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Unemployment Warning; Youth Unemployment "New Deal"; EU Youth Unemployment Crisis; Youth Guarantee; Struggle Finding Skilled Workers; Global Market Rally; Housing Market, Consumer Confidence Up in US; China's Building Boom; SOHO China CEO Zhang Xin; Dollar Up; Make, Create, Innovate: More Cork for the Bark

Aired May 28, 2013 - 14:00   ET


NINA DOS SANTOS, HOST: Germany's finance minister warns that a failure to tackle youth unemployment will tear Europe apart.

An embarrassing letdown for Brazil as part of a stadium roof caves in just weeks before a major international football tournament.

And the problem with pop-ups. Companies now lose friends after their Facebook ads turn up on offensive pages.

Hello, I'm Nina Dos Santos, and this is QUEST MEANS BUSINESS.

Good evening. Politicians in Europe are raising the alarm these days about youth joblessness. Tonight, Italy, France, and Germany warn that the entire European project could be at risk if nothing is done about this pressing issue.

We'll also be speaking to the CEO of Manpower tonight, who says that despite high unemployment, companies are still finding it difficult these days to find workers with the right set of skills.

Also on the show, global stock markets are rallying at the moment. The Dow is currently up, as you can see, about 83 points at the moment. We'll have more on why it's going from strength to strength later on in this show.

First off, though, it's a fight for the future of Europe. France and Germany have launched an all-on assault, now, on youth unemployment, saying that Europe could break apart if they feel to conclude with decent policies on this issue.

The French president, Francois Hollande, and the German finance minister, Wolfgang Schaeuble, have said that they want a new deal on youth unemployment, a deal that would be set to target the hardest-hit nations across the eurozone.

It'll offer funds to help businesses over there to hire and encourage young people to move around across the continent in search of work. The $7.7 billion that'll be set aside in costs here will come from existing government funds.

And Schaeuble says that if the EU fails, it'll lose the battle for Europe's unity. Mr. Hollande of France has been saying that even countries like Germany now face a serious threat.


FRANCOIS HOLLANDE, PRESIDENT OF FRANCE (through translator): I don't need to insist. Youth unemployment is reaching unbearable levels in many countries. Over 50 percent in countries hit by recession, 25 percent in a country like ours. Germany is also not protected from this type of incompatibility between job offers and job seekers. So, we need to implement what we have decided.


DOS SANTOS: Well, France and Germany say that businesses in the south of Europe in particular are struggling to get the funds that they need to hire people. And in fact, the average youth jobless rate across the eurozone stands at 24 percent. So, we're talking a quarter of the young people across this region that can't find a job.

In the southern half of the bloc, it's even more pronounced than that. Let me just run you through some of the figures. We have two countries in particular where the rate of joblessness among young people is over 50 percent.

And, as you can see, if we start out with Greece, it is particularly high: 64.2 percent as of the latest count in February of young adults unemployed. This country's been trying to cut the minimum wage to make it cheaper for people to hire young people these days.

And also in Spain, recently the scene, of course, of many a protest against austerity, the jobless rate among 15 to 24-year-olds across Spain now stands at almost 56 percent and is rising.

Well, five other countries across the eurozone have high youth unemployment rates that stand above 30 percent. We're talking about Italy over there, also Portugal here in the west, and countries like Slovakia and Cyprus over there in the east, as well as Ireland in the west make up the other three.

ING's senior economist says that it's countries like these that'll define the future of the European project of a whole. Carsten Brzeski joins us now, live from Brussels to examine this topic in more details.

Carsten, the reality is, we just can't go on with 24, perhaps even more, percent of the young people in the eurozone being unemployed. This raises the specter of social unrest and a lost generation.

CARSTEN BRZESKI, SENIOR ECONOMIST, ING GROUP: Exactly. I think this is the biggest fear, and I think the German government has realized that this is the biggest fear, that the destiny of the eurozone can be decided, actually, on the streets of Madrid, of Rome, and not only in Brussels and Berlin.

Because social unrest could lead to populist parties and could probably lead to new trends that some European countries want to withdraw from the eurozone in a worst-case scenario.

DOS SANTOS: OK, so let's examine the 7.-something billion that's being put towards trying to get companies to hire. Throwing money at the problem won't solve it.

BRZESKI: No, definitely not. But we have to do something. That is for sure, and this is a very good first step. And of course, the other problem is that there is no demand, that there is no demand for the products of the SMEs in southern European countries.

So you can throw money at it, you can give some incentives to hire young people, which is fine, but you also have to do the structural work. The structural work means improve education, also enhance and increase labor mobility across the eurozone. Start off with a common second language, for example, and really bring incentives that southern European people are moving to core countries.

Because if you look, for example, at Germany, there is a lack of highly-qualified people, so try to match these skills and have people moving to Germany so that we're really at a functioning monetary union in which labor mobility works.

DOS SANTOS: Well, this is the really interesting thing. There's a hideous irony to all of this. It's that in places like Spain, where we have 50 to 60 percent unemployment, they could be moving north to Germany, where there are some low-skilled jobs that people don't want to take up. Why are we not seeing as much labor movement as originally the European project promised us 20-odd years ago?

BRZESKI: There are several reasons. One, obviously, is the language. We still don't share the same language. We even don't share a common second language in the eurozone. This is a big obstacle. The other one are cultural differences. Are these people really welcome to buy a German mid-size enterprise? We don't know.

These -- and the other thing is, actually, we don't even have the same diplomas or graduate diplomas acknowledged across the eurozone. So, if you had a Spanish diploma, it is not necessarily recognized by German authorities, which also hampers labor mobility across the eurozone.

DOS SANTOS: OK, Carsten Brzeski from ING, thanks ever so much for coming to us live from Brussels to put that into context.

Well, the European Commission has said that it already has plans in place to fix this ongoing pressing issue and that work needs to start as soon as possible. Let's have a look at exactly what they've said so far.

Well, the kind of measures that have been tabled here include a youth guarantee scheme. That means that every young person, according to this plan, should get a quality job offer or apprenticeship within four years of leaving education or paid work. Well -- four months, I should say.

It's based on programs that have already been tried and tested in places like Austria and also Finland, but he Commission also wants to overhaul traineeships. This would be designed to avoid young people being exploited as a source of cheap labor as well.

And it's designed to work with businesses, as Carsten was just saying before. This would be designed to offer better apprenticeships across the continent. The European Council president Herman Van Rompuy says that he's going to be putting youth unemployment high up on the agenda for the next month's EU summit meeting when it takes place.

As we mentioned before, there is an irony here. It's because millions of people have been searching in vain for work and as they've been doing so, companies themselves are also struggling to find the right workers for the jobs that they have on offer.

Manpower Group says a third of employers worldwide just can't fill the jobs that they have on their books because of a lack of available talent. Earlier today I spoke to Manpower's chairman and CEO, Jeff Joerres, and I asked him why there was such a mismatch.


JEFF JOERRES, CHAIRMAN AND CEO, MANPOWER GROUP: It's easy to point the fingers and say education's not doing it. Well, education is still putting out maybe what they were putting out in ways of skills years past. What's happening is is the criteria that companies are looking for for hiring has gone up.

The one that really is tough on the individual is two years experience. Well, how do you graduate from university and graduate with two years experience?

So, what you're seeing is companies raise that bar, they ask for intellectual curiosity, certain types of skills, working on a team in a global environment, and while education can give it, it's really about the experienced individual. So, internships, apprenticeships, are key.

Clearly, education and business need to work closer together, but right now, it's a bit of a conundrum because businesses keep kind of changing the game as education is a little bit harder to keep up with that kind of velocity of change.

DOS SANTOS: They certainly do. And so, would you say that, really, the policy response in terms of updated training and making sure that workers and people in the workforce get access, updating their skill set, falls on government policy? Or should the companies themselves be retraining their employees or constantly training them as part of the job?

JOERRES: It's a great question, because what we've seen in the past, particularly the 80s and 90s, very robust training programs delivered by companies. But however, companies don't have the margins that they had before and they can't keep the employee as long as they did before, 25, 30 years. Now, you're looking at 15 jobs in a person's life.

So, it really comes down to much more of a social dialogue. Government has a large role to play in training and development. That is a role that could be played. But doesn't mean that companies abdicated completely. Individuals have a large role to play because they have to stay intellectually curious. They can't just go to university and check out.

So, what I talk about is -- it's much more of an iterative model, back and forth, training, workforce -- experience in the workforce. And government, businesses, and individuals should be at a table and come up with much better solutions than what we have right now.

DOS SANTOS: Now, we've got the EU planning to come out with its major policy response to the current high levels of youth unemployment. What would you, as the head of Manpower, think that they should be putting into that policy package?

JOERRES: Well, I was fortunate enough to do a lot of work on the G20 that was held in Mexico, specifically on youth unemployment and unemployment, as a representative of the B20. We talked about four or five major initiatives, but one of the big initiatives is paid internships more -- put more money into apprenticeships.

Also, work with the suppliers, particular the smaller suppliers of large companies, to mentor those companies so that jobs can be created, and then also do some infrastructure investment where young people can participate in it.

We have to get the young people participating in the workforce, because if they check out -- which in many cases they have, either their fault or the economy's fault or a company's fault -- when they check out for five, six years, you've pretty much lost that person all the way through their life. And that's something that we just can't afford from a social perspective or from an economic perspective.


DOS SANTOS: Let's have a look at how all this is playing out on the stock markets. Well, stock markets right around the world seem to be recovering from last week's wobbles. As you can see here, at the last count, Wall Street has managed to return from its day off yesterday in something of a positive mood.

Nerves seem to be steadying after Ben Bernanke's comments made last week, that the Fed may scale back its bond-buying program. For the moment, as you can see, the Dow Jones industrial average is having none of it. At the last count, it was up nearly six-tenths of one percent.

And here's another issue which has brought the positive sentiment back on the table. A strong housing report has been boosting stocks in the United States as well. Now, the US home price has posted their strongest gains since all the way back in 2006, and that means that prices are up more than 10 percent in Q1 alone. That's the fourth consecutive quarter- on-quarter year of gains.

We have said many times that the S&P/Case-Shiller index is obviously a key indicator for how the US is doing these days. The housing market has really, really rebounded. The jobs market a bit less so, though.

Now, all of this is also a good impact on consumer confidence, because US consumer confidence a few hours ago showed a significant uptick. Renewed confidence in the jobs market managed to push this key index up, as you can see, to 76.2 percent for the month of May, and that is actually a five-year high.

This kind of data, surprise surprise, helped European markets to finish up on something of an upbeat note themselves. The London FTSE 100 rebounded from last week's losses finishing up more than 1.5 percent on the day.

On Monday, the European Central Bank signaled that it would -- that stimulus would stay in place as long as it was needed by some of these ailing economies. We also saw the bank of Japan making some supportive comments as well, and that's helped to boost stocks as well.

After the break here on QUEST MEANS BUSINESS, how to be a billionaire. The story of this Chinese developer made a fortune. She talks about he possibilities but also the profits.


DOS SANTOS: Build it and they will come. That expression has been likened to China's development plan for rapid urbanization. While affordable housing remains out of touch for many people, empty apartments have been gathering in the dust in the city of Zhengzhou. Even so, the high rises are still springing up, as Ivan Watson now reports.


IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): This is the Chinese dream: a young couple, posing for wedding photos. The Zhangs have traveled more than 100 miles for this photo shoot in a park in the provincial capital of Zhengzhou.

It's an oasis in an urban landscape of recently-constructed towers of glass and steel. But the newlyweds say they can't afford living this Chinese dream, and the same goes for 25-year-old Li Cai Juan and her friends. The tell us they'd like to live here, but they simply can't afford it.

As China's economy has surged, Zhengzhou has experienced a construction boom. In an area nearly twice the size of San Francisco, entire new districts of towers have sprung up where ten years ago, locals say there were only empty fields. Experts call this a uniquely Chinese model of urban development.

TOM MILLER, AUTHOR, "CHINA'S URBAN BILLION": China is different because it has this very kind of authoritarian power structure, and the power rests in the hands of very few people. And that means that local government officials can take big decisions, sort of looking ahead to 10, 15 years, and they can therefore build ahead and create something for a society that hasn't really arrived yet.

WATSON: Developers are working hard to populate the city's new district. Advertising a buy-two-floors-for-the-price-of-one deal in a new apartment building. And this is just the tip of the iceberg.

WATSON (on camera): This is how one of the real estate companies in town is advertising this new city, and basically pitching it to customers as an entire city under construction.

WATSON (voice-over): In the showroom, I get a look at plans for a massive new office part.

WATSON (on camera): Do you think there are going to be enough customers for all of this?

SONG LEI, SALESWOMAN (through translator): Altogether, probably not, because some people are buying property only for investment.

WATSON (voice-over): Investment. Experts say some of China's booming real estate market is being driven by wealthy Chinese investors, like this man, who's signing a deal for the purchase of two new unfinished offices. He and his friends say they make much more money buying up property than they would parking their money in banks, were interest rates are low.

This speculation in the real estate market has led to some strange results. In Zhengzhou, we find brand-new buildings standing empty. Take this shopping mall, for example.

WATSON (on camera): Looks can be deceiving. Outside, the signs advertise the shopping experience in this mall, which opened up months ago. But look indoors. There's not a single store in this massive empty space.

WATSON (voice-over): Ghost developments like this have led some observers to question China's development strategy: if you build it, they will come.

MILLER: China has ways of making them come as well. So, it's build it, and they will come, and build it and force them to come, to a certain extent. But of course, there will be big waste from investments white elephants along the way.

WATSON: So, China keeps building, betting that eventually its rapidly-growing urban population will need these houses, even if for now, many ordinary Chinese people simply can't afford them.

Ivan Watson, CNN, Zhengzhou, China.


DOS SANTOS: The Chinese property market is vibrant, that's certainly the case, but the layers of policies behind it all too complex, according to a major player in China's real estate boom.

Zhang Xin is the CEO of SOHO China, last year the biggest commercial property developer in Beijing and Shanghai, made around about a profit of a half a billion dollars here. Zhang Xin posts comments every day on China's version of Twitter, and she has more than 5 million followers.

Pauline Chiou sat down with her and spoke to her earlier. She started off by asking if it's difficult to do business in China.


ZHANG XIN, CEO, SOHO CHINA: In certain ways, you have a government that is -- its policies are very unstable and very often come out with -- real estate policies are very much against the market. But on the other hand, you also have a market that is very vibrant. People are hungry for new products.

So -- and in that regard, if I was a developer in Hong Kong, for instance -- there are just so few opportunities. Whereas in China, there are a lot of problems, but also there are a lot of opportunities, precisely because there is so many problems. Things are not established, and therefore, there are opportunities.

PAULINE CHIOU, CNN INTERNATIONAL CORRESPONDENT: You moved from residential real estate to commercial, and now you're focusing on commercial. Why did you do that, especially when we see new home prices still rising?

ZHANG: We made a very conscious decision about seven, eight years ago when we saw that residential development has become very political, because the government's policy kept on coming out which are against any price going up, because it's a very social issue.

People -- people who buy the properties will want the property prices to go up, but people who haven't bought the properties don't want the property price to go up, and everybody voiced their opinions and it becomes very political, and the government comes out with policies that deals one day with this side of the board, and the other day with this side of the board.

CHIOU: It's not just a knee-jerk reaction --

ZHANG: That's right.

CHIOU: -- to home prices. But why don't you think the measures are working? Because they've done everything from requiring a higher down payment, banning certain cities from giving out third loans, third homes -- loans, and also trying the property tax. But we saw in the last month, home prices are still rising. Why isn't it working?

ZHANG: I think the policies are so distorted that it's no longer -- you no longer know what works what doesn't work, because it's like someone who's sick. You've been taking so many medicines, you've lost the sense which one works, which doesn't. That's a little bit like the real estate market in China.

In a perfect situation -- of course, we're never in the perfect situation -- in a perfect environment, where there is demand, there should simply be a supply. If people want to have the properties, you just supply, right? And if you don't want too much supply, you can always control the land price, you can control the interest rate.

But in China's case, the government has so many elements they need to worry about -- local government needs revenue. So, if they don't sell land, where do they get the revenue? So, then they have to continue to sell land. So, and then it's just all very complicated policies, layer after layer.

I personally think that this industry really badly needs a longterm, sustainable policy that gives people a right sense of what will happen in the next -- if I were to make an investment, if I were to buy something, what would happen this year versus next year versus five years versus ten years. Without that, it's just very, very hard for people to make a decision.


DOS SANTOS: Time now for tonight's Currency Conundrum. Canadians have been complaining that their plastic bank notes smell of something strange. So my question to you this answer is, could it be A, that the smell of maple syrup? B, damp dog? Or C -- afraid it's the grossest of the lot -- socks. I'll have the answer for you later on in the program.

Well, speaking of currencies, the dollar's up against the British pound and the single currency across the eurozone. It's also up nearly 1 percent against Japan's currency, the yen. Obviously, that'll give the Bank of Japan something to celebrate about. We'll be back after this.


DOS SANTOS: Welcome back, you're watching QUEST MEANS BUSINESS. Now, to Portugal, where money really does grow on trees. Scientists there have worked out a way to get even more bark for their buck. Nick Glass traveled to Portugal for this week's Make, Create, Innovate.


NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Along a sandy track and into the trees, vast swathes of southern Portugal are like this, hundreds of thousands of hectares, idyllic, bio-diverse. And everywhere, a crop first harvested by the Greeks and Romans.

GLASS (on camera): Quercus suber, that's its Latin name, the species of Western Mediterranean oak tree that has given us something very special for thousands and thousands of years, namely, cork. Now, scientists have been able to extract more from it, namely give us more cork for our bark.

Do you like cork?


GLASS (voice-over): Cork is impermeable, buoyant, elastic, fire- resistant. Professor Helena Pereira fell in love with it and this landscape as a child. Her research is now helping sustain its future.

Cork can only be harvested from mature trees every nine years. You have to be deft, surgical, with an ax. The trunk itself shouldn't be touched, only the bark. Two men strip this tree in just ten minutes. The yield, a pile of cork worth about $100.

GLASS (on camera): There is a little bit of snobbery in the cork industry. Corks for fine wine are literally punched from the raw materials. They're an integral part of how a good wine ages. Reconstituted corks from granules are rather less pleasing on the eye, and they're only used for lesser wines.

GLASS (voice-over): Professor Pereira and her colleagues discovered a way of getting more cork from the granules left over from the raw bark. At a cellular level, cork's a honeycomb of hexagonal prisms, millions of them, all a little warped and bendy. By adding a little moisture and some intense heat, they were able to stretch the cells.

PEREIRA: We expanded the cells so they became straight, and they increased in volume, of course. And the increase is quite heavy. They best case is we add over 80 percent increase.

GLASS: Equally surprising was the way they did it in the lab, by moistening the granules in a special container and then simply popping them into the microwave.


GLASS: A few minutes later, and presto, bigger cork granules. On the left, the granules before. And on the right, after they were microwaved.

GLASS (on camera): Did you have to buy a domestic microwave?

PEREIRA: In fact, yes. In fact, yes. It was. We started with a domestic microwave, yes.

GLASS (voice-over): This expanded granular cork has more and more applications, most obviously for insulation. In the factory, they rain down in their millions. The leading Portuguese producer, Amorim, is reasserting its market share against competition from plastic and metal bottle tops. Turnover last year was over $600 million.

Outside in the sun, the factory's stockyard is full of cork planks.

GLASS (on camera): Making the most of the harvest has helped reinvigorate an ancient industry.

GLASS (voice-over): Science is helping us preserve this landscape. The same beauty, the same sounds, outside and in.


DOS SANTOS: Fascinating stuff. Well, coming up after the break, a leaky roof raises concerns over Brazil's preparedness for the 2014 World Cup.



DOS SANTOS: Hello and welcome back. I'm Nina dos Santos. These are the news headlines this hour on CNN.


DOS SANTOS (voice-over): There are fears a foreign arms race could begin in Syria after the E.U. agreed to allow weapons to be sold to rebel fighters. The E.U. dropped its embargo under pressure from Britain and France.

The decision was criticized heavily by Russia, though, which has now disclosed that it is to provide the Syrian government with anti-aircraft missiles.

Lebanese state media has reported that rockets have fired from Syria and landed in and near the city of Hermel within its borders. It's just across the border from Qusayr. That's where Hezbollah fighters are currently helping Syria's al-Assad regime. Well, so far, there's no word on reports of injuries.

One of the suspects accused of murdering the British soldier Lee Rigby in London last week has been discharged from hospital. Police say that 22- year-old Michael Adebowale will be interviewed by counterterrorism detectives at Scotland Yard.

Another suspect, Michael Adebolajo, is still under police guard in hospital. His family have issued a statement condemning all acts of religious and political violence.

A car bomb has killed at least seven people near a busy intersection in Sadr City in eastern Baghdad. The blast injured dozens more people in the densely populated Shiite area at the Iraqi capital.

Now the Spanish prime minister, Mariano Rajoy says that the ECB should do more to fund small businesses in Spain. Word of this comes as France and Germany have launched what they call a new deal to encourage companies in Southern Europe to hire more young people.

And this is news just coming in to us here in CNN, a train has derailed in Baltimore, Maryland. According to a local fire department, there's been some kind of explosion -- that's their words -- involving cars on a train.

The cause of the incident is not yet known. What you're watching is smoke billowing from that train. These are live pictures we're showing you, coming from that train in Baltimore, Maryland.

Now fire crews are making their way to the scene. A spokesman from the fire department there was not aware of any injuries at present, and they also say that they're not aware of the contents of the rail cars.

But these are live pictures we're showing you now from Baltimore, Maryland, where a train has derailed as a result of what the fire department there calls an explosion on cars that were traveling on board that particular train. We'll bring you more as we get it.



DOS SANTOS: Part of the roof of the Brazilian football stadium has given way. And this is just weeks before this country is due to host a major international soccer tournament.


DOS SANTOS (voice-over): Well, the manager of the Arena Fonte Nova says that workers mistakenly bent part of the stadium's roof, allowing rainwater to build up. Well, staff were seen bailing out water out of the sagging roof with buckets to stop another section from caving in after the first one did.

The arena is set to stage three matches in the eight-nation Confederations Cup that's set to take place next month.

The Brazilian president Dilma Rousseff has praised her country's preparations for the cup, saying that Brazil would, quote, "shine on," and also off the field.

The Confederations Cup is considered to be a warm-up for the World Cup, which Brazil is set to host next year. The incident underscores concerns that this country may not have its facilities ready in time. CNN's Shasta Darlington has more now from Sao Paulo.


SHASTA DARLINGTON, CNN CORRESPONDENT: A new embarrassment for organizers of the Confederations Cup here in Brazil, and coming just one year before the World Cup. Heavy rains in the northeastern city of Salvador ripped a hole in the roof of a brand-new stadium there.

Now the company that installed the roof says this was actually due to human error. They say a worker doing tests on the waterproofing in the roof left the canvas folded over so that when the rains came, it accumulated and ripped a hole through that roof. No one was hurt.

These tests were being carried out between games and organizers say this could never happen during a game itself. But this can't help but raise questions about just how prepared Brazil really is.

And to add to the embarrassment, it happened on the same day that Brazilian president, Dilma Rousseff, went on her weekly radio program to praise organizers, saying, "You see; you got all six stadiums done ahead of the Confederations Cup, proving those pessimists wrong."

And this isn't the only stadium to have problems. Even Marikana, the iconic stadium in Rio de Janeiro, isn't 100 percent ready. Organizers there say that the friendly that will get played this weekend between Brazil and England won't benefit from 100 percent systems go. They say they actually won't be completely ready until kickoff on the 15th of June, when the Confederations Cup starts.

Now to be fair, Brazil had a very ambitious plan ahead. The Confederations Cup will be played in six stadiums in six different cities. And one year from now, the World Cup will be played in 12 different stadiums in 12 different cities.

So they've had a lot of arenas to prepare, a lot of airports to update, hotels to build. Public transportation to think about and no doubt visitors will be wondering if everything is going to be ready on time -- Shasta Darlington, CNN, Sao Paulo.


DOS SANTOS: In other news, it's been alleged that Chinese hackers stole blueprints for Australia's new intelligence hub. The Australian government is so far refusing to confirm the report that aired on the national broadcaster. China has dismissed the claims as groundless. This report is from our Australian affiliate, Channel 7.


ALEX HART, CNN CORRESPONDENT (voice-over): The Australian Security Intelligence Organization's director general, David Irvine, was optimistic after touring his nearly complete headquarters last month.

DAVID IRVINE: Well, I certainly hope it's a very secure building.

HART (voice-over): But a report last night claims it's not, alleging Chinese hackers stole the building's blueprints from a contractor's computer, seizing details of the security systems, floor plan and server locations.

KEN MORGAN, COMPUTER SECURITY EXPERT: It's embarrassing for the government and the organization.

HART (voice-over): The prime minister says the report was inaccurate.

JULIA GILLARD, AUSTRALIAN PRIME MINISTER: There were a number of unsubstantiated allegations of hacking.

HART (voice-over): But the government initially refused to publicly comment on the central claim.

NICK XENOPHON, AUSTRALIAN INDEPENDENT SENATOR: It's just a bit cheap for the government to say it's all a national security issue. We have a right to know.

HART (voice-over): A short time ago, government sources told 7 News the allegations about Asia were not correct. The Greens believe massive cost blowouts and construction delays still warrant an inquiry.

CHRISTINE MILNE, LEADER, AUSTRALIAN GREENS: We need to know exactly what's going on with the building.

HART (voice-over): Alex Hart, 7 News.


DOS SANTOS: Well, after the break, a Twitter storm rains down on Facebook. Some advertisers have been pulling out.



DOS SANTOS: Facebook's facing a backlash after ads appeared alongside content which appeared to promote violence against women. Well, the issue has sparked a protest on Twitter. More than 50,000 tweets have been sent using the hashtag #fbrape. The campaign highlights brands whose ads appear alongside content which encourages or it seems condones abuse.

Britain's Nationwide Building Society has suspended its advertising in this tweet. It also apologized for any upset, as you can see, that this has caused.

Now Dove, the skin care manufacturer, whose campaigns are often about women's self-esteem, has faced criticism itself for not pulling its advertising immediately. And this is exactly what the statement that it came out today has said.

"We are working," as you can see here, "with Facebook," Dove says, "to prevent our ads from appearing on these pages." It also went on to say that the ads target the users, not the pages themselves. Well, Facebook's told us tonight that most of the content referred to the original Twitter campaign that is no longer on the site.

But of course it's something that has generated a lot of heated debate out there in cyberspace. And joining me now to discuss all this from CNN New York is Peter Shankman. He's a social media consultant and also the author of the book, "Can We Do That?"

So great to have you on QUEST MEANS BUSINESS tonight, there, Peter. First of all, could you explain to us exactly how you think this has happened? Because it seems pretty unfortunate, but it also seems to be linked to algorithms that you can't control.

PETER SHANKMAN, AUTHOR: Yes, that's one of the problems when you're Facebook and you're that big and all your ads are targeted specifically through specific algorithms, through specific people, specific brands, specific pages who make this much money, who are this old, who live in this part of the world. You know, you're going to get backlash at times.

The problem they're having right now is that someone who monitors these campaigns for the brands should have looked to see that they were running and said, hey, now, wait a second, it's running next to some stuff we're not -- no, that's not cool, and just immediately kill it. Figure out what's going on.

You have the ability to suspend a Facebook campaign in real time. That would have solved the initial problem because then the brands wouldn't be linked to those ads for more than five minutes, 20 minutes, for as long as it took them to bring them down.

The problem is once they hit social media, no matter when they're taken down, it's a lot harder to defend yourself. The right response when it's something advocating violence towards women or something along those lines, which really isn't appropriate in any form, even to make a joke out of, is to say simply we didn't realize it was there; we have removed the advertising.

I'm a little disappointed in Dove, to be honest with you. They're usually first and foremost, especially with women's self-image and women's rights, to say we're looking into it. It was a little bit of a copout. Keep in mind, though, Dove is owned by the same company, I believe, that owns Axe and Axe Body Wash is well-known for their ads that promote guys meeting girls, having sex, things like that.

DOS SANTOS: Right. OK. So a little bit of a conflict there. But Peter, this also raises the specter of Facebook yet again. Facebook has been repeatedly criticized for things popping up on Facebook that are particularly graphic or violent or dangerous and not taking them down in time. This doesn't look very good for Facebook at all.

SHANKMAN: No, it really doesn't. And Facebook does need to act on this, because it's going to get bigger. These are small things that start off -- when Facebook had their first advertisers, not everyone knew about it.

Now Facebook is a daily part of our lives in every single capacity. Now, granted, it's not as much of a daily part of our lives the same way it was when it was only college kids getting on. Now it's mom and dads; it's grandmas, it's aunts and uncles. So you know, Facebook does need to be aware of this.

And it wouldn't surprise me if they're putting together a team to proactively go and look for these sort of conflicts when they arise and remove them. Facebook in the United States walks a fine line in the respect that, you know, what is prohibited content and what is socially acceptable versus what is First Amendment free speech.

And they can't be seen as censoring. It could advocates violence, you know, it's the shouting fire in a crowded movie theater analogy. That can incite violence; that can incite problems, you can remove that.

But Facebook can't remove everything simply because someone doesn't like it, because they're so big, there's always going to be someone who doesn't like something. But they do need to set certain guidelines and Facebook has been a bit lax in doing that. They've been hiding behind their classic line of we look at each case individually and we take action based on the case.

Unfortunately, that's sort of a copout as well. They need to come down with a hard set of stringent rules and really stick to them.

DOS SANTOS: I suppose the issue is that if you got over a billion users, which is more than many countries have as populations, you also have to have the kind of governance to deal with the issues that crop up because you are responsible for that.

Thanks ever so much for that, Peter Shankman there, social media consultant, also the author of "Can We Do That?" joining us from New York.

Now let's turn attention towards the weather forecast. Now I'm afraid to say apparently that's not looking particularly positive for those of us here in Europe, either, Jenny Harrison is standing by for the bad news for people like me.


DOS SANTOS: At the CNN International Weather Center.


HARRISON: I tell you what, Nina, you look lovely. I was saying to you earlier, you've got a lovely linen frock on and you are -- you're just going to ignore the weather and just carry on as if it was beginning to move into summer. But yes, you're right; it's not very good I'm afraid. This usual sort of picture on the satellite (inaudible). We've got some thunderstorms.

It's all moving through. I can tell you that the system that's bringing quite a bit of rain across the U.K., very heavy rain across into Wales right now, it is actually pushing south. Look at this in the past 24 hours, 35 mm to this location in Poland, at Poland and then also some more pretty large hail again in Italy. We had some large hail there this time yesterday.

But look at this, all pushing across much of western France, some very heavy thunderstorms through southern and eastern France, pushing into the low countries and this is all just spinning across and pushing through the U.K. And as I say, very heavy across much of Wales as well.

Now what it means for the French Open is I have to say a little bit of a soggy sort of picture, really, the showers have eased off in the last few hours. And as for current conditions the temperature obviously has dropped just 14 degree Celsius. The winds are quite breezy as well coming in from the west. So as we head into Wednesday, there is still that chance that we could see a few more showers.

The temperatures are being kept lower, which is pretty good I'm sure for the players. It just means if you're standing there or sitting there as a spectator, you probably do have to stay wrapped up. So 16 Celsius at best with those showers. See, and that is just the thing continuing. So I'm afraid yet another few days ahead, cool and showery.

This is the jet stream. It's so far south and it's just blocking these systems from moving further eastwards. And then allowing anything like high pressure to actually move in in its place, so look at this, still very unsettled, still a bit more snow across the line of the Alps. And you can see instead, just not many places enjoying fine and dry weather.

Even Madrid pretty cool as we head into Wednesday, just 19 Celsius, that cool air really spreading to the southwest. But very nice in Athens, 29 Celsius. And of course, pretty nice to the east of Europe, where we've got that high pressure. So 22 Celsius in Bucharest.

Now across the West Coast of the U.S., we have got these -- at this time of year again some fires burning, in particular this one has been called the White Fire, not far at all from Santa Barbara. It's in Santa Barbara County, only 10 percent contained so far. There's still the growth potential too for it.

We've got some pictures to show you.


HARRISON (voice-over): It began on Monday afternoon and the -- obviously the emergency personnel out there, hoping to have about 700 personnel on the ground. They're fighting it, of course, from the air as well. They perhaps will evacuate several thousand personnel, people on the ground.

There's a big campground here, which was really busy over the holiday weekend so several thousand people have been evacuated from there. The winds are going to die down as we go through the week. If you come back to me, I can just tell you a little bit.


HARRISON: But that will stay dry. But the winds will ease instead. We're just going to have to watch this system across central regions, more severe thunderstorms breaking out here. And of course, it'll stay hot and dry in the south, but a bit cooler out towards the west, Nina.

DOS SANTOS: OK, Jenny. Well, good news for some, even if it's going to be rainy for people like me. But thanks ever so much for that, Jenny Harrison there, with the full weather forecast picture.

Well, speaking of the E.U. and the United States, here's an interesting factoid for you. In the European Union, it's 20 days; in the United States, it's zero. After the break, why the U.S. still lags behind the world's richest nations when it comes to paid vacation.





DOS SANTOS: Welcome back. Time now to answer tonight's "Currency Conundrum," it's an answer I'm sure many of you (inaudible) some time for. Earlier in the show, I asked you why the (inaudible) Canadians have been complaining that their banknotes smelled of something strange. And the alleged odor in question was this stuff.

It's maple syrup. Arguably this is obviously a Canadian national staple, isn't it? And it does indeed have something of a very distinctive smell. I can vouch for that here with this bottle that one of our producers picked up earlier.

The Bank of Canada was actually forced to issue a statement to deny that the parliament bills had somehow been impregnated with the flavor of this very sweet substance that comes from Canada, one of the most famous substances and exports they have.

Well, Americans who had a day off on Memorial Day yesterday and were paid for it should count themselves lucky, apparently, because the United States is the only advanced economy in the world that doesn't require employers to actually offer paid annual leave.

This is according to a report for the Center for Economic and Policy Research. Felicia Taylor joins us now live from New York with more on this.

A lot of people have been wondering this for years, Felicia. Why is it?

FELICIA TAYLOR, CNN CORRESPONDENT: Well, let's be very specific, because many corporations in this country do offer paid holidays and vacations. It's just not a requirement. It's not a mandate that companies have to do this. On average, you're going to see that people get about 10 days, depending on the size of the company.

Let's take a look at some of the other nations, because the number of days is quite remarkable and it's fabulous, if you ask me.

In France, you get 30 paid vacation days, one holiday. And (inaudible) the distinction is it's probably Christmas if it is their guaranteed or New Year's if they're guaranteed. And then in the United Kingdom, you guys don't have any paid holidays, but you've got at least 20 paid vacation days, not so bad.

Moving through, let's take a look at some of the nations that have the most holidays and paid vacation days. That's Austria, Portugal and Spain. You can draw your own conclusions about the number of days that Portugal and Spain take off in order to have paid vacation and paid holidays.

So and then, you know, it's varying numbers. On average throughout the European countries, it's about 20 paid vacation days, and the number varies when it comes to the various holidays, because obviously, you know, the different holidays in different countries, everybody may not take Christmas or New Year and there may be other individual holidays in those various countries.

All right. So here's the big fat naught in the United States. But like I said, the caveat really is that most companies depending on the size and also the seniority, the age of the employee, do offer some sort of paid vacation and paid holidays, depending.

And most companies, like I said, they get 10 paid vacation days. Twenty-three percent, though, get actually no paid vacation. Another 23 percent get no paid holidays. So that's quite significant. And on average, most rich countries offer at least six paid holidays.

I found this incredibly interesting. There are some companies that actually offer you extra money for your holiday days to help assist you with your actual trip, like for instance, you get money to go to fly to Hawaii. That's a good deal. That is a really good deal.


DOS SANTOS: Money to go on your holiday, especially when it's somewhere warm. Sounds pretty good to me.


TAYLOR: (Inaudible) in addition to the day.

DOS SANTOS: Extra money for the (inaudible) put my hand up for that one, I might say.

Felicia Taylor, joining us live from CNN New York, with that interesting comparison on holiday days.

When we come back, we'll hear from South Africa's finance minister.



DOS SANTOS: In South Africa, growth has slowed. The economy expanded at just 0.9 of 1 percent in the first three months of the year. Now the reading is actually the slowest pace of growth that we've seen since all the way back into 2009 (inaudible).

The main culprit, it turned out, was manufacturing, which suffered a steep decline. And the central bank in South Africa recently cut its four- year economic growth forecast back to 2.4 percent.

Richard spoke to the South African finance minister two weeks ago and asked him what he made of those who say his country will be lucky to expand just 2 percent this year.


PRAVIN GORDHAN, SOUTH AFRICAN FINANCE MINISTER: I think that's overly pessimistic. There are more positive than negative factors at this point in time. And if the European situation is more stable, it provides less surprises and less shocks to the global economy, I think we have a much more optimistic outlook.


DOS SANTOS: And that's it for this edition of QUEST MEANS BUSINESS. Thanks for joining me. I'm Nina dos Santos in London. I'll be back with a recap of the news headlines (inaudible).



DOS SANTOS (voice-over): There are fears that a foreign arms race that could begin in Syria after the E.U. agreed to allow weapons to be sold to rebel fighters. The E.U. dropped its embargo under pressure from Britain and France.

The decision was criticized by Russia, though, which has disclosed that it could provide the Syrian government now with anti-aircraft missiles.

A car bombing has killed at least seven people near a busy intersection in Sadr City in eastern Baghdad. The blast injured dozens more in the densely populated Shiite area of the city.

One of the suspects accused of murdering the British soldier Lee Rigby in London last week has been discharged from hospital. Police say that 22- year-old Michael Adebowale will be interviewed by counterterrorism detectives at Scotland Yard.

And also finally fire crews are working to free a person trapped in the derailed train in Baltimore, Maryland. The local fire department says that there was some kind of explosion involving cars on the train.


DOS SANTOS: That's a look at some of the top stories we're watching for you on CNN.

"AMANPOUR" is next.