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QUEST MEANS BUSINESS
EU Budget Deal; Breaking Down the Budget; European Parliament Still Must Approve Budget; European Markets Climb; Dow Up; Reaction to Budget; AOL Bounces Back; Euro, Pound, Yen Up; UK Horsemeat Contamination
Aired February 8, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: Hard times hit home as the EU finally cuts the budget.
(BEGIN VIDEO CLIP)
HERMAN VAN ROMPUY, PRESIDENT, EUROPEAN COUNCIL: It's perhaps nobody's perfect budget, but there's a lot in it for everybody.
(END VIDEO CILP)
QUEST: They thought they were buying beef, and they got horsemeat instead. The food scandal that's hitting Britain.
And getting to the top and the cost of the climb.
I'm Richard Quest. It may be Friday, but of course, I still mean business.
"Deal done and worth waiting for." That was the tweet from the European Council leader Herman van Rompuy as the EU agreed the first-ever cut to the European -- the budget. The deal has done and they agreed the funding.
Europe leaders worked through the night and well into today, eventually agreeing to a cap to the multiannual financial framework, the MFF, which is what you saw on the tweet. It determines the spending from next year all the way to the end of 2020, and it is capped at $1.3 trillion. That's more than $100 billion less than the first proposal that was put forward by the Commission.
Now, these are large numbers, but if you put it in relative terms, it amounts to around a 1 percent of the bloc's GDP. Herman van Rompuy and the French president, Francois Hollande, agreed with European nations facing austerity back home that a budget cut was always on the cards.
(BEGIN VIDEO CLIP)
VAN ROMPUY: This is a budget of moderation. We simply could not ignore the extremely difficult economic realities across Europe. So, it had to be a leaner budget. For the first time ever, there is a real cut compared to the last multiannual financial framework.
FRANCOIS HOLLANDE, PRESIDENT OF FRANCE (through translator): The circumstances regarding the fiscal situation, many countries are facing difficulties, and for good or bad reasons, as a result, they did not want to spend more at the European level.
(END VIDEO CILP)
QUEST: Now, Francois Hollande made it clear that this was not the budget that he would have passed. He said -- excuse me -- "Non," quite clearly. But the cuts were a sizable victory for the UK prime minister, David Cameron, who said Europe has been living beyond its means, and he was determined when he came to Brussels that at best it would be a cut and at worst, a freeze.
(BEGIN VIDEO CLIP)
DAVID CAMERON, PRIME MINISTER OF BRITAIN: The credit card limit for the European Union has been too high. It's always been pushed up. There are lots of people who wanted to push it up, and at last, someone's come along and said this has got to stop, it's time for that credit card limit to come down.
We got the limit down, not just the limit down, but got it down in a way that's going to constrain future spending properly. And now, the European Union will have to focus harder on the quality of spending rather than on the quantity.
(END VIDEO CLIP)
QUEST: So, how did the various countries fall out, if you like, or fall in in getting to that $1.3 trillion? At the CNN super screen, you'll see exactly what I mean.
The UK was the loudest voice pushing for the cuts to the budget, and it found allies in some of the other big net contributors. These are people -- these are countries that obviously by its very definition pay in more than they take out.
Germany was -- had an ally -- the UK was allies with Netherlands, Germany -- which is the biggest net contributor -- and Sweden. Ironically, France is a net contributor, but was also against the cuts to the common agricultural policy. The German contribution is about 20 percent, the UK about -- France is 17 percent, and the UK about 14 percent.
So, those are the net contributors and how they fell together. The recipients, of course, the Southern European countries and those in the countries of Central Europe -- Poland, the biggest recipient of EU funds, said that the cuts were inconceivable. Now, the other main recipients include Greece, Hungary, Spain, and Portugal down here.
So, you start to see when you put the map together overall how this was a difficult deal to come to, but at the same time was led by the Netherlands, Germany, and the UK.
The budget deal must be approved by the European Parliament. Its president, Martin Schulz, told me he's disappointed by the decrease in spending and said it was too early to know if he could live with these figures.
(BEGIN VIDEOTAPE)
MARTIN SCHULZ, PRESIDENT, EUROPEAN PARLIAMENT (via telephone): For the time being, we have a deficit in the European budget for 2013 of 16 billion euros, and now we decide about engagements of 960 billion euros, but payments of 908 billion euros. I think, under the pressure of some of the member states who are not taking sufficiently into account, that we are on the way into a deficit union, and this is what's worrying me a lot.
QUEST: If we are heading to a deficit union, then it really does come down to a fundamental choice, doesn't it, in the future? Does the union cut back and spend less, or does the union get more from its members?
SCHULZ: The question is, do we want Europe that we just say investing in research, in development, in connecting facilities, in broadband infrastructure, in the new technologies for the 21st century? In international cooperation and aid to a fuller access for Europe to the worldwide markets in trade policy, this is the question. And all these policies were considerably cut.
The contradiction is that especially those countries who are always claiming we must invest more in future-oriented spending are those who want to reduce the budget, but accept the maintaining of the agriculture budget and the maintaining of the cohesion budget and cut in the future-oriented headings. This is a contradiction, and especially a contradiction by David Cameron.
QUEST: And is that one of the reasons why you have now said if you don't like the final agreement, you will reject it?
SCHULZ: I think in a democracy, the normal thing is that the executive of the government must win the confidence of the parliament and not the other way around, the parliament must win the trust of the executive of the government.
(END VIDEOTAPE)
QUEST: That is the president of the European Parliament. It was a positive finish for European stocks.
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QUEST: The numbers, encouraging Chinese trade, they pushed the market into -- up a bit. Look at that. We don't need to waste too much time looking at those numbers. Paris was up 1.35. Banks were doing particularly well.
A quick look at the Dow, where the Dow Jones Industrials is up 45 points, still tantalizingly close to 14,000, bouncing around there.
Mohamed El-Erian is chief exec of PIMCO, the world's largest bond trader. Good to see you, as always. Well, the Europeans have done a deal that's going to cut the budget, the market's up 14,000. There's a debt ceiling being put off. Well -- are you feeling the love and the good cheer, here, Mohamed?
MOHAMED EL-ERIAN, CEO, PIMCO: So, I think all of us are feeling a mix of three emotions, Richard. One is excitement that things are happening. Two is hope that this will translate into stronger growth, higher employment. And thirdly, uncertainty, because the big issues haven't been addressed yet. So, we are conflicted by these three feelings, and I think that's what most people are.
QUEST: If the glass is half full or the glass is half empty, which do you think it is?
EL-ERIAN: I think the glass is getting fuller, but it's not even half full as yet. And the reason why, Richard, is we haven't addressed the big issues. We haven't done anything, really, either in Europe or in the US, that promotes economic growth and that promotes employment.
What we have done is kick the can down the road on financial disruption. That's good news, but that is only a window that needs to be exploited, and our politicians haven't exploited it as yet.
QUEST: Now, I know you're not a -- sort of a market analyst on a day- by-day basis, but if you are right, then the sort of market rally we have seen has to be regarded -- let's not get into minutia as Bill Gross has said of whether it's a bubble or not, but it has to be regarded as fragile.
EL-ERIAN: Absolutely. Think of it in the following ways: market prices are up here, fundamentals are down here. And the difference is the wedge that has been created by central banks. So, what we need for these markets to stay strong are for fundamentals to catch up to market prices, and that involves a lot of effort on the part of policymakers.
QUEST: Policymakers, we had one of them, the former -- the future governor of the Bank of England, Mark Carney, he is in favor -- and he talked about new reviewing monetary policy -- he talks about wanting to go for nominal GDP as opposed to inflation targeting. First of all, what's the difference and why do we care? And secondly, is he right?
EL-ERIAN: So, there's two differences. One is the signal the central banks are not just targeting inflation, but also targeting growth. So, there's a signaling element. The second one, which is much more uncertain, is by giving you a terminal value, the idea is you give enough certainty to the system so that the system itself delivers that terminal value.
How do I feel about it? Very mixed. On the one hand, it's wonderful to have people think -- thinking out of the box, and central banks have been way out of the box. I think of them as a pharmaceutical company that brings drugs to market without even clinically testing them.
(LAUGHTER)
EL-ERIAN: So, it's good to have central bankers thinking out of the box, but the bad news is, they don't have the right tools, that they are trying to deliver too much, and they're allowing other policymakers to be too complacent.
QUEST: Mohamed, good to see you. Thank you for joining us on this news session. I know that you and I will talk more about this nominal GDP, so it's good to get it on the agenda. Have a good weekend.
Really important that we get that on the agenda, because in the months ahead, you and I are also going to be discussing nominal GDP as a targeting for monetary growth. It sounds dull as ditch water, but it's going to become extremely significant, I am predicting, before year's end.
AOL has transformed itself, so the numbers seem to say, ad-driven business. The company's chief exec in a moment.
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QUEST: QUEST MEANS BUSINESS.
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QUEST: For most of us, that noise -- brrrrrrr, beep! Beep! Beep! -- when you logged on in the 1990s became the way we all were introduced to the internet. Now, the US internet firm, AOL, which led that way, is finally showing signs of a revival.
It's the first time in eight years -- count them -- the company's reported year-on-year revenue growth. It was a boost in global advertising, up by 13 percent in Q4. The profit jumped by 57 percent. Investors liked it -- the shares climbed more than 7 percent in trade.
AOL's chief exec, Tim Armstrong, joins me now from New York. And the -- I suppose it's a case of it's been a long time coming, but it's finally arrived, and the question, Tim, is is it going to last?
TIM ARMSTRONG, CEO, AOL: Well, Richard, first, thanks for having us on. And today's a big day for AOL. We did our third anniversary of our earnings call after splitting out of Time-Warner. The company has beat the major indexes in the US, S&P, NASDAQ, and Dow Jones, over the last three years. We've returned $1.5 billion of value, either cash or buybacks of shareholders --
QUEST: Right.
ARMSTRONG: -- and the most important thing today was revenue growth, and you hit the nail on the head. We've had the comeback and the turnaround of AOL. Now, we're into growth, and really, we hope it lasts for a long, long -- decades in the future, but it really starts with continuing to preform they way we have over the last three years.
QUEST: There's so much in there. What -- why give -- I know your shareholders have been long-suffering and probably have been snapping at your heels, but why give money back to them? You need that money. All right, prop up the share price a bit, but you need that money to invest.
ARMSTRONG: So, Richard, if -- I think there's a lot of case studies about his, but money doesn't solve all problems, and I think from us, we have half a billion dollars, roughly, in the bank right now.
And we believe that with the investments we've made already, things like the Huffington Post and TechCrunch and some of the acquisitions we've done in the video space, that we can organically grow the business, and if -- opportunistically, if there's things we should acquire --
QUEST: Right.
ARMSTRONG: -- we would look at those, but really, what we've done is actually invested a tremendous amount of money in the future of the internet, and we're kind of harvesting those investments, and that's what you see in our results.
QUEST: Is the ultimate revenue stream for -- for a company that had a subscription revenue stream that became obsolete, is your ultimate revenue stream forward pure advertising and the other things that you do? But the dominant part is advertising? And if that's so, you're going to need something else to take the counter-cyclical nature of it.
ARMSTRONG: Well first, Richard, we have a pretty robust subscription service. We have another subscription service coming out later this year, which we've talked about, which will be a new subscription service for the web, so we're interested in that business.
Advertising's been a tremendous growth vehicle. We think there's a big tailwind of consumers that have moved to digital, advertisers are chasing them. We have probably the second-largest advertising technology tech stack in the internet business, so we believe that will be a robust business going forward.
Are there things like commerce and other things we'd get into the down the line? There may be, but really, for now, we've been focused on fixing the current subscription business, launching a new one, and then making sure we have the world's best advertising products.
And again, I think the success today points to all of those things, and we're going to continue to move that forward in the future as quickly as we possibly can.
QUEST: There is only one thing of which we are certain in this world -- well, maybe certain, please God -- and that is that we'll see you in another three or four months to see if you're right. Tim Armstrong, thank you very much for joining me --
ARMSTRONG: I hope so.
QUEST: -- joining me --
ARMSTRONG: Thanks, Richard.
QUEST: -- from New York. Get home safely with that bad weather this evening, when you get there.
ARMSTRONG: Thank you.
QUEST: Weather's appalling in New York. We'll be telling you about it later in the program.
And now, tonight's Currency Conundrum. There are four languages on the Swiss franc bank note. There isn't enough space on the coins, so which language is used? Is it German, French, or Latin? The answer a little later in the program.
The euro's up against the dollar, the pounds up, the yen's roaring ahead. Those are the rates --
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QUEST: -- this is the break.
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QUEST: Pick up the papers this morning in Britain and there really was only one story on the front pages and being discussed at the dinner table tonight, 99 percent horse in Findus lasagne. Findus being a frozen food company. Findus beef lasagne, up to 100 percent horse, screams "The Daily Telegraph."
Now, it's been announced: all beef products nationwide are to be tested in the UK after Findus revealed its frozen beef lasagne had found to contain up to 100 percent horsemeat. The British prime minister, David Cameron, said whilst there was no health risk, it was unacceptable nonetheless.
(BEGIN VIDEO CLIP)
CAMERON: This is a very shocking story. It is completely unacceptable. And the -- the Food Standards Agency has said there's no reason to believe that any frozen food currently on sale is unsafe or a danger to health.
But this isn't really about food safety, it's about effective food labeling. It's about proper retail practice. And people will be very angry to find out that they have been eating horse when they thought they were eating beef. So, this does need to be dealt with.
The secretary of state for agricultural is returning to London. He's been speaking with his ministers today. He's on a meeting with the Food Standards Agency tomorrow. I've noted that the Food Standards Agency has said that all retailers need to test all their processed beef products over the coming days, and I think it's very important we get this right.
(END VIDEO CLIP)
QUEST: People bought beef and ate horse, and that's really the nub of this situation. Millions of burgers have already been withdrawn in the UK this year after traces of horsemeat were detected from Ireland. Regulators say they need a more robust response. Erin McLaughlin has the details.
(BEGIN VIDEOTAPE)
ERIN MCLAUGHLIN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Findus beef lasagne as advertised is made with fresh ingredients: pasta, cheddar cheese, and beef bolognaise. Officials in the UK now say that in some cases, that beef bolognaise actually contained horsemeat.
ANDREW RHODES, DIRECTOR OF OPERATIONS, FOOD STANDARDS AGENCY: Findus sampled 18 particular batches, and they found 11 of those batches to be contaminated.
MCLAUGHLIN (on camera): So, as things stand now, though, that is possible that someone was eating horsemeat.
RHODES: Well, it is possible, because that product did have horsemeat in it, and it was on sale in the UK. But that product has been withdrawn, has been recalled by the original manufacturer.
MCLAUGHLIN (voice-over): The Findus horsemeat debacle is part of a broader issue authorities first reported in January.
MCLAUGHLIN (on camera): The UK Food Standards Agency says 10 million suspect burgers were taken off shelves in the UK and Ireland after other burgers supplied to supermarkets were found to have traces of horse DNA. Last month, authorities in Ireland investigated a possible link to a beef supplier all the way in Poland.
MCLAUGHLIN (voice-over): Suppliers in other European countries are also under scrutiny. For instance, with the lasagne, authorities say it was supplied by the French company Comigel. CNN has reached out to Comigel France, but the company has not yet replied.
Findus says it has pulled the lasagnes from stores in the UK and Ireland. In a statement to CNN, Findus says, quote, "We understand this is a very sensitive subject for consumers, and we would like to reassure you we have reacted immediately. We do not believe this to be a food safety issue. We are confident that we have fully resolved this supply chain issue. Fully compliant beef lasagne will be in stores again soon."
UNIDENTIFIED MALE: I'm not that worried about it, actually.
MCLAUGHLIN (on camera): So, you think it's --
UNIDENTIFIED MALE: They're still poisonous. It's meat. So, it shouldn't be in the package, which it says 100 percent beef. So, in fact, they lied. But actual horsemeat is eaten on the continent.
UNIDENTIFIED FEMALE: Absolutely abhorrent and it's despicable, and I think it -- it's an animal that has to be really treasured.
MCLAUGHLIN (voice-over): Despicable and abhorrent to some. Authorities say they are looking into the possibility that there's more mislabeled horsemeat out there.
Erin McLaughlin, CNN, London.
(END VIDEOTAPE)
QUEST: The UK shadow environment and food secretary says horsemeat may have been used in some products for up to a year. I asked Mary Creagh how widespread this problem really was.
(BEGIN VIDEOTAPE)
MARY CREAGH, UK SHADOW ENVIRONMENT SECRETARY: I believe this is the tip of the iceberg, and I have evidence that I've now passed to the police about UK companies who are involved in trading horsemeat, which I've passed onto them today.
I think the food chain has become a kind of worldwide web, and that's what this scandal has exposed: horses being traded into Europe from Canada, from Mexico, chicken coming in from Thailand.
We've got a very long chain, and it's absolutely vital that consumers have confidence in the standards that retailers and caterers apply to those networks to make sure the food we're eating is properly labeled, legal, and safe for us to eat.
QUEST: What's your fear, here, ma'am? Tell me your gut feeling. How deep and how widespread do you believe this contamination to be?
CREAGH: Well, the Irish authorities now believe that horsemeat could have been getting in and being passed off as beef for anything up to a year. That is the first finding that they've made, and it was an educated guess.
We just don't know how far these products go, we don't know whether they've gone into schools, into hospitals, into prisons. We know that there's an issue with halal food in prisons containing pork DNA.
So, I think we're beginning to see the tip of a very unpleasant and difficult iceberg, and the only way we're going to face up to it as a country and for the meet industry to face up to it is by facing it -- looking it in the eye and saying what are we going to do to get over it and get confidence back in some of the great British meat that British farmers are producing.
QUEST: If you a lasagne -- a Findus lasagne in your fridge, would you go home and cook it, or would you go home and throw it away? Which would it be?
CREAGH: Well, if I had a Findus lasagne in my fridge, I'd take it back to the retailer that I bought it from and ask for my money back. And I think that's what people should do, that's the best advice from government.
QUEST: Right. But would you go --
(CROSSTALK)
CREAGH: And we need --
QUEST: But would you go out tonight and shun -- not just Findus lasagnes, but would you go out tonight and shun frozen meat, processed meat products?
CREAGH: It depends who's making them. And I think if you know who's made them, if you have a relationship with the person, people are buying these products in farm shops, they're buying them from different supermarkets.
QUEST: Right.
CREAGH: It's -- it's down to consumer choice. And at the moment, the Food Standards Agency is saying there isn't evidence that it's not safe to eat. That doesn't mean that that advice won't change over the coming weeks.
(END VIDEOTAPE)
QUEST: When we come back, Rupert Murdoch's News International pays to settle over 100 lawsuits for phone-hacking, including the one by Hugh Grant, the actor. All this after the break.
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RICHARD QUEST, CNN HOST: Hello, I'm Richard Quest. There's 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): European leaders have struck an historic budget deal which, for the first time ever, cuts E.U. spending. It's a $1.3 trillion budget and it will fund the bloc through 2020.
Riot police have clashed with protesters outside the funeral ceremony for the opposition leader in Tunisia. Thousands of people joined that procession and accomplished Chokri Belaid's coffin to the cemetery in Tunis. Belaid was assassinated on Wednesday outside his home.
There's a powerful winter storm barreling through the northeastern United States. And forecasters say it could break records. It's beginning already to dump heavy snow. Check out this video from the state of Maine, where police say snow conditions have already caused a 19-car accident on an interstate highway.
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QUEST: A hundred and 44 victims of the News International phone hacking scandal have received financial settlements today from Rupert Murdoch's newspaper business. The Duchess of York, the actor Hugh Grant and the TV psychic Yuri Geller are amongst those to have been handed, in the words of the law, "substantial damages."
CNN's Atika Shubert has our report.
(BEGIN VIDEO CLIP)
ATIKA SHUBERT, CNN CORRESPONDENT: Well, here's the hacking scandal by the numbers, 144. That's how many hacking lawsuits against News Group were settled on Friday, including celebrities Hugh Grant, who received an undisclosed sizable sum in damages and, of course, the Duchess of York, Sarah Ferguson.
The other number, $60,000 to $200,000. That's how much celebrities like Jude Law and Sienna Miller got during the first round of settlements last year. We can expect similar payouts this round. Also $35 million. That's how much Rupert Murdoch has put into a separate compensation fund for hacking victims. In fact, more than 250 people have settled through the fund out of court.
But this fund is due to close in April. Finally, thousands, that's how many victims of hacking are out there. In fact, no one knows the exact number. And the investigation is continuing; some victims are still being notified to this day, which means for Rupert Murdoch, the repercussions of the hacking scandal are not over yet -- Atika Shubert, CNN, London.
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QUEST: It's a room with a view and a big cost to boot.
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QUEST: The Shard may be the tallest building in Europe and certainly it dominates the skyline, but it also has this other record now to its name.
(Inaudible) skyscraper has raced to the top of the vertigo index.
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QUEST (voice-over): The answer to tonight's "Currency Conundrum," we asked you, there are four languages on the Swiss franc banknote, but only enough space for one. Which is it? It is C, none of the four national languages are represented. In the Swiss tradition of remaining neutral, Latin is used, depending on the denominations, of Helvetica, Confoederatio Helvetica or liberatis inscriptionis (ph).
(END VIDEO CLIP)
QUEST: There's the huge snowstorm in the northeast of the United States has grounded thousands of flights across the country. On the line now, the chief operating officer of JetBlue is Rob Maruster, who joins me on the line from the headquarters.
Mr. Maruster, you've canceled hundreds of flights, obviously. This is the old argument of precautionary cancellations. But this is going to be very bad, isn't it? So you need to get ahead of the game.
ROB MARUSTER, COO, JETBLUE: You know, Richard, I think we've learned -- we've learned the lesson that when Mother Nature wants to win, we're going to let her win. And I think what we've found is that getting out of harm's way, as disruptive as it is to cancel flights on the front end, I think it means for a less disruption overall for our customers than if we try to operate through it.
QUEST: So as you are now planning, because how bad do you expect it to get?
MARUSTER: Well, I mean, let's put this in perspective. This pales in comparison to superstorm Sandy from last fall, because I think the whole northeast region experienced. But in terms of winter storms, this is a -- this is a pretty big one. I mean, you've got a couple of combining low pressure systems in the northeast.
And I don't think -- just think it's a precipitation/snow event. I think it's also a very large wind event. So I think long after the precipitation stops, I think there's some concern of just the blowing snow and the continuing blizzard conditions well into the day on Saturday. And I think it's really going to disrupt, not only just air travel, but travel in general because of the challenging conditions. So it's a pretty big storm.
QUEST: And, of course, I've just been in Oslo, where of course the -- they are the past masters of winter weather, not necessarily on the scale that you're going to see tonight or over the next few days, but it's a hub and network operation, isn't it, that you have at JetBlue, these multiple airports, these increased frequencies that really makes it so very difficult for you to maintain the integrity of a service when weather like this hits.
MARUSTER: Well, definitely, and I think, you know, with this storm, 80 percent of our operations are concentrated or touch in some way, the northeastern portion of the United States, you know, we're home based here in New York, but we're also the largest airline up in Boston and throughout New England. So this has far-reaching impact for us.
But I think just with the magnitude of this storm, what's also important for us to do, particularly with places like Boston, is really getting all of our aircraft out of there because with the amount of snow that we're going to see on the ground, we really have to let the port authorities know, Mass Port, the Port Authority of New York and New Jersey, do their work to get the runways and taxiways cleaned up so that we can operate if at all tomorrow, but hopefully start to recover by Sunday.
QUEST: So get the planes out off to Florida; bring them back as quickly as you can.
Rob, I'm guessing you're going to be sleeping on a cot in the office over the next 24-48 hours. So I wish you a comfortable or at least-- I was going to say peaceful, but the one thing you're not going to have is a peaceful time. I wish you well in your endeavors, sir.
MARUSTER: Thanks, Richard. Be safe.
QUEST: And to you, sir.
Jenny Harrison's at the World Weather Center.
Jenny, you heard Rob there; give us an idea of what it is they're facing and show us the (inaudible) pictures so far.
(CROSSTALK)
JENNY HARRISON, CNN METEOROLOGIST: You know what, Richard, he made a very good point. It really is going to be about the winds. This is what it's like at the ground, a lot of the aircraft, particularly at Boston Logan Airport because they tend to win awards over the years for how quickly they can clear an airport. And it's between 10-20 minutes. So it's not that so much as these blowing winds.
So there are the two systems. You can see them beginning to merge in the last few hours. Here's a slightly different view. See you've got the system coming in from the northwest. This bringing in the very strong winds and that bitterly cold Arctic air.
And then rolling up the East Coast, we have this system; this is the nor'easter. This, of course, bringing in all that moisture, all that energy of the warmer water. So it's when the two come together, we expect to see this huge storm roll its way up into the far northeast. Now in the meantime, the snow, of course, it has been coming down.
The warnings are out there, very extensive warnings and, in particular, all the way along the coast, we have got this in red. That is for those blizzard conditions. So that is (inaudible) not only the snow but of course the very strong winds as well.
And as the systems come together, the winds will certainly strengthen and of course eventually that snow as we continue through Friday into Saturday, we'll get heavier and heavier. Now we could easily see over half a meter of snow. The winds could well be gusting to about 100 kph. All of that combined means that visibility pretty much down to zero.
Now this isn't just bad, of course, if you're trying to be airborne, but also on the road, if (inaudible) pedestrian, really not a good idea to be out there. Now as we know, it takes a lot to actually close an airport, but we're expecting very long delays and, as we know, cancellations, Boston in particular.
So far, over 3.5 thousand flights have been canceled. And, again, as we're hearing from (inaudible) also elsewhere, remember, there's a real knock-on effect here. So even though you could be somewhere in the U.S., or somewhere around the world, where there's no weather conditions or concerns at all, if you're trying to get to this particular region in the U.S., well, then, please be prepared for some lengthy delays.
Now likely delays elsewhere across in the region. Once the storm goes through, the worse is going to be continuing through Friday into Saturday. And by Sunday, this should be a good (inaudible). (Inaudible) notice we've got quite a line of thunderstorms erupting out of Texas.
But in the meantime, that storm system clearing as we go through Saturday, but look at the amount of snow we're expecting to see. So maybe 56 centimeters in Boston. Will that break the record? Everyone's been talking about this.
Well, at 56, it may not. But we could get a bit more than that. But look at this, 2003, there are actually 70 centimeters of snow, but that is why there are such huge concerns for this storm as it winds its way towards the northeast, Richard.
QUEST: Jenny, you have a long weekend ahead of you, like Rob does at JetBlue, and we'll check in with you, of course, in the hours ahead. Thank you, Jenny.
Jenny Harrison at the World Weather Center.
Now it is 300 meters tall. It's not even a year old. And it has one of the best views across London. It is the Shard, and it's open to the public with the observation deck. Many viewing sessions are already sold out, At $40 a pop, the altitude isn't the only reason you feel left light- headed.
"The Economist" has put together what they're calling the vertigo; we're calling the vertigo index, comparing observation decks from the world's biggest buildings, and show you how much value you get for your money.
This chart shows -- so, for example, the Shard goes up to that height and that's how much it costs, 20 cents per meter, 20 cents to get to the top of the Shard. The Empire State is much bigger, and only costs less than 15 cents. Petronas Towers, that also has a -- shows you it's much cheaper. The Willis Tower, a real bargain. And the Burj Khalifa, where I was recently, is also a bargain.
So what this proves on our vertigo index is that tallest isn't always most expensive but sometimes newest goes through the roof.
Now I've learnt (ph) my trip to the Burj, of course, was amongst the most eventful that we've seen. You don't really want to know how we did that. But I'm sure you can probably guess, at the price, I just jumped down. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable.
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ROBYN CURNOW, CNN HOST: Now this is the biggest mining conference in the world, say organizers, more than 7,000 mining leaders are here in Cape Town to talk about Africa's resources. I'm Robyn Curnow and you're watching MARKETPLACE AFRICA.
JONATHAN MOGRE, MANAGING DIRECTOR: For 19 years, the Mining Indaba has been the catalyst for billions of dollars of direct foreign investment into the African continent.
CURNOW: Now here in South Africa, there are rising tensions between the government and the mining companies over jobs. Here's Nkepile Mabuse.
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UNIDENTIFIED MALE: (Inaudible).
NKEPILE MABUSE, CNN CORRESPONDENT (voice-over): Like thousands of mine workers in South Africa, Sithela Lubonza is facing an uncertain future.
"We came back from the Christmas holidays," he tells me," and found the mine shut. We were turned away at the gate by security personnel with guns."
Late last year, wildcat strikes were the order of the day in the mining sector. Clashes turned deadly, bringing several operations to a halt. There were also protests underground, chaos that cost the country a billion dollars in lost production.
Today, its plans to restructure, disinvest and cut jobs that are taking center stage. Harmony's Kusasalethu mine lies about 100 kilometers west of Johannesburg. The New York-listed company delayed its post-holiday start citing safety and security reasons.
Workers were told not to return in January until a decision on the future of the mine has been reached. Despite assurances from the company that they will be paid, Lubonza and his colleagues are camping near the mine, surviving on handouts. Many are from the Eastern Cape, some from neighboring countries. They refuse to go back home while their fate remains uncertain.
"The boss wants us out of sight and off his conscience," he says. "We have no guarantees that we'll be paid. If we go home, we'll be too far to demand what's rightfully ours."
Harmony says it can mine here for another 25 years. But the company has warned that up to 6,000 people could lose their jobs if safety cannot be guaranteed. It says managers have received death threats and shots have been fired at the police. There have also been fatal clashes between rival unions.
MABUSE: Has it become dangerous to mine in South Africa?
GRAHAM BRIGGS, CEO, HARMONY: I think it's potentially dangerous if you allow it to escalate. People seem to have accepted a lot of the violence, a lot of the intimidation. (Inaudible).
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MABUSE: (Inaudible) Harmony taking a stand now?
BRIGGS: This is Harmony taking a stand.
MABUSE (voice-over): He's not the only mining CEO warning about uncertainty and potential job cuts. In January, there was a mass walkout at the world's number one platinum producer, Anglo-American Platinum announced plans to close down shafts and sell an unprofitable mine. Here, 14,000 jobs are at stake.
UNIDENTIFIED FEMALE: (Inaudible) has disappointed this country.
MABUSE (voice-over): While mining buses under pressure from shareholders, the ruling ANC wants to avoid the wrath of its voters. Unfulfilled promises of a better life post-apartheid have already led to an increase in urban unrest. With national elections due next year and over 25 percent unemployment, projected job losses could spell trouble for Nelson Mandela's party.
After this dramatic confrontation last year at Lonmin platinum mine, here, too, downsizing is on the cards; 34 workers were killed while demanding higher pay. As labor unrest spread, some foreign investors fled.
UNIDENTIFIED MALE: (Inaudible) South Africa is one mining destination out of many. So you know, Latin America's a big investment destination for mining companies and for investors; Australia, the rest of Africa's seeking and in the bold up to the mining in Darbuk (ph), there's a lot of attention focused on the growth in African mining.
MABUSE (voice-over): Ghana, the DRC and even Zimbabwe stand to gain. Some investors say at least, in these countries, the uncertainty is certain. In South Africa, machines are taking over while mining continues to shrink.
Gold mining alone once employed over half a million people. That's a total workforce of the entire industry today, according to the Chamber of Mines. But with 80 percent of the world's reserves, there's potential for growth in platinum.
MABUSE: After more than a century of mining gold, platinum had become South Africa's new cash cow. But an oversupply in the international market and rising production costs has seen the sector buckle under pressure. Internal instability has only served to exacerbate an already challenging situation.
MABUSE (voice-over): Still, most agree that mining holds the key to a prosperous South Africa.
UNIDENTIFIED MALE: South Africa's mining sector has a lot more potential to offer the country. It can create more jobs in the future. It's all about partnership and leadership, cooperation, constructive engagement and those are very much the angles that we're working on.
MABUSE (voice-over): There's also the matter of ending the violence.
BRIGGS: We can't continue in this threat situation, where we just don't know what's going to happen today.
MABUSE (voice-over): When I asked Lubonza about his future, he simply says, "It's in God's hands." Nkepile Mabuse, CNN, Johannesburg.
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CURNOW: Thanks, Nkepile, for that report.
Now after the break, we're going to talk Ghana, gold and the growing responsibilities companies face if they want to do business here in Africa. Don't go away.
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CURNOW: Our guest on "Face Time" this week is Ghanaian businesswoman Joyce Aryee. She was the first woman to head up a Chamber of Mines here in Africa. And we talk about how Ghana can attract more investment.
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CURNOW: So we're at a mining conference. There are a lot of pressures on a mining company today.
DR. JOYCE ARYEE, GHANA CHAMBER OF MINES: Indeed.
CURNOW: And particularly one thing which I know Ghana is really experiencing, is trying to balance the need of shareholders with the needs of the local communities.
That's a really, really tough one, and the mining companies, (inaudible) industry, we have become extremely sensitive to that. And so no company now sees social responsibility or corporate social responsibility as an added-on philanthropic enterprise.
Now mining companies recognize that it is part of the business. And that it is good for the old business to be seen to be making a sustainable impact on the community.
CURNOW: South Africa's experienced this, even if companies do try and uplift the communities around the mines, there's still a deep sense of dissatisfaction and I think many mining companies might say we can't do enough. But there's still strike --
ARYEE: I agree with you.
CURNOW: How much more do the companies or how much more responsible should they be to the communities? Because it's becoming not only expensive, but politically explosive in many areas.
ARYEE: I couldn't agree more. I think that, well, that resource is sort of owned by the nation. The nation itself ought to determine ahead of time what it wants to do with the mineral. So if you're going to ask somebody, an investor, to get involved in extracting the mineral, you as the nation ought to know what you want to do.
CURNOW: But African nations doing this, has Ghana done this? Is there that --
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ARYEE: Oh, no; I don't think we've done --
CURNOW: -- regulatory process, the frameworks, all of that. Is that (inaudible)?
ARYEE: I don't think -- I don't think we've done enough. You know, the thing with African countries and I'll say for Ghana, I think South Africa has done much better than most countries. But in Ghana, for example, the needs of the people are so many.
Mining usually, at least in Ghana, happens in remote areas where governments own development agenda has not reached. So the company becomes a pseudo-government, a substitute government. And the people expect everything.
CURNOW (voice-over): Aryee suggests that up-front partnerships between governments and mining companies might (inaudible) solution, a message that's needs to be central (inaudible).
UNIDENTIFIED FEMALE: We cannot overemphasize the importance of partnership, (inaudible) and trust, shared vision in 2015 (ph) and confidence.
CURNOW (voice-over): But it's easier said than done.
CURNOW: But there's this mistrust that (inaudible).
ARYEE: (Inaudible) deep, deep mistrust. Deep mistrust.
CURNOW: Between governments, big business.
ARYEE: People also.
(CROSSTALK)
ARYEE: (Inaudible) also the community.
CURNOW: And the unions.
ARYEE: And they -- oh, the unions and the NGOs, you know. So you know, I mean, well, like cannon fodder, you know, everybody (inaudible). But I think that it is useful to think more in a more integrated fashion. We've been talking about even environmental issues, because it is a very expensive to keep the environment from destruction.
You know, you have to make sure that you do the right thing and the environment also, the environment (inaudible) money and causes people's problems as well. So there are many things that go into the end cost of doing mining.
CURNOW: But still, the miners come.
ARYEE: Still they come.
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CURNOW: There's still -- there's great allure, particularly now.
ARYEE: (Inaudible) I think --
CURNOW: (Inaudible) resources.
ARYEE: Yes. I think gold is such an allure, maybe it shines, that's why. But it is a strong allure and the demands are coming from everywhere.
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CURNOW: And remember, you can watch that interview with Joyce Aryee and many others at CNN.com/MarketplaceAfrica. I'm Robyn Curnow in Cape Town. Thanks for watching. Do join us again next week.
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