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QUEST MEANS BUSINESS
Typhoon Haiyan Aftermath; Getting Aid to Survivors; International Aid Response; UK Recovery Gaining Ground; Banking Troubles; European Market Down; US Markets Up; Prestige Spill Verdict
Aired November 13, 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)
RICHARD QUEST, HOST: It is the middle of the week, the trading day comes to an end, and the Dow Jones is up ever so slightly in a lackluster session that we saw on Wednesday, the 13th of November.
Tonight on the program, the Philippines is getting aid, it's getting the aid to the people who need it most, which is now the challenge.
A mark of confidence, literally. The Bank of England governor says the recovery has taken hold in Britain.
And the chief exec of Virgin America tonight tells us why he thinks the Americans were wrong to approve the merger of American and US Airways.
I'm Richard Quest. I mean business.
Good evening. The verdict is far too slow. That's how the United Nations emergency aid chief is describing the relief effort in the Philippines. Far too slow because five days on and rescue and aid workers have still not reached some of the hardest-hit areas.
And yet, help is arriving. It's coming in by air and by sea and it's being transported by members of the military and by civilians. But much of this lifesaving aid is literally piling up in the airports because distributing supplies is challenging, extremely challenging. CNN crews on the ground tell us that they've seen few signs of any organized relief efforts in the most devastated areas.
And it's obviously not as straightforward as anyone might see. Roads still need to be cleared and debris is blocking access to some of the more remote parts.
The World Food Program is in the Philippines working as quickly as possible to distribute food and water. On this program this week, we've shown you the preparations being made in Dubai, and we spoke to its chief spokeswoman. Paula Hancocks, now, has been following the group, trying to make sure supplies get to the victims who need it most.
PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Hungry hands reach out for food and water given out by the police. In front of the gutted Tacloban Airport terminal, the World Food Program is loading up its latest shipment.
VALERIE AMOS, UN HUMANITARIAN CHIEF: So, it's happening. We will see even more of this tomorrow. But it would have been better if this had happened three days ago, but the weather situation that we faced yesterday was difficult to get anything.
HANCOCKS: Through the dusty road of devastation to the city center, the army transports the supplies to make sure they get to their destination. Cheered along the way, WFP has so far delivered around 75,000 family bags.
HANCOCKS (on camera): The sight of these trucks driving down the road to Tacloban City is certainly welcome. Those along the sides of the roads are shouting at the truck, and what's inside these is basically high-energy biscuits, so something crucial for the early days of such a natural disaster.
HANCOCKS (voice-over): Ten minutes down the road, a government warehouse filled with rice, bread, and canned goods is largely undamaged.
REMIA TAPISPISAN, PHILIPPINE DEPARTMENT OF SOCIAL WELFARE AND DEVELOPMENT: It's a bigger space, so they probably can serve more and we can serve faster all the victims of the disaster.
UNIDENTIFIED MALE: Angelo Fernandez?
HANCOCKS: Fifty volunteers work around the clock here. They're paid in food.
HANCOCKS (on camera): This place is now known locally as the golden warehouse, basically because it wasn't destroyed by the storm and also it hasn't been looted. It's the only one in the area, and there's a reason that it hasn't been looted. The security here is incredibly strong.
HANCOCKS (voice-over): An armed effort to protect something as basic as food could well save lives here.
Paula Hancocks, CNN, Tacloban in the Philippines.
QUEST: Correspondent Nick Paton Walsh spoke to the UN humanitarian chief Valerie Amos after she arrived in the devastated city and asked her for an assessment of the relief effort.
(BEGIN VIDEO CLIP)
AMOS: Things are beginning to move now, but we still have people who are hungry, who haven't had water. I'm very pleased that a field hospital is being set up, I hope by the latest, tomorrow morning.
We're bringing in a lot more, but we need vehicles, we need a lot of vehicles to come in from Manila so we can get out to the outlying areas. We now have more C130 aircraft, but we need more of those. We need more helicopters.
But we need things like waste management, so that the bodies on the side of the road can be moved, and we have to move the debris. Yes, the roads are now open because the debris has been pushed aside, but we have some issues.
This is a major operation that we have to mount. We're getting there, but in my view, it is far too slow. Part of what I'm here to do is to try to unblock any blockages that there are so that we can speed up our efforts.
(END VIDEO CLIP)
QUEST: Countries around the world have stepped up their offer of support to the Philippines. The biggest contributors so far: the United States has offered up to $20 million in humanitarian assistance, emergency food aid, and relief supplies. The United Kingdom is providing $16 million in aid through various relief organizations. The European Union has put up nearly $13.5 million.
Now, you may want to sit comfortably for this. China, the world's second-largest economy in GDP terms, has promised $100,000 in aid, along with another $100,000 through the Chinese Red Cross. No, we didn't put the decimal point in the wrong place. It really is $100,000.
And you may well be asking, well, that seems -- doesn't seem a very large sum of money, even for a country in an emerging market. Ian Bremmer is the founder and president of the Eurasia Group, risk consultants. He joins me now.
I'm assuming offering $100,000 is not an accident or a mistake or they had failed to recognize the value of money.
IAN BREMMER, PRESIDENT AND FOUNDER, EURASIA GROUP: No, they never send a lot, frankly, because they like to say, look, we're an emerging market, we're a poor state, that sort of things.
But this is beyond the pale. This is a direct message to the Philippines. When the Chinese engage in foreign aid, it is done with economic and political strings attached.
The Philippines are far from an ally of China. They're actually fighting over contested territory with the Chinese, and this is a very pointed message that we don't like you, we don't like your government, and we're prepared to play politics with humanitarian aid accordingly.
QUEST: You're quite sure on that?
BREMMER: Oh, they're not stupid. I don't think -- I think the Chinese government, you're sending a country like this --
QUEST: But this is -- but this amount of money that is being sent --
QUEST: -- borders on offensiveness.
BREMMER: It does if you're an American talking about it or a Brit or a Kiwi or an Aussie.
QUEST: No, if you're a humanitarian.
BREMMER: Yes --
QUEST: If you're a country the size of China, you can afford to send more than 100,000 bucks.
BREMMER: Oh, yes, you can afford to, but I would say there are a lot of folks in China right now on Weibo and other social media that are saying why are you giving them $100,000? They have enough money to buy American military systems. Surely they can get cash from their friends. This is a very different perspective than American-led global norms.
QUEST: Now, the -- the Philippines, obviously, there's the disputed territory aspect to it, and there's also the question, of course, of the hostage -- the whole Hong Kong area that also has raised tensions between the Philippines and China.
BREMMER: And there are stepped-up military exercises with the United States, they're talking about reopening a base.
QUEST: But don't they -- but won't this -- or let me rephrase that.
BREMMER: Sure, go ahead.
QUEST: Does this risk backfiring on the Chinese?
BREMMER: Sure! Look, this is the same China that came out a few weeks ago and called for the world to de-Americanize. And, well, what is your alternative? We like to say put your money where your mouth is in this country. The Chinese are making a very direct statement, and lots of countries around the world are going to be asking themselves, what kind of a world --
QUEST: What is that statement they're making?
BREMMER: Well, that statement is that you're not going to have these humanitarian norms. They're going to be politicized. And the Chinese government, when they become larger, are going to be thinking very carefully about who they give to and why they give.
QUEST: Ian, thank you for joining us.
BREMMER: My pleasure.
QUEST: Putting it in perspective. I appreciate it as always.
Now, despite the problems of getting aid to the Philippines, it is crucial that the country gets as much support as possible. If you're looking for somewhere to donate, whether you're in China or elsewhere -- I suppose we might be blocked there for showing this -- but cnn.com/impact can help you connect to the groups that are already providing relief on the ground. We have already done the necessary work of vetting those involved, cnn.com/impact.
When we come back, it's been a long time covering -- coming, but now, even the governor of the Bank of England says the recovery has arrived.
QUEST: It's probably worth a ring of the bell.
QUEST: The governor of the Bank of England, Mark Carney, says the UK recovery is truly gaining ground and momentum. It's in the bank's inflation report, which suggests economic conditions are improving faster than expected, and Governor Carney said all signs are now pointing to a healthy recovery.
(BEGIN VIDEO CLIP)
MARK CARNEY, GOVERNOR OF THE BANK OF ENGLAND: Inflation is now as low as it's been since 2009. Jobs are being created at a rate of 60,000 per month. The economy is growing at its fastest pace in six years.
For the first time in a long time, you don't have to be an optimist to see the glass is half full. The recovery has finally taken hold.
(END VIDEO CLIP)
QUEST: So, the recovery has finally taken hold and the glass is half full. Even the optimist. Well, if you join me at the super screen, you will see exactly what, perhaps, we mean.
So, here's the glass. And now, let it's put it, as the Bank of England said, it might consider raising interest rates earlier than expected. So, the data, the so-called knock-out factors that would cause them to raise interest rates sooner rather than later.
Let's start with unemployment. Now, unemployment, which of course, 7 percent is the target. That's the threshold that the government has talked about. But now, it seems that the 7 percent target will be reached, perhaps, at the back end of next year, early 2015 rather than back end of 15 and into 16. That's quite a remarkable difference.
Then you've got inflation, which also fills up the glass, falling faster than expected. It's now close to the 2 percent target that the Bank of England -- you'll be aware, of course, since 2009, they've been over that 2 percent target and the governor has had to be writing letters explaining why this is the case. Now it seems that there could be a risk of an undershoot of the 2 percent, which of course would be just as worrying for the governor.
And then finally, to take us halfway full or maybe just above, growth forecasts have been upgraded for this year and next. The, if you like, the glass is extremely full, if you can have such a thing.
Christian Schultz is the European economist for Berenberg Bank, joins me now from London. Let's get the detail out of the way before we talk about the analysis. When do you now expect bank rate -- the first rise in bank rate?
CHRISTIAN SCHULTZ, EUROPEAN ECONOMIST, BERENBERG BANK: Well, we're expecting it towards the end of 2015, so that's probably pretty much in line with what the Bank of England tried to communicate today. It's maybe slightly later than the market expects, which is probably on Q3 2015 at the moment. So, it's still going to be two years of very low rates.
QUEST: OK. The -- the speed of this recovery that is now picking up in the UK, is this a cyclical V-shape, albeit three years late? Or is there something longer-lasting about it?
SCHULTZ: Well, it is a bit of a sigh of relief kind of recovery. Since last year, the euro crisis has been easing, monetary policy is gaining traction, the housing market is doing better, households are reducing their saving rate, they're spending more. So, it's a consumption- driven recovery at the moment.
But remember that real wages are still falling. Wage growth is very low despite that improvement in the labor market. And what we do need at some point is incomes actually rising so that consumption recovery can be made sustainable. And we're not right there yet. But with a fall in inflation, I think things are looking brighter on that side as well.
QUEST: In many ways, it is an exceptionally rosy picture in the sense that you have this low-inflation environment which looks like it will continue. Now, as long as that low inflation subsists, then of course, he's OK to keep the monetary -- the pedal down, isn't he?
SCHULTZ: Indeed. That's the bet that the Bank of England has. The Bank of England says, well, the economy -- the UK economy is still 2, 3 percent smaller than it was in 2007, while the US economy or the German economies are much bigger than they were before 2007. So, there's that big gap in UK output, which still needs to be filled before inflation can really --
SCHULTZ: -- be a threat again. That will take us quite a long time.
QUEST: Mark Carney arrived just a few months ago. He's going to get the credit for much of this, isn't he?
SCHULTZ: Well, he came in at exactly the right point. Although much of this recovery is probably driven by decisions taken last year, like the Bank of England's funding for lending scheme or Super Mario, the ECB's president, who changed the world last year with his pledge to keep the eurozone together.
So, much of the decisions were taken before Carney arrived, and he's now getting credit for it. But his guidance, his dovishness, I think, has also improved the outlook for UK households.
QUEST: Let's just talk about that for one second because there is a different feel, a different tenor about the Bank of England now at the moment, isn't it? Very quickly, Mark Carney has stamped his authority on this institution.
SCHULTZ: Well, yes. And that's also because he has the support of the government. George Osbourne, the chancellor --
SCHULTZ: -- did everything to get him, gave him a good pay package, and Mark Carney is there to improve the economy, and he has done everything he can to improve confidence. Although we do have to remember, he's just one out of nine policymakers at the Bank of England, and he can't decide everything himself.
QUEST: Good to see you, Christian. Thank you very much for joining us from London this evening.
Now, Barclay's compliance chief, Sir Hector Sants, is turning his sick leave from the bank into a permanent exit and resignation. Sir Hector took a break from his role last month. Barclays described it as exhaustion and stress. He was a top regulator and former head of the FSA. Sants was brought in following a string of scandals.
Now, he had to deal with multiple regulatory issues. It was a very short time at the bank. In the US, regulators wanted to enforce a $470 million fine against Barclays for allegedly manipulating energy prices. Barclays is refusing to pay that money by the way. The dispute's now going to go the federal courts.
European regulators are preparing to fine six banks who are accused of rigging the eurozone interest rate scandal. Barclays tipped off the commission to eurobor rigging, and so it won't be fined. But even so, it's still enmeshed in the scandal.
And Barclays is cooperating over this investigation into the alleged manipulation, the Forex inquiry. Now, this one just keeps growing and growing and growing. More banks, there's six major banks all involved in this one. Barclays is highly involved in it.
"The Financial Times" is reporting lately that the Forex investigation has expanded to 15 of the world's biggest banks. William Cohan is a financial author and a former banker, joins me now. Good to see you.
WILLIAM COHAN, FINANCIAL AUTHOR: Yes, Richard, nice to see you.
QUEST: So, he's gone.
COHAN: He's gone.
COHAN: Well, it depends on who you want to believe. If you want to believe Barclays, he's had health problems and he decided that he didn't want to come back from them. Or I thought "The Financial Times" had a very interesting take on it, which is political infighting, Richard, resulted in him deciding not to come back, which frankly sounds more likely to me. Because this is --
QUEST: Political infighting over what, though? Because --
COHAN: Power. What he's going to do, what he's going to be responsible for. Because Antony Jenkins had brought in some people in and around him. I don't know whether he thought his career path was going to be stunted in some way as a result of --
QUEST: But the man was brought in with a specific goal.
QUEST: He was brought in with a goal to -- not just to clean up, because that was already underway.
QUEST: But compliance, to make sure the rules were followed and ethics were back into the system.
COHAN: Correct. It was a great appointment. If you can get the head of the FSA to be in your bank, what a great political -- what a great public relations coup that is. But having him leave six months later is probably the worst thing that can happen, because it calls into question everything that Antony Jenkins is trying to do at the bank.
QUEST: It's -- and dressing it up as exhaustion and stress, I'm not suggesting --
COHAN: Yes, I'm not --
QUEST: -- I'm not suggesting for a moment the poor man hasn't done well.
COHAN: Look, these are very difficult jobs, but exhaustion and stress -- he's -- I don't know his medical condition, but he's --
COHAN: -- in his mid-50s. He should not be having exhaustion and stress.
QUEST: Well, hang on, hang on. Let's leave that one, though, since we don't know.
COHAN: We don't know.
QUEST: We don't know. And those of us in our early 50s --
COHAN: I'm right there with you.
QUEST: -- aren't going there. But I do want to talk about this Forex inquiry.
QUEST: This -- has it got legs? Does it get the feeling of something really nasty and smelly, like libor or eurobor? Or do you get the feeling it's going to peter out somewhere along the way?
COHAN: My view with these investigations is where there's smoke, there's fire, just as there was with libor, which turned really embarrassing for the banks across the world, frankly.
This also has a critical mass to it now. I don't know whether it's 13 or 14 banks have now been brought into this investigation. All of our leading banks. It's viewed as a -- an area that is, unfortunately, rife for manipulation.
QUEST: Which is why I think it might just get kicked into the long grass. Everybody's in it.
COHAN: No, I think there seems to be a sea change, frankly, Richard, where people -- where the regulators finally have gotten the upper hand again, and I wouldn't think this is going to end anytime soon.
QUEST: Good to see you. I can hear 50-year-olds --
COHAN: Nice to see you.
QUEST: -- all around the world --
QUEST: -- joining us.
COHAN: Well, we're among them, so, welcome.
QUEST: Now, to the European stock markets and how they closed. Shares in London fell. It was on concerns that the Bank of England could hike interest rates sooner than expected as the European Commission says it will formally investigate Germany's export supplies. Let's just look at those numbers. You see, London is off the worst, down 1.4 percent.
The Dow clawed its way back from a lower open. It's a record, up 70 points, and the NASDAQ and the S&P also climbed higher. An interesting session, indeed. We'll be back with more in just a moment, QUEST MEANS BUSINESS.
QUEST: It blackened hundreds of miles of the Spanish coastline, and according to early estimates, it was a $5 billion bill for the country. And today, more than a decade after the Prestige oil spill, a Spanish court found the tanker's crew and the government not guilty of an environmental crime.
Now, the Prestige oil tanker sank off the northwest coast of Spain in 2002, you may well remember the size and scale of it, 60,000 tons of oil leaked into the sea. There were hundreds of thousands of sea birds that have died, and many of them, of course, since the disaster and in the many years after. The spill brought Spain's fishing industry to a standstill for months.
The ship's captain was convicted of a lesser charge. He's not likely to spend any time behind bars. Al Good man joins us live from Madrid.
They have a saying, don't they? Justice delayed is justice denied, Al. Twelve -- ten, eleven, twelve years on, what was the point of this case?
AL GOODMAN, CNN MADRID BUREAU CHIEF: The point of the case was to try to get some damages to show at least some criminal responsibility for these three people, the captain, crew member, and a former government official who are all elderly men at this time.
But the court, the presiding judge reading out the sentence said it was just too complicated, they couldn't establish an exact cause, a criminal responsibility on why that ship went down, and that left, basically, no one holding the bag.
No damages are being claimed, and you have some indignation from people here in Spain, like this environmentalist, who was outside the court. Let's hear what he had to say.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE (through translator): And if they acquit of criminal responsibility the three defendants, especially the only Spanish government representative, the message is clear: you can come do what you want. International pirates of petroleum trafficking and some politicians at your service and absolutely nothing will happen to you.
(END VIDEO CLIP)
QUEST: Is there --
GOODMAN: Richard, the case can be appealed to the Supreme Court.
QUEST: Right, right. Sorry, forgive me, Al, the delay between here and Madrid. It can be appealed to the Supreme Court. Highly -- I'm guessing if they basically said it's all too complicated, this is basically going away. This is the end of it, it's over, done.
GOODMAN: Well, it looks like that. And with what you were describing at the beginning -- and I covered this oil spill with the ship put out its first distress calls exactly 11 years ago to this day on November 13th in 2002, and with the amount of pollution that hit Spain and France and the indignation, the fishing industry and whatnot, that there's no one being held responsible, that is really seen as quite incredible. Richard?
QUEST: OK. So, no one's responsible. The damages have all been -- the damage has been done. The government paid for the cleanup. Where does it leave, if you like, the Spanish judicial system to have come to this result?
GOODMAN: Well, the court will argue that it did the best job that it could. But what you've already got coming out is the agriculture minister in this conservative government who was the agriculture minister in that conservative government at the time of the spill, he's come out and tried to put a good slant on it saying that Spain is much more prepared now for these kinds of spills --
GOODMAN: -- that they're requiring double-hulled tankers -- this was a single-hull tanker -- and that they're much more ready. That remains, really, to be seen, Richard.
QUEST: Al Goodman, late for you, Al. Thank you for taking time and staying up late tonight and joining us.
When we come back, Anderson Cooper is in the Philippines. We'll hear from him after the break. It's QUEST MEANS BUSINESS.
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes first.
Security is now becoming a concern in the devastated areas of the Philippines in the wake of a stampede at a warehouse on Leyte that was mobbed by hungry residents. Eight people died in the crush of people trying to grab more than 100,000 bags of rice. Police say they were overwhelmed by the mob.
A top technology officer at the White House says he can't guarantee that the Obamacare website will be fixed by the end of this month. Todd Park was grilled at a House oversight committee investigating the problems that have hit the US government's health insurance website.
Toronto's city council has voted in the last hour to ask its mayor, Rob Ford, to take a leave of absence by 37 votes to 5. The vote comes more than a week after Ford admitted to smoking crack cocaine. The mayor has consistently said he will not step down.
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UNIDENTIFIED MALE: On the count of three, everyone, please. One, two, three.
UNIDENTIFIED MALE: All right.
(END VIDEO CLIP)
QUEST: The first new skyscraper on the old World Trade Center site has officially opened. The New York mayor Michael Bloomberg was amongst those cutting the ribbon that you saw there at Number Four World Trade Center. It's a 72-story office block. Its largest sibling, the One World Trade Center, was then the tallest tower in the United States on Tuesday. Five days after Typhoon Haiyan tore across the Philippines, rescue workers are still trying to get relief to those in need. Our senior international correspondent Nick Paton Walsh drove from Tacloban City to the coastal city of (Bailo). And there he spoke to residents and they described the terrifying moment when the storm struck.
NICK PATON WALSH, SENIOR INTERNATIONAL CORRESPONDENT WITH CNN: We drove south, away from Storm Yolanda's epicenter to answer the question how far had the destruction spread? It took about 40 kilometers before life breathed easier, but then the storm led to other dangers. Police warned us of bandits ahead.
WALSH: (Inaudible). OK, and why are they doing this?
Male: We believe they are looking for food.
WALSH: We turned back towards the heart of the chaos. As we move closer towards the eye of the storm, signs of the devastation begin to grow and while many of the trees here are left standing, you can see telegraph poles bent at a slight angle, a sign of the sheer ferocity of what passed through here. They warned us again of bandits at this school where the smallest are hungry and sick and where Storm Yolanda was so fantastical in its power it came straight from Hollywood's own Apocalypse.
Female: It's just like a movie 2012. A Storm Yolanda.
WALSH: Are you scared?
Female: Yes, super. Super scared.
WALSH: The basics, a struggle, (inaudible) for little gas remains. Trees are scattered like matchsticks as you approach the town of (Paolo). Its two church spires standing defiantly although 800 people died here in this town of 60,000. Some here where waters surged, the winds tearing the back off this house and from their relatives across the river.
Male: Yes, we have an aunt from the one (inaudible) which was flooded. So they're missing and three grandchildren including her.
WALSH: Death has been more dignified in Palo than the bodies left on the streets of neighboring Tacloban, even though life itself remains a shell of what it was. The mayor had mass graves dug fast and now gives free calls to loved ones, medicine even (bureaucracy).
Female: Most of them died out in the waters. We have survived this far, so I think we can rebuild it.
WALSH: The job of simply cleaning up so mammoth (inaudible) seems a distant idea. Nick Paton Walsh, CNN Palo.
QUEST: Anderson Cooper is live in Tacloban with the latest on the relief effort joins me now. Anderson, day time, obviously, a new day has begun in the Philippines. So, give me a sense now of whether that aid is arriving in larger amounts.
ANDERSON COOPER, ANCHOR OF CNN'S "ANDERSON COOPER 360o" SHOW: Without a doubt, it's arriving in larger amounts. The Brigadier General Kennedy the Marine head (front) here had promised to get this airport in Tacloban, the main hub, up and running on a 24-hour basis in terms of the runway -- usable runway 24 hours. They had no lights previously. Air Force Marines came in, they put lights on the runway and last night -- well it's now dawn -- that was the first night we started to have C130s coming in with supplies throughout the evening. And some Malaysian jets came and others. There's now pallets of tarps and food from USAID from Malaysia and elsewhere lined up on the side of the runway, and that's going to be just increasing. But the problem, Richard, is getting it out even a mile from here, getting it out even you know half a mile from here.
COOPER: There aren't the trucks as you were just hearing in Nick's piece. Fuel is very hard to find. There's just not the level of organization on the Philippine government's side to get the aid that's been brought here by others distributed. They've been focusing on basically just evacuating as many people as possible, and there is already, as dawn breaks, a long line here at the airport close to where I'm standing of people, many of whom have been waiting all night long. Many of whom were waiting much of yesterday to try to get on --
COOPER: -- a few C130s run by the Philippine military to just get out.
QUEST: And we're hearing a lot of stories now about the security question. We obviously know about one of the event that happened with the crush and injuries and deaths, but is there any sense that you're getting of matters out of control?
COOPER: No. I think it's a danger to pay too much heed to that. There has been -- there were some sporadic incidents yesterday, exactly the cause of it is not really clear. There was talk of it as you heard in Nick's piece about rebels, but it could also just be people you know frustrated. But there's not a sense where you know -- we walk around all the time -- there's not a sense of imminent danger in any way like that. But for a lot of residents here who don't have electricity, who don't have security, that's one of the main reasons they want to leave. It's not just the lack of food and the water, it's the lack of security for them in their neighborhoods.
QUEST: Anderson Cooper live for us this morning -- well morning your time. Thank you, sir, for joining us. And now, to the weather forecast. And we talked a lot about the mechanisms and the various structures and what was going on. Jenny Harrison is at the World Weather Center and joins me now. Jenny.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Yes, Richard, one of the things in particular that we talked about of course was the storm surge, and we hearing from the (mariner) piece Andrew Stevens (inaudible) with him that they were saying that if it had been called a tsunami, they would have actually taken different precautions -- they would have evacuated. Well, there is a difference and certainly in my job it's my role here as the weather anchor and a meteorologist, we have to obviously call it by the correct term. So I wanted to explain to you the difference in a tsunami and storm surge. Now, a tsunami. This is caused and usually results in a series of ocean waves and it's caused of course by an earthquake or a volcanic eruption or also you get these submarine landslides all taking place way under the surface of the ocean. They range in size greatly from just a few centimeters to indeed several meters. Now, a storm surge is something really quite different. Now of course the end result is often -- it could look -- to all intents and purposes the same, certainly the damage that can be. But it is actually quite different. This is when the water is actually pushed towards the shore during the (sterm) -- during the storm. And this is affected by the intensity of the storm -- and we know this one was coming in with sustained winds of 315 kilometers an hour. The forward speed of the storm, the northern edge, was going to be the forward, the fastest moving area for this. It was coming onshore at about 41 kilometers an hour, and also the angle and the shape of the coast where this storm surge was actually going to hit. So, again, just to show you of course when it came on shore in Guiuan was that actually first store -- that storm, when it came roaring ashore with those sustained winds and those gusts at actually 380 kilometers an hour. I'm just trying to move on to the next graphic. And here we go, and this is Guiuan and you can see here some before and some after images. And you'll see straightaway what the storm surge did. The winds as well but a lot of this was actually caused by the storm surge and at a slightly different angle, and again, what is now left of what perhaps is not left behind. And then we had it cross into Tacloban, and again, this particularly hit hard by the storm surge. And here you can see it very clearly, and this is how far inland it went -- about 150 meters. We know as well that in some areas this storm surge was about 5.1 meters and you can see that there is very little of course left standing all the way along this coastline. And, Richard, when you think the number of islands particularly through the path that this actual cyclone headed -- this typhoon headed --
HARRISON: That is a lot of coastline that it actually impacted. So that's basically the difference between storm surge, what it can do and a tsunami and what that does.
QUEST: Jenny Harrison at the World Weather Center. That you for clarifying that. You and I have been talking about that. Good to talk to you. Now, when we come back, Virgin America's chief executive is warning that the new mega airlines hurt the industry's little guys and the American people. His carrier has dropped a legal protest against the merger of American and U.S. Airways. You'll hear from the CEO after the break.
QUEST: So the aviation world in the United States is looking very different today now that the U.S. Department of Transportation has allowed this merger to go ahead. First of course, if you look at how the airlines have merged, American, U.S. Airways, Delta, United, Southwest, all of which came together to create three big carriers plus Southwest. You've got Delta, United and now the new American. But the issue of course is what does this mean for all the other airlines? Well, Virgin America has withdrawn its legal opposition and it's still against what's happening in the industry. The bigger carriers that we see here claim two-thirds of the market. So, a short while ago I was joined by Virgin America's chief exec David Cush and I asked what's left for the rest?
DAVID CUSH, PRESIDENT AND CEO, VIRGIN AIRLINES: We're the only airline that started since Jet Blue started back in 2000 that has been founded, started and is actually still flying. So I think that's the other issue is new entrants have always been a big, competitive discipline on the legacy carriers. So, you know, it's not only us but it's the guys coming down the road.
QUEST: Right, but you stand to be 'nutcrackered' now don't you by these three large legacies and Southwest? You are in jeopardy.
CUSH: Well, I wouldn't say we're in jeopardy, Richard. If this had happened a couple of years ago I would be much more concerned. But you know we have the airline where we'd like it. Our operating margin in the third quarter was higher than American, higher than United, Jet Blue and Southwest. So we feel pretty stable right now. But what I will say is the competitive dynamic has changed quite a bit since these guys have been allowed to merge. You know, we look at what Delta and United are able to do with 1,000 airplanes and $40 billion in revenue and they can come after little guys like us, and they certainly have been trying.
QUEST: So , what do you fear now that there is a third -- well not even a third behemoth -- the largest behemoth has been created? What is your fundamental fear?
CUSH: Well, my fundamental fear is that we will be frozen out of going into smaller markets, and right now those have really been locked up by the legacy carriers as they've gone in and have bought their competitors, have shut down competing hubs and have concentrated traffic from small-town and mid-town America over these large hubs. They've also shut out the rest of the carriers, so we cannot connect passengers or bags into these big networks they've created. So my concern very simply is we're going to be shut off from 80 percent of the nation. Maybe more importantly from the Justice Department's standpoint -- QUEST: Right.
CUSH: -- is 80 percent of the nation is going to be shut off from low fare competition.
QUEST: And how can you compete and what is your strategy going to be now this deal is going ahead?
CUSH: Well we're going to keep focusing on quality of our product, and we're going to keep focusing on large urban areas. You know, the large urban areas are going to do fine. You're always going to have five or six competitors and we've been able to do very well, and they are against American, United and others. So we're going to just kind of keep to our (knitting) and I think we will be fine. You know, I think the big losers out of this are small- and mid-town America and then anyone who wants to start an airline -
CUSH: -- down the road, I think this effectively shuts the door for them.
QUEST: Finally, mid-town America with small-town America -- that's not your market, is it? I mean, you are -- you are -- the cosmopolitan big, urban centers?
CUSH: That's correct. What I would say though is having access to you know these very dominant hubs that these legacy carriers have built so that people can connect onto our flights from say Peoria over Chicago to San Francisco, we would provide great pricing discipline in those markets and I think that's the next step that the DOT actually needs to look at you know in the months and years to come.
QUEST: That's the chief executive of Virgin America who must be wondering what on earth you do now. easyJet has created an artificial ash cloud and flown a plane through it to test a new detection system. The budget airline wants to fit its fleet with volcanic ash sensors next year to avoid the sort of travel chaos caused by Iceland's eruption in 2010. You'll remember of course we -- many of us -- were caught up in what took place -- E15, the name of the volcano. Now in the test, an airbus aircraft dispersed over a ton of ash into the earth at the height of three kilometers. A second plane, fitted with the technology, flew towards the cloud, successfully identifying and measuring it from 60 kilometers away. We're lucky tonight -- easyJet's senior engineer is Ian Davies. He joins me now from CNN in London. Ian, virtually from the beginning easyJet was one of those carriers -- was the carrier -- that basically said 'you can come up with technology to handle ash clouds.' Is this the latest development of that?
IAN DAVIES, SENIOR ENGINEER, EASYJET: Yes it is and in fact it's a continuation of the testing that we did in 2012 and the thing we needed to do is test the detector on real volcanic ash. Up to that point, we'd done tests on Saharan dusts but we really need to recreate the conditions of 2010. And the tests we conducted on the 30th of November actually did that. We actually took ash from Iceland, the very ash that was causing the problems.
QUEST: You're going to have a real struggle there, aren't you? To now make that leap to get the authorities -- the JAA or the FAA, CAA, all the joint authorities, to ever allow you to go that next stage further?
DAVIES: Well, I think there are two ways we've discussed with Airbus that this can go. The short route is to be able to give the crews on our aircraft advisory information which will come from three main sources, one of which is satellite-based information, the second will be modeling based on weather information and predicting the weather with ash in it and the third one will be from onboard detection. This will be advisory information to assist the crew in making the right decisions when they are flying near volcanic ash. The longer routes to get this into the integrated systems and avionics packages will be a much longer process.
QUEST: Do you still now believe that the reaction back in 2010 was an overreaction?
DAVIES: Well, we've come a long way since 2010 and the techniques that we have now with as I say satellite-based technology, we can now take a look back because all the data is there. When we do that, we find that less than 2 percent of the airspace had levels of contamination in that would actually do harm to our aircraft. That's with the benefit of hindsight. What we're trying to do is make sure that in the future our passengers never have to go through this again.
QUEST: And, finally, can you remember -- because I can't -- how to pronounce the name of the volcano?
QUEST: Eyjafjallajoekull. Thank you very much indeed.
QUEST: I know, I -
DAVIES: Thank you very much.
QUEST: -- didn't go that close, but we always knew it as E15, E being the beginning letter and 15 being the number of letters afterwards. But there you are, Ian (Inaudible) to remind us how it's pronounced. After the break, Motorola unveils its low-cost smart phone. The firm hopes the Moto G will prove popular in emerging markets and those on a budget in the United States.
QUEST: The Federal Reserve vice chair Janet Yellen will speak before the Senate tomorrow. It's in part of her confirmation process to be the next chairman of the Federal Reserve. Well, the text of her testimony has now been released, and of course we're all pouring over it in great detail because we're trying to see any evidence of the so-called 'dovishness' of Janet Yellen. Will she be prepared to continue the monetary policy and commutative stance longer than others to try to get unemployment down, even at the cost of inflation? That's been the thought and the fear of somebody like Dr. Yellen. Well, she says the last six years in her words have been 'challenging,' that according to the testimony, but that the economy is much stronger and continues to improve.
Amongst the main points that she said, unemployment is still too high, inflation's been running below the Federal Reserve's goal of 2 percent, and the Fed is still using its monetary tools to promote strong recovery. A robust recovery will allow the Fed to ease its reliance on those tools like asset purchases, otherwise known as buying of bonds. That's the prepared testimony. We'll watch very closely in the questioning of Janet Yellen tomorrow, because it's really in the questioning that they'll get to grips with these fears about or thoughts about her possible policies.
Motorola has launched a new low-cost smartphone, and if you join me over here you'll see exactly the issue. This is a very interesting issue because the Moto G has been targeted towards customers in emerging markets and those of budget buyers in mature markets in Western countries. So, let's give you an example. You're talking about a $179 say in the United States for the Moto G. Now, that's a third of the iPhone 5C, and even considerably cheaper than the Galaxy S4 Mini. What is perhaps most interesting about it, Motorola didn't unveil the Moto G in the United States, but instead in Brazil from where Shasta Darlington reports.
SHASTA DARLINGTON, INTERNATIONAL CORRESPONDENT FOR CNN: The global unveiling of Motorola's new low-cost smartphone.
DENNIS WOODSIDE, CEO, MOTOROLA: We're introducing Moto G.
DARLINGTON: In the U.S., the Moto G will cost just $179 unlocked. But that's not where they're launching it. The announcement was made in Brazil. CEO Dennis Woodside said Moto G has set its sights on the world.
WOODSIDE: And it's really designed to serve the half a billion people in the world who next year will buy a smartphone for around $200.
DARLINGTON: Many of those people are in emerging markets like Brazil, home to the six largest economy, a rising middle class and a major smartphone market. The Moto G won't be offered in the United States until January. Eventually it'll gone on sale in some 30 countries around the globe. But here in Brazil, sales start now. The price starts at R$649 or about $280. That compares to $600 for the cheapest new iPhone without a contract. Industry observers at the launch said it should be a hot ticket heading into Christmas.
RAFAEL RIGUES, EXECUTIVE EDITOR, PCWORLD: And we have no products that offer the same features at this price level.
DARLINGTON: Those features include a big high resolution screen, the latest Android software and long-life battery.
WOODSIDE: So I have all these applications open now.
WOODSIDE: They're all running in parallels -- about eight applications. Google Earth which is very computational-intensive, you know, it's running Google Earth incredibly smoothly.
DARLINGTON: In the U.S., Motorola, the phone maker owned by Google, has its eye on the prepaid market, especially students and children. Noticeably absent from Moto G's rollout -- China, the world's biggest market for low-end mobile phones but a country that blocks many of those Google services needed to make Moto G the new smartphone of choice. Shasta Darlington, CNN Sao Paulo.
QUEST: A profitable moment on airlines.
QUEST: It is perhaps a misnomer to call it a "Profitable Moment" if we are discussing airlines and how they have made such little money. So, the announcement that American and U.S. Airways want to come together, yes, to be sure, does create four behemoths -- three of which you see here -- American, Delta, United and of course Southwest which merged with AirTran here in the United States. But really, it's the little airlines, those like Virgin America that are most worried because with the power and strength and resources of these (precarious) -- well smaller airlines -- stand to be frankly 'nutcrackered.' And in this industry, it's difficult to keep profitability. But there is very little alternative because these big carriers are competing against Etihad, Qatar and Emerest of the Gulf -- the big, global airlines. And only today we saw Emerest's results -- $600 million profit in their latest results. It's a very difficult environment for the aviation industry, and frankly, it's an industry that's never made much money. And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you tomorrow.