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Record Anti-Trust Fine; Rate-Rigging Schemes; Down Day for Banks; Dow Down; European Markets Lower; Ukraine Crisis; Protests Continue in Kiev; Next for Ukraine; Mexico Missing Truck with Radioactive Cargo; "Good Progress" at Fukushima Plant; OPEC Meeting

Aired December 4, 2013 - 16:00   ET



MAX FOSTER, HOST: The Wall Street rally is wobbling. The closing bell marks the end of a choppy session indeed. It is Wednesday, December the 4th.

Shocked and appalled. The EU's rate-rigging probe leads to record fines for banks.

Signs of change. One of Ukraine's top billionaires tells me the future is European.

And the rise of the machines. Google takes Android to a whole new level.

I'm Max Foster, and this is QUEST MEANS BUSINESS.

Hello to you. Now, the European Commission has fined six financial institutions a total of $2.3 billion in a record anti-trust penalty. Some of the world's most powerful banks have -- were found to have conspired together in illegal cartels to manipulate interest rates for their own benefit. The EU Competition Commissioner, Joaquin Almunia, says he was shocked by the bank's actions.


JOAQUIN ALMUNIA, EU COMPETITION COMMISSIONER: To work properly and bring benefits to the real economy, transparency and healthy competition are crucial. Obviously, the picture may look very different if derivatives markets are rigged to benefit the private interest of a few because financial institutions decide to collude instead of competing.

These decisions taken today provide appalling examples of such misconduct, and if you had the opportunity to look at some of the conversations through internet of some of the traders involved in these cartel decisions, you would be appalled.


FOSTER: Well, like any good cartel, there's a cast of characters. First, there's Dirty Half Dozen. These six banks took the fall. Deutsche Bank was hit with the biggest penalty, nearly one point -- well, nearly $1 billion, actually, for manipulating eurobor.

Societe Generale, about $600 million. RBS around $530 million. JPMorgan, CitiGroup, and the British broker RP Martin were also fined.

Then there were the banks who blew the whistle: Barclays and UBS have already been penalized by regulators in the UK and the US for libor rigging. They escaped a new combined penalty of more than $4 billion by cooperating with the EU commission on the investigation.

Finally, there are the banks who lived to fight another day. The European Commission is still going after HSBC and Credit Agricole on related charges. HSBC told us it intends to defend itself vigorously.

William Black is a professor of economics and law and former director of the Institute for Fraud Prevention. He joins me live from Kansas City in Missouri. Thank you very much, indeed, for joining us. If you're able --


FOSTER: -- to explain to us, how actually are these deals done in a cartel like this? Is it directors sitting around a table? How does it work?

BLACK: It worked in two different ways, and it worked in multiple markets. So, the two different ways are one, they rigged libor and other indices, like eurobor, and some Japanese indices that are used to set prices on over $300 trillion in financial products.

And the traders would figure out which price index would benefit their trade, and then they would collude with up to 13 to 15 other banks to ensure that they reported that the rate was something that it had no relationship to reality but would produce a price that would make their trade a win and would avoid losses. So, that was the first and the longest-lasting of the cartels.

The second was that once the financial crisis became acute, with Lehman Brothers' failure and such, the banks conspired -- the largest banks conspired to artificially depress libor, the London Inter-Bank Rate, with the idea of making people believe that they were healthier than they otherwise were.

And both of these things in the US context would be criminal conspiracies, but the EU doesn't criminalize this kind of behavior that they find supposedly appalling, and for some reason, they're shocked about even though everybody's known about it for many years that all of the largest banks were involved in this conspiracy.

FOSTER: It was part of the culture, wasn't it? That's what's so extraordinary here. But beyond them managing to make profits out of this, how much did it damage the financial system and people like you and me?

BLACK: Well, the -- English bankers, the London bankers, called libor the "most important price in the world," so it was their crown jewel, and they -- well, you would have to use barnyard epithets for what they did to their crown jewel. So, that was incredibly stupid and short-run thinking.

They've harmed literally tens of millions of people. Actually, they've harmed hundreds of millions of people by manipulating these rates. This is the largest cartel in terms of dollar amounts affected, of deals by four orders of magnitude. In other words, it is 10,000 times larger than any other cartel in terms of the amount -- dollar amount of instruments affected.

FOSTER: OK. Well, it's a fascinating story, complex but important, and thank you very much, indeed, for helping to break it down for us, Professor Black at the Institute for Fraud Prevention. Thank you very much, indeed.

Now, it was a down day for the banks as Deutsche Bank and Societe Generale, two of the banks punished by the EU, fell by about one percent each. HSBC and Credit Agricole also declined. Both banks are still under investigation in the libor probe.

Despite some upbeat jobs and housing numbers, stocks on Wall Street ended the day mixed. The Dow slipped 24 points. Maribel Aber joins us from the New York Stock Exchange with all the details from there. Hi there.

MARIBEL ABER, CNN BUSINESS CORRESPONDENT: Hi there, Max. Investors weighted those better-than-expected readings on private sector jobs and new home sales against a weaker-than-expected report on the service sector and didn't know what really to make of it all.

The conflicting data coming two weeks ahead of the Federal Reserve's next policy meeting, and Wall Street is really unsure what this will all end up meaning for basically the stimulus. So, we're three trading days into December now and we have yet to see a single day of gains on the Dow and the S&P.

This is historically a strong month. The S&P 500 has gained in December in 24 of the past 30 years. And while some caution can be attributed to stimulus worries, you can also pin some of it on traders just simply getting out of the game and closing their books for the year, wanting to close things out while they're already so far very ahead. Max?

FOSTER: OK, Maribel, thank you very much, indeed, for that. Now, European markets all closed lower on concerns that the Fed may scale back its stimulus efforts. The sell-off was tempered by a worse-than-expected reading on the US services sector in November.

Germany's Xetra DAX led the losses with a drop of nine tenths of one percent. Banks across Europe posted losses after the EU announced record- breaking fines for that rate-fixing that we've been talking about.

Now, Ukraine's deputy prime minister is turning to Russia for help as massive demonstrations against the government continue in Kiev. More on the political and financial crisis in Ukraine when we return.


FOSTER: Ukraine's government is casting its net far and wide as it looks for financial support as protesters remain on the streets, calling for the government to step down. Ukraine's deputy prime minister, Yuri Boiko, is in Russia trying to secure aid. Prime minister Dmitry Medvedev told Boiko that Ukraine is an important strategic partner for Russia and called for stability and order.

Meanwhile, Ukraine's president, Viktor Yanukovych is on a business trip in China. It's a move that has infuriated the opposition, but Yanukovych defends the timing of his visit.


VIKTOR YANUKOVYCH, UKRANIAN PRESIDENT (through translator): We give a lot of attention to inter-region cooperation. We think that it's inter- regional cooperation that created mechanisms that very quickly solve issues of economic relations.


FOSTER: And the United States is making its presence felt in the region as well. Assistant secretary of state Victoria Nuland is scheduled to visit Ukraine on Wednesday. Secretary of State John Kerry, however, chose to skip a trip to Kiev. Instead, the secretary will go to neighboring Moldova, which signed the EU trade agreement despite the threat of retaliation from Russia.

Meanwhile in Ukraine, the protests against the government continue. These are live pictures for you, coming to us from Kiev. Phil Black has more from the capital.


PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT (voice-over): The faces of this revolution are old and young.


BLACK: They're united in anger and determination to see President Viktor Yanukovych removed from power.

OLYA RESEY, PROTESTER: He's not for us. He is for himself.

BLACK: Olya Resey is a doctor who traveled from the west of the country to join the crowd now occupying Independence Square.

BLACK (on camera): What will happen now?

RESEY: We will win.


RESEY: We will stay until the end, and we will demand all our rights, to give us all our rights and to make our lives with freedom.

BLACK (voice-over): The protest started because the president decided not to sign agreements that would have locked Ukraine in close step with the European Union, choosing instead to improve relations with Russia.

Those protests have now evolved into a revolutionary movement demanding a change of government. Everyone here says the tipping point came when police used force against the people.

BLACK (on camera): Why have you come here today?

SERGEI KOPYL, PROTESTER: Because I can't be anymore patient about what's happening in my country.

BLACK (voice-over): Sergei Kopyl is among those who believe closer ties with Europe can bring greater democracy and prosperity to Ukraine.

KOPYL: Up to the highest level, up to President and Prime Minister, everything is corrupt, and I feel it everywhere.

BLACK: The clear view on these streets: Europe is the future and Ukraine's Soviet-era master, Moscow, remains a reminder of the dark past. Natalia Syryakova is a history professor who says she knows that better than most. "Russia has always tried to degrade and abuse Ukraine, both economically and spiritually," she says.

Behind the barricades on Independence Square, this revolution often feels like a party. The protesters say they want to achieve their goals peacefully, but they have a hard-line position: the government must go, and they don't want to negotiate. The government is equally determined to hold onto power. Confrontation may be inevitable.

Phil Black, CNN, Kiev.


FOSTER: Now, Petro Poroshenko says he's not demanding the resignation of President Yanukovych as a condition for negotiations to end the unrest. He's a former foreign minister and one of Ukraine's wealthiest individuals, having made his fortune in chocolate. I spoke to Poroshenko and asked him to describe the scene in Ukraine right now.


PETRO POROSHENKO, UKRAINIAN POLITICIAN AND BUSINESSMAN: I think this is one of the most prominent events I've ever seen in my life. When tens and tens of thousands of people under the very cold weather are standing not for rising up pensions or salaries or lowering taxes, but they're standing for the idea, the idea of European integration of their country. And I'm really proud of these people and I'm really proud of this country.

FOSTER: You didn't manage to win the no-confidence vote, though, in the government, did you? So do you really have the political support? Is what's going on behind you really representative of what people think in the country?

POROSHENKO: This is absolutely not a confidence vote. This is just breaking the possibility to launch negotiations for improving the situation for overcoming the political crisis in the country.

I think that there is absolutely not any reason for optimism for authorities, for Ukrainian government, because you see that the crisis because of this confidence vote absolutely not stop. People are still on the street, and people are still demanding the changes. That's the case.

FOSTER: I know you've talked about getting around a table and discussing this, which is probably a good solution. But you're putting conditions on those talks, aren't you? So isn't that preventing the talks from taking place? You're actually stopping progress in the negotiation.

POROSHENKO: The decision for the round table is condition number one: we should return back to Brussels. We should sign the association agreement with the European Union, and we start the process for modernizing the country, for improving the Western climate, for fighting against corruption, for doing all necessary reforms that make my country much more competitive.

FOSTER: Would you also insist on Mr. Yanukovych stepping down?

POROSHENKO: Look, there are only two possible options of solving the crisis. Either solving it by force, and I think this is very dangerous for both sides, for the government or authorities and for the people. And democratic. And the only democratic way is the election.

And I think that if we provide the changing of the government, if you provide the signing of the association agreement, we can talk about the election and the parliament, and they'll make the decision what would be a further step.

I doubt that the -- it is quite reasonable -- I doubt that it is possible that the resignation or impeachment of President Yanukovych is a precondition for negotiation. I think that would be absolutely not the real scenario for a peaceful solving of the problem we have here. We are waiting that President Yanukovych return back to Brussels and sign that agreement.


FOSTER: You're watching QUEST MEANS BUSINESS. Coming up this hour, a missing truck in Mexico and on it, a dangerous radioactive substance. We'll bring you the latest on that story and much more.


FOSTER: A truck carrying dangerous radioactive material is missing in Mexico. The truck was taken by armed robbers on Monday whilst it was transporting Cobalt-60 to a waste storage site.

The UN nuclear agency warns the cargo could be extremely dangerous if removed from its protective shielding, and an intense search is underway. Let's get the latest from Nick Parker in Mexico City. What have you managed to find out, Nick?

NICK PARKER, CNN INTERNATIONAL CORRESPONDENT: Well, information is still fairly scarce, Max, but at this stage, we understand that a multi- agency, multi-governmental task force has fanned out across seven Mexican states, desperately trying to search for this stolen lorry. Frantic efforts underway right now.

Just to give you a little bit of background in terms of how this happened, as you mentioned, the lorry was carrying a radioactive substance described as highly dangerous, extremely dangerous, in fact, called Cobalt- 60, which had been used in medical procedures in a hospital in Tijuana.

The lorry had picked up that material and was on its way to have it disposed at a depot in Estado de Mexico, when it stopped at a gas station in a town called Tepojaco, which is something like 45 minutes drive from Mexico City.

At that point, at about 1:00 AM, the drivers say that they were approached by two gunmen who proceeded to hijack the lorry. And one crucial factor in all of this, though, is that Mexican nuclear officials tell us that they do not think the gunmen had any idea of the truck's toxic payload, that they had no idea that it was carrying this kind of nuclear material.

But despite that, obviously, the Mexican government had to notify the IAEA, and they have offered to assist in this frantic investigation, Max.

FOSTER: How do they manage to make contact with them? Presumably, the priority is to make sure that they don't tamper with this load. So, is there some sort of information campaign going out to try to grab their attention?

PARKER: Information still very scarce at the moment. We've been speaking to the Interior Ministry for most of the day, and they've been referring everything to these nuclear officials. And certainly at this stage, they're very wary about the kind of information they're giving out. This is pretty much most of what we know.

But there's no kind of hotline or help line for these people to get in contact, and I guess they assume that that's not really going to be an option for these thieves.

In terms of the threat that it poses to the general public, this is a highly dangerous material. It has a half-life of five years. And it does emit gamma rays, which can be absorbed into the blood and tissue.

But very importantly, nuclear officials have made it very clear that the material was pretty well sealed inside of its carrying container. So they think that it would be difficult for these thieves to try and open it. So at this stage, there's not a widespread health alert, Max.

FOSTER: But that's got to be the big concern, hasn't it? Because if they've stolen it, they're going to want to know what they've stolen, and they're going to try to get into it, and that in itself, will that cause a major problem?

PARKER: It could indeed. Basically what they're saying is that they think it'll be difficult to open it, but not impossible. And one possible motive for stealing this truck in the first place was that they were actually trying to steal what the truck was carrying in terms of waste and spare parts and things like that.

So certainly, it is a possibility the thieves could try and disassemble the container, which would lead to some kind of risk, obviously. But they do maintain that's quite a remote possibility. All the same, the task force is carrying radioactive detection equipment, as you might imagine, Max.

FOSTER: Nick, thank you very much, indeed. Back with you to get more information on that frightening situation. UN nuclear inspectors are in Japan checking in on the cleanup at the Fukushima plant there. It is the first visit since April, and they say progress is being made.

The accident, which followed the tsunami disaster in 2011, forced 160,000 people to flee. Since then, 8,000 people have worked on the cleanup, and over $100 billion has been spent. The decommissioning process may take up to 40 years. Anna Coren reports from Fukushima.


ANNA COREN, CNN INTERNATONAL CORRESPONDENT (voice-over): Once a vibrant community, now a ghost town as we drive towards the epicenter of Japan's worst nuclear disaster. A checkpoint signals the exclusion zone, a no-man's land that was once home to 60,000 people.

It was the deadly earthquake and tsunami of 2011 that triggered the meltdowns at the Fukushima Daichi nuclear power plant, still a radioactive site undergoing a highly-dangerous cleanup by more than 3,500 diligent workers. The plant operator, TEPCO, invited us for an inspection, insisting that progress is being made.

Wearing protective clothing, no skin exposed, we head to reactor four. It suffered a massive hydrogen explosion during the crisis, but it was the least damaged of all four reactors because it was undergoing maintenance and wasn't operational when the earthquake and tsunami hit.

COREN (on camera): Well, this is what TEPCO is calling a milestone, using this enormous crane to move the fuel rods in the pool behind me here at reactor four, where they are being transported to the cooling pool next- door. This is a delicate process and one that will take at least a year to complete.

COREN (voice-over): But while this may be TEPCO's first success story, reactors one, two, and three are proving to be a nightmare. Radiation levels are dangerously high. We can't go anywhere near them. And the company has yet to come up with a concrete plan to close them down.

"There are big challenges ahead, but we have to do it," says TEPCO manager Kenichiro Matsui. "It's our mission, and we won't give up."

The other big problem facing TEPCO is contaminated water. Because the plant sits at the base of mountains, a buildup of ground water is getting into the buildings. About 400 tons is collected each day and stored in these newly-built tanks, some of which had been leaking. There are also fears this radioactive water is seeping into the ocean.

The International Atomic Energy Agency says the process is very complex, but believes the operators have achieved good progress.

COREN (on camera): After more than two and a half years of being criticized for the way they've handled this crisis, TEPCO is finally being praised for its efforts and progress. But it still has an enormous job ahead of it. Officials believe this plant won't be decommissioned for another 40 years.

COREN (voice-over): While all of Japan's nuclear reactors have been shut down, there is now a political push to get them working again to reduce energy costs and make Japan competitive. But for a country that came so close to a nuclear catastrophe, that future remains uncertain.

Anna Coren, CNN, Fukushima, Japan.


FOSTER: Now, the world's major oil producers met in Vienna today. They agreed to keep production targets unchanged. John Defterios looks at the challenges ahead for OPEC if Iran returns to the market next year.


JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: OPEC ministers in Vienna did what most of them promised to do before the meeting, and that is leave their production output exactly where it is at 30 million barrels a day.

And why not? Oil prices have averaged more than $100 a barrel for North Sea Brent for a record three years running, meaning over a trillion dollars a year in export revenues for OPEC producers, mainly here in the Gulf.

There is no immediate challenge for OPEC, but Iraq's rising production and Iran's six-month agreement with the P5+1, could present a bigger obstacle in 2014. Iran's oil minister suggests that he republic could get back up to 4 million barrels a day if sanctions are lifted. That would mean that the group's biggest producer, Saudi Arabia, may need to trim its sales.

Meanwhile, diplomacy is moving quickly. Here in the Gulf Wednesday, Iran's foreign minister, Mohammad Javad Zarif, met with the president of the UAE, Khalifa bin Zayed Al Nahyan.

ROB SMITH, FACTS GLOBAL ENERGY: If everything is cleared on Iran's side, I think they're prepared within about a 90-day period to probably get back up to over 3 million barrels per day of oil production. And it's a little bit contentious, but Saudi will be the ones who will be forced to cut back if they want to continue to prop up oil prices.

DEFTERIOS: OPEC has its own internal politics to wrestle with, but at the same time, it is competing with added production from North America. At this stage, OPEC is suggesting that the shale oil boom will begin to tail off by 2025.

But this is not factoring in additional finds in North America, Latin America, or even Africa. At the meeting in Vienna, ministers could push that challenge to a later date and not deal with it right now.

John Defterios, CNN, Abu Dhabi.


FOSTER: Up next, a defining challenge of our time. President Obama reveals a greater threat than the fiscal deficit.


FOSTER: Welcome back, I'm Max Foster. These are the top news headlines we're following for you this hour.

A senior commander in the Hezbollah Shiite militant group has been killed outside his home in Beirut, Lebanon. The group blamed Israel, although Israel denies it. A little-known Sunni organization has claimed responsibility for his death on Twitter.

Demonstrations continue in Ukraine's capital. Anti-government protesters are occupying Kiev's Independence Square with tents and barricades. Ukraine's Interior Ministry says no force will be used against he crowds as long as they remain peaceful.

911 recordings from the Sandy Hook Elementary School massacre have been released. CNN is reviewing the material and deciding which excerpts are suitable for our broadcast, but 20 children and 6 adults were killed at the school in Connecticut last year.

An urgent search is underway in Mexico for a stolen truck carrying dangerous cargo. Onboard, radioactive Cobalt-60, used for medical treatment. But experts say the isotope material can be used as well to make so-called dirty bombs. The truck was heading to a radioactive waste storage center when it was stolen near Mexico City.

A Los Angeles County coroner's office has released the official causes of death for actor Paul Walker and his friend, Roger Rodas. The two died in a weekend car crash. Walker, who was the passenger, died of traumatic internal injuries. Rodas, who was driving, died of multiple traumatic injuries. Toxicology results could take at least six weeks.

Earlier today President Obama spoke about twin problems threatening the American dream. He addressed the challenges of growing income inequality and shrinking economic mobility. Mr. Obama took a queue from the Vatican.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: As you may have seen just last week the Pope himself spoke about this at eloquent length. "How can it be," he wrote "that it's not a news item when an elderly homeless person dies of exposure but it is news when the stock market loses two points." This increasing inequality is most pronounced in our country. And it challenges the very essence of who we are as a people.


FOSTER: Now in 100 cities across America from New York to L.A., fast food workers plan to take to the streets on Thursday to demand higher wages and the right to unionize. Star Buck, McDonald's, Wendy's and other chains want what they call a living wage of $15. Alison Kosik spoke to some of those who are struggling to make ends meet.


EDUARDO SHOY, FAST FOOD EMPLOYEE: Living on $7.25, you cannot do it.

ALISON KOSIK, BUSINESS CORRESPONDENT FOR CNN: This is what minimum wage looks and sounds like.

SHENITA SCOTT, FAST FOOD EMPLOYEE: I'd rather sacrifice my meal, my husband rather sacrifice his meal to make sure my kids can have what they need.

KOSIK: They are fast food workers struggling every day.

SHOY: How can you live on $7.25? You couldn't even pay your apartment, buy food. If you have a family of maybe zero you could support yourself. But if you have a family -- two kids, a wife -- where you live at? Underneath the Williamsburg bridge? It's not right.

KOSIK: The median pay for fast food workers is $9.00 an hour or $18,720 a year.

DORIAN WARREN, ASSISTANT PROFESSOR, COLUMBIA UNIVERSITY: Workers are taking these jobs because they are desperate, and in an economy that is still not creating enough work for people who want to go to work and still not creating enough middle class jobs.

KOSIK: Eduardo Shoy lost his job a few years ago. Now 58 with two children headed to college, he works at Kentucky Fried Chicken in New York earning $7.25 an hour. He also works a night shift as a forklift operator at Kennedy Airport. He moved his family to another state and is trying to sell his house.

SHOY: For me, it's tough, real tough. It's -- I can't do none of the things that I used to do. I used to able to pay my mortgage, able to pay my car payment, able to take my family out to dinner. That, we had to cut it out. You know, we had to sacrifice a lot of stuff.

Female: Eduardo will take to the streets of New York this Thursday to take part in the strike which demands that the federal minimum wage be raised to $15 per hour. The protests have expanded since last November when 200 fast food workers staged a one-day strike at more than 20 restaurants in New York City. In this past July and August, there were strikes by fast food workers in states across the country.

SHOY: Once the nation is hearing it, you know, we've been striking all over the country so people are getting an understanding -- they're really seeing the light of what's going on.

KOSIK: But the industry says it has created jobs in this difficult economy. In response to the strike, the National Restaurant Association said in a statement, "Dramatic increases in a starting wage such as those called for in these rallies will challenge that job growth history, increase prices for restaurant meals, especially in the value segments, and lead to fewer jobs created."

WARREN: Half of all Americans make $26,000 a year or less so this fast food worker movement possibly will do the same thing that the industrial workers movement did to our economy in the 1930s and 1940s.

KOSIK: I'm Alison Kosik in New York.


FOSTER: And coming up, Britain is selling its stake in Eurostar, a movement that could reap millions of pounds for the government.


FOSTER: Time for today's "Business Traveller" update, and the British government is selling its 40 percent stake in Eurostar, the company which runs trains through the Channel Tunnel. The sale could generate around $33 billion for the public purse. It's part of a privatization program aimed at raising money to invest in Britain's infrastructure. Eurostar is in the midst of a big expansion. A new kind of hotel built specifically for the millennial traveler as well, complete with complimentary Wi-Fi and bars which double as business centers. Richard reports on what may be the future of travel.


RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: The Grand Hotel. And all too often hotels of a certain age seem slow to change. Yet with millennials making up to 50 percent of bookings, it's something that can no longer be put off. Starwood rose to the challenge. In 2008 Aloft was launched.

BRIAN MCGUINNESS, GLOBAL BRAND LEADER, ALOFT HOTELS: This is the next generation of hotels, and it's built for the millennial traveler. So our research indicated that they wanted open floor plans, so loft-like spaces so that they can congregate, they can work as groups. Right from the beginning is our front desk is right in the center of the lobby. That traditional desk you found on the back wall, we pulled it right out. We made this sort of like the DJ booth if you will. Or WXYZ Bar -- that's closed -- those are (carriages) there. But in the evening those all swing open and this becomes a dynamic bar scene.

QUEST: Hotels have always had bars and restaurants.

MCGUINNESS: But they weren't integrated. The millennial traveler wants to be connected, they want to be in social spaces, they want to be in the lobby. Really at Starwood we think about the psychographic. What are the reading? What are they listening to? And what are they doing in their spare time that actually translates into their work life? Millennials work interesting hours, so they may come in to work at 10, 11, noon or 1 in the afternoon and work until 1 in the morning. And so a traditional restaurant concept certainly didn't work for the millennial traveler or that mindset. And so what we created was a grab-and-go cafe.

QUEST: Brian, we're in the elevator. What on earth gets with this?

MCGUINNESS: They're in the elevator, why not have music, why not have some interesting light and certainly an interesting floor?

QUEST: I can't argue with success, can I?

MCGUINNESS: You can't. You know what, 75 hotels now will be 100 by the end of next year in just a five-year period. Here we'll take a look at one of our guest rooms. High speed internet access complimentary, so there are access points in all of our guest rooms -- the ability for them to actually hook up to the television which is important. We have Apple TV here in Cupertino on all of our televisions.

QUEST: It's not just the bricks and mortar that's changing.

MCGUINNESS: We are learning every day from millennials. They are rewriting the rules of yield management. Certainly they're booking mobile -- it used to be 3, 4, 5, 6, 10 days out. Now we're seeing that it can be early as same day or within 24 hours off of a mobile device. So, yes, as we start to think about how we operate our hotels, it is very different for the new level of travel that we're seeing out of millennials.

QUEST: That changes at Aloft will slowly start filtering out across all Starwood brands. No one can afford to be left behind. Marriott often (inaudible) more traditional is now changing fast.

BILL MARRIOTT, EXECUTIVE CHAIRMAN, MARRIOTT INTERNATIONAL: We're on the leading edge now with a lot of new designs for all of our brands and we'll be ready to meet the millennials. They're over 50 percent of our business now. They spend less time in the room, and when they're in the room, they work on the bed, they work in their chair, they work on their computer, the move around the room, they don't want big desks, they want open closets. Half the time they don't even unpack their suitcase, so it's a totally different lifestyle, totally different way of traveling.

QUEST: Marriott's answer is Moxy. It's named millennials. The brand will open up next year.

ARNE SORENSON, PRESIDENT AND CEO, MARRIOTT INTERNATIONAL: It clearly is the future and inevitably that's aging demographics, right? And so we've listened to our customers, and increasingly it's about our millennials who work for us too who say, 'You know what, we see things that we think we'd like as travelers and like to change.' The expectations get higher and higher on quality of food -- it's not enough for me to have a clean room. I want a room that turns me on in some way.

These are the kinds of changes that have to be worked through. It's easier with a new brand like Edition or Moxy or Autograph. It's harder with an existing portfolio of hundreds or thousands of hotels. But it's all happening. It's not your father's Marriott. Time change.


FOSTER: Richard's reporting there. Now Benjamin Ginsberg is anything but a millennial traveler but he's certainly making his mark. Ginsberg is an American Rabbi at the heart of a case that's reached the U.S. Supreme Court over the rights of airline frequent flyers. Northwest Airlines kicked him out of the incentive program saying he abused his privileges by complaining too much. As Joe Johns explains it is a case with implications far beyond the departure lounge.


JOE JOHNS, CNN CORRESPONDENT: It's been said that Rabbi Benjamin Ginsberg spends more time in the air than on the ground, taking his teaching of the Torah to children coast to coast and overseas. But he lost faith in his frequent flyer club when Northwest Airlines dumped him from its rewards program. Why? Because the airline said he complained too much.

BINYOMIN GINSBERG, RABBI: I was sitting with my wife in the car and we both started laughing thinking it was a prank.

JOHNS: Turns out Northwest was serious. They said he was abusing the program to get extra perks. He says his complaints were all on the up and up.

GINSBERG: It wasn't the nature that the peanuts were too salty or they served Pepsi products versus Coke products. You know, they were legitimate concerns and they were expressed in a very, very polite and cordial way.

JOHNS: It's a David and Goliath story that boils down to this -- Ginsberg sued in State Court claiming the airline acted in bad faith. But Northwest had a contract that said it could do anything it wanted and rules put in place during airline deregulation in the late 70s said Northwest could not be sued over services. Northwest attorney Paul Clement argued airlines should not be forced to haggle over such things in court. " . . . The reason is you can't run a national, let alone an international airline, if every one of your judgments about taking an unruly passenger off or taking out an abusive customer is going to be second-guessed by a jury . . .."

A very unusual case to make it all the way to the Supreme Court, but it may be bigger than it looks. Frequent flyer programs have partners -- lots of hotels, rental car companies and many other brands that feed into the programs. But Gary Leff who blogs about frequent flyer programs says lawsuits are rare. What's more common is customer confusion.

GARY LEFF, CO FOUNDER, MILEPOINT.COM: think the biggest drawback comes from misperception of what -- exactly what's being offered by the programs where the programs themselves -- frequent flyer programs -- have become very complicated.

JOHNS: Members of the court appeared split over the case. A ruling is expected by the spring. Joe Johns, CNN Washington.


FOSTER: Well on the subject of travel, it's not worth traveling in Europe or America according to Jenny Harrison. She's got a very pessimistic forecast for you.

JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Well, you know, Max, it's good to be forewarned about these things, but you're right actually. If you don't have to travel, I really would say stay indoors over the next couple of days. It hasn't been too bad in Europe the last few hours. In fact, some pretty good clear skies across central and southern areas. But you see this mass here across the northwest. This holding the arrival of this next very intense area of low pressure. This is the track we expect it to take if you go Wednesday on into Thursday, and Friday it's already made its presence known across the outer reaches of Scotland. But some very, very strong winds with this system. In fact, gusts likely over 100 kilometers an hour, all these areas in red are obviously where we're going to see the strongest winds. And I've just put this together to show you the timeframe as we go through Wednesday night into Thursday. Pause it at this point because this is Thursday early morning hours. The timeframe given is the central eastern time. But look at this Glasgow -- a wind gust of 104 kilometers an hour. Pause it again later in the day on Thursday, 104 in Copenhagen and you'll notice these really high numbers all the way around this area of high pressure.

So we've got wind gusts -- 97 in Amsterdam and then again as we continue into Friday early morning first thing there. Wind gusts are expected around 86 kilometers an hour in Stockholm. And you just see these really high numbers across northern Europe -- Warsaw, Berlin, generally these winds are getting up to 80 or more. Eighty-eight in Warsaw. And that is by Friday lunch time. So this system is really going to hang around through Thursday and Friday into the first part of Saturday.

Now, as well as bringing these strong dangerous winds as well, that of course could cause huge delays at the airport but also very dangerous conditions on the ground if you're driving. We have got to deal with this storm surge because (inaudible) of the wind (inaudible) funnel on this water through the North Sea along these low-lying coasts, areas around Denmark, right the way across into the Netherlands as well, around coastal areas of Norway and possibly even around towards Sweden as well. And of course it's bringing with it very heavy amounts of rain and some widespread snow.

It's a very, very wintery picture for the next couple of days. So, certainly the warnings are out. The snow's going to become quite widespread across much of central and northern areas as you can see. When it comes to delays, expect lots of those but there might be cancellations as well, particularly on Thursday for Stockholm, Copenhagen, Glasgow and Amsterdam literally just to name a few. You can see the wind delays really beginning to kick in throughout Thursday afternoon and evening as to all the major airports. Long delays -- Copenhagen 90 minutes with snow coming in as well. So blizzard-like conditions for some places such as Stockholm and Glasgow and Amsterdam as well not to be left off the list.

Then we head across the United States. These are the current temperatures -- -13 in Denver right now, it's -26 in Dallas. It feels even colder when you factor in the wind. Temperatures are going to stay well below the average for the next few days. And where we have this dividing line between the two -- look at the temperatures, -19 in Calgary, we've got this ice to contend with. Again, long delays at the airports, very, very dangerous conditions on the road. So we'll keep you well updated, Max, in the hours ahead. But you're right, if you don't have to go out and be on the road, I really would stay indoors.

FOSTER: OK, Jenny, thank you very much indeed. Google is working on a whole new type of Android. It's putting money and its best people into a project all about robots.


FOSTER: The man behind Google's android projects is moving on to the real thing. The firm has acquired seven technology companies over the past year and it's planning to use them to build the next generation of advanced robots. Andy Rubin the executive who's been the driving force behind Android software is in charge. Now robotics might sound like science fiction.


Male, EXCERPT FROM MOVIE: Why don't you just hand the world over on a silver platter?

Female, EXCERPT FROM MOVIE: Maybe we did. We are on the eve of the largest robotic distribution in history. There'll be one robot to every five humans.


FOSTER: But Google robotics will focus on opportunities in the manufacturing and logistics markets. The company's Googlebot specializes in robotics and artificial intelligence. One of the firms called Meka makes humanoid robots and robot arms. Rubin plans to purchase small companies in order to build a mobile and dexterous robot. The idea of robots playing an integral part of daily life seems rather far out yet the future may be closer than you might think. Major companies develop products and services that now operate sans humans. Peugeot's driverless cars have been approved for use in more than one U.S. state. The engineer behind the project says that his self-driving vehicle aims to "help prevent traffic accidents, free up people's time and reduce carbon emissions by fundamentally changing car use." Amazon announced earlier this week that drone deliveries are their future. The online mega retailer's prime air service would use unmanned opti-copters initially for products under 2.3 kilograms. That accounts for nearly 90 percent of Amazon's offerings.

And (inaudible) flying pepperoni. The Domino's franchises here in the U.K. has developed a drone capable of delivering pizzas. While the DomiCopter idea has been shot down in the U.S., the concept promoted a flurry of e-mails. Erik Brynjolfsson says there's bounty to be had from new robot technology. He's a management professor MIT and I spoke to him earlier via Skype from Cambridge, Massachusetts. He told me we're a turning point in the relationship between man and machine.


ERIK BRYNJOLFSSON, PROFESSOR OF MANAGEMENT, MIT SLOAN SCHOOL OF MANAGEMENT: We're at an inflection point now I think where robots are beginning to do things that could never be done before that only humans could do, and it's not just Google but a lot of companies are seeing that opportunity and moving forward to develop some technologies in all sorts of different industries.

FOSTER: We like the idea that we have robots going around the house and doing all of our work, but this is generally not about a consumer market, is it? It tends to be business to business.

BRYNJOLFSSON: Well, that's bulk of robotics is used in industry and business, behind the scenes, not in households. And it will be that way going forward.

FOSTER: And do you think that's what Google will be looking at?

BRYNJOLFSSON: Yes, from what I understand, Google's focus is in some of the business applications, manufacturing applications. Of course they have also developed that self-driving car which would have all sorts of applications for individual consumers as well.

FOSTER: Is this about making things cheaper in a very simple sense? Or is it about taking human error out of processes so there are less mistakes?

BRYNJOLFSSON: It's both of those things. There's certainly some major cost savings in a lot of areas. But it's also true that you can get a lot more precision in a lot of applications by having robots do the jobs. So you can reinvent the production process to get much finer levers of precision.

FOSTER: Do you worry about it at all?

BRYNJOLFSSON: Yes, actually I do worry about it. I think that mostly this is good news. We're going to have vastly more wealth and there will be bounty, but there's no guarantee that bounty's going to be evenly distributed. It's entirely possible that there'll be some people who end up being big winners and a lot of other people who are put out of work. And so the big task before us is not just to move the technology forward but also to reinvent our institutions and organizations so that we get shared prosperity.

FOSTER: It will cost certain jobs, won't it? But presumably it will create others because you're going to need an army of humans to support this army of robots.

BRYNJOLFSSON: It will. It'll -- every technology creates jobs and every technology destroys jobs. Recently we've been destroying jobs at a faster rate than we've been creating them and we need to work harder to get the creation side keeping up.

FOSTER: A lot of people worry about science fiction and robots potentially taking on their own personalities and making their own decisions. Presumably we're a very long way away from that?

BRYNJOLFSSON: Yes, I think that is not an immediate or even medium term thing that we need to worry about. I think the economic disruption is much more real and that's where we should be focusing.

FOSTER: And are you surprised at how quickly things are developing because a lot of these ideas -- Amazon for example, Google, we find out about them after they've been worked on for some time. Actually we're quite far ahead on this, aren't we?

BRYNJOLFSSON: Well, I have to confess I am surprised. I make it my business here at the MIT Center for Digital Business working with Andrew McAfee to keep on top of technology trends, and I always try to be on the cutting edge, but to be honest, these things happen even faster -- they surprise even me. A few years ago, I was talking to my students about how driving a car (AUDIO GAP) when we saw the self-driving car. Now with what Google is doing, what Amazon is doing, it's all happening faster than even the experts predicted.


FOSTER: That is Brynjolfsson speaking to me earlier and trying to get his head around what the future holds. We'll be back with more "Quest Means Business" after this short break.


FOSTER: Looking at pictures of a Young Queen Elizabeth as you've never seen her. Fascinating photographs show the teenage royal and her late sister Princess Margaret in Panto, a particularly British tradition. Here they are on stage in (Chris' Productions major) in second World War. The shows include Sleeping Beauty, Aladdin and Cinderella. And in 1941 then-Princess Elizabeth plays Prince Florizel in Cinderella with her younger sister in the lead role. In Aladdin, Princess Elizabeth on the left performed the titular and male role. Her sister took to the stage as Princess Roxanna during the festivities of 1943, and the uniquely British (inaudible) shows were performed in front of select audiences at Windsor Castle. A scrapbook of these images from a private collection are being auctioned off in England next week and are expected to fetch thousands of pounds. That is "Quest Means Business." Thank you for watching. I'm Max Foster in London.