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QUEST MEANS BUSINESS

Back to Work on Fiscal Cliff; Dow Slips; Fiscal Cliff Countdown; Fiscal Fears; Lobbying With Lattes; European Markets Review; Euro Monopoly

Aired December 27, 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: How to fall over a fiscal cliff and hit a debt ceiling. Tonight, the US faces the double whammy.

The oracle and his office. We go behind the scenes with Warren Buffet.

And for once, I got to be banker.

(BEGIN VIDEO CLIP)

BOB PARKER, SENIOR ADVISOR, CREDIT SUISSE: It shows how quantitative easing doesn't work. You're giving me money, but I'm not doing anything with it.

(END VIDEO CLIP)

QUEST: It's a case of Euro Monopoly. I'm Richard Quest, and yes, I mean business.

Good evening. President Barack Obama is now back in Washington, and there are only days left to avoid that pernicious brew of tax rises and spending cuts. The president flew to Washington from Hawaii overnight after speaking to all four major congressional leaders on the phone.

It came as the treasury secretary warned that the US would also hit the debt ceiling on Monday, and the US treasury is now starting to take "extraordinary measures," in their words, to avoid a default. Despite earlier reports, the president was planning to offer a scaled-back plan. We understand the president is not offering a new -- we understand the president will not offer a new deal today.

The Senate is back at work while the House is still on holiday. The top Democrat in the Senate says his colleagues should return before it's too late.

(BEGIN VIDEO CLIP)

SEN. HARRY REID (D), SENATE MAJORITY LEADER: If we go over the cliff, and it looks like that's where we headed, the president -- the House of Representatives, as we speak, with four days left after today before the first of the year, aren't here with the speaker having told him they'll have -- he'll give them 48 hours notice.

I can't imagine their consciences. They're out wherever they are around the country, and we're here trying to get something done.

(END VIDEO CLIP)

QUEST: Markets are open for business between Christmas and New Year.

(RINGS BELL)

QUEST: And, well -- that tells its own tale. All you need to know. Down 130 points, off 1 percent, but crucially, we've come under the 13,000 level, and that's what the markets and the economists will be worried about and, indeed, we should all be worried about: the confidence.

We also had consumer confidence numbers, incidentally, which showed a sharp fall in the United States. That is further evidence that the drip drip drip effect of the fiscal cliff is taking its toll. Republican congressman will get 48 hours notice to return to Washington. They haven't heard anything yet. That's worrying. Five days to go.

Lisa Desjardins is in Washington for us tonight. Lisa, now, we need to take this in a fair old tip. Are we expecting the president to put forward new proposals today? Clear up the confusion.

LISA DESJARDINS, CNN RADIO CAPITOL HILL CORRESPONDENT: All right, I will clear this up. We're not expecting a new bill, so we're not expecting formal language from the president, what they actually need to pass. But what we are expecting is that the president is going to clarify and perhaps give some new details to Republicans about exactly what he wants to happen.

As you know, in the back-and-forth, lately Republicans have said, "We need to know exactly what you're proposing, President Obama, before we can tell you whether we can support it."

So, the president says, "All right, I've outlined things before, I'm giving you more details." That's what we expect today.

QUEST: Now, Lisa, Harry Reid in the Senate said it's looking likely that we're going over the cliff. An unnamed Democrat quoted in the "Financial Times" says we're going over the cliff, there's no doubt about it. I'm guessing where you are in the capitol, there's pretty much an acceptance in some shape or form, you're going over the cliff.

DESJARDINS: I would say they're 90 percent of the way there. I feel like I'm looking over the cliff myself right now, standing near the capitol. But it's not all the way done yet, Richard. I think at the very least, a lot of us figure we will be here this weekend.

We don't know that's going to be all for show, if Democrats and Republicans want to make it look like they're working until the last hour, or will they really be working until the last hour?

As you know, Richard, a lot of effects from this fiscal cliff, and I think that Americans may start to take it seriously soon.

QUEST: Now, finally -- and just to prove that we're going to throw everything into the melting pot here -- we've got the fiscal cliff, and now, perhaps somewhat unhelpfully, Tim Geithner has thrown the debt ceiling into the mixture as well. Are they -- will a deal be done? Are there talks that you need to link the two deals? Deal with the immediacy of the cliff and the debt ceiling?

DESJARDINS: Well, originally President Obama did want to link both. He wanted the debt ceiling and the fiscal cliff to all be taken care of --

(AUDIO GAP)

DESJARDINS: -- time. Republicans were more resistant to that. But now that it looks like they're just going for broke for a very basic sort of low-rent deal, the very minimum they could get, no, I think that the debt ceiling will have to be dealt with on its own.

And Richard, you probably know, the debt ceiling for the US right now, $16.4 trillion, that's the limit on how much this country can borrow. Right now, they are at $16.3 trillion. So, really nudging up against that debt limit, and certainly within the next couple of months, the US would not be able to borrow any more unless Congress acted.

QUEST: Good to see you Lisa. I've a feeling you've got your duty and work cut out for you in the weekend ahead. Lisa Desjardins joining us from Washington, bringing it all together, the fiscal cliff and the debt ceiling.

At the super screen, you'll see exactly what we're talking about. Let's start with the fiscal cliff, and then we'll -- these are the two storm clouds that are fundamentally now hovering over Washington by the US economy and, by definition, the global economy. The fiscal cliff.

So, John Boehner, speaker of the House, says the Senate must go first. Harry Reid, the Senate majority leader, the to Democrat there, says the US is likely to go over the cliff, and consumer confidence is falling.

No formal negotiations, the House isn't there, the Senate held a conference call, the president may have some proposals. That's the seriousness of where we stand on the fiscal cliff tonight.

But if you add in what Lisa was talking about and the debt ceiling and this very idea that the US government -- oops, I keep pushing the button, you see? It will work eventually. If you talk about the debt ceiling, where the US is already up to roof --

Now look. Imagine Tim Geithner says he's now going to use "extraordinary measures" to try and create. Think of it this way, if this is the ceiling -- if this is the ceiling -- the US is now bumping up against it. So, what Geithner has to do -- he can't go above that. If he does, he's breaking the law.

So, what Geithner has to do is create more room, which is effectively shifting spending. He literally brings the limit down -- or he shifts the money around. It's called creating head room within the debt ceiling, and that's what the US will be doing over the next two months, because they cannot hit $16.4 trillion. But eventually, they will, of course, if he doesn't get an increase in it. What a situation.

Starbucks, the coffee company, is doing its bit to help the talks on this side of it. It's going to be writing on coffee cups -- the chain is asking employees to write "come together" on cups served to customers in the Washington area. It's a voluntary campaign for staff. It affects around 120 stores and is running today and tomorrow.

The chief exec, Howard Schultz, says he hopes it will send, quote, "respectful but potent messages to those on Capitol Hill." He told earlier -- CNN earlier in the month, a seismic effect would take place if the US went over the fiscal cliff.

Now, you might be wondering, with all this miscellany of mischief and mayhem in the world, fiscal cliff, debt ceilings in the United States, on the markets, very quiet reaction. Not so much -- they're holding their own. Shallow gains in the shadow of the cliff.

Italy also held a relatively successful bond auction. In Spain, Bankia shares finished almost down 20 percent. A new audit showed the parent company has minus $13 billion. So, very small gains, extremely thin market. We would be foolish if we extrapolated anything out of what happened there.

Coming up in just a moment on QUEST MEANS BUSINESS --

(BEGIN VIDEO CLIP)

VANESSA ROSSI, INDEPENDENT GLOBAL ECONOMIC ADVISOR: Community Chest.

QUEST: Typical for France --

ROSSI: Oh!

QUEST: Get out of jail free.

ROSSI: Oh, yes!

(END VIDEO CLIP)

QUEST: It's Monopoly, but not as you know it. We roll the dice on Europe's economy and forecast the fortunes of a continent in crisis. QUEST MEANS BUSINESS, good evening.

(COMMERCIAL BREAK)

QUEST: All right. Now, it's a game of strategy, risk, and business skill. In Monopoly, fortunes are made and just as easily lost. It's a fast-paced wheel-and-dealing in the property world, making money, losing money, the inescapable threat of --

(RINGS BELL)

QUEST: -- bankruptcy. Pertinent when it comes to the question of Europe. Well, this is Euro Monopoly, and I challenged four of the continent's finest: two business leaders and two leading economists to a game of Euro Monopoly to extrapolate the various issues that we have seen in the euro crisis this year.

And what better place to play Euro Monopoly than at London's St. Pancras station, the UK's gateway to Eurostar.

(BEGIN VIDEOTAPE)

(MUSIC - "ODE TO JOY")

QUEST: You will notice that for the purposes of today's game, I am the bank. You each get to choose a country of these -- that are to play with. Which one would you like to be? You can be -- which country are you going to be?

ROS ALTMANN, DIRECTOR GENERAL, SAGA GROUP: I'd love to be the UK.

QUEST: You're going to be the UK. How appropriate. That's yours. Why the UK?

ALTMANN: As it happens, probably the UK has got much more credibility than most other European countries at this point. Whether it's deserved or not, it seems to have achieved quite a lot, I think.

PARKER: I'll go for Germany, please. Stable economy, strong budget position, strong trade position, stable politics.

ROSSI: I shall say non.

QUEST: Non?

ROSSI: France. Le francais.

QUEST: Ooh! Ooh!

ROSSI: No, you can't have France.

NICOLAS PETROVIC, CEO, EUROSTAR: What am I to do?

QUEST: All right? You're choice?

PETROVIC: I don't know, I'm hesitating. I think -- because you've got -- that's not very nice for Italy to have a leaning tower.

QUEST: But economically appropriate.

PETROVIC: OK, maybe, so --

PARKER: Well, Greece hasn't got a roof, so --

ROSSI: Or maybe the tax haven in Belgium.

PETROVIC: Uh --

QUEST: Oh, yes!

ROSSI: Gerard Depardieu.

(LAUGHTER)

PETROVIC: I'm going to go with Gerard, then.

QUEST: You're going to be the German suitor.

(LAUGHTER)

PETROVIC: I'm going to help him.

QUEST: All right, start -- Vanessa, why don't you kick us off with the dice.

(ROLLS DICE)

QUEST: Five, six, seven. One, two, three, four, five, six, seven. Chance.

ROSSI: Oh!

QUEST: What chance do you give the eurozone and the European politicians overall for solving the problems in 2013 that they've failed to solve for the last two years?

ROSSI: It will appear as if it is all solved. We have -- we have unity. We have a -- we now have the formation of all of the things that we need for the framework to survive.

ALTMANN: I don't see the eurozone solving its problems. I think it will attempt to say that it solved the problems, and it may put more sticking plaster on it, but we're going to need more political will, I think, before we get the solution.

PARKER: The eurozone won't break up in 2013. All the member states will remain members of the euro, but the fundamental problem of lack of competitiveness of man countries --

ALTMANN: Yes.

PARKER: -- is going to remain, still, very much a problem.

QUEST: So, your go.

PARKER: OK.

(ROLLS DICE)

PARKER: So, nine. I think that puts me in jail, doesn't it?

ROSSI: No, not quite.

PARKER: No, it puts me on Poland.

QUEST: The emerging markets of the European Union, they are, to some extent, the growth areas.

PARKER: Well, I think so. Let's not forget, Poland was one of the few economies which did not go into recession in 2008 and 2009. And --

QUEST: But also you've got here Romania -- because we're going to do it by colors -- you've got Bulgaria. So, all these countries have great potential in 2013.

PARKER: Well, I think northeast Europe: Poland, Czech Republic, Slovakia, the Baltic states, yes, there is great potential. If we look at southeast Europe, there is still a lot of restructuring going on. Let's not forget that countries like Hungary are only now successfully coming out of an IMF bailout program.

QUEST: That's a good answer.

ALTMANN: Hang on one minute, Mr. Banker.

QUEST: Yes?

ALTMANN: You haven't given us any money.

QUEST: That's because I'm the ECB. Unlimited funds will be made available at the moment of time.

PARKER: And on conditions.

QUEST: And on conditions. You can have Warsaw.

PARKER: Thank you.

QUEST: Your go. Where do we start? Let's start -- you have a go now.

PETROVIC: Thank you.

(ROLLS DICE)

QUEST: Yes, we don't need any money. We're talking about --

PETROVIC: Three. Typical of Brussels, very slow. One, two, three.

QUEST: If we take your business --

PETROVIC: Yes.

QUEST: Your trains -- we'll come around to some more of them at the moment -- how much of an indicator of what's happening in Europe at the moment is Eurostar?

PETROVIC: I think it's very -- we see things very quickly because it's sort of a confidence. I find since when there was the announcement by the ECB in July, literally it was a watershed for us. We could see the numbers changing, because it changed from a crisis management to, for customers, to a way of normality, so we can feel things very well.

QUEST: Your go. Your first go. To get Britain off. You see, slow coach Britain at the back.

ALTMANN: That was rigged by you, though.

(LAUGHTER)

(ROLLS DICE)

QUEST: Oh! Seven.

PETROVIC: That went very well.

ALTMANN: One, two, three, four, five, six, seven. European Parliament.

ROSSI: Oh!

QUEST: Do you see Britain as being -- significant? This ongoing argument, is Britain in, is Britain out? Referendum, no referendum? That'll eventually hurt. Where do you stand?

ALTMANN: I don't think Britain can survive without the rest of Europe. I think we have been right so far to be out of the euro, but I think we will -- there will come a point, once the euro itself restructures enough, where we should think about joining it, actually.

ROSSI: To be realistic, on business, we know we need to be members of the union. We need all of the trade and the people links. We want -- how can we not have freedom of movement of people?

QUEST: But Britain --

ROSSI: Really?

QUEST: But the UK could want the Norway or the Switzerland solution, Bob.

PARKER: Yes, but I think the key question is that the UK is a very different economy from Norway and Switzerland. These are wealthy economies, but they are small economies by size of population.

The UK historically is a very open economy. Yes, if we had a referendum on the EU, it might well go that we leave the European Union. That would have a major negative on investments and trade.

QUEST: Vanessa, it's back to you.

ROSSI: Ah!

(ROLLS DICE)

ROSSI: Oh!

ALTMANN: Oh, you've got the double.

ROSSI: Oh!

(CROSSTALK)

QUEST: No, you don't, you've got --

PARKER: Oh, no, I get to charge you rent, now, please.

ROSSI: Ah! Hello. Budapest.

QUEST: That meant -- No, no, you go again.

ROSSI: Oh, I go again?

QUEST: These people have got no idea how to play Monopoly.

ROSSI: Oh! Oh, dear.

QUEST: And you're on Warsaw.

ROSSI: Oh, so I get nine, then.

PARKER: Yes, you get nine now.

ROSSI: One, two, three, four, five, six, seven, eight, nine. Community Chest!

QUEST: Typical for France.

ROSSI: Oh!

QUEST: Get out of jail free.

ROSSI: Oh, yes!

(LAUGHTER)

ROSSI: Ah!

QUEST: Where are you?

PARKER: I'm on Community Chest as well, so you have to ask another question.

QUEST: Advance to Go. This is typical Germany.

PARKER: There we are.

QUEST: It advances forward --

(CROSSTALK)

PARKER: Round we go, and I get --

QUEST: -- and they get some of the 500. Let's move on. Whose go is it? You got us into trouble at the --

PARKER: I think it's your -- have another go?

QUEST: No, I think it must be your go.

ROSSI: Yes. You're still here. You're still close to jail.

QUEST: Typical Europeans, they can't decide whose go it is.

PETROVIC: Ah.

QUEST: Oh --

ALTMANN: Lisbon.

PETROVIC: Are we to Lisbon?

ROSSI: Lisbon.

QUEST: Ah!

PARKER: Ah, OK, a good bailout country.

ROSSI: Well -- that was --

QUEST: So, that takes us into our discussion on the bailout. Have we come to the end of bailouts in 2013, Bob?

PARKER: I think the bailouts for Ireland and Portugal are actually showing good signs of working. So, there, the bailouts are successful. Greece has got enough money for 2013, but Greece has still got a lot of work to do.

If you actually asked the question when will Greece come back and be able to raise money from investors at low-ish interest rates, I think we're talking many years.

ROSSI: Remember, there's -- for Portugal, there's still some of the infrastructure. I just divert slightly, because there's infrastructure issues. Which are interesting for the train sector, because one of the projects they canceled was the fast rain line between Madrid and Lisbon. So, from your point of view, you haven't got an observation yet, so maybe you want to put that back on the table somehow.

PETROVIC: Yes, we've looked at that, and I think it's a pity, because many countries, they first cut back on the capital expenditure and the infrastructure when actually --

ALTMANN: I think that will change.

PETROVIC: -- that's something that could help to --

ALTMANN: I think that will change.

PETROVIC: -- hopefully --

ROSSI: Taking control of the banks, because it's one way of trying to avoid a bailout if you do others kinds of work.

ALTMANN: We're going to get more emphasis on infrastructure across Europe. It's inevitable. One of the reasons Germany has done so well is that it's got efficient infrastructure. France has got some pretty good infrastructure.

PETROVIC: Germany --

ALTMANN: Some of these -- the potential for growth would come if you were to invest -- you could use pension fund money, you could use some of the institutional investor money --

PARKER: Yes

ALTMANN: -- that there is, rather than relying on bank finance, for example.

PARKER: Well, I think it's very interesting that pension funds want long-term assets --

ALTMANN: Yes.

PARKER: -- and infrastructure, whether it be --

ALTMANN: It's ideally suited.

PARKER: -- transport, like trains. Whether it be energy, it's an ideal asset for these venture funds.

ROSSI: We have some more money in the kitty, now, from this.

QUEST: You will have rapidly realized that this is the opposite of Monopoly, where they give me the money. In this game, the European Central Bank gives them the money. Quantitative easing. Whose go is it?

PAKER: Actually, this is -- it shows how quantitative easing doesn't work. You're giving me money, but I'm not doing anything with it.

(CROSSTALK)

ROSSI: This is the problem.

ALTMANN: He's just keeping it.

(LAUGHTER)

ALTMANN: Absolutely, perfect.

PARKER: Thank you.

QUEST: Has QE worked? As we've gone in for Q --

(CROSSTALK)

ALTMANN: No way.

ROSSI: Yes. Oh, come on.

QUEST: You first.

ROSSI: Some things have worked. If we hadn't had the Draghi efforts last year, the disaster in Europe at the beginning at 2012 would have been terrible. So, in that sense, shoving money out does something. But it doesn't do as much as people would like in terms of generating jobs in the rest of the eurozone.

ALTMANN: Monetary policy does not create jobs. Quantitative easing is an indirect route of helping the banking system, but until we clean out some of the bad debts in the banking system, and until we get money actually working in the economy directly, quantitative easing is just stabilizing things potentially at a low level. It's not generating growth.

PARKER: I'd just add that without the action by the ECB, and others who've done quantitative easing, like the Bank of England, I think the recession that we have been through, this period of very low growth in Europe, would have been significantly worse.

QUEST: Finally, a question for each of you. I'm going to move each of your pieces to the middle. This is the politically unpleasant question that none of you want to answer. Put your charm, your piece, on the city that you think we most need to watch in 2013 and tell me why in Europe.

PARKER: I put it on Paris because the market is discounting or ignoring potential budget problems in France. Whereas in 2013, Germany will probably eliminate its budget deficit, I think France is going to really struggle with budgetary problems, plus there is a huge problem with the difference in competition or competitiveness between France and Germany.

ALTMANN: I put it on Dublin, because I think Ireland could be a role model for how to help some of the weaker European countries.

PARKER: I agree with that.

ALTMANN: If Ireland worked, then I think there could be a big sea change within Europe.

ROSSI: And I've gone for Spain because, sorry to say, I think Ireland will be seen as somewhat different, its special reasons for turning around, whereas the critical factor we've got still on the table and how much money that may be needed or maybe not, is Spain. It's hanging in there in the balance.

And, of course, it's going to be the big example for the large countries as to whether economies can begin to turn around. The little ones will be nice, but a big one would be that much better.

PETROVIC: I put it on Italy because with the election coming and is Mario Monti going to run again? Is Berlusconi going to get active? I think where there has been a lot of stability -- and it's a very big economy, Italy -- there could be a problem if the market takes a wrong turn.

QUEST: Well, I'm finally the ECB. Thank you very much for playing.

ROSSI: Thank you!

QUEST: Another round of quantitative raising, LTRO.

PARKER: Good. Can I cash this into real money?

(LAUGHTER)

ROSSI: Where can we spend it?

PETROVIC: Thank you.

QUEST: I thank you all, and I say to each of you, thank you for being generous with your time and always coming in and talking to us, and I wish you a happy, healthy, and prosperous 2013.

(END VIDEOTAPE)

QUEST: And if you're wondering about the statue behind us, as we were playing, it was the British poet John Betjeman. He fought to save the facade of London's St. Pancras station in the 1960s. A magnificent, awe- inspiring, uplifting place for the Eurostar to go from London.

And if you want to read the poem written around the base of that statue, go to facebook.com/CNNquest, where we have put that. And our thanks to our guests who joined us at the Eurostat terminus.

Some are spartan, others are a mess. An office desk speaks volumes about us. Coming up, we look at the desk of one of the world's richest men, and it's a rare glimpse into the workplace of Warren Buffet.

(COMMERCIAL BREAK)

RICHARD QUEST, CNN HOST: 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): President Obama has returned from his Christmas holidays to address the issue of the fiscal cliff. Mr. Obama flew back from Hawaii overnight. A series of tax rises and spending cuts come into effect on Tuesday unless lawmakers cut a deal.

House Republicans are due to hold a conference call on the matter just about now.

The U.N. envoy for peace is pushing a plan to bring a transitional government to Syria. Lakhdar Brahimi says the so-called Geneva plan could end the bloodshed within months. He's in Damascus this week to meet with President Bashar al-Assad and other Syrian officials.

In Pakistan, Taliban fighters have captured at least 21 government paramilitary soldiers outside Peshawar in Pakistan's volatile northwest. Local officials say heavily armed fighters stormed at least two camps overnight and seized the soldiers.

The former Egyptian president, Hosni Mubarak, has been ordered back to hospital for urgent medical treatment. Doctors say he fractured three ribs after slipping in a prison bathroom earlier this month. The former president is serving a life sentence for complicity in state-ordered killings.

He's been ill for some time and attended his trial last year on a medical gurney.

(MUSIC PLAYING)

(END VIDEO CLIP)

QUEST: I want you to come with me on a little walk. It is a walk from the QUEST MEANS BUSINESS studio through into the newsroom. And where you will discover the delights of the office desk. For this is where it all takes place, the little trinkets that we collect, the memorabilia that's we've got, the souvenirs that we've picked up along the way, old and new, all alike.

However, what does it tell us about ourselves, the office desk? When it's untidy and a mess with a mug of the Royals, what does it tell you? Well, if we take a look at the desk of one of the world's richest men, we see an enormous amount of humility and a great deal of thought.

Poppy Harlow has visited the desk of the sage of Omaha, Warren Buffett.

(BEGIN VIDEO CLIP)

WARREN BUFFETT, CHAIRMAN & CEO, BERKSHIRE HATHAWAY: Well, I've been in this building 50 years. They moved me around a little bit.

POPPY HARLOW, CNN CORRESPONDENT (voice-over): History on the walls legendary investor Warren Buffett's office.

BUFFETT: I formed my first partnership in May of 1956. So this was the year-end balance sheet, which I typed myself. In fact, there's probably about a few typos in it. And these are my partners I had at the time. And this was my father-in-law. That was my roommate in college, that was his mother, that's my Aunt Alice, that's my sister Doris and that's her husband Truman and --

(CROSSTALK)

HARLOW: And you.

BUFFETT: That was the gang. Yes.

If they -- if they kept the $10,000 investment and then when I liquidated the partnership re-invested that in Berkshire Hathaway, they would now have about $500 million.

I did very well with small amounts of money back in 1964. When a panic happens with a really good company, I like to buy.

HARLOW (voice-over): Buffett's M.O. for investing. This 1901 "New York Times" article reminds him daily of an important lesson.

BUFFETT: We never get out on a limb. We always have lots of money. We never borrow a lot of money.

First campaign I got really active in was when I was 10 years old in 1940 and Willkie was running against Roosevelt. My dad thought that if Roosevelt got elected, that there would never be another election.

HARLOW (voice-over): A vocal Republican in his earlier years, Buffett now leans left and is a big Obama supporter.

BUFFETT: We were talking about the economy and --

HARLOW: What else?

BUFFETT: -- I brought along figures that I thought would be of interest to him. That was when I got the presidential Medal of Freedom.

HARLOW (voice-over): But he's never had political ambitions like his father.

BUFFETT: That's my dad's campaign picture when he was 39 years old running for Congress the first time in 1942. This is my dad's desk. This sat on his desk when I was a kid, when I was 10 years old. I always admired it.

HARLOW: This is my favorite thing in your office. I need one of these -- the "too hard" box.

BUFFETT: Right. There's a lot of things that belong in there. The real problem is if they're all of them in there and I don't realize it.

HARLOW (voice-over): Then there are the fun things, like the model Mars Rover, given to him by students at Cal Tech.

BUFFETT: That beats getting a T-shirt, though.

HARLOW (voice-over): And the mock "Sports Illustrated" cover.

BUFFETT: If they ever bring me out, it will be as water boy.

HARLOW (voice-over): No fancy flat screen TV, just an old tube.

BUFFETT: No, no computer.

HARLOW (voice-over): That means no e-mail, perhaps the secret to Buffett's success -- Poppy Harlow, CNN, Omaha, Nebraska.

(END VIDEO CLIP)

QUEST: Now that's the sort of insight that you only get here on QUEST MEANS BUSINESS.

Still to come on the program, (inaudible) hundreds of flights canceled across North America, thousands of travelers, tens of thousands are stranded. And the roads are pretty bad as well. (Inaudible) from New York State in a moment. QUEST MEANS BUSINESS.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

QUEST: Now a real "Business Traveller" update this week, thousands of travelers are stranded across the United States and Canada. Wild winter weather is the blame. At least 600 flights inbound and outbound have been grounded already today. And these are the worst affected airports.

Some services are operating if you just look at the number of delays, Newark down inbound 11/2 hours, New York JFK, LaGuardia, Montreal YUL, nearly 2-hour delays for flights into and out of Quebec province.

CNN's Ines Ferre is in Syracuse, New York, one of the areas hardest hit.

My word, there's a lot of snow there.

INES FERRE, CNN CORRESPONDENT: Yes, that's right, Richard, and it's still snowing here. And now there's a little bit of wind, too. So the snow is blowing all over the place. You can see behind me a pile of snow. This is just from one of the sidewalks in downtown Syracuse. And also behind me a skating rink here where people are actually skating here today.

And check this out. This is the amount of snow that this storm has left plus some other storms in the past couple of days as well. This whole area, central New York, northern New York, the northeast of the U.S. is used to getting a lot of snow. I had one local person tweeting me, saying they call it a snowstorm. We call it Thursday.

The problem is is that when there's so much snow in such a short period of time, that creates a mess on the roads; plows has to work overtime. They've been working 12-hour shifts just trying to clear the roadways. And, of course, it's a huge headache for people that are traveling by plane, but also by road as well.

Now one of the good things is that this is happening during a holiday weekend, during a holiday week, that is. So people, a lot of people aren't going to the office. So a lot of offices are closed and also schools are closed as well, Richard.

QUEST: Right. Now, I mean, it's all very picturesque and all very nice. Is it actually cold?

FERRE: It is cold. It's very cold. It's 25 degrees Fahrenheit. That's -4 Celsius. So you can imagine the weather. I've got -- my glove, it's off right now but, yes, it's cold as well.

QUEST: All right. Inez Ferre, who's up in Zurich (inaudible) for us bravely revealing the flesh of the digits of her fingers in the service of our corporation. We thank you for that.

Now cold weather in North America, your storm over there, things are getting parky and chilly in Europe as well. Luckily Jennifer Delgado is at the World Weather Center for us tonight.

JENNIFER DELGADO, AMS METEOROLOGIST: You asked Ines if it's cold out there. You could ask me that question. It's -3 out there. Of course she's cold, Richard. All that snow.

QUEST: (Inaudible), you're in a warm --

DELGADO: You know what? If I want to know something about currency, I'm not going to go ask somebody other than you, Richard.

Would I?

QUEST: Touche. Touche.

DELGADO: Yes, I like that bell. All right. I'll get on to the weather now.

Yes, it's cold outside across parts of the U.S., including Syracuse where Inez is reporting from now. I'm just digging a little bit to Richard. But you can see on the radar overall the storm system is winding down. We are still dealing with some snow moving through parts of the northeast, but really, it's going to be affecting parts of New England as well as eastern regions of Canada.

Now first some of these locations, we are talking about 20-40 centimeters of snowfall. And look at Montreal. You're going to be getting a big helping out of that. Even Toronto's dealing with some snow. But overall, the only area that we do have a winter storm warning for the U.S. is in the state of Maine. And that's going to expire right around 4:00 am.

Notice some more snow working into parts of the Midwest as we go into the upcoming weekend. As we talk about some of the travel delays for the upcoming day or so, notice for LaGuardia as well as JFK, we have a delay of 1 hour and 20 minutes.

I know Richard showed you a graphic there as well. But this gives you an idea of the updated conditions and the same for Montreal. We're talking delay and a ground stop until 2100 GMT.

Now for tomorrow more delays are expected. And if you notice for Montreal, for the morning as well as through the afternoon, that's the greatest delays. But I will really expect some of those to really linger even until Friday. I know that graphic did say Thursday. Heavy rain been coming down for the Benilux region.

You can see through Germany as well as spreading into Austria, bringing some snow there. That's what's happening across parts of Europe. But it's very windy. And the wind is causing and a lot of delays, even more than the U.S. right now. For Stuttgart, we had a wind gust up to 94 kph; for Geneva, 72 and the winds right now still generally right around 24-35.

But look at this, Richard, for these delays, we're talking a lot of red, especially for northwest Europe. For London, both of the airports, there's Glasgow, Amsterdam, a 60-90 minute delay. That's for Friday and for other areas across northwest Europe. We're also talking about more delays for Stockholm as well as for Dublin for Friday as well.

Now go ding your bell again.

QUEST: All right. Thank you very much, Jennifer Delgado at the World Weather Center.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.

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QUEST: From the festive lights of the Christmas market in Basel, Switzerland, this is MARKETPLACE EUROPE. I'm Richard Quest.

2012 was another very difficult year for Europe's economies. With budget cuts and bailouts just about everywhere, how glad we are to reach the festive season.

For the CEOs doing business across the continent, it was a time of warming up the balance sheet in the very cold climate of austerity.

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QUEST (voice-over): Throughout 2012, we traveled to the continent to take the temperature on the shop floors of Europe.

(Inaudible) factory in Nuremberg, Faber-Castell has been churning out pencils for a quarter of a millennium, 800,000 (inaudible). The 8th generation owner puts the company's success firmly down to having the mindset of Mittelstand, an army of family-run small- and medium-sized firms that is the backbone of the German workforce.

COUNT ANTON WOLFGANG VON FABER-CASTELL, CHAIRMAN AND CEO, FABER- CASTELL: The big advantage which we have as a Mittelstand company is we are not publicly traded. We are not listed. As soon as you are listed, you have to undergo the rules of being publicly traded, among others, quarterly earnings per shares.

You know, with this kind of short-term view, which is constantly over your head, I would say as a threat but as a challenge you don't have so much time anymore for some (inaudible) regarding the far future. It's, in some ways, not my company. It's something which I carry on during my lifetime.

And so I have a vision for the next generation that my great- grandfather, Lothar, who was an outstanding entrepreneur, he was educating the workers. He was trying to build houses for the workers in order to make better workers. And in having better workers, he was automatically more competitive.

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QUEST (voice-over): Maintaining a competitive edge in austerity- driven Spain where loans are hard to find has been an uphill struggle for businesses like this reusable nappy company.

QUEST: This is the original small business opened in the teeth of recession but because it has a niche market, is expanding.

It's got one machine over here. Come with me.

MONTSE MUNOZ, FOUNDER, TUCUXI: Yes.

QUEST: And this is the empire.

MUNOZ: Yes, three sewing machines. That's it. You don't need much more.

QUEST (voice-over): Second-hand machines at that because, like thousands of small businesses across Spain, there's precious little support from the banks for investment.

MUNOZ: To get one euro from a bank, you have to put two euros in the business and you have to guarantee it with five euros of your own. You need such guarantees that it makes impossible to get a loan.

QUEST (voice-over): She's proud her products are made in Spain. She's frustrated that the current tax regime makes local production uncompetitive.

MUNOZ: For every 100 euros I pay to a person, I have to pay 40 to 50 to the state and that is very expensive, extremely expensive.

QUEST: In Italy the economic crisis has dented sales for GEOX, the country's leading shoe brand. Like many businesses across the continent, GEOX is having to look further afield for whatever growth it can get.

MARIO MORETTI POLEGATO, CEO, GEOX: GEOX suffer about in some country like Italy, Spain, Portugal. Our strategy now is just to invest more in some country where the economy grow. As a particular area, like to Hong Kong, China, East Europe, included Russian, India, Turkey and our program now is to open 300 new GEOX store all in China.

QUEST (voice-over): It's a strategy that will keep GEOX on its toes - -

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QUEST (voice-over): -- in 2013 if they're to stay one step ahead of the competition, you might say.

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QUEST: I do like a Christmas market, a chance to try and experience new and different things.

What do we have here?

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QUEST: I'll have one of those, that nice big one.

We will -- we will like this. Fill it up with those.

QUEST (voice-over): Coming up, the view of 2012 from the boardroom.

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QUEST: These are the men and women in charge of Christmas. On MARKETPLACE EUROPE during the course of 2012, we've brought you the men and women in charge of some of the continent's biggest companies.

And they've all told a story of difficult times and challenges of finding new markets. They've had to ensure they keep the companies moving forward.

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QUEST (voice-over): Deutsche Post DHL is a giant in its own right, with more than 275,000 employees and resources in many countries around the world.

DR. FRANK APPEL, CEO, DEUTSCHE POST DHL: Even if you have an economy slowdown, most of the European economies are still managing by domestic demand. Trading continued, even in countries like Spain and Greece. And so we don't expect a massive impact, even in our business.

QUEST: But does it come down to preparing for individual scenarios, Greece going bust, the Eurozone collapsing, the -- whatever it might be?

APPEL: I think scenario planning is, you know, some scenario planning is always good. But if we do too much and think your Excel spreadsheet will tell you what will happen in the future, it will only distract you (inaudible) important to be ready to take action if they come, because you know, we know certain things, only if they happen.

And then you need the right mindset to change your behavior, to be flexible. And that has something to do with your willingness to learn and correct mistakes that you might have taken before.

The good news for our industry is even if the euro would not be around and just for the sake of the argument, somebody still has to deliver letters. Somebody has to deliver parcels and somebody has to deliver (inaudible) containers around the world.

QUEST (voice-over): The Swedish telecoms group Ericsson is the biggest supplier of mobile networks in the world, providing equipment and services to both mobile and fixed network operators. The company is in 180 countries and has more than 100,000 employees. Forty percent of the world's mobile traffic passes through Ericsson's networks.

QUEST: How difficult is it for you in this economic environment to maintain an R&D of $5 billion at that sort of level? The temptation?

HANS VESTBERG, PRESIDENT & CEO, ERICSSON: Excellent question. I think the temptation is easy to cut down on that but I think that in a fast moving -- one of the most important technologies for the future if you start cutting it you will be irrelevant in five years.

So we hold on R&D investment because we think that is huge for the company. That's why we are number one in all mobile infrastructure in the world.

QUEST: So do you believe that ICT or even mobile technology is just about, just about -- and I'm not going to go all the way yet -- just about countercyclical?

VESTBERG: No, I wouldn't say that, I think that we are getting to a stage where it's so important for our life, for our business and for the society that ICT is there, the mobility and the broadband.

So I think it's long term, the fundamentals long term are very good for mobility and broadband. But of course short term, anything can happen.

QUEST (voice-over): Belt tightening by governments across the continent has inevitably led to a slowdown in consumer spending. That's something clearly on the mind of Unilever's president for Europe when he spoke to Juliet Mann.

Unilever produces 400 brands, from teas to ice cream and soap powder.

JAN ZIJDERVELD, PRESIDENT EUROPE, UNILEVER: If you look at the -- where the opportunities are for the future, it's obviously the BRIC countries. But it's much more than that. So it's Russia but it's also China but it's also the Vietnams of this world, it's the Pakistans and Bangladeshes of this world. It's Africa, the growth in Africa.

So as a global enterprise, we really have to look at where the opportunities are. And that's where the people are, the population growth is, where the economies are growing and the consumption is still low.

And Europe is a tough environment. So when markets are not growing and, actually, the cost to compete is going up, because the consumer demands great products, demands it at a good price, demands innovation, you've really got to turn every euro in every part of the business to be able to actually reinvest that into the marketplace.

MANN: What are the main obstacles or barriers to doing business in Europe, would you like to see some tweaks to certain E.U. regulations, for example?

ZIJDERVELD: What would I like Europe to do is become a little bit more pro-business, to make the environment a little bit easier for us to operate. And we can learn a lot from the emerging world. It is a lot easier to do business in the emerging world. It's a lot more proactive. It's less bureaucratic.

The E.U. has said they would cut 25 percent of all regulations, I think by 2015. They're not on the way of doing that.

To get an innovation through, it takes too long. To get approvals through, it takes too long. So things are just too slow and too bureaucratic.

And if we want to reinvent this continent and make it innovative, growing, you need to be able to loosen it up a bit. Let in some fresh air. It's almost like a spring clean. Europe needs a little bit of a spring clean to be able to innovate again.

QUEST: The chief executives of 2012, if only we could all have a crystal ball to see into next year.

And that's MARKETPLACE EUROPE for this week. I'm Richard Quest in Basel in Switzerland. Whatever market you're in, I hope it's profitable. I'll see you next year.

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