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QUEST MEANS BUSINESS
EU Softer on Austerity; Mission for Growth; Uneven Recovery; OECD's Report Card; Slovenia Concerns; Markets Falling; Kenya Pay Hike; Dollar Down; China Outlook Worsens; Chinese Tourists in New York
Aired May 29, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, HOST: Heading for extra time. France and Spain get two more years to hit their deficit goals.
Negative thinking. The OECD says it's time to go below zero in the eurozone. We'll be speaking with the secretary-general.
And the best-paid politicians in the world, Kenyan MPs, give themselves a pay rise.
I'm Max Foster, this is QUEST MEANS BUSINESS.
Brussels has given its clearest sign yet that it is turning away from austerity. It's taking a softer line on budget discipline, allowing some member states to overshoot the bloc's debt and deficit limits.
Now, the Netherlands and Portugal get an extra year to bring their deficits of GDP. Spain, France, and Poland -- Spain, Poland, and Slovenia have an extra two. Commission president Jose Manuel Barroso urged France in particular to use the extra time wisely to lift competitiveness.
Now, the Commission also excused five countries from special corrective measures known as excessive deficit procedures, or EDPs. They've -- they're triggered when a member state breaches EU debt limits.
Now, Hungary, Italy, Lithuania, Latvia, and Romania are all off the list. Italy's new prime minister says the Italian people should be proud. Enrico Letta has reaffirmed his commitment to stick to Italy's budget commitments.
However, the Commission added Malta to its list, taking the total number of countries under an EDP to 16. The European Commission president warned many parts of Europe are facing a social emergency.
Jose Manuel Barroso said reforms are urgently needed and must be targeted at getting people back into to work. He added, "Good budget discipline should help, not hinder, economic growth.:
(BEGIN VIDEO CLIP)
JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: The debate about austerity versus growth has been to a large extent futile and even counter- productive. Instead of fueling with our devices and can only undermine confidence, our capital should focus on promoting European consensus, which the commission is putting forward.
With more determined and urgent action growth and reforms. And tat the same time, more focused action to address unemployment, especially youth unemployment. The crisis has left us with a strong conviction that we need to reform, and to reform now.
(END VIDEO CLIP)
FOSTER: While EU member states get an easier ride, the European Central Bank is being urged to take radical steps including negative interest rates to tackle recession and unemployment in the eurozone.
The call comes from the OCED. Today, it forecast the recession in the eurozone will be even deeper than predicted, with the economy shrinking by 0.6 percent this year. He said the global recovery will be uneven with the chief risks as follows.
Number one is Europe. OECD warns of bad interactions between weak banks, government finances, and the real economy. It could feed off each other to ill effect as well.
The second risk is what happens after the end of QE. The OECD warns that withdrawal of all that extra cash could lead to market instability.
And finally, the OECD says there's no credible plan to get the debt down in the US and in Japan. Just before we went to air, I spoke to Angel Gurria, the secretary-general of the OECD in Paris.
ANGEL GURRIA, SECRETARY-GENERAL, OECD: Well, I think it was inevitable. There's been a slowdown in the most important economies in the world. Trade is growing only at around 2 percent. Normally it was growing at 5 percent in the years before, even during the recovery period.
So, right now, we're in a bit of a difficult patch and yes, we have a very low or negative growth in Europe. We have the stimulus in Japan, which is creating growth for the time being in 2013. And in the case of the United States, that's where we see the more robust type of growth, a more sustainable growth going forward.
And in the large emerging economies, of course, China is back on the track around the 8 percent level. India is about 1 percent more than last year. So, it's a very uneven kind of multi-speed type of recovery.
And then the problem is, of course, if people are not buying, those open -- large open economies, those medium, small-sized open economies that depend on trade are not going to go very far.
FOSTER: Good news about the US economy, the world's largest economy, possibly driving what growth there is, but the big concern, obviously, Europe still. And you're talking about a concern about complacency setting in, which could make this whole recession in the eurozone even worse.
GURRIA: Frankly, I don't think there's any room for complacency even in the case of the United States. Of course, we are confronting the fiscal sequestration or whatever the part of the fiscal cliff that is remaining, and that is taking away an important chunk of the potential growth.
In the case of Europe, we do have some of the major economies still in negative growth or flat growth. And we have to deal with the short term. We have to deal with the debt, we have to deal with the unemployment, the question of growing inequalities.
Unemployment is still growing in the euro area. It's above 12 percent on average. But then if you look at the unemployment for the youth, you're talking about 24, 25 percent. Countries like Spain or Greece, you're above 50 percent unemployment of the youth. So, their conditions are more difficult.
And there's a third element, which is a very serious erosion of trust. And this is happening throughout, not just in the case of Europe. Because of the economic situation, because it's been five years in the crisis already and we don't seem to be able to get out of it.
Then there is a very serious erosion in governments and ministers and political parties, of course, in the banking system, in the large multinationals, et cetera. And that also is not good because, of course, if people do not feel ownership about the policies, the policies take longer and it's more difficult for them to work.
FOSTER: And this policy-making, the lack of direction, there's a lot of confusion, there's -- that's one of the problems in Europe.
And now we have this move -- this softer line on those three big European economies, allowing them to overshoot their budget deficit limits, which was a fundamental sort of cornerstone of the whole system. And so, is the whole system breaking down? What do you think about that move?
GURRIA: No, Max, I think here I disagree with this notion. I think it is appropriate that we give some of the countries more time to reach their stated targets. Why? Well, because facts have changed. Conditions have changed. The context has changed.
If growth is much lower or even negative, in the context in which these economies are operating, they are, of course, each other's main trading partner, they're not going, therefore you can not expect trade and exports and the -- to have a big pull effect.
So, basically, you are having a situation where in order -- because recession or low growth brings down or reduces the income, the revenue, and at the same time, you have more people unemployed, you have to pay for their unemployment benefits, you have to pay for their health benefits.
Then, of course, you have this double whammy that reflects in the deficit. So, you need one more year, two more years. Just don't lose sight of the ultimate target.
We have to get to a point where we start reducing -- or at least first of all we stop growing -- we stop growing the debt -- we stop growing the debt-to-GDP ratio. And then, over time, we start reducing it. But we're talking about 15 to 20 years. It's going to take a generation to get back to where we were a few years ago.
FOSTER: Well, as I mentioned, Slovenia is one of the countries getting two more years to put its finances straight. In return, it's being told to step up reforms.
The European Commission says Slovenia should stand ready to recapitalize its banks. It should also increase official scrutiny of the banking sector and make it more transparent, and it should step up efforts to privatize its state-owned companies. The commission says the quick sale of 15 state-owned assets would signal that the country is open for business.
The OECD is also concerned about Slovenia's banking sector as well as rising unemployment and a weak labor market. It says the economy will shrink more than 2 percent this year.
To reflect on this grim economic picture, Denis Ostir joins me live from the Slovenian capital. He's a news editor with POP TV. Thank you for joining us. What sort of response has this had in Slovenia? Because they're pretty harsh words.
DENIS OSTIR, NEWS EDITOR, POP TV: Well, quite honestly, we just had the prime minister in our studio in POP TV about an hour ago, and you'd be surprised that, honestly, they don't perceive the wording as being too harsh.
The prime minister has been a guest on QUEST MEANS BUSINESS about a month ago, and at that time, she said that all Slovenia needs is time, and right now she's saying that, well, they -- we did get the time.
But you don't see any people celebrating in the streets, being extremely joyful about it. Why? Two years is not a lot to do all the reform that needs to be done. And the reform that is -- is going to have to be done is going to be hard, especially on the population of Slovenia.
FOSTER: Well, it could come up with announcement -- couldn't they? -- about privatizing certain state-owned companies, which the commission wants to see, perhaps investors would like to hear as well.
OSTIR: Well, the main point is that all of the reforms that have been announced haven't kicked in yet. What has happened, we're going to see the raise of a VAT on July 1st. That's going to happen in the second part of the year.
The government has reached an agreement with the public sector unions to lower wages and to also reduce some additional costs. However, that's going to kick in in the second part of the year.
And when it comes to the privatization of certain companies, the government is saying we want to sell 15 companies, like large telecommunications companies, the national air carrier, the airport, and some other assets. But it's not saying when and it's not saying how much money it intends to get from that.
And all that combined, we haven't seen any result, it's causing the deficit of the country has reached a billion euros just in the first five months. They've planned for the budget deficit to be 1.2, 1.3 billion by the end of the year, and we're already pretty much 80 percent there.
So, something drastic is going to have to happen if we actually intend to prevent a bailout from happening even this year.
FOSTER: What about this rather murky banking sector, the picture that we've got anyway. It needs to be more transparent, says the commission. Also needs to have just better oversight. I presume the banking institutions are not particularly keen on that and will fight it, but do you think it's likely to happen?
OSTIR: Well, it will definitely happen. The harshest wording from Brussels has been that 900 million euros which has been planned, which has been set aside by the government and should be enough to save at least the two major banks to add additional capital into them is not going to be enough. The European Commission says get an external auditor, see if that will be enough.
There are some steps that are being taken. A bad bank has been established, about a billion euros worth of bad debts will be taken from the two major banks and moved over to the state-owned bad bank in -- probably in July, but that's not going to be enough.
They estimate that overall it's going to have to be about 3.3 billion euros worth of bad debt is going to have to be transferred from these over to the state-owned bad bank.
But just to put this in perspective, what I have in my pocket, this is -- for instance, is a chickpea. If this represents 3.3 billion euros worth of bad debt that everyone's talking about right now, let me show you this.
This is a trillion euros worth of bad debt that is in all of European banks. So right now, everyone's talking about this little chickpea, about 3.3 billion, and not talking about the big elephant in the room, which is that all the banks -- all the banks in the eurozone -- hold about a trillion euros worth of bad debt. And that's going to have to get sold. Why? It's creating a credit crunch.
Also here in Slovenia, banks are dealing with themselves. They're dealing on how to get additional capital and not putting money where it is needed. There's a whole bunch of Slovenian companies that desperately need capital, but they're not getting it.
So, we're seeing quite a lot of bankruptcies just because companies need two, five, maybe even 10 million euros, and they're not getting it as a loan from the bank because they're dealing with other stuff. This needs to be a priority for the government for sure.
FOSTER: Denis Ostir, thank you very much, indeed, for joining us. Now, let's have a look at the European stock markets. They retreated today with all the major indices, really, closing in the red. A raft of worrying data weighed on stocks. Lower growth forecasts from the OECD and the IMF, most notably for China, hurt the sentiment. So did an increase in German unemployment.
US stocks are also falling in this session. Concerns the Fed may scale back its bond-buying program. They've reemerged and thus the Dow is down 0.5 percent.
Still to come tonight, as Kenyan lawmakers grant themselves a massive pay rise, we hear from the man who's trying to put a stop to it.
FOSTER: On Tuesday night, Kenya's lawmakers voted to give themselves a hefty pay rise. Nothing was going to stop them, not protest, not even the president. Each member of parliament will have their pay increased to $10,000 a month, giving them an annual salary of $120,000. That makes Kenyan MPs among the highest-paid in the world. On average, Kenyan workers earn around $912 a year.
Early this month, demonstrators staged a rather chaotic protest outside parliament. They released pigs and piglets onto the pavement, and the protest organizer said lawmakers are greedy, just like the pigs.
Earlier, I spoke to the chairman of the Kenyan Law Society, Eric Mutua. I asked him if the pay hike was a done deal.
ERIC MUTUA, CHAIRMAN, LAW SOCIETY OF KENYA: No, it's not a done deal because what they have done is unlawful and unconstitutional.
So, watch the agency concerned to call the salaries as the commission has done is the rights to the respective bodies of government, which are supposed to be paid salaries and to tell that they cannot pay the salaries in view of certain provisions or articles in the constitution. So, it's not a done deal, no.
FOSTER: So, what sort of response are you going to give? How do you block it?
MUTUA: The response we've done so far is first to write to the speaker of the National Assembly to tell him that what they have done is unconstitutional.
And secondly, we've taken steps to file a suit, which we are lodging tomorrow, where we are asking the high court to make an interpretation as to whether parliament can interpret the law and at the same time legislate. So, that is part of what we have done. That is the kind of option we've taken so far.
FOSTER: Do the courts, do the judges generally agree with you, as far as you're aware?
MUTUA: As far as I'm aware, I think the judges are on our side in terms of interpreting the law in that in the constitution is provided very clearly that parliament cannot legislate on an aspect of the law where they are giving themselves benefits.
And as such, since it is expressly provided in the law, then it means that the judges will agree with us when it comes to interpreting the constitution as to whether their action amounts to an unconditional action by parliament.
FOSTER: And presumably, you have a lot of public support, considering that so many members of the general public are on salaries so much lower than what the politicians would potentially be on.
MUTUA: You are right. We have great support from the public. I can tell you that probably 99 of the public are in support of the action that we've taken.
The public do not agree with the action by parliament in terms of increasing their salaries, because as it is, even at -- as of now, the public feels, and rightfully so, that indeed the parliament -- amount of money in terms of salary that parliament receives is quite high compared to the kind of salary the ordinary person earns.
FOSTER: Well, we're staying with Kenya for tonight's Currency Conundrum. The Maria Theresa Thalers is commonly considered to be the first real currency used in Kenya.
Our question to you: who is Maria Theresa? A, an empress who ruled Austria, Hungary, and Bohemia? B, a British nun who's credited with bringing Christianity to Kenya? Or C, the wife of the first leader of the British East African protectorate? I will have the answer for you later in the program.
The dollar is falling against the major currencies as US bond yields rise and stocks slide. It's especially weak against the yen, falling about 1.5 percent against the Japanese currency so far today.
FOSTER: China's economic prospects are looking less rosy. The International Monetary Fund has become the latest institution to lower its current forecast for the country. It predicts expansion will be about 7.75 percent this year, down from 8 percent.
The IMF cautioned that a rapid expansion in credit could endanger growth. It questioned the quality of investments and the ability of borrowers to repay loans. The IMF also is concerned about high income inequality. It recommends decisive reforms to put the Chinese economy on a more sustainable growth path.
China's government is trying to stop Chinese tourists from behaving inappropriately while they go on vacation as well. It's posted a list of guidelines reminding people not to spit, cut in line, or deface historic monuments on their travels, such as recently happened in Egypt.
All this week on CNN, we're taking a look at China's rise as a global superpower. Today, Richard Roth investigates what brings so many Chinese visitors to New York City.
RICHARD ROTH, CNN CORRESPONDENT: It's hard not to run into Chinese tourists on the sidewalks of New York. Large Chinese tour groups are everywhere, and ready to spend. From Lady Liberty in New York Harbor to the top of the Empire State Building, the Chinese tourist is ever-present.
UNIDENTIFIED FEMALE (through translator): We actually see New York City all the time in the movies and on TV, and we really want to come here.
ROTH (on camera): How come you don't have a sign in Mandarin saying "Beijing this way"?
UNIDENTIFIED MALE: Because Beijing's actually here in New York City right now, right here with us.
ROTH (voice-over): First, it was Chinese business travelers. Now, relaxed visa rules and a strong economy back home brings busloads full of vacationers.
GEORGE FERITITA, CEO, NYC & CO: The Chinese tourist is clearly an incredibly growing market. Over the last year, we've grown about 22 percent.
UNIDENTIFIED MALE: So, now we are driving to the east part of Manhattan.
ROTH: Forty percent of all Chinese visitors to America come to New York City.
UNIDENTIFIED FEMALE: I love New York.
UNIDENTIFIED FEMALE: We're on the east side, and this is the East River.
UNIDENTIFIED MALE: Every single Chinese people have heard about New York when they heard about America, so we just want to come and see it.
ROTH (on camera): Would you be interested in buying a piece of the Brooklyn Bridge? I can sell you that. That is a New York tradition.
UNIDENTIFIED MALE: Yes, sure.
ROTH (voice-over): L&L Tours shows them a good time. Ten years ago, tourists brought their own food and didn't want to buy anything.
RICH SUN, VP, L&L TRAVEL ENTERPRISES: The purchasing power has grown dramatically. Now, we have the customers who are here to by an iPad, iPod, and different computers and all the luxury brands.
LILY FAN, CHINESE TOURIST: Oh, my gosh. I know that my friends are spending $10,000 by shopping.
ROTH: Luxury goods stores, like Tourneau, make sure to have Mandarin- speaking employees to watch out for that growing clientele.
LARRY BARKLEY, VP OF RETAIL, TOURNEAU: We sent team members of our marketing team to China in order to reach out to the different groups that are organizing tours to come to the United States.
ROTH: One UN study said the Chinese spent $102 billion last year in their world travels, surpassing the US and Germany.
UNIDENTIFIED MALE: It's a nice place, so it's going to make everyone happy.
ROTH (on camera): Any final thoughts?
UNIDENTIFIED MALE: Welcome to New York City. Ni hao.
ROTH (voice-over): Richard Roth, CNN, New York.
FOSTER: Straight ahead on QUEST MEANS BUSINESS, we update you on last night's Facebook story. The social media giant promises to do better following a row over offensive content.
FOSTER: Welcome back, I'm Max Foster, and these are the headlines this hour. The European Union has softened its stance on austerity. It's now giving some members states more time to cut their budget deficits. In return, countries like France, Spain, Portugal, and Slovenia are being told to focus urgently on structural reform.
Speaking to this program, the secretary-general of the OECD said the move was appropriate. The OECD today cut its economic forecast for the eurozone again to minus 0.6 percent this year. Angel Gurria says that the length of the crisis is causing a serious erosion of trust amongst the public.
Hezbollah is deploying more fighters to back up Syrian government troops in the Syrian city Qusayr. Activists say the strategic border city has been under heavy fire for more than a week now. Rebels gave Hezbollah fighters a 24-hour deadline to get out of Syria on Tuesday, but so far, there's no sign of any withdrawal.
Two men have become the first gay couple in France to marry. It's just a few days since President Francois Hollande signed the same-sex wedding bill into law. Gay rights activist Vincent Autin and his partner said their vows in Montpellier under tight security.
A newborn baby is reported to be in a stable condition after being rescued from a toilet pipe in China over the weekend. According to local police, the mother says she unexpectedly gave birth on the toilet after feeling stomach pains.
FOSTER: Facebook has promised to make changes after an outcry on Twitter about pages which appeared to promote abuse against women. The campaign targeted Facebook and its advertisers. In a statement, Facebook said that recently it had become clear that our "systems to identify and remove hate speech have failed to work as effectively as we would like, particularly around issues of gender-based hate.
"We need to do better and we will."
A little earlier, Hala Gorani spoke to Laura Bates; she helped start the protest on Twitter.
(BEGIN VIDEO CLIP)
LAURA BATES, FOUNDER, EVERYDAY SEXISM PROJECT: We're really happy with the statement that Facebook has released because it's really quite historic. It's very unusual for them to react publicly to a campaign in this way.
And what they have pledged to do in that statement is exactly what we ask them to do in our open letter. They've committed to reevaluating their policies and guidelines on hate speech, particularly regarding violence against women and to retrain their moderators to recognize and remove that content.
HALA GORANI, CNN CONTRIBUTOR: And some of the content we're talking about it shocking. I mean, it's young girls with their eyes blackened, people -- groups, in fact, on Facebook, glorifying rape.
Is that content still there? Or has it been removed?
BATES: I think Facebook is even now, as we speak, really cracking down on that content and removing as much of it as possible. But it was really very horrific stuff that we were seeing. It was pictures of women bruised, bloodied, battered with captions like, "Get back in the kitchen," or "Next time, don't get pregnant," so really very serious stuff.
GORANI: And I want to tell our viewers we're not showing some of that content because it is too offensive and it's certainly not something we want to highlight again.
Now you started a campaign also on Twitter with the hashtag #fbrape. It was quite popular and immediately got pickup.
Did you think that it would have this kind of impact, that 15 major corporations and others, groups, other companies would pull their ads from Facebook?
BATES: I heard that it might because I knew the strength of feeling behind this. I knew that so many women really care about this, and men, supporting them around the world. And I've been absolutely blown away by the outpouring of creativity and support and the effort that people have been prepared to put in to really stand up together and make Facebook listen this time.
GORANI: Right. And what difference do you think it's going to make? I mean, ultimately somebody whose intention it is to harm or rape might do it regardless of what content is on Facebook.
But what difference do you think it'll make in the culture, in the social media culture?
BATES: Well, I think it's really important and a big step in terms of reaching a cultural tipping point in our attitudes towards rape and violence against women. Facebook has a huge reach, you know, with over a billion users. And that means that it does have a right-sizing opportunity to shape cultural norms.
And what is publicly and socially acceptable or not. So the fact that they have chosen to send this very clear message, that it is no longer OK and acceptable in a world in which one in three women will be raped or beaten in their lifetime, to laugh and joke about rape, to put up pictures of violence, of women being beaten and suggest that that's something funny.
I hope that that's a really great step towards ending the acceptability of joking about these issues.
(END VIDEO CLIP)
FOSTER: Well, let's take a look at the impact, if there's been any, on Facebook's share price, looking at the current numbers, Facebook shares are down nearly 2.5 percent.
And in other Facebook related news playing into this, the Nasdaq has been ordered to pay a $10 million penalty relating to its handling of Facebook's bungled IPO last year. Regulators blame Nasdaq's poor systems and decision-making for creating confusion amongst traders.
Now the Apple CEO, Tim Cook, has taken a dig at Google Glass at the All Things Digital Conference. Dan Simon is there. Earlier I asked him if the event is a big deal.
(BEGIN VIDEO CLIP)
DAN SIMON, CNN CORRESPONDENT: Right. This is an annual technology conference. This is the All Things Digital Technology Conference.
And you get hundreds of people in the industry that converge here at Rancho Palos Verdes every year to kind of hear from some of the biggest names in the industry, Sheryl Sandberg, the COO of Facebook, is here; Dick Costello, the CEO of Twitter; as well as Tim Cook, the CEO of Apple. And he took the stage and he talked about where the company is right now.
And he also weighed in on this new technology called wearables. And he didn't seem to have a lot of good things to say about something that's getting a lot of buzz called Google Glass. Take a look.
SIMON (voice-over): Google's newest product called Glass has been steadily gaining buzz, that new wearable technology that takes videos with a simple command.
UNIDENTIFIED MALE: OK, Glass, record videos.
TIM COOK, CEO, APPLE: I think the likelihood that it has a broad range appeal I don't -- that's tough to see.
SIMON (voice-over): Apple's CEO, Tim Cook, making a rare public appearance at a technology conference seems to be giving a thumbs' down.
COOK: I wear glasses because I have to. I can't see without them. I don't know a lot of people that wear them that don't have to.
SIMON (voice-over): But the company that pioneered the smartphone may soon branch into the category known as wearables, if you're to read into comments like this.
COOK: I think there will be tons of companies playing in this. I don't --
WALT MOSSBERG, MODERATOR: Will Apple be one of them?
COOK: I don't want to answer that one.
SIMON (voice-over): Sharing the stage with technology bloggers Walt Mossberg and Kara Swisher, Cook weighed in on other hot tech topics, like why doesn't Apple come out with a bigger screen for the iPhone?
COOK: A large screen today comes with a lot of tradeoffs.
SIMON (voice-over): And why not come out with other versions of the phone like its competitors?
COOK: We haven't so far. That doesn't shut off the future.
SIMON (voice-over): Then the subject turned to taxes, where Apple has recently been criticized.
COOK: We pay $6 billion and that is the highest in the U.S. We pay more taxes than anybody.
SIMON: Cook's appearance here comes about a week after testifying in Washington. He was questioned by senators about the company allegedly keeping money overseas to avoid paying U.S. taxes. Apple has $144 billion in cash, but about $100 billion of that is kept offshore, money not subject to U.S. corporate taxes.
SEN. JOHN MCCAIN (R), ARIZ.: And you understand there's a perception of unfair advantage here?
COOK: Honestly speaking, I don't see it as being unfair. I'm not an unfair person. That's not who we are as a company.
SIMON (voice-over): But as Jon Stewart noted, it wasn't exactly grueling testimony.
MCCAIN: You've managed to change that world, which is an incredible legacy.
SEN. CLAIRE MCCASKILL (D), MO.: I've harassed my husband until he converted to a MacBook.
SEN. ROB PORTMAN (R), OHIO: Your products are great.
SEN. CARL LEVIN (D), MICH.: My granddaughter even knows how to use it.
MCCASKILL: I love Apple. I love Apple.
JON STEWART, HOST, "THE DAILY SHOW": What the hell was that? What is the opposite of a genius bar?
UNIDENTIFIED MALE: Did you give them all free stuff or, I mean, what happened?
COOK: I didn't feel it was (inaudible). I know that was -- sort of came out in the media.
Sitting in a witness chair, you don't necessarily have that feeling.
(END VIDEO CLIP)
FOSTER: And Dan, obviously Apple's under a lot of pressure. Did Tim Cook address this issue about whether or not his company's losing edge?
SIMON: You know, Max, there is this sense that Apple is somehow lost its quote-unquote "cool factor." If you look at the competition that they're really catching up, Samsung, HTC, they now have these phones with bigger screens. And people seem to like them.
Apple, according to critics, is sort of stuck in the past and so Tim Cook was asked whether or not Apple is losing its edge. And he said absolutely not. But I think time will tell whether Apple can sort of regain some of this luster. You know, of course they sort of jumpstarted the smartphone industry, the tablet industry as well.
And so until they come out with a new category of device, whether that's something in the television space or in wearable technology, I think folks are still going to continue to have this sense that perhaps Apple has lost its legs (ph) a little bit, Max.
FOSTER: Well, still to come tonight, no men allowed from health clubs to hospitals and hotels. Next, a look at the trend of women-only spaces.
FOSTER: Time for today's "Business Traveller" update. There are few issues more important to women travelers than safety. Hotels recognize this need in a separate floors dedicated entirely to women. In India, this is a welcome option. It follows a string of high-profile attacks on women and girls in the country. Rosie Tompkins reports now from Mumbai.
(BEGIN VIDEO CLIP)
ROSIE TOMKINS, CNN CORRESPONDENT (voice-over): Safety and femininity, two issues that go to the heart of how women travel the globe, none more important than a feeling of security in a hotel.
Today that means more than a knock on the door or a peephole to see who's knocking. Women make up almost 40 percent of guests, according to new research by Hyatt. So many hotels are going the extra mile to make women travelers feel comfortable.
DIVIA THANI, EDITOR, "CONDE NAST TRAVELLER", INDIA: Very often you'll be ordering room service after a very long day, and you're in your bathrobe and you're not particularly comfortable with a man entering to set up, however gracious and polite he is. You know, you sort of -- you can't sit down until he leaves.
TOMKINS (voice-over): Divia Thani is Indian born and bred. And as the editor of "Conde Nast Traveller, she travels alone a lot for her work.
THANI: I would never suggest a woman (inaudible) come to this country. You have to be very careful. And anywhere in the world, if you're a woman, you know how to take of yourself. The same applies in India.
TOMKINS (voice-over): Nevertheless, with heightened awareness from recent events here in India, the significance of women-only floors is all the greater.
This is the Eve (ph) wing at the ITC Maratha in Mumbai, where no one can enter, neither guest nor staff, unless they are a woman.
TOMKINS: This is the key to system, quite literally. It's just a special access card. And without one of these, you can't even get into the Eve (ph) wing. So I'm going to see if mine works.
DHUNJI KAVAFRANA, AREA MANAGER, ITC MARATHA HOTELS: It makes them feel that whilst I'm fast asleep, there are no menfolk sort of traversing or criss-crossing the corridors. And they have a more peaceful sleep without any worries or cares about what's happening.
THANI: I don't think that the hotel has been really the areas where a lot of these incidents have taken place. But they have made some excellent initiatives, I think, in terms of what they can do to make sure that women do feel safe and secure.
The butlers, the housekeeping staff, you can request for all of that to be female. I think that's something that really does help.
TOMKINS (voice-over): Safety on the road is rule number one. But women travelers are a growing group with needs of their own.
TOMKINS: While we demand quality in the business environment, women still have different needs. Now that might be as simple as a decent mirror with decent lighting to do their makeup or just a more powerful hair dryer.
THANI: Hotels will make sure that those particular rooms have full- length mirrors, so you can drape a sari. They'll make sure that a vanity kit in the bathrooms that have all kinds of things that you may forget.
TOMKINS: Nail file, tweezers, lip balm.
THANI: I think that we do need to figure it out completely and maybe evolve a little bit in terms of their thinking. But it's definitely starting and it's definitely appreciated.
TOMKINS: Women-only floors have been part of hotels for many years. And it only takes concerns for women's safety, like those here in India, to reinforce the demand and then the growth so that now hotels all over the world are realizing that catering to the women's needs is a very smart way to go about doing business -- Rosie Tompkins, CNN, Mumbai, India.
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FOSTER: And back here, Heathrow Airport will almost certainly have to close if London gets a new major air travel hub. That is the key finding in a report by Independent Transport Commission and it lays out three plausible options.
Option 1 is a brand new Thames Estuary airport, causing passengers and airlines to face possible higher charges.
Option 2 expands Stansted if either goes ahead. Heathrow would have to close.
Option 3, expand Heathrow. The Airports Commission which will make this final report to the government in the summer of 2015.
Let's have a look at the weather now, particularly European weather. Jenny has the details.
And she's going to report on the rain in London, which is back.
And it's going to last all summer, probably.
JENNY HARRISON, CNN METEOROLOGIST: I told you that London was not the coldest place and you didn't believe me, did you? And I'm going to prove it to you in just a second.
You're right; the rain is back. I'm not surely when it went away when you did it, Max, but it is a very unsettled picture. There is some sunshine out there. You just have to know where to look. And right now, I'm a little bit hard pushed myself to tell you where to look. I can tell you perhaps southern Spain and Portugal, some areas across the Mediterranean and actually Eastern Europe is not too bad, either.
But in the last 24 hours, again, we've had some pretty heavy amounts of rainfall, 35 millimeters across into Switzerland, some large hail has been reported in the southeast of Spain and we have had a tornado reported just on the outskirts of Milan. We've got some pictures to show you of this particular tornado.
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HARRISON (voice-over): Look at it. I mean, this came very close to one of the major motorways on the outskirts. You can just see. Look at all this debris that was being picked up. Now thankfully, there were -- they said no deaths reported, but also there were no injuries reported, either.
As I say, this is coming alongside literally this really, really busy main road, as you can see there. It lasted about four minutes, many of the people said, well, obviously who witnessed all of this. And it really did leave a trail of damage, quite a lot of damaged vehicles as well.
And it was through quite an industrial area. So some of the hangars there were damaged as well and also, as you can imagine, a lot of trees were taken out and some pretty large vehicles. You can see the firefighters there standing next to that. And you can see some of the damage that was left.
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HARRISON: So pretty strong stuff there, as you can see. Now remember, of course, every year about 300 tornadoes actually do touch down in Europe and that was indeed just one of them.
So this has been the picture in the last 12 hours, more rain, more thunderstorms, cold air across the Alps so, again, more snow there. And this is what I mean about London not being the coldest city. Now it's sort of the second coldest city, it has to be said when you look at our map here, showing these particular cities, 10 Celsius in Munich. And right now it's 19 up in Oslo, very unsettled across in particular Paris.
It's not been a good start, has it, to the French Open. Right now it's 15 Celsius in Paris. The wind is light coming in from the west, not that it particularly helps. Of course, it is late in the day, but as we go through Thursday, I'm afraid there is more rain expected, and it will keep the temperatures lower as well.
And then guess what? On Friday it should be a better day finally some sunny skies, the temperatures getting better to the average. We've got a very cool and showery pattern as we continue into the next couple of days, some warnings because of some of those thunderstorms will be quite heavy, a very mixed pattern again.
And those temperatures for Thursday, warm in the east, cool out in the west. And look again you see Max, 17 in London, 14 in Paris, you see. London not the coldest place again, you see.
FOSTER: OK, OK. You're right as usual, Jenny. Thank you.
Up next, China goes whole hog. The country's biggest pork producer doubles up Smithfield Foods. Reaction from Wall Street next.
FOSTER (voice-over): (Inaudible) the answer to tonight's "Currency Conundrum," the Maria Theresa thaler is only considered to be the first real currency used in Kenya. We asked you who is Maria Theresa.
The answer is A, an empress who ruled Austria, Hungary and Bohemia during the 1700s. Her coins have been used in world trade continuously since they were first minted in 1741. The word thaler is where we get the world dollar from.
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FOSTER: Now how about this for pork barrel spending? Smithfield Foods, the world's largest pork processor, has been sold to Chinese company for around $5 billion.
Alison Kosik's at the New York Stock Exchange. A lot of money in pork.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Yes, there is. You could sort of say it's a double-edged sword here. It's all the talk on the floor here at the New York Stock Exchange as we watch shares of Smithfield Foods rally, more than 29 percent right now.
As you said, this company is the world's biggest pork processor. It's being purchased by the Chinese company called Shuanghui International for about $5 billion. It valued Smithfield at 31 percent -- at a 31 percent premium over its closing price on Tuesday. But there are going to be some hurdles to clear first.
There's naturally going to be a lot of regulatory scrutiny along with questions of food security because as you know, there have been lots of issues with meat contamination in China recently.
In the press release about this deal, the company did stress they would retain their world leading food safety and quality control standards. The deal is expected to close in the second half of this year. And once it does, Smithfield will no longer be a publicly traded company, Max.
FOSTER: OK, Alison, thank you very much indeed.
And let's have a look at the big board, the Dow falling from its record high set on Tuesday. It's down nearly 0.6 percent. We saw losses of more than 100 points earlier in the session. So it's not quite as bad as it was, 15,320.
Let's return to our top story, and that's Europe as governments look for measures to boost growth. One industry is already making an economic impact. A new study claims that private equity helps to generate jobs and innovation and boost productivity and business creation. Nina dos Santos spoke to the chairman of the European Private Equity and Venture Capital Association.
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VINCENZO MORELLI, CHAIRMAN, EVCA: Yes, indeed in the 2007-2011 period, we invested about $250 billion in private equity in Europe, which was up materially from the previous five years; whereas overall private investments declined precipitously during that same period.
So we've kept doing what we like to do, which invest in growth. And the study, I think, shows pretty clearly that we contribute disproportionately to what drives growth, which increasing productivity, increasing innovation, increasing competitiveness.
NINA DOS SANTOS, CNN HOST: You have been hampered, though, by legislation. And we have the E.U. Commission adding more layers to the legislation, particularly for the high finance end of the industry like private equity.
MORELLI: Yes. Well, we are now a regulated industry, which we used not to be. And there is one piece of regulation, so-called AIFMD, under which we're regulated. But I think we've had a very constructive three years of debate with the commission and now with ESMA, our regulator, the European Securities and Markets Agency in Paris.
And I think actually regulation can help as well, because it will level the playing field. And it will make sure that our investors are comfortable in investing in private equity. I think the key mistake that regulators should avoid is somehow artificially restraining the flow in institutional funds into long-term investment.
You know, there needs to be a good supply of risk capital to the European economy for companies to grow, for recovery to happen.
DOS SANTOS: Very often private equity companies bring in people who really know how to manage businesses. They know how to streamline it; they know how to look from the bird's eye view and see where the fat can be trimmed.
MORELLI: Yes, and I would say that that is increasingly so and it's been a characteristic of private equity. It's smart capital. It's funding together with a lot of experience about the sector, with a lot of experience of company growth, turnarounds, technology development. It's all the intangibles you mentioned. I myself was a CEO for 25 years before I joined private equity on a permanent basis.
DOS SANTOS: How did you find that transition then, because what many people will put the finger at the private equity industry for is that obviously when they come in, they were structured big time. Often that leads to layoffs; that leads to really aggressive rounds of cost cutting and people lose their jobs.
MORELLI: Well, I think those are the situations of investments that maybe make the headlines sometimes. But 85 percent about European private equity is about small and medium-sized enterprises. Private equity in your finances, 20,000 companies and the vast majority of them are small and medium-sized; the vast majority of them are really using our capital to grow.
So, yes, there will be some turnaround situations. There will be some restructurings. But it's by no means the normal situation.
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FOSTER: Now six years ago today a man reached the summit of Mt. Everest for the very first time. Six decades later, we will show you what (inaudible).
FOSTER: It is 60 years today since Edmund Hillary and Tenzing Norgay climbed to the top of Mt. Everest. Former and current mountaineers are celebrating the anniversary in Nepal, along with Nepalese officials and local people.
Everest is both a boon and a burden to Nepal's economy. A study from American University in Washington shows foreign visitors bring in at least $60 million every year, the largest single source of foreign exchange for Nepal.
However, the World Wildlife Fund says only about 20 cents out of every $3 spent by climbers actually reaches village economies.
And the accumulated trash at the top of the mountain, including everything from oxygen tanks to beer bottles, is estimated to cost half a million dollars to clean up.
That is QUEST MEANS BUSINESS. Thank you for watching. I'm Max Foster in London. And your headlines are next.
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FOSTER (voice-over): These are the headlines. The European Union has softened its stance on austerity. It's now giving some member states more time to cut their budget deficits. In return, countries like France, Spain, Portugal and Slovenia are being told to focus urgently on structural reform.
(Inaudible) on this program the secretary general of the OECD said the move was appropriate. The OECD today cut its economic forecast for the Eurozone again to -0.6 percent this year. Angel Gurria says that the length of the crisis is causing a serious erosion of trust amongst the public.
The United Nations is warning of an increasing number of foreign fighters are entering Syria to support government forces or rebel troops. The high commissioner for human rights says the action is fueling sectarian violence and warns the situation is showing signs of destabilizing the region as a whole.
Two men have become the first gay couple in France to marry. It's just a few days since President Francois Hollande signed the same-sex wedding bill into law. Gay rights activists Vincent Autin and his partner said their vows in Montpelier under tight security.
A newborn baby is reported in stable condition after being rescued from a toilet pipe in China over the weekend. Police have found his mother and they say she deeply regrets what she did and claims it was an accident.
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FOSTER: That's a look at some of the stories we're watching for you here on CNN. ""AMANPOUR" is next.