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QUEST MEANS BUSINESS
Turkey Protests; Turkish Stocks Plunge; Causes of Turkish Unrest; Eurozone Employment Plan; Dollar Falling; Data and Decisions
Aired June 3, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
NINA DOS SANTOS, HOST: A cloud of uncertainty. As teargas flies in Turkey, stocks are tumbling.
Getting Europe back to work. Tonight, Germany's labor minister on how to solve the ongoing jobs crisis.
And the return of the Special One. Jose Mourinho heads back to familiar surroundings in Chelsea.
Hello, I'm Nina Dos Santos, and this is QUEST MEANS BUSINESS.
Good evening. First, let's head towards events in Istanbul, where there are currently large crowds gathering in the Turkish city. Protests have been sweeping Turkey for the past few days. CNN's Ivan Watson is live on the scene in Istanbul. Ivan?
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hi, Nina. There is a crowd of tens of thousands of people filling Taksim Square and the neighboring Gezi Park. And within the last five minutes, we have gotten that -- this unmistakable taste and smell of teargas in the air that we can't see an obvious place where any canister may have hit.
It has sent a sizable number of the demonstrators leaving, some of them coughing and choking, some of them trying to cover their faces, while some of them have started increasing their chants, "Tayyip istifa," which means "Resign Recep Tayyip Erdogan," the Turkish prime minister.
Very disturbing to think that teargas may be employed in an area with such a sea of humanity and the potential panic it could create with this crowd.
Now, the Turkish government has conceded during these unprecedented protests over the past four days that perhaps the police have used too much teargas in their clashes with demonstrators in cities across Turkey.
And earlier today, the Turkish president made a statement suggesting that there had to be freedom of expression. Take a listen to what he had to say.
(BEGIN VIDEO CLIP)
ABDULLAH GUL, PRESIDENT OF TURKEY (through translator): When we talk about a democracy, we of course mean the expression of the will of the people in electing the leaders of the country. But democracy does not just mean elections. It is natural that outside of elections, if there are differing opinions, situations, or objections that they be voiced. And peaceful protests are a part of that.
(END VIDEO CLIP)
WATSON: Now, what he is saying does not entirely match the rhetoric of the Turkish prime minister, who really is the most powerful politician who runs the affairs of state. The president is a largely symbolic position.
Erdogan, in his speeches and televised appearances on Sunday and Monday, has said listen, "I have more than 50 percent of the vote, I'm democratically elected. You people in the streets are acting like dictators. How dare you call me a dictator."
And the crowd here, the people that you talk to, Nina, are saying the prime minister should be a prime minister for the whole country, not just the 50 percent who voted for him.
I'm watching a police helicopter circle over this area. So, between the teargas we're smelling and the police helicopter, these are worrisome signs during four days of unprecedented violence in the streets of Istanbul and neighboring cities, particularly when give the amount of people here and that these are not youths or party activists.
I've seen families here, I've seen middle-aged men, women, children, mothers with their children. If this does become a target, I don't even want to imagine what that would look like if the security forces decided to do something here, Nina.
DOS SANTOS: Yes, Ivan you can definitely see that there's people from all age groups in the crowds, a number of them actually wearing some kind of mask to protect themselves against the teargas. What exactly is it that they want to protest, though?
WATSON: This has become very personal. It started with a small sit- in to prevent a government plan highly endorsed by the Turkish prime minister Erdogan, to bulldoze a small park adjoining this square.
And as it was repeatedly attacked by riot police using water cannons and teargas and pepper spray, that triggered indignation from segments -- broad segments of Turkish society, who have been appalled at seeing the excess use of force by Turkish police, particularly against unarmed demonstrators.
Now, we've created a cycle of violence where some of the demonstrators have been attacking the police, where one of the headquarters of the ruling political party, the Justice and Development Party in the port city of Izmir, suffered an arson attack overnight.
Now, the demonstrators, their criticisms have been focused almost entirely on the Turkish prime minister himself. It has become a very personal battle of wills between the people in the streets here and the Turkish prime minister, who has frequently ridiculed them over the past 36 to 48 hours, saying they are extremists and members of marginal groups, Nina.
DOS SANTOS: Ivan, somebody coined this rather well by saying on our air about three hours ago, I think it was John Defterios saying that the problem is is that some people in Istanbul say that Recep Tayyip Erdogan views himself as another Ataturk figure, albeit with an Islamist twist. Would that be a fair thing to say, do you think? That people are protesting that?
WATSON: This is without a doubt an incredibly ambitious politician, an incredibly successful one who has served time in prison in the past and has come back from that to win elections, to break the stranglehold that army generals had over Turkish politics for more than half a century. And he has helped govern this country through, really, a decade of unprecedented economic stability and growth.
That said, he has also embarked on a very personal view of what Turkey should look like. He has made very controversial decisions about building enormous mosques on hills that are parks overlooking Istanbul, on digging a second Bosphorus Canal, a manmade canal through Istanbul.
On telling Turks frequently how they should live their lives, and that kind of approach has really chaffed at certain segments of Turkish society, particularly secular segments of Turkish society that were very uncomfortable with the recent law that dramatically reduces the sale of alcohol, which has been one of the symbols of the cultural wars in this increasingly polarized country.
Many of the demonstrators we've talked to also concerned that Erdogan wants to transform the political system here from a prime ministerial system, where he is a very powerful prime minister with very few checks and balances, to an even more powerful post of president, a presidential system, with himself as the president.
He's been in power for ten years now, elected of course, but many of these young Turks who are protesting against him, he's the only leader they've ever really known in their adult lives. And it's no surprise that after ten years, some of them are starting to get frustrated with the man who's been the symbol of the state. Nina?
DOS SANTOS: That's an excellent point. Ivan Watson, there, live on the scene in Istanbul, many thanks for that.
Well, Turkey's stock market, as you'd imagine, has been falling on the back of all of this. It actually fell about 10.5 percent on this very Monday session. That's the biggest drop, I should say, that we've seen that index suffer in the best part of the decade.
Now, investors started dumping shares as reports of those anti- government protests started across the country. Anger managed to boil over on the streets of Ankara, as well, here. This is the Turkish capital, right in the middle of Turkey.
The protests were originally sparked by the government's plan to bulldoze a park next to Istanbul's main square, Taksim Square, as Ivan was just saying before. And of course, what began as a small sit-in has, as we've seen over the last few days, escalated into a countrywide clamor for change, with unions now threatening to strike on Tuesday.
The prime minister, Mr. Tayyip Erdogan, called for calm and also blamed, as we heard before, a small minority for starting the trouble. Take a listen.
(BEGIN VIDEO CLIP)
RECEP TAYYIP ERDOGAN, PRIME MINISTER OF TURKEY (through translator): Regarding these incidents, as a prime minister and a resident of Istanbul, I would like to say that if we put aside people who joined this protest with their naive emotional feelings after the social media calls, extreme elements organized these protests, and unluckily, people joined it.
(END VIDEO CLIP)
DOS SANTOS: So, that's Recep Tayyip Erdogan, there, the prime minister of Turkey. Earlier today, I spoke to our John Defterios from CNN Abu Dhabi, and I asked him if the economy had something to do with this, or rather whether it was concerns about the erosion of secularism in Turkey.
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: It's really a complicated mix, in fact, Nina. One would have a difficult time arguing with the track record of Prime Minister Erdogan. After coming into power in 2003, he delivered growth of between 7 and 9 percent of the first three years.
And during even the financial crisis, they bounced back with growth of 9 percent. So, it's not the economy. In fact, the country was just upgraded by Moody's to investment grade, something they were waiting for for months to take place.
But it's that growth of the economy to a $730 billion economy and the power it's given Prime Minister Erdogan. He has very big designs for Turkey and, in particular, Istanbul. And perhaps those designs don't match up with the Turkish people today.
DEFTERIOS (voice-over): Istanbul is a city that straddles Europe and Asia. The financial and business center of a country on the rise. Turkey has long been the poster child for emerging market success, and a Muslim majority secular democracy.
DEFTERIOS: But today, there's tension on the streets after another night of violent protests. Turkish stocks slumped as uncertainty spreads to investors. The nation's currency down to a 17-month low. And anger intensifies against Turkey's prime minister, a man who steered the country out of a deep recession, introducing economic reforms.
Since coming to power in 2002, Prime Minister Recep Tayyip Erdogan has presided over a nearly threefold increase in Turkey's GDP. Economic growth did slow to just over 2 percent last year, but as Turkey's finance minister told me before these protests began, the country is set to rebound and reach 4 percent this year.
MEHMET SIMSEK, TURKISH FINANCE MINISTER: It is actually a fairly plausible, fairly realistic target. There is some downside from Europe, because Europe is still in recession. But we're not banking on a strong recovery in Europe, and we're not banking on a quick resolution of the Syrian situation.
There is some indirect impact, but Turkey is likely to achieve 4 percent real GDP growth, that's basically sound.
DEFTERIOS: When ratings agency Moody's recently upgraded the country to investment grade, it was the latest in a series of international endorsements for the economic course Erdogan had steered, and the political stability his leadership had until now brought.
SIMSEK: We've created about 4.8 million jobs. Growth has been strong, and so across the board, macro performance has been first rate, plus macro management, of course, has been much better.
DEFTERIOS: But the protests stem from a growing and pent-up frustration about Erdogan's style of leadership. He's accused of becoming increasingly authoritarian, and some have criticized his handling of the conflict in Syria.
The prime minister has grand plans to turn Turkey into a top ten economy and build up Istanbul ahead of the 100th anniversary of the founding of the Turkish Republic in 2023.
SIMSEK: It's important to have ambitious targets, to rally people around a vision. So, we will continue to push towards achieving those targets.
DEFTERIOS: But the question now, of course, is whether those protesting on the streets of Istanbul and other cities will derail his grand ambitions.
DEFTERIOS (on camera): And those grand designs, Nina, include a transfer of power. Prime Minister wanted to Erdogan wanted to move the constitution to transfer this power to the presidency, a job that he would like to take.
And those on the ground in Turkey are suggesting we've seen that before, but it took place in Russia, and they're not interested in that taking place in secular Turkey right now. Nina?
DOS SANTOS: John, the other issue is -- and it's interesting that you talk about things outside of Turkey's borders -- is that Erdogan's going over to North Africa, isn't he? Some might say, well, that's taking his eye off the ball.
DEFTERIOS: Well, he's been moving very aggressively in his ten years in power to organize trade relations with North Africa very successfully. But again, the big question mark on the ground that you hear in Ankara and Istanbul and the other major cities of Turkey, what are his ultimate goals right now?
He was very quick to move into Libya, very quick to support the change in Egypt, very quick to get involved in Tunisia. And some say he's overplayed his hand to get involved in Syria, and that's starting to spill over to his border right now.
So he's been pushing Washington to go for a no-fly zone, and some in Turkey are suggesting, look, you're getting us into deeper trouble than we want to be at this stage of history for Turkey with that violence south of our border.
DOS SANTOS: CNN's John Defterios there. Well, speaking of Turkey, one person has been killed and more than 3,000 injured in those demonstrations across Turkey. This is coming from the Turkish medical association in Ankara. They say out of the people who've been injured, some 26 are in critical or serious condition.
Well, after the break, Germany's labor minister tells me how she's fighting to save a drowning generation.
DOS SANTOS: Welcome back. Well, Germany solved its youth unemployment crisis ten years ago, and now the country's labor minister says that the rest of the eurozone can do the same. Ursula von der Leyen explained her two-pronged approach to me earlier today.
URSULA VON DER LEYE, GERMAN MINISTER FOR LABOR AND SOCIAL AFFAIRS: We need two things. First of all, there is a credit crunch for the small and medium enterprises in some countries in southern Europe specifically.
Therefore, we need capital for jobs. We have the European Investment Bank to get involved to give loans or credit with moderate interest rates - - this is very important for these countries.
And the second thing we've seen is we need way more vocational -- dual vocational training for young people. It should be enterprise based, it should be demand-driven. We have the funding, so what we do now is just build up these structures for a dual vocational training so that these young people, the workforce of tomorrow, that have skills that are needed.
DOS SANTOS: What the eurozone crisis has shown us is that everybody seems to want to pull their own different ways. People are very nervous about the erosion of sovereignty here. Do you think that the German model would naturally be accepted by countries with high levels of youth unemployment?
VON DER LEYEN: Ten years ago, Germany was the sick man in Europe. We had a high youth unemployment. So, we've learned what do do and what not to do, what to avoid. If you want to fight youth unemployment successfully, the two things I've just named, the dual vocational training and capital for jobs in the small and medium companies were the crucial things to really be successful in that field.
DOS SANTOS: May I be blunt? Why does Germany necessarily feel so strongly about this if it isn't Germany's problem?
VON DER LEYEN: On the medium and longterm, if you look at Europe, we have to think European -- from the European labor market. Europe will need more skilled labor. The skill shortage is the most difficult thing we are having, too. So, if we give the young generation now the opportunity to learn something, to get into the labor market, everybody will benefit.
The moment the economy picks up again, for example, in Spain or Greece or Portugal, there are young people coming from that country who do have the knowledge, then, who do have the skills that are needed in their countries, and I think on the longterm, this is a very good investment.
DOS SANTOS: It'll take years to address this youth unemployment problem. How long do you think it'll take?
VON DER LEYEN: Well, it will, on one hand, take years to build up solid structures that are sustainable. But on the other hand, as I've said, if you increase mobility, if you really invest now in healthy structures that are -- that suffer from the credit crunch, you can give a short-term answer, too. So, we have to move on a parallel way, I think.
And the second part is, the pressure is high -- and what we feel now that the different actors we need for that, and it's not only politics, it's not only the banks, it's also the private sector -- are ready to join forces because they know if we lose that generation, we lose Europe. So, we really should invest right now with joint forces.
DOS SANTOS: That's Germany's labor minister there, Ursula van der Leyen, speaking to me earlier about the pressing issue of youth unemployment.
Time now for a Currency Conundrum for you out there. Greece has announced that more than 180 silver coins have now been returned to Greek soil having been seized at an airport. So, our question to you this evening is, in which country were they actually found?
Was it A, in Cyprus? B, in Switzerland? Or C, in Sweden? We'll have the answer for you later on in the program.
Speaking of currencies, the dollar is falling against most of the major currencies around the world. It's down by around about one percent against the euro, the pound, and also the yen, as you can see there. Weak manufacturing data has curbed expectations that the Fed will soon rein in on its bond purchases. We'll have more after the break.
DOS SANTOS: Hello and welcome back. Well, we've had a week of data already today, and we've got plenty more data an decisions to come later on. Let's start out with the key reading on manufacturing in the eurozone that we had earlier today, because this is the biggie that sort of set the tone for the week.
Well, what it showed was the downturn seems to have eased for the month of May. This is because the Market Purchasing Managers' Index rose, as you can see there, to 48.3. Though I should point out that isn't actually indicating that manufacturing is rising, because it's still below the level of 50. Anything below 50 represents a decline.
And if we move on, the reading for Spain was actually at a two-year high, although that sector is still shrinking because it's below 50.
For France, the index hit a 13-month peak. Again, though, as we're seeing, it's still below 50, so it's not exactly growth.
If we move along on the calendar, as you can see, on Thursday, on the 6th of June, what we're going to see is two interest rate decisions from the ECB and also the Bank of England. Both of these key institutions are expected to keep their rates on hold and unchanged.
In the past 24 hours, the heads of both of these central banks have been talking up the pace of recovery. This will be the last policy meeting for this man, though, the Bank of England Governor Sir Mervyn King, who is retiring at the end of this month.
And on Friday, what we're also going to have is a key US jobs figure. We could see an increase of 170,000 jobs, that's slightly up on April's number, according to a survey of analysts conducted by Reuters.
To help us gauge the impact of all of this, let's go over the Mohamed El-Erian, who joins us now live from Newport Beach, California. He's of course the CEO of PIMCO, which is the world's largest bond trader, and of course, he's a friend of QUEST MEANS BUSINESS and a regular guest.
Good to have you on the show as usual, Mohamed. First of all, big week. What are you picking, the US jobs report?
MOHAMED EL-ERIAN, CEO, PIMCO: So, all that mention. It is a very big week. The US jobs report is the most important one, because it's going to give us some insight, not just on the economy, but what the Fed is likely to do.
But let's not also forget the ECB and the Bank of England, as you mentioned. So, it's a very busy week, and at a very important time for markets that are trying to figure out how to position themselves for the next phase.
DOS SANTOS: Well, you've been writing about he kind of volatility that we've seen in the markets. We seem to have this sort of perception gap -- don't we? -- between what the data is showing us and really what the markets are showing us. Because the markets have had a really impressive really.
EL-ERIAN: They have indeed, and it's a very simple way of thinking of it. Fundamentals would justify prices down here, but prices have gone up here, and the difference is simple. It's the wedge that central banks have created. They have created a disconnect between fundamentals and prices.
So, now, people are questioning whether A, the central banks are still committed to this disconnect, and B and most importantly, will they succeed in improving the fundamentals to validate these prices? And markets are nervous because the recent data suggest that that's not happening fast enough.
DOS SANTOS: If we talk about the jobs picture generally, not just in the United States, we have things looking up in the US, although the Fed may still continue to engage in quantitative easing for the time being. But in Europe, the jobs picture looks absolutely dire. And it's set to peak from here on, isn't it? It's going to get worse.
EL-ERIAN: Oh, it is. Not only the 12.2 percent overall unemployment for Europe, but as your piece mentioned, youth unemployment, 62 percent in Greece, 56 percent in Spain, 42 percent in Portugal. These are horrific numbers, and unfortunately, they're going to get worse before they get better.
DOS SANTOS: So, let me just ask you briefly about the Fed. When do you think they're going to turn the taps off? You are the head of the world's largest bond fund.
EL-ERIAN: So, they're not going to turn off the taps for a very long time. They're not even going to touch the tap, we think, this month. They may do something in September. But the tap is still going to be on for quite a while. They're just going to look to slightly reduce it.
And the reason why they're doing that is not because the economy is doing great, but it's because they're worried about the cost and risks, that's the term Bernanke uses, costs and risks. Or think of it as the collateral damage and unintended consequences of running such artificial interest rates.
DOS SANTOS: OK, Mohamed El-Erian, the CEO of PIMCO in California. Thanks ever so much for joining us to put some perspective on that.
Straight ahead here on QUEST MEANS BUSINESS, we'll have the latest on a coming together of two giants, American Airlines and US Airways. Richard will be talking to the bosses of both of those two airlines in a moment's time.
DOS SANTOS: Hello and welcome back. I'm Nina dos Santos. This is CNN and you're watching QUEST MEANS BUSINESS.
Time now for a roundup of the news headlines.
(BEGIN VIDEO CLIP)
DOS SANTOS: One person has been killed and more than 3,000 people injured in violence related to demonstrations across Turkey. This is according to the Turkish medical association's latest figures. Prime Minister Recep Tayyip Erdogan has blamed ongoing demonstrations on extremists and political enemies. Protests have broken out in most provinces across the country.
Police and protesters clashed again today in Ankara and also in Istanbul.
A fatal fire at a poultry plant in northeastern China may have been caused by an explosion from a chemical leak according to reports. More than 100 people were killed and dozens of others were hurt. Workers who did manage to escape say the gates of the plant were locked at the time.
The Czech Republic is on high alert for heavy rains and flooding. Floodwaters have already forced thousands to evacuate across central Europe, especially in countries like Austria and Germany.
Well, at least nine deaths have been blamed on the flooding so far and there are power outages and rivers exceeding flood levels not seen since back in 2002.
The U.S. Army soldier accused of aiding the enemy by passing documents to WikiLeaks is now on trial at a military base in Maryland. The prosecutor said at his opening statement the government will provide evidence that materials used by Al Qaeda operators can be traced to Bradley Manning's illicit downloading. He denies that he knowingly aided the enemy.
And in Cambodia, riot police broke up a protest involving thousands of workers at a factory which makes clothes for the sportswear brand Nike. Several people were arrested. As a result the demonstration over pay is just the latest in a series of unrest at factories which make goods for Western brands.
(END VIDEO CLIP)
DOS SANTOS: And some good news for you out there, airlines will have a more profitable year than previously forecast, according to the industry body, IATA. It expects global carriers to make $12.7 billion this year. That's $2.1 billion more than it originally forecast in March.
Typically for the airline industry, margins are set at razor-thin levels. So they're set to a mainstay from here on, forecast at around about 1.2 percent. Even so, it'll be the 20 -- it'll be 2013 will be the third strongest year for airlines since the events of 2001, which is certainly a trend in the right direction, some might say.
One hot topic at the IATA conference is the planned merger between the US Airways and American Airlines. Well, they're coming together to create the world's biggest airline worth around about $11 billion as, of course, the game-changer for the industry. Both CEOs told Richard that there's quite a bit at stake here.
(BEGIN VIDEO CLIP)
DOUG PARKER, CEO, US AIRWAYS GROUP: The value is very large to consumers and to the airlines. Having said that, of course there are some issues that we're learning to manage through. We've both done this before. But we have the right teams in place. We do indeed know where the pitfalls are. It doesn't mean there won't be some bumps along the road.
We're aware of that as well. The challenge is to make sure we manage those as well as possible and keep moving forward and make sure the customer's disruption is as small as possible.
RICHARD QUEST, CNN HOST: You're spending a small fortune building what you called at IATA last year the new American.
THOMAS HORTON, CEO, AMR CORPORATION, AMERICAN AIRLINES: That's right.
QUEST: Well, the new American really is a different new American than the one we talked about at IATA.
HORTON: It's a bigger and better new one.
QUEST: All right. Well, it's a bigger new American. But you're spending a lot of money doing it, aren't you?
HORTON: Well, when I was -- laughed together with Richard, we talked about American's mission going forward, and that was really to put American back on top. And that meant restructuring the company to be competitive and strong and profitable. That's largely been done.
It meant renewing our fleet and our assets, which we're right in the midst of, and our product and services. And ultimately it meant getting bigger and a merger which we're now in the midst of.
So the new American will be the largest airline in the world, with 6,700 flights a day, some 1,500 airplanes. But our mission is not to make it the biggest airline in the world. It's to make it the world's leading airline. And that starts with the customers. So your first question was the right question. We have to make this integration work for our customers. And Doug and I are laser focused (inaudible).
QUEST: Where do you want to position internationally the new American?
Where do you want it to stand, because obviously you've got your domestic competitors to beat.
And then you've got the international carriers that you've also got to now play against.
PARKER: Right. And we all -- we -- and, of course, as do Delta and United.
Where we intend to be positioned as one of the leading global airlines in the world, one that can serve both through the oneworld alliance but also through our own mainline airline, more markets than anyone else in the world and provide the kind of service that people all around the globe are looking for to get them from points around the world.
QUEST: I've got to ask you, Tom, it's -- being English, let me put it this way. It's more difficult for me to ask you this question than for you to answer it.
The sensibilities of being -- asking people about severance packages.
HORTON: I look forward to this question.
QUEST: I can see you have.
This is more painful for me than for you, but the severance packages once again, is on the agenda. It's in the restructuring package. It's going to come before the bankruptcy judge again. And the number is there.
What's your thoughts now that the bank trustee and the DOJ are opposing your severance package?
PARKER: Well, it's fair question. It is a -- it is a question to be resolved by the board of directors, by the owners of the company and by the court. And my focus has been and will continue to be putting American Airlines back on top. That is my sole purpose.
(END VIDEO CLIP)
DOS SANTOS: That's Richard speaking to the heads of US Airways and also American Airlines at the IATA AGM which is taking place in Cape Town.
Moving on, parts of central Europe are suffering some of the worst flooding that we've seen in that region in literally years. Thousands of people have been evacuated from their homes. Tom Sater is standing by to tell us all at the CNN International Weather Center.
Hi, there, Tom.
TOM SATER, AMS METEOROLOGIST: Hello. It looks like rain is continuing to really plague some regions and many countries. The worst flooding over the weekend in parts of Germany, Czech Republic, Austria, Switzerland has flooding along the Rhine. We had a tornado today in Poland. That was in Smielneg (ph).
So also, as you've seen this area of low pressure spin, notice where we have the sunshine, still dry in areas of Paris for the French Open, dry and warm, well off toward the east. But this is the same area of low pressure that's really been producing heavy amounts of rain.
As we get in a little bit closer, you're going to see some of these numbers, in fact, in Austria alone, a two-day total beginning really Friday and heavy amounts on Saturday and Saturday afternoon, are dropping as much as they typically pick up in the entire month.
And then we have Germany and Switzerland as mentioned. The rising waters along the Rhine, the Danube is very high in many areas. But as we move in a little bit closer, it's not just the heavy amounts of rain, which is trying to taper off in some areas. We get a little bit closer and we still have some thunderstorms where we had the tornado, central areas of Poland.
As it makes its way southward and the waters continue to rise, the smaller tributaries generally getting into the larger river systems. And we've had problems now in parts of Germany. Notice the rainfall. Now the radar kind of breaks off here. But if we get in even a little bit closer, you're going to start to see how it tries to taper off somewhat. But any additional rainfall is going to cause more problems.
Let's take a look at some of the pictures we have. This is one of the bigger issues. And of course, this is in southern Germany. We have parts of lower Saxony, of course, central areas as well, even down in Bavaria, where this is in Passau (ph).
Now this is known as the City of Three Rivers. You've got the Ilz, you've got the River Inn and the Danube, some of the worst flooding since 2002, water levels up to 12 meters. Now I want to show you some areas that we've seen in Bohemia. Now this is the Czech Republic, including the capital of Prague, devastating floods.
The government has issued a state of emergency, Czech rivers do continue to rise. The worst in south Bohemia as water rescue after water rescue, homes are being inundated. They're doing what they can to block the roadways. You see here sandbags are used to protect homes and factories, which are closing. So any additional rainfall is unneeded.
Unfortunately, this area of low pressure on our map is not on the surface. It's an upper area of low pressure which doesn't have anything to kick it out just yet. High pressure well off to the northwest. So I think it's going to hang around for a while, where areas that have, Nina, that cloud cover, the temperatures are much cooler.
Of course, where they're in the sunshine I think they're going to be getting into the mid-20s you see. But on the Tuesday, Kiev, Bucharest, as well. So they need a break. This is only going to get worse, I think, in the next 24 hours.
DOS SANTOS: OK. Tom Sater there at the CNN Weather Center, thanks for bringing us the latest, Tom, that.
Now after the break, here on QUEST MEANS BUSINESS, Apple's in the dark in the Big Apple, accused of collusion with stands to make consumers pay more for (inaudible).
(BEGIN VIDEO CLIP)
DOS SANTOS (voice-over): (Inaudible) the answer to tonight's "Currency Conundrum" for you. Earlier in the show we asked you when more than 100 ancient silver coins were found before being returned to Greek soil. And the answer is B, Switzerland. The coins were minted in the 4th century B.C. They were seized in Zurich airport back in 2011.
(END VIDEO CLIP)
DOS SANTOS: Greece is of course one of the countries that's been hit hardest by the Eurozone crisis, and as unemployment growth across this region so too could the specter of social unrest, according to the International Labor Organization.
Well, the ILO is warning of a widening gap between rich and poor and it says that that gap will present a major global challenge for years to come. I spoke to the ILO's director general, Guy Ryder, earlier today, and began by asking him just how concerned he was.
(BEGIN VIDEO CLIP)
GUY RYDER, DIRECTOR-GENERAL, ILO: This problem of growing inequality was before the crisis. And it seems to be being continued by the policies being put in place to try to get us out of the crisis. And I think we need to be worried inequality from a social point of view.
There are basic questions of social justice involved here, but also from an economic point of view as well, because very high concentrations of income are not going to be good for job creation and growth as we try to move forward.
DOS SANTOS: Well, indeed, if you look at some of the top economies around the world, in the United States, some of the biggest companies are paying their CEOs on average about 508 times more than their average employee.
Many people will be watching this and thinking if we're supposedly still in the midst of an economic downturn, why are we seeing CEOs getting paid 508 times more than their average employees?
RYDER: Yes, and I can't give you the answer to that question. I think very few people could give you a credible answer to that question.
I really do think that at a time when people around the world are being asked to tighten their belts, one sort of basic demand is that the burden be shared equally, fairly. And clearly if executive and top-level pay is not going to be reined in, as it clearly isn't at the moment, then I think people are going to react to this type of situation. And it's fully understandable.
So we do need to look at executive pay. There are countries. You know, we know in Europe that there are debates out there and measures being taken. And I think business itself also should be looking very carefully at its performance --
DOS SANTOS: Here's the problem. What some people would say is that a lot of these companies have trimmed all the fat. Why should the CEO be deemed paid so much more for this savings that they've made by making people at the bottom end of the ladder unemployed?
RYDER: Well, I think that's fair criticism. And we've got a very strange sort of a situation arising in business now. We're seeing business sitting on very, very large stacks of cash, cash holdings by publicly listed companies right now have tripled since the beginning of the century, over the crisis period.
People are not investing. People are not using the money that have been -- that has been accumulated from the cuts that have been put in place, the savings that have been affected. They're not reinvesting them into getting our economies moving and getting people back to work. And I think that's a very serious situation.
At the same time, there's small and medium sized enterprises find their profit levels very badly squeezed and their access to credit restricted as well.
Now, not only have we got economic and social -- not only have we got social inequality in terms of people's incomes, we seem to be developing a phenomenon of economic inequality between big business, lots of money, but not doing much with it and small business which just simply can't get access to credit. And it's having a pretty hard time out there right now.
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DOS SANTOS: Well, that's the ILO's director-general, Guy Ryder, speaking to me earlier today.
Let's move on and talk about business news. And I want to tell you about a tale of intrigue with a plot laden with collusion claims. Today a judge is wading between fiction and fact, because Apple is in court to deny conspiring to fix the PRC of ebooks.
So here's the story so far. Once upon a time, in 2007, Amazon started selling ebooks for its Kindle priced at $9.99. It's alleged that several publishers thought that that price was too low, but Amazon would not budge.
So here's the question: what happened next? Well, it's alleged that Apple did a deal with the publishers when it was prepared to launch the iPad.
So it struck a deal here, ditching the wholesale model, allowing reach of allowing retailers to set their own prices and instead the publishers set the prices in what's called the agency model. And the result of all of this was that the Department of Justice says it's higher prices.
So where does that leave us today? In the end, the Department of Justice has decided to launch a lawsuit. And although the five publishers actually settled, Apple instead is the one that fought on. And as you can see there, it's been saying that the collusion claims are pure fiction.
So Maggie Lake joins us now live at CNN New York to find out exactly how this will play out. They're debating between fact and fiction.
How do you think it's going to go, Maggie?
MAGGIE LAKE, CNN CORRESPONDENT: Yes, this is going to be an interesting one. And, Nina, as you well know, we've talked about it a lot on our business shows, Apple no stranger to lawsuits, to courtrooms, to trials as we know from its ongoing patent disputes with Samsung.
And in this case, it's interesting that the five publishers, everybody else in this case, has settled. But Apple, but Tim Cook has been emphatic about the fact that they're not going to, even just last week saying once again, listen -- and this is a quote -- "We won't sign something that says we did something that we didn't do. We are going to fight."
Here's the problem, though, and it really shows up on this quote we have here. In the DOJ complaint, it seems full of some pretty damning emails, including some of the late Steve Jobs himself.
Can we just put that up, guys? You put that up a little earlier.
He's allegedly told this from his biographer, Walter Isaacson, well, this is a quote from that. "We'll go to the agency model," this is what he told publishers, "where you set the price and we get 30 percent."
He went on to say, "Yes, the customer pays a little more, but that's what you want anyway."
Again, these are quotes that are in the DOJ complaints, presumably Apple's lawyers are going to come back and say, listen, that was taken out of context and give another explanation for it.
But as we know, emails can really sometimes make the difference in trials. And when you've got a whole bunch of them that are pointing in one particular way, that's going to be very interesting to see how Apple tries to refute that.
Another thing that has people a little bearish about Apple's chances here, Nina, this is going to be heard by a district judge.
It's not a jury trial, it's a district judge. But that judge just last month recommended that Apple settle, saying, listen, it looks pretty convincing that the government has enough to make a case against you. When the trial judge is telling you to settle, because she thinks the government has a good case, you would think they might take that under advice.
But again, Apple's saying they're going to fight it out. So this will be an interesting one to watch.
DOS SANTOS: Well, briefly, that begs the question, doesn't it, Maggie, what happens if they lose?
LAKE: Yes, they're not -- the government's not going after damages. What they want to do is prohibit Apple from this kind of behavior in the future. However, some lawyers are saying, listen, this could set the bar for Internet commerce.
This could have really far-reaching precedent for not just Apple, not just the publishers, not just publishing, but Internet commerce in general. So a lot of legal minds really watching this closely. So no fine, no financial damage, but perhaps changing their behavior in the future and also, Nina, it doesn't let them off the hook for any suits that may come from individual states.
So Apple may still have to pony up money for this. But it's really that legal precedent everyone's watching.
DOS SANTOS: OK, Maggie Lake in New York, thanks ever so much for that.
Now speaking of things in New York, Wall Street, as you can see, is trading in the green at the moment, as you can see the Dow Jones industrial average remaining in the black for the moment, up around about 75 points or half of 1 percent.
That's despite today's decidedly underwhelming manufacturing and construction figures from (inaudible) what everybody's going to look at on this market is the monthly jobs report that comes out on Friday.
But so far, it's been something of a stellar year for stocks. All of these indices in the United States, the S&P 500, the Dow Jones industrial average, even the Nasdaq are up between 14 percent and 16 percent so far.
Now there is one stock that we are keeping a close eye on on this market, Ford shares. They're up by around about a fifth of 1 percent at the moment. And that's still despite recalling 465,000 of their current model cars because of a suspected fuel leak. It just goes to show that despite disappointing and bad company in news like that, the broader sentiment in the market is still managing to lift some stocks up.
Now the Special One is back, Jose Mourinho has unfinished business at Chelsea and he's ready for the challenge. We'll have more on his return to English football. That's next.
DOS SANTOS: Jose Mourinho has officially returned to Chelsea. The West London football club has given the so-called Special One a four-year contract, nine years to the day since they first hired him. That original spell ended in a bitter dispute with the club's owner, Roman Abramovich, though as Jim Boulden now explains, sometimes looking back is the best way forward.
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JIM BOULDEN, CNN CORRESPONDENT (voice-over): There are few personalities and egos as big as Jose Mourinho in the footballing world. But that could also be said about him if you think of him as the CEO. In this case, the returning leader of Chelsea Football Club. He did, after all, call himself the "Special One."
JIMMY BURNS, FOOTBALL WRITER: I think what attracts him to his friends and to his fans is the sort of kind of psychological games he plays, the sort of sense of inspiring the people that follow him, a sense that we follow Jose; we're going to win everything.
BOULDEN (voice-over): It may be unusual in sports to bring back a manager, especially one that left in a huff after three years at the helm. But it's become a bit of a trend in the board room. JCPenney and Procter & Gamble have brought their old CEOs back in recent months. Some say these moves are acts of desperation or show that a company failed to have a succession plan.
But you could also point to the late Steve Jobs, who cofounded Apple, was fired and then brought back after 12 years to unprecedented success. After all, insiders' knowledge from longstanding executive, even one that leaves, can be invaluable.
PAUL WINTER, MANAGEMENT CONSULTANCIES ASSOCIATION: Going away, I mean, (inaudible) different experience. Experience (inaudible) from stakeholder groups. So Real Madrid, you've got a very big, powerful stakeholder (inaudible). You can't just do what you want.
Going away and realizing that is probably one of the reasons why Mourinho has been able to come back.
BOULDEN (voice-over): After leaving Chelsea in September 2007, Mourinho won titles and trophies at Inter Milan, including his second Champions League title, Europe's top honor, something he failed to achieve while at Chelsea and at Real Madrid.
But certainly his proven winning record is one big reason Chelsea owner Roman Abramovich swallowed his pride and asked the Special One to come back -- Jim Boulden, CNN, London.
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DOS SANTOS: After the break, lessons in life from the head of the Fed. We'll tell you what Ben Bernanke told graduating students next.
DOS SANTOS: Graduates of Princeton University received a pep talk from a pretty high-powered careers adviser. That was when the Federal Reserve chairman Ben Bernanke, no less, popped in. Here are some of his top tips, as he told the class of 2013.
First of all, it seems as though Mr. Bernanke endorses the Forrest Gump school of thought; that is to say life is like a box of chocolates. You never quite know what you're going to get.
And crucially, he also says don't plan your life too soon. As you can see, he told students, don't be afraid to let the drama play out. Probably knows a little bit about that, given as though he presided over the 2008 financial crisis and had to deal with the aftereffects.
Now another issue close to Mr. Bernanke's heart and the rest of us as well, he says, is, "Money is a means, not an end." That is, though, if you're lucky enough to choose, it seems.
And thirdly, he advises students, don't worry about making those mistakes. He says, "Failure is an essential part of learning." There was however, another very important piece of advice that the Fed chairman left with the students as well.
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BEN BERNANKE, CHAIRMAN, U.S. FEDERAL RESERVE: Call your mom and dad once in a while. A time will come when you'll want your own grownup, busy, hypersuccessful children to call you. Also remember who paid your tuition to Princeton.
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DOS SANTOS: And that's it for this edition of QUEST MEANS BUSINESS. Thanks for joining me. I'm Nina dos Santos. I'll be back with a check of the news headlines in just moment's time.
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DOS SANTOS (voice-over): One person has been killed and more than 3,000 people injured in violence related to demonstrations across Turkey today. That's according to the Turkish medical association's figures. The Prime Minister Recep Tayyip Erdogan has blamed those ongoing demonstrations on extremists and political enemies. Protests have broken out in most provinces across the country.
Police and protesters clashed yet again in Ankara today and also in Istanbul.
A fatal fire at a poultry plant in northeastern China may have been caused by an explosion from a chemical leak according to reports. More than 100 people were killed and dozens others were hurt and injured as well. Workers who did manage to escape say that the gates of the plant were locked at the time.
The Czech Republic is on alert for heavy rains and flooding. Floodwaters have already forced thousands to evacuate across many parts of central Europe. At least nine deaths have been blamed on the flooding in that part of the world.
And the U.S. Army soldier accused of aiding the enemy by passing documents to WikiLeaks is now on trial at a military base in Maryland. The prosecutor said in his opening statement that the government will provide evidence that materials used by Al Qaeda operators can be traced to Bradley Manning's illicit downloading. He denies knowingly aiding the enemy.
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DOS SANTOS: That's a look at the headlines that we're watching for you at CNN. "AMANPOUR" is next.