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QUEST MEANS BUSINESS
Turkey PM's Final Warning to Protesters; Turkey's Economy; Update on Turkey Protests; Murdoch Divorce; Dow Rallies; Little Change in European Markets; Asian Markets Down; Brazil's Economy; Dollar Flat; EU-US Privacy Split
Aired June 13, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAGGIE LAKE, HOST: In Turkey, protesters return to Taksim Square. I'll be speaking live with the country's finance minister.
Mind your own business. The EU warns the US to respect its online privacy.
And a News Corp split. Rupert Murdoch is getting divorced.
I'm Maggie Lake, welcome to QUEST MEANS BUSINESS.
Good afternoon from CNN New York. Turkey's prime minister has delivered a final warning to protesters. In an attempt to stop the unrest which has shaken investors' faith in the country, Recep Tayyip Erdogan told his opponents to pack up and leave Istanbul's Gezi Park, the place where it all began nearly a fortnight ago.
Taksim Square was peaceful this morning. It's littered with tents, debris, and makeshift barricades. As well as the protesters, Turkey's leader took aim at the EU's criticism of his handling of the crisis.
(BEGIN VIDEO CLIP)
RECEP TAYYIP ERDOGAN, PRIME MINISTER OF TURKEY (through translator): Those who took this decision should think what they did when people clashed with police in Greece. What did the European Union and even the eurozone do, except for giving out money?
This is my final warning. I am calling on mothers and fathers, please do something about your children.
(END VIDEO CLIP)
LAKE: For the sake of its economy, Turkey cannot risk letting these protests continue much longer. Moody's, the rating agency, put it like this: "These political disturbances become increasingly credit-negative the more they intensify and the longer they continue."
That downhill trend is reflected in the Istanbul Stock Exchange. The ISE National 100 was actually already falling before the protests started on May 31st. Since then, the demonstrations began, more than 10 percent of them wiped off share values.
As well as the impact on stocks, Turkey is braced for a slump in tourism in one of the busiest months of the year for visitors. Let's cross to Ankara and speak to the Turkish finance minister, Mehmet Simsek. Thank you very much for being with us today, sir.
Clearly, you can see from looking at the markets, investors are nervous. Political stability has been key to Turkey's economic success. What do you say to investors who look at Turkey now and say that has changed and are thinking of pulling more money out of the country?
MEHMET SIMSEK, TURKISH FINANCE MINISTER: Turkey's fundamentals are still strong. Gezi events or Gezi Park unrest has contributed to recent market volatility, but even prior to that, the real cause was the change in Fed's rhetoric.
Having said that, remember that these events, both in Ankara, Istanbul, and Izmir, are confined in very tiny parts of the cities. So, the implications or the fallout for the real economy has been insignificant. But if it is sustained, clearly yes, it is negative.
The implications for tourism is negative, but Turkish tourist industry is stress-tested. We've seen in the past events like these or geopolitical risks have had some temporary impact, but no lasting impact.
So, Turkish macroeconomic fundamentals are strong. Outflows over the past ten days from equity market, from bond market, has been negligible. For example, international investors hold about $70 billion of free float in the Turkish equity market. Outflow has been only $1 billion.
In the bond markets, similarly, international investors have about $60 billion of Turkish local currency bonds. The outflows have been only $260 million.
LAKE: Right. Of course, as you know, though, they have been willing in the beginning to take a wait-and-see attitude, but the longer this goes on, the more they worry that may change, and frankly, the prime minister's very defiant tone has some concerned -- many concerned -- that this is going to be more sustained, that it may spread from the confined areas that you talk about.
SIMSEK: I would like to disagree with you here, because I think Prime Minister -- my government is making a real distinction between peaceful protesters, law-abiding protesters, and violent, militant protesters. And that's why we've been -- actually, yesterday, Prime Minister accepted -- received representatives of the peaceful protesters.
Similarly today, he's -- he has announced that he will be meeting other representatives. But clearly, no country can tolerate to violent, militant protests that harms public property, private property. And clearly, you wouldn't probably tolerate that in Times Square or in Trafalgar Square. It doesn't really matter.
So, what we're trying to do is to make a real distinction between peaceful protesters who have a case regarding environmental concerns. We hear them, we hear their plea, we will respect that. That's why we are seeking a referendum on the project. But as far as the violent protesters are concerned, clearly we cannot tolerate.
LAKE: Mr. Simsek, longtime Turkey watchers, while you make those distinctions, do point out the fact that Prime Minister Erdogan has been in power for a long time, now, and that even the rating agency Moody's saying these protests remind investors of the persistent domestic political risk.
Are we at a juncture where there needs to be new political leadership to ensure that the economic stability, that the growth Turkey has enjoyed, can continue?
SIMSEK: That is for Turkish people to decide. This is a government that is democratically, legitimately elected. Prime Minister is extremely popular. Remember: yes, you've got some violent street-level protests, but keep in mind that vast majority of -- silent majority is out there.
So, the idea to present it otherwise or misrepresent it, which has been the case in certain media outlets, that's really not fair. Prime Minister even more recent polls that were held last week -- opinion polls - - suggest that my party, the governing party, Prime Minister's party, still has at least 50 percent support.
So, clearly, the idea that Prime Minister is around for a long period of time and that means something else is very unfair, because that's for Turkish people to decide. It's a democratically elected government.
We have to listen to the minorities as well, we have to listen to other citizens. We represent -- we are a government of the entire Turkish people, 76 million. So, we have to hear them, and we do. But we have -- we cannot tolerate violent protests.
So, we're making a distinction, and Prime Minister clearly has done so, and that's why he's meeting representatives of Taksim Square -- whatever environmental protesters or activists.
LAKE: All right. Mehmet Simsek, the Turkish finance minister, thank you very much for taking the time to join us tonight. Obviously, investors watching the situation very closely. Thank you, sir.
We want to stay in Turkey and go straight to Istanbul and Nick Paton Walsh, who is there where the action is. He's been on the front line in Taksim Square and has seen the unrest unfold. Nick, a lot of the action we've seen has been happening in these hours. What do you see right now?
NICK PATON WALSH, CNN INTERNATIONAL CORRESPONDENT: What you're seeing behind me just past is a chain of women, mothers, who have linked arms and are now forming a chain, it seems, as far around the park as they can.
Now, that is in direct response, it seems, to the words of Prime Minister Erdogan earlier today calling on mothers to take their children out of the park. Now, here they are, en masse, holding hands.
When you hear the line about extremism, this is one of the issues --
WALSH: -- and obviously this long procession of reasonably young-aged women don't appear to be extremists or have any particular extremist ideology. So, so much of the complication the Erdogan government has faced is the fractured nature of the protests here.
WALSH: And people, scenes like that -- we're hearing drumming here now. This park increasingly filling up with people --
WALSH: -- but also a degree of tension, too, because we are seeing police taking positions -- in small numbers, it's fair to say -- but positions in Taksim Square over there.
WALSH: Here still continues their chain.
LAKE: Nick, if you can hear me --
WALSH: -- there's a sense that
WALSH: -- deadline is this sense of a --
WALSH: Maggie, yes, I can hear you.
LAKE: Yes. We seem to be -- unfortunately, Nick's signal seems to be breaking up with this, so we're going to leave it there right now. Nick Paton Walsh, thank you so much, live from Taksim Square where, of course, throughout the evening will continue to come back to Nick as news develops.
Up next, though, a turnaround on Wall Street. After three days of losses, investors are back in the market. We'll head across town to the New York Stock Exchange next.
LAKE: Rupert Murdoch has filed for divorce from his wife, Wendi Deng. A spokesman for the News Corp founder says the relationship had been irretrievably broken for more than six months. Felicia Taylor joins me now live from New York. Felicia, this sort of catching people by surprise.
FELICIA TAYLOR, CNN INTERNATIONAL CORRESPONDENT: You know something? You're absolutely right, Maggie. There's no question about that. Because I've spoken to a number of people in the last hour or so, and every single one of them was almost shocked that this had happened.
But indeed, Rupert Murdoch did file for divorce in the Supreme Court of New York City earlier today. They had been married for 14 years, so quite a long marriage. They had two daughters together. And he, though, is worth a quite sizable sum, about $9.4 billion.
He is 82 years old, she is 44. Reports are indicating that there was some sort of prenuptial agreement, but if you take a look at one of Mr. Murdoch's previous wives, who was Anna, and she is the mother of three of his -- the other three children, who are obviously much older, they -- Anna, after her 30-year marriage, got $1.7 billion in their settlement.
But as you said, this was a marriage that reports are saying was irretrievably broken. But what's a little bit interesting about this is the timing of this split. It comes just after News Corp is going to -- or just before News Corp is going to split into two different companies -- no pun intended -- one for the entertainment business, and one for the publishing business. That is supposed to be filed on June 28th.
So, other reports are indicating that this is all about full transparency, and that's why it's happening before the filing of the splitting of News Corp into two different companies. But nevertheless, it is taking people by surprise. What's interesting is --
LAKE: Well, that --
TAYLOR: -- Wendi was -- Wendi was recently most well-know for -- and this didn't happen very long ago, as you well know -- when Mr. Murdoch was testifying before the British parliament, somebody played a prank and tried to put a fake pie in Mr. Murdoch's face, and she intercepted, literally, and pushed him away. So, it looks like things got a little rocky only very recently.
LAKE: Yes, that's the thing. That is the image that most of us -- I mean, she's not that much of a well-known name in and of herself, unless you're really an inside News Corp watcher, and that is the thing. She always seemed so protective of him, almost sort of a guardian, especially that lunge, made headlines all around the world. I think that was has people a little bit confused.
Rupert's had a little bit of a tough time with his reputation, though, hasn't he, given all those hearings, Felicia, and the --
TAYLOR: Oh, yes.
LAKE: -- fate of the company? I wonder how this is going to factor in.
TAYLOR: I don't think it is going to factor in, and that's exactly why they're doing it. Shares right now are unchanged, and that's perhaps exactly why the timing of this is taking place now.
There has always been a discussion as to what role the two daughters would play in the company. Reports indicate that the three children are going to maintain voting control within the company, and the two daughters -- although of course they are part of his will -- will not have any voting control.
So, the issue of this divorce is not going to affect what happens at News Corp. It is something, obviously, very separate and between Mrs. -- Wendi Deng and Rupert Murdoch.
LAKE: Right. And something for the water cooler, that's for sure. Felicia Taylor --
LAKE: -- thank you so much for that.
Well, US stocks are rising for the first time this week, another surprise for us today. The Dow Industrials pared losses as a report showed retail sales climbed 0.6 percent. That was better than economists expected. So that big sell-off we were expecting instead has turned into this, take a look. A rally, a triple-digit one at that, the Dow up over 100 points, a gain of about three quarters of a percent.
It has been a rough week, though, as investors try to gauge when the Federal Reserve will exit its huge bond-buying program. We should say when and if, as well. The Fed meets next Tuesday and Wednesday. It's going to be a huge week in terms of central banks.
European stocks, meanwhile, finished little changed. That was actually an improvement on how those markets opened. Earlier today, the World Bank lowered its growth forecast for the global economy to 2.2 percent this year, down from its original forecast of 2.4 percent. So, the US -- the better US showing certainly helping things in Europe.
Asia, though, fared the worst today. Shanghai and Hong Kong each fell more than 2 percent. In Tokyo, the Nikkei plummeted 6.4 percent right into bear market territory.
Now, a bear market is generally defined as a 20 percent drop from a recent peak. In the case of the Nikkei, it has declined 22 percent since May 23rd. That day, the stock average plunged 7.3 percent. Since then, the Nikkei has become the world's most volatile share market.
Investors are increasingly nervous over the fate of Japan's unprecedented quantitative easing policy. This week, the Bank of Japan refrained from pouring more cash into the system despite the violent moves in the market.
And emerging markets are taking the brunt of investor fears over the availability of cheap money. Brazil's main stock index, the Bovespa, became the first major developing market index to fall more than 20 percent since its January high. Growth in Brazil has slowed substantially. The economy expanded at just 0.6 percent in the first quarter.
A sluggish economy is proving to be a headache for President Dilma Rousseff. Two recent opinion polls show her approval ratings have slipped. Respondents are most concerned about inflation, which is running at 6.5 percent.
Paula Newton is in Rio de Janeiro and joins us now live. Paula, a lot of people in that area have very painful memories about inflation. Tell us what's going on.
PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: Well, the inflation is really just half the story. What is going on is this expansionary policy by this government, and it does not seem to be working.
Maggie, just yesterday, this government announced almost $9 billion in low-interest loans for people to basically renovate their houses and invest in the economy. What are they trying to do? They're trying to expand this economy because growth has been sluggish. And that has really led to many people wondering where this government is going and, quite frankly, where this economy is going.
S&P just last week -- Standard & Poor's -- really looked at the outlook for this country and said that they were reviewing and that they moved it from a stable outlook to negative. And that was wholly significant.
Now, Maggie, I did speak to Standard & Poor's analysts, and they said, look, there's no reason to press the panic button. But what is going on here is a fairly classic example of sluggish growth and a government that is being too interventionist and perhaps being a bit too ambitious and a bit to risky, and it's putting investors on edge. I want you to listen now to one of the economists based here in Rio.
(BEGIN VIDEO CLIP)
RENATO FRAGELLI CARDOSO, ECONOMIST: Brazil has been growing at 2 percent a year on average in this current government. That's too low. We could be growing much more than that. But in order to grow much more than that, we should have a better economic environment. I mean a more market- friendly government, which we don't have at all.
(END VIDEO CLIP)
NEWTON: What's incredible here is the fact that before this, Brazil really was an absolute darling of investors, as you know, Maggie. And when you consider that they moved anywhere from 30 to 35 million people out of poverty and into the middle class, so significant.
Still, going forward, the -- they're predicting perhaps 2, 2.5 percent growth for this economy. It's just not enough, and Standard & Poor's again pointing to the lack of investment. You just have to spend a little bit of time here, Maggie, a couple days, and you realize in terms of traffic, public transport, there are a lot of issues that this government needs to deal with right now. Maggie?
LAKE: Yes, but it's funny, if people are criticizing them for being too interventionist, what do they want them to do? Is it just a different kind of intervention they're looking for?
NEWTON: Well, you can't blame this government for saying, yes, one minute we're not doing anything, the next minute, we're doing something. Look, they wanted them to make sure that they did not lower interest rates. They tried to lower interest rates. They do not want public finances to be put at risk.
And this is what they've seen this government do. And at that point in time, they want things just at a halt. And I think they're a little bit more convinced that the finance minister, along with the president, will now actually heed their advice and not really put too much of a burden on public debt here in this country. And I think that will serve to kind of ease investors.
Now, the loans announced yesterday, Maggie, didn't help. Let's see if it works over the next few months. People watching this market, though, how can you ignore it, right, Maggie? In terms of it's moved well into the top 10 economies of the world.
This is still a market to watch, and believe me, investors are rooting for this market. They want to be here. They're looking for just a little bit more of an edge of confidence from this government here. Maggie?
LAKE: That's right. Of course, the global volatility that's happening as a backdrop just making it even more challenging for them, right? Paula Newton there live for us in Rio de Janeiro. Thanks so much.
Well, a Currency Conundrum for you now. Turkey has 13 security features built into the 200 lira note: 13 in order to prevent forgery. Which one of these is not one of them? Is it A, Braille lettering? B, macro lettering? C, mini-lettering. I'll have the answer for you later in the program.
The dollar is flat against the euro and the pound, and it's down against the yen, trading at a two-month low.
LAKE: A US scandal over online surveillance is threatening to derail a potential trillion-dollar trade talk with the US. A series of leaks suggest major US-based tech firms were ordered to give the US government private data, including e-mails, pictures, and online chats uploaded by non-US internet users.
The EU's justice commissioner has now written to the US attorney general warning him to respect the privacy of Europeans. Viviane Reding said she was concerned America's mass data surveillance programs, quote, "could have grave adverse consequences for the fundamental rights of EU citizens."
Well, the United States and European Union are already split over internet privacy laws. This latest scandal might encourage the EU to hold out for tougher data protection standards in any trade deal that may be negotiated. Jim Boulden joins me now live from London. It sounds like something that is complicated just got a lot more complicated, Jim.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Complicated and long- standing, Maggie. And let me explain that. Because there are so many differences between the privacy laws in the US and in Europe.
Think firstly about privacy when it comes to photos taken and the press. Now, who's this man? This is Alexander Dumas, the French author of "The Three Musketeers," and his was one of the first test cases. Photos of him with his mistress were banned in France, but they were considered fair play in the US.
Nowadays, it's all about data protection along with privacy, of course. And under European law, consumers have a right to ask how their data is being used, and companies must respond. In Europe, companies must alert consumers if they are collecting data. Consumers must give explicit permission to collect, use, and keep data.
For instance, credit cards. Websites and call centers cannot retain credit card details without permission. In the US, it can be stored for long periods of time. And in the US, laws on privacy and data protection often vary from state to state. Add to that federal data laws. So many different laws for people to comply with.
And remember, the US collects and stores air passenger details in the way that has upset Europe, though the two did broker a compromise deal last year.
Back to that letter. Well, the EU commissioner has asked the US attorney general a series of very serious questions to find out if the US is, indeed, collecting data on European citizens and, if so, Maggie, how can citizens find out more? Because after all, that is their legal right here in Europe, even if that data is collected in the US.
LAKE: Yes, it's such a good point, Jim. The state-by-state, the state power over this stuff is something that's very often lost from the outside. I'm just curious, quickly: how much power does this woman wield? Sometimes looking from the outside, the EU seems like a bureaucratic web. Does she actually have the clout to derail the trade talks?
BOULDEN: This is interesting, because she's been calling for more -- tighter data laws here in Europe for several years. She's actually had this problem with the US before. Since 2010, Viviane Reding has been talking about this.
If you read between the lines, there's other people in the Commission who don't agree necessarily with her because they don't want to upset the upcoming trade talks with the US. So, she is not speaking at all for not just the Commission, but for the European Union. It is very splintered on this issue. But data privacy itself is something people here hold very dear, Maggie.
LAKE: Yes, certainly this story is going to continue to make waves. Jim Boulden for us in London. Thank you so much, Jim.
On tomorrow night's show, Richard is in Berlin speaking with German chancellor Angela Merkel ahead of next week's G8 summit. He'll get her reaction to reports about the PRISM surveillance program in the US. That's on QUEST MEANS BUSINESS when Richard goes face-to-face with Chancellor Merkel.
After the break on QUEST MEANS BUSINESS live from New York, it's a row that's pitting Wall Street against a regulator, and it's splitting Congress, too. Bank regulation in the wake of the financial crisis.
MAGGIE LAKE, CNN CORRESPONDENT: Welcome back. I'm Maggie Lake. This is CNN. Here's a check on the news headlines this hour.
(BEGIN VIDEO CLIP)
LAKE (voice-over): Turkish police have fired smoke grenades to disperse protesters in the capital, Ankara. Turkey's prime minister has again called on protesters to leave Istanbul's Gezi Park.
Recep Tayyip Erdogan said his government is running out of patience.
The United Nations human rights office now says the number of documented deaths from Syria's civil war has reached almost 93,000. But that count is based on data only through April. So the actual death toll is believed to be much higher. The U.N. also says the vast majority of those killed have been now (ph).
Thousands have taken to the streets in Athens, protesting the government's sudden decision to pull state-run TV and radio services off the air. Unions called for a general strike in support of the journalists. Today we learned more than 27 percent of Greece's workforce is out of a job.
An explosion at a chemical plant in the U.S. state of Louisiana has killed at least one person. Reuters news agency is reporting more than 30 people have been injured. The cause of the explosion and subsequent fire are not yet known.
The U.S. Supreme Court has ruled that human DNA cannot be patented, quashing patents held by Utah-based firm on two genes linked to breast and ovarian cancer. The court decided, though, that artificially copied DNA can be claimed as intellectual property.
(END VIDEO CLIP)
LAKE: U.S. prosecutors say an epidemic of smartphone crime is sweeping across the country. They're meeting with four of the largest players in the smartphone industry today to try to come up with solutions. It's getting so bad in some cities police have come up with a nickname for it: Apple picking. Samuel Burke reports.
SAMUEL BURKE, CNN CORRESPONDENT (voice-over): For all of us with mobile devices, these are chilling scenes. Thieves prying a smartphone from a woman's hands in the subway and grabbing a smartphone in broad daylight on the street. It's all part of a growing crime epidemic, smartphone theft now accounts for an astounding one in three robberies across the United States.
Police even have a name for it: Apple picking.
CHARLES RAMSEY, PHILADELPHIA POLICE COMMISSIONER: These devices are being taken point of gun. They're being taken after serious assaults. So this is no small crime.
BURKE (voice-over): New York City last year saw a 40 percent increase in mobile thefts, and studies indicate that 40 percent of robberies across major U.S. cities involve mobile devices. The big challenge, to take the incentive out of stealing these costly gadgets.
JULIANNE PEPITONE, WRITER, CNNMONEY: A lot of the problem is that it's relatively easy for thieves to just swipe a phone. And once they have the device, they know that there's a resale value of several hundred dollars.
BURKE (voice-over): Until recently, there has been little reason for smartphone makers and wireless carriers to improve security. After all, if a phone is stolen, you've got to buy a new one. But officials like New York Congressman Eliot Engel are turning up the heat. His bill would force wireless firms to immediately cut off service to stolen phones.
REP. ELIOT ENGEL (D), N.Y.: What I've gotten from the providers so far is not outright hostility, it's more or less ambivalence. I think they should be leading the charge in order to prevent people from making money by stealing phones.
BURKE (voice-over): Carriers point out they help set up a U.S. database to track stolen phones and shut them down, and just this week Apple unveiled a so-called kill switch that would deactivate an iPhone completely the way you would a stolen credit card.
CRAIG FEDERIGHI, SVP, APPLE: With Activation Lock, if a thief tries to turn off Find My iPhone or if they even wipe the device entirely, they will not be able to reactivate it because they don't know your iPod (ph) username (inaudible).
BURKE: It remains to be seen whether hackers can get around Apple's newest security measure or whether anything at all can truly end smartphone theft. But rising crime makes this problem harder for the tech world to ignore -- Samuel Burke, CNN, New York.
LAKE: New York's attorney general says smartphones are simply too easy to steal and resell. Eric Schneiderman told me it's up to the companies that make them to do something about it.
ERIC SCHNEIDERMAN, N.Y. ATTORNEY GENL: Essentially this is an epidemic of crime that must be stopped. And in New York City, crime has been falling in virtually every category. We have a great law enforcement community. But we had a 40 percent increase in the robberies related to smartphones last year.
This has to do with products that are too easy to steal and too easy to wipe and resell. And we know that we have more technical expertise in this industry than anywhere else.
And if we can have credit cards that can be automatically canceled, and we have cars that can be designed so they're very, very hard to hotwire and steal, we certainly should be able to install something that renders these phones worthless if they're stolen and reported stolen and that would take away the incentive for all of these robbers.
And as was noted, assaults and sometimes even deaths (inaudible) joined today by the father and sister of a young woman who was actually murdered for her smartphone. So this is not just a matter of economic crime.
LAKE: After the break, we'll have a check of the weather. Stay with us.
(BEGIN VIDEO CLIP)
LAKE (voice-over): And now the answer to tonight's "Currency Conundrum," I asked which of the following is not a security feature on the 200 lira note? And the answer is B, macrolettering. We made that one up. But you will find Braille and microlettering and minilettering, in fact. So a magnifying glass may help.
(END VIDEO CLIP)
LAKE: OK, time for the weather right now. Jenny Harrison is at the CNN International Weather Center.
Jenny, I know we've been paying so much attention to those terrible floods that have been plaguing central Europe.
What's the status?
JENNY HARRISON, CNN METEOROLOGIST: Well, unfortunately, Maggie, you know what, it's going to be a few days yet before we finally see in particular the Elbe River and also the Danube really just eventually crest through at either end.
But let's have a look, first of all, at the Elbe, because this is what it looked like literally last Saturday. So beginning of May was what the first image was, when you could barely actually make out the river from space.
And then not helped by the fact that of course one of the levees broke. So this is the image in Fischbeck in Germany. And of course once a levee or a dam breaks, you end up with the inevitable flooding.
Another picture, because you saw some thunderstorms come through, it's been a very unsettled picture for the last few days in terms of the weather conditions. Unfortunately, that will stay pretty much the same.
Now with what is going on, we have got some lower water levels. Certainly the one end of the Danube, but the restrictions for shipping are still in place. It is still cresting, working its way now through Serbia, the water continuing to rise at this particular end. So hoping to crest as we go through this weekend. and it'll be several days yet, though ,before it crests out in the Black Sea.
And similar story in the Elbe, working its way through Germany, Hamburg eventually and then of course slowly draining into the North Sea there. But as I say, a very unsettled picture the last few hours. You can see quite a bit of weather pushing up into Northern Europe. Keeping the temperatures down there as well.
The next front comes through, a bit of a break and then another system comes through. Central Europe actually seeing some of the better weather, but we can't rule out, though, showers and those thunderstorms. You can see here in the next 48 hours, most of the Mediterranean seeing some pretty good summer weather as you would expect or hope to expect this time of year.
So Rome, 28 degrees Celsius for you this Friday; 21 in Paris. But it is cooler to the north, 19 in Copenhagen, 18 in London and just 16 Celsius in Dublin.
Now we could do with temperatures like that across in the United States, particularly out West and especially in Colorado. This is the Black Forest fire, 24 hours ago it was half this size. No containment. Now it's burned 60 sq kilometers, 360 homes are destroyed. They have never lost so many homes in any single fire in Colorado. That's according to "The Denver Post."
Thirteen thousand homes evacuated, 38,000 people have been impacted and have had to evacuate those homes and businesses. Very, very low relative humidity, really sort of that perfect fire weather ,which is terrble, of course, it is tinderbox dry. We've got winds up to 50 kph. Expected over the next day or so and of course the conditions are so dry because of the ongoing drought.
Look at these colors. It really explains to you why conditions are so right for these fires, extreme to exceptional drought. The red flag warnings are in place. That really is the strong --
HARRISON: -- West that you can have in this situation.
Meanwhile, across the Midwest, the Northeast, more of these thunderstorms, more lightning strikes. That'll eventually clear out in the next sort of 48 hours, Maggie.
LAKE: Yes, talk about extremes; and you're right, Jenny, it is absolutely dreadful where I'm sitting right now, Jenny Harrison, thank you so much for the update.
Let's get back to the market. The top U.S. regulator is heading for a fight with banks and with Congress over new plans to monitor foreign banks.
The Commodity Futures Trading Commission wants the power to oversee any bank trading with the U.S. whether it's inside or outside the country. It wants to police the market and financial instruments known as derivatives, which we certainly heard a lot about during the financial crisis.
Bart Chilton, a commissioner of the CFTC, joins me now, live from New York.
Bart, thanks very much for being with us. Let's start with what seems to be the crux of the argument here. And there are both lawmakers who are putting this forth, this legislation and as well as those in the financial community who basically say, listen, you guys are overreaching. There are already books on the rules in Europe.
Why do you need the power to oversee that? What do you say to that?
BART CHILTON, CFTC COMMISSIONER: Well, hi, Maggie. There's two things. I mean, one, we learned that these are global interconnected markets. As we saw in 2008, risk knows no boundary. I mean these are global financial firms.
So it's not just risk in the U.S. from some other, you know, affiliate of the U.S. in another nation. It's the other way around, too. It's a firm in the U.S., where there's holdings in the E.U., say, and that -- so it -- this needs to be a network of global regulations. And my view is not to actually go and, you know, have a physical presence around the world.
We're not looking to be some blue-helmeted regulator. But our law, Dodd-Frank law, requires that when there's systemic risk and a direct and significant connection, significant connection with U.S. commerce, that we either have a substituted compliance that, in the foreign country, substituted compliance or that it -- our regulations take precedent for the U.S. part.
LAKE: Bart, I -- Bart, I -- yes, Bart, I just want to jump in.
Bart, I want to jump in because we're running out of time, but are we any safer than we were when derivatives almost blew up the global economy. Wall Street's been watering this down. Where do we stand today?
CHILTON: A little safer, Maggie, not much. You're absolutely right. It's been watered down and watered down; there's 10 lobbyists for every member of Congress, from the financial community. And this go-slow approach has slowed all regulations down.
In the U.S., we've only done 37 percent of the required regulations. And it's been nearly three years.
So we've got a long way to go. But getting this cross-border guidance and these rules internationally is really the way to make people safer and our economy globally more healthier.
LAKE: And that is certainly what we need. Bart Chilton, commissioner for the CFTC, usually in Chicago. Thank you so much for joining us.
And that's QUEST MEANS BUSINESS. I'm Maggie Lake in New York. MARKETPLACE EUROPE continues on CNN.
RICHARD QUEST, CNN HOST: From the River Thames in London, this is MARKETPLACE EUROPE. I'm Richard Quest. Transformation and revolution, the keys to Europe's business resurgence.
On this program, how 3D printing is giving a boost to the continent's manufacturing and how one well-established company is finding new ways to stay on top.
(BEGIN VIDEO CLIP)
ALEXANDRE DE JUNIAC, CEO, AIR FRANCE KLM: We have to improve our service on every point of the chain, you know, from the call center or the website until the moment the passenger leaves the airport.
(END VIDEO CLIP)
QUEST: In the battle to increase productivity, few new technologies are more important than 3D printing, which offers a vast array of potential for companies small and large. Isa Soares has been to Cologne to Ford's research and development department to see how the company's using 3D to design new vehicles.
ISA SOARES, CNN CORRESPONDENT (voice-over): The cave where the cars of tomorrow are designed and refined, this interior consists of nothing more than a car seat and a lot of imagination.
SOARES: Ford uses its 3D cave to test and refine thousands of details on new models with these funky glasses, I'm going to take it for a test drive.
Is the steering wheel at the right level? Am I within easy reach of the GPS? And do I have a clear view of the rearview mirror?
SOARES (voice-over): Using 3D simulations projected on the ceiling and surrounding walls designs are brought to live without the need to build costly and time-consuming prototypes.
BARB SAMARDZICH, V.P., PRODUCT DEVELOPMENT, FORD OF EUROPE: So we're looking for areas where parts aren't made incorrectly and we have a term in the industry called a ravel (ph). But it's just a small hole that you know, a customer could see through or that a product looks like it's not finished. We're able to see those things in the caves.
These tools are enabling us to make those decisions way in advance of when we normally would have a hard prototype after you've tooled a part, when it's a little bit late to say maybe this won't work.
SOARES (voice-over): When only physical designs will do, Ford turns to its roughest 3D printing technology. It's here that ideas come to life.
Layer upon layer building complex shapes and designs, a steering wheel is formed in 12 hours. Last year, over 77,000 parts were produced in this way.
SANDRO PIRODDI, SUPERVISOR, RAPID TECHNOLOGY, FORD OF EUROPE: It looks like a very large oven, but it is a so-called elective labor centering machine (ph), which gives you the possibility to produce parts.
I have an example here, which I can show you. This is a so-called front grille (ph), which was requested from Design. This was cutted (ph) in the middle because it was a little bit too big sizewise for the both day (ph). But we have a special system to bring this two parts together. But at the end, based on the data, we are in the position to make a very high- quality grille (ph).
SOARES (voice-over): With most economies weak or in recession and unemployment hitting record highs, demand for new cars across Europe has slumped to its lowest level in nearly 20 years. Despite this, Ford has spent $5.5 billion on research and development, investing heavily in 3D technology.
SAMARDZICH: What really sets us apart, I believe, is our ability to integrate those tools into our development process and make sure that at the end those tools are lending towards delivering the best product possible to our customers. And the broadest showroom opportunity.
SOARES: You have the seat adjusted and the vehicle would build around you when you're sitting --
SAMARDZICH: The one thing we have done is continue to invest and to grow our product portfolios in Europe so that when the economy does turn around and customers come back in to start buying and replacing their vehicles, we will have the freshest vehicles in the showroom and we will have a full portfolio available of all new products for our customers to choose from.
SOARES (voice-over): Behind all this, a virtual world, rapidly modeling for its future.
QUEST: Isa Soares with the revolution of 3D printing of Ford.
After the break, the transformation in the air, the incoming chief exec of Air France KLM tells us change is essential.
QUEST: Welcome back to MARKETPLACE EUROPE.
There's no industry that is undergoing transformation more perhaps than European aviation. All the major airlines are having to go back to basics.
Air France KLM is redoing its strategy. The new incoming chief executive of the group, Alexandre de Juniac, explained how he's going to move forward in the future.
DE JUNIAC: The growth that Africa is having now is a longstanding growth which is new. It was -- it was up and down before. Now everybody forecasts -- and I think everybody is right to forecast a longstanding rapid growth in many countries.
So it means, as usual, dynamic growth in (inaudible). So it is possible now to make reasonable even dynamic investment in airlines. So it is, you know, on the long-term basis. So that's our bet (ph) and I do not think that it is a risky bet.
Now it become reasonable.
QUEST: Talking about the core company, Air France KLM, the performance of the group has been spotty at best and the restructuring is underway, another restructuring.
You're all still trying to grapple for the model that will unlock profitability in your core business.
DE JUNIAC: Sure. So as you know, we have launched a plan called transport (ph) in 2012. We were probably among the first in Europe to launch the new restructuring. First of all, it's a plan which is very ambitious but also very important in terms of job cuts, cuts in spending, competitiveness improvement. That's the cost part.
But it -- the -- we have also a major issue and I push it. I push every day. The point? To improve the product and the salaries (ph). We'll be at the top of the market in terms of product and salaries (inaudible).
QUEST: It seems now that a model is developing for the major European carriers. You have the full service; you have the regional, which could be, in your case, very hot (ph). And you -- that's your answering some, in a sense, to the low-cost carriers.
DE JUNIAC: Not really. No, it -- for us, we have the full service and the Air France brand. And this full service will remain of course for long haul obviously, but also for short and mid-haul, especially to feed our hub because it's a part of our long-haul service. And on our -- probably on our main routes, on point to point.
Then there are two other areas. First of all, it's the regional market that that will be served with small aircraft, smaller than the Boeing 737 or an Airbus 320, because it's small flows (ph). But including business traffic and the i.e. (ph) of passengers and that is served by hop (ph), which also proposes low fares also for other passengers.
And you have the sentiment (ph) of leisure, dedicated to leisure, which is typically a low-cost segment that we address. (Inaudible).
QUEST: If they are -- if the experts are right and basically Europe will have three major hub carriers, Air France KLM, the Lufthansa Group and IAG.
One expects that you will all look pretty much the same in structure because you'll have all unlocked the same route to profitability.
Is that the way forward?
DE JUNIAC: To address the market, it is appropriate structure which has to be very flexible along the various companies or the various subsidiary that address the short and mid-haul market. We have to be able to shift one line from one subsidiary to another, depending on the season, on the traffic. We have to be flexible and quick, first of all.
Secondly, (inaudible) that we will compete efficiently if we provide on our main line, but also on our low-cost staff (ph) the mood (ph) service. We must be at the low end of the market even on the low-cost part.
Because you know, you have different low-cost companies and type of service. And we want to address the high end of the market instead of the low end of the market that we leave to other carriers.
QUEST: One thing I'm hearing from every chief exec here in IATA is it's all about service.
DE JUNIAC: Service, product -- and product.
QUEST: Service and product. And what's interesting about this is that you all fly the same metal, aluminum or carbon tubes now and therefore service and product is what it's going to come down to.
Is that true?
DE JUNIAC: Yes, that's OK (ph). But it means -- it is absolutely true, but it means that we have to improve our service on every point of the chain, you know, from the call center or the website until the moment the passenger leaves the airport.
QUEST: That costs money.
DE JUNIAC: It's -- yes, it costs money, but it all -- it's also a matter of culture, of discipline, of training people, of atmosphere in the company, of dedication.
QUEST: Alexandre de Juniac of Air France KLM. And we stay with aviation for next week's program, which comes from the Paris Air Show.
And that's MARKETPLACE EUROPE for this week. I'm Richard Quest on the River Thames in London. Whatever market you're in, I hope it's profitable. I'll see you next week.