Return to Transcripts main page
Quest Means Business
Obama Taps Immelt to Head Economic Advisory Panel; Page Replaces Schmidt as Google CEO
Aired January 21, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: It's a new message and a new mission. GE's chief gets a new spark.
From start up to global powerhouse, my, hasn't Google grown?
And he wrote "The Black Swan". Now Nassim Taleb says it is the U.S. that is sinking.
I'm m Richard Quest. I mean business.
Good evening.
Perhaps galvanized by the visit of the Chinese president, now the U.S. President Obama has gone to the heart of corporate America. And he's ramping up his push to create jobs and make the U.S. more competitive. On tonight's show, from deals with China, to a blistering set of earnings. We look at why Jeffrey Immelt is the man Obama has chosen for the job.
Because in the hour, President Obama made the announcement on a visit to New York, the birthplace of GE's energy business. And it looks like the GE chief exec and chairman will have his work cut out for him. Mr. Immelt will be asked and tasked with finding ways to help the U.S. economy grow, make the country more competitive, in all, create jobs. It is at the heart of the visit, of course, from the Chinese premier. The council will also work with business leaders to focus on investing and innovation in clean energy.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: That is why I met with Chinese leaders this week, and Jeff joined me at the state dinner. During these meetings we struck a deal to open Chinese markets to our products. They are selling here, and that's fine. But we want to sell there.
(APPLAUSE)
OBAMA: We want to open up their markets so that we have two-way trade, not just one-way trade.
(END VIDEO CLIP)
QUEST: And that comment, two-way trade, not one-way trade, is perhaps the message of the mission. Our Correspondent Alan Chernoff spoke to Mr. Immelt before the press conference and began somewhat controversially by asking if American manufacturing is dead?
(BEGIN VIDEOTAPE )
JEFFREY IMMELT, CEO, GENERAL ELECTRIC: Totally don't agree. You know, we're one of the country's biggest exporters. We have great manufacturing people. The fact is in the high-tech products we make, it is mainly materials content, labor content is lower. So our guys can compete, or people can compete with anybody in the world. So, I think our markets, our export markets that is going to drive manufacturing.
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT (On camera): What would your message be to other chief executives, especially now that you are leading this council. Would you say to them, hey, have the confidence to hire?
IMMELT: Look, I think it is about confidence. I think the president is reaching halfway. Giving some certainty around taxes helps. And I just think that for the other CEOs who have cash, now is the time to invest. The economy is getting better. Let's go.
CHERNOFF: Well, we're not going at full speed yet; 9.4 percent unemployment, unacceptable.
IMMELT: Very high, very high.
CHERNOFF: What can we do about it?
IMMELT: Look it is a function really of two or three things. One, we're coming out of a difficult economic time period, number one. Number two, American business is more productive today than it has ever been. And that has had an impact on overall employment, but the most important part is we have to invest and we have to drive exports. You know, 95 percent of the world's population is outside the United States. Ultimately, to create manufacturing jobs we have to be innovating and we have to be exporting.
CHERNOFF: About a year ago you had said that you were worried about the Chinese, as to whether they were really receptive to our exports. You feeling different now after striking, what, five big deals with the Chinese?
IMMELT: You know, Alan, I have always said, free means free. You know, love us or not, at GE, we have always advocated for free trade. And so we talk about that in Washington. We also talk about that in Beijing. And when President Hu was here, he really made very clear statements that if you are an American company investing in China, you will be on the same footing as any local Chinese company. And I respect that.
CHERNOFF: You believe that?
IMMELT: I really do. Because we have been there a long time. You know, I've been going there, myself, for 25 years. GE has been in China for 100 years.
(END VIDEOTAPE)
QUEST: That is the chief executive of General Electric, GE, Jeffrey Immelt. And his appointment marks a turn around for the GE chief. He has not always been to see eye-to-eye with President Obama. Last year he criticized Mr. Obama to a group of Italian executives. "The FT" says he said this about the United States.
"People are in a really bad mood. We are a pathetic exporter. We have to become an industrial power house again but you don't do this when government and entrepreneurs are not in synch."
You may remember those quotes. GE said Mr. Immelt's comments were taken out of context and not reflective of the company's policies.
We're focusing on GE because it is one of the big name companies that make up our exclusive Q25. The index every quarter helps you to make sense of the earnings seasons. Now we are more than halfway through this latest edition of the Q25. If you look, these are the numbers of chips we have handed out. And so far the greens are handily-the greens, obviously, showing companies that are improved or beating expectations. Good earnings results are out numbering the reds. Companies are easily beating our criteria. And that probably means that corporate earnings, as a whole, are remaining robust.
Maggie Lake is in New York, where we need to obviously talk about the individual stocks. Remind viewers that are new, these are the criteria that you make. If you get four or five of them you get an automatic color, three or two in either direction and Maggie and myself, along with our producers, have a good old fashioned ding dong.
Maggie, let's start with, I believe, GE.
MAGGIE LAKE, CNN FINANCIAL CORRESPONDENT: Let's do it.
QUEST: It was five out of five, or four out of five, so there is not debate on the color. I'll put that one in straight away.
But you liked what you saw?
LAKE: I did. This is a good day all around for GE. And you know, this is one of these companies that it is not just good for GE but says good things about the economic recovery, because they are across so many sectors.
The standout thing here, Richard, is their equivalent (ph) orders almost all health care, energy, all the sectors of the business look good, including their finance arm. This was the dog for GE. It had been such a weight around the company but even that looks good. So again, good news for GE that that is shaping up; it is an important business for them, but also good for the economy.
QUEST: Which isn't surprising, Maggie, when you hear how Jeffry Immelt described the results.
(BEGIN VIDEO CLIP)
IMMELT: We showed this morning, great earnings for the company. Earnings up 33 percent. Financials services is doing great. Our industrial businesses have good orders growth. So the company is starting to fire on all cylinders again. And we have a lot of excess cash. We believe that the dividend is very valuable to GE investors, and so we think the dividend will continue to grow in line with earnings. So we're quite bullish on the dividend.
(END VIDEO CLIP)
QUEST: And not surprisingly I think the phrase used to be, as so go- the phrase used to be GM, goes the United States, I think it was. Anyway, or other-I thought it was GE. Oh, well, GE, GM.
One other company now, Bank of America. Again, there was no debate on the color, was there?
LAKE: No, there wasn't. This is not good looking. Only one out of five. It absolutely gets a red. But, Richard, it is worth pointing out what that one, the one criteria they did meet. And that was future optimism. Moynihan already said, the CEO, the new CEO that this was going to be-that 2010 was going to be a bad year. They had oh so many write downs in this it was actually confusing to understand.
But investors seem to with him on that future optimism. They are looking past this, looking ahead and thinking that there is going to be a turn around going on there. They are giving him the benefit of the doubt.
QUEST: All right. For Bank of America it was known as the kitchen sink quarter. They threw everything in, which is why you got really bad Q- on-Qs, year-on-year numbers.
LAKE: Yes.
QUEST: But, Maggie, most banks and most companies had their kitchen sink quarter about 18 months ago.
LAKE: Yes, Bank of America is very ingrained in all the trouble we are seeing with mortgages, not just the housing meltdown, but some of the controversy about the modifications and stuff. That is why they are still struggling. So absolutely a red, I'm just saying watch this space.
QUEST: Schlumberger, now for those who don't know, it is an oil drilling equipment company, heavy machinery, a U.S. corporation. It made an investment, an acquisition within the few some years, year or two ago. It is still integrating that.
The numbers were very good, Maggie.
LAKE: They were. I mean, you would hope so, right? With oil prices moving up the way they are.
QUEST: Ah.
LAKE: But still, still we can't take away four out of five, very good. They upped their dividend, didn't they? Their quarterly dividend, investors love that. And listen, let's remember there were some real questions with oil drilling, deep water drilling, after everything that happened with BP. So this is looking like a good-Schlumberger, they say setting the bar for that sector. So investors are happy with it.
QUEST: All right. Schlumberger, not a company we talk about very often, but certainly tonight, they get a green.
Important, one of those companies, important, Google. Now, should I go for a green, or a red, for the Google result tonight?
LAKE: Hmm.
QUEST: I wonder.
(LAUGHTER)
LAKE: It's getting boring to talk about. No, it is never boring to talk about Google. Hey, listen, four out of five, though. They are four out of five. What did they miss on? Oh, betting Wall Street estimates. They didn't beat by 10 percent, just 8, yeah. Listen, this company continues to rock.
But, Richard, interesting, we have been talking about it all day. A little bit overshadowed by the news of the change at the top, though.
QUEST: No doubt, overshadowed. And also they still haven't perfected their, uh, their social media strategy. So, we give it a green because it meets four out of five. It obviously gets a green.
Maggie, have a good weekend.
LAKE: Thank you.
QUEST: And we will see you back with us on-well, I'll be in Davos, you'll be in New York. But the Q25, let me remind you now, where we stand, three, six, nine, 12. So, the greens clearly now double over the reds. That is showing how corporate America is performing. Indeed, how the corporate world is performing. When we come back, in a moment, Google is getting all grown up. Larry Page is ready to run the company he founded. But even grown ups sometimes make mistakes, in a moment.
(DESK BELL CHIMES)
(COMMERCIAL BREAK)
QUEST: Call it coming of age, call it graduation day, but it certainly was Google's big day. At age 12 and three quarters, and with a profit from a previous quarter of 2.5 billion the company is setting out on life without adult supervision. That is how Eric Schmidt, the outgoing chief exec, put it as he announced he would be stepping down and becoming executive chairman.
In April, he will hand over the job to Larry Page, one of Google's founding fathers. Schmidt says Page, at 37 is now, in his words, ready to lead. Schmidt becomes the exec chair, the third man in the triumvirate, of course, Sergey Brin. He take charge of on work on new products. Schmidt described him as an innovator and an entrepreneur to the core.
This next phase, with a good report card, profits for the fourth quarter, as you have heard, and you can see it, 29 percent on the year; much better than the market had expected.
Eric Schmidt says he's happy to be going out on a high.
(BEGIN VIDEO CLIP)
ERIC SCHMIDT, OUTGOING CEO, GOOGLE: It has been a great privilege to be the CEO for 10 years, literally a decade. And a decade is a long time to be a CEO. So I'm very much looking forward to this. A new role, a more strategic role, and something where I can work on some new things, which I'm excited about. And I'm even more looking forward to working with my, literally, best friends, and partners Larry and Sergey. And I hope you all understand how powerful this triumvirate has been and how, for us personally, and how much it means to us as individuals.
(END VIDEO CLIP)
QUEST: That is the triumvirate, the adult supervision from Schmidt, ready to lead, from Paige, and Brin, who is the innovator. It looks like a generation tech is striking out on its own. We've been here before though, with mixed results.
Jim, you're champing at the bit.
JIM BOULDEN, CNN FINANCIAL CORRESPONDENT: I like how you called him the founding father, I mean-
QUEST: Which is the founding father?
BOULDEN: Well, you called Larry Page a founding father. I mean, that is somebody in their 70s, not somebody in their 30s. So it is interesting.
QUEST: You're just jealous. He's younger than you are-and me.
(LAUGHTER)
BOULDEN: You know, you could be forgiven for thinking that Eric Schmidt was the first CEO, or the only CEO of Google. But, of course, Schmidt, the so-called adult, was brought in as chairman and then CEO, in 2001 after he spent years at Novell and Sun. Now, who was that first CEO? Of course, it was co-founder Larry Page, when the company was founded in 1998. So, now after 10 years, Page is returning to that role, which a company that now has 24,000 employees.
Well, does that sound familiar? Let's look at two other examples. In 1998 the three-year old eBay hired Meg Whitman as its adult, by the two founders, and by the Venture Capital firm. Now remember in many of these cases, the venture capital firms, back in the `90s, were willing to money to these companies, but not necessarily to the kids who founded them. They wanted to see an adult at the helm. So Venture Capital brought in Meg Whitman. At the time it was actually called AuctionWeb. Now she worked for Walt Disney and Hasbro, so she was all about the brand. Of course, Whitman left in 2008.
Then there is the failed example, Yahoo!. Jerry Yang, of course, co- founder in 1994. He was not really the CEO. Tim Koogle, of Motorola, was hired for that role. And then in 2001, Terry Semel took the helm. You'll remember, though, in June 2007, Jerry Yang, himself, became the CEO. It was pretty much considered a failure, along with that aborted takeover bid from Microsoft. After 18 months, the adult, Carol Bartz was brought in, in 2008.
Now, of course, Larry Page will hope that he doesn't follow the Yang model.
QUEST: The Yang, the Whiteman, and the Page.
BOULDEN: Yes.
QUEST: It is absolutely fascinating. Jim, have a good weekend.
BOULDEN: Take care.
QUEST: See you on Monday.
Today is all about reading between the lines. And we've done just that, which is why we are bringing you some Tweets from the top. Eric Schmidt hadn't actually Tweeted since December 11 of 2010. Then all of a sudden, just 20 hours ago, he Tweeted the following: "Day to day adult supervision no longer needed." Eight short hours later he Tweeted, this is from Schmidt. He says, "Stepping up as exec chairman. New to dos, London- Monday, Munich-Tuesday., Zurich-Wednesday, Davos-Thursday."
So, that is a Tweet from the top him. AOL's co-founder Steve Case said, and this was the key question, "Was Eric Schmidt pushed or did he jump? Both."
Those are the sort of Tweets we like. Case was quoting a piece from "The New Yorker" magazine. You may want to read that piece from "The New Yorker" magazine. And I've posted a link to it, where you can find it. Twitter.com/RichardQuest. And you can read and Tweet yourself, accordingly. Follow the program and see what we're up to.
I'll be keeping you up to date, by the way, you over there, now. I'll be keeping you up to date with my Davos travels.
A boost for daddy daycare, a new era on the horizon. Some British dads will show new fathers what to expect.
(COMMERCIAL BREAK)
QUEST: In the workplace there are few more, perhaps, controversial or at least issues that will get people talking other than that relating to parental and maternity leave. Now the U.K.'s coalition government is bringing in new parental leave plans designed to help working mums and dads of newborn babies.
Now, let's look at it from the father's point of view. Right now, U.K. fathers get two weeks off, with pay. Mums received up to a year with nine months of that paid. Come April, fathers in the U.K., if the proposals go ahead, will be able to take over part of their partner's maternity leave, after six months. In other words, if the woman has to go back to work, the dad can pick up the slack.
In the United States, well, what can we say about the United States? Many employers are required by federal law to offer 12 weeks unpaid leave, it is a part of the parental medical leave legislation after the birth or adoption of a child. But there is not right in the United States, paid leave measures have been introduced, but that varies from state to state.
Sweden, ah, Sweden: In Sweden, 13 months paid maternity leave. And you can split the time off with your husband. Sweden perhaps is the gold standard of this; 85 percent of Swedish dads say paternity leave, the law says they must take at least-at least, 12 months.
In there, there you have the United States. There you have Sweden, and there you have London. Let's bring in our three parents, one from each country, we've highlighted. We're happy to put the human face on the numbers. Manoj Ladwa is the senior trader at ETX Capital. It offers a U.K. father's view form London. In the United States, "Pink" magazine's chief exec and co-owner Cynthia Good joins us from Atlanta. And we're also in Sweden with the Stockholm midwife, Doctor Jonas.
Let's start with you, in London. Why would you take, would you take, Sir, parental leave if you could?
MANOJ LADWA, SR. TRADER, ETX CAPITAL: I would take parental leave, Richard, for the two week period. But then you can perfectly understand, people take it for much longer period. It allows a lot more flexibility for parents here in the U.K., but then it is given the current economic environment there are a couple of problems with this. Certainly for the employee, for the male employee being that long, for that long of a period out of the workplace. Especially if you are working in sales or performance related environment, coming back in to your job, after a prolonged period away from work, you could find that your remuneration has dropped, or you could feel pushed to the wayside.
QUEST: All right. OK, but so you are being hesitant if this law or this rule comes in to actually split the paternal leave, with your partner?
LADWA: I would be. I would be. At the end of the day my partner is home, she is a full time housewife, so there is not there much to split, so after the two weeks I'd be back to work as normal.
QUEST: Doctor Jonas, splitting of the parental leave? Do you believe that is the right way, and if so, what do you think it gives?
Hello, can you hear me, Doctor Jonas, in Stockholm?
DR. WIBKE JONAS, MIDWIFE: Oh, yes, I could hear you. Sorry.
Well, actually I should say, I think it is not 12 years (sic) to the dad, in Sweden; it is two months that our-he has to take this parental leave. But then, still, it is up to the parents how they want to split this parental leave.
(CROSS TALK)
QUEST: Right, but the core question is, taking the parental leave, what advantage do you think it gives, allowing the father to partake in the parental leave?
JONAS: I think there are a lot of advantages. The first advantage is there is also very well documented is the breast feeding duration for the mother. If the father is at home and is supportive and he ahs a positive attitude to breast feeding. Then mothers will breast feed significantly longer than a father who is not at home.
So that is a public health issue, actually. And then, we also know from a master's thesis, that I have examined, at least, we know that fathers who had been at home with the children, have a much better relationship with them, than the children when they were growing up.
QUEST: OK.
JONAS: And the interesting thing is that it was especially true for girls, when they became teenagers.
QUEST: Right. OK, let's just pause there and talk to Cynthia Good in Atlanta.
Cynthia, if we look at the U.S. position, by any standard, compared to Sweden, or the U.K.. You are in the developing world?
CYNTHIA GOOD, CEO, PINK MAGAZINE: You're right, Richard, but what we see in the United States, is still is that idea that parental leave is really all about maternity leave, it is really all about women taking the time off. So the perception is that having a child is really still, in this country, a woman's issue, and not a family issue.
Also, similar to in the U.K., here in the United States, a vast majority of women and high level executive positions. Either an at home partner, or they don't have kids, because it makes it harder for the woman to juggle all of this. And for her to be taken seriously in the work place.
QUEST: All right. But would you favor, yes, or now, would you favor, halving or allowing the splitting of the maternal leave with the father?
GOOD: Well, there are a lot of complications. It is a difficult challenge for smaller businesses, as you heard earlier in the conversation. Overall, though, I think it is a fantastic thing when it comes to women in the workplace. We saw even, in Sweden, as more men began to take the paternal leave. We even saw that change, in the home, correlated to higher pay for women in the workplace. That's nice.
QUEST: Final question to you, in London, Sir, would you swap your position with either Sweden, or the United States? Yes, or a no, do you think?
LADWA: No, I'm perfectly comfortable with the position that we have here in London. I think two weeks is probably, probably just about adequate.
Cynthia, in Atlanta, would you swap your position, with Sweden or the U.K.?
GOOD: Well, you know, I really want to see women get ahead. This certainly is one way to change some of those stigmas attached to women in the workplace. I think it is a really exciting thing in the United States is going to be watching carefully.
QUEST: Ah, ha, I'm not sure if we got a yes or a no on that, but a diplomat nonetheless. And doctor, in Stockholm, I finished with yourself, because you've got the most generous leave around. Would you swap with the U.K., or the U.S.?
JONAS: No, I don't think so?
(LAUGHTER)
QUEST: No surprises for getting that. Thank you, very much, all three of you for joining us on this Friday. And whatever you are doing with your families this weekend, I hope you have a good weekend. Many thanks, indeed.
It is the premier week on Piers Morgan Tonight. And it continues in about 30 minutes from now.
(DESK BELL CHIMES)
The interview everyone is talking about, Ricky Gervais, with is first comments since the controversial appearance on the Golden Globes this week. During the ceremony Gervais took hits at celebrities with his comments. Some say the critics say they weren't as much funny as barbed personal attacks. Gervais, tonight, defends his performance.
(BEGIN VIDEO CLIP)
RICKY GERVAIS, ENTERTAINER: I'm not judging them. I'm not judging them for what they did.
PIERS MORGAN, CNN ANCHOR, "PIERS MORGAN TONIGHT": You are mocking them, aren't you?
GERVAIS: No, I'm not. I'm-I'm-I'm-I'm confronting the elephant in the room. They hired me. Like I'm going to go out there and not talk about the issues in their industry. Don't forget I've got to be an outsider there. I mustn't come out there as everyone's mate and schmooze. That is nauseating. I've got to come out there and I've got to roast them.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN. And here, the news always comes first.
And these are some of the top stories.
Tough questions for the former British primary, Tony Blair, along with shouts from a packed public gallery as he appeared before a panel looking into Britain's decision to go to war in Iraq. It was Mr. Blair's second time being questioned. The panel chairman said he was recalled to clarify events surrounding the March 2003 invasion.
Representatives from each permanent member of the U.N. Security Council plus Germany have been meeting with Iran's top nuclear negotiator in Turkey. The world powers are pushing for Iran to freeze its nuclear program, but the Islamic republic has said that's not going to happen. Neither side shows any sign of backing down.
Protests outside the Albanian prime minister's office turned deadly, as a crowd of thousands called for his resignation. Officials say at least three people were killed during the demonstration. It was called by the opposition Socialist Party, which accuses the government of corporation and electoral fraud.
Apparently, it's not who you know or what you know, these days, it's what you don't know that's most important. And that's the philosophy of the economist, Nassim Taleb. His book from 2007 was called, of course, "The Black Swan." It's all about unforeseen risks. They come from nowhere and they have a huge impact on the world. It was a shocking book at the time, but as we look back at his predictions, they seem even more extraordinary.
"The Black Swan's" synopsis has now been used by Taleb to perhaps look at other ways of moving forward and judging risk.
For example, when it came to "The Black Swan," he predicted the financial crisis. He said that banks were arrogant for being so exposed to risk. He -- the quote, "We've never before lived under a threat of global collapse, globalization and interrelations of banks, when one fails, they all fail." The next black swan, Fannie Mae, "seems to be sitting on a barrel of dynamite," he wrote. "Financial crisis worse than the 1930s."
And as for the third black swan, he's critical of the U.S. government. He says stimulus plans are like giving more drugs to an addict.
Now, the important thing about Mr. Nassim, Dr. Nassim Taleb's views, is he says what's happening in the U.S. is not a black swan because everybody has already warned about it. He was in Athens when I spoke to him on Thursday and he drew worrying comparisons between Greece and the U.S.
I asked him if he thought the world economy was getting back on track.
(BEGIN VIDEOTAPE)
NASSIM TALEB, AUTHOR, "THE BLACK SWAN": Invariably, people are at the worst point when they're complacent. And, of course, it's exactly like a patient who has cancer. The worst point is right before they're diagnosed with cancer, when they feel that everything is OK and they act in a very complacent way.
I was in Greece three years ago and three years ago, everybody was happy, everybody was complacent and they're running deficits, OK, with this illusion of the future, you know, being rosy, as it had been in the past.
Today's it's exactly the opposite situation. It's like a patient undergoing chemotherapy. You look at them, they look sick, but, in fact, they're a lot better off than they were before.
I like Greece, because, from my experience, not necessarily my experience in economics, my experience in dealing with risk, well, compare the situation with September 11th. New York City was vastly safer on September 12th than it was on September 10th.
Well, it's the same thing with Greece today. They're doing something about it. They're talking about it and they have an immense amount of anxiety, OK?
Perhaps not as much anxiety...
QUEST: But...
TALEB: -- as the IMF would like them to have, but enough anxiety that they're going to find something.
My problem is not Greece. The real problem is the United States, where we have no such anxiety.
QUEST: Right, now let's, let's just take that point, because, again, adopting your black swan theory of the unexpected, the unforeseen, out of the -- out of the unknown, if we cannot see that...
TALEB: Yes.
QUEST: -- we know the deficit problems. We know what is happening within the United States at the moment. But you say that that's a clarion call that's being ignored.
TALEB: Exactly. What's happened -- I mean I deal with -- with the notion of robustness and fragility to black swan events.
So to me, someone who is flying a plane fully aware of the existence of storms and a little paranoid will do a lot better in the long run than a pilot who's vastly too optimistic and has never heard of storms, OK?
In the United States, we have an immense amount of complacency. The system is very fragile. They seem to talk about quantitative easing as if it were a win-win situation, not understanding that these things can get out of control.
The United States is -- doesn't have adult supervision. Greece has Germany, the EEC and the IMF. For all of its ills -- I'm not -- I'm no fan of the IMF, but the mere existence of someone disciplining a country is going to be very good at forcing them to find their own solutions.
The United States doesn't have the IMF. We are running humongously large deficits. We are in a situation in the United States of risk blindness that you don't have elsewhere.
QUEST: OK...
TALEB: The Europeans are one step ahead of the rest of the world.
QUEST: That is an extremely pessimistic approach pondering the future of what might happen next.
Would you agree?
TALEB: Well, I mean, pessimistic -- I am less pessimistic about Europe than people -- people (INAUDIBLE)...
QUEST: The USA, though, talk about the USA.
TALEB: About the U.S., I am -- I am very pessimistic about the transfer of private debt in the United States and the transfer -- the conversion of private debt into public debt. I am extremely pessimistic about the total level of debt increasing be -- thanks to the deficits. And I'm extremely pessimistic about the government of the United States, because it doesn't look like they have an idea of what got us there. They're -- they're -- they're talking about recession, not about risk, whereas in Europe, they understand that what got us here is debt and the problem is principally debt.
QUEST: Right.
TALEB: So -- so there's -- there's -- we have a complete different approach here than we do there. And that is why I'm much more comfortable in Greece, because people -- people are talking about the crisis. In the United States, people are talking about recovery and jobs and things like - - like that, not -- not discussing the core of the problem.
QUEST: Nassim Taleb.
And as he warns about what happens in the United States, do bear in mind, he wrote the book, "The Black Swan." And he did forecast the last recession.
Another year, another strike -- British Airways cabin crew plan another walkout.
The weekend weather, in just a moment.
(COMMERCIAL BREAK)
QUEST: Passengers of British Airways flights could face further disruption because the airline's cabin crew union members have voted in favor of striking once again. It's all part of the two year dispute over pay and starting levels.
Unite union's head, according to them, it's the fourth time in 13 months the cabin crew have voted for a strike action. B.A. looks at the numbers and says the union doesn't have the support of the majority of cabin crew. No strike dates have yet been announced. We'll let you know when they are.
The weekend is upon us.
And Pedram is at the World Weather Center, as we take a look at Europe. I suppose most of us really only want to know good, bad or indifferent.
PEDRAM JAVAHERI, CNN METEOROLOGIST: You have no choice, I guess. Yes, the conditions out there across much of Northwestern Europe, Richard, it looks like, are going to be pretty benign the next couple of days. And that's pretty good timing here for the weekend, as high pressure kind of pitches a tantrum here in parts, really, for the next couple of days and gives you generally foggy conditions in the morning hours and perhaps some Sunday breaks in the afternoon. But it's across portions of Central and even Eastern Europe, where we have some of colder temperatures. And a widespread area of snow showers is certainly possible, from Northern Italy across the Alps in the mountains, get up above a couple of thousand meters and you're talking about significant accumulations possible. And the moisture source is certainly there.
This storm system right here, in the Western Mediterranean, that will pump in the moisture. Again, temperatures cold enough to support a nice line of snow showers all the way across Bosnia and Herzegovina, there across portions of, say, Croatia, Albania, all Yugoslavia certainly have a chance to pick up some significant accumulation in the next couple of days. And, again, it begins to taper off as you work your way out toward portions of Eastern Ukraine over the next couple of days. And the major travel issues, the large scale air force, at least, not going to see many of them here.
But it's just some of the lower lying clouds or the fog that could cause some problems.
Now, talking about problems, take a look at these current temperatures. Out of the North-Central United States, on into Canada, talking about 22, 15, 14 degrees below zero. Right now in Chicago, you factor in the winds and it feels a lot colder than these temperatures. But it was earlier this morning they had some remarkably low temperatures. And believe it or not, some of the lowest readings on Earth coming out of the United States here. It has low temperatures at 43 degrees below zero Celsius, in International Falls, Minnesota. That translates to minus 46 degrees Fahrenheit. And again, large scale temperature contrasts here, about 35 to 40 degrees below the seasonal averages. And, incredibly, the temperatures well into the 20s in portions of South Florida. So you can kind of see what a disparity we're talking about as far as in air masses in place.
But look at that temperature. That's the 43 below we're talking about in International Falls, Minnesota.
Now, how about the coldest place, typically, on Earth?
That's Vostok, Antarctica. They have the world record at minus 90 Celsius, or minus 127 Fahrenheit, for the coldest temperature ever recorded on Earth. Look at this -- minus 38 degrees. It was actually warmer in Vostok than it is -- it was in Minnesota, in the U.S. in Minnesota hereon Friday.
So again, very cold temperatures across the United States, but talking about what's happening, quickly, over areas of Brazil, some scattered showers around the areas hit the hardest here, Richard.
But now the focus turns a little farther south as the state of Paranah (ph) down to the south there, south of Sao Paolo, it looks like some heavy rain certainly possible the next couple of days, which could lead to some problems there. So we'll be monitoring that throughout the weekend -- Richard.
QUEST: Well, yes.
Thank you very much.
JAVAHERI: Yes.
QUEST: And that is QUEST MEANS BUSINESS.
I'm Richard Quest in London.
I thank you for joining us on our nightly chat on business and economics.
Whatever you're up to in the hours ahead, I hope it's profitable.
"MARKETPLACE AFRICA" is next.
(COMMERCIAL BREAK)
ROBYN CURNOW, HOST, MARKETPLACE AFRICA: This is MARKETPLACE AFRICA.
I'm Robyn Curnow in Johannesburg.
Now, businesses here in Africa are eagerly watching the results of that historic referendum in Sudan. If Southern Sudan does become the world's newest country, well, then there are going to be plenty of business opportunities in a nation that's largely underdeveloped.
Well, David McKenzie has been there so he gives us an In Focus look at the first wave of commerce in Southern Sudan.
(BEGIN VIDEO TAPE)
DAVID MCKENZIE, CNN CORRESPONDENT (voice-over): Africa's newest frontier -- a beer run through the capital of what will be the continent's 54th country.
During Sudan's civil war, southerners rode bicycles through the mine fields to bring in beer. How things have changed.
In just four years, SABMiller got their state-of-the-art brewery. The first beer came down the line in 2009. Now, it brews upwards of 20 million liters a year. And it's becoming a major soft drinks and bottled water player. It was a risky move, but in business and branding, being first counts.
IAN ALSWORTH-ELVEY, MANAGING DIRECTOR, SSBL: First in is always great because you can leverage that position of first in. You -- it helps win the hearts and minds of the consumers when you're first in.
MCKENZIE: They snagged customers with a new lager called White Bulb, a powerful symbol in Sudan, banking on the aspirations of a new nation.
(on camera): This is one of the busiest markets in Juba. It's called Custom because literally during the war, it was a customs checkpoint. The southern rebels held the bush and the northern army held the town and would check people coming in and out.
And it's not just the name that show a legacy of war here, like a lack of development. Most people can't read and write. Few have skills. And there's little infrastructure.
While there is plenty of hope, it may be up to foreign companies to build the most fundamental blocks of the economy.
ZACH VERTIN, ANALYST, INTERNATIONAL CRISIS GROUP: Well, I certainly think there's a lot of interest already. And it may take some for a broader pool of investors to -- to -- for interest to take hold here in Southern Sudan, but we've already seen a huge investment from the region. Ugandans are driving cars and building houses. Eritreans are here opening businesses. Kenya is -- is -- is developing, you know, new business plans here, in conjunction with South Sudan. So I think it may start from the region.
MCKENZIE: Oil is the South's biggest asset. It provides more than 90 percent of the revenue. But economists believe that it's not enough to build an economy from scratch.
ALSWORTH-ELVEY: The government here has created or created a very enabling environment for investment. You know, they have a very good investment promotion act. They understand that they have to broaden their base of revenue and not solely rely on oil.
So, yes, they have created a great environment for investment, in any sector here.
MCKENZIE: But that needs a skilled workforce. Diana Hasan was trained as a chemical engineer in the U.K. On her first trip back, the brewery approached her.
DIANA SUSU HASSAN, HEAD OF QUALITY CONTROL, SSBL: I needed to contribute to my own society. I needed to give back for what was given in to me. But I left when I was very young. So I felt that it would be helpful for me to come back to also be -- to be part of the vision of the society.
MCKENZIE: There's a long list of challenges in operating in the South. Absenteeism is high and maintenance imparts a headache. Everything but the water needs to be imported. But the payoff can be huge in profits and people.
BIZMARK ROMA, BREW MASTER, SSBL: Hey, it's not every day you see a new country. So investors will have to come. It's a new market.
MCKENZIE: Many investors are waiting for a more solid foundation before they dig in. But it's clear that the South is advertising for business. The only thing left is to decide who will occupy the space.
David McKenzie, CNN, Juba, Southern Sudan.
(END VIDEO TAPE)
CURNOW: Even when the referendum results are known, there will still be many issues to be sorted out between Juba and Khartoum, issues around citizenship, the borders, and, of course, oil revenues. Apparently, the North and the South divide the oil revenues 50-50. About 75 percent of all the oil is based in the south, but the Chinese-built pipeline goes through the North.
Up next, it's hard becoming a successful entrepreneur in Africa, but it can get easier if you know about our Face Time guests. Meet Tim Vang, next.
(BEGIN VIDEO CLIP)
TIM VANG, CO-FOUNDER, MYC4: It's not about waiting for the U.N. and others to take the lead. It's about you and I having a tool at our fingertips to be able to help and save the world and develop it.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
CURNOW: Our guest on Face Time this week is Tim Vang. He heads up a company called MYC4. It's a bit like a matchmaking service, but instead of helping people to find love, he helps small businesses find money -- essentially pairing up owners with investors.
Well, Max Foster recently caught up with him in London.
(BEGIN VIDEOTAPE)
MAX FOSTER, CNN INTERNATIONAL ANCHOR: In terms of, you know, where you got the idea from, what was the need that you discovered?
VANG: Yes. Six years ago, I meet the other co-founder, Ness (ph), in a cap (ph) in London by coincidence. And he's been working the last two decades within and for Africa, whereas I haven't. I mean my knowledge of Africa was really, you know, a small piece.
And -- and we actually got inspired by how we can help Africa. We read everywhere that Africa is growing, Africa is -- I mean the GDP growing 5 percent a year. But -- but actually, the access directly to these itames (ph), small and medium sized enterprises, is hard to access.
So we said, could we create an infrastructure that we're investing directly into African entre -- entrepreneurs?
I mean we would have a completely different story. It's not about waiting for the U.N. and others to take the lead. It's about you and I having a tool at our fingertips to be able to help and save the world, make a better world.
FOSTER: So we get the story of someone that's looking for some finance, is that right?
VANG: Correct.
FOSTER: And then you can offer a loan?
VANG: Yes.
FOSTER: Explain how that works, though, on the site.
VANG: At round numbers, an entrepreneur is looking for 1,000 euro. We have 10 people each with 100 euros and you go in and bid. There's a Dutch auction. So you come with a very attractive offer of 3 percent. I am -- I'm trying to optimize my bid and come with a 28 percent. And altogether, the average weighted interest is then -- is that fulfills (ph) that the borrowers need. And then Person Number 11 comes in and says, Tim, you're too expensive and kicks me out with a lower interest rate and I can come back into the auction.
FOSTER: So someone with some money can offer a loan and the one with the cheapest rate, in the end, gets to give the loan?
VANG: Yes, and not just one, it could be several. We've seen loans with one lender. We also see it with several hundreds of lenders in -- in each loan.
FOSTER: So give us an example. I know you've got an example here of a product that's actually made it through the process, right?
VANG: Yes.
FOSTER: So just take us through this product.
VANG: Yes, this is a new supply chain project. We're working with the largest supermarket chain in Denmark, called FTB Co-op (ph). And for the last two years, we've been working on it on the white board, and now it's a realization.
It's a yogurt containing mangoes grown in Africa. And the story goes that the Tabu Delies (ph), which is the person on the picture here, is -- is wanting a loan. He wants to buy some steel wire for the mango trees to grow. He wants to buy some shade. And he wants to buy a simple irrigation system for his -- for his output to grow.
This, by buying this, it's retailed at 2.25 euro and 40 euro cents is paid by the supermarket chain into a pocket where they invest into the entity.
FOSTER: OK. And how do we know that Tabu isn't using some of the money that your businesses lent him in his home on -- on a project which isn't the project that you think you're investing in?
VANG: We have providers which are our partners in Africa, financial institutions that are doing the vetting of the business, looking at the -- the business plan and -- and I mean business plan is a big word for a small loan -- but vetting this business -- can they repay, do they have the ability?
And also we -- we run spot checks, meaning that we are ensuring that the loan they're asking for is also used for the business growth so they are not -- in order to be -- to be able to repay the loan with interest.
FOSTER: How do I know that that is safe, because I know that you're not a bank, so you're not regulated like a bank.
VANG: Right.
FOSTER: Where does the regulation come from?
VANG: We work together with banks, meaning we are, popularly said, we are a platform on top of banks...
FOSTER: OK...
VANG: -- meaning your money will never be in our platform, it will be in a bank. And that bank will be transferred to another bank in the -- in the local country that it's being dispersed. So we are a -- kind of the steering mechanism that is sending messages down to the -- the bank to be - - to be sent out.
FOSTER: And what are you appealing to in terms of the loan givers?
Are you offering them a chance to get involved in charity or is this just pure business in a -- in an economy which inevitably will grow?
VANG: I think it's a combination. I think these two things go hand in hand. And a smart tool line would be business must be for profit, but profit must be for a purpose. I was once asked, Tim, are you stealing the money from poor Africans?
I said no. But you are trying to optimize your bids?
I said, yes, the more I make, the more I can reinvest. And from there, that conversation kind of ended.
So I mean it is a -- for some, it is an -- an obvious I want to make a profit. For others, it's clearly the social up side of helping other people.
(END VIDEO TAPE)
CURNOW: Tim Vang there from MYC4.
Now, here's what's trending this week.
(BEGIN VIDEOTAPE)
CURNOW (voice-over): The Massmart-Walmart deal is sealed, but not without some lingering controversy. Ninety-seven percent of Massmart's shareholders approved Walmart's $2.3 billion offer for a majority stake. But South Africa's largest union, COSATU, threatened boycotts of Massmart, saying Walmart has been unfriendly to unions in the past.
Walmart has said it will honor a Massmart standing agreement with the union.
And Toyota of South Africa has just made a $52 million sign of its commitment to stay in the region. Toyota is building a new warehouse in Kartang (ph) which will be the largest of its kind in Africa. The warehouse will employ 800 people and will provide parts to Toyota dealers in Southern Africa, as well as ship parts to Europe and other African countries.
(END VIDEO TAPE)
CURNOW: Well, that's it for this week's show.
I'm Robyn Curnow here in Johannesburg.
Remember, you can watch all of our interviews and stories online at CNN.com/marketplaceafrica.
But until next week, good-bye.
END
