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Quest Means Business
Spain Out of Work; Austerity Activists; U.S. Retail Sales Rise; U.S. Stocks Trading Higher; Global Consequences; interview with Richard Fisher
Aired November 15, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, CNN INTERNATIONAL HOST: The Occupy Wall Street Movement, moved on. Police forcibly evict protesters.
Nervous markets: Italian bond yields top 7 percent.
And the luxury of emerging markets. Burberry's chief executive tells us next season looks strong.
I'm Max Foster. This is QUEST MEANS BUSINESS.
Hello.
It started as a protest against economic inequality. Thousands gathering in Lower Manhattan to express their discontent. The protests against finance proved popular and global, sparking solidarity movements across the world. Police have now torn down tents and have arrested more than 100 people who refused to leave on their own.
This hour, we will be live from Wall Street, where Mayor Bloomberg has ordered the protesters camp to be removed.
(BEGIN VIDEO CLIP)
MAYOR MICHAEL BLOOMBERG (I), NEW YORK CITY: Protestors have had two months to occupy the park with tents and sleeping bags. Now they will have to occupy the space with the power of their arguments.
(END VIDEO CLIP)
FOSTER: For the first time in almost two months, Wall Street is unoccupied. Riot police have cleared the protest camp in New York. Now there is a standoff between protestors, city officials, and local judges. All with different ideas about what should happen next.
Maggie Lake is at the park at the center of this whole debate, Zuccotti Park in Downtown Manhattan.
And actually a very smooth operation in the end, because it took everyone by surprise.
MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: Yes, that is right, Max. And I would say they are not in the park, but Wall Street very much occupied still. The protestors have ringed around Zuccotti Park, the former headquarters. The barricades are still in place. The hearing still underway over the legality of whether the protestors have a right to occupy that private property.
I want to bring in someone from the movement. Peter Dutro, who has been here form the beginning.
Pete, I want to get your reaction. What does this do to the Occupy Wall Street Movement now that you have been pushed out of the park.
PETE DUTRO, OCCUPY WALL STREET PROTESTOR: This is just going to make us grow. It is going to make us get stronger. I've already seen it unify the different groups. I've been amazed at the use of social networking and social media to get everybody on the same page today.
We had -- we started out very scattered at around 1:00 o'clock in the morning when they came in. They came in very violently, started tearing our tents apart, and pushing people out, using their batons.
LAKE: And, in fact, we have seen that sort of tension throughout the day, although not to the extent. There have been arrests. Is it important for the message, for the economic complaints, that have been registered all along; is it important for this movement to have the physical presence in the park still?
DUTRO: It is important, but what I think is even more important is that we have a billionaire mayor, who used the police to illegally evict us. As he stated before, we had our first amendment rights to protest, and they were just going to leave us alone. And then they came in with no warning, kicked us out, then there was a court order for them to let us back into the park and they have still not let us back in the park. So, they use the law when they want to use it, and when it doesn't suit them, they blatantly just skirt the law.
LAKE: Pete, when I came down here in the beginning, in the early days people had told me that we want to change the political dialogue. Do you feel that has happened with the movement so far? What needs to be done from here, when it comes to the economic issues, which are at the core, and unite this?
DUTRO: Well, I do think that that is still at the core. And I think today was actually a very, very good example of why these things need to be changed. You know? The police, the NYPD have been you know to protect and serve the people. And today they did not protect and serve the people. They protected and served people on Wall Street who knew that we had a week of action planned. And they did not want to see it happen. So they thought that ejecting us in the middle of the night would be the answer to their problems. And all this did is actually make us firm in our resolve.
LAKE: Pete, if you don't get in here tonight, what is going to happen? Are you going to stay here overnight? Are you going to continue to occupy the sidewalks here? What happens next?
DUTRO: I have a feeling that there is going to be a very heavy presence down here. I also know that other sites are being scouted. And this is just going to spread it.
LAKE: So you are not going away?
DUTRO: We are not going away.
LAKE: All right. Pete, best of luck to you. Hopefully, it is a peaceful evening.
And, Max, you can hear the tension there. They are determined to stay. The protestors say they have a legal right to be here. The city, right now, not letting them in. We have seen scuffles throughout the day. It is quiet now, but the numbers are growing down here again, and the police in riot gear remain behind those barriers. We are going to have to hear what the court has to say about this, Max.
FOSTER: Maggie, it does raise the question, could this strategy have backfired for the mayor. Could this embolden the campaign and make their presence even stronger? Whereas before it was actually quite localized, wasn't it?
LAKE: Well, I wouldn't say it is localized, but absolutely there is that feeling that on this two month anniversary that this has put the movement and the issues right back in the fore. Pete, himself, when we were talking to him earlier said, this is the worst thing that can happen, to see this sort of police action. But it is the best thing, as well, because it sort of underscores what we have been saying all along.
That there is a message that those in power don't want to get out. So, you know, social networking, Twitter, Facebook, has been buzzing with this all day. So, in a way it certainly does embolden. And it underscores the sort of difficult position that the delicate balance politicians are in, while the encampment has been controversial, the movement resonates with people. There was a lot of support for the messages of economic inequality, that are being voiced here. The fact there are no jobs, that there is such a divide between the rich and poor.
So there is a distinct possibility that those sort of issues, at the fore again, could pour more support into this cause. We'll just have to see, Max. Again, a very fluid situation and we will be watching it as the night progresses.
FOSTER: Maggie, thank you very much indeed.
Well, here in Europe fears over the bloc's debt crisis refused to die down. Today nervous investors sent the cost of government borrowing in Italy and Spain, into dangerous territory. In Italy, the yield on 10-year bonds has risen above 7 percent, a level that pushed Ireland, Portugal, and Greece into seeking a bailout. In Spain the 10-year bond yields are now more than 6.3 percent rising there.
Stock indices in Milan and Madrid both fell for a second straight session today. In Paris, fears that France will be next to get sucked into the debt spiral. The CAC 40 down to a six week low. Societe Generale, BNP Paribas, each lost more than 5 percent there.
Stagnant economic growth isn't helping boost confidence in any way. Official figures show the Eurozone's GDP rose by just 0.2 percent in the third quarter. That is exactly the same as in the second quarter, and the major slow down from the 0.8 growth seen in the start of the year.
Focusing in on Spain, though, it is an even worse picture. It's economy didn't grow at all in the quarter; falling from 0 -- actually from 0.2 to zero of a percent. So, a very grim picture there.
Well, for some people austerity is looking so last season. Burberry is wearing well through these tough times. We'll hear from the CEO on the secrets of selling luxury during a downturn.
(COMMERCIAL BREAK)
FOSTER: British luxury goods retailer, Burberry says it is defying global belt tightening and making more money out of selling luxury goods. Burberry says pre-tax income was $257 million for the six months to September. That is a rise of 26 percent for the half year. Sales went up 29 percent during the same period. There was also good news for share holders. Burberry is raising its interim dividend by 40 percent, to seven pence a share. Some rare good news. Burberry says its future plan is to focus on increasing space on shop floors at its top 25 markets worldwide.
CNN's Jim Boulden spoke to its chief executive.
(BEGIN VIDEOTAPE)
ANGELA AHRENDTS, CEO, BURBERRY: I would tell you in the developed markets we are not slowing down. We are focusing the investment in these flagship markets. In the developing markets, we are going at a very different pace. Obviously, you are on a low based. So we have just opened up a couple in Brazil. But the entire Latin America market has a strategy now. We are up to our sevenths store in India and as that market evolves we'll continue to invest. And we often go into these markets with franchise partners. So we're, you know, we're not typically doing that on our own.
And then as we just announced with our Saudi Arabian stores, we open a franchise, we get the market developed, and then we either do a joint venture or acquire that entire business back at some point when it is more developed.
JIM BOULDEN, CNN BUSINESS CORRESPONDENT: I noticed you are raising your dividend as well. So there is money in there as -- for the shareholders, that was something that maybe you wouldn't have done five years ago. You talked about wanting to invest in new stores, instead.
AHRENDTS: Absolutely. And we were thrilled. Thrilled to take our (UNINTELLIGIBLE) and 40 percent, almost per share. And you know, I just think that it reinforces also, at this stage, our confidence in the future of the business. And the confidence in the investments that we are making.
BOULDEN: You look at the volatility, as you talked about, especially in Europe and the volatility your share price as well, for the last six months. It hasn't reflected this great growth in places like Brazil, and China, and India. Why is that?
AHRENDTS: You know, I always tell the team, focus on what we can control. So the good news is the whole sectors has -- from a public standpoint -- has been just a volatile. The performance, however, has not. So I think we are all investing in the same markets and all of the luxury estimates came out. They are still projecting the sector up 10 percent. This year, still double digits the next three years. And they are also still claiming that 60 percent of the luxury goods sales should be done in these top 25 flagship markets. And we do believe that that investment is somewhat sheltered from the global volatility.
BOULDEN: When we talk about the Eurozone, do you spend a lot of time worrying about the upheaval? Do you look at what is happening in Greece? Do you look at what is happening in Italy? Or is luxury beyond that?
AHRENDTS: You know, you have to be cognizant of it. I mean, you know, Italy is a very strong market for most luxury goods brands, including Burberry. So you are very aware of it. And you've got very different business models and formats that you run. We have a very high specialty base in Italy. We had a very high specialty base in Greece.
So, you watch it coming and then you do everything you can to mitigate that risk. You know, in Greece we had a distributor that we were working with, but we opted then to take that business in-house and work directly with the strongest partners. So we have been able to offset that. Again, focusing on those big flagship markets.
So, of course you have to be aware of it. And you have to do everything you can to offset, but --
BOULDEN: But clearly volatility in the euro is not good for business, with the fluctuations in the currency markets. Again, something you can't necessarily do anything about. But you can plan for -- or can you not plan for?
AHRENDTS: You have to plan for, you know, you have to plan for the volatility. And again, it is -- I think there are a couple of things though, it is the great news is that when you are playing in 150 countries, always say that you have a great balanced portfolio. And one of the key messages I wanted to get across today at our presentation is -- and one of the facts I'm most proud of -- is every single region was up double digits. Retail and wholesale, key channels to market were up double digits. And in a case like Burberry we have got four key product divisions. And everyone of those was up double digits.
So you have different teams running the different markets in the different divisions and maintaining this consistent balanced performance is really what's critical. And that helps shelter you, again, from the volatility in the outside world.
BOULDEN: And Burberry, I remember asking a few years ago, it is not about cutting prices. It is not about sales, but sale signs in the window. You don't go through that kind of thing during recession and volatility and market upheaval and concern about economies.
AHRENDTS: No, honestly, just the opposite. I mean, we are doing everything to protect the long-term sustainability of the brand. You know, Burberry has been around 155 years. And, no, nothing short term. Everything is for the long term. That is why these big flagship stores that we are opening up. I mean, we are going from 8,000 to 25,000 square feet of selling space just right here in London alone with our Regent Street Store. We have just opened a beautiful Paris flagship last week. Taipei, Hong Kong, so no, I mean, it's a very -- when you are playing long term and you are playing the global luxury brand game, it is very different.
(END VIDEOTAPE)
FOSTER: Well, another company with plans for expansion is German- based software company SAP, which will invest $2 billion in China, during the next four year. Just before we came to air I spoke to Co-CEO of SAP Jim Hagemann. And I asked him just how important China was to his growth strategy.
(BEGIN VIDEO CLIP)
JIM HAGEMANN SNABE, CEO, SAP: Yes, it is a very important part of our growth ambitions. We have been in China for more than 20 years now and are by far the largest international play in the software arena, in China.
With the announcement today, at our user conference in Beijing, we are increasing our investment in China. We are seeing a large demand for Chinese companies to become global companies and grow internationally. And obviously SAP is the preferred choice for that. So we want to capture this opportunity with the increased investment in China.
FOSTER: How easy you finding it, working there, because a lot of companies talk about the restrictions and the pressure they face working there. But you are, obviously, not really having a problem expanding there.
SNABE: No, we have had very, very good relationships in China. I think one of the reasons is that we invested very early. We already today have 2,500 people in China. And we are not just selling and installing software in China, but are also innovating in China, which is an important part, of course, of the Chinese strategy.
If you look at the last five-year plan from China, a lot of that talks about how they need to build next generation infrastructures. And we come in with new technologies on the mobile side, with a country with 800 million mobile users; with cloud computing, which helps, of course, deploy software in simple ways. And we are in memory computing to analyze large volumes of data which is very much the challenge of the Chinese.
FOSTER: Are you talking about mobile services there? It is interesting isn't it, the way mobile services are developing in China? Just explain how you are cashing in on that. The way they are getting these extra services on mobile phones, which the Chinese are so interested in.
SNABE: Yes, it is a fascinating story of a country that kind of jumped, leapfrogged over one generation of technology and moved directly to the mobile phone, in a very, very strong way. We feel a lot of productivity gains can be made with this technology if we bring the mobile device, not just in a consumer context, but in a business context. And as you know, we acquired Si-Base (ph) last year, a very successful acquisition to be number one in business mobility. And now we are bringing these assets into China and see a tremendous opportunity to leverage the mobile infrastructure already there.
FOSTER: And this drive in China and the Asia-Pacific, is this a reaction somehow to what is going on in your home market? Obviously, Germany caught right in the heart of this euro crisis, which seems to be going from bad to worse.
SNABE: No, actually I must say that we have very strong business, even in Europe. We just reported a couple of weeks ago our Q3 numbers, the seventh consecutive quarter of double-digit growth. And indeed we grow rapidly in Europe, in Germany, for instance, our growth in software was 37 percent. And if you consider how a mature that is and how strong a market share we had, you'll see that with the innovation strategy that we have articulated. We have a tremendous growth opportunities not just in Asia, but also in very mature countries like Germany.
FOSTER: I mean, are you happy, politically, with what is going on with your government and those Eurozone governments?
SNABE: Well, it is clearly a fact that we have a debt crisis in Europe. I must say the way I've seen the politicians handle it, and particularly the (AUDIO GAP) have been very firm on their commitment to the euro, which I think is very important.
And we shouldn't forget, of course, that the root cause of this crisis was the financial services industry that went too far in risks. So, countries bailed them out and now some countries need some help. I think it is a healthy iteration for Europe to make sure that even on a country level we are getting more productivity in Europe. And that we focus more on innovation. And that is exactly what we have done at SAP.
(END VIDEOTAPE)
FOSTER: Well, all work and no play makes for a dull day at the office. So it is time for our bosses to liven things up. Your appointment with "The Boss" is right after this.
(COMMERCIAL BREAK)
FOSTER: Well, it doesn't matter how good a boss you are, when you are running the show you are only as good as the people around you. This week, Francis Lui from Galaxy Casinos, and Sean Cornwall, from eHarmony, are both taking the time off -- or taking time, I should say, to reward their staff. And who is to say they can't have a little fun themselves. It is time for "The Boss".
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Previously on "The Boss": A different kind of matchmaking. Sean Cornwall introduces us to the agency that will be creating his eHarmony adverts.
SEAN CORNWALL, VICE PRESIDENT, eHARMONY INTERNATIONAL: I thin it is very important that Kamarama bring in thinking, approaches this in a different way.
UNIDENTIFIED MALE: And in Macao, Francis Lui finds room for improvement.
FRANCIS LUI, VICE CHAIRMAN, GALAXY ENTERTAINMENT GROUP: Maybe ask me if we should get it back and we do it again, I want to make the pool even bigger.
UNIDENTIFIED MALE: Francis Lui is used to being in the spotlight. He has even grown accustomed to the handshakes and the pats on the back. Today, however, it is not about him. The celebratory claps are for his staff, who tonight are being congratulated for their hard work and loyalty.
LUI: This is a special night for us. This is the night when we celebrate with our team members.
UNIDENTIFIED MALE: As the vice chairman of Galaxy Entertainment Group Francis Lui is leading the celebrations, with a staff banquet organized by this executive team.
This is one of 12 staff dinners designed to thank employees who have been with him since the beginning.
(CHEERS)
UNIDENTIFIED MALE: In this case, they are celebrating the fifth anniversary of Francis' Star World Casino.
LUI: I think in the hospitality business, staff is by far the number one asset of the company. And we treasure every one of them very, very much.
UNIDENTIFIED MALE: These are not empty words. Francis knows he is nothing without this staff. And in Macao where there are too many jobs and not enough people holding onto your staff is key to success.
LUI: Of the 5,000 people that we have in the company, who work for us, up until the end of last year, 3,000 of them actually stayed with us. So that is a colossal, impressive retention rate. But this is a very competitive market.
UNIDENTIFIED MALE: To retain his staff, Francis knows he has to keep them happy. And celebrations like this one, with dinner, entertainment, and raffle prizes, help to do just that.
LUI: While they stay with us we make sure that we give them all the facilities, that they can work with, and make sure they can do a good job.
(On Screen Translation): People asked me whether the opening of Galaxy Macau will impact Starworld. The Starworld business has actually been better since the opening of Galaxy Macau.
People asked me why the two hotel's business is so good. I say because I have a great staff!
(APPLAUSE)
UNIDENTIFIED MALE: In Soho's central London, another boss is following in Francis' footsteps, and taking time out with his staff. Sean Cornwall, the head of eHarmony International, is joining his team at the quiz night.
CORNWALL: We spend a lot of together, I think it is important, occasionally, to make sure that everyone just kind of pauses for a second and just has some fun.
UNIDENTIFIED MALE: Sean organizes events like this one on a monthly basis. For him it is the best way for his team to get to know each other.
UNIDENTIFIED MALE: Ladies and gentlemen, good evening, and welcome to the (UNINTELLIGIBLE).
(CHEERS, APPLAUSE)
UNIDENTIFIED MALE: With beers to hand, and chicken and chips at the ready.
UNIDENTIFIED MALE: Are you ready for question one, round one, ladies and gentlemen?
UNIDENTIFIED MALE: This eHarmony team is ready to go.
UNIDENTIFIED MALE: Steps have a new single?
UNIDENTIFIED MALE: Oh, no, I won't get this. Count me out.
UNIDENTIFIED MALE: Sean believes nights like these help break down the barriers that come with being the boss.
CORNWALL: I guess I do want to be seen as someone who is more informal, and who has that balance, between work and life. And I want people to have that integrated sense of themselves; that they can be at work, who they are .
UNIDENTIFIED MALE: This Sunday, Knights of October was the 44th anniversary of which icon's assassination?
(UNINTELLIGIBLE)
UNIDENTIFIED MALE: We all know it, but does the boss of eHarmony?
(LAUGHTER)
UNIDENTIFIED MALE: Despite the laughter, Sean, is the first to admit it is impossible to completely remove his bosses hat at events like this one.
CORNWALL: From their perspective I'm still their boss, I'm still their manager. And you know, they will always view me as that. But I'm not there analyzing them. I'm not there taking notes or scoring them. One, that is totally unfair, and two, it is not the point of this.
(UNINTELLIGIBLE)
UNIDENTIFIED MALE: As the quiz night reaches its finale, Sean is glad he is making time for his team. After all, it is a win-win situation for both employee and boss.
CORNWALL: These events definitely help productivity, because people enjoy them, which means they get to know each other better. Which means they have more fun at work, because they like the people better and they know the people better. And if you have more fun at work, ultimately, you are more productive.
UNIDENTIFIED MALE: Next week on "The Boss": We follow Sean Cornwall from London to Berlin, as he pushes his brand to main land Europe.
And in Brooklyn, New York, Steven Hindy expands his empire by betting on Italian beer.
(END VIDEOTAPE)
FOSTER: Meanwhile, out of work, and out of options. Spanish unemployment just keep getting worse, we'll take you to one city where hope is in short supply.
(COMMERCIAL BREAK)
FOSTER: Welcome back.
I'm Max Foster.
These are the main new headlines this hour.
The Turkish prime minister says the Syrian government is on the edge of a knife. The Turkey -- Turkey is threatening to -- threatening Syria with power cuts and halting joint exploitation with its former ally. That came on a day described as one of the bloodiest in the eight month uprising against the ruling regime in Damascus.
Angry confrontations at New York's Zuccotti Park, the birthplace of the Occupy Wall Street movement. Ousted demonstrators are trying to get back in. But so far, police won't let them. That's despite a new ruling from a judge that allows protesters to bring in tents and other equipment.
Italy's incoming prime minister will meet with the president tomorrow to discuss the country's new government. Mario Monti is thought to have enough backing from politicians to form a ruling coalition. Ruling coalition. Bond markets today set the yield on Italy's 10-year bond to 7 percent, a level that most economists consider unsustainable.
You, too, could be taking that walk to your spacecraft. NASA has announced the application process for hiring its next wave of astronauts. The come-on at NASA.gov is "Fly NASA, where the sky is not the limit." One warning -- according to the U.S. space agency, frequent traveling may be involved.
Spaniards go to the polls on Sunday and many of them will only have one thing on their mind and that is jobs. The latest figures show unemployment at its highest rate for 15 years -- 21.5 percent. Almost five million people now out of work there. That's five million people facing a challenge to make ends meet.
Al Goodman went to the city of Toledo to meet some of them.
(BEGIN VIDEO TAPE)
AL GOODMAN, CNN CORRESPONDENT (voice-over): Juan Jose Carasa has lots of time to take care of his chickens. He's been unemployed for two years, one of nearly five million jobless in Spain. Three fresh eggs help stretch a tight budget for his family. And he says there's another problem -- his heart condition, which cost him his last job as a waiter.
JUAN JOSE CARASA, UNEMPLOYED WAITER (through translator): Even if you look for a job, it is very hard to find one, because so many people are out of work. The truth is, you don't know where to turn.
GOODMAN: Has had to move back to his childhood home, but his wife is also unemployed. In nearly a million-and-a-half Spanish households, all working age adults are jobless.
(on camera): In Spain's deep economic crisis, keeping a roof over your head is a huge challenge for jobless. Carasa's family has already fallen behind on the mortgage payments for this home.
(voice-over): It's near the Medieval city of Toledo, an hour south of Madrid, where the line forms every weekday morning at the unemployment office. These are the early risers. Carasa comes later, to request jobless benefits on top of $570 in monthly disability for his heart condition.
Outside, we meet Nerea Romero, just 18. She's been looking for work as a nail manicurist for two years. Forty-five percent of Spanish youth are jobless.
The economic crisis has pushed the opposition Conservative Party far ahead of the incumbent Socialists in the polls leading up to Sunday's elections for prime minister.
Nerea says she'll vote Conservative.
NEREA ROMERO, UNEMPLOYED NAIL MANICURIST (through translator): This crisis will take years to fix. But I think the Conservatives can solve some of it. That's what will help.
GOODMAN: Across town, this union leader says Spain needs a new economic model not so reliant on construction, which, during the boom years, enticed young people to drop out of school for good jobs before going bust when credit got expensive.
PEDRO DE LA CRUZ, UGT UNION (through translator): Young people who worked in construction instead of finishing school are now unemployed without an education, making it more difficult to get back in.
GOODMAN: Carasa finally comes out, with bad news. He's told he won't get jobless benefits because he's collecting disability.
CARASA: They tell me no. It's too much. I didn't expect this.
GOODMAN: He says he can't give up, he's got three kids to support and he's just 23 years old.
Al Goodman, CNN, Toledo, Spain.
(END VIDEO TAPE)
FOSTER: Well, further east, families in need are resorting now to dramatic measures just to get by.
Dan Rivers looks at how, for some, moving into vacant buildings is both a protest and a way of getting by.
(BEGIN VIDEOTAPE)
DAN RIVERS, CNN INTERNATIONAL CORRESPONDENT: (voice-over): An unremarkable apartment block in Barcelona. But behind the turning autumn leaves, evidence this isn't just another vacant relic of Spain's property bust. This is now an austerity squat, taken over by a group of racial protesters, the indignant ones, determined to fight government cuts.
I said, a soup kitchen for hard up families -- food donated by local businesses. They call this Building 15-0, liberated for the needy on the 15th of October.
As the election approaches, the indignados are angry and clear about who they blame for Spain's problems.
MARI CARMEN MARTIN, ACTIVIST (through translator): Activist Mari Carmen Martin says they picked this building because it belonged to a bank and since the working class saved the banks with their own money and the banks haven't given them anything in exchange, he says it's a legitimate target.
Juan Moreno is one of the residents. He shows me his new home. His family is one of 11 occupying these half-finished apartments.
I said, it looks comfortable, but there's no heating and the nights are getting colder.
Juan is a former waiter who hasn't worked for three years -- not unusual in a city where unemployment is running at 20 percent. Now, his government handouts have been cut completely. He says this accommodation keeps his family off the streets. If Spain's center right People's Party wins, he fears austerity will accelerate. He says, "The situation is very bad and it's about to get worse. The politicians will have to implement more cuts, but here, the people will not stop and watch, we're going to fight," he says.
Fourteen-year-old Maria is ashamed to appear on TV. None of her school friends know she lives in a squat.
MARIA MORENO, BUILDING RESIDENT (through translator): I'm worried I am not going to have luck.
How am I going to look after myself?
There are no jobs. There's nothing left.
RIVERS: This from a 14 -year-old, it speaks volumes of the despair pervading even the children in this building.
(on camera): Behind each door in this building is a family which has run out of options. They've already had their lives turned upside down by austerity. The prospect of more cuts is simply too much to bear.
(singing)
RIVERS (voice-over): In the stairwell, Gabriel Perez (ph) sings a gypsy lament.
(singing)
RIVERS: He, too, is out of luck -- evicted from his last house, his job running a market store brings in half what it used to. Spain's battle to control its deficit is being felt painfully by the squatters and the indignados.
Dan Rivers, CNN, Barcelona, Spain.
(END VIDEO TAPE)
FOSTER: Well, meanwhile, the sound of ringing cash registers is bringing hope to the United States. We'll ask the CEO of Lord & Taylor if shoppers can get the U.S. economy back on track, next.
(COMMERCIAL BREAK)
FOSTER: Now, shoppers in the United States have given the economy a much needed boost, it seems. The retail figures for October are out and they show sales grew .5 of 1 percent, a little better than expected, would you believe?
Given that consumer confidence is still very low, that's an encouraging sign. And if you take car sales out of the equation, the figures look even better. Excluding autos, sales were up 0.6 percent.
If that doesn't sound like much of an improvement, bear in mind that that's more than three times better than expected.
Even with these encouraging numbers, though, Americans we talked to in New York's Times Square say they will not be splurging this upcoming holiday season.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Well, times are tough out there. I think I feel a little bit guilty spending too much money on stuff, but it is the holidays and it is the season for giving, right?
UNIDENTIFIED FEMALE: We'll be buying for kids and grandkids, just going to the local mall, probably. A little bit online, but not much.
UNIDENTIFIED MALE: I'd probably say we'll probably be a little bit less, but not dramatically, but a little bit less.
UNIDENTIFIED FEMALE: I mean I'll definitely look for deals wherever I can. But it'll probably be about the same.
(END VIDEO CLIP)
FOSTER: Well, we are a little more than a week away from Black Friday, which is traditionally a day when Americans hit the shops.
Lord & Taylor is one of America's oldest and largest department store chains.
And its CEO, Brendan Hoffman, joins me now live from New York.
Thank you for joining us, Mr. Hoffman.
How do you read the psychology of the American customer going into Black Friday?
BRENDAN HOFFMAN, CEO, LORD & TAYLOR: Well, I mean I -- I think, as you heard, there's a lot of mixed emotions out there. But we think that, at Lord & Taylor, we're going to get -- continue to get more than our fair share of her wallet. And all the different things, those -- those interviewees talked about, we think we offer at Lord & Taylor, whether it's the great gifts for children, great value, great fashion.
So we're excited for Black Friday to get here and -- and for the holiday season in general.
FOSTER: Am I right in saying that there are shoppers out there looking for presents, probably the same number of presents as last year, but they're being a bit more choosy, a bit more price sensitive?
TAYLOR: Well, I mean I think that's been a trend that's been happening now for a few years, quite honestly. And -- and so I don't necessarily see this holiday season being any more promotional -- promotional than the last couple.
Having said that, the last couple have been pretty promotional. So there will be great deals and great value out there and so we think the customer will be very pleased.
FOSTER: You're having to use whatever army you can, and I know that you've got this big social media effort, as well, this year, haven't you?
Tell us a bit about this peer-to-peer sort of work that you've been looking into, because that seems quite interesting.
TAYLOR: Yes, well, I mean I think anything we can do to make sure the customer knows we're being authentic. I mean it's one thing for us to tell the customer how much we've changed over the last couple of years and how we've gotten younger, in -- in a certain way. But it -- it works much better when it's peer-to-peer.
And so using social media, whether it's through Facebooks, Tweets, blogs, we've found to have been a very effective tool for us as we reposition the company.
FOSTER: But you're not selling to them across social media, are you?
You're getting them to talk about the products so they're talking to each other about it?
TAYLOR: Well, I -- I -- yes, that's true. But I think any time you get them talking, you hope -- and you get them engaged, you hope, ultimately, it leads to a sale. And I think that, you know, the pace is changing so quickly online with the social media, the new media, that the - - the commerce piece will catch up.
But right now, you know, we're very happy just to get them engaged and talking to each other and -- and the -- the -- the payoff, we know, will come very quickly.
FOSTER: Give us a specific example, which I thought what was interesting was this idea you had about -- in relation to prom dresses, right?
You were getting people to swap pictures?
TAYLOR: Right. Right. You know, back in the spring, we had our Prom-A-Palooza event, you know, we're -- we've always been known as a dress store, but it's always been more your mom's dress store. So we wanted to make sure that the daughters and -- and the college aged kids knew that they could buy -- get great dresses at Lord & Taylor.
So we did this big event where we let them post their pictures on Facebook, talk to each other. And it just really took on a life of its own, I mean, far greater than any newspaper advertisement or e-mail that we could have come up with. They really did the speaking for us.
And as I said earlier, really authenticated and validated us as a -- as a go-to store.
FOSTER: And it meant that they weren't using the same dresses as each other, as well, I guess.
Just briefly, people going to New York, you know, they're all going there for their Christmas shopping. They will see your window displays, which is part of the fabric there.
Just talk us through what you've got this year.
TAYLOR: Yes, absolutely. We launched our windows yesterday. We've been doing this since 1938, really, the first department store to do the Christmas windows as we know them. And this year, it was all about what Christmas means to you. And we asked local children to draw pictures about what Christmas is all about. And we used that to inspire the windows and used their pictures not only in the windows, but throughout the stores.
So we have great fun with it every year and this year is no exception. So we hope all the local New Yorkers and all the international travelers come and see our windows and come inside and shop.
FOSTER: Well, we're going to speak to a local New Yorker now.
Thank you very much, indeed, for joining us, Brendan.
We're going to go to Alison Kosik.
She's hard at work, though, not out shopping at the moment.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Oh, yes.
No -- no shopping right now, but I definitely love looking at those windows walking by. And it -- you know, it is that retail sales report, Max, that is helping to keep stocks in the green today. The Dow is up 34, the NASDAQ, S&P also higher. Because that -- those retail sales numbers, they show that, you know, consumers are spending money. And as you said, retail sales are up by .5 percent.
It came in line with estimates. But it's better than expected when you strip out auto sales. And then you look at October sales. They were up more than 7 percent from a year ago. And that could be a really good sign, as we get into the most important two months of the year for retailers.
And you touched on this, as well, the fact that people continue to spend money, as unemployment remains high, is really an important sign of confidence, especially as the economy here in the U.S. only slowly moves forward.
You know, one trader that we were talking to says the way it is, even with high unemployment, the reality is 90 percent of people get up every day, they go to work and they make money. And at the end of the day, they really just want to get out there and buy things, too -- Max.
FOSTER: Alison, thank you very much, indeed.
Well, there is no doubt that Europe's debt crisis is having an unsettling effect on the U.S. economy. And there's not much the U.S. can actually do about it.
Richard Fisher is the president of the Dallas Federal Reserve.
He told our Felicia Taylor that America's central bank doesn't have the power to help ease the Eurozone crisis.
(BEGIN VIDEOTAPE)
RICHARD FISHER, PRESIDENT, DALLAS FEDERAL RESERVE BANK: We're innocent bystanders here. We're separate authorities. They have their charter and franchise and we have ours. Each of us are created by the sovereign powers that gave us our charters. We are the central bank of the United States. The ECB is the central bank of Europe. The difference, of course, is that we have one fiscal authority. It may not work as smoothly as we would like, but it's a little bit better than having 17 fiscal authorities that they have to deal with.
So other than the swap lines that we provided for dollar demand, and that's to facilitate dollar driven businesses around the world, there's really nothing we can do but cajole them, advise them, if asked, and give them the best advice that we can.
The -- this is their deal. They are Europeans. We are Americans. And never the twain shall meet.
FELICIA TAYLOR, CNN BUSINESS CORRESPONDENT: Do you think that would - - it would be appropriate for Greece to default?
FISHER: I'm not going to say a word about default. I -- I -- I do note that they have put a very good friend of most of us at the Federal Reserve, Papademos, in charge of their government. They -- they are turning to technocrats. So I would give credit to those that have made those decisions. They're doing the best that they can. They're in a very difficult predicament. They do have to work not just with the ECB, not with just the Stability Fund and authority, they have to deal with the bond market vigilantes. And this is a powerful force that you cannot escape, whether it's those that decide to buy sovereign debt or the debt of the banks that finances sovereigns. And that's a powerful force.
And I think it's very, very important that these new technocratic governments and the people they represent demonstrate to the bond markets that they're serious about getting their houses together.
TAYLOR: Well, but we've already seen Italian bonds' yields -- 10-year yields -- go above 7 percent. I mean it...
FISHER: Yes, and...
TAYLOR: -- at what point...
FISHER: -- and a government fell because of it. This is a good lesson...
TAYLOR: Right. But at what point...
FISHER: -- this is a very good lesson...
TAYLOR: -- do you need...
FISHER: -- Felicia, for our own politicians. This could happen here easily.
TAYLOR: What, our 10-year would go above 7 percent?
FISHER: No, I'm not saying a level. I'm just saying that we have been the beneficiary of being the best looking horse in the glue factory, as I've said before. We've seen a rush into dollars, the safest currency in the world.
TAYLOR: It's not such a pretty factory.
FISHER: It's not a pretty factory. So they ought to put us together back as the best looking stallion and the most beautiful filly.
TAYLOR: Now, when you look at the state of things, do you really expect the super committee to be able to achieve what it's intended to do by the date of November 23rd?
FISHER: There is good news surrounding this. At least, A, they're talking about it. B, they've seen the consequences of what happens with European nations that do not impose fiscal discipline. And, C, they know that the Federal Reserve has limited powers.
I work for the Federal Reserve. On either side of the aisle, none of them can possibly expect that monetary policy will bail them out of the fiscal hole in which they have dug themselves.
We're reaching the point where decisions have to be made. And even if they punt here, I don't think the voters will be terribly forgiving. They're going to insist -- this is what the last election was all about. And whether you are an Occupy Wall Street type or a Tea Party type, the message that's been sent is social unrest will ensure unless you guys get your act together.
(END VIDEO TAPE)
FOSTER: Well, there you are.
We'll be back in a moment with the weather forecast -- or, rather, a volcano forecast, after the break.
(COMMERCIAL BREAK)
FOSTER: Let's find out what's going on in Africa, because there's a volcano -- Jenny Harrison.
And tourists are flocking to see it.
JENNY HARRISON, CNN METEOROLOGIST: They are, Max.
It is actually Africa's most active volcano. And my goodness, it is erupt right now.
Have a look at some of these images, because, really, you have to see this.
It is an incredible volcano, this one. And the good thing is because of where it it, it's actually in the Virunga National Park in a very remote area of the Democratic Republic of Congo.
And because of that, it's actually quite a long way from any populated places. So that is the good news.
Let me just show you exactly where it is, if we were to actually head into Africa. Because, as I say, it is in the Virunga National Park. It's about 25 kilometers north of the Lake Kivu here in the East African Rift Valley. And the volcano itself, as I say, is extremely active. It actually erupts probably every couple of years. That shows you where it is.
The summit, Caldera, this is what, of course, is -- this is where we see most of the -- of the lava, the spectacular lava flow coming from the summit, Caldera, that's what it's called. It is about two kilometers across in width, and at many times, there's actually a -- a lava lake literally inside the summit of this volcano. It's called a shield volcano. As I say, it's the most active, nearly every two years it will erupt.
And that lava that comes out can actually cover an area as great as 1,500 square kilometers.
Now, throughout the actual makeup of the volcano, if you like, there are many, many, many fissures. And this is what actually emits all the lava. So this is what the tourists are there to see, as well, because literally all the way around the outside of this volcano you're seeing other, smaller fountains, if you like, of lava.
So a really spectacular sight, particularly, of course, at nighttime.
Now, the only thing to say is over the next few days, so the volcano is situated just about here. We have got some rain in the forecast. And, in fact, typical for this time of year, some rain, some thunderstorms. So something of an accumulation in the area, maybe as much as one to three centimeters of rain.
But what that does mean, of course, when you mix lava with water, this is when we get what's called lahar. The ash comes down with the lava, the rain mixes up with it. And then you get what, at the time, is like a consistency of concrete -- very fluid. It moves very fast and could also flow a long way, up to 100 kilometers. But, of course, it solidifies when it is stopped. So that's the only down side at the moment, is we have got the rain mixing in with all of this ash.
But even so, as I say, in the meantime, yes, tourists are flocking there, camping out to see what must be a spectacular site.
Now, meanwhile, across in toward the east end of the Mediterranean, Turkey in particular, again, on Monday, there was another sizeable tremor in the region, not tremor, there was actually a sizeable earthquake in the region. Conditions are still very cold. We've got some mist right now. The wind chill has eased off. So temperatures five degrees above freezing. But remember, it's been a bitterly cold November, the coldest since 1992.
There is more snow in the forecast. It's very cold, of course, across the region generally. And, in fact, that snow, as you can see, will also begin to accumulate across northern and central areas of Turkey.
So not good at all for the people of Van, who are still camped out. Obviously, their homes have obviously been destroyed, in some cases, but also are too damaged to actually enter back into.
So Thursday and Friday, we have got more snow in the forecast. And, again, that's when the temperatures in the overnight hours are going to dip way below freezing and well below the average.
Central Europe, it is still fine. It is dry. We've got some high pressure in control. And that means we've got those still continuing mild conditions. In fact, so far, Max, it has been a very mild November in the UK.
I'll have more on that as, no doubt, we go through the month later in the days.
FOSTER: Yes. Still cold.
HARRISON: Oh, it's still cold.
FOSTER: Which you'll find when you visit.
HARRISON: It's not cold. It's been milder than ever.
FOSTER: It is cold.
HARRISON: It's been milder than ever. I won't have it.
FOSTER: It's only statistics. I know what it feels like.
HARRISON: You're in the studio.
FOSTER: Jenny, thank you very much...
HARRISON: It isn't cold in there.
(LAUGHTER)
FOSTER: We'll be back in a moment with the news from the stock market.
(COMMERCIAL BREAK)
FOSTER: Well, here in Europe, most of the region's main indices fell for a second straight session. The FTSE ended just in the red. The DAX in Frankfurt lost around .9 percent. Rising pharmaceutical shares helped stem the losses on both of those indices.
The CAC 40 in Paris was the worst hit, sinking to a six week low. Societe Generale and BNP Paribas each lost more than 5 percent, as investors panicked, really, about their exposure to Italian debt this time.
That is QUEST MEANS BUSINESS.
Thank you for watching.
I'm Max Foster.
The news continues here on CNN.
END
