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QUEST MEANS BUSINESS
Buffet Recommends Equities; Dow Flat; Stock Market's Next Move; French President Reaches Record Low in Polls; Hollande's Presidency One Year On; European Markets Down; Dollar Up; Trafficked to Iraq
Aired May 6, 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: Buffett says buy, and tonight, Warren Buffett tells us why his money these days is better off in stocks.
Better luck next time. Francois Hollande says his second year in power, it'll be better than the first.
And a deadly weapon made in your own home: 3D printers could be the future of firearms.
We start a new week off together. I'm Richard Quest, and I mean business.
Good evening. US stocks are near record highs, and if you had any doubt about the direction of future trading tonight, Warren Buffett says equities are the place to be. The Berkshire Hathaway boss has told CNN investors 20 years from now will be wishing they had a piece of today's action.
It is a clarion call to stocks and shares. Mr. Buffett once said about investing, you don't have to be a rocket scientist. Well, maybe not a rocket scientist, but certainly a seriously wealthy man. CNN's Poppy Harlow spoke to Mr. Buffett over the weekend.
Poppy, you and Warren Buffett get on rather well and have sort of got over the fences of interviews several times, so when he says something like this, "equities are the place to be," we know he has a love affair with real companies that make real things and do real business. So, what's the core of his message?
POPPY HARLOW, CNN CORRESPONDENT: Well, I'm not surprised, because we have to remember and look at this in its entirety. This is Warren Buffett, a longterm investor, so when he says look at equities, they're attractive now, he means if you're going to stay in the market for 10 or 20 years. He's not talking about short-term players at all. So, that's the difference between him and other investors.
We talked about a number of things this weekend in Omaha, Nebraska, after that Berkshire Hathaway annual shareholder meeting that drew over 35,000 people to hear from Buffett and his partner, Charlie Munger. We talked about a number of issues. Top of mine, though, this run-up we've seen for US equities, is it justified? And also thee US job market. Listen.
(BEGIN VIDEO CLIP)
HARLOW: I want to start with the market, because we've seen the market on a tear, and with every imbalance, I think the questions increase about when this is going to end, the Fed pumping so much money into the system, is it artificially pumped up? What's the risk to the market right now because of the policy?
WARREN BUFFETT, CEO, BERKSHIRE HATHAWAY: Well, I don't worry about what the market is going to do next week or next month or next year. I think that 10 years from now, 20 years from now, you'll look back and you'll probably feel that you should have bought stocks at this point. But whether you feel that way a year from now or two years from now, I have no idea.
There's no question that low interest rates have pushed up all assets, including stocks. But if you as me whether -- where I'd like to have my money, I like to have them in stocks.
HARLOW: What about foreign investors that are looking at this market in a more short-term manner than you are? Should they be concerned right now?
BUFFETT: I don't know -- I don't know how to advise them. I don't -- I think they're trying something that's impossible if they think they can decide when to buy and sell stocks in the short term.
HARLOW: Because you don't know what the Fed's going to do?
BUFFETT: Well, we don't know what the stock market ever is going to do. If you think you know, you're kidding yourself.
HARLOW: The jobs report that we got on Friday, better than expected, but still, we have 7.5 percent unemployment, it's stubbornly high, it is too high. What would you do in the next 12 months to bring unemployment down?
BUFFETT: I think it'll come down in the next 12 months, but I don't think necessarily the rate will be very fast. We have been doing in general the right things since the great panic, basically. We've applied fiscal stimulus in a big way. Not everything's called stimulus, but anytime you're running huge deficits, that's fiscal stimulus.
We've -- Ben Bernanke has put his foot to the floor on monetary policy, and we had an enormous shock to the system in 2008, and it put the economy in the -- intensive care unit, and it's taken a while to come out. But it is coming out, and it's been doing it steadily for almost four years, now, and I think it'll keep doing it.
HARLOW: Given sequester, there are questions, given the latest jobs report, as to how negative an effect sequester is having on jobs, but aside from that, is there any policy, anything that can be done on the policy side that would increase job creation at a more rapid rate.
BUFFETT: Well, we could apply way more fiscal stimulus, and that would have some effect. There isn't much to do on the monetary side, but whether the downside --
HARLOW: Do you support more stimulus?
BUFFETT: Well, the downside of that stimulus would be greater than the immediate damage. You don't want to take something that makes you feel extremely nauseous because of that fact without considering consequences. So, I really have no great recommendation in terms of change of policy.
HARLOW: That was one of the most interesting parts of the conversation, Richard, I think, hearing Buffett say you have to consider the downside consequences of pumping more stimulus into this economy right now. This is someone who's been very supportive of President Obama's administration and moves, and Fed chairman Ben Bernanke's moves to prop up the economy since 2008.
Now, on the question of the Fed and what's going to happen to the market when the Fed starts unwinding those positions and pulling back. He said he that he has a lot of faith in Chairman Bernanke, but he called what the United States Federal Reserve is doing right now a, quote, "huge experiment" --
QUEST: All right.
HARLOW: And he said whenever we see the Fed pull back, it will likely by, quote, "the shot heard around the world." So, still to see, of course, what happens with Fed policy.
QUEST: Couple of odd little things from the meeting. He's -- apparently the board and Buffett have decided on a succession plan, but they're not going to tell anybody about it.
HARLOW: Exactly. This question comes up every single year. Buffett is 82 years old. Who will succeed him to run Berkshire Hathaway? The question came up again this year. What he did say is he said the key to the successor is that that person has more brains and more energy than I have.
But he also said, quote, "we are solidly in agreement as to who that individual should be," "we" meaning he and the board. They've chosen that person in case anything should happen to him, but we don't know who that is.
QUEST: All right.
HARLOW: There's been no indication about who it is.
QUEST: Quick question. Berkshire Hathaway shares, as I recall, are some exorbitant amount of money. The actual share --
QUEST: Hundred and something thousand per share.
HARLOW: $165,000 a share, and they're up 1.5 percent right now.
QUEST: Right. How do they manage to get 35,000 shareholders who can afford shares to all turn up? I know you can split them and you can have funds that track the shares and all sorts of things.
HARLOW: This is -- they have -- those are the A shares, Richard, and then they have B shares, which are significantly less expensive.
HARLOW: So you only have to hold one share, A or B, to come to the meeting. B shares $110 right now.
QUEST: But of course, they don't have the same voting power as the A shares. Many thanks, indeed. Poppy Harlow, who is in New York, clarifying the As and the Bs.
QUEST: And that's the market for you today. No trading in London. It's a holiday. On Wall Street, well, there's barely any trading there at all. The Dow Industrial's hit an all-time high intraday, about 15,000 on Friday. But just look, we're just up 11 points with some two hours to go before the end of the day.
But keep your eye on these numbers, because as Buffett was talking about, stocks keep rolling, and the Federal Reserve shows no sign of winding down the bond-buying program. The Dow's gained almost 15 percent since the start of the year, and the S&P 500 up almost 14 percent.
So, I asked CNN's contributing editor, Todd Benjamin -- and bearing in mind what we've heard from Mr. Buffett -- what the next stock from -- what the next move for stocks just might be.
TODD BENJAMIN, CNN CONTRIBUTING EDITOR: I think the risk on trade is here for the very reason you mentioned, because you have extremely easy monetary policy, not only in the US, but among the other major central banks as well, and there's no indication that's going to end anytime soon.
And as long as that is in place, that favors, I think, a continued rally. Does it mean there could be some disruption along the way, some correction? Yes. But I think the general trend is in favor of the wind being at the back of the market because of this very easy monetary policy.
QUEST: But we've been in a bull market now for quite some time.
QUEST: And -- besides the odd little correction on the way, when does it exhaust itself? Or maybe it doesn't because of the structural problems, which are only just starting to unwind?
BENJAMIN: Well, the other thing is also too, once the Fed has to sort of wind back its quantitative easing, a lot of people feel that's going to be more difficult than they may assume or acknowledge.
BENJAMIN: Because you're going to have to mop up a lot of this liquidity. I think once the market gets a whiff that easy monetary policy is no longer here, at first, there may be a knee-jerk reaction, then we'll assess how long will it take?
I was just doing something with Nouriel Roubini last week, Dr. Doom, and his indication was maybe another four years is when things could get very, very tough in terms of a credit crunch. Maybe another two years of very easy monetary policy, maybe another two years of then mopping it all up, and then we'll see the truth.
QUEST: But is there still that view out there that inflation, nonexistent at the moment, tamed and becalmed, inevitably returns with this highly- accommodative stance?
BENJAMIN: Well, I think that's the big fear, and I think the answer is no one really knows at this point.
QUEST: There's no consensus on this.
BENJAMIN: Because we're in uncharted water.
BENJAMIN: And again, how they deal with it when they pull it back in will help determine whether inflation again rears its ugly head.
QUEST: You're sounding rather cheerful about equities. Rather distressing.
BENJAMIN: I know. I'm always very bearish, but --
QUEST: You are.
BENJAMIN: -- I have to be realistic. Again, it's the risk on trade is here. And as long as the super easy money stays, then I think you have to favor going into equities, because people are looking for higher returns, and bonds right now, even corporate bonds, even junk bonds, the yields are no longer as attractive, and it's a very crowded trade.
QUEST: Todd Benjamin talking to me earlier. Rather cheerful. Two cheerful voices, there you have. Warren Buffett and Todd Benjamin, both giving the thumbs up to equities. But of course, nothing that we ever say on this program should be taken as investment advice. Shares go up and they go down, you win and you lose.
QUEST: And ahead on the program, once the French said, "Je t'aime" to Francois Hollande. Now, it's more like "Sacrebleu!" A look at what on Earth went wrong.
QUEST: Today is one anniversary the president of France might prefer to forget, or at least not remember. After his first year on office, Francois Hollande is facing record unpopularity. Now, the 24th president of the republic's approval rating is, ironically, 24 percent.
None of that seemed to bother Mr. Hollande. It was all smiles and handshakes from the man who today promised more investment and reform, and he sent the troops -- well, his political troops, anyway, to greet the press.
(BEGIN VIDEO CLIP)
NAJAT VALLAUD-BELKACEM, FRENCH GOVERNMENT SPOKESWOMAN (through translator): The truth is that we are now putting into practice the structural reforms which have already been adopted over the question of employment during this year, this first year in power, and the results will start to show in the coming months, yes.
(END VIDEO CLIP)
QUEST: Now, these are the people he has to convince: Paris at the weekend, many of these are the president's onetime socialist supporters. They're looking at the effects of austerity and a stagnant economy and staring at recession multiyear recession.
President Hollande has seen problems on the business, the political, and on the economic front. So, let's start in the library over on the business front. Just look at the PMI numbers, the Producer Manufacturing Index, and how those, the PMI index, show business activity is contracting. Across new businesses in the private sector, it is in decline.
And a falling PMI number is widely taken as being obviously a contraction in GDP further down the road. All of which is worrying for a president who has an anti-business perception. He famously described business and finance as -- or finance, at least -- as the enemy.
Then, of course, there was the very public row with the CEO of ArcelorMittal. That was over the closure of the plant, when of course Mittal wanted to close the steel plant in France, the government got involved, and one of Mr. Holland's ministers said the firm was no longer welcome in France.
And they said they'd planned to nationalize the company. That since has been put on the back burner, pending agreement with the European Union on a wider steel deal.
On the political front, you can't help but talk about the Cahuzac Swiss account. This is a national scandal after the former budget minister, Jerome Cahuzac, had to admit firstly he had a Swiss bank account and had it for many years, and secondly, he like to authorities and regulators and the president about its existence, something Hollande said was unforgivable.
And then, if you've done the finance and you've done the politics, then you come to the economic. That's the number you need to concentrate on: 3.2 million people are unemployed and climbing.
France's growth will be in recession, stagnant at best, with a falling PMI, high unemployment, slow reform of the Union rules and workers' rights, you start to see the problem that he faces. As Jim Bittermann now reports, even some politicians in his own party are unhappy with Mr. Hollande's leadership.
JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): Even before he was elected, the French president told CNN that selecting any leader is a risk for voters. You just never know how he'll turn out, he told me.
But after his first year in office, many French seem to be of the opinion putting their money on Francois Hollande may not have been the best bet. No president has declined so far so fast in the opinion polls as Hollande has.
Nearly three out of four of his countrymen say they are disappointed with his first year. A plurality of French now say they think Hollande's predecessor, Nicolas Sarkozy, would've done a better job than Hollande has.
The biggest complaint: Hollande's inability to halt the rising unemployment rate or declining economy. But political analysts say there's more to it than that.
BRUNO CAUTRES, PUBLIC OPINION ANALYST: The feeling that Francois Hollande maybe is not (inaudible) -- that maybe he's lacking the leadership style that the French president normally needs.
BITTERMANN: Indeed, one leading news magazine here last month put out a cover story calling the president "Mr. Weak." Perhaps even more worrying is a suggestion of another that France is in a pre-revolutionary state.
The reason for such alarmism is not Hollande's critics on the right, but the disaffection of his onetime supporters on the left. Many who voted for him, such as these steelworkers, believed his promises that their jobs would be protected. But they were not, and the workers, along with many others here, are disillusioned.
Leading members of Holland's own socialist party are openly critical of the president.
MARIE-NOELLE LIENEMANN, SOCIALIST SENATOR (through translator): There's a bad indicator on the lost in trust of the president in his own electorate. Francois Hollande knows that he cannot govern with only two thirds of the socialist party. He needs allies.
BITTERMANN: And Hollande is having difficult finding them. His socialist critics say change in the government is not good enough unless there's also a change in policy that takes a clear turn toward the left.
BITTERMANN (on camera): Under the French constitution, Francois Hollande still has four more years in office, and nothing short of a revolution could change that. Still, increasingly, his supporters and detractors are wondering what could possibly change his political hand for the better? Because there is no change in the employment and economic picture.
So far, only his quick decision to intervene militarily against the Islamist revolutionaries in Mali gave Hollande the slight uptick in the polling numbers. Even his personal life, sometimes the source of popularity for president, has worked against him, with continuing criticism in some quarters of his unmarried relationship with a companion who some call "the First Mistress."
Even dissolving the parliament and calling for new election may not help.
ROLAND CAYROL, POLITICAL OBSERVER: If you are very low in the surveys and political crises, you pronounce a disillusion and you lose the election.
BITTERMANN: Which could backfire. Could be a very disaster.
CAYROL: Could be a real political and electoral disaster.
BITTERMANN: So on both sides of the French political aisle, on the president's first anniversary in office, there are not many plans to celebrate.
Jim Bittermann, CNN, Paris.
QUEST: Now, here in London, the markets were closed for a bank holiday, but falls across the board, red arrows galore, gloom in the eurozone with those PMI figures brought a downturn. And in Italy, GDP' s expected to fall 1.4 percent this year, with a slowdown in domestic demand.
To tonight's Currency Conundrum. You will remember that before the euro, France used the franc as its currency. Why was it introduced in the first place? A, to prevent French citizens from using the British pound? B, to pay a ransom for the king? Or C, the old currency had lost its value? The answer later in the program.
The dollar is up against the pound, the euro, and the yen. Those are the rates --
QUEST: -- this is the break.
QUEST: Six hundred thousand people may be the victims of forced labor in countries across the Middle East, according to a new report from the International Labour Organization, the ILO. The report believes many of those victims are lured into jobs that simply don't exist and usually have terrible conditions. Atika Shubert met one woman who was told about an opportunity in Italy and ended up being trafficked to Iraq.
ATIKA SHUBERT, CNN INTERNATIONAL CORRESPONDENT (voice-over): Eli Anita tells her story in broken English, but there is no mistaking her anger when she recalls how her employer at a labor company in Dubai sexually harassed her in 2007.
ELI ANITA, TRAFFICKING VICTIM: He was so angry, and he also beat me and kidnapped me in a back room for many hours. And he knocked on the door and he said, "Eli, just obey me."
I say, "I'm sorry, I don't want anything from you. I came for working, and I will not allow anybody to touch my body, also looking at my body," I say like this.
And then, he's asking me, "What do you want?"
I say, "I want another job."
SHUBERT: Eli says her employer shunted her off to a new job in a place she'd never heard of, far from the skyscrapers of Dubai.
ANITA: He tell me, "I will send you to a new country, high technology, it's good country."
"Which one? What's the name?" I said like this.
"It's Kurdistan, it's a part of Italy."
SHUBERT: For a village girl from Indonesia, Eli says she had no idea she was being sent to Kurdistan in northern Iraq, at that time, in the midst of war. She says she was flown to Erbil Airport under the constant watch of labor company chaperones, with about a dozen other women from Ethiopia, Indonesia, and the Philippines. She says the labor company took her passport.
ANITA: Every ten minutes is some army stops us with gun, touch our bodies, say, "Show us your identity," like this.
I say, "Oh, my God, I'm in war country." At that time, I was thinking like this --
SHUBERT (on camera): You still didn't know where you were?
ANITA: Yes, I still didn't know where I am right at that time.
SHUBERT (voice-over): Eli finally convinced one of her minders to let her call her Dubai employer.
ANITA: I used the telephone, I called my agency, "You send me to Iraq, and then you're telling me they're a part of Italy?" I say like this.
They say, "Eli, just keep quiet. I already received $4,500 US.
SHUBERT (on camera): $4,500?
ANITA: Yes. So, at that time, I know that they sold me.
SHUBERT (voice-over): She says she tried to run away several times, but after days on the street, she was found by the labor agency, dragged back, and she says, beaten as a punishment.
ANITA: The agency also kidnapped me inside the bathroom with a gun on my head. He said, "If you don't stop your action, call your government, I will kill you."
SHUBERT: Eli finally escaped by secretly contacting the International Labour Organization. They brokered her release from the labor agency and brought her back home to Indonesia. We made repeated attempts to contact the company but did not get a response, so we visited their office asking to speak to the man who Eli says sold her, trafficking her from Dubai to Iraq.
SHUBERT (on camera): Would you like to answer the allegations? We could sit down with you --
UNIDENTIFIED MALE: Sorry, ma'am.
SHUBERT (voice-over): He refused to talk to us or give us his side of the story. But Eli is clear about what she thinks this is.
SHUBERT (on camera): Do you feel like this is -- essentially a form of modern-day slavery?
ANITA: It's more modern-day slavery.
SHUBERT (voice-over): Eli now works with migrant care in Jakarta, Indonesia, helping other workers who have returned home. She has no intention to work abroad again.
Atika Shubert, CNN, Jakarta.
QUEST: On May the 17th and 18th, we have a premier of a new CNN Freedom Project documentary following the passionate crusade of a Philippines human rights pioneer to protect children from the sex trade and her efforts to convince the nation's biggest star, the boxer, Manny Pacquiao, to join the fight against modern-day slavery. It's called "The Fighters," and it's only on CNN.
After the break, preventing another tragedy: Bangladesh plans to reform labor laws after the deadly collapse of a garment factory. That's next.
RICHARD QUEST, CNN HOST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. This is CNN and, on this network, the news always comes first.
And news just in to CNN:
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QUEST (voice-over): A U.S. official has confirmed that two North Korean missiles have been withdrawn from a launch site. There was concern that putting the missiles there in the first place could signal Pyongyang intended to test-fire them.
Israel is increasing its defenses following Sunday's attack on what Syria says is a military research facility outside Damascus. Rebel sources say 42 Syrian soldiers were killed and at least 100 people remain missing. Syria is calling the attack a declaration of war.
The U.N. human rights investigator Carla del Ponte (ph) says there are strong suspicions that Syrian rebels have used the deadly nerve agent sarin. The same accusation has been leveled against the regime of Syrian President Bashar al-Assad. The U.N. stressed there is no conclusive proof that any parties in the conflict have used chemical weapons.
In Germany, the trial will resume next week of a woman accused of a seven- year crime spree while being in a far-right hate group. The prosecution says the woman was involved in 10 murders, two bombings and 15 bank robberies, and most of the killings appear to have been racially motivated. The case has been adjourned until next Tuesday after the defense asked for a new judge to be appointed.
A Massachusetts funeral director is struggling to find a place to bury one of the accused Boston Marathon bombers. Tamerlan Tsarnaev's uncle wants him buried in Cambridge, Massachusetts, where he lived. The city has said no. The funeral director says many cemeteries are worried about reprisals if they allow the burial.
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QUEST: Dhaka's commercial center resembled a battle zone on Monday, rocked by a deadly weekend protest, which left at least 14 people dead and 75 injured.
(BEGIN VIDEO CLIP)
QUEST (voice-over): Around half a million Islamists protesters took to the streets, demanding laws that would punish any blasphemy against Islam with death. They clashed with security forces, and that brought destruction to the Bangladeshi capital.
(END VIDEO CLIP)
QUEST: The violence follows last month's devastating building collapse that killed more than 650 factory workers. Bangladesh has promised to pass a series of new labor reforms outline in the United Nations statement this morning.
Yet given the country's dependence on the export of cheap clothing, it's not clear whether this can realistically improve the working conditions of ordinary Bangladeshis. Jim Boulden reports.
(BEGIN VIDEO CLIP)
JIM BOULDEN, CNN CORRESPONDENT (voice-over): The garment industry found a natural home in poorer nations, the way to provide an abundance of cheap, ready-made clothing is finding a huge labor pool that is paid little.
Bangladesh is now the second largest apparel exporter after China. How? Well, unlike some of its competitors, Bangladeshi manufacturing remains dirt cheap, and unions have limited power. The country cornered the absolute bottom of the value chain.
JUDY GEARHART, INTERNATIONAL LABOR RIGHTS FORUM: What's happened in Bangladesh is they've been too successful at this low-road model of development, where they've offered low-wage labor and have underinvested in their own infrastructure, underinvested in government regions and government enforcement of laws.
BOULDEN (voice-over): And while contracts poured in from the likes of Primark, Walmart, Carrefour, Gap and Disney, buildings went up fast, filled with workers, sometimes housed on illegally built floors. But wages remained low.
NIRMALYA KUMAR, LONDON BUSINESS SCHOOL: You have upscale, you have expertise; you have an ecosystem around that industry which has built up in Bangladesh. So that even if the wages rise to, let's say, double or triple, you know, from $40 a month to $80 or $120 a month, you still have a thriving garment industry in Bangladesh.
BOULDEN (voice-over): Bangladesh also benefits from the European Union giving the country extra help. Because it's so poor, Europe allows Bangladesh to ship garments to the world's biggest trading block duty free, a sweetener, the E.U. says, it might now suspend, a penalty for the country not cleaning up its garment industry.
On the other hand, the United States still imposes duties on clothes from Bangladesh. The Bangladeshi government says if the U.S. eliminated that tariff, costing as much as 32 cents on the dollar of each garment, the workers would benefit.
MOHAMED QUAYES, BANGLADESH HIGH COMMISSIONER: If this 32 cents were not an impediment, then it is possible for us to offer the American middle class a lower price; it's possible for us to have a bigger margin. It's possible for us to transfer the biggest chunk of this space to better terms of employment.
BOULDEN (voice-over): The big brands may not wait for trade sanctions. Disney pulled out before the latest building collapse after a fire late last year. That and political disruptions have made some Western firms look toward higher cost India.
GEARHART: We would not want to see the brands departing. I mean, they've benefit from the profit margins. Now is not the time to walk away from the mess.
BOULDEN (voice-over): But more could follow.
KUMAR: A couple more of these incidents and the foreign brands will be gone, because they cannot afford to take the kind of brand image beating that they're taking right now.
BOULDEN (voice-over): But then who would force Bangladesh to change and keep scenes like this from happening again? Jim Boulden, CNN London.
(END VIDEO CLIP)
QUEST: Straight ahead on QUEST MEANS BUSINESS, if you think you can dodge luggage fees with this, think again. We're going to show you the airline that gives free carryon bags the chop and why some airlines say this is OK and this is not, after the break.
QUEST: The trusty carryon bag, it's the best way to avoid getting charged for putting a bag in the hold. Instead, you put it into the overhead compartment. Unfortunately, now, many airlines are seeing this as being a way to get a bit of this out of you and me.
The American carrier Frontier is the latest charging to start stowing hand luggage in the cabin. It says passengers find it unacceptably difficult to find space in the overhead compartment. So instead, they introduced this policy, which will also drive people because they penalize you if you use somebody else's website.
Let me explain. So the price of a return flight on Frontier from New York's LaGuardia to Denver, departing October 1st, returning the next day, straightforward there and back, book it through Frontier's website and it costs just $198. Exactly the same fare without the (inaudible) third party website, $198. So the two are the same.
Now when the new policy is introduced, book with Frontier's website and for this bag, of course, you will pay nothing. But they are determined to drive people to their website. So if you book it with this website, this will cost you between $25 and $100.
Now Frontier is basically not only using a revenue-raising operation, but they are also, of course, driving traffic to their own website. They are not alone. I want you to come over to the superscreen. Now Wizz, the Hungarian airline, has got a really nifty new weez (ph) for revenue raising -- same argument. It says it creates more room in the cabin.
If your bag -- basically a briefcase -- is that size, it goes in free into the cabin. But if it's this size, which is basically a carryon bag, then you pay a fee of 10 euros, roughly 13 euros. And to make sure, here's a novel one; look at that. We're all familiar with the gauge, that. But this is for that side and that is for this side.
And apparently, it seems, there's no such thing as a free bag. Now if you can't stomach those kinds of charges, well, you could always try traveling by rail. As Ayesha Durgahee discovered, European rail companies, at least they are trying to make things a little bit more simple.
(BEGIN VIDEO CLIP)
AYESHA DURGAHEE, CNN CORRESPONDENT (voice-over): Point to point travel for passengers against the clock, high-speed rail stands for ease and efficiency with more comfort and modern features. Without a central booking system, pan-European high-speed rail isn't stress-free and easy.
MARK SMITH, RAIL EXPERT, MAN IN SEAT SIXTY-ONE: At the moment, it's almost going backwards. It's coming more fragment, if you like, the downside of the new high-speed revolution. It's that you've got a lot of different operators with different separate ticketing systems.
And if you want to go for example from London to Frankfurt, you need to book two different tickets with two different operators sometimes in order to complete that journey at the cheapest price.
DURGAHEE (voice-over): SilverRail (ph) is building a rail ticket network and has so far signed up four European operators.
CAMERON JONES, SILVERRAIL: Our technology makes it consistent and standard across every rail carrier. In your home currency and your home language, (inaudible) same process of booking either French rail or Italian rail or Spanish rail. It's making rail as easy to book as air.
DURGAHEE (voice-over): New rules in Europe have opened up this $80 billion market, allowing operators to expand beyond their domestic platforms. Only 6 percent of high-speed rail in Europe is currently cross-border and only a fifth of tickets are booked on the Internet.
Rail operators are starting to realize their online potential.
CHRISTOPH KLENNER, EUROPEAN TECHNOLOGY & TRAVEL SERVICES ASSOCIATION: Rail operators have traditionally had a very strong brand recognition in their own country but not so abroad. Global distribution systems could take their content and distribute it to hundreds of thousands of travel agents worldwide.
DURGAHEE (voice-over): Cross-border rail in Europe will be fully liberalized to include domestic as well as international passengers in 2019.
DURGAHEE: Here in France, rail operator SNCF (ph) is preparing for the competition by launching the first-ever low-cost high-speed train.
DURGAHEE (voice-over): Bright blue and raspberry colored throughout, SNCF (ph) old TGB trains have been transformed into Ouigo. There's no food or drink sold on board and depending when you book, the non-reclinable seats start at 25 euros from Paris to Marseilles and Montpelier via Lyons.
GUILLAUME PEPY, CHAIRMAN, SNCF: It's never been done. We are pioneers in that field. If it's a success, I can't imagine that within the next years there will be opportunities to go to Barcelona (ph) and Amsterdam and from and to London and perhaps from and to Spain. This is a -- I would say -- a very good asset for SNCF in the forthcoming liberalization system.
DURGAHEE: Whether it's low-cost or first-class, high-speed rail operators want to cater for every budget, as European rail becomes even more integrated.
DURGAHEE (voice-over): There will be new high-speed lines to Barcelona from Paris. And by the end of this year, from Marseilles and Geneva. It's all about making journeys seamless, from criss-crossing Europe by rail to hopping onto a long-haul flight.
PEPY: You can fly from Shanghai to Frankfurt or from New York to Charles de Gaulle and then connect to the high-speed train. The high-speed system will be connected to airports. Frankfurt is connected to the high-speed line; Lyons is connected.
DURGAHEE: If high-speed rail can effectively feed into long-haul air networks and take over short-haul routes, it won't just connect the dots around Europe, but also build alliances with airlines as well -- Ayesha Durgahee, CNN, Lyons, France.
(END VIDEO CLIP)
QUEST: Whether you're going high-speed, low-tech, low-cost carrier, Tom Sater is at the World Weather Center with an idea of what you might find when you get there.
TOM SATER, AMS METEOROLOGIST: Well hopefully, Richard, the airlines won't start changing us just to carry a wallet in our back pocket. It might be (inaudible).
QUEST: Oh, no, no, no. No, that won't be a problem, Tom, because it'll be empty by the time you pay the charges.
SATER: That's right. We won't need it. Good point, Richard, thank you.
Let's take a look at weather across the world. If you are traveling, we still have an area of low pressure that's spinning. And it continues to drop some rainfall, heavy at times as well. But we're also watching another surge of moisture with another system moving into the northwest.
Look for possible delays maybe in the pickup in the days ahead around Dublin over toward Glasgow. Heaviest rain right now, south central areas of Germany, moving into central areas of Italy as well. Finally, the moisture from this area of low pressure feeds into the new one. So with this, the winds could cause some disruptions.
But nothing really, I think, that's much discouraging right now, I mean, light the travel disruptions, call ahead from Frankfurt, Munich, Berlin, again, keep in mind areas of the northwest. Now this is the U.S.
We still have river flood warnings all over mainly down to the south, shouldn't cause problems if you're flying by air except for the clouds that are dropping all of this rain, as it now moves toward the East Coast, major hubs, you can see the area of low pressure moving now, the rainfall in towards D.C.
With that, the fog could be an issue as far north as Logan Airport up in Boston, but heavy rain expected in the D.C. area. So with that, some major delays in the U.S. possible, Boston, JFK, Minneapolis for fog and the Twin Cities as well, but also LaGuardia could be 1-, even 2-hour delays on your Tuesday. Keep that in mind.
Across Asia, look for rain to move in toward Shanghai; Taiwan will be looking at some pretty strong winds; Hong Kong isolated showers, but mainly we're watching the rainfall pepper areas of Malaysia and Indonesia. And with that we typically find our delays there as well.
Notice areas around Bangladesh, though Calcutta kind of tops our list here, again light delays but they get a little bit better with those late-day thunderstorms dropping heavy amounts of rain, Kuala Lumpur and Singapore.
Elsewhere, Melbourne and Perth, fog, cloud cover, winds into Wellington and New Zealand as we watch the next system move in well to the west. This will have some pretty strong winds, some needed rainfall, but also that on- air shore and flow coming into around Cairns (ph), could cause some issues there as well.
Winds could be an issue as it carries from Perth all the way across the south; therefore, in the days ahead, look for possible problems from around Adelaide and Melbourne over toward Brisbane in the days ahead. But Richard, that's it, in a nutshell; no major problems except in areas of the U.S. for the next 24 hours.
QUEST: We thank you for that, Tom. If people are traveling the world, at least they are better informed.
When we come back in a moment, controversy indeed: the world's first 3D printed gun has been tested and apparently it works. We'll talk about The Liberator -- at least that's what it's called -- after the break.
(BEGIN VIDEO CLIP)
QUEST (voice-over): The answer to tonight's "Currency Conundrum" why the French franc was established as the country's currency prior to the euro, to prevent French citizens from using the pound to pay for a random, the old currency lost its value, the answer is to pay a ransom for King John the Good. The medieval monarch was imprisoned by the King of England after a lost battle in 1356.
There we are.
(END VIDEO CLIP)
QUEST: Now this is an extraordinary story. It's called The Liberator and it claims to be the world's first 3D printed handgun. The company behind the gun, Defense Distributed, based in Texas, says it successfully test- fired the gun.
These are the parts, the various parts which 3D printing did. So for example, you have the threaded barrel of the gun. You have the trigger spring. These all were manufactured, the hammer body and of course, you have the frame.
And this is the only metal part of the whole thing and it has to be at least 6 ounces of metal to comply with the U.S. law. And there -- also there's a firing pin made from a regular nail.
But once you've printed all of this and you've put it together, there is a gun. And these are the instructions. We'll build the trigger first, how to legally print the barrel must be built in the 0 axis. We'll build this hammer subassembly, literally, in two pages, once you've printed, it's a method of making a computerized model. Now Emily Schmidt is in Washington, and joins us now.
We've just seen -- I'm going to about this -- we've just seen over here, Emily, the various parts, I've got the instructions but you've actually manufactured one of those parts. I think you've probably manufactured the grip.
Is that right?
EMILY SCHMIDT, CNN CORRESPONDENT: The grip; that's exactly right, Richard. We went to a 3D printing company, a place that's been in business for 10 years doing this sort of thing, printing architectural models for people, printing sculptures.
We said, here are the instructions. How would you do it?
Within an hour and 20 minutes, they showed us this is the grip that they were able to put together, a simple piece of plastic, weighs just a couple of ounces. And the person who is behind all of this says this is an entirely new landscape; in fact, it is a shot heard 'round the world.
Cody Wilson, in fact, put up the video online. He says it is the very first time he believes that someone has been able to print a gun entirely on a 3D printer and fire it. I spoke with him on the phone a couple of hours ago. He says Friday they fired one gun remotely. He says successfully.
They used a .380 caliber round. Saturday, they upped the ante, firing that second gun by hand. Now it did blow the barrel out. He says he's retired that particular gun, but he says this is going to change the very concept of gun control. As you mentioned, he's got that link to the gun design. Anyone can go online and download and print it right now. That's what has some lawmakers very worried.
(BEGIN VIDEO CLIP)
SEN. CHUCK SCHUMER (D), N.Y.: Let's think about this for a second. Now anyone, a terrorist, someone who's mentally ill, a spousal abuser, a felon can essentially open a gun factory in their garage.
(END VIDEO CLIP)
SCHMIDT: And Cody Wilson has posted this video online just a couple of hours ago. He said it has already been downloaded all around the world.
QUEST: Now here's a question, I suspect you can't answer, or indeed anybody can answer, as a matter of public policy at the moment, if they tried to restrict 3D printing of guns, do you think that would be regarding as against the Second Amendment, the right to bear arms?
SCHMIDT: You can bet that some people are certainly going to argue that. In fact, when you talk with Wilson, he says it's going to, he believes, correct the illusion, he says, that any kind of law can correct social problems.
But there's also, some are arguing, the idea of expression. This is something that is an online communication. So if you take a written document and print it, is that Second Amendment? Or is that a freedom of speech, is that a freedom of expression, printing something off? It's an entirely new situation and we really don't know where it's going to go next, Richard.
QUEST: Interesting stuff. Thank you very much for that report; very interesting, Emily Schmidt from Washington.
So the 3D printer which has been the boon and possibly the great benefit for the American renaissance of manufacturing in the future now appears to be ready for firearms. I'll have a "Profitable Moment" on something quite different after the break.
QUEST: Tonight's "Profitable Moment," and at the moment, it's a very profitable one for the airlines. Some of the low-cost carriers can be little tinkers. I didn't know whether to laugh or to cry when I heard that some airlines were now starting to charge to take a carryon onto the aircraft. Having taken money from us for a bag in the hold, now they want one for putting a bag on top.
In fact, these days, they charge for every conceivable extra. We'll have to wait and see if this particular cost contagion spreads to more airlines and all those little charges soon add up.
Whether it's Wizz Air with its double bag policy or British Airways with its new standard fare with a discount if you put something in the hold, I hate to say it, but I'm getting the distinct feeling that more and more airlines are going to start charging us to take a bag into the cabin.
So whether you want to sit together, take a bag on board, buy a drink, have extra leg room, one thing seems clear: the low-cost fare isn't so low after all. No, gone are the days where you paid a fare and you got on the plane. Now they say it's all a matter of choice. It seems to me it's a matter of entering your wallet.
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.