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QUEST MEANS BUSINESS
2014 EU Forecast; Italy Still in Recession; European Markets Pulled Back; Protesters in Greece Greet Troika; Banking Giants Face Huge Fines; US Stocks Close Slightly Lower; Ukraine-Chevron Deal; Google "Helpout" Launched; Targeting Counterfeiters; Toronto Mayor Admits Drug Use; NYC Mayoral Election; Toronto Mayor News Conference
Aired November 5, 2013 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
MAGGIE LAKE, HOST: Celebrating the end of another trading day, it's the closing bell on Wall Street. It's Tuesday the 5th of November.
Subdued and sluggish. Europe's economy reaches a turning point, but there are difficulties ahead.
Italy's finance minister tells CNN they've had a bad year. Next year will be better.
And knocking out the knock-offs. Europol tells us fake pharmaceutical products and car parts are increasingly common and dangerous.
I'm Maggie Lake and this is QUEST MEANS BUSINESS.
Good evening. The eurozone will grow slower than expected next year. The autumn forecast for 2014 is calling for 1.1 percent growth. That is down slightly from the spring. Still, the EU Commission says the recovery will continue and gain speed next year. EU vice president Olli Rehn says there is still work to be done.
(BEGIN VIDEO CLIP)
OLLI REHN, VICE PRESIDENT, EUROPEAN COMMISSION: We are seeing clear signs of an economic turnaround, but growth will pick up only gradually and will translate into jobs only with a lagger.
And that's why we cannot yet declare victory and we must not fall into the trap of complacency. Further decisive action to boost sustainable growth and job creation will continue to be necessary in Europe.
(END VIDEO CLIP)
LAKE: Let's take a closer look at the autumn report. The outlook for the EU on employment remains bleak. Forecast at 26.9 million people, that's how many people will be unemployed in 2014. That is up slightly from the previous forecast. In terms of 2015, the forecast remains over 26 million. That is stubborn.
Italy, if we focus on individual countries, Italy, its forecast lowered for growth for 2013, and that is since the last report we had in the spring.
France, the EU warned France could miss its budget deficit targets. The goal was to lower the deficit below 3 percent of annual GDP by 2015. Instead, the forecast is for a deficit of 3.7 percent in 2015. That probably means more austerity measures will be needed to bring that down.
In terms of the UK, this is the bright spot. A bright outlook for growth, forecast growth at 2.2 percent in 2014, and that is expected to increase to 2.4 percent in 2015.
Now, Italy is stuck in recession, a weak spot in the eurozone. GDP is now expected to shrink by 1.8 percent this year. Italian finance minister Fabrizio Saccomanni told CNN 2013 hasn't been a great year, but things are definitely looking up. He spoke to CNN's Manisha Tank in London.
FABRIZIO SACCOMANNI, ITALIAN FINANCE MINISTER: I think the profile of the economic activity in the course of the year is positive and we -- the economy will stabilize in the third quarter and will start showing positive growth in the fourth quarter of this year. And then, a rate of growth, a positive rate of growth of 1.1 percent next year.
So, it's still a modest performance, but it is what you can expect after a protracted period of depression. And I think the measures that we have taken should sanction this process in the course of next year.
MANISHA TANK, CNN INTERNATIONAL CORRESPONDENT: Let's talk about the euro itself, and we've seen euro strength.
TANK: What do you think can be done about it and how much is it undermining the Italian economy right now?
SACCOMANNI: I think the strength of the euro is also the reflection of the fact that the eurozone has a balance of payments in surplus, has a level of public debt and public deficit lower than other countries, and its record on inflation is very low. So, I think it reflects some of the fundamental elements of strength of the European economy.
From a cyclical point of view, as I said, I see room for greater emphasis to sort of supporting the recovery of the economy, not only in Italy, but also more broadly in Europe, including in Germany.
TANK: There's been a lot of political drama in Italy. I'd like to say for the last year, but actually, for years. How is that undermining the work that you're trying to do?
SACCOMANNI: Drama is like beauty. A lot of it is in the eye of the beholder in the sense that I think there has been, perhaps, a certain amount of turbulence and political instability, but I think since the end of 2011, there's bee a sort of a more -- clear sense of direction in the sense of strengthening the reform efforts, addressing the structural weaknesses of the Italian economy.
And now we have a broad coalition of parties that, of course, sometimes quarrel among themselves, but I think on the fundamental issues, we seem to be moving all in the same direction.
LAKE: European stock markets pulled back on Tuesday, hurt by concerns about European growth. There's also a lot of uncertainty in the run-up to the ECB policy meeting on Thursday. A lot of people worried about falling inflation in Europe.
If you take a look, the Paris CAC tumbled more than 1 percent. Autos were lower by BMW, which dropped nearly 3 percent. BMW's quarterly profit fell more than expected. Renault fell more than 2 percent.
EU and IMF bailout inspectors met in Athens today to check up on Greece's progress with austerity reform. The Troika, as they are called, were greeted by protesters who jeered and heckled. Riot police had to hold the crowds back.
Well, six of the world's biggest banks may be facing fines worth hundreds of millions of dollars from the European Commission. The EU is preparing to fine these lenders over allegations that they manipulated the interest rate known as eurobor, that's SocGen, Deutsche Bank, Credit Agricole, JPMorgan, HSBC, and RBS.
Now, this investigation is focused around eurobor. That is the European version of libor or, in other words, the rate of interest that determines how much it costs banks to lend to each other. You'll remember the scandal over libor led to the Barclay's CEO, Bob Diamond, losing his job.
Now, there won't be any fallout at Barclay's this time, that's because Barclay's tipped off the European Commission about the wrongdoing in the first place. That means they have immunity.
The US stock markets have just closed for the day. Zain Asher is at the New York Stock Exchange and has been watching all of the action for us. Zain, looks like a little bit of a different mood today.
ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Yes, absolutely. Investors do seem to be sort of taking a step back. Now, we started off the session, Maggie, with significant losses. We saw triple-digit losses in the morning. And then around the afternoon, stocks began trading at around the flat line.
Part of the reason investors are showing some caution is really ahead of a lot of economic data you have coming out towards the end of the week. Obviously, we have the jobs report, that's coming out on Friday. Tomorrow, you have the final revision to third quarter GDP, that's expected to come in roughly around 2 percent. Obviously, on Thursday you have the usual jobless claims.
But I think, Maggie, we talked about this earlier, what makes this week stand out is the significant number of IPOs you have. You have 15 different private companies essentially trading publicly for the very first time this week. Obviously, the most notable of which is Twitter.
But these do represent a lot of new opportunities for investors, so they are taking a wait-and-see approach. And I will say, even though stocks are trading -- traded flat today, overall this year, stocks have had a pretty good run. The Dow is up 19 percent, S&P 500 up 24 percent so far this year, Maggie.
LAKE: Those are big numbers. Not surprising to see people taking a little bit of profit while they can.
LAKE: All right, Zain Asher for us at the New York Stock Exchange.
Let's turn our attention to another story we are focusing on. Ukraine has signed a shale deal worth up to $10 billion with Chevron. It's a big step for Ukraine as it strives for energy independence from Russia, and it's a win for the country's leaders at a time fraught relations with Moscow over gas supplies.
Chevron will initially invest $350 million into exploratory and drilling work in the Oleska field. Ukraine will receive 30 percent or more of the extracted gas, depending on the field's capacity. The Chevron deal follows a similar agreement that Ukraine signed with Shell earlier this year.
The country's president, Viktor Yanukovych, said that these agreements will enable Ukraine to be self-sufficient by 2020 and might even lead the country to export energy.
Well, after the break, an internet of everything. We'll hear from the Google chairman, Eric Schmidt, on where his company is headed next.
LAKE: Google has just launched an online tool called "Helpout" linking users with experts over live video chats. It is the latest innovation from the internet giant, which is also rumored to have its own SmartWatch in the works. Kristie Lu Stout recently spoke to Google's chairman about it.
ERIC SCHMIDT, EXECUTIVE CHAIRMAN, GOOGLE: Well, the good news about Android, which is the operating system that is used on more than a billion devices, is there are a number of manufacturers that are either building or have announced Android SmartWatches. Samsung, for example, has already been shipping one. And there are others coming.
So again, you'll have an IP address on your hand, you'll have a mobile phone, maybe you'll have something on your glasses.
KRISTIE LU STOUT, CNN INTERNATIONAL CORRESPONDENT: It's very exciting. Google just bought one of these Android SmartPhone -- or SmartWatch makers, WIMM. So, is something in the works here?
SCHMIDT: Well, let's not talk about Google's future products.
SCHMIDT: But I will tell you that the Android ecosystem, there's a lot of devices like that coming. We anticipate a sort of internet of everything model, which has been discussed pretty broadly. What will happen is -- computers will all self-assemble.
You'll walk into your house and your watch will figure out that they're in your house and interesting things will happen that make your life more productive and fun.
STOUT: Let's talk about Google Android, OK? And in particular, Samsung's dominance in Google Android. Is that a good thing or a bad thing? Because Google Android has enabled the success of Samsung. Your thoughts on that?
SCHMIDT: Well, Samsung -- and I met with them when I was in Korea --
SCHMIDT: -- very, very committed to Android. And indeed, they're bringing out a large number of other sort of Android-related products. Because of course, Samsung makes more than just phones and tablets. They make refrigerators and many, many other kinds of devices.
So, they're part of our partnership to make Android and the internet of everything really happen. So, that partnership is very good for us. Samsung has really redefined the SmartPhone space. Today, they are the number one mobile phone manufacturer in the world, and they're number one ahead of Apple's iPhone.
STOUT: So, you're bullish about Samsung's continued success?
SCHMIDT: Not only am I bullish, Samsung itself is riding high on the success of their decision to standardize on Android and to use their technology. And they're really an innovator in terms of integrated hardware. They do a fantastic job.
STOUT: Let's talk about Moonshot Project. So much discussion about the driverless cars at Google, immortality project.
STOUT: Why does Google do this?
SCHMIDT: Because we can. Because we have the economic resources and the leadership, that we can take that that other companies can't. We fundamentally believe that technology can be a force for good, that investment with very, very sophisticated scientists can invent new products.
And we're willing to fail. We're willing to build products that might not work or might not work in version one. But we know if we keep trying, eventually something really interesting was going to come out. And who doesn't want to be immortal?
STOUT: There are prices to that, right? There's --
SCHMIDT: Well, let's get the --
STOUT: It's going to be taxing on society for a number of reasons, but that's for another conversation.
SCHMIDT: Let's get the products built first.
STOUT: That's right. Then deal with the social impact.
SCHMIDT: That's right. Let's build the product before we regulate them.
LAKE: Now, I bet you're wondering what this is. Take a look at these chainsaws. The one on the left is from a leading German manufacturer. The one on the right is an imitation, a counterfeit. Now, can you find the fake in this next set? Take a look. If you guessed the one on the bottom, you'd be correct, but it's hard to tell, isn't it?
When we hear about counterfeit goods, we tend to think of designer handbags, expensive watches, but that is not what worries European law enforcement. The head of Europe's police agency says that counterfeiters are moving their focus away from luxury goods and turning their criminal attention towards everyday items like medicines, food products, and car parts.
I spoke with Europol's director, Rob Wainwright, earlier, and I started by asking him how consumers can spot the fake items from the real ones as this multibillion-dollar black market grows bigger.
ROB WAINWRIGHT, DIRECTOR, EUROPOL: Well, I think that's really difficult because counterfeiters are becoming better and more sophisticated in their product lines, not always some are clearly fake. So, consumers do need to be aware.
My best advice to the consumers is stick to those tried and trusted outlets. Make sure if you need to buy cancer medication, and we've seen fake forms of that, you get it from the pharmacy or you get it from the doctor. You don't go online to try and save some money.
The same when you're buying stuff online about the car or electrical goods, make sure that you're getting it from known retail outlets that you can trust. Don't take risks with your health and safety. Make sure that you know what you're getting into when you're buying this stuff.
LAKE: Rob, I think it's tough for consumers. We know what the unemployment rate is in some countries, it's a tough economy, consumers are really strapped. Some of these items we're seeing the growth in counterfeit are expensive items: medication, appliances.
If the companies were to price them a little bit lower, would that help take away the market for counterfeits? If they took a little bit less profit margin, would that help the problem?
WAINWRIGHT: Well, I'm not a market economist. I'm not going to talk about that. I'm here to talk about the police action in this area to help protect our free market economy, protect our businesses, who are losing millions, billions of dollars in this area as well from the unscrupulous activities of organized crime groups who are distorting markets, who are lowering competition, who are changing and undermining our trademark and our design technologies for example.
So as much as anything else, the victims are the businesses as well, and the law enforcement community, we need to protect them. In the end, the citizens have to make their own choice about which goods they buy.
What I'm saying today is, this is no longer about a Gucci handbag. This is about fake medication, fake food. In some cases that we've seen, people have lost their lives from consuming fake goods and fake alcohol, for example. So, people really need to take care when they're choosing what to buy, especially online.
LAKE: Does law enforcement have the resources it needs? It seems that these criminals are able to stay one step ahead. We know they're very tech-savvy. Are you able to keep up with them?
WAINWRIGHT: We're investing as well in our new European cybercrimes center here at Europol. We're working with our US partners in this area as well. The police are pretty good at doing this work as well.
And in a number of cases, we've managed to crack down on many of these organizations. We've already, working with ICE in the US, we've already closed over 500 domain -- internet domain names in this area, internet sites that are selling these fake stuffs.
Last year, we worked with Interpol to recover 135 tons of fake and substandard food culminating in 100 arrests in 28 countries.
So there are major international police efforts underway to protect our consumers from this, and we'll remain engaged to ensure, therefore, that the organized crime groups do not profit from this new trade in their activity.
LAKE: After 12 years, a change in New York City. Voters are choosing a new mayor to replace this man, Michael Bloomberg. Whoever wins has a tough act to follow when it comes to working with Wall Street.
LAKE: After months of denials, the mayor of Toronto, Canada, has finally admitted he used crack cocaine. Pressure increased on Mayor Rob Ford late last week after Toronto's police chief said investigators had video of him smoking a crack pipe. He made the frank admission to reporters just a few hours ago.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: You smoked crack cocaine?
ROB FORD, MAYOR OF TORONTO: Exactly. Yes, I have smoked crack cocaine.
UNIDENTIFIED FEMALE: When --
FORD: But no, do I? Am I an addict? No.
UNIDENTIFIED MALE: When have you smoked --
FORD: Have I tried it? Probably in one of my drunken stupors, probably approximately about a year ago. I answered your question. You ask a question properly, I'll answer it.
(END VIDEO CLIP)
LAKE: A member of Toronto's city council, who tried to strip Ford of his powers, says it is time for the mayor to step aside and take stock of his life. Now, we are expecting Rob Ford to give a news conference any minute now. You are looking at live pictures of where that news conference is going to happen. Once it starts, we will bring it to you live.
Meanwhile, it is election day in New York City. Voters here are casting their ballots to decide who will be the next mayor. The leading candidate is Democratic nominee Bill de Blasio. According to the latest polls, he has a comfortable lead over Republican rival Joe Lhota.
The winner will succeed Michael Bloomberg, who steps aside after three terms in City Hall. Here he is voting earlier today. Bloomberg told CNN's Fareed Zakaria this is no time for complacency in the Big Apple.
(BEGIN VIDEO CLIP)
MICHAEL BLOOMBERG, OUTGOING MAYOR OF NEW YORK: London is a real competitor to New York, and we've got to understand if we were to stop improving, stop diversifying, stop investing, we will get pushed back and other places will take over.
(END VIDEO CLIP)
LAKE: Now, after 12 eventful years with Michael Bloomberg, many New Yorkers are ready for change.
LAKE (voice-over): The campaign has been fiery.
JOE LHOTA, REPUBLICAN CANDIDATE FOR MAYOR OF NEW YORK: Crime will go up.
LAKE: The mud-slinging relentless.
BILL DE BLASIO, DEMOCRATIC CANDIDATE FOR MAYOR OF NEW YORK: My opponent never met a corporate subsidy he didn't like.
LAKE: And the ads ever more emotive.
DANTE DE BLASIO, AGE 15, BILL DE BLASIO'S SON: I want to tell you a little bit about Bill de Blasio. He's the only Democrat with the guts to really break from the Bloomberg years. And I'd say that even if he weren't my dad.
UNIDENTIFIED MALE: Don't let Bill de Blasio take New York backwards.
LAKE: The candidates know what's at stake.
LHOTA: He's responsible for picking up the garbage every day in New York and at the same time making sure that there's world peace.
LAKE: Home to the United Nations, New York City has a budget many cities in those nations dream of. At almost $70 billion, it's triple the size of London's budget at $23 billion and almost seven times Paris, which has just less than $11 billion.
LHOTA: Think about the GDP of New York City alone. It's 11 percent of the United States' GDP. That's how concentrated an economic area we are.
DE BLASIO: We are the strongest market in the country, we're the place that national and international businesses want to be to sell their products.
LAKE: It's not just the strongest market, it's the home of the markets.
BLOOMBERG: When Wall Street catches a cold, it's a very serious illness to us.
LAKE: Outgoing mayor Michael Bloomberg has been a staunch supporter of the financial sector, even amid very public opposition. Now, change may be afoot.
DE BLASIO: I've asked for a very modest increase in taxes for those who make a half million or more, I think I can safely say those are folks who are doing well, look at he stock market in recent months, they're doing better all the time with their investments.
LAKE: If elected, Bill de Blasio would be New York's first Democratic mayor in 20 years. Taxing the rich is his signature policy. His opponent, Joe Lhota, himself a Wall Street veteran, disagrees.
LHOTA: We need to get the government out of the way of entrepreneurial spirit. We really do. And New York City has gotten to a point where we are over-taxed, we are over-regulated, and we need to fix that.
LAKE: There is one area they strongly agree.
LHOTA: I am not satisfied with the status quo right now.
DE BLASIO: We're not where we need to be. We're not positioned for the future.
LAKE: New York is underperforming: unemployment at 7.6 percent, poverty at 21 percent. Both higher than the national average.
DE BLASIO: Look at our competitors around the world, the countries we're competing with, the cities New York City is competing with. We are not producing an educated generation ready to fully participate in the modern economy.
LHOTA: It is urgent. It is absolutely urgent. We need to have job training programs for everybody in New York, we need to make sure our education system is better. I want New York to be a place where anyone can conduct business.
LAKE: So, it's up to you, New York.
DE BLASIO: All right, Melissa has a question.
LHOTA: Can we sing?
DE BLASIO: Yes, I think we've said.
LAKE: Just don't forget, the world is watching.
LAKE: Wall Street is also watching with great interest. Will the next mayor be a friend or foe? Kathryn Wylde is president and CEO of partnership for New York City and she joins us today. Thank you so much, Kathryn, for being with us.
De Blasio certainly looks like he is going to be the next mayor. Polls don't close until this evening, but is New York going to be a less- friendly place for business if he wins? Part of his platform, he has said, is cutting back on resources for tax breaks for businesses. Is it going to be less business-friendly?
KATHRYN WYLDE, PRESIDENT AND CEO, PARTNERSHIP FOR NEW YORK CITY: Well, tax breaks are not what drive the New York economy, obviously. I think that clearly having Mike Bloomberg as our mayor for the last 12 years has been a real boon for the business community and for the city.
New York has really prospered under his leadership, our economy has grown at double the rate of the national economy in the last few years. We have more private sector jobs than we've ever had before. We've got 54 million tourists this year, a record-breaker. So, we've done very well as a city.
But as the city has become more expensive and the high-tech job market has become more competitive, the average New Yorker has felt increasing stress, and I think Bill de Blasio has picked up on that theme and the real job insecurity and insecurity about their future, the pressures people feel economically. So, he has appealed and caught, really, the spirit of concern of the average New Yorker.
LAKE: But what will that mean for the city? There is -- one thing when you're in a campaign and there's rhetoric. We'll see if he moves more to the center. But let's face it, those people at the top of the income, the Wall Street bankers and their bonuses, they are a critical part of New York's economy.
You often hear the argument that if you tax us, we feel income inequality too, but if you tax us, listen, we'll just go live someplace else. We can live anywhere we want in this day and age.
WYLDE: Absolutely. High earners are highly mobile and we have a lot of global competitors that we didn't have a dozen years ago. So, we certainly recognize that and it's a concern for the New York business community.
But really, prior to Mayor Bloomberg, Wall Street, our global industries, did not look to City Hall to really drive the economy. That wasn't their main concern. They wanted to see a city that was safe, that was well-managed.
LAKE: But one of the -- one of the other issues with de Blasio that he campaigned hard on was sort of the police -- OK, the police force and stop and frisk.
WYLDE: Stop and frisk.
LAKE: We'll have to leave that for another day, though. We've got to go to a press conference -- Rob Ford, the Toronto mayor, is speaking. Let's listen in.
FORD: With today's announcement, I know I embarrassed everyone in this city, and I will be forever sorry. There is only one person to blame for this, and that is myself. I know that admitting my mistake was the right thing to do, and I feel like a thousand pounds have been lifted off my shoulders.
I can't explain how difficult this was to do. I hope -- I hope that nobody -- that nobody has to go through what I have gone through.
I know what I did was wrong, and admitting it was the most difficult and embarrassing thing I have ever had to do.
Folks, I have nothing left to hide. I would do anything, absolutely anything, to change the past. But the past is the past and we must move forward.
I want to be clear. I want to be crystal clear to every single person, these mistakes will never, ever, ever happen again. I kept this from my family, especially my brother Doug, my staff, my council colleagues, because I was embarrassed and ashamed.
To the residents of Toronto, I know I have let you down, and I can't do anything else but apologize, and apologize, and I'm so sorry. I know -- I know I have to regain your trust and your confidence.
I love my job. I love my job, I love this city, love saving taxpayers money. I love being your mayor. There is important work that we must advance and important decisions that must be made. For the sake of the taxpayers of this great city, for the sake of the taxpayers, we must get back to work immediately. We must keep Toronto moving forward.
I was elected to do a job, and that's exactly what I'm going to continue to do. In 2010, I made a commitment to Toronto voters. I have delivered on that commitment, and I will continue to deliver on that commitment of saving taxpayers money.
But they have a choice. We live in a democracy. And on October 27th of 2014, I want the people of this great city to decide whether they want Rob Ford to be their mayor. Again, I sincerely, sincerely, sincerely apologize. God bless the people of Toronto. Thank you very much.
LAKE: That was the mayor of Toronto, Rob Ford, giving a press conference talking about his admission today that he has used crack cocaine. He took responsibility, apologized and said he would be forever sorry, that there is nothing left to hide, but at the moment is refusing to step down, saying he wants to continue doing his job and the time for voters to decide is next fall -- in October when there will be an election. We'll be right back after this break.
LAKE: South Asia's space race is on. India launched its first ever mission to Mars on Tuesday, but the effort comes with a hefty price tag. Mallika Kapur reports.
MALLIKA KAPUR, CNN's MUMBAI-BASED INTERNATIONAL CORRESPONDENT: The spacecraft blasted off from earth at 2:38 p.m. local time, carrying with it great expectations. If it reaches its destination, India will go where no Asian country has ever gone before -- Mars. So far only the U.S., the former Soviet Union and Europeans have successfully sent missions to the Red Planet. The journey will take ten months. Once there, the orbiter will study the planet's surface and atmosphere, looking for any sign that there could have been life on Mars. The cost of this mission is $73 million. That's a bargain by international standards. Still, many critics in India say it's a luxury this country can't afford. Not when so many of its people live on less than a dollar a day. But India defends this cost plus its billion dollar's annual investment in its space program, saying its satellites are used for a number of applications -- in TV broadcasting, tele-education, telemedicine, defense and meteorology. Authorities say an early warning about a cyclone last month helped save thousands of lives. Tuesday's launch also fueled talk about a growing space race between India and regional rival China. China's attempted mission to Mars in 2011 failed.
GEORGE KREEGER, GEORGIA INSTITUTE OF TECHNOLOGY: I don't think it will upset the geopolitical balance, particularly if it's just another notch in the system. China's chosen to put a human being in space. India sending a mission to Mars. I think that's the way they play the game.
KAPUR: For the Indian public, Mangalyaan which is Mars Craft in Hindi, is a matter of great national pride.
UNIDENTIFIED MALE: I'm really excited about it, I actually feel proud that India is taking a big step towards it. We can -- if we can get to Mars, we can get to anything (inaudible).
KAPUR: Mallika Kapur, CNN Mumbai.
LAKE: China has quickly taken center stage at this year's World Travel Market in London. Chinese travelers are the top source of tourism cash in the world, spending $102 billion on international travel last year. And as Jim Boulden reports, it's also one of the hottest destinations.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Panda's booth here at the World Travel Market is hoping to attract tour operators to China. Nearly all the hundreds of other booths are trying to attract the Chinese.
TALEB RAFAI, WORLD TOURISSM ORGANIZATION, SECRETARY-GENERAL: Up until 2011, Germany was the number one source market of the world, sending the most number of tourists all over the world. In 2012, this was China. China grew 31 percent in the first eight months compared to last year.
BOULDEN: This sudden influx has countries scrambling. Italy for one is learning how to cater to large groups of first-time Chinese tourists.
ALESSANDRO GIANANDREA, GAR TOURS: They need to (inaudible) fast and move because they want to see everything as soon as they can. Plus they want their own shopping. Plus they want -- I mean, I would think that if they had like 15 days, they would see 15 cities.
BOULDEN: But then, operators say, they expect the travelers to come back again in smaller groups and spend more time. And some say don't treat the younger Chinese different from any other travelers.
RAFAI: We are a little bit at a mistake if we think that we need to change ourselves just to attract the new travelers. The growing middle class in China is just like the middle class anywhere else.
NAZRI ABDUL AZIZ, MALYSIAN TOURISM MINISTER: Thailand attracted four million.
BOULDEN: Thailand has done well at attracting Chinese tourism, Malaysia has not.
AZIZ: There are 83 million Chinese tourists all over the world. But we're getting only a mere 1.5 million. We still have to do more. Our problem is accessibility, and we are attacking China, we are agreeing to the second tier cities to bring them.
BOULDEN: Getting a visa is still a big hurdle for Chinese wanting to travel. While the U.K. and Malaysia say they are trying to ease visa requirements for Chinese travelers, and Italy says it cannot wait until the Chinese get their visas faster.
GIANANDREA: When they will make it faster, the number will grow and grow and grow.
BOULDEN: And it's not just the number of travelers. The World Tourism Organization says the Chinese also became number one last year in money spent, overtaking German and U.S. tourists and surpassing $100 billion. That's before the huge jump in numbers so far this year. Jim Boulden, CNN, London.
LAKE: They look like they're having fun. Well, the Philippines want to become a premier travel destination in Asia, but the country's tourism minister says it faces stiff competition from its regional neighbors. Ramon Jimenez told Jim Boulden that can actually be an advantage. Here's what he had to say.
RAMON JIMENEZ, PHILIPPINES TOURISM SECRETARY: Asian is a tremendous block of, I would say, just natural friends. And the more we compete, the more people we attract to each other's market, and each other's country, so we compete in earnest, in a very friendly way.
JIMENEZ: But in a very -- shall we say -- a very active way. And that really works.
LAKE: Now it will be easier for European travelers to get to the islands after Philippine Airlines resumes direct flights to London after more than 15 years. The first flight from Manila to London landed on Monday after the carrier was removed from a European Union blacklist last year. The airline says flights between Manila and other European destinations are also in the works. Joining me live now from London is Philippine Airlines president and chief operating officer Ramon Ang. Thank you so much for being with us today, sir. Fantastic to see you. Congratulations, but 15 years is a long time. What are you doing to win back customers?
RAMON S. ANG, PHILIPPINE AIRLINES PRESIDENT AND CHIEF OPERATING OFFICER: We are providing -- we are providing the best service, the safest service from London to Manila, with non-stop, just one take off and landing, best fair, lowest fare compared to any other airline, best service with our Philippino hospitality, and best food and fastest way from London to Manila in about 12 hours and connectivity on board. You can use your own cell phone and access to internet Wi-Fi throughout the flight. And our Philippine Airline extensive route network -- we can connect you to any part of Asia, America, Japan, China and Taiwan, and -
LAKE: Tell me, how are your -- who are your target customers? Who are you going after? Is it Philippinos who are living abroad, are you trying to attract tourists, is it the business traveler? Who do you have your sights set on?
ANG: I think we are targeting tourists but not only tourists, but also the businessman from Europe and Asia. And I think Philippine Airline can provide these travelers with the best value. We offer lowest fare compared to any other one or two-stops airline traveling between Europe and Asia or Philippines.
LAKE: Well I can tell you competition always a good thing for consumers, for travelers, you're going to have your work cut for you, but we wish you the best of luck.
ANG: Thank you thank you.
LAKE: Thank you for being with us. Well Zimbabwe is trying to lure more tourists to that country at the World Travel Market to help drive economic growth. I asked the Zimbabwe tourism minister just how important the industry was to the economy.
WALTER MZEMBI, ZIMBABWE'S TOURISM AND HOSPTILITY INDUSTRY MINISTER: It's 10 percent contributed to gross domestic product. Employs directly and indirectly 300,000 people and is projected to grow to 15 percent contribution, employing some 450,000 by 2015. Currently, we are ending just about 1.1 billion from the sector and we projected to grow to some 3 billion or so of the United States dollars by 2015. So it is set to grow and set to be a major player in our economy. It's going to facilitate and stimulate the economic turnaround and growth going forward.
LAKE: Which will be so important, and clearly there's huge potential but also some challenges. There is I think some lingering perception because of the country's history of political instability some tourists maybe wonder is it safe or reliable for me to book a holiday to Zimbabwe. What are you doing to address that?
MZEMBI: Well, they just concluded 20th session, the United Nations World Tourism Organization general assembly which is the premier global event that is held every two years (inaudible) all the world and any destination. A highly committed (forum) by countries, the 156 membership was just recently held in Zimbabwe. On the border between Zimbabwe and Zambia, the Victoria Falls in itself a natural wonder of the world, and it was described by the UNWTO Secretary-General Dr. Taleb Rifai as the best ever general assembly in the history of general assemblies since their consummation in 1975. And that confirmation of 147 countries visiting, 900 affiliate business organizations including 400 media is in itself a confirmation of the investment of brand Zimbabwe, and the global endorsement of our destination going forward. And we are riding on that success in London as you can see and it couldn't be better.
LAKE: Now your office has made a real effort to reach out to Chinese tourists in particular. Why is that so important?
MZEMBI: Well, $140 billion expenditure they've just surpassed Germany as the biggest spender, the Chinese. We intend having a bit of action from that and we have a preferred destination access agreement with the Chinese which we would like to see taking more practical effect between our two republics. And I would hope and I dream that one day we can have a (inaudible) flight between Victoria Falls and Beijing and Beijing and (Inaudible) so that we can have a piece of this action.
LAKE: All right, for all of you that have travel booked this week, we want to check in on the weather. Of course Jenny Harrison is at the CNN International Weather Center Hi, there, Jenny.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Hey, Maggie, you're quite right. And of course it's that time of the year, conditions are changing quite rapidly in some cases. And in Europe it's still a very wet and very windy picture. The last few hours have been more of the same coming in across areas of the west. And you can see that the cloud is certainly very thick and of course the rain's been coming in with it as well, being blown in by these very, very blustery conditions. Now, one thing I can tell you too in that cooler air we're seeing quite a bit of snow but also look at these wind gusts in just the last few hours. In Spain first of all, 136 kilometers and across in the Czech Republic 98 kilometers an hour. And we could well have more of that very windy weather. But in the meantime, have a look at this because my goodness, doesn't it look lovely -- one of the vineyards there crossing into western regions of Germany. This is of course the colors beginning to change. The leaves on the trees -- well it has to be said not a great deal of color changing going on just yet here. This is actually Wilshire, and this is in sort of the west as well above the U.K. So the leaves will begin to change and I have to say if the windy and rather cool weather continues, we're going to see certainly plenty of that and certainly plenty of leaves being blown off the trees as well. But it's the central Med. This is where we're seeing some very, very stormy conditions. There have been warnings in place the last couple of days, and more of the same too as we continue through the next couple of days, so much so that Tuesday into Wednesday the warnings are in place. Mostly for heavy rain and always a chance of tornados. But hopefully nothing more than that, and the system is moving pretty quickly out of the way. Something we do need to be aware of is Acqua Alta in Venice. This was taken a day ago. You can see the water level beginning to rise. It has of course been a lot higher than that in the past, and so much so that the warnings have actually been issued. Now normal tide is anything up to and below 80 centimeters. But of course once it gets higher than that, this is what we see. And of course warnings go hand in hand with some of these levels, and of course once we get to some of these heights of water then as much as 17, maybe 19 in some of the city at times have been and can be flooded. So, the warnings are in place actually for Wednesday morning just after midnight, 12:15 a.m. local time, maybe 80 centimeters. So that of course means high tide and it could be as high as that. So not the highest warning but enough to cause some flooding in some parts of the city. But the worst of that weather really continues to move away towards the southeast. But you can see that line of pink and white across the Alps -- that of course is the snow accumulating. And plenty of snow accumulating in areas across Scandinavia and also areas of the U.K. But for the most part, because it's generally quite mild, this is just a very wet picture. And talking of how mild it has been, well, the stats are in and certainly in the U.K., the ninth warmest October on record -- the average temperature 11.2 Celsius. And look at this, in some areas as many as 3.5 degrees above the average, to the north as many as 2.5. So that really is something you can certainly feel. And as for what's going on in the next couple of days, got snow accumulating across the Alps and then when it comes to temperatures, not too bad. Most places in double figures. You can see the cooler air in place -- 15 in Paris and 11 Celsius in Vienna. Maggie.
LAKE: All right, the skiers will be happy about that snow. Jenny Harrison for us at the Weather Center. Well the momentum stock of the year is taking a hit. Tesla shares are falling 9 percent in after-hours trade. Investors seem disappointed with Tesla's third-quarter results, even though the headline numbers beat the Street. Earnings came in at 12 cents a share, a penny ahead of estimates. Revenue was $603 million, also better than expected. The issue appears to be with its outlook for the fourth quarter. Tesla says it plans to deliver just under 6,000 Model S cars. Analysts it appears were expecting a higher figure. Now even with that, (sell off) Tesla shares are up 400 percent this year, so, a lot of (froth) in there. Well, a treasure trove of masterpieces hidden away for decades. Investigators share new details on the man who kept the paintings and the works and the priceless discovery when we come back.
LAKE: Stunning works of art missing for more than 70 years have been found. German authorities have just unveiled the details surrounding nearly 1,500 paintings that were discovered during a raid of a Munich apartment in 2011. Within the looted trove are previously-unknown treasures, including some of these that we can see -- this seated woman by Matisse behind me, as well as this oral -- allegorical work by Marc Chagall, and another self-portrait by Otto Dix. It is believed to have been painted by him when he returned -- shortly after returning from the battlefields of World War I. Now, Jim Bittermann filed this report from Munich.
JIM BITTERMANN, CNN's SENIOR EUROPEAN CORRESPONDENT BASED IN PARIS: The art treasure trove of the century was found in a non-descript apartment building in a quiet Munich neighborhood. In the fifth floor apartment of 80-year-old Cornelius Gurlitt investigators found 1,400 priceless works of art. Largely unknown paintings by Marc Chagall, Henri Matisse, Max Liebermann, Otto Dix and many others including Picasso and Lautrec. Some were centuries old like this (Pantaleo) from the 18th century. Many works were what the Nazis branded 'degenerate art' and confiscated from mainly Jewish owners. Others may have been sold at a fraction of their worth by families fleeing the Nazi regime. Art historians say Gurlitt's father at one point worked for the Nazis, collecting the confiscated art, and his son is thought to have taken over the collection after the father died in a car crash in the 50s. A prosecutor said it was a stunning discovery.
REINHARD NEMETZ, PUBLIC PROSECUTOR, VIA TRANSLATOR: The first of the accused was searched by tax and customs officials. Here, 120 framed and 1,285 unframed pictures were confiscated, some of them by Max Liebermann and others. Because of the immense idealistic value of the paintings, we have found clues that this find could be so-called degenerate art, or littered art.
BITTERMAN: Authorities assisted by art historians have been working for more than a year trying to find the origins of the art. They say Gurlitt was being investigated because he was found carrying a large amount of cash back from Switzerland after selling this Max Beckmann painting to a Swiss art dealer.
MARKUS KRISCHNER,"FOCUS" MAGAZINE: The case is highly complicated and all the questions of ownership are not answered.
BITTERMANN: After an investigative report by a German news magazine, prosecutors finally went public with the story. The reporter says it was impossible to talk with Gurlitt and little is known about it.
KRISCHNER: I think he's a curious man. Totally isolated.
BITTERMANN: Kind of reclusive?
KRISCHNER: Totally reclusive, living with his pictures and perhaps these pictures are -- I think that these pictures, they dominated his whole life.
BITTERMANN: Cornelius Gurlitt's name is still on the buzzer here at the apartment building where he lived and kept his fabulous art collection, but he was virtually unknown to his neighbors. They said he hasn't been seen around here for months. And he was unknown to authorities. He was on none of the tax rolls, not even the social security tax. No charges have been filed against Gurlitt. He is not under arrest, and the prosecutor said it's not clear which laws if any have been violated. But the discovery in the fifth floor apartment will almost certainly raise once again a nasty legal fight over who rightfully owns the works of art the Nazis stole. Jim Bittermann, CNN Munich.
LAKE: We need to recap one of our main stories. The mayor of Toronto, Rob Ford, has apologized to the city after admitting to having smoked crack cocaine. Speaking in the last half hour, Ford vowed to regain the trust of the people.
FORD: With todays' announcement I know I embarrassed everyone in the city and I will be forever sorry. There's only one person to blame for this, and that is myself. I know that admitting my mistake was the right thing to do, and I feel like 1,000 pounds have been lifted off my shoulders.
LAKE: U.S stocks drifted lower Tuesday. Stocks are still hovering near all-time highs. Michael Kors soared on better than expected earnings, AOL stocks spiked more than 7 percent despite a drop in profits, CBS surged on positive earnings, T-Mobile dipped 2 percent after taking off in early trading. And we take a look how -- look at how European stock markets fared. They pulled back on Tuesday. Investors took in the European Commission's latest economic forecast. Uncertainty in the run up to the ECB policy meeting on Thursday, also Wang Autos were in focus and they were lowered by BMW which dropped nearly 3 percent. BMW quarterly profits fell more than expected. (Renno) fell more than 2% Well EU and IMA bailout inspectors met in Athens today to check up on Greece's progress with austerity reforms. The Troika as they're called, were greeted by protesters who jeered and hackled. Riot police had to hold the crowds back. And that is "Quest Means Business." I'm Maggie Lake in New York. Thanks for watching.