to the American economy last year.
Maggie Lake joins me from New York.
We will deal with the politics in a moment, Maggie. Let's deal with the economics of it so far. The gun lobby in response to the appalling incident of last week must surely find themselves on weak ground.
MAGGIE LAKE, CNN CORRESPONDENT: Well, they certainly find themselves in the spotlight, Richard. And a lot of people looking very hard at the connection between the finances and what's happening in terms of legislation and the inability to pass gun control here.
Let's take a look at some of the numbers. It's a tough economy, but, boy, you wouldn't know it looking at the gun industry. We're going to focus on two widely held publicly (inaudible) public gun companies, gun manufacturers, Smith & Wesson and Ruger. Both of those companies posted sales just last quarter of 48 percent.
Year-to-date, though, stocks have been down an absolute tear, up 126 percent in the case of Smith & Wesson. And for Ruger, up 53 percent. Now both have been under pressure since this story broke on Friday, losing about 7 percent. But still, those are some pretty hefty gains.
Of course, they're not the only gun manufacturers. Some of the other ones that are familiar to people, Remington, Glock, et cetera, are either privately held; they don't trade publicly or they're just not as widely held.
But it's not just the companies people are looking at, Richard. It's also the National Rifle Association, the NRA. It's a name that's very familiar to people. But the numbers behind this, they're not very transparent. But this is a -- this is to give you an idea, some of the sort of financial influence, if you will, of this group.
According to Bloomberg, they brought in $200 million in 2011. Fifty related firms have given $14.8 million since 2005 -- there were a change in laws that allowed that. And that means corporate money has grown twice as fast as member dues.
It's causing a lot of people to say, is this really a member organization? Or have they turned into a very powerful lobby that people don't know very much about, Richard?
QUEST: Now here's the problem, though, Maggie. Americans may say on one hand something has to change; but on the other hand, they will say until it does, I better have a gun of my own and go out and buy some more.
LAKE: That's right. And in fact, after you've seen similar episodes, you have seen increases in gun purchases. But there's also a lot of confusion, Richard, because when you look at wide polls, a majority of Americans are in favor of tighter gun restrictions, despite the fact that the NRA's stance is opposite. This comes back to the question of who does the NRA really represent?
If it represents its members, and a majority of its members are OK with some sort of greater restrictions, are they really representing, speaking on behalf of gun manufacturers who, one would imagine, are not in favor of anything that's going to restrict those very high profits we've seen? Again, not a lot of transparency here.
This is a very complicated debate, as is the entire issue. But people are really going to start to dig here to try to follow the money trail and follow that influence, Richard.
QUEST: Maggie, stay on that story in the days and weeks ahead and here on QUEST MEANS BUSINESS. I promise you this: we will, of course, report those results from the gun manufacturers as they give us their quarterly numbers.
We'll have more on the aftermath of the Connecticut shooting in just a short while.
Tonight, "AMANPOUR," Christiane speaks to a U.S. Senate Democrat and a gun rights advocate who says it's time for the United States to get serious on gun control. That's 30 minutes from now.
And later on "NEWS CENTER," a look at the young woman hailed as -- rightly -- the hero: the teacher who died protecting her students. "NEWS CENTER" is just an hour or so from now.
When we come back after the break, the European Union welcomes a new trade deal with Singapore. A landmark, says some, and we will show you how Singapore gives businesses the right (inaudible). QUEST MEANS BUSINESS. We're live tonight. We're in Abu Dhabi. Good evening.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The answer to today's "Currency Conundrum," what special service to many Japanese ATM and (inaudible) provide? The answer is C, they dispense clean and pressed banknotes. You can even insert dirty notes and get them back fresh and crisp. No. You can't put a five and get a 10. It puts a whole new spin on the idea of money laundering.
(END VIDEO CLIP)
QUEST: The European Union is strengthening ties with Asia. It's clinched a free trade deal with Singapore. Trade between the two has increased around 40 percent in the last few years. The E.U. trade commissioner, Karel de Gucht, who did the negotiations, called it a landmark agreement.
(BEGIN VIDEO CLIP)
KAREL DE GUCHT, E.U. TRADE COMMISSIONER: We see this as a stepping stone to a (inaudible) agreement in the future. And I believe that Singapore is perfectly fit for that because we have two-thirds of our trade through Singapore with the Asian region. So that's where we should start and that's where we have tried to make the blueprint.
(END VIDEO CLIP)
QUEST: You only have to look at the sheer volume of goods moving between the E.U. and Singapore. DHL, for instance, has been moving parcels between the two regions for four decades. The delivery giant chose the island state as its regional hub. I went to DHL in Singapore and I found out why.
(BEGIN VIDEO CLIP)
QUEST: This is a guitar or something approximate (inaudible).
CHRIS BRESNAHAN, EVP, DHL EXPRESS ASIA PACIFIC: Yes. We have a customer who want a guitar urgently.
QUEST: High-end electronics. This is oil, oil machinery.
BRESNAHAN: Oil and gas, a big growth industry for us.
QUEST: When you started, it was -- it was on the (inaudible) carrying contracts and checks and important documents.
BRESNAHAN: Correct. And as you can see, it's changed a bit since then. So we're now really a package company (inaudible) we're carrying a heavier and a bigger and the product that we carry is more (inaudible).
QUEST: I mean, just look at this stuff. It's about to open up. The sheer amount of stuff that's going to be in here. Do you ever think about it?
BRESNAHAN: Well, of course. I mean, traditionally, the express industry has shipped electronic parts, high-value items, just in time for manufacturing. But these days, we've got more and more consumer items with the online retailing that we have now.
QUEST: All these have been pre-cleared by customs electronically, correct?
BRESNAHAN: Yes. And that's one of the advantages of Singapore is they've got a very friendly, seamless customs system. So it's quite easy to import and export out of Singapore.
QUEST: Good grief! Who sends something that heavy by express?
BRESNAHAN: That's actually quite light, Richard.
BRESNAHAN: Every shipment goes through at least 7-8 processes.
BRESNAHAN: All right. From the time we pick it up to the time we take it back to our service center to do some processing there, to the time it gets to the outbound gateway, to the time it goes through the transit hub to the time it gets to the inbound gateway and through to the service and then delivery we have at least 7-8 checkpoints that we're then able to use real time to track the shipment.
QUEST: How many gateways or transit hubs will it go -- on average go through, do you think?
BRESNAHAN: Normally, a shipment going from Asia to Europe will go through our central hub in Hong Kong and link through -- then through our central hub in Leipzig and then be (inaudible) Europe.
(END VIDEO CLIP)
QUEST: And tomorrow, we stay in Singapore, obviously with this trade agreement, to show you just the size and the scale. We show you 40 ships transporting 151/2 thousand containers from Singapore across the world. We'll take a tour through the vast (inaudible) ship and we'll show you the shipyards and put that into perspective for you.
Cold and snow weather continues across portions of southeast Europe. Jennifer Delgado is at the CNN World Weather Center.
And Jennifer, here's a funny thing. The last 48 hours here in the Gulf I've had storms and rain. I never thought it really got that cold and stormy.
JENNIFER DELGADO, AMS METEOROLOGIST: Well, clearly, you brought the bad weather over from England with you, because it's not normally like that.
But you're right. It has been bad there. And we'll get to that in just a moment. But right now we want to focus on Europe, where we've been dealing with some snow, especially coming down in parts in southeast as well as into Poland. (Inaudible) video to show you. People trying to travel through these snowy conditions.
You can see cars jammed up. Again, this is out of Poland with some locations actually picked up 25 centimeters of snowfall. It certainly white out there. Will it remain white for Christmas? Well, if it stays cold enough it will certainly see (inaudible) that snow on the ground.
As I take you over to our graphic now, across western Europe, where we're just really talking about some rain for areas, including southeastern England, moving into France as well as into Germany. You can see right along the Alps, we're looking at some rain as well as some of that snow mixed into the higher elevations.
But as we go through midweek, we're going to see a low coming out of the Adriatic Sea and what that is going to be doing is pumping in a lot of moisture. And what's going to happen is we're going to start to see some of that snow exploding down towards the southeast.
We'll see some rain in the western part of Turkey, but over towards eastern Turkey as well as into Georgia, as well as into Armenia, we're talking about some big-time snow, 25-30 centimeters over the next 48 hours. And it's really going to start to get more active, especially as we head into late Tuesday.
But look for areas like Poland, Latvia, Lithuania. And we're also talking for you about 15-20 centimeters of snowfall.
So we've moved from the snow and how it's affecting travelers out there for Sofia as well as Marseilles. We're going to see some delays due to winds as well as for snow.
Now across the Middle East, where, oh, well, Richard was complaining about the rain as well as the clouds around. Well, guess what? We're still looking at some moisture out there. Richard is in Abu Dhabi.
So overall, things are quieting down for now. But for tomorrow, we are expecting overall a little bit more quiet weather in place for Abu Dhabi. Comfortable temperature of 25 degrees and then for other areas like Riyadh as well as Kuwait City, temperature of 19 degrees. It's still better than your weather in England. You got to admit that.
QUEST: Yes, which, of course, is not very good news, since I am on the 0300 flight tonight from Abu Dhabi back to London.
But I have to tell you, crossing the Gulf yesterday and today, with all this turbulence -- because the plane only gets to about 20,000 feet -- it went -- I nearly had to spill me coffee.
But Jennifer, (inaudible) --
DELGADO: Or something else.
QUEST: -- thank you -- we'll thank you --
QUEST: -- for joining us from the World Weather Center.
QUEST: And we will be right back after the break. QUEST MEANS BUSINESS in the Gulf.
QUEST: (Inaudible) Abu Dhabi. Now normally that is lit up rather beautifully. Tonight it's not; we did call them to ask would they switch the lights on again for us. But apparently it's been -- it's a maintenance or there's some problems with the lights.
Anyway, it's still a magnificent building (inaudible) light -- with the lights on or off. Next time I come, we'll give them a small amount and they'll switch the lights on for sure.
Moving along, for a movie about a rather small hero, "The Hobbit" brought in a big amount of money at cinemas around the world this weekend.
(BEGIN VIDEO CLIP)
RICHARD ARMITAGE, "THORIN OAKENSHIELD": So this is the Hobbit!
IAN MCKELLEN, "GANDALF": You asked me to find the fourteenth man for your expedition. But I have chosen Mr. Baggins.
ORSON BEAN, "BILBO BAGGINS": Me? No! No, no, no.
"GANDALF": Hobbits --
QUEST: "The Hobbit: An Unexpected Journey" took a trip to the top of the box office rankings; $85 million in the U.S. and Canadian ticket sales. Fans flocked to see the fictional realm of Middle Earth return to the big screen. It set a new record as the biggest opening weekend ever for a film released in December. I suppose if you look far and hard enough, you could always find some statistic.
The next installment in "The Hobbit" trilogy, called "The Desolation of Smaug" is out next year. All three "Hobbit" films are made by Warner Brothers. Of course, it's part of TimeWarner, which is the parent company of CNN, which pays me wages.
The film critic, Richard Fitzwilliams, joins me now from London.
The December blockbuster, Christmas time, best of holiday time, is it traditional? I know we talk about the summer blockbusters, but is December also a traditional time?
RICHARD FITZWILLIAMS, MOVIE CRITIC: Oh, yes, it is, summer and Christmas you get the big movies, because after all, there's the family interest and "The Hobbit" definitely taps into that. Absolutely deliberately.
What you've got originally was the "Lord of the Rings" trilogy made for almost eight years for under $300 million by Peter Jackson, which grossed $3 billion. He's hoping to repeat it with this.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: -- determined to reclaim their homeland.
QUEST: Now if we look at the other blockbusters, "Life of Pi," "Les Miserables," all these movies coming out in the December period, what do you define as being a successful blockbuster?
FITZWILLIAMS: A successful blockbuster would have family appeal, as the "Life of Pi" does and as "Les Miserables." That's got some pretty tough scenes in it, I have to say, and it made me moist-eyed at the end.
Also does, but also you've got a movie that's a bit larger than life. And that, like "The Hobbit," like "Life of Pi," you've -- takes you out of this world, perhaps into another world, into Middle Earth or into a fantasy world.
QUEST: You talk about the fantasy world. The only harsh reality is the cost of these movies and the profitability of them if they're not successful or the losses, if they're not successful. Now I know from our own company, TimeWarner, if you look at the movies and the trilogies that have been made, they've been exceptionally profitable to the bottom line. "Harry Potter," for instance.
FITZWILLIAMS: Absolutely phenomenal, or "Star Wars." I mean, this is the extraordinary power hype and advertising have over the cinema audience. I mean, it's phenomenal. But word-of-mouth counts, too. Critics a bit less so. They have been impressed by "The Hobbit" for the reason that, quite frankly, it is overblown and grandiose, to be honest.
But the fans will love it because you've got so many battle sequences and so many spectacular pieces of scenery. So at Christmas time, what you're offering, it's escapism on a huge scale, not necessarily with intelligence. It's nothing like as good as "Lord of the Rings."
QUEST: Overblown, grandiose and huge scale. Richard Fitzwilliams, we'll talk more in the next few weeks, because obviously we're getting to awards season and we will need you to help us navigate the thicket of profitability.
I'll have a "Profitable Moment" -- talking of profitability -- after the break.
QUEST: Tonight's "Profitable Moment," Gerard Depardieu has decided he's had enough of paying taxes and giving up his French citizenship to avoid stinging rates. It's tempting to quote an old canard from Ben Franklin about "death and taxes, the only certainty." In troubled economic times, wealthy people are being asked to contribute more. If you want to protest, the correct way is to be political, not take your bat home.
If Depardieu still can't find happiness in Belgium, where taxes are lower, perhaps he should come to Abu Dhabi, where they don't pay anything at all.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in Abu Dhabi. Whatever you're up to in the hours ahead, I hope it's profitable.
I'll be back in London tomorrow.
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QUEST (voice-over): The news headlines: the community of Newtown, Connecticut, is trying to endure another difficult day as the first funerals take place for victims of Friday's school shooting. Two 6-year- old boys are being laid to rest, Jack Pinto and Noah Pozner. The investigation is ongoing and police aren't releasing many new details.
Syria's vice president is calling for an historic settlement of the country's civil war. In an interview with a Lebanese newspaper, he said a national unity government could be created.
At least 24 people have been killed in a day of deadly attacks across Iraq. A car bomb exploded outside a government building; a second went off during a car auction. To the north, five bombs went off in a small village. And south of that, two car bombs killed at least five people and wounded 25 more.
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QUEST: You're up to date with the news headlines. Now to New York. "AMANPOUR" is live.