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Quest Means Business
Interview with Brendan Howlin; Greek Budget Vote; Protests in Moscow; Interview with Bill Browder; Europe on Watch; Geithner's European Tour; Obama's "Square Deal," Age of Uncertainty
Aired December 06, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, HOST: Cut your spending or we'll cut you out -- a leaked memo hints at more power to Brussels.
Ireland is just in time. We'll be speaking to the expenditure minister on his tough new budget.
And Russia rising -- opposition protests mount as stocks plummet.
I'm Max Foster.
This is QUEST MEANS BUSINESS.
Good evening to you.
Well, Europe's weakest economies are racing to trim the fat ahead of Friday's summit. And they have reason to hurry. From Brussels to Washington, from Timothy Geithner to the ratings agencies, the pressure really is piling up.
Tonight, three days are left in our Countdown to Save the Euro. And there's no room for half measures, it seems.
Also tonight, U.S. President Barack Obama speaking now in Kansas, in the U.S., where he's pushing to extend the payroll tax cuts.
We'll be monitoring this for you and giving you any developments on that.
But European leaders are planning to force austerity measures on countries in financial trouble, with penalties for those who don't play along. A leaked memo from Herman Van Rompuy, the U.S. -- the EU president, even, says the European Commission could get exceptional powers to deal with countries who get bailed out, even improving their austerity measures in advance. There could be penalties for those who fail to meet deficit charges and targets such as losing voting rights.
Now, it would mean a major shift of sovereignty to Brussels and it would be the strongest example yet of a new, more powerful fiscal union.
Now, the countries which have accepted help are already having to swallow a severe dose of austerity. Right now, Ireland's government, for example, is laying out the second half of the country's austerity plans, its budget. It's focusing on tax increases today, worth more than $2 billion. Yesterday was all about spending cuts. Nearly $3 billion worth where announced by expenditure minister, Brendan Howlin. We'll hear from him in just a moment.
Now, in Greece, meanwhile, lawmakers are voting right now on the 2012 budget. We're expecting them to approve the deal. The budget forecasts another year of recession in 2012 and a drop in the deficit, too, down to 5.4 percent of GDP.
Spain's new prime minister is planning cuts, too. Mario Monti won't be at the big summit on Friday because he hasn't been officially sworn in yet. But tomorrow, he's going to be at a meeting in Marseilles. We're expecting to see him share his austerity plans with leaders like Nicolas Sarkozy and Angela Merkel.
Now, the spending cuts in Ireland were unveiled yesterday by the public expenditure minister, Brendan Howlin. And he says the leaked proposals from Brussels would go against the founding principles of the European Union.
When I spoke to him on the phone a little earlier, I asked him if his own country was still on track to get its own house in order.
(BEGIN VIDEOTAPE)
BRENDAN HOWLIN, IRISH EXPENDITURE MINISTER: We are still on the path to recovery. It's a painful path. We are complying completely with our obligations under the Memorandum of Understanding with the EU and the IMF. And we are hitting our fiscal targets.
But we are underscoring how difficult that is.
FOSTER: You were a single problem in Europe, weren't you, at one point?
But now, the whole Eurozone is suffering. That wasn't the case 12 months ago.
Have the tables turned here and is that adding the extra pressure on you?
HOWLIN: Well, in truth, you know, this time last year, I said in my speech to our parliament that, in a way, we were Europe's problem.
Right now, the problem of our recovery is being hindered by the greater Eurozone problem.
So we do need to ensure that the Eurozone problem is fixed, that there is confidence again that we can insure that we get back to a group trajectory, because, bluntly, the austerity measures that this country has endured for the last four years, necessary and all as they are, are not the path, by themselves, to a sustainable economic recovery. We need growth. We need to create jobs. And we need to have our export markets recovering in order for that to happen.
FOSTER: As we understand it, at the EU summit, one suggestion on the table is the European Commission being empowered to impose austerity measures on Eurozone countries being bailed out, countries like Ireland. And that would usurp government decisions.
What have you heard about that and what do you think about it?
HOWLIN: Well, we are in a program, for the last 12 months. The IMF, the Comm -- the EU Commission and the European Central Bank are monitoring our fiscal policies. We set targets in agreement with them and they are monitoring the achievement of those tar -- targets.
As we understand what a high level of fiscal scrutiny means so there's nothing on the table in the current round of discussions that we find daunting and we -- we've accepted, as part of our recovery program, that level of oversight.
But we do need, I say, a European solution that will acknowledge the sale of indebtedness that has been foisted on the banks of the Irish taxpayer by decisions of the previous administration here and to ensure that we do become the success story of Europe, where we can be, given the proper policy instruments at European levels.
FOSTER: But what could happen is that bailout countries like you could have your -- your voting rights stripped from the the EU, which effectively takes democracy away from the Irish people, doesn't it, and gives it to Brussels.
HOWLIN: Well, I don't see that could happen at all. I mean the fundamental basis of the European Union is equality of membership. There are 27 member states. Each has a voice. That's the basis of the founding principles of the European Union from its inception.
We want to develop a community focus on the solution rather than an intergovernmental focus. The solution has to be one that suits all member states and not dominated by any small grouping of member states.
(END VIDEO TAPE)
FOSTER: Well, right now, Greece's parliament is voting on its budget for -- for next year. These are live pictures from inside the lower house, where lawmakers are debating the 2012 budget from the new prime minister, Lucas Papademos.
We are expecting them to approve it, though voting is likely to go on for a few hours yet.
There have been clashes outside the parliament building again, as well.
Elinda Labropoulou joins me now from Athens -- Elinda, first of all, in terms of the vote inside, very, very tough austerity measures.
They'll pass, though, right?
ELINDA LABROPOULOU, CNN CORRESPONDENT: Yes, they will. I mean it is a budget that is based on austerity measures. It's also a budget that has some optimistic things in it. It's the first time in a long time that Greece will be looking at a primary surplus, if things go well. The deficit is about -- it will be cut by almost a half is the estimate.
But it does come with austerity measures and it comes with a lot of the commitments that Greece has made to its lenders. These commitments, these requirements, must be met. This is the main point of this budget, to meet Greece's creditors' requests.
In order to do that, that will require a number of reforms, a number of austerity cuts. But all the Greek lawmakers seem to agree that this seems to be the only way forward for Greece right now.
So the vote is going to go ahead in a few hours and the budget is expected to get through.
FOSTER: Elinda, thank you very much, indeed, for joining us.
Back with you as you get that approval through.
Now, Wall Street is hoping that Europe is gradually moving in the right direction. The Dow is moving gradually higher itself. It's been a fairly flat session for stocks as a whole. We saw losses early on, but the Dow has picked up a bit. It's currently up around .5 of 1 percent.
Now, in Russia, the election may be over, but the opposition is fighting on. As protests hit Moscow, we'll ask what it means for this man. A report from the streets of Moscow, next.
(COMMERCIAL BREAK)
FOSTER: Now, a major political protest and accusations of electoral fraud.
Russia's stock market is taking a real beating today, its main trading session. The ITS Index dropped nearly 5 percent, falling to its lowest level this month. It's down even further in evening trade. The Russian benchmark is now down 30 percent from its higher point earlier this year.
Moscow police say they arrested at least 250 anti-government protests today. They were demonstrating against the results of Sunday's parliamentary election, which kept Vladimir Putin's United Russian Party in power. Opposition leader Boris Nemstov, once the country's deputy prime minister, was one of those detained at the rally. Police say some 8,000 people attended a separate rally, this one supporting the united Russia. The country's central election committee confirmed today the party won a slim majority of 238 seats. That's down from more than 300 in the outgoing parliament.
Now, CNN's Phil Black joins us now live from Moscow.
First of all, what do you make of what you saw on the street today -- Phil?
PHIL BLACK, CNN CORRESPONDENT: Well, Max, the opposition protesters that were hoping to build on the momentum of yesterday's spontaneous protests that brought thousands of people onto the streets of Moscow, protesting, venting their anger about the way they believe those elections on the weekend were conducted. They weren't able to maintain their same momentum. Firstly, they didn't get the numbers. It was only hundreds instead of thousands. And the security forces were very firm in dealing with them, driving them away, either quickly or slowly at times, but just generally pushing them back. And in the protests, arresting hundreds, as you say, around 250 or so.
The other dueling protest group, those in favor of United Russia, well, they had all the numbers and the much bigger voice. Thousands of people in a number of locations that effectively filled the vacuum that was left once those opposition protesters were driven from the square they were hoping to occupy -- Max.
FOSTER: This is seen as an -- as a -- a change in the mood for Putin and his -- his government.
So I'm -- has there been any reaction from him?
BLACK: Well, on the protests, the government generally says that it will not tolerate any sort of illegal rally. On the nature of the losses that United Russia suffered in those weekend elections, Putin has tried to put it in some context to remind Russians that his party is, in fact, the party that has been in power for some time, and, in effect, play down those terrible results that his party suffered.
Take a look from him speaking earlier today.
(BEGIN VIDEO CLIP)
VLADIMIR PUTIN (THROUGH TRANSLATOR): Yes, we suffered losses, but they are unavoidable. They are unavoidable for any political power, especially a political power that has held the responsibility for the state of a country for some time. In today's conditions, the result is good. You and I see what has happened recently in countries with much more stable economies and culture spheres.
(END VIDEO CLIP)
BLACK: Now, on the international criticism that Russia has received for the way these elections were conducted, for the alleges braches in procedure that it is claimed favored United Russia. The foreign ministry here has used much firmer words. The United States has been among the countries expressing concerns about the way the elections were carried out. Today, the foreign ministry has described those comments from the U.S. administration as unacceptable and it says that it hopes that it will refrain from using that sort of unfriendly language, which -- which it says risks damaging relations between the two countries -- Max.
FOSTER: Phil, thank you very much, indeed, for that.
Well, Bill Browder is CEO of the hedge fund Hermitage Capital.
He founded it in 1996 to invest in Russian businesses.
He joins us now.
And at that time, it was a fantastic time to invest, wasn't it, and for years to come?
BILL BROWDER, CEO, HERMITAGE CAPITAL MANAGEMENT: Well, in 1996, they were just going from sort of communism to capitalism. And there was all the hope and -- and optimism of the world, as there was a democracy, there was free markets and -- and everything was very, very cheap. And so we got in there and started investing.
And, actually, my fund became the largest fund in the market over a -- a 10 year period, until I started clain -- complaining about corruption. And at that point, I was expelled from the country. The authorities then raided my offices, took away our documents, expropriated our companies and then stole $230 million of taxes that we paid.
FOSTER: If we go back to the -- to the start of that period, Putin, though, was seen as -- he created a fantastic mood in Russia, didn't he, and gave it an energy and the economy grew underneath him.
You -- you've capitalized on that, as everyone else did.
So that was a good time for him, right?
BROWDER: Well, he -- when he came into power it was -- it was absolute chaos and the oil price was at $10 a barrel. And he had two things going for him. One -- one was that in his first sort of three years, he acted like a real leader, a leader sort of working in the national interests.
And the second thing that happened was oil prices had already gone from $10 to $20 to $30 to $40 a barrel. And -- and so, as a result, people's lives started to improve. And I would say it probably had like 80 percent to do with oil and 20 percent to do with his policies.
But the whole thing went off the rails about 2003 and 2004, when he -- when he arrested Michael Khodorkovsky from Yukos and then all of a sudden, you know...
FOSTER: His system started breaking down, right?
BROWDER: Well, his system didn't break down, he became -- he was fighting the oligarchs and then he became the biggest oligarch. And when he did that, when -- when he and his -- his clan of -- of former KGB operatives started taking over the economy, all the money went to them and no money went to Russian people.
And what you saw -- what you see happening right now is a situation where, if you have 10,000 people getting all the money and 140 million people going to hospitals that don't work, that can't educate their children, with roads that have wholes in them and the life expectancy is -- is less than 60 years, people start getting mad. And that's what happened.
FOSTER: Do you think what's happened in this election, even though he's still very popular -- 50 percent of the vote for his party.
Is there a sea change now in Russia?
And that's -- is that related to the economy?
BROWDER: Well, it -- it's -- it's related to -- to this whole criminality that permeates the whole -- the whole system in Russia. And -- and I -- I wouldn't be so fixated on this 50 percent. I mean there -- there was huge cheating going on in these elections and sort of objectively measured.
And so probably he got 30 percent of 50 percent of people who voted. The rest were ballot boxes being stuff and so on. And so you had a very small minority of -- of the country, actually, voting for his party.
FOSTER: OK, Bill Browder, thank you very much, indeed, for joining us on the program.
BROWDER: Thank you.
FOSTER: Now we have some important developments coming to us -- coming just into us, actually, here at CNN.
The British prime minister, David Cameron says he is prepared to veto any new EU treaty. We heard his German and French counterparts calling for treaty change in Paris yesterday. Now, Mr. Cameron says any new treaty must protect British interests, such as its financial services industry and that the U.K. will insist on safeguards.
We're expecting a full statement shortly.
We'll bring more to you as we get it, because from a point where you had two big European powers agreeing yesterday, you've got the third one coming in now not agreeing. Thursday and Friday at that summit certainly look interesting at this point.
Now, next, Europe's top notch ratings are under threat, as well. We'll look at why Standard & Poor's is putting the Eurozone and its bailout fund on downgrade watch.
(COMMERCIAL BREAK)
FOSTER: now, the Eurozone bailout fund's AAA status is on thin ice. Standard & Poor's has put the European Financial Stability Fund, the EFSF, on credit watch negative. S&P warns it could knock the fund's rating down two notches if the country's (INAUDIBLE) downgrade, that could be on the cards.
On Monday, S&P also put 15 Eurozone countries on negative watch. We reported on that yesterday on the program.
Our Nina dos Santos has been looking at why.
(BEGIN VIDEOTAPE)
NINA DOS SANTOS, CNN CORRESPONDENT: It has been a difficult year. And I can tell you that some of these countries' grades have been sliding.
What I can say is that we've got six particular countries across the Eurozone that enjoy a top notch AAA credit rating, mind you, having said that some of the credit ratings agencies, like, for instance, Standard & Poor's, have put these countries on credit watch negative. That means they could threaten to lose that coveted AAA rating.
We're talking about countries like Austria, Finland, but also the powerhouses of Europe, France and also Germany, which could lose their AAA...
FOSTER: (INAUDIBLE)...
DOS SANTOS: Let's take a look at exactly what is worrying places like Standard & Poor's.
Well, Germany, on the one hand, just like all of the Eurozone, is at risk of a recession to a certain extent. But what it does have is a burden of the bailouts, because it's going to have to be shown the cost of bailing out countries like Greece, Ireland and also Portugal, to a certain extent. And it's also got a lot of resistance toward those bailouts on a domestic basis.
Let's also have a look at France, because this is the country whose borrowing costs have been rising significantly. That's one of the things that has been worrying Standard & Poor's. It does have a high debt to GDP ratio, standing at about 81 to 82 percent.
And then, if we look at the ones that have come in below expectations over the course of the year, yes, you guessed it, these are the ones that have gotten bailouts before. We're talking, of course, about Greece, Ireland and Portugal, three countries that have had a hard time implementing austerity to an extent enough to try and restore market confidence. As such, they've been priced out of the world's bond markets and have had to have a bailout.
In particular, Greece is the one that has been the most worrying pupil of the year, let's say. It's had difficult in implementing its austerity measures. It's had difficult in jump-starting growth, as well. And that is why this particular country only is rated as CC at the moment by Standard & Poor's.
And then if we move to another troubled member of the class, let's say, we have Portugal here. Now, Portugal does have a deep recession, which is deepening. It's also having trouble cutting its spending. And that's why this country was recently downgraded by yet another credit ratings agency. And it currently has a BB Minus rating.
And then the final problem child of the class, perhaps, who is showing some signs of improvement. We're talking about Ireland here. It has been implementing public sector cuts, wending (ph) public sector cuts and new taxes. And that's why although this country's rating is not quite among the stellar league, it is slightly better than the other two. And it currently rates with a BB Plus.
Nina dos Santos, CNN, London.
(END VIDEO TAPE)
FOSTER: I wanted to bring you more now on that threat of a veto to any new EU treaty from the United Kingdom.
Now, the prime minister, David Cameron, has been speaking. We can bring you what he just said.
(BEGIN VIDEO CLIP)
DAVID CAMERON, BRITAIN PRIME MINISTER: When I'm going to Brussels, I will be there to defend and promote British interests. Now, the most important British interest right now is to sort out the problem in the Eurozone that is having the chilling effect on our economy that I've spoken about.
Now that obviously means Eurozone countries doing more together. And if they choose to use the European treaty to do that, then, obviously, there will be British safeguards and British interests that if I want to insist on. And I won't sign a treaty that doesn't have those safeguards in it around things like, of course, the importance of the single market and financial services.
Now, if they choose to go ahead with a separate treaty, then, clearly, that's not a treaty Britain would be signing or would be amending.
But, of course, if they want to use the European institutions, then we will be insisting on the safeguards and the protections that Britain needs.
Britain is a full member of the European Union. We benefit from our membership with the European Union. Key to that is the single market. We want the single currency crisis solved, but we will protect and defend British interests at the same time.
(END VIDEO CLIP)
FOSTER: A key moment there, really, the -- Britain, one of the main players in the European Union, although it's not in the Eurozone.
And there David Cameron being very clear that he's not going to sign a treaty he's unhappy with. He's very keen to protect Britain's financial services industry. And there are some of those in the continent who say taxes are lax there and it's an unfair advantage for London. He's saying he's going to protect that, whatever the accusations. And it certainly make the summit at the end of the week a lot more interesting. Perhaps the Eurozone may have to come up with its own deal amongst those countries as a result of this. But we'll see what Cameron makes of what Sarkozy and Merkel come up with.
Ireland's benchmark ISEQ Index fell 0.7 percent today, meanwhile. It was a bit of a mixed showing elsewhere in Europe. London's FTSE 100 ended the day almost exactly where it started. German retailer, Metro, dragged down the DAX in Frankfurt. Its shares fell nearly 14 percent after it issued a profits warning due to slow pre-Christmas sales.
In Paris, retailer Carrefour was the biggest drag on the CAC 40, down more than 6 percent. And Zurich's SMI managed modest gains, helped by rising pharmaceutical stocks.
Now, over in the U.S., Lehman Brothers' bankruptcy has finally come to an end. It's where it all started, of course. Today, a New York judge approved a plan to wind down the investment bank's remaining operations and pay out $65 billion to its creditors. Lehman Brothers' collapse three years ago was the biggest bankruptcy in U.S. history. It was also a trigger for the 2008 financial crisis.
An American voice on Europe's problems -- Treasury Secretary Timothy Geithner in Germany to offer his take on the crisis. We'll bring you the latest from Berlin in a moment.
(COMMERCIAL BREAK)
FOSTER: Welcome back.
I'm Max Foster.
More QUEST MEANS BUSINESS in a moment.
These are the headlines, though, this hour.
A deadly suicide blast in Afghanistan has killed at least 60 people on the Shia holy day of Ashura. The Taliban is denying responsibility for the unprecedented attacked against Shiites. A leading Shia member of parliament blames foreign criminals for the attack and sectarian violence.
Russia riot police arrested some 250 opposition protesters during a night of dueling demonstrations in Moscow. Hundreds of Russians who say last weekend's elections were rigged were balking at numbers by pro- government demonstrators. The ruling United Russia Party lost dozens of seats in the duma, but kept its majority.
This is new amateur video that is said to show destruction in the Syrian city of Homs. An activist group says at least 30 people were killed there on Tuesday. Three other deaths have been reported on other Syrian cities.
The European Union could impose its own austerity measures on member countries in economic trouble and penalize those who don't hit budget targets. That's the message from a leaked memo sent around Brussels by EU President Herman Van Rompuy. In talks -- it talks of giving exceptional powers to the European Commission.
Timothy Geithner is adding his voice to calls for a fiscal union in Europe. The U.S. Treasury secretary jetted into Germany today, where he met the German finance minister, Wolfgang Schaeuble. It is the beginning of a whirlwind three day tour to meet Europe's top players.
Diana Magnay joins us now live from Berlin.
And if European leaders haven't got enough to worry about, they've now got America breathing down their throats.
DIANA MAGNAY, CNN CORRESPONDENT: I think, Max, they've learned that America is going to be breathing down their throats for a while. I mean this is his third trip to Europe since September. And at the beginning of his first trip back in that finance ministers' meeting in Poland in September, he wasn't really received very well, or at least from sort of lesser Eurozone members or smaller economies -- finance ministers of smaller economies within the Eurozone.
Now, he's meeting heads of state on this tour, the heads of state of France, Italy and Spain. I think everyone is prepared to listen to what he has to say.
And what he is saying, really, is, you know, a message of public support for the plan for fiscal union that France and Germany have put on the tables and really a call to rest of the Eurozone to put their voices behind it, too, because this, a strong Europe matters not just to tepees, but for the U.S. economy, also, and to the wider global economy.
Let's just have a listen to how he said that kind of fiscal union should be pushed through.
(BEGIN VIDEO CLIP)
TIMOTHY GEITHNER, SECRETARY OF THE TREASURY: I am very encouraged by the developments in Europe over the past few weeks, including the reform commitments made by the new governments of Italy and Spain and Greece and the new steps we've heard this week about progress toward a fiscal compact for the Eurozone.
This, of course, will take time. It will take a very substantial commitment and a sustained commitment of political will. And as the leaders of Germany and France have recognized, the three key elements of success are these.
Economic reforms in the member states to lay the foundation for future economic growth, reforms to create the architecture of fiscal union to...
(END VIDEO CLIP)
MAGNAY: He also said, Max, that it was going to require very determined action both from national governments and from central banks to try and build a firewall, really, around troubled Eurozone economies.
But he wouldn't be drawn on what the role of the European Central Bank should be, stressing, as did Finance Minister Wolfgang Schaeuble, that it should remain independent, that it would be wrong for him to comment.
And another point I think is -- which it important to bring up as a result of that press statement was that he said any media reports suggesting that the Federal Reserve may contribute to the IMF fund to try and sort of boost that firewall around Europe were untrue.
So we can draw a conclusion from that that -- that the Fed won't be contributing anything to the IMF. If anyone does, it will be Europe -- Max.
FOSTER: And we're all looking ahead, aren't we, to this summit at the end of the week, Diana. But complexity is coming into the situation all the time. We heard David Cameron in the last hour talking about a possible spammer in the works. He's not going to sign a treaty that isn't in Britain's interests.
And when you get to the summit, all the divides are going to appear again.
But are you feeling confident that there will be a bit landmark agreement at this point?
MAGNAY: I don't think anyone feels particularly confident anymore in terms of this sort of long-protracted unraveling of the Eurozone. I do think that the fact that Germany and France have said if they can't get all 26 member -- EU -- EU member states to agree, they're prepared just to go for the Eurozone 17. That is a step in itself.
And -- and perhaps the treaty changes required won't be big enough to require sort of individual ratification within parliament.
But these are all details that we still don't know. Presumably, they'll be clarified in that letter that euro -- that Germany and France are going to be sending to Herman Van Rompuy tomorrow that will be on the table at Friday's summit.
But there is so -- still so much that's uncertain. It's difficult to have any certainty that it will work -- Max.
FOSTER: Thank you very much, indeed, for that.
Well, U.S. President Barack Obama, meanwhile, is speaking about the economy, on the same spot, actually, where teddy Roosevelt declared, "The object of government is the welfare of the people." That was more than a century ago.
Today, Mr. Obama traveled to Kansas to push for extending the U.S. payroll tax cut.
We go live now to White House reporter, Brianna Keilar.
It's all about the economy, isn't it, wherever we go around the world?
BRIANNA KEILAR, CNN CONGRESSIONAL CORRESPONDENT: it is all about the economy. And this, Max, is being billed by the White House as a major economic speech. The president really trying to accomplish a couple of things here. He is following on a push to -- on a push for Republicans to extend a payroll tax cut that about 160 million Americans have had for the last year and that if Congress doesn't ask -- act, pardon me, would expire going into the next year. So he's pushing for that.
But, really, there's a bigger thing going on here, President Obama really framing the argument that we will be hearing him talk about through the next year as he fights for his reelection. And that is that he stands for the middle class and that he's fighting for financial security for the middle class, as you can tell by some of what he said in his speech.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: But ultimately, this is not just another political debate. This is the defining issue of our time. This is a make or break moment for the middle class and for all those who are fighting to get into the middle class, because what's at stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home, secure their retirement.
(END VIDEO CLIP)
KEILAR: now, President Obama also said earlier, Max, that he said -- and -- and he didn't really point exactly by name to Republicans, but he said there are some who believe that we should go back to the way things were, to the way things were that got us into a financial crisis.
And he essentially accused Republicans of having collective amnesia.
Right now, as you know, there was a vote on this extension of the payroll tax cut for Americans, that the battle is going on right now between President Obama and Republicans. There were votes last week in the Senate. They failed. And so now all eyes are certainly on Congress, as they try to work out something before Christmas, certainly, before the end of the year, when these taxes would be set to basically go back up.
I think the bottom line, though, the expectation is that Congress will come to some sort of agreement so that that won't happen -- Max.
FOSTER: Is there much discussion so far about the economic damage caused by problems elsewhere in the world?
We've got Timothy Geithner traveling through Europe right now. And this is out of control of all of those candidates, isn't it?
KEILAR: yes, it is. And, you know, you hear, certainly, from President Obama and a lot from White House officials. They're always saying that we're facing very strong headwinds coming from the situation in Europe.
But I think one of the things is you hear them mention it, but I also think that it doesn't resonate as much with Americans as maybe people in other parts of the world might think that it does.
I think that short of some sort of calamity involving the Eurozone, unless we were to see it fall into even more of a crisis, if you can imagine that, defaults, for instance, and the trickle down that that would have for the American economy, there's a lot of Americans who aren't focused on that.
They're focused very much on pocketbook issues and sort of really what's happening for them and their financial security and just the very personal financial hurt that they're feeling -- Max.
FOSTER: Very interesting.
Brianna, thank you very much, indeed, for joining us.
Well, what keeps business leaders up at night?
Lloyd's of London went in search of answers. Its chief executive tells us what he found, next.
(COMMERCIAL BREAK)
FOSTER: Now forget bank credit, falling demand is the big worry plaguing businesses. That's the -- that's the -- what Lloyd's of London is seeing right now. The world's oldest independent insurance market carried out a worldwide survey and found that lost orders are what keep chief executives awake at night these days.
Another source of stress, losing skilled workers. Most of London says its survey is a -- is a snapshot of two years of economic uncertainty. And certainly, certainty is what businesses and markets really are seeking right now.
That's what Lloyd's CEO, Richard Ward, told CNN's Nina Dos Santos recently when she caught up with him at the famous Lloyd's Building here in London.
Nina started by asking him about the topic that's on everyone's mind, and that is, of course, the Eurozone.
(BEGIN VIDEOTAPE)
RICHARD WARD, CEO, LLOYD'S OF LONDON: Many businesses have been working through the consequences of sovereign debt default and what that does to their finances. We have over $50 billion of assets in place to match our liabilities. Those assets are vested across various classes, corporate bonds, government bonds and cash.
And so when looking at the Eurozone and the consequences of any problem in the Eurozone, we need to model that impact on our assets.
NINA DOS SANTOS, CNN CORRESPONDENT: And how big is that exposure in comparison to other things?
WARD: Well, $50 billion of the assets that we have that we hold to match the liabilities that we've written. On an annual basis, we're writing roughly 22 billion pounds worth of business and we're paying claims of anything between 8 and 10 billion pounds a year.
So that gives you the size of the businesses that we're in.
But if we look at these catastrophes that we've dealt with this year, the first half of 2011, the catastrophes, that is Australian floods, the Christchurch earthquake, the Japanese tsunami, they account for an economic loss of around about $275 billion, of which $70 billion was insured in the insurance markets.
DOS SANTOS: Going back to the Eurozone issue, because that is obviously huge. There's something like nearly $9 trillion worth of debt out there...
WARD: Yes.
DOS SANTOS: -- if you count up the Eurozone debt pile as a total. And some of that will be insured.
How risky is it, for just the general insurance market, if we were to see a collapse of the Eurozone?
WARD: I think from our point of view, there are two things we worry about in terms of a collapse of the euro. One is the impact on our assets. We don't insure against the financial collapse that you're talking about. So it's really the impact on the assets that we hold in any write-downs that we might have to take as a result of devaluation of the currency or financial institutions.
But secondly, of course, if the -- if there is a -- a Eurozone failure, what will it do to cross-border trade?
What will it do to all those trading relationships?
And we're an international business. Twenty-percent of our business comes from the UK. So 80 percent comes from outside the UK. Of course, the European market is a very important market for us and we would be concerned about the impact any Eurozone failure would have on those markets where we provide cover.
DOS SANTOS: What would you say to policymakers if you had an opportunity to tell them perhaps how they should resolve this crisis and also to avoid a recession?
What would be your message?
WARD: Well, I mean, clearly, it's a very difficult crisis to resolve. Otherwise we would have resolved it by now.
I think what we're all seeking is certainty.
(END VIDEO TAPE)
FOSTER: And we, at this point, want to bring you another look at Europe's markets and how they ended the day. And some of the figures that we showed you earlier were incorrect, so let's bring you the right ones.
London's FTSE 100 closed almost exactly where it started. German retailer Metro dragged down the DAX in Frankfurt after it I said a profits warning due to slow pre-Christmas sales.
In Paris, the retailer Carrefour, the biggest drag on the CAC 40, down more than 6 percent.
And Zurich's SMI managed modest gains, helped by rising pharmaceutical stocks.
Let's cross to the Weather Center now.
Jenny Harrison has some news of snow in Europe.
JENNY HARRISON, CNN METEOROLOGIST: Yes, I do.
FOSTER: Apparent at this time of year, but that's not unusual I guess.
HARRISON: No, no, no, no. But I think it's good news, except they've now been talking about snow, of course, for days and days. And last week, also about the lack of snow. But, yes, we have been seeing more of the white stuff work its way across from the northwest, across much of mainland Europe and also lying along the line of the Alps. But look at all this cloud. It's a very widely unsettled picture across much of Europe and more of that snow, as you can see here in the last few hours.
There are still more warnings in place across the northern regions of the U.K., not just for the snow, but unfortunately, there's more very strong winds coming in. So that could pose the next problem.
But look at all this snow really beginning to accumulate across into Central and Southern Germany, and, as I say, along the line of those alps. And that means good news for all the ski resorts, if you're a skier heading out there.
These are the winds. And, in fact, they're just eased off quite dramatically across the north of the UK. But you can see pretty strong still around Plymouth. They have been for several days now.
And these systems are going to continue to funnel across much of Northern Europe, the next system. So there's the winds (INAUDIBLE) like today.
And then there is the next big system coming through. That is probably going to be Wednesday into Thursday. And we do expect to see those winds reaching some pretty high numbers, some pretty high dangerous speeds, as you can see there. but generally, overall, very unsettled pattern, lots of rain, lots of snow in the mix, all of which is needed. We have had that drought in place and still have it in place across many areas. And so at least there is some form of precip coming in over the next couple of days.
It is, however, quite cold, not surprising, as the winds are coming down from the north. But low pressure positions in the North Sea. So with the wind factored in, minus three is how it feels in Glasgow right now, minus five across into Oslo, minus seven in Stockholm.
And be prepared, again, for some lengthy delays when you go to the airports because of those winds, for the most part, but also some snow as those systems were working into the southeast of Europe.
So the morning hours on Wednesday, snow for you in Socia (ph). And you can see the forecast here across the UK. A little bit of a break, as you can see. There it goes. That is a little bit of a break. But as I say, don't expect too much. The next system is pretty much hot on its heels.
Not too bad across the Central and Southwest of Europe. Not exactly warm conditions this time of year, 15 in Rome and we've got 40 Celsius in Madrid.
And a cool day, as you can see, up to the north, just 20 Celsius in Stockholm. We'll probably see even colder than that with the winds that are in place.
A very similar story in the U.S., that has to be said here. We've got this cold air pushing down from the north. We've got snow at the moment across the Midwest.
This is the snow, the big snow out toward the southwest. That is easing. The rain isn't. And, unfortunately, it will stay pretty chilly, up to 15 degrees below the average. So you're not on your own, Max, thinking it's cold. It's cold in a lot of places.
FOSTER: You're right.
Jenny, thank you very much, indeed.
Now, just ahead, the demands of success -- our business leaders show us why the top job is no place for shrinking violets. That's next on CNN.
(COMMERCIAL BREAK)
FOSTER: This week on The Boss, don't be shy, not if you want to be a business leader. In Macau, Francis Liu is a boss who's not afraid to speak his mind.
And in London, the head of eHarmony International is no wallflower.
Sean Cornwell shows us why he needs to be center stage to take a big brand global on The Boss.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: previous on The Boss, from Berlin with love, we follow Sean Cornwell as he pushes his brand to mainland Europe.
SEAN CORNWELL, VICE PRESIDENT INTERNATIONAL, EHARMONY: I think two or three years ago we were looking at the continental European market and we saw the big opportunity there. We definitely wanted to be part of that.
UNIDENTIFIED MALE: and in Macau, Francis Liu tells us why it pays to have an eye for detail.
FRANCIS LUI, VICE CHAIRMAN, GALAXY ENTERTAINMENT GROUP: And I've been working for 32 years already and I know that somehow if you want to be really successful, you just have to pay attention to detail.
UNIDENTIFIED MALE: a bustling Mediterranean kitchen, part the ham (ph), fine wine and the stirring of rich creams. But this isn't Italy, this is Asia, Macau, to be exact.
LIU: To try the food today, we are going to have -- talk about some wine pairing, all right, which I'd like to learn more from you.
UNIDENTIFIED MALE: today, Francis Liu, the vice chairman of Galaxy Macau, is tasting Chinese wines and a Christmas menu with a brand new flavor.
LIU: OK, Richard, what are we eating?
UNIDENTIFIED MALE: so we're having our seared sea scallops with chestnuts. And you can see the scallops are here. There's the -- the chestnut you see pink. LIU: The link, the media for us to be able to relate the festive seasons to our menu, chestnut. And so this is why we have a menu for chestnuts.
UNIDENTIFIED MALE: to keep appealing to history mostly Asian customers, Francis is keen to pair the menu with some Asian wines. So far, he seems surprised by the quality.
LIU: If you don't tell me, I would never imagine I'm drinking a Chinese wine.
UNIDENTIFIED MALE: but the price, on the other hand, is not going down so well.
LIU: Seven hundred dollars for a Chinese wine?
That's -- that's...
UNIDENTIFIED FEMALE: but you're in a restaurant.
LIU: -- that's (INAUDIBLE).
UNIDENTIFIED FEMALE: you're in a restaurant.
LIU: That's -- that's challenging.
UNIDENTIFIED MALE: for today, though, the focus is the food and Francis doesn't hold back. Within seconds of the start of being served, he's already found a fault with it.
LIU: So this is for sharing or this is for sort of putting a place setting in front of you.
UNIDENTIFIED MALE: (INAUDIBLE) a place setting? This is what the guests would get.
UNIDENTIFIED FEMALE: one person.
LIU: One person. The plate could be a bit...
UNIDENTIFIED FEMALE: challenging.
LIU: Challenging.
This is the first time we actually tasted our Christmas menu. I think that we probably have served it to many generations before we find it perfect. There's still a way to go. I think we are in the right direction. I like the food they are creating. But of course, as a perfectionist myself, there are many, many other things that we can do to make it better.
UNIDENTIFIED MALE: Francis believes he knows his Asian customers better than anyone else. And after all, he's the boss and what he says goes.
LIU: I thought...
(CROSSTALK)
LIU: -- I thought that prawn in the food was not spicy enough. This one with me, I thought, you know, the Asian customer probably prefers something more spicy.
I think I do know what local customers would like to have. And this is why sometimes I am not afraid to be outspoken to my chef, to tell him what I want.
In Central London, by the banks of the River Thames, Sean Cornwell is stepping up and leading by example.
CORNWELL: Hey, how are you?
UNIDENTIFIED MALE: hey.
Pretty good. How are you?
CORNWELL: Long time no see.
UNIDENTIFIED MALE: today, he's speaking at a leading Internet conference. The theme of the day, going global.
UNIDENTIFIED MALE: I now have the pleasure of introducing Sean Cornwell.
CORNWELL: (INAUDIBLE) materials and I try and run for it once before I actually get up on stage. But you never feel like you've quite really done enough.
UNIDENTIFIED MALE: this time, however, it looks like Sean has come prepared, knowledge and wit on hand.
CORNWELL: How many people in this room have used an online dating service of some kind?
Hands up?
UNIDENTIFIED MALE: on stage, the head of eHarmony International looks focused and relaxed. No nerves in sight, not an easy task for a man whose job rarely involves face to face contact.
CORNWELL: And I have about five people (INAUDIBLE) went up, which is clearly somewhat misleading. By my estimation, probably about half the people in this room are single in some shape or form and (INAUDIBLE) will they be using an online dating service.
You need to represent the company, obviously. That's the story that you're telling. That's why you're up there. It's great to get more people to know about eHarmony's international story, our global expansion, how well we're doing internationally.
But, equally, you need to try and bring your own personality to the party, because otherwise it can be quite wooden and boring.
UNIDENTIFIED MALE: Sean has reason to feel comfortable up there. After all, he knows his business inside out. Since 2008, Sean has taken eHarmony into the U.K., Australia and Brazilian markets with some 3.5 million users signing up in search of love.
CORNWELL: Going global. If you want to go to our market (INAUDIBLE).
UNIDENTIFIED MALE: Sean believes his experience will interest many of the listeners here. In his eyes, he has a product that everyone can relate to.
CORNWELL: Be very aware when you enter other markets beyond your own country.
Do you think it's going to be hard?
Multiply that by three or five E.
UNIDENTIFIED MALE: next week on The Boss, letting go and moving on -- Sarah Curran and Steve Hindy tell us why they're ready for a change. That's next week on The Boss.
(END VIDEO TAPE)
FOSTER: Now, another day, another dilemma and another door to open on our advent calendar. The the Quest to Save the Euro continues after the break.
(COMMERCIAL BREAK)
FOSTER: Well, it really is down to a flip of a coin. There's a 50-50 chance now that Eurozone's nations are heading for a downgrade, according to Standard & Poor's, at least. And the time they have to change the situation seems to be running out.
Here's a reminder of the warning we got from Olli Rehn last week.
(BEGIN VIDEO CLIP)
OLLI REHN, EU ECONOMIC & MONETARY AFFAIRS COMMISSIONER: We are now entering the critical period of 10 days to complete and conclude the crisis response to all the European Union.
(END VIDEO CLIP)
FOSTER: Well, that was last Wednesday. And that means we have just three days to go and another window to open on our festive calendar here, Europe's Quest to Save the Euro.
Starting there on November 3rd, on Wednesday, we had that intervention from the central banks to boost liquidity then, on December the 1st. The sounds and the touching don't seem to be coordinating.
But anyway, on December the 1st, on Thursday, we have talk of a stronger fiscal union from Europe's leaders.
On Friday, we saw the -- the best single week of gains the markets had since 2008.
And then on Monday, after the weekend, it was Italian austerity, all about that, $41 billion worth of cuts and new taxes.
Today, a wakeup call from Standard & Poor's. We're talking about that downgrade warning issued to almost every member of the Eurozone and also the EFSF's bailout fund for good measures. Now, Germany's finance minister here with Merkel, his chancellor, said it's the best encouragement to do what Olli Rehn says needs to be done and fix the Eurozone once and for all. So even finding positivity in downgrades today.
That is QUEST MEANS BUSINESS.
I'm Max Foster in London.
Thank you for watching.
Do stay with CNN.
END
