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Quest Means Business

Losing Faith in Euro; BP's CEO: Oil Spill `A Drop in the Ocean'

Aired May 14, 2010 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JOHN DEFTERIOS, HOST, QUEST MEANS BUSINESS: Losing faith in the euro, the single currency crumbles, stock markets take a beating as well.

Just a drop in the ocean, BP's chief executive sparks controversy in the Gulf.

Adobe Systems declares its love for Apple, but Steve Jobs plays hard to get.

I'm John Defterios in for Richard Quest. And this is QUEST MEANS BUSINESS.

Good evening.

European stock markets headed into the weekend on a very sour note. In a week that began with EU leaders saying they had guaranteed the stability of the Euro Zone, the survival of the single currency block is now being openly questioned. Right across Europe stock markets fell like a stone in this session. Let's start with Spain. The IBEX ended down more than 6.5 percent. Official figures showed Spain's underlying inflation rate turned negative in April for the first time on record. That is called deflation.

Italy's Midtel (ph) sank 5.25 percent and shares in Portugal were also sharply lower and that is built into the other markets as well. Look at France down 4.5 percent. The Xetra DAX down better than 3 percent, as well as the FTSE 100.

And market watchers were lining up today to cast doubt on the stability of the euro and the economies that rely on it. And that mood is spreading all the way across the Atlantic, yet again. Let's take a look at the Dow industrials. Down sharply. Down 1.75 percent, that is near the low for the day. Down 191.25 points. Now hovering above 10,500, at 10,589. In a moment Gerard Lyons from Standard Charter Bank, who argues the very survival of the Euro Zone is now in question.

But let's get an update on everything that transpired through the day. A very busy day, it all started with a euro at an 18-month low. Let's bring in Jim Boulden for the latest on that--JB.

JIM BOULDEN, CNN INT'L. CORRESPONDENT: Busy day and busy week, John.

Certainly the Euro Zone is under severe pressure tonight as the consequences of the financial crisis create this toxic mix. In one country after another governments have run up unsustainable debts and now they've realized it is time to exercise some discipline. Traders are worried for two reasons, one that budget cuts could deal a blow to economic growth and of course, company profits. And in any case, it may not be enough to fix the debt problems leaving countries still over borrowed and then back into recession.

As John said, the euro is plunging to new lows, this session it crashed through the $1.24 level. You cans see it there, $1.2356. That is the lowest it has been since the collapse of Lehman Brothers in September 2008. Right now it has picked up slightly trading just above $1.24.

But let's look at stock markets. Of course, it has been an incredible week. Banking shares lead the losses this session. The sector plunged right around the region. Barclays here in the U.K., down more than 6 percent; Deutsche Bank and Frankfurt down more than 4 percent. Societe Generale, down nearly 8.5 percent; Santander, in Spain, down nearly 9 percent, that is just today. Now, despite this brutal session, believe it or not most of the main markets actually managed to post a weekly gain. That is partly thanks to the euphoria earlier in the week. You remember that incredible Monday after that $1-trillion crisis package was pledged. How easily, though, traders seem to have rushed to the side.

Well, here is where some of them are putting their money instead; gold, another record high this session. It came within a few cents of $1,250 an ounce. It has come back a bit now to about $1,225 an ounce, John.

DEFTERIOS: Yes, they broke that 1,000 euro barrier, which was symbolic today for gold, for the first time.

I saw a report late in the day coming out from the IMF basically saying that even though the G8 economies are making these great efforts to bring on their debt, it is going to go from 6.7 percent, globally, in terms of the debt right now, to only 6 percent in 2010. They are suggesting to jack up taxes, which is the opposite thing many businessmen and economists are saying to keep growth going in Europe.

BOULDEN: Yes, the IMF says they are not cutting their deficits enough. And some of these countries are actually seeing an increase this year. And they want to see, what they said was steep rises in the value added tax, and duties. Now, as you say that is what the markets are worried about, that that will actually kill off growth. But the IMF says you must look longer term. And they must bring these deficits down and they are quite worried that the countries aren't taking it as serious as much as they need to be.

DEFTERIOS: I'm not sure about you, I'm having flashbacks to the Asian crisis and the medicine that the IMF offered back then.

BOULDEN: Yes.

DEFTERIOS: Jim Boulden, thanks very much. Well, as Jim noted, traders are fixating on cracks in the Euro Zone. And in doing so, they are bringing even more stress to bear on it. Earlier I spoke to Gerard Lyons, chief economist and group head of global research at Standard Charted Bank. He told me why investors are really climbing the wall of worry right now.

(BEGIN VIDEOTAPE)

GERARD LYONS, STANDARD CHARTERED BANK: The markets now realize that Europe, at best, faces a period of austerity, which means very weak growth. And there are still concerns about whether the packages will work, either in terms of Greece itself, in terms of ring fencing the other economies around the periphery of Europe. So, the markets are very cautious, both about growth, and basically about the debt situation that still overhangs many European countries.

DEFTERIOS: Because the reality, particularly in the Southern Mediterranean, that the high debt and deficits coupled with very high taxes, to close the deficits, is going to serve like a wet blanket over growth for the next three to five years?

Well, that's the reality. Well, the best way out of a deficit is economic growth, but if the economic growth is not there then the last thing to do is sort of dig a bigger hole. But that is what is being forced upon many of the peripheral countries. Because they're not given the freedom to actually devalue, because they are part of the Euro Zone. Therefore they continue to remain uncompetitive. And the structural change, therefore, needs to be forced upon them.

DEFTERIOS: I had and interview with Delgado, of Spain, the finance minister, she expressed confidence that she could close the deficit and has control over the regions to get it down. Is that really true? That these other markets can close the gap, despite what is happening in Greece?

LYONS: Well, the positive news is that the European Central Bank is going to have to keep rates low. And they have a potential positive, which is key to your question, is whether countries can retain the credibility of the markets and thereby keep their longer term rates low as well. Portugal, like Ireland, has tried to come out with austere but hopefully credible packages. But can they really achieve growth? The answer is no. What they're trying to do is minimize the pain. And whilst they are taking the pain, trying to keep the markets on side.

Certainly low European rates and low bond yield rates will help them. But it won't prevent the pain and the pain points to a recession in Portugal, as in Ireland, as in Greece.

DEFTERIOS: Is the reality now, Gerard, that we have the have and the have-nots. The haves who have basically the exports markets to look towards. Particularly to Asia, like Germany, France, the U.K., Northern Italy, and the others are going to struggle through this recovery?

LYONS: Well, that's right. Basically the weaker euro is good news for the export-orientated economies, particularly Germany and the Northern European economies, particularly because Asia and the emerging markets are still doing well. And it is bad news in terms of those economies that have to have austerity. The big question mark is what impact it has on confidence. The recovery in Europe, like everywhere else, depends on the fundamentals, on policy and on confidence. The fundamentals particularly for the periphery, or poor, the policy? Basically the policy cupboard is bare at the core, it is now actually tightening in terms of the periphery. That is not good for growth. And the big question mark is therefore confidence.

DEFTERIOS: Can you keep the Euro Zone together with all these members? Or do they splinter off eventually because the cracks are too deep?

LYONS: Yes-no, is the answer to that question. At some stage the Euro Zone will come to a fork in the road. At that fork, it has to decide that political union is necessary for some of the countries to remain in the Euro Zone. And they go down that fork. And the other countries who can't sort of go into a political union have to go down a different route. The question is whether we are at that fork in the road now. I feel that all the money that has been thrown probably moves us further down towards reaching that fork, but we're not yet there. At some stage Europe needs to become a political union to survive, and not all the countries currently within the Euro Zone will be able to go into that political union.

(END VIDEOTAPE)

DEFTERIOS: Bold statement there from Gerard Lyons, of Standard Chartered Bank, saying politics driving the future of the euro today. Again, the euro at an 18-month low against the dollar.

Now, let's get you up to date with the news headlines. And for that we go into the newsroom and bring in Becky Anderson.

(NEWS BREAK)

DEFTERIOS: On that story, and on that note, minute by minute more oil is gushing into the Gulf of Mexico. In the next 24 hours BP is pinning its hopes on a new approach to stemming the flow. We'll take a look at how they really plan to do it, when we come back.

(COMMERCIAL BREAK)

DEFTERIOS: Right now BP is trying a new approach to stop the leak that is pouring into the Gulf of Mexico. Undersea robots are working to put a small tube inside the fractured oil pipe. If it works the tube will siphon off the oil and channel it up to a drilling ship, above the site of the accident.

BP has said it thinks about 5,000 barrels of oil a day are spilling into the ocean. Although a new independent estimate says as much as 70,000 barrels a day. BP says the most important thing is not measuring the spill, but fixing the problem.

(BEGIN VIDEO CLIP)

DOUG SUTTLES, COO FOR EXPLORATION & PRODUCTION, BP: I understand the frustration. I mean, you can imagine I'm just as frustrated as everyone that we haven't been successful yet at either stopping it or containing it. But you know, just earlier this week Secretary Salazar and Secretary Chu visited our office in Houston, where the efforts to contain and stop the flow are underway. And they reference, that you know this is the best scientific minds in the world working on this. The best engineers, so I think we're doing-we're trying to find everything we can do here to apply the best technology and the best thinking possible.

U.S. President Barack Obama made it clear today that he's very angry. In a press conference he blasted oil executives for pointing the finger of blame at each other. He also promised to change the way the U.S. government deals with oil companies and offshore drilling.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: For too long, for a decade or more, there has been a cozy relationship between the oil companies and the federal agency that permits them to drill. Seems as if permits were too often issued based on little more than assurances of safety from the oil companies; that cannot and will not happen any more.

To borrow an old phrase, we will trust, but we will verify.

(END VIDEO CLIP)

DEFTERIOS: Once again, Barack Obama, at the White House today. David Mattingly is keeping an eye on developments from New Orleans, and he joins me now.

David, we hear that the position of the president, but let's kind of pick up on the technology first, because this is the big move by BP, to try to get down to the deep break in the pipe. What's the update in terms of the technology and if it is making progress?

DAVID MATTINGLY, CNN INT'L. CORRESPONDENT: What they're looking at is using what they're calling an insertion pipe. And that is exactly what it sounds like. They are going to insert a pipe inside that large leaking pipe at the bottom of the ocean. We saw pictures of that pipe spewing clouds of oil out into the water. They are going to insert a pipe into that, seal that pipe off, and the plan is to pump that leaking oil from that leak up to a ship waiting at the top on the water.

Now, this will collect about 80 to 85 percent of the oil if previous estimates are true, and their final solution is going to come next week when they look for a way to shut off this oil completely.

But I want to show you something. When we looked at that video, to see that pipe, we can't really get a perspective on exactly how big it is. It is a 22-inch pipe. And this wash basin is exactly that same size. So, we're seeing what kind of size of pipe they're working with, and we're seeing a cloud of oil, just spewing out of this, just constantly that has been doing this for a couple of weeks now. The first estimates were about 5,000 barrels a day. We have had some other experts looking at that video now, and they're coming out saying they think that that is just a fraction of the oil that might be leaking into the Gulf of Mexico.

So, at this point, it is really anyone's guess exactly how much oil is coming out of there. But we do know exactly how big that pipe is and we see that huge cloud coming out every single second.

DEFTERIOS: Yes, I've been following the oil markets for better than 20 years. That did not look like 5,000 barrels a day, to be candid. So, I'm not surprised at the raising of the estimate.

President Obama is in a difficult position. He wants to open up some of the tracks to drilling and now he's trying to play tough with the oil industry. Can he basically take the center line on this policy issue?

MATTINGLY: Politically, economically, so many different realms. People are looking at this event as a possible game changer. And we heard the president coming out very strong today particularly when it came to the issue of taking responsibility. He called it a ridiculous display when the three representatives from Halliburton, Transocean and BP were speaking to Congress, essentially trying to shift blame from one another. And the president said we will no longer tolerate this kind of finger pointing. There is going to be a lot of change made in how the U.S. government deals with oil companies. And we've also heard from BP. There are going to be a lot of changes with how oil companies drill for oil that deep in the ocean.

DEFTERIOS: Yes, we learned after the fact, unfortunately. David Mattingly there, joining us from New Orleans with the latest on the technology being used today.

Well, the chief executive of BP is unlikely to have won many friends with his comments that he made to a British newspaper this week. Tony Hayward told "The Guardian" the Gulf of Mexico is a very big ocean, the volume of oil and its dispersant we're putting into it is tiny in relation to the total volume of water out today.

So, controversy from Tony Hayward, basically saying right now that the challenge, of course, is dealing with the technology going underground, but that the politics is trumping everything else that is taking in the United States. Let's get somebody to comment about this, who is depending on the sea for his livelihood. This is Captain David Boola, he is a charter fishing boat captain, and he joins me now on the phone from his hometown of Venice, Louisiana.

Captain Boola, it is nice to have you on the phone. I appreciate that.

Number one, I want to see if we can clear something up. I know BP has been trying to make some payments to keep the fisherman happy. Did you receive a payment of $5,000 and then what happens after this? Did you get any guarantees that there are more funds to come?

CAPT. DAVID BOOLA, CHARTER BOAT CAPTAIN: I did receive the $5,000. I was told, you know, wait a month come back with my tax returns, my books, and all that good stuff, and they'd look at it and see what they could do. You know, I'm getting to see that. But meanwhile, you know, myself and commercial fisherman, you know, my fellow charter fisherman, you know, they wait all year for this peak season to happen. You know, you are waiting on this money that you are fixing to make, and it just got sucked from underneath us. And you know, $5,000 that would hardly even pay for what we've put into it, you know, leading up to this.

DEFTERIOS: It is indeed peak season for people like you in the Gulf of Mexico, and there in Louisiana. But this is a very, very delicate marsh system and I wanted to get your comments, too, what Tony Hayworth said today, that this is basically a drop in a very big ocean. But the marshlands, and I've been down there, are very delicate. How do you respond to the chief executive of BP?

BOOLA: Well, the big thing is, OK, yeah, it is a big gulf. And it is also a big spill. The biggest spill we've ever seen. And you know, it is not just a spill, it is a leak. It is topped and there is no end to it yet. And we have a fragile system. I mean, we have the Mississippi River Delta down here in Venice and don't get me wrong, it is a real rich estuary and it takes care of itself even with the hurricanes. But the more that oil leaks out the scarier it is getting. And if that oil gets in that marsh, there is no cleaning it. There is no fixing it. There is not a price tag on it. You know, you can't clean it. So that is what we're up against.

DEFTERIOS: OK, we'll have to leave it there, David. Thank you very much. Captain David Boola joining us from Venice, Louisiana.

Now, let's go now to the Kennedy Space Center join the coverage in Florida from our sister network, CNN domestic, of course, in the United States. This is the Space Shuttle Atlantis about to blast off on its last flight.

UNIDENTIFIED MALE: Was able to build this space station. We are going to move on and develop new vehicles that will be in their place, in their time.

JOHN ZARRELLA, CNN CORRESPONDENT: But right now, the last couple of shuttle flights-

DON LEMON, CNN ANCHOR: Hey, John, I want to jump in right now.

ZARRELLA: Don?

LEMON: Yes, I want to jump in right now, because as I said it is history in the making. Let's just listen in to the last couple of seconds and let our viewers hear the whole thing.

UNIDENTIFIED MALE: --rocket booster nozzle, gimble check. Firing chain is armed, sound suppression water system activated. T-minus, 13, 12, 11, 10, 9, 8-go for main engine start, 6, 5, 4, 3, 2, 1, and zero and lift off, Space Shuttle Atlantis, reaching the crest of its historic achievements in space.

UNIDENTIFIED MALE: Roger roll.

UNIDENTIFIED MALE: Houston is now controlling. The roll maneuver is completed, Atlantis is in a heads down position, on course for a 51.6 degree, 136 by 36 statute mile orbit. The three main engines on Atlantis have now been throttled down to 72 percent of graded thrust, as the orbiter prepares to pass through the area of maximum dynamic pressure on the vehicle in the lower atmosphere. Engines now beginning to throttle back out.

UNIDENTIFIED MALE: Atlantis you are go, at throttle up.

UNIDENTIFIED MALE: That's a go on throttle up.

UNIDENTIFIED MALE: All engines looking really good back at full throttle now. At lift off the fully fuel shuttle boosters and external tank weighted 4.5 million pounds, it has now burned half of that lift off weight in propellant. One minute, 30 seconds into the flight all three auxiliary power units that provide hydraulic power to the orbiter's systems in good shape, as are the fuel cells providing electricity to all of the systems on board. Atlantis is already 19 miles in altitude, down range from the Kennedy Space Center, 20 miles, traveling 2,500 miles per hour.

Coming up on staging the point at which the twin solid rocket boosters burn out and separate from the orbiter.

Booster separation confirmed. The onboard guidance system has done it's job as settling out any of the-

DEFTERIOS: OK, the 30 seconds and final flight of Atlantis. It first made its first voyage in 1985. Taking off there from Cape Canaveral at the Kennedy Space Center, in Florida. The Discovery and Endeavor Shuttles will also fly later this year. And then, of course, the 30-year shuttle program comes to an end. We have heard the announcement from President Barack Obama, with his future plans, of what he wants to do with the space program. It will not include the space shuttle program after 30 years of flight and about a $173 billion of investment.

We're going to take a short break. QUEST MEANS BUSINESS continues right after this.

(COMMERCIAL BREAK)

DEFTERIOS: Britain is set to clash with other members of the European Union about new rules for hedge funds. The EU wants closer scrutiny of a sector that is best known for being relatively free of rules right now. Under the EU proposal hedge funds and private equity groups would have to tell regulators much more about their activities. They may also have to abide by pay curves and submit to other controls.

New so-called passports would be issued to funds that comply with the new rules, enabling them to promote themselves to investors inside the 27 nations of the European Union. EU finance ministers are expected to make the rules into law next Tuesday despite opposition from the new government here in the United Kingdom. Britain is where 80 percent of Europe's hedge funds are based. London says the new rules would discriminate against U.K. funds set up offshore and damage business in the future.

Well, earlier I spoke to Paul Marshall, co-founder of Marshall Wace, one of Europe's most high-profile hedge funds. I asked him whether the industry had accepted the rules that were coming and whether the industry is ready for a bit of a shake up.

(BEGIN VIDEO CLIP)

PAUL MARSHALL, CO-FOUNDER, MARSHALL WACE: It is very close to becoming law. We have two things happening next week. On Monday the parliamentary, the European parliament produces their report. And on Tuesday the (UNINTELLIGIBLE) foreign ministers, the finance ministers, will get together and produce their final report. And then it has to go to the commission. So, those two reports, which are going to be different, will then be brought together to produce the final report, which will come through the commission.

DEFTERIOS: Well, there is one law in European parliament, called the Gosses (ph) Proposal, here, which is going to create a blacklist for countries who do not comply with the directive from the European Union, which mean that a European investor cannot invest in that fund if it does not register. Some call that absolutely protectionist.

MARSHALL: It is absolutely protectionist. There is a huge amount of populism in this directive and the real danger to it is that it will cause a backlash from the United States, which is by far the most important market in the world for hedge funds.

DEFTERIOS: In fact, Timothy Geithner is opposing it but they don't seem to be listening to his complaints.

MARSHALL: Yes, it is very unfortunate. And the bad-the end result for Europe-for U.K. and European hedge funds is they may loose or be restricted in their access to the U.S. market. And suddenly 5 percent of all investments in hedge funds currently happen in the United States. So it is potentially very damaging to what is an important new industry in Europe.

DEFTERIOS: You support greater transparency of the hedge fund market. Is there a medium here that we can be reaching where you don't have such a radical piece of legislation, a block in industry from innovation? And that is the number one argument, is it not?

MARSHALL: Yes, transparency is not an issue which comes up, really, in the directive. Or it is not a central issue to the directive. I am in favor of, if you like, proportionate transparency between long positions and short positions. And as I think a lot of people in the industry are. But that should not be-I mean, that is not what is driving the directive. What's driving the directive is I think a populous backlash against hedge funds which is in my view unjustified and theoretically concerns about financial stability for which hedge funds were not really responsible in 2008.

DEFTERIOS: This is primarily a Franco-German initiative. So there is a lot of weight behind it. It seems like the timing could really backfire, because you do want to spark market creation and investment right now, when the euro is sinking and the European economies are basically trading sideways.

MARSHALL: It is a Franco-German initiative, in relation to an industry which is 80 percent based in the United Kingdom. So, it is extremely unfortunate in that respect. And as you say, the consequences are serious, the point about hedge funds is they are a branch of the fund management industry. They're not part of the banking industry. And we're going to be in a situation where you are going to have quite, very heavy, if not penal regulations around hedge funds when we still haven't even go solutions for the banking industry. The main one being on remuneration where we are potentially going to have rules on remuneration of hedge funds, which are typically privately owned companies, when we still haven't got any rules on remuneration for banks. I mean, it is absolutely absurd.

(END VIDEOTAPE)

DEFTERIOS: Not mincing his words there. Paul Marshall, once again, of Marshall Wace, the hedge fund manager. Well, many economies are in the spotlight for overspending. Up next we'll hear from a man who says his country is a model of fiscal responsibility. And how Indonesia, the world's fourth most populous nation, is looking to attract investors.

(COMMERCIAL BREAK)

DEFTERIOS: Welcome back. I'm John Defterios in London and this is QUEST MEANS BUSINESS right here on CNN.

Thailand's economy is starting to suffer as protests on the streets of the capital grow more violent by the day. Today anti-government protestors clashed with troops who fired back with bullets and teargas. At least seven people have been killed and several wounded in recent clashes. Many hotels and central banks, right now, are empty. Earlier Thailand's finance minister spoke to CNN saying the economy is starting to feel the financial impact.

(BEGIN VIDEO CLIP)

KOM CHITIKAVANIJ, FINANCE MINISTER, THAILAND: We reckon damage so far, to the economy, given the protests over the past month or so, have been equivalent GDP-wise, about 0.3 to 0.5 percent. There is an impact, obviously, also on domestic consumption. And in indirect, and as yet, incalculable impact on investor confidence.

(END VIDEO CLIP)

DEFTERIOS: Once again, the finance minister of Thailand. Well earlier I spoke to Gita Wirjawan, he is the chairman of the Indonesia Investment Coordinating Board, basically the investment minister. I asked him if there was concern in Southeast Asia about the turmoil in Thailand spilling over and if he was worried about it spilling over to investors throughout the region.

(BEGIN VIDEO CLIP)

GITA WIRJAWAN, I think, inevitably, it will have to be a combination of everything. But I do believe that with everything that is been happening in Indonesia, I think we have a story to tell. And I think people have taken a 5-, 10-, 15-year view of Indonesia. This is good. Because this, I think, will serve Indonesia well, in isolation, you know, regardless of what happens. And I do believe that these are the guys that are still going to come to Indonesia, whatever happens to Southeast Asia. It is a little unfortunate, in terms of what is happening in Thailand. I'm not-I'm certainly not counting, for purposes of our investment thesis, on whatever happens in other places in Southeast Asia, but I think we have got to take a view on what needs to fixed in Indonesia, and we're doing that.

DEFTERIOS: Speaking of visitors coming to Indonesia, Wen Jiabao and Barack Obama, over the next 30 to 60 days, what are they after here? The largest Muslim population, the fourth largest population in the world, trying to latch into 4.5 to 5 percent growth, what is the motivation?

WIRJAWAN: I think it is many fold, but I think it is good, for my sake, in that this will elevate the awareness level. Because I think the real issue is not a lot of people in the U.S. know about Indonesia. There is not enough books about Indonesia. Not a lot of people in D.C., New York, and many other places in the U.S. know about Indonesia. So, I think for the first time that Indonesia will get to appear on the front page of international magazines and newspapers for some of its positivities (sic), as opposed to some of the negativities that it has been, you know, been-

DEFTERIOS: But the Chinese are paying a great deal of attention, because they like your natural resources. You are expecting some deals to be signed on the visit of Mr. Wen.

WIRJAWAN: Right. We are quite excited about it. But, again, I think we would like to see more value added. You know, we don't want people to just take our coal. I think we want people to build a power generation capability, and build the roads, and don't just take our bauxite, but build a smelter. Don't just take our palm oil, but take-you know, build a refinery.

So, it is the whole value optimization of the value chain. And that is the kind of stuff that we're encouraging to everybody, whether it is the Americans or the Chinese, or what have you.

DEFTERIOS: Is this the new investment triangle, if I look at Asia. China, India, Indonesia? Some even coin it, "Chindonesia". But is this the growth plate that you are trying to tap into?

WIRJAWAN: Partly, partly. I think Indonesia now, you know, has been able to show fiscal sustainability. Prudence and all that, and monetary stability.

DEFTERIOS: Is this the positive realism that you like to talk about.

WIRJAWAN: Yes.

DEFTERIOS: We have to be realistic about the future and what Indonesia can really provide?

WIRJAWAN: Correct. I always talk about the positives, but with realism. I think we probably may have made too many promises in the past, without showing real ability to deliver on every one of them. But I think today, I think we've got a completely different picture of Indonesia.

(END VIDEOTAPE)

DEFTERIOS: That is the picture of Indonesia, let's get a picture of the Big Board, and it is not a very pretty one, if I can say that. Let's take a look. The Dow at its near low for the day. Down 200 points, at 10,582. That is a drop of 1.87 percentage. You can see retail sails were up in the U.S. by 0.4 percent, but that did not turn the tide of the very negative information coming for the euro. At an 18-month low, breaking the $1.24 barrier. Got as low as $1.2395, this put a lot of pressure on the European markets throughout the day. We saw drops in Spain as low as 6 percent and spill over into the U.K. and German markets with losses of better than 3 percent.

Well, it is the smart phone that famously has an app for almost everything. But there is one thing iPhone users can't play with, and that is a program called Flash. The people who make it are trying to change that in a very public way. We'll have the story after this.

(COMMERCIAL BREAK)

DEFTERIOS: A technology row between Adobe Systems and Apple is heating up. Adobe has launched an advertising campaign criticizing Apple's refusal to allow its Flash multimedia software on its iPhone and iPad. Adverts placed in U.S. papers carry the message, "We Love Apple" with a big heart there. But it adds we don't-is anybody taking away your freedom to choose what you create, and how you create it and what you experience on the Web. Adobe also published an open letter saying that Apple threatened to undermine the next chapter of the Web. Apple has never allowed applications based on Flash software onto the iPhone, and the new iPad also does not support the technology, sparking complaints from users and reviewers. Steve Jobs last month defended Apple's decision not to work with Flash. He says the most important reason is that Flash would put a third party between Apple and its software developers.

By the way, full-page ads, we did a little research on this today, in "The Financial Times", about $200,000, if you buy a worldwide spot. "The Wall Street Journal", $223,000, and that was not all, they did the big approach, and the big bear hug outreach online as well, with a number of the tech blogs. Let's get an update on how this is playing in the blogosphere, if I can put it that way, and bring in John Sutter, he is from CNN.com and he joins us now from Atlanta.

John, number one, let's get to the debate here. Is it really a case of not separating Apple from the software developers, it doesn't want Adobe sticking a wedge in between here on the platforms?

JOHN SUTTER, CNN.COM: Yes, I mean, this has been a back and forth that has been playing out over the last month or so. Like, you said, with notes sort of passing back and forth between these two companies, and bloggers are definitely jumping on this. I think from like a consumer perspective this might sound like a bigger deal than it actually is. Apple's products haven't-Apple's iPhone, and iPod, haven't carried Flash in the past, which maybe has been a problem for consumers. The iPad sort of escalated this feud, because it is much more of a Web browsing device. So, if you are using those devices, you might see some large holes where a Flash video or flash animation might go.

But there are a number of work arounds that Apple has sort of talked about, with another programming format called, HTLM5, that lets a bunch of web sites be viewed even if they are in Flash. Like our video on CNN.com, for instance, is Flash video, but it still will work on the iPad.

DEFTERIOS: What is the response? I saw there was some blogging on CNN.com today and a number of the other leading tech sites. Do consumers support Adobe with its big high-profile campaign?

SUTTER: They are really split on this. Like I've seen a lot of funny comments, some people saying, you know, like they feel like their parents are fighting. Like they sort of want to side with both and they don't know who to come down with. And there is a Facebook group called we're with Adobe, sort of a play off the, you know, Conan O'Brien, that whole campaign. You know, with people sort of saying that Apple is trying to exert too much control over the future of the Web, and the future of games, on mobile devices, among other things.

So, you see a lot of comments in both directions. People who are flash developers, which is a lot of the tech community, obviously have some interest in seeing Adobe's format preserved, because they work in that and that is how they earn their living.

DEFTERIOS: Is this really about open source versus a closed source platform, though, John?

SUTTER: You see those terms thrown around a lot. I think both companies are trying to position themselves as open. They have both been saying that in these statements. The truth is that both of them are closed, to a degree. Apple wants to maintain a lot of control over the apps that go into its gadgets, because it wants them to work well, not to use a lot of battery life. And so Steve Jobs, in a note that he posted online said that, you know, those were the reasons that he is not letting flash onto these devices. He says that it just doesn't work well. So-but at the same time, Apple is also claiming to be more open, because they use this HTML5, which is an open software. Adobe, at the same time, this sort of trying to play both sides here, too, a little bit.

DEFTERIOS: I kind of get the sense that this story is not over. We'll have to check back in with you in the future. John Sutter, joining us from CNN.com in Atlanta.

Let's get an update now of the weather situation. And for that we go to CNN Center again, and join Lola Martinez.

(WEATHER REPORT)

DEFTERIOS: And that is QUEST MEANS BUSINESS for this Friday, May 14. I'm John Defterios in London. I'll be back in a flash, with "MARKETPLACE MIDDLE EAST", that is next. Stay with CNN.

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