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Quest Means Business
U.S. Unemployment Rate Rises; Madrid's Traffic Controllers Strike; WikiLeaks Forced to Relocate Web Site
Aired December 03, 2010 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: It is a disappointing end to a week that showed promise. U.S. unemployment is painfully high. Madrid's airports are closed as air traffic controllers walk off the job. And the net closes in on WikiLeaks, it's forced to relocate its Web site.
I'm Richard Quest. It may be a Friday, but I still mean business.
Good evening. It may be recovering, but the United States still isn't working. The latest job numbers are a body blow for a job seeker, job seekers and investors, alike, as a growing U.S. economy fails to deliver the goods.
Employers created just a handful of new jobs in November and that is just 39,000. It is nowhere near enough to keep up with the population growth. Never mind offering hope to the growing mass of unemployed.
The marked slowdown, analysts had expected better, instead the slowdown in job creation continues compared to September and October. But it's worse than that. Apparently now, more than 15 million are out of work and seeking work in America. And the jobless rate stands at 9.8 percent. It is up from 9.6 percent in October.
If you take that particular rate, it has now been over nine percent for 19 months. Now, the numbers are such, can be a little misleading, because the jobless versus those seeking versus new jobless claims, all depend on those who are still looking for work and haven't dropped out of labor market.
Irwin Stelzer is the director of Economics Policy Studies at the Hudson Institute of Washington Think Tank, also writes for Britain's "Sunday Times" newspaper, the American account.
And a very good time for you to be with us. This week, when he pull the strands together, of the week, and we get this sort of number, what do we make of it?
IRWIN STELZER, HUDSON INSTITUTE: Well, you have to look at it in context. It's a lousy number. Everybody was expecting a better number and it's even worse than the numbers you said, because there's a lot of people dropped out of the labor force, there's a lot of people working part time who wish they weren't, so you've got about 26 million people who are unhappy, that's about 17 percent of the workforce. So, I think that's a bad report. On the other hand, the Fed came out with a very good report about the economy growing. And it's very hard for an economist to say how do you integrate those. I think I know how to do that.
I think employers are nervous. They don't know what the health care costs are going to be and they don't know what their taxes are going to be. There's a huge amount of uncertainty, so even though the economy is growing, they are hesitating to hire.
QUEST: But this idea that we've also heard quite a few people express, that the real problem in the United States, whatever they do with the deficit or whatever they do with health care costs, there is something now structurally wrong with the United States economy. It's not as competitive as emerging markets are. There needs to be a radical rethink. Do you go along with any of that?
STELZER: A little bit of that. I think that there's a very real danger that some of the people who've been out of work for a long time, will have trouble reentering the labor market, partly because of international competition and they can't cut it. So I think we're going to have some of that. But basically, the U.S. economy seems to me to be rather healthy, it's recovering. We've had policy mistakes and I -- look, I'm not a dreamer, but America has the greatest entrepreneurial talent in the world and that, in the end, is going to matter.
QUEST: I keep coming back to the, on this program, and we talk about the rise of China as the second largest economy. We talk about India's role. I suppose what some people say is, your day in the sun's over.
STELZER: Well, look at it this way, the per capita consumption in the United States is 14 times that of China, so...
QUEST: For now.
STELZER: For now. Now, you mean, will America decline relative to those countries? Certainly, and that's a good thing, it's good if more people get rich. There's more poverty than relief in this great world of ours in the past 10 years than ever before, that's a wonderful thing.
QUEST: Did the Fed do a good job in handling the crisis and are both the Fed and the Treasury doing a good job post-crisis?
STELZER: I think you have to say yes, that the fed did a good job, No. 1, and yes, that they're both doing a pretty good job now. Remember, look, it's easy to second guess all this stuff, the question is when you make decisions in real-time, when you're sitting there and the market's going to open in 22 minutes and you have to decide what to do, I think by and large they've done the right thing. Did they make a couple of mistakes? Yeah, but I think the greater risk would have been doing other things than what they did.
QUEST: As we look to the markets and I'm not necessarily asking you to forecast next year, I mean, if you and I could do that, we wouldn't be sitting here.
STELZER: We wouldn't be sitting here.
QUEST: Absolutely. And, so let's forecast the market for next year. I thought 2010 would be better than it has been. I said in January that I actually thought that the naysayers were probably being too pessimistic. I was partially right, mostly wrong.
STELZER: No, you weren't mostly wrong. It is better. I mean, if you think back to...
QUEST: But then we kind (INAUDIBLE) in the tipping points and back off to the races again. Is that going to be 2011?
STELZER: If I knew that we wouldn't be sitting here. I don't know that. It does look as if the, certainly corporate profits at a record. Cash flow is at a record. Corporations are sitting on $2 trillion of cash, which sooner or later, since they're getting no interest on it, they're going to have to invest. So I'm rather optimistic about 2011 and especially in America. I'm very pessimistic about Europe in 2011.
QUEST: Well, that's a nice note to end it. What, you don't think -- and we're going to talk about this in just a moment with our next guest, Jim O'Neill of Goldman Sachs...
STELZER: Oh, Jim is terrific.
QUEST: Isn't he? He's on the program in a moment or two, but you don't forecast the end of the Euro?
STELZER: It's possible. It's more possible then it was if we were talking about this six months ago.
QUEST: All right, many thanks. Thank you for coming in.
STELZER: Thanks for having me.
QUEST: You're very welcome. We look forward to having you again.
STELZER: Now, traders in New York are already looking beyond the jobs numbers. Alison Kosik is in New York, joins us now.
Good evening, Alison. And, a bad job report.
ALISON KOSIK, CNN NEWS CORRESPONDENT: Hi Richard.
QUEST: A bad job report, but the market's held its breath. So why do you think that is?
KOSIK: Well, first of all, not many people are trading the volume here is really low today, Richard. And you know, and as you said, yes, they're moving beyond these numbers, they're focusing on what could happen in Washington with policy changes because of these disappointing jobs numbers. It pretty much gives more ammunition to Congress, at least to petition Congress, to go ahead and extend those Bush era tax cuts, not just for the middle-class, but for the wealthy, as well. This jobs report also gives more credibility to the Fed decision to buy up more securities and of course, it gives more credibility to keep interest rates low, well into 2012, which are all things that are good to business and the markets. And finally, I got to say this, Richard, you know, some on Wall Street are really just taking this jobs number with a grain of salt because, you know, the trend in economic data that we've had lately, really points to some upbeat movement in the economy that we are in the middle of a recovery, we've had strong manufacturing, housing and retail sales numbers, as well. You know, and these investors are thinking that next month's job number will come with a big revision to this number that we're getting, today -- Richard.
QUEST: You and I will talk about that next month. Have a good weekend and come back to us on Monday on one piece. Alison Kosik in New York.
When we come back, the ECB continues to buy Irish and Portuguese government bonds, it provides the market with a briefer (ph) spite. The long-term solution to the soft index prices, we'll be talking about with Jim O'Neill.
(COMMERCIAL BREAK)
QUEST: Not a particularly happy number for the week. Most markets slipped on the Friday session. They caught the cold from the jobs number in the Atlantic, even though maybe Wall Street isn't reacting as badly. If you look at the FTSE was down nearly .4 of a percent, XETRA DAX, as well, Barclay's one of the biggest losers in London down nearly three percent, 260 and change. I should have got out of those Barclay shares that I bought a couple of years ago when they were nearly four pounds. Still showing a profit, but I've handed money back.
Heidelberg Cement is down, New Frankfort (ph) nearly three percent, Califor (ph) down two percent in Paris. It all helped drive the -- but actually after the CAC (INAUDIBLE) was up nearly a tenth of a percent. Look at the change on the week and you do get a much better perspective of what happened.
Strong gains in commodity shares and in financials that the FTSE higher. On the XETRA DAX, it was up one and a quarter percent. Also it did drop one and a half a percent. And in Paris, the CAC (INAUDIBLE) was again was nearly half a percent overall. So, you get a view there of what was happening, overall.
The main talking point, or the main problem, of course, in the markets was European government bonds, which got a lift after the European Central Bank purchased more Portuguese and Irish debt. It's part of a program aimed at stabilizing the markets which have been battered by the Euro's own debt crisis. As a result, there was a fall in risk premiums reflected in bond yields. That's the exit -- the extra yield investors demand to hold debt in peripheral countries.
European governments continue to bicker over long-term solutions to the debt crisis, ranging from a bigger bailout fund or a full-fledged fiscal union.
Fiscal union and the policies necessary to make the Euro work have been very much in our mind throughout the course of the week. It was a subject I discussed with France's finance minister, Christine Lagarde on Monday.
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, FRANCE FINANCE MINISTER: To look at the work that has been undertaken by the Herman Von Rompuy, the president of the European Council, together with the task force, which I'm a member, that's where we're heading. We're heading towards better coordination, more joint economic governance, accountability, sanctions. These things, if the discipline is not respected, that's what you call better inclusion.
(END VIDEO CLIP)
QUEST: So, does there need to be a fundamental rethink of European Monitory Union or has EMU just been pulled back from the brink and it's just incremental changes? Jim O'Neill the chairman of Goldman Sachs Asset Management joined me earlier. The views of Jim O'Neill are always worth hearing.
(BEGIN VIDEOTAPE)
JIM O'NEILL, GOLDMAN SACHS: I believe you interviewed the ECB leader, Mr. Trichet this week and some important hints coming from him was at the core of the question you have asked and we don't know the answer, because we're going to go back and forth for quite a bit longer, but you know, in my...
QUEST: But there is an acceptance, isn't' there? No, wasn't there, three or four months ago, and it -- by policy makers, but there has to be a reform of institutions and the way the Euro works.
O'NEILL: Yes, I think there is a growing acceptance. And of course, many European policy makers have their own angle on it still, but I there is a growing acceptance. I would argue that what we're going through here is not a crisis of European debt, it's a crisis of governance. And so what we need is greater leadership and more central acceptance of a better way of EMU governance than we've had.
QUEST: That, there are two aspects of that, one is just downright diplomatically inappropriate that I'm going to ask you. Are the...
O'NEILL: Never stopped you before.
(LAUGHTER)
QUEST: Well, one is over fall of the instructions and that can take place, but are the people in the jobs up to it?
O'NEILL: That's a very interesting question. You know, I think back to a management course which, like most of the people, always think that they never learned anything, but on one that I went on many years age, the guy talked a lot about the difference between consensus and conciliation. And European policy makers live for consensus building and it's not the right way. And I think we need to have a era of policy making that thinks tougher and so fights to get the right outcome as opposed to compromises and linked to what you are undiplomatically asking, probably a new era, younger era that isn't focused on the original reason EMU exists, which in essence in some ways is to make sure we never have World War III in Europe, and goes on to dealing with modern Europe in this new dynamic or be it, complex world and I think it needs a younger generation, to be honest with you.
QUEST: The way in which it has structured EMU, if we did have fiscal union or greater fiscal union, what does that mean in reality? It's a phrase that's being bandied about.
O'NEILL: It is, yeah. I mean, it could mean a number of things. I mean, at its most extreme, of course, which scares people, it means, one central decision making body that decides every country's budgets, even if it's not democratically elected. We're not going to get that. what it can practically mean or I think is where we're going towards, it's some central authority that effectively has a say on the appropriate budget of everybody's.
QUEST: The talk, and it's on the front page of "The Economist," this week, today's edition, that EMU, the don't write off the Euro, don't kill it off because it -- and even if they wanted to, it would be simply too difficult to do. Do you subscribe to the view that the Euro is here to stay?
O'NEILL: I'll answer you as a very naughty economist, as I sometimes do, by not answering the question exactly.
QUEST: Surely not.
O'NEILL: At the start of EMU, I would say to people that over the first 20 years there was zero probability of a breakup. As we come to the 11th year and I look at the rest of this decade, so as to complete the 20 years, I don't think it's zero anymore, but it's not much higher.
(END VIDEOTAPE)
QUEST: Now, Jim O'Neill of Goldman Sachs, how incidentally, of course, was also extremely closely involved in the Red Kight's penitential offer of Manchester United because Jim is an expertly keen football fan, a soccer fan. When you've got Jim O'Neill in the chair, you need to ask him about his view to FIFA awarding Russia the 2018 World Cup.
(BEGIN VIDEO CLIP)
O'NEILL: What is fascinating for me at a time in my new life when I'm actually embarking on strategy for us to rebrand emerging markets, as growth markets? Maybe FIFA is more ahead of the game than the IMF. If you look at the decade ahead, the only World Cups we're going to have are going to be hosted in Brit countries. And if football is the game of the people and the game of the masses, I think their basic instinct is right.
(END VIDEO CLIP)
QUEST: Only Jim O'Neill could bring the emerging market, FIFA and bring it all together in economics.
In a moment, the biggest intelligence leak in history and it's temporarily unavailable. We'll look at WikiLeaks brief spell of homelessness and now it is at Switzerland.
(COMMERCIAL BREAK)
QUEST: WikiLeaks will not be silenced. Hours after its U.S. hosted Web address was terminated, WikiLeaks was back up and running it has a new Swiss domain name. apparently the previous host EveryDNS.net said that cyber attacks had threatened the stability for other customers. And it's not just the domain that may have a new address, WikiLeaks filed, could have found a new home. As CNN's Brain Todd reports the location would a do a Bond villain proud.
(BEGIN VIDEOTAPE)
BRIAN TODD, CNN CORRESPONDENT (voice-over): WikiLeaks has certainly made some military powers angry and from the looks of this place, you would think the Web site is bracing for a full-scale attack and not the Internet kind.
Welcome to White Mountain, a fortified data center in a Cold War era bunker near Stockholm, Sweden. This is the place which at one time hosted at least some of WikiLeaks' computer servers. And now that Amazon has dumped WikiLeaks from its servers, WikiLeaks has reportedly moved some of its files back here.
DEAN NELSON, CHAIRMAN, DATA CENTER PULSE: James Bond, watch out. TODD: That is Dean Nelson, chairman and co-founder of a group called Data Center Pulse, an association of data center owners and operators.
(on camera): Dean Nelson was granted access to White Mountain last year and took a video tour. I have got him on Skype right now.
Dean, what do you think the benefit was for WikiLeaks to move its operations, its servers back into that bunker, if in fact it has done that?
NELSON: It is actually 30 meters under solid bedrock, and it has got a one-foot-thick solid bomb door. So, it's a pretty secure facility. That's probably one of the primary reasons. TODD (voice-over): The host for WikiLeaks' servers in this place is a company called Bahnhof. It opened White Mountain as a data center in 2008 and it hosts servers for other Web sites as well.
As he showed Nelson around, Jon Karlung, CEO Bahnhof, made no secret of his inspiration for this layout.
JON KARLUNG, CEO, BAHNHOF: These are science fiction, James Bond stuff (INAUDIBLE) from science fiction films.
TODD: Move over, Dr. No. This place boasts a futuristic room for its servers with dozens of electronic cabinets, a floating glass conference room above it, for backup power, two diesel engines from German submarines.
Experts say this kind of security does not prevent hackers from stealing data or protect Web sites from the kinds of denial of service attacks that have plagued WikiLeaks. But Nelson says more and more Web sites are relying on places like bunkers, even and container ships, to store their servers.
NELSON: It is an innovative way to solve a data center problem, because as you get more computers and more data on the Internet, the density or basically the heat that is generated from those computers, you can use things like underground cooling to get rid of that heat.
TODD: Why would Bahnhof, take WikiLeaks back in? In interviews, Jon Karlung he's said he is a strong supporter of free speech. But a spokes woman for the Senate Homeland Security Committee told us it's not out of the question that that committee will bring some pressure on Bahnhof to kick WikiLeaks out.
Brian Todd, CNN, Washington.
(END VIDEOTAPE)
QUEST: So, where WikiLeaks goes is the question. It's moving around as much almost as the founder, Julian Assange. CNN's Jim Bolden is with me.
Jim, the difficulty, but the speed with which this is happening is extraordinary.
JIM BOLDEN, CNN NEWS CORRESPONDENT: Yeah, and it's actually changed in the last hour as well, Richard, because as Richard said earlier, WikiLeaks had moved to .ch, but in the last hour it's not also available .de, .fi, .nl. I just tried .ch about five minutes ago, I couldn't get on. That's the speed in which their trying to move around to keep this site going and able to get new areas and get new domains to host this Web site.
Now, let's to back to EveryDNS. We talked about it earlier, Richard talked about it, now they knocked off .org because they said they have 500,000 other companies they need to worry about and they said there was a series of attacks and it was important for them to actually help their other companies by getting rid of .org. And we talked about Amazon, as well, and Amazon said it's clear that WikiLeaks doesn't own or otherwise control all the rights to the classified content. That's Amazon's reason, they say, for taking down .org.
Now, let's move on to where we are with hosting. Now this is Web hosting. Now, OVH is a French company who came under attack by the French government today. The French government industry Minister Eric Besson said, "France cannot host Internet sites that violate the confidentiality of diplomatic relations."
OVM said, "It's not up to the politicians or up to OVM to decide whiter to take down a Web site."
Another small company called Octopus (ph), now this is just four employees in France. I spoke to them a few hours ago on the phone, they were part hosting. They told me until Thursday. They also came under a series of attacks, they decided then they would take it down the same time that Amazon took it down.
Now, let's move on to another area of WikiLeaks. Of course it only runs through donations. So these companies are involved, in an indirect way. If you want to donate to WikiLeaks you can do it through Landsbanki in Iceland, PayPal which of course is owned by eBay in the U.S., PostFiance in Switzerland, and branch of Commerce Bank in Germany, DataCell (ph), and the Australian Post Office.
QUEST: There is all the transmissions mechanisms for the money.
Quick question, because we're nearly out of time. If things are moving so fast, as you suggest they've gone from German, Finland, Netherlands, how can the WikiLeaks organizers physically make the calls, make the arrangements, do all the mousing and the keyboarding?
BOLDEN: All of it has been -- is diluted anyway, it's never been centralized. Maybe the servicers are centralized in places like Sweden where the actual information, but even that is split up. It's in mirror sites. It's BitTorrent, it's knocked around. That way they're trying to keep the authorities off their feet and also he's trying to move it around to countries where he thinks he might be able to have it up for longer than maybe he can other places, so it becomes very complicated. And you know, this could have changed in the time you and I have been speaking, as well.
QUEST: It probably has. Jim, many thanks. Have a good weekend.
Be sure to tune into a special edition tonight, CONNECT THE WORLD, that's on in around and hour and a half from now when we'll dig deeper into the WikiLeaks controversy as we examine the affects the WikiLeaks are having on policy for a number of key issues including North Korea and Iran. CONNECT also takes a broader look at the impact of diplomacy. CONNECT THE WORLD, 21:00 in Europe, 22:00 Central Europe, it's 19 minutes from now.
When we come back, the U.S. jobless rate inches higher. I'll be asking an industry expert where he sees the employment market heading from here.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And here, the news always comes first.
The founder of the WikiLeaks Web site has revealed his backup plan if his whistleblower Web site is ever taken down or attacked. During an online chat with Britain's "Guardian" newspaper, Julian Assange said 100,000 people already have the classified documents in encrypted form.
Among those documents, indications Washington doubts Mexico's drug war efforts. Mexico calls the leaks a serious challenge to diplomatic relations.
President Barack Obama has landed in Afghanistan, surprising U.S. troops with a holiday visit. The U.S. president told them they will succeed in their mission to defeat the Taliban. Mr. Obama was expected in Kabul to meet President Hamid Karzai. A dust storm, though, forced a change of plans and he's staying at Bagram Air Base instead.
Police suspect an arsonist may be behind the fire deadly wildfire in Northern Israel which killed 41 people over the past two days. Police say the blaze started from a single location and that suspicious objects found on Thursday suggest it may have been started intentionally.
Well, returning to our top stories again, the disappointing U.S. job numbers. Just 39,000 jobs -- just 39,000 were created and added last month, far less than the 150,000 that were expected. On top of that, the unemployment rate unexpectedly rose to 7 -- to 9.8 percent. As you can see, the unemployment rate, the forecast versus the reality. And this, of course, is where we start to get job creation.
But, unfortunately, the forecast was considerably higher than what we finally saw. It's a worrying situation.
Let's talk to Stephan Carter, the president and chief executive of the recruitment speculate, Hudson North America.
Stephan joins me from Chicago.
Before we look at where the jobs are, why is it -- why, considering growth has returned, do you believe employers are not taking on staff again?
STEPHAN CARTER, PRESIDENT & CEO, HUDSON NORTH AMERICA: Well, Richard, I think one of the issues people continue to be very cautious about what the economic environment looks like.
That being said, I do think there were actually some positives in the results that were issued today. For example, 40,000 jobs were created in the temporary staffing area, which seems to indicate that employers are looking for flexible ways to manage their workforce.
QUEST: That flexible way will provide temporary relief. But as you know, Stephan, it's no way in which a major economy can get back to trend growth, is it, on the back of over time, part-time and temporary workers?
CARTER: Well, you know, I think that we are seeing some positive signs in the U.S. economy. And while I'm no economist, you know, we are starting to see the consumer come back into the marketplace. And as we see that companies have been putting off their activities, particularly in areas like infor -- information technology struc -- infrastructure.
And so we do start to see some opportunities for some employment in certain key areas where skills are, quite frankly, at -- at a premium.
QUEST: Now, let's talk about that because one of the -- the common views is that there is now a mismatch between the skill set and people who are out of work.
Is that what you're discovering?
Do you find the right people are going for the right jobs?
CARTER: Well, I think there is something of a mismatch in terms of skill sets. Where we see pretty strong demand is in terms of higher level professional types of skills -- IT professionals, accountancy professionals, people in the legal firm. We've actually seen fairly significant growth in terms of demand for those types of roles over the past six to 12 months. And some of the other older types of industries, where skills are not in as great a demand, certainly, that's where it's driving a lot of the unemployment today.
QUEST: If I was looking for one area where jobs were most plentiful at the moment, what would it be?
CARTER: In the higher level professional areas. I would think you would see it primarily in health care, health care providers, health care payers. Obvious, there's a lot of dru -- change being driven by the new health care law in -- in North America. Also, in areas having to do with companies trying to manage their information technology infrastructure.
QUEST: Stephan, many thanks, indeed for joining us.
Have a good weekend.
Stephan Carter joining us there from Chicago.
It was the flight that grounded the Qantas A380 super jumbo fleet. Now, a month after the engine fire, terrifying details of what went wrong. I'll have a summary. I've read the relationship. I'll let you know in a minute.
(COMMERCIAL BREAK)
QUEST: On one of Spain -- one of Spain's busiest holiday weekends, a strike by the country's air traffic controllers has left tens of thousands of people stranded. It's happening tonight across Spain.
Al Goodman is in Madrid and joins me now.
First of all, it's a bit out of the blue, isn't it?
This all came very late in the day.
AL GOODMAN, CNN CORRESPONDENT: Absolutely, Richard. It started in Madrid, spread to the Balearic Islands, Palma de Mallorca, a really busy airport in Palma de Mallorca and now has spread across most of the country, this wildcat strike by the air traffic controllers. We've heard from people who are stranded on planes.
Because it's a long holiday weekend, extending through next Wednesday in Spain, a couple of national holidays early next week, people were going to London with their children, people flying all over the place. At this time of year, millions of Spaniards get out of their towns by car, by rail or by planes. So this is causing chaos -- Richard.
QUEST: OK. A couple of quick questions, because time is tight.
How long is it likely to last?
GOODMAN: Well, apparently, the -- the -- the unions of the air traffic controllers are heading over to talk with the government at this hour. The government has taken a very firm stance. They're warning that this could be a crime, they could be prosecuted, they could be fired. They're calling this irresponsible and they're getting -- they're calling on the controllers to come right back.
Clearly, the people who were on the flights this night, because the flights on the weekend are also full, for Saturday, getting out of town, these ple -- these people may not be able to get away for their vacations - - Richard.
QUEST: OK. Finally, Al, is the message if you're -- if Spain or Spain air traffic -- air space is on your agenda this weekend, the message is what?
GOODMAN: The message is that you're going to expect delays, if you're able to make it at all. It depends on whether they're able to reach some deal late tonight. Certainly, the Friday flights are basically finished...
QUEST: All right...
GOODMAN: -- and whether this is going to extend into Saturday, people going each way, it's anybody's guess right now, Richard. It doesn't look good.
QUEST: All right. Al Goodman, who will be doing duty, no doubt, over the weekend as this story continues, joining us from Madrid.
The first report into the engine fire on the Qantas A380 last month shows just how serious the situation was. The Australian, the ATSB says the airline wasn't at fault and it pins the blame squarely on the engine manufacturer, Rolls-Royce. Qantas is now suing Rolls-Royce.
We've covered this so closely on QUEST MEANS BUSINESS that you'll want to know a little bit more detail, because it's obviously one of the areas that we talk about a lot.
This is the Trent 900 engine. And it -- the actual blowout, if you like, was just here. It was at the intermediate turbine point, where, to use the -- the language of the report, the -- one of the pipes feeding oil to this part of the engine, the high pressure and the intermediate pressure part of the turbine failed, leaked oil, which then set on fire, leading to the explosion. The actual cause is believed to have been this. It's one of the parts of the -- of the intermediate pressure turbine area. And it was a misaligned counter ball (ph), which caused a fatigue fracture and then that, of course, led to the leakage of the oil, which then led to the explosion.
And this is really what makes it very clear what happened. To use the language of the report, part of the turbine disks were liberated. Yes, that's the word they used, liberated. And they went out three different ways. It went out that way, through the wing, that's reducing support to the -- to engine number one, which they couldn't switch off, by the way, when they actually landed. This bit came through the top of the wing and damaged parts of the controller and the fuel lines. And this bit went into the fuselage and belly fairing and that, of course, caused enormous damage. This sort of damage on the aircraft.
And what we know is there was a tremendous amount of damage. There was a fuel leak, hydraulic leak, undercarriage problems, they couldn't lower the front slats. They had serious problems across a wide range of hydraulic issues, to the point where the plane actually had to be landed heavily overweight.
Not surprisingly, the ATSB says this was a superb act of airmanship.
(BEGIN VIDEO CLIP)
MARTIN DOLAN, CHIEF COMMISSIONER, ATSB: We've recently done extensive interviews with the pilots. We've also reviewed some of the initial flight data recorder information. And as we say, we see this as being a highly professional, very focused handling of -- of a potentially disastrous situation.
(END VIDEO CLIP)
QUEST: Now, while we're talking about air incidents, here's another one. You may want to have a read of this. Indian authorities have released a report about an AirIndia express flight that went into a nose dive. The captain had gone to the bathroom and while he was out, the copilot caused a plunge as he adjusted his seat. The report says if the pilot hadn't rescued the plane, it would have been a catastrophic structural failure.
It's a horrifying incident and I will post on Twitter and Facebook, where you can read and find out more about it.
The weather forecast -- it's going to be cold, it's going to be unpleasant and it's going to be snowy.
So, after I've told you that, do we really need Guillermo?
GUILLERMO ARDUINO, CNN METEOROLOGIST: Yes, you do. Things are getting better a little bit, now. I'm going to help you feel a little bit of fresh sir. I'll tell you why.
This is usually what we saw, what we saw lately, the sea effect snow - - you know, the moisture being picked up by the winds there. In the States, we call it lake effect snow because of the Great Lakes. So the cold air is in place. The warm weather there is providing the humidity. And then it snows like crazy.
Now, let's show our viewers what happened in Buffalo last night or yesterday. That is so much more snow than in Northern Europe and so many more problems at highways at airports and so on and so forth. Look, that is big time snow.
So the phenomenon is basically the same. And we saw narrow bands here providing some more snow.
My luck, I'm going to Italy tomorrow, Northern Italy, that is, close to the Alps. And, of course I'm not going to see 81 centimeters, but perhaps something closer to what we saw in Munich. And I have to say, Richard, that the -- the warnings continue. Actually, I was checking out and even though Saturday and Sunday are going to be very cold days, especially Sunday in London, because of the high pressure, the snow warnings continue to be in place for one more day -- back to you.
QUEST: All right.
Guillermo, have a good weekend.
ARDUINO: Thank you.
QUEST: Enjoy Italy, if you get there with the bad weather.
And that is QUEST MEANS BUSINESS for today.
I do thank you for joining us this week. It's very kind of you.
I'm Richard Quest.
Whatever you're up to in the hours ahead, I hope it's profitable.
"MARKETPLACE AFRICA" next.
ROBYN CURNOW, HOST, MARKETPLACE AFRICA: Hello and welcome to MARKETPLACE AFRICA.
I'm Robyn Curnow here in Johannesburg.
And this week, we're at the Food, Wine and Design Fair.
Now, this is the perfect place to talk about the business of South African design.
So we're going to have an In Focus look at one woman, who, while running a large family, is also running a company that has almost single- handedly changed the way South African design is marketed and sold to the rest of the world.
(BEGIN VIDEOTAPE)
CURNOW (voice-over): Based in her remote beach side home, South African Trevyn McGowan is mother to five children...
TREVYN MCGOWAN, SOURCE DESIGN: Hello. That picture that's shown in...
CURNOW: -- and runs a small business that many say has revolutionized South African design globally.
MCGOWAN: Ceramic mattes (ph). There are inflated bars. I've got two little pieces of biandilar (ph) and miso. Of art, there is this amazing mosaic sculpture of the cruido (ph) head.
CURNOW: Called Source, McGowan's company is the main exporter of South African design to the rest of the world, she says. She sources and delivers hundreds of thousands of dollars worth of uniquely South African products to international stores such as Anthropology and the Conran Shop.
MCGOWAN: You know, the Conran Shop has 11 stores around the world, so they have got branches in Japan, in Milan, in Ireland, in Paris, New York, London and what -- what they get from South African design that is very different to what -- from -- from sort of product from the East or product from Europe, which is probably the two other main suppliers, is a sense of fun, a sense of whimsy, an all organic essence. South African designers work very much from a -- a soulful, personal experience. So they're not mass producing. They're not doing what's the latest trends, let's churn this out. They're going from a place of who am I, what is my history, what is -- what motivates me, what moves me?
And so those products carry that sort of energy with them.
CURNOW: Even one of the world's most famous homes has a sparkle of South African design inside.
MCGOWAN: We had a -- a chandelier with Anthropology sold to the White House into the Obama residence that was made from recycled bottles in Barrydale.
CURNOW: She says the selling points are originality.
(on camera): And so this is a beautiful table setting.
MCGOWAN: Yes.
CURNOW: But these are all (INAUDIBLE) and skew and a bit, so that people might say hold on, this is not really a round ball...
MCGOWAN: Yes.
CURNOW: But I think that's the point and that's what you're trying to say, that this -- this is still beautiful.
MCGOWAN: Well, absolutely. And the thing is that there are lots people who would say this is not round, I don't like it, I don't understand it. And that's fine. But, actually, this is probably the -- you know, one of the most advanced pieces, trend wise, internationally.
CURNOW (voice-over): McGowan's international retail network helps small companies like this one, called Bronze Age, to sell their art work to a larger audience. Jobs are created and more money is earned because of Source. But McGowan is concerned by the lack of support for South Africa's design industry.
MCGOWAN: Our route to market is hampered by our relatively limited production facilities, support by the government, financial understanding. Some big manufacturing companies, it's a pain for them to stop their production to do this little design thing and then carry on with their normal run.
I'm -- I'm getting these massive orders and then the suppliers can't fulfill it because, you know, because they can't get extra electricity, they -- they can't get three (INAUDIBLE) electricity for another kiln or, you know, there's -- there -- there are those kind of things, where, if there was some sort of organization or board that could just understand and help and -- and assist where we need it.
CURNOW: At least now South Africans can shop for locally made design goods under one roof. Boardmans, a nationwide store, has collaborated with McGowan to sell a collection called Homecoming. New products like this Swazi made glassware are being launched each season.
Slowly, South Africans are waking up to what McGowan has been championing for years.
MCGOWAN: Yes, is there -- is there money in design and is there money in the export of South African design?
Unequivocally. And it's just that we need to get it out there and to, you know, I'm going to America next year in March to -- to go all coast to coast. Currently, I only supply the East Coast. But there's that entire country who, you know, would love to see our products. Yes.
(END VIDEO TAPE)
CURNOW: It makes you want to shop, doesn't it?
Now, let's take a look at some numbers. Trevyn McGowan says that she has about 500 artists, designers and artisans on her database and that some companies who are now part of the Source network have increased their workforce by about 200 percent. Also, she says every three or four months, the Conran Shop puts in about $200,000 worth of orders for merchandise.
Now, coming up after the break, we get investing advice from a woman who advises foreign companies on how to deal with corruption in Africa.
(BEGIN VIDEO CLIP)
OBIAMAKA MADUBUKO, PARTNER, MCDERMOTT, WILL AND EMERY: It affects any company who hires a U.S. person anywhere in the world.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
CURNOW: Welcome back to MARKETPLACE AFRICA.
Now, our guest on Face Time this week is Obiamaka Madubuko.
She advises U.S. companies on foreign investment opportunities.
And she says she tells them that Africa's value is on the rise.
She sat down with Stephanie Elam in New York.
(BEGIN VIDEOTAPE)
STEPHANIE ELAM, CNN CORRESPONDENT: Is there an example of a country in Africa that you can think of that's a good example of taking advantage of international investment?
MADUBUKO: There -- there are several. There are several. I would say South Africa is one. They are the largest economy and most diversified economy on the continent. They have done a very good job, as the World Cup was a great example, of showcasing their strength and really focusing on bringing more people to learn about what is South Africa about.
Nigeria is another one. Nigeria, I can also say that's because my father comes from Nigeria and does business there. And so I've had experience with, you know, I call it my country, because I am a Nigerian. And I -- I have found that it's an exciting business environment. People who are interested in doing business in Africa cannot ignore Nigeria. It's the most populous country on the continent. The opportunities there are immense, but it is a challenging business environment, particularly when it comes to areas of managing corruption risks.
ELAM: And I think some people also have a vision that there's a lot of corrupt government, not just -- you know, not -- not just the fact that they may be going through a lot of turmoil, but the fact that they do have government that is really corrupt.
And so I think a lot of companies are going to say, you know what, I'm just going to back away, because that's going to be too hard to deal with and find out that our money is going to all the right -- wrong people.
Is that something that you've seen?
MADUBUKO: Yes. I -- I have seen that. And there is a reality of a risk of corruption when you do business in what they call emerging or developing markets. A lot of my practice involves representing companies who do work in international markets. How I help companies to try to deal with those risks when they're going into places where there's a known or perceived high risk of corruption is to go in with your eyes open, making sure that you have knowledgeable people on your staff who can advise you on corruption risks.
For example, here in the U.S., there's a law called the Foreign Corrupt Practices Act. And it says, essentially, any U.S. companies, you can't bribe a foreign government official when you're trying to get business or to keep business anywhere in the world.
And this law is a broad law. It's not just for U.S. companies. It affects foreign companies who have business in the U.S., who trade on the U.S. stock exchanges. And it affects any company who hires a U.S. person anywhere in the world. So the -- the reach of this law is very broad and the penalty for violating it has been going up. Companies have been getting sanctioned of millions of dollars.
ELAM: That's really interesting.
So what about if you're just doing business in a different country?
Do you have a lot of things that can protect you as a company in that situation?
MADUBUKO: If you're doing business in a company, you should have your own compliance plan. So there is this law that says please don't bribe people. And if you do, you'll be in a lot of trouble.
And typically, this is what drives a change in behavior. So companies, knowing that there's a law like that out there and knowing how strongly it's enforced, create their own compliance programs. So if they go in country, they tell all their employees, you have to abide by these rules. And the rules are put up in place to monitor and protect them against corruption risks.
ELAM: Do you think it's possible in like 25 years people won't be referring to Africa as a whole as an emerging market?
MADUBUKO: My hope is in less than 25 years, Africa will have the same kind of cachet as, you know -- it -- it will still be considered a region, just as we have the EU, but it will be a powerhouse that people will have to recognize when it comes to economies. And they will have to recognize that it is a major player in terms of global marketplace.
(END VIDEO TAPE)
CURNOW: Some good points there.
Now, here's what's trading this week.
(BEGIN VIDEOTAPE)
CURNOW (voice-over): Retail giant Walmart has made a formal offer of nearly $2.5 billion for a controlling stake in South Africa's Massmart. Massmart would remain listed on the Johannesburg Stock Exchange. The plan still needs the approval of South African regulators and 75 percent of Massmart's shareholders.
And December the 15th will be a big day for Ghana. That's when the first oil will begin flowing from the much anticipated Jubilee field. Tullow Oil says it will produce about 55,000 barrels a day at first and twice as much once new wells are completed. The Jubilee field is estimated to hold a million-and-a-half barrels of crude, with recent discoveries suggesting it could hold much more.
Well, that's it for this week's MARKETPLACE AFRICA.
I'm Robyn Curnow here at the Food, Wine and Design Fair in Johannesburg.
Thanks so much for watching.
If you want to follow me on Twitter or e-mail us, please do go to our Web site, which is CNN.com/marketplaceafrica.
But until next week, goodbye.
END
