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US Fed Report; UK Budget Targets Missed; Bailout Fallout; Market Reaction; UK Budget Discussion; Cyprus in Crisis; Russian Rescue Talks

Aired March 20, 2013 - 15:14   ET


RICHARD QUEST, HOST: Good evening, a little later than usual, but a warm welcome nonetheless. It's QUEST MEANS BUSINESS, and tonight, our program is all about the letter B. The three Bs. First of all, the bailout in Cyprus. Secondly, Ben Bernanke of the Fed. And the third B, the budget in Britain.

It's been a day of seismic importance for the global economy, and tonight we're going to explain exactly what's happened and where it leaves us all. Join me at the super screen for a moment and I'll show you just how all these -- areas come together.

Let's begin. An hour ago in Washington, we start with the Fed. The Fed has trimmed its growth forecast just a tad at the upper end. But it does also say that employment will -- unemployment will fall faster than expected. So, the Federal Reserve with its continuing bond purchases very much on the case.

And then in London at the budget of the chancellor, George Osbourne, announced that targets were being missed. The growth target for this year had been cut in half, the deficit will be larger than expected, and the chancellor, the finance minister, saying it's all taking longer than anyone had hoped for. He specifically said the UK was being hit by the euro crisis.

And then of course, finally, Cyprus. The finance minister is in Moscow, the cabinet's debating a new bailout plan, and everybody's wondering what on Earth is plan B. The banks will stay closed, incidentally, until next Tuesday.

Now, Ben Bernanke says Cyprus isn't going to have a major impact on the US economy, but the one thing we can say at the moment is the way the tentacles of this crisis all moves around and then transmits itself over to Russia and into Asia, and then all throughout the globe. Before long, you start to understand why the -- the US -- the global economy is in such a fragile mood at the moment.

This is the way the markets are trading at the moment. Stocks are gaining ground in the US. That's on the back of the Federal Reserve and not so much on the instability in Europe abating. It is the Fed that's caused that up, it's up just about half a percentage point. There was a new intra-day record set.

As for the European markets, London off just a tad. That's on the back of the dreadful growth numbers for the UK, the higher deficit that we saw. And you can tell that, of course, because Paris, Zurich, and Frankfurt both were higher after the speech.

So, it was a bleak budget for Britain's underweight economy. The UK finance minister, George Osbourne, cut a penny off a pint of beer. Oh, and then sliced UK's growth forecast in half. He cut the business tax rate to try and coax austerity -- or growth out of austerity in a weary nation.

In his budget speech, the chancellor said the economy will grow 0.6 percent this year. Three months ago, he was expecting double that number. And his trimming debt is behind schedule. Debt as a proportion of GDP won't stop falling until 2017 to 18, two years later than planned.

Corporation tax will fall to 20 percent, down from 28 percent when the coalition took power. George Osbourne said that even tough times are challenging, the UK's faring better than its eurozone neighbors.



GEORGE OSBOURNE, UK FINANCE MINISTER: While less than we would like, our growth this year and next year is forecast by the IMF to be higher than France and Germany. It is a reminder that all Western nations live in very challenging economic times.

And the ABR then expect the recovery to pick up to 1.8 percent in 2014, 2.3 percent in 2015, 2.7 percent in 2016, and 2.8 percent in 2017. Crucially, jobs are being created.


QUEST: Now, put all this to the test. John Prescott is the former UK deputy prime minister. Andrew Sentance is a former UK monetary policy committee member. They are with me here in the studio. And from central London, Lord Lamont, former chancellor of the exchequer, former finance minister, joins me.

I'm going to start with you, Norman Lamont. The budget -- there seems to be a consensus -- we'll come to you in a second on this point -- but there seems to be a consensus that the budget, fiscally neutral, could have been a lot worse. As somebody's who's put these budgets together, what did you make of it?

NORMAN LAMONT, FORMER UK FINANCE MINISTER: Well, I think he was in a very awkward position, his back was against the wall. He had very little room for maneuver. He had to announce these downgrades in forecasts, which quite honestly, I don't think surprised anyone. Anyone who knows what's happening in our main export market, historically --

QUEST: Right.

LAMONT: -- knows that that is likely to be the situation. But I thought he had one imaginative innovation, which was the help he's going to give the housing market. There's not a lot he can do about exports. Exports are the reason --

QUEST: All right.

LAMONT: -- that our growth has not met the expectation. But he can do something domestically, and the way in which he was going to use the government's balance sheet to help the housing market might actually just do something.

QUEST: Lord Prescott?

JOHN PRESCOTT, FORMER UK DEPUTY PRIME MINISTER: Well, I think you showed this is a global problem. There's a big argument in Britain, well, it was the Labour government or Tory government. It's global, and it's affecting the world.

The reality is, in America, your shares you go up. In UK, they've gone down. We've lost our triple rating. And the real problem for the chancellor was that he promised four years ago that he had the solution.


PRESCOTT: Cut the debt and then be able to get the increase in jobs and prosperity. It just did not happen.

QUEST: But he has had Greece, Portugal, Ireland, and now Cyprus, all of which have taken their toll.

PRESCOTT: Well, of course they've taken, but a lot of other countries, such as Germany and France, that's not the same case. But in reality, what he promised was that he could cut the debt. He hasn't. It's gone up. He could growth factors. It's gone down. He hasn't got the credibility now to present the policy he's got.

QUEST: Norman Lamont?

LAMONT: Well, the one thing that has to be recognized that John Prescott is not recognizing is that it isn't austerity that has caused our deficit to go down slowly, it's the fact that these other countries, they've done better on deficit reduction not because they've had growth -- they've had far worse outcomes for their economies than we have. But they've got it down through absolutely slash and burn.

QUEST: All right.

LAMONT: We have actually pursued a more gradual approach, and that is why the domestic economy really has performed in the circumstances not too badly. The economy has broadly flat, but employment has been growing because of the favorable domestic conditions.

QUEST: OK. MPC -- former MPC member, you had to make the decisions or were there when the decisions were taken on interest rates and quantitative easing. Andrew Sentance.

ANDREW SENTANCE, FORMER UK MONETARY POLICY COMMITTEE MEMBER: Yes, well in terms of the budget, I think the situation is the chancellor was hemmed in. He has chosen not to try and claw back the extra borrowing. Actually, that means --


QUEST: Do you welcome --

SENTANCE: -- that borrowing targets are higher.

QUEST: But do you --

PRESCOTT: Hemmed in by his own policy.

QUEST: Do you welcome the change in remit to the monetary policy committee that they're going to have to now justify when they are trading off growth versus employment or inflation?

SENTANCE: I think it's good in the sense that it's making things a bit clearer and more transparent. I think the worry I have about it is it appears to perhaps dilute the focus on the inflation target, and the banks already played fairly fast and loose with the inflation targets.

QUEST: That's gone out the window.

SENTANCE: And there'll be an encouragement, I think --


PRESCOTT: They haven't been flat and loose in three and a Monday for their growth, have they?

SENTANCE: -- through this to --

PRESCOTT: That's another problem.

QUEST: What about -- Lord Lamont, do you agree that it's right that the Bank of England should have this wider remit?

LAMONT: Well, I really agree with what Andrew Sentance said, and I think it would be a great mistake to think that inflation was yesterday's problem. The Bank has consistently missed its inflation target, and you know high inflation or higher than target inflation is why consumer spending has been squeezed and real incomes have been squeezed --

QUEST: Right.

LAMONT: -- and real incomes have been squeezed. If we'd had lower inflation, we'd have had stronger consumer demand.

PRESCOTT: Yes, but other central banks have tried to measure this -- the jobs, employment, and inflation, and that's proper, and I think we get more information by these changes to make a judgment about it.

SENTANCE: Well, as long as the -- it depends on how it's going to operate. And the problem with the MPC remit, now, it's now an extremely long, complicated document.

QUEST: It's very difficult, as opposed the Fed's, which is straightforward --


SENTANCE: And the --

QUEST: Growth -- employment, and inflation.

SENTANCE: And the question is, how will the new governor and how will the committee interpret down the scope for quite a lot of different ways of interpreting this complicated remit.

QUEST: It's a busy night, if you want --

LAMONT: I think we forget, the reason the Bank was given independence in the first place was because it was thought and argued that there was no tradeoff between inflation and employment. And by taking other criteria into account, you're really going backwards --

QUEST: All right.

LAMONT: -- and undermining the whole case for the independence of the Bank.

PRESCOTT: Well, it's working for America --

QUEST: I want --

PRESCOTT: -- it's working for New Zealand. There are other central banks who get a better balance.

QUEST: I want to pull this together finally with the idea that whatever is happening, the UK has got many more years of austerity and slow growth ahead. Can we agree on that, Andrew Sentance?

SENTANCE: I think we're in what I call the new normal for growth for Western economies.

QUEST: That's depressing.

SENTANCE: Well, it's interesting that the United States is experiencing slower growth, but it's still getting unemployment down --

PRESCOTT: And it's still getting growth!

SENTANCE: -- and what that's telling us is that productivity growth is slower across a range of economies as we adjust the financial crisis and the big changes in the global economy.

PRESCOTT: Well, that chancellor's telling us we're not going to get any growth in the next five years, for God's sake!

QUEST: Isn't that the point, gentlemen? That the US is still growing by 1.5 to 2 percent --


QUEST: -- Lord Lamont, and unemployment's coming down? Whether it's Germany -- well, actually Germany, it is Germany's unemployment has done. Whether it's any of the other major European countries, it's exactly the opposite.

LAMONT: No, I think that's true. America has this tremendous dynamism, this productivity and innovation. But we have many countries in Europe that are in a far, far worse position than Britain. If you take Italy or Spain, they have something like 7 and 8 percent below the peak of output in 2008.

PRESCOTT: But how do you explain Germany? How do you explain Germany?

LAMONT: Germany contracted 0.6 percent in the last quarter.

PRESCOTT: On what has growth?

QUEST: All right --


PRESCOTT: We have a reduction and no growth.

QUEST: And there we must leave it, gentlemen, for this evening. Lord Lamont, thank you. Lord Prescott, thank you. Andrew Sentance, would you still like to be on the MPC today?

SENTANCE: I'm happy to leave it to others for the moment.


QUEST: Thank you very much, indeed. A slightly more truncated discussion than we'd have hoped for, but obviously with the president and the prime minister in Israel, that takes a certain -- lead of the day.

When we come back, Cyprus. We've talked about Britain, but one of the reasons everything's so grim is when you look at what's happening in Cyprus, staggering though one of the worst weeks in its economic history. Certainly one of the worst weeks of the eurozone's history. It's now looking to Russia for help. We are live in Moscow and Nicosia after the break.






QUEST: So to Cyprus. Well, the crisis is in the country, but the result may be in Moscow and in Nicosia, where members of the Cypriot government are trying to keep their economy alive. They know how much money they need, they don't know how they're going to get it or if European officials will play along.

Tonight, Jim Boulden for us is in Nicosia, and Phil Black is in Moscow. Going to start with you, Jim. Time is brief, but tell me, any sigh of plan B?

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: No sign of plan B, and that's why the banks will be closed on Thursday and Friday. The government made that announcement a few hours ago, so Cypriots will not be able to go into their banks until Tuesday, because Monday is already a public holiday.

One of the debates is whether they should put controls on the amount of money that Cypriots can take out of their bank accounts if and when they open up. They cannot open up, I have to say, until plan B is agreed to.

Plan B could be money from Russia, plan B could be a bond that could be issued. Anything like that would have to be agreed by parliament. We could see voting tomorrow if the government can hash out a plan. We'll have to see whether Europe likes it.

QUEST: Phil Black is in Moscow. Phil, are the Russians minded to put more money into Cyprus or, perhaps, buy one of the bankrupt Cypriot banks?

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: Well, that's what all the speculation is here about right now, Richard. Historically in recent years, no, there's been no enthusiasm for Russia to do anything of the sort.

It has very much viewed all of this as a European Union responsibility, has been unwilling to go beyond that initial 2.5 billion euro loan that it gave to Cyprus back in 2011.

But the Cypriot finance minister is here right now, hat in hand, asking for more. There were no results from the talks today. We don't know what, if any, solid proposals are being discussed. But it is probably a fair bet they are now looking at something beyond initially just renegotiating the terms of that initial loan, which is what this visit was supposed to all be about, Richard.

QUEST: Gentlemen, in a word, first to you, Phil Black, do ordinary Russians even care, first of all, in a word, about what's happening Cyprus and their money there?

BLACK: Yes, I think so. Yes, absolutely. Anything that affects Russian money anywhere in the world and people here absolutely concerned. And certainly among business people, analysts, politicians, they're all singing with one voice on this very much so, Richard. They're not happy about what's happening there.

QUEST: And Jim Boulden in Cyprus, do the Cypriot people care whether the money comes from Moscow, from Brussels, from Frankfurt? In other words, are they prepared to do a deal with Russia at Europe's expense?

BOULDEN: A lot of Cypriots are, though I do hear mixed words on the streets. Many people say we already have a Russian influence because of the loans. Others are very worried that the Russians were to buy their banks, for instance, they find that very worrying.

But even more so, they feel very turned off by Europe very quickly because of what happened, and they feel very cheesed off at the European Commission and Germany in particular.

QUEST: Gentlemen, Phil in Moscow, Jim in Cyprus, you'll both have many hours ahead of you in the days and weekends ahead. Gentlemen, Nicosia and Moscow.

When we come back, I promised you, today is busy. We've had Nicosia and Cyprus, we've got the budget. Next, it's Bernanke. The Fed statement. Bernanke says Cyprus won't hurt the US economy, but what's happening in the US economy? QUEST MEANS BUSINESS.



QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. First, this is CNN and, on this network, the news will always comes first.


QUEST (voice-over): The U.S. president has been holding talks with the Israeli prime minister in Jerusalem. Benjamin Netanyahu said he's sure Barack Obama's determined to prevent Iran from developing a nuclear weapon. Mr. Obama said he didn't expect Israel to defer to Washington on the question of how to handle the Iranian nuclear threat.

The central bank in Cyprus says the country's banks will be closed at least until next week. The country's leaders are trying to figure out a rescue plan and avoid a financial meltdown. Cyprus is now also asking Russia for help, which is a third of the deposits in the tiny country.

The Syrian government is asking the U.N. secretary-general to investigate the regime's claims that rebels use chemical weapons to attack civilians this week. Syrian state TV broadcast these images from a hospital in Aleppo, saying it's where some of the wounded were taken. The Syrian rebels deny using chemical weapons and instead it claims the regime has been using them.

South Korea is on heightened alert after a cyber-attack on media outlets and banks. The government has set up a crisis team to investigate. Suspicion immediately fell on North Korea, given the heightened state of tensions between Pyongyang and Seoul.

French police raided the Paris home of the IMF managing director, Christine Lagarde, although it says part of an investigation of her role in settling a business dispute when she was the French finance minister some years ago. She says she has nothing to hide and is cooperating with investigators.



QUEST: The third B in our program tonight, Bernanke. The U.S. Fed says the U.S. should expect a slow recovery for many years. It's cut growth forecasts very slightly at the upper end. Fed members say growth this year will be no higher than 2.8 percent. They have (inaudible) as much as 3 percent. Unemployment may fall faster than previously thought.

All members now believe it will reach the magic 6.5 percent sometime in 2015. And that's when most Fed governors consider raising interest rates according to the forecast. Interests are on hold for the time being, as is QE. And the matter of Cyprus, Ben Bernanke said he wasn't expecting it to have a major impact on the U.S.


BEN BERNANKE, CHAIRMAN, U.S. FEDERAL RESERVE: It does have some consequence. But having said that, you know, the vote failed and the markets are up today. And I don't think the impact has been enormous.

I mean, I think it's something we're paying attention to. We hope that the Europeans will come up with an efficient and equitable solution. We are monitoring very carefully. But at this point, we're not seeing a major risk to the U.S. financial system or the U.S. economy.


QUEST: That's Ben Bernanke. Ken Rogoff is the professor of economics at Harvard University.

Boy, Ken, we've got a lot to chew over this evening.

Let's start with the U.S. Let's -- (inaudible) I mean, basically, no surprise on QE, no surprise anywhere else. But this trimming of the growth forecast at the upper end, to be expected.

ROGOFF: Yes. I mean, I think that's data's come in that it's awfully unlikely we'll get to 3 percent growth, even though on the whole the Fed recognized that housing has been doing well. Labor market signs are better maybe than they had thought. I'd actually say in the scheme of Fed statements it was slightly upbeat.

QUEST: And yet we are -- we have sequestration. We've got various other crises on the horizon. And seemingly that -- I mean, in 2013, the Fed has not accounted for that in any change in forecast of growth.

ROGOFF: Well, they had accounted for it early on, I think that there's, you know, at least some idea that the federal government's going to come to a plan even if it's a bad plan. Europe has Cyprus, they're, you know, saying I'm still here; Europe's still here. But you heard Chairman Bernanke say that Europe would find an efficient and equitable solution. I hope he knows what it is.

QUEST: All right, efficient and equitable solution. Tonight on the program, we've got the three B's, the British budget, where growth is slashed by half; the bailout in Cyprus, which is a euro shambles, and you've got Bernanke with a slightly smaller (inaudible). So pull the strands together for me, Ken. How much more risky is the global economic situation, do you think, at the moment?

ROGOFF: Well, I actually think it's a good deal less risky than it was a year ago because despite the theatrics in Cyprus, there's more clarity near-term over Europe, despite the craziness in Washington, it's -- they've come to the sequestration idea, which isn't a good way to run things.

But it moves forward. And all -- and the Chinese leadership has rotates; it's a little smoother than people had worried.

So all in all, it's a little less risky. But yet you're seeing that we're not growing fast. We're still twisting in the wind. And if something did happen, we're very vulnerable. And that's really the core problem here, that it's not a healthy situation.

QUEST: But to refer back to our discussion, which you wouldn't have heard earlier in the program, where Lord Prescott, the former U.K. deputy prime minister, and Lord (Inaudible), making the point that the U.S. does manage to grow, albeit slowly, and bring down unemployment quite improvingly. Europe is not managing to get growth or bring down unemployment.

ROGOFF: Well, I mean, the U.S. has a couple of things going for it. One is it doesn't have the euro. That's still to be sorted out. Another is there's this shale gas boom that's just a huge bonanza. It would say it could be adding as much as 1 percent a year to U.S. growth. And of course, the U.S. has population growth that's a little bit greater than Europe.

You take those things out of the equation, and I don't think it actually looks all that different.

QUEST: Ken Rogoff, good to see you.

And very busy time, you've got to admin, whichever way we look, whichever continent, there's something happening.


ROGOFF: Yes, there's a lot going on and it will continue to be a lot going on because we're growing slowly, there are rests and we don't see a clear way out of this yet.

QUEST: Ken, good to see you. Thank you for joining us tonight.

Now. Let's take us back to the U.K. budget. I spoke to Sajid Javid, who is the economic secretary to the U.K. Treasury. And until four years ago, he was also a banker (ph). So he knows his onions, as they say, when it comes to the financial markets. I put it to the minister, the outlook was bleak, especially with recent events in the Eurozone.


SAJID JAVID, ECONOMIC SECRETARY, U.K. TREASURY: The global outlook is very poor and very worrying at the moment. You've mentioned Cyprus and the Eurozone in general. But let's not forget, just in the last quarter, there was no growth at all in the United States, in Japan, in your large European economies like Germany.

And Britain, you know, is a -- the -- Korea is a big trader in the world economy, 40 percent of their exports, for example, go to the Eurozone alone. And we will be affected by that.

QUEST: There is still the fundamental austere nature to the government's plans, and that's what the critics say needs to change.

JAVID: First of all, I think everyone agrees pretty much you have to deal with the deficit, and you don't deal with a deficit by borrowing even more. And that's what some of the critics are saying. Somehow they have this idea that (inaudible) reduce borrowing you actually need to borrow more, clearly a nonsense.

And this government needs to work hard at dealing with what it inherited, the largest deficit in the industrialized world. And that brings economic credibility. That brings lower interest rates. That attracts investment. And that helps create jobs.

QUEST: Except the deficit or at least the public spending, if you take out the asset transfer from the APF and you take out the Royal Mail asset transfer, public borrowing is actually rising.

JAVID: Well, no, actually, if you take out both those things you mentioned, it's still falling; but it's falling admittedly by a very small amount, you know, versus last year. But if you look at the deficit projections, again, not made by this government, but made by the independent Office of Budget Responsibility, you'll see that the deficit keeps falling year on year.

QUEST: The U.K. has been the poster child for austerity and for really drilling down on the deficit. The jury, some would say, is still firmly out on whether this is the right policy, bearing in mind, Minister, that everybody else is doing some version of austerity at the same time. That's your problem, isn't it?

JAVID: If you look at employment -- and that's a very major factor in all of this -- as I said, our employment rate is the -- first, it's the highest ever in our history.

We created jobs in 2012 at a faster rate than the United States, than Japan, than Germany, all our major competitors. The private sector is what's creating those jobs, 1.3 million net new jobs in the last three years. That's more net new jobs than the -- were created under the previous government during their last 10 years.


QUEST: That's the U.K. economics minister, talking to me earlier.

We're going to take a complete different direction after the break, a fish finger fare to a caviar capital. It's easyJet, which is bringing budget air travel to one of Europe's most expensive routes. You'll hear from the chief executive after the break.




QUEST: European politicians may be worrying about Russia's links with Cyprus over the bailout of banking crisis, but budget conscious travelers are far more concerned on connections to the Russian capital and, in particular, to the U.K. easyJet began flights from London to Moscow this week. It's in direct competition with British Airways and Aeroflot.

easyjet's offering return flights for around $190. That's half BA's cheapest fare. And easyJet says it'll stay that fix for the next three years.

Nina dos Santos spoke to the budget airline's CEO before the inaugural flight left. She pointed out to Carolyn McCall that easyJet was clearly taking advantage of one of Europe's most expensive routes.


CAROLYN MCCALL, CEO, EASYJET: We're a low-fares airline. Our low cost model is very much what we do for our passengers don't see that. Our passengers see a fantastic network, the best in Europe, excellent on-time performance.

We've just had 100 percent on-time performance in Gatwick today in freezing fog. And they see our service, which is extremely friendly and warm. And you will see a lot of that as you, you know, see it today.

And I think that's what we deliver to our passengers. We would also be able to (inaudible) holidays to quite a lot of packaging of hotels and flights. And we will work with hotel operators to offer that to our passengers.

easyJet holidays will be an important part of that. But, again, you know, if you're traveling on business, you know what hotel prices are, and you will have a corporate deal with all the hotels, as do we now. So that's the way into the hotel issue.

NINA DOS SANTOS, CNN HOST: Visas in Russia, (inaudible) difficult (inaudible) process to get a tourist visa, let alone a business, visa, which is I have personal experience of difficult. So how are you going to manage to make that match with people who want a cheap airline and a quick (inaudible)?

MCCALL: It's a very good point. You know, it's a very good point. I think we just have to help them on our website understand that it takes time to get a Russian visa and that they would have to answer loaded detail questions. But I think we can -- we, easyJet, can help them understand that.

DOS SANTOS: What the future like for easyJet? Are you looking out towards these growth markets? Russia is an emerging market within this sphere that easyJet operates in. Is that the future?

MCCALL: Well, you know, the bulk of our future is what we do as our call, which is short haul Europe. That's what we're really, really good at. And that's what we will continue to do. And we are in Switzerland, Germany, France, you name it. You know, we're at all the primary European markets.

And that's the core business. We will always look at things that are interesting and give us opportunities that are within our range. And you know, between 3/12 and four hours is within our range. And that's why Moscow is so appealing.

DOS SANTOS: The Eurozone crisis, how has that affected companies like yours that, as you say, whose core business is within the Eurozone and those short-haul flights?

MCCALL: Well, actually, interestingly, the Eurozone crisis has actually been of benefit to easyJet only because you know, our value is so good that if you're a leisure traveler you know that you can afford to have your holiday and you can bank that. And that's what we've found right across Europe, that families will not give up their summer holiday.

And sometimes they won't give up their skiing. We've had a very good ski season. That's about our affordability. They also know when they get on our planes and we will look after them and we'll look after them well.

I think on the business side, it's been a fantastic opportunity because actually businesses that would never have considered flying easyJet in the past actually now consider us. And we know that once they try easyJet, they come back to us.

So actually it's been a great opportunity for easyJet.


QUEST: Carolyn McCall, the chief execute of easyJet.

And the airline isn't the only travel group expanding in Russia. IHG, InterContinental Hotels Group, which is the world's largest chain, is also planning a major move into Russia. And you can find out more on that, including an interview with the chief executive, the CEO of IHG, lots of initials and jargon to battle your way through on our "Business Traveler" website,, where you can also, of course, see plenty of our reports from the program itself.

After the break, a glimmer of glitter and a silver of stardust. We go behind the scenes at the record-breaking David Bowie and that perspective up next.



QUEST: Earlier we told you there were three B's in the show tonight. Let's throw in another one for good measure. David Bowie's comeback album, "The Next Day," another B in our program, Bowie -- or Bowie -- some say Bowie, some say Bowie -- anyway, it's reached the top of the iTunes download charts in more than 60 countries.

A retrospective of his career, it's due to open this Saturday, has smashed presale records at London's Victoria & Albert Museum, the V&A. Now take your protein pills, put on your helmet and enjoy this sneak peek inside of the Bowie and Bowie.


VICTORIA BROACKES, V&A CURATOR OF THEATRE & PERFORMANCE: The title of the expression kind of sums up the fact that David Bowie, is -- he's here in the present tense -- but it's also David Bowie is what? And through the exhibition, we look at different interpretations of that.

We've got all manner of objects, costumes, photographs, stage set models and also fantastic music and AV in the exhibition, including film that's never been seen before.

GEOFFREY MARSH, V&A DIRECTOR OF THEATRE & PERFORMANCE: We have been given really access to David Bowie's personal archive for the first time ever. I kind of knew that he had a collection, but I had no idea how big it is, and also that he's been connecting everything from sort of (inaudible). (Inaudible) or whatever.

And so to find a collection in one place that represents 40 or 50 years is -- I could say is pretty rare. I guess he must be one of the 10 most recognizable people on the planet.

BROACKES: (Inaudible) in London, because London seems to be so much part of Bowie's inspiration and imagination at that stage. It's so important. So we did want to sort of ground him there. And we take the chronology through "Space Oddity," his first breakthrough single.

MARSH: There's obviously the costumes and, you know, people love costumes and of course at lot people remembering seeing them at different concerts. So there's about 50 or 60 of those.

BROACKES: When you see the costumes close up, it is really thrilling. It's very exciting actually how (inaudible) the original objectives. There's nothing -- nothing beats it, really, in this age when you can do so many things in other ways, actually seeing the real thing.

It's like you're seeing it on stage, you might have seen it on film. But to see the "Ashes to Ashes" costume, for example, up close, it's pretty fantastic. We've also got the Ziggy costumes, and they really are amazing.

MARSH: But if you hate fashion, you hate costumes, you hate all this, I think for the fans, one of the most interesting things is seeing all the early design work and obviously a lot of rock stars, you know, this was a, you know, they just get people into do their videos. But David is -- controls everything. You know, he thinks the idea up; he works it out, the storyboards, there's his notes.

BROACKES: Through the exhibition, we have -- we have lyrics on display sort of in the areas they relate to. We have "Starman," we have "Fame," and we have a section on Bowie's processes on creation, I think lyrics with little crossings out, very interesting to see what might have been and wasn't.

Bowie's permeated every area of our culture.

MARSH: In the end, you know, there's a whole generation that's sort of grown up with him. And without him, they're finding the idea of him in a museum a bit strange. I think the fact that he can do that and product a new album, successful album at the same time, actually shows what a remarkable person he is.


QUEST: David Bowie or Bowie. We'll have a break and a "Profitable Moment" afterwards.



QUEST: Tonight's "Profitable Moment," the time we've spent together this evening shows just how precarious is the global economy. Tiny Cyprus threatens to derail the Eurozone. You've got austerity in Britain stumbling onto another year of virtually no growth. And the United States is cutting back its own economic forecasts, too.

All these countries have been both the beneficiaries and the victims of globalization. The way insecurity and the need is transmitting itself across the world, each time a target is missed, a forecast cut or a bailout bungled, red flags to investors and an erosion of trust. And what's really worrying about this, seemingly there is no end in sight.

Certainly, Cyprus remains the most dangerous. But in the U.K. tonight, people are really thinking when will this austerity be over? 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.



QUEST (voice-over): The news headlines at the top of the hour:

The central bank in Cyprus says the country's banks will be closed for at least until next week. The country's leaders are trying to figure out a rescue plan and avoid a financial meltdown. Cyprus is now asking for help from Russia, which is responsible for about a third of all the bank deposits held on the island.

The U.S. president held talks with Israeli prime minister in Jerusalem. Benjamin Netanyahu said he's sure Barack Obama is determined to prevent Iran from developing a nuclear weapon. Mr. Obama said he didn't expect Israel to defer to Washington on how to handle the question of the Iranian nuclear threat.

The Syrian government is asking the U.N. secretary-general to investigate the regime's claims that rebels used chemical weapons to attack civilians this week. Syrian state TV broadcast these images from a hospital in Aleppo, saying it's where some of the wounded were taken. The Syrian rebels claim the regime itself was using them.

French police raided the home in Paris of Christine Lagarde. The head of the IMF's lawyers says part of an investigation of her role in settling a business dispute when she was the French finance minister some years ago. They say, however, Madame Lagarde is now the managing director of the IMF has nothing to hide and is cooperating with investigators.


QUEST: You are up to date. Now to New York, "AMANPOUR" is live.