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Quest Means Business
Dow Breaks 15,000; U.S. Unemployment Numbers Look Encouraging; EU Warns Deeper Recession Possible
Aired May 03, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN HOST: Wall Street is rocking this Friday. The Dow has broken 15,000. It's a job well done. U.S. unemployment numbers are encouraging. And look, the cherry blossoms are out; spring has sprung. But with the forecast, Europe faces a deeper recession ahead. I'm Richard Quest in the German capital tonight, where we mean business.
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QUEST: Good evening. We are live tonight in the German capital and an appropriate place to be when the economic situation on both sides of the Atlantic could not be seen to be more different. They are in stark contrast tonight.
(BEGIN VIDEO CLIP)
QUEST (voice-over): On Wall Street, in New York, celebrations on the trading floor as the Dow and the stock market hit record highs, the Dow over 15,000, the S&P over 1,600. And job numbers beat expectations.
Here in Europe, markets may be up and we had the E.U. spring forecast with a warning of a deeper recession this year.
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QUEST: Tonight we have analysis from both sides of the Atlantic. We'll start, though, over on Wall Street. For the first time the Dow Jones has gone over 15,000. The S&P gained -- went over 1,600.
Alison Kosik joins me from the New York Stock Exchange.
It's been a -- it's been a while coming, an inevitability some would say. But, Alison, worth saying nonetheless.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Yes. It is, you know what, when you saw the Dow hit 15,000 even the sort of -- the traders downstairs who don't necessarily, you know, live their lives on these numbers per se, that necessarily the media does, they actually did cheer. They cheered, they rang a few bells. They were excited when the Dow hit 15,000 and so was everybody else.
Now you've seen the Dow pull back a little bit from 15,000, but even if it closes at the level it's at now, it would still be making history. We have never seen the Dow trade this high.
Let's not forget the S&P 500. It also is trading at record highs right now at 1,650. It is off the highs of the session.
But once again, if it closes at this level, Richard, it would make history as well. And this is all after we got that upbeat jobs report, showing that employers here in the U.S. added 165,000 jobs in April. The unemployment rate ticked lower, from 7.6 percent to 7.5 percent. All of that, Richard, pushing investors to buy in, Richard.
QUEST: Alison Kosik at the New York Stock Exchange, let me dot the I's and cross the T's on that jobs report.
The numbers were 165,000 jobs added in April, better than expected. And as Alison said, the unemployment rate fell to 7.5 percent, still 1 percentage point, of course, a whole percentage point above where the Fed wants to see it before it said it will move on interest rates.
More interestingly, revisions upwards for both February and March, with a total of 114,000 extra jobs.
Mohamed El-Erian, the chief executive of PIMCO, joins me now from Newport Beach, California.
Good evening, Mohamed, from Berlin. Now this is the sort of economic news to be cheerful about.
MOHAMED EL-ERIAN, CEO, PIMCO: Yes, it is, Richard; like you say, it's an encouraging report and in three mutually reinforcing ways. So first, if you look at the average for the last three months, the U.S. has now created 212,000 jobs per month. That's getting close to what I think is a threshold level of 220 which is really important.
Secondly, the unemployment reason, the unemployment rate is finally coming down for a good reason. People are getting jobs as opposed to people exiting the labor force.
And finally and perhaps most importantly, long-term unemployment is coming down. So this is a big step in the right direction.
QUEST: So pull these strands together for me. The U.S. is forecast to grow 2.2, whatever, 1.8 percent. So there's going to be growth in the U.S.; job numbers are coming -- jobs are being created. Jobless is coming down. The deficit is still somewhat of a problem.
What is the difficulty now? Why should people be a dog in the manger about the U.S.?
EL-ERIAN: So there are a few things happening. The good news is that this economy continues to heal. So think of a patient that ended up in the ICU because of the financial crisis. Now they're out of the hospital and they can walk, and walk a little bit faster but they cannot run. And they need to run.
Why can't they run? A couple of reasons. One is that the political system is creating headwinds. And secondly, the economy is still structurally impaired. So, yes, the economy is growing, but growing at about 2 percent.
Now that's great relative to where you are, but that's not enough relative to what's the potential of the United States.
QUEST: But what I think people need to understand tonight is whether this improvement is a false dawn.
I mean, is this something, whether it's the sequester or the budget gridlock or the debt ceiling? Is there something that we are not seeing here that in six months to a year will prove this to have been Scotch Mist and disappear quite as quick?
EL-ERIAN: Yes, there's three major rifts. One is that the politicians create additional headwinds. And Congress has found a way year after year to do that.
Two is that the central bank policies that are assisting this process prove to be detrimental. We're getting very close to the point where the benefits of this hyperexpansion gets offset by the cost and the risk.
And then finally, the international environment. The U.S. could catch a cold from outside. So this is a tenuous process, but it's yet to gain strong traction. But it's in the right direction.
QUEST: OK. Finally, the U.S. at these numbers is sailing more smoothly. But it -- to mix my metaphors -- it is at these numbers by no means an engine of growth for sclerotic Europe, which we're going to talk about in just a moment.
Would you agree?
EL-ERIAN: I completely agree.
QUEST: And there we'll leave it.
Have a lovely weekend, Mohamed El-Erian, joining me from California.
So that is the side -- that is the story as seen from the U.S. part of the Atlantic.
As for this side of the Atlantic, in Europe, on the continent, it gets worse before it gets better.
Simply put, that's the bleak outlook for the European economy. The European Commission has scaled down growth predictions, part of its regular review, the spring forecast came out today. Now growth will return on the back half of 2013. And even so, even with very small smidgens of growth, France, Spain and the Netherlands are all expected to miss their 3 percent targets.
In the Eurozone, these are the headline numbers, GDP forecast cut to - 0.4 percent, unemployment forecast to stabilizes at 12 percent. Next year economic activity growth of 1.2 percent.
France is now forecast to enter recession this year, deficit bigger than was previously believed and it's likely to widen certainly France is asking for extra time to meet master criteria.
As for Germany, only one of top five Eurozone economies to grow, miserable, 0.1 of 1 percentage point. But the country's said to be -- it's having a robust job market.
So to the European markets, buoyed by jobs data, German stocks closed at an all-time high, the Xetra DAX gaining over 2 percent. They were listening to the -- for direction from the European Commission and, in that case, it was Olli Rehn.
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OLLI REHN, EUROPEAN COMMISSION: It is a sense that we do everything we can in order to combat youth unemployment and restore confidence and the recovery in our economy. This calls for both consistent consolidation of public finances and statutory (ph) reforms that will help to boost growth and competitiveness (ph).
It also calls, obviously, active labor market policy in order to fight youth unemployment.
(END VIDEO CLIP)
QUEST: Now, joining me now is Michael Burda. He is the economics professor at Humboldt University here in Berlin.
Good to have you.
MICHAEL BURDA, PROFESSOR OF ECONOMICS, HUMBOLDT UNIVERSITY: (Inaudible).
QUEST: Now Mohamed El-Erian was painting a very -- I mean, he wasn't, I wouldn't say, rosy picture of the U.S., but he did say, of course, that the right pieces of the jigsaw are in place. It's very different in Europe at the moment. When you see these spring forecasts, this is a cause for concern.
BURDA: Absolutely. The growth situation in Southern Europe is pulling down the entire continent. Germany is doing OK, but as you said, it's not doing well enough.
The job market in Germany is doing well and that's the stabilizing factor but to be honest with you, Germany needs a bit of a boost from within. So we're all hoping for a nice, big fat wage settlement in the coming months to boost German demand.
QUEST: And yet if I look at the spring forecast, it talks about German growth coming from domestic demand. Now that implies that people around us are going to go out and start spending money and not save it as they have been.
BURDA: That's right. (Inaudible) they need to have more money, so they're -- the government's either going to give them a pay increase or the firms are going to have to loosen up their tight pay policy or the unions are going to have to start getting active. I don't see that happening necessarily. But it's what Europe needs right now to rebalance between the North and the South.
QUEST: Does Germany still have to be the -- along with maybe Finland and other Northern European countries, do they still have to be the main engines here? And have they got room? I mean, we know that Germany's, you know, the constant criticism is why don't they spend more?
BURDA: Well, they've got a surplus right now, which is phenomenal. Today's markets has been better since --
(CROSSTALK)
QUEST: It's tight, tight, 5 percent.
BURDA: That's right. It hasn't been better since the unification phase. So there's a lot of room there, but the Germans are concerned about the debt --
QUEST: What are they concerned about the debt for?
What are they concerned about?
BURDA: They're the last -- they're the last financiers of the whole of Europe. So if, you know, if Southern Europe doesn't follow their footsteps, they're going to -- they're going to set the wrong example. The worst fear would be for the rest of Southern Europe to just throw in the towel and run huge deficits, not try to cut back at all. I think it's a huge conflict of objectives.
QUEST: And yet, seen from here in Berlin tonight, a glorious spring evening, but seen from Berlin, with Germany at an unemployment rate of 5 percent, 5.5 percent, and you compare it to Spain up in the high 20s percent and there's no meaningful reduction in unemployment this year or next.
BURDA: Well, Richard, unemployment is a lagging indicator so --
QUEST: Everybody always tells me that. It's a lagging indicator until you get social unrest. And then suddenly it becomes the primary indicator.
BURDA: That's exactly right. And that's why Germany won't have any social unrest for a while. But I think we need to worry about Southern Europe. The pressure on them to loosen up -- and also in France, where France needs to do the structural bitter pill right now. They're the ones that the Germans are worried about.
QUEST: Really. And, OK. Now if France, when you say France is -- you're talking about structural change. But do you accept that there will have to be longer accommodations to hit Maastricht (ph) limits?
BURDA: Of course.
QUEST: Cutting three to four years down the road?
BURDA: Yes, cutting spending, raising taxes now is poison for the economy. It's --
(CROSSTALK)
QUEST: Well, tell them over there.
BURDA: If they'd listen to me, I'd tell them.
QUEST: I mean, they're the people who have to listen to it.
BURDA: That's right.
No, they have other objectives, too. Remember, the Germans are the last --
QUEST: Ms. Merkel has an election to win.
BURDA: That's also true.
QUEST: I just -- and if the last polls (inaudible), she'll still win it, but there's a bit of a weakness there, isn't there?
BURDA: Well, there's a little minor party that's coming. It's called the AVD -- AFD. And they're basically advocating bringing back the deutsche mark, which is a bad idea, I think, for most companies that export to the rest of Europe. So this -- if this gets a tailwind, this, big trouble in September.
QUEST: Finally, pull the strands together in the same way that Mohamed did in the U.S. The U.S. is doing rather well.
BURDA: Absolutely.
QUEST: Asia's doing not too bad; China a bit of a slowdown. Europe goes where?
BURDA: Well, Europe has the potential to stabilize. They've done -- they've got the financial markets on their side. I think bondholders are happy with what's happened in the South. But people who work are not so happy. And I think if the euro went down a notch, it would help exporters in this -- in this part of the world. It would help a lot overall.
QUEST: Well, (inaudible) was meaningless this week, but nonetheless, we thank you for joining us in Berlin tonight.
Now when we come back on QUEST MEANS BUSINESS, live from the German capital, as the number of victims in the Bangladesh factory collapse rise - - it's more than 400-500 -- the E.U. responds with a threat. We have the commissioner after the break. Good evening.
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QUEST: State-run media in Bangladesh says heavy equipment is one of the key reasons why that garment factory building collapsed with such terrible tragic results last week. Heavy machinery and high capacity generators in the building were largely responsible.
The tragedy has killed more than 500 people just outside of Dhaka. Hundreds of people remain near the wreckage, anxious for word of loved ones still missing.
As the government comes under heavy criticism over safety standards, millions of workers are back at their clothing factory jobs. Bangladesh's $20 billion garment industry was almost completely shut down for eight days. In addition to the human cost, the finance minister admits the tragedy will also have an effect on the country's economy.
(BEGIN VIDEO CLIP)
ABUL MAAL ABDUL MUHITH, BANGLADESHI FINANCE MINISTER: On foreign investment, yes, it has already impacted because a lot of investors, buyers, they had to cancel their visit to Bangladesh. This is one of the realities in some Bangladesh hotels are not fully booked.
(LAUGHTER)
MUHITH: And also the planes which come to Bangladesh are not fully booked.
(END VIDEO CLIP)
QUEST: Now the European Union is threatening to shut Bangladesh out of the common market. The E.U. trade commissioner Karel de Gucht said in a statement, "The alleged criminality" -- this is his statement -- "the alleged criminality around the building's construction is finally becoming clear to the world. "
The commissioner joins me now, live from CNN in London.
Commissioner, let's just be clear about this. What purpose does shutting Bangladesh out of the common market or any form of sanctions or restrictions have on a developing country?
What would you hope it would achieve?
KAREL DE GUCHT, E.U. TRADE COMMISSIONER: First of all, we have not said that we are going to shut them out of the so-called everything but arms whereby they can export everything but arms, of course, freely into the European markets.
What we have said is, look, we have to work on both fronts with the clients, many of them are European, big European companies and so we're going to sit together with them very soon, trying to put into place a compact kind of a code of conduct for those companies that they have to respect because I believe that those big companies have a corporate social responsibility.
And on the other hand, we should also work with the Bangladeshi government to have swift reforms. And if that does not happen, then I'm ready to launch an investigation on the -- everything but arms. And that ultimately could lead to suspension of their very favorable trading system, yes.
QUEST: Right, right, right. So we are talking about -- we're talking here about a process beginning which starts with carrot and ends with stick. That's pretty much the way the Europeans are looking at it.
DE GUCHT: That's what we are looking at. We want the solution and we realize that this is certainly not easy for a leasable (ph) country as Bangladesh. But on the other hand, it's also completely unacceptable that people work for $40 a month in completely unacceptable health and safety conditions.
And it's not the first disaster that we have undergone there in Bangladesh, because we also got it three months ago. You know, we cannot not any longer accept this as -- these are rays of modern slavery. And I think we have a special responsibility because we are by far the biggest market for the Bangladeshi products.
QUEST: It is somewhat of a tragedy, isn't it, that it took this event before the Bangladeshis look at this, and also the Europeans. I mean, I know that you have been onto the Bangladeshi authorities for some time.
But could and should and will more be done now?
DE GUCHT: It has to. And if they don't do it then we will take action. We will launch an investigation and that could very well lead to the suspension of this trading facility, this so-called everything but arms, which would be a disaster for Bangladesh.
So I hope they realize that they have now really to put their act together and take swift action, because we cannot any longer stand that we are wearing very cheap clothing made by people who are not paid, almost not paid and work in unacceptable conditions for human beings. We -- I think we simply, from a humane point of view, certainly cannot continue accepting this.
QUEST: Right. Commissioner, let's just talk about the -- one other areas. I do need to just to talk -- to touch on.
The E.U.-U.S. free trade talks, when do you hope that those talks, not talks about talks or negotiations about agendas, when would you hope talks can begin?
DE GUCHT: I hope they can begin the second week of July. So that's a tentative date that we already have fixed. And it will not be talk about the talks. It will mean start doing business because this is a negotiation that has been thoroughly prepared with the Americans. We have made a report on what is possible, what we should do and within what timeframe we should do it.
And as you probably know very recently President Obama has nominated Mike Froman as his USTR, so the U.S. trade representative. It's with Mike that I have been preparing these talks for about more than a year now. So we are really headed for a kickstart.
QUEST: OK. Kickstart and finish line. I'm asking anybody who's involved in this, give me a ballpark date, Commissioner. When do you think, realistically, a deal can be agreed, signed and put together? Are we talking about before I collect a pension?
DE GUCHT: Well, I don't know exactly your age, but no, no, you will certain still be -- you will certain still be working, because the idea that Mike and myself have about this is that we should try to finalize these negotiations by the end of next year. So before the end of the term of this commission and before the midterm elections in the United States.
This is -- it will be very tough to do it. But on the other hand, I mean, if you really want to make this deal, it's about political resolve. And if we have the necessary political resolve, then we can make it as the Americans have been saying, on one tank of gas. If there is no political resolve or not enough political resolve, then probably we never will make it, you know.
QUEST: Commissioner, good to have you on the program, on QUEST MEANS BUSINESS, talking serious subjects tonight with us as always. We thank you for that. And, yes, I'm 51, so you've got a bit of time before I'm hoping going to collect me pension and head off into the blue yonder.
Commissioner --
(CROSSTALK)
DE GUCHT: You get the agreement before 53.
QUEST: There we are, two years. You -- I'm writing it down and I'm taking it to the bank. The commissioner joining us tonight. We thank you for that.
Now for tonight's "Currency Conundrum," the first minister of Scotland is coming under attack from all sides for his currency plans in the event of independence. So what does he want to do? Does he want to introduce a new currency called "The Scottie," keep the pound, join the euro? The answer later in the program.
Not surprisingly, these are the results tonight. The dollar's down against the pound and the euro. It's up against the yen. It's been a busy day on the markets. Those are the rates. This is the break.
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QUEST: Never mind Berlin. All roads lead to Omaha for Berkshire Hathaway shareholders. It's an annual rite of passage, a ritual. The annual meeting takes place on Saturday in the Midwest. Shares of the company are up 33 percent over the past 12 months. The man can do no wrong. And now its leader's accumulating Twitter followers as fast as he is investors.
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QUEST (voice-over): "Warren is in the house." You are looking at Warren Buffett's first-ever tweet. In case you are wondering, the billionaire investor came up with it himself.
The world's third richest man, famously, doesn't have a computer in his office. Yet he already has more than 300,000 Twitter followers. CNN's Poppy Harlow looks at why so many investors are so keen on the man they call the Oracle of Omaha.
(BEGIN VIDEO CLIP)
POPPY HARLOW, CNNMONEY.COM CORRESPONDENT (voice-over): Last year, Warren Buffett's Berkshire Hathaway gained more than $24 billion for shareholders, not bad. But Buffett himself called the result subpar. With the market on a tear, the S&P's gains have surpassed Berkshire's over the past four years.
But his track record is still stellar. Since 1965, the S&P 500 has only outperformed Buffett's investments nine of those years. His advice:
WARREN BUFFETT, CHAIRMAN & CEO, BERKSHIRE HATHAWAY: In stocks, people, you know, their neighbor whispers something to them and they run out and spend money that it took them years to earn. So you always want to look at the productive ability of the asset you're buying.
HARLOW (voice-over): It's why tens of thousands flock to Omaha each year to listen to Buffett and his partner, Charlie Monger, speak at Berkshire Hathaway's annual meeting.
Buffett lamented not making a major acquisition in 2012, but certainly made up for it earlier this year, acquiring half of Heinz in a $28 billion deal.
BUFFETT: We have a very resilient economy. We've had one for hundreds of years.
HARLOW (voice-over): And if you think print is dying, you're on a different page than Buffett. He recently picked up 28 newspapers for $344 million.
Buffett made headlines throughout the presidential election, once again, throwing his weight behind President Obama and calling for higher taxes on the rich.
BUFFETT: I'd much rather get it from the ultra-rich than from my cleaning lady.
HARLOW (voice-over): With high-profile female executives in the news, here's Buffett's take:
BUFFETT: If the United States got to where it was from 1776 and made all the progress it did, with more than half of that period, women really being shut out of most activities, just think what you can do when you get the whole team out there.
That's my dad.
POPPY HARLOW, CNNMONEY.COM CORRESPONDENT (voice-over): On a rare tour of his office this fall, Buffett showed us the history on his walls.
BUFFETT: When a panic happens with a really good company, I like to buy.
HARLOW (voice-over): And after being diagnosed with Stage I prostate cancer and undergoing radiation last year.
BUFFETT: I couldn't feel better now.
HARLOW: Totally clear?
BUFFETT: Totally clear.
HARLOW (voice-over): In fact, his first tweet came just this week.
UNIDENTIFIED FEMALE: What's your first tweet?
BUFFETT: "Warren is in the house."
(LAUGHTER)
BUFFETT: Who says you can't teach an old dog new tricks?
HARLOW (voice-over): But he's 82 and more are asking who will Buffett tap to succeed him, a question that will undoubtedly be asked again this year at Berkshire Hathaway's annual meeting -- Poppy Harlow, CNN, reporting.
(END VIDEO CLIP)
QUEST: This is QUEST MEANS BUSINESS, live in the German capital in Berlin. We're back in a moment.
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QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS from Berlin in just a moment. But this is CNN and, on this network, the news always comes first.
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QUEST (voice-over): At least five people have been killed and 30 others have been hurt in a bombing outside a mosque in northeastern Baghdad. The blast happened as workers were leaving the Sunni mosque after Friday prayers. Iraq is seeing a sharp increase in violence between Shiites and minority Sunnis.
Media reports say heavy machinery is one of the key reasons for the catastrophic building collapse in Bangladesh. Authorities say more than 500 people are now confirmed to have died in last week's disaster.
The E.U. is threatening to shut Bangladesh out of the common market. Speaking on QUEST MEANS BUSINESS, the commissioner said enough is enough, and something must be done. And the E.U. would play its part.
The online news site GlobalPost said that an American journalist abducted in Syria late last year is probably being held by the Syrian government. The news about James Foley follows a damning report from Amnesty International, which accuses both the rebels and the government of targeting journalists.
A source has been briefed on the Boston bombing investigation told CNN explosive residue has been found at the home of the suspect who was killed in a police shootout. The source said samples have been tested positive at at least three areas at Tamerlan Tsarnaev's home.
Meanwhile, the source told CNN investigators are checking about tips on large explosions heard in the Dartmouth areas of Massachusetts recently.
And a surprisingly strong jobs report has investors in a happy mood. The U.S. economy added 165,000 jobs in April. The unemployment rate fell to 7.5 percent. On Wall Street, the Dow and the S&P have both hit new highs.
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QUEST: As you heard in the news, the jobs number was better than expected. Now, look, don't get excited and head off rip-roaring; 165,000 new jobs isn't perhaps the most exciting number that we will ever see. But it is the right number at the right time in the right place, and that's why Wall Street has reacted with the right reaction.
The Dow over 15,000, the S&P over 1,600, and Alison Kosik is at the New York Stock Exchange.
This was -- it's not exactly a barn burner, but it's the sort of embers that warm the heart.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: I think that's really what it is. Listen, the reality is is that, you know, the economy's not going to be healed on 165,000 jobs that were added in April. That's the reality; Wall Street knows it.
The cherry on top of this whole thing actually is you see the revisions, upward revisions for February and March.
Remember, March we were talking about 88,000 jobs added; that was abysmal. So hear that that was bumped up into the triple digits, that February was bumped up to over 300,000 jobs for that month, that is the reason you are seeing the Dow hitting 15,000 today, although pulling back a little bit right now, still trading at record highs. Same with the S&P 500, making history of its own today, Richard.
QUEST: The question, of course, is whether the virtuous cycle, the upward spiral, has begun. And I think it's probably -- Alison, would you agree -- it's soon to say that a self-propelling mechanism has begun?
KOSIK: I'm trying to understand what you're asking. One more time?
It's loud down here.
QUEST: I saw; you're on the floor of the exchange.
I'm basically asking does this momentum continue?
KOSIK: Yes, it does. As long as the Fed, the Federal Reserve has its hands in creating this wealth effect, I say, yes, this upward momentum continues.
The Fed is buying up $85 billion worth of mortgage-backed securities and treasuries every single month. It's pushing interest rates low. It's pushing investors to the best game in town. That's stocks. They're not going to make any money in bonds. So the best game in town at this point seems to be stocks.
Although, you know, I did talk with one trader today -- you may know him -- Hetty Weisberg (ph). He told me that when the markets go up and up and up like this, it gets him nervous. He says, "Greed prevents you from selling, but it's hard to find something to buy," although looking at the number today, I'm not looking at investors having any trouble buying in today, Richard.
QUEST: Don't do any damage between now and the closing bell in just 90 minutes from now. Alison Kosik at the New York Stock Exchange.
You know, I have been wearing spectacles for the best part of, I don't know, 30 -- well, no, it's more like 40 years. Now, of course, there are new glasses, those of wearable computing. Maggie Lake tries out smart glasses after the break.
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QUEST (voice-over): Well, we asked you which currency is the first minister of Scotland wanted to use if the currency became independent. The answer is B, to keep the pound, which is controversial. (Inaudible) in many ways, the British chancellor has warned he might reject the proposal. And having the Queen's head on the currency might cause some consternation anyway.
But the truth is, Scotland's already said -- Alex Hammond's (ph) already said the Queen will remain head of state.
(END VIDEO CLIP)
QUEST: Now Google's new gadget has taken everybody by storm in many ways, just the mere promise and prospect of spectacles that have computers within them. Now for the first time, they've been tried outside the company. And one of the testers is our very own Maggie Lake.
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MAGGIE LAKE, CNN CORRESPONDENT: We got a pair of the Google glass. We got some instructions. We're ready to take a test drive. OK, Glass, directions to Times Square.
The glasses are actually very comfortable. You get used to them quickly. There's a little screen that you can look, which is showing you a map of how to get to Times Square. So whether you're in a cab or whether you're walking, you just follow what's on the screen.
LAKE (voice-over): The glasses work with any Bluetooth enabled phone, but the best fit is with an Android phone running Google's MyGlass companion app.
LAKE: So here we are in Times Square. Two the easiest features to use right off the bat on Google Glass are taking pictures and recording video. And what a better canvas? Now the camera's turned on the cameraman.
You can get some of the features of Google now with the glasses, but there are no third-party apps yet, and that's where the real potential is. I would love, if I had an app that told me where the nearest Mexican restaurant was to Times Square or something where I could compare prices for a shop that I was going to go into. And that is not far off.
So no restaurant app? I guess I'm going to have to rough it.
Hey, there; can I have a pretzel?
LAKE (voice-over): Some busy New Yorkers never noticed what I was wearing, but those who stopped us were very enthusiastic.
It is the Google glasses.
UNIDENTIFIED FEMALE: Oh, my God.
LAKE: What do you think?
Do I look like "Star Trek?"
UNIDENTIFIED MALE: (Inaudible)?
LAKE: Google Glass. How do you say hello in French?
Taxi!
We're at the top of The Rock, a beautiful day. Now you might want to have a bodyguard when you have these. They're about $1,600 a pop. But remember, they're just a prototype. They're actually very comfortable and fairly easy to use some of the simpler functions. I have to say, though, the setup is a little bit difficult.
And so we're working some of the connectivity issues. That's definitely something they're going to have to iron.
OK, Glass. Take a picture.
Take a look at that view.
This definitely feels exciting. I feel like I'm looking at the future, but there is a learning curve, no doubt about it.
Oh, wait, oop. (Inaudible).
Is this still recording?
So I turn it off?
(END VIDEO CLIP)
QUEST: I can honestly say I'm not at all convinced about all of this, having spent most of my life looking through glasses. I'm not sure I want anything else in a heads-up screen and a computer.
Now, before we go, an apology to one and all. I've not been tweeting as much as I have been lately as I've been traveling 'round, which of course means that the discussion really does need to get going and I need to do my part, too.
The tweet address as always is @RichardQuest. And scout's honor, promise to do better. As for today, what a day it was. In the U.S., the Dow Jones industrials went the best part into record territory on the back of better -- or at least better than expected -- job numbers.
And here in Europe, the best prospect that can come forward is more misery, high unemployment and no serious benefit or gains until the end of the year. And even then, growth may only just come back. But that is QUEST MEANS BUSINESS for this Friday. I'm Richard Quest in the German capital, Berlin. Whatever you're up to in the hours ahead, I hope it's profitable. See you in London on Monday.
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ROBYN CURNOW, CNN HOST: Scenes like that are a common sight here in Africa, trash just dumped on the streets because waste management is often overlooked. You're watching MARKETPLACE AFRICA. I'm Robyn Curnow.
Now Vladimir Duthiers is now going to introduce us to a man who says he's going to clean up (inaudible) when it comes to refuse.
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VLADIMIR DUTHIERS, CNN CORRESPONDENT (voice-over): Two kilometers east of the center of Ghana's capital, Accra, the Obokobe (ph) dump site is where some of the 14,000 tons of waste generated by Ghanaians every day ends up.
For years Ghana, like most developing countries, did little to provide sanitation facilities or manage the growing mountains of trash that pile up in rivers, seep into groundwater and spread disease. Frustrated by what he felt was a failure by Ghana's leaders to devote money and resources to addressing the problem, Joseph Siaw decided to help save the planet and earn some money while doing it.
JOSEPH SIAW, ZULINE (PH): We're making money out of trash.
DUTHIERS (voice-over): In 2006, he founded Zuline (ph). The mission?
The passion has been for waste management, a complete, comprehensive solution: collection, processing and treatment.
DUTHIERS (voice-over): He started by hiring and training a small cadre of garbage collectors. Now Zuline (ph) employs more than 250,000 employees across the continent.
SIAW (PH): We are now in Zambia; we are in Angola, Equatorial Guinea, Togo (inaudible). Most Africans (inaudible) are attracted by our model, that we generate employment.
DUTHIERS (voice-over): Africa's high growth rate and increased foreign investment have raised standards while driving migration from rural areas to the big cities. More people concentrated in megacities along with rising consumer consumption and Ghana's increase in mining and oil drilling means more waste.
SIAW (PH): When you take the whole West Africa, Africa have natural resources, iron ore, bauxite, gold. And I want to go into the (inaudible), the wastewater is contaminated to drinking water. When you are given a concession to let the people to they left out the waste management aspect of it.
DUTHIERS (voice-over): That's because the priority was building up infrastructure and creating jobs while spending millions fighting preventable diseases.
SIAW (PH): (Inaudible) malaria treatment, (inaudible), you look at cholera or other diseases, tuberculosis and other tests, they are (inaudible) very huge. When you look at waste management treatment, very minimal.
DUTHIERS (voice-over): The U.N. estimates that less than a quarter of the region's population has access to sanitation facilities, which has led to the highest under-5 mortality rate of all developing regions.
SIAW (PH): Every leader and every individual must take waste management as an issue. People must not die because of waste management.
DUTHIERS (voice-over): Before Zuline (ph), there was an out-of-sight, out-of-mind mentality. Waste was dumped in landfills like this one and left to scavengers.
DUTHIERS: Even though this dumpsite looks fairly chaotic, there is some semblance of order going on here. Check this out. It's an enormous pile of tin cans. Over here, metal. That there, rubber; water bottles. There's another business going on, the business of scavenging, men and women spend their entire day here, picking through this stuff to sell to recyclers. And here, time is money.
DUTHIERS (voice-over): Now Zuline (ph) collects this trash and recycles it here at the Accra Compost and Recycling Plant.
SIAW (PH): This plant processes 600 tons of waste every day.
DUTHIERS (voice-over): Waste that's collected, processed and recycled, starting with the little plastic water bags popular all across West Africa.
SIAW (PH): (Inaudible) about 10 million production every day, 10 million. So what we have done is to recycle this. So it comes here, it comes -- people throw it away. It goes into the plant. It's been sorted out and then passed through a washing process, first primary washing process. And then --
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DUTHIERS: -- it ends up here, yes.
SIAW (PH): It comes here and then from there we have a shredder that comes into it, shred it into pieces and then it goes in this form. And there's this, a machine, equipment that process it. This (inaudible) granules to product (inaudible) or any (inaudible).
DUTHIERS: So this ultimately becomes this.
SIAW (PH): It becomes plastics. It becomes so many things.
DUTHIERS: So 1 ton of this is how much in dollars?
SIAW (PH): $1,750 per ton.
DUTHIERS: Per ton?
SIAW (PH): Per ton.
DUTHIERS: Wow.
We drank so much bottled water in the world, so much. This is an insane amount of water bottles.
SIAW (PH): When we sort out the loose bottles, we put them on a conveyor belt and then they are dropped into the bailing machine, that it compresses the PET bottles so they'll be able to, you know, have more bottles (inaudible).
DUTHIERS (voice-over): And Zuline (ph) is doing business around the world.
DUTHIERS: You have buyers for this?
SIAW (PH): Yes. We have a buyer from -- all the way from Romania.
We have set up an (inaudible) for waste management and sanitation. The focus of it is to bring less (inaudible), community leaders, NGOs and all people opinion leaders that look we can manage the waste. Waste must be managed.
DUTHIERS (voice-over): Then, he says, it's working.
SIAW (PH): Formerly, (inaudible) you come here, every place where I see waste. Now it is changing. That if some of them have sent themselves to be task force. (Inaudible).
DUTHIERS (voice-over): And while there is a profit motive, Siaw (ph) says the reasons for doing what he does has less to do with dollars and cents and more to do with investing in Africa's future -- Vladimir Duthiers, CNN, Accra, Ghana.
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CURNOW: That's one success story from Ghana. But what about the rest of the continent when it comes to garbage? After the break, I'll speak to an environmentalist. Stay tuned.
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CURNOW: Pelean Borde (ph), Henry Wanyama (ph) holds a Ph.D. in environment education and community development and his environmental consultancy is currently implementing projects in more than 10 African countries. Well, I recently sat down with Dr. Wanyama (ph) to talk about how junk in the city can create jobs.
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HENRY WANYAMA, LEAD CONSULTANT, TASHMA GREEN CONSULTANTS: Waste is something that has been neglected for a long time. And yet it's a viable option for generating jobs for young people and mostly poor people.
If you look at waste at the moment, waste management of (inaudible) the majority of the people who are actually doing it are poor people. So they are already there. What we need is for the government to get involved, for them to attract the private sector, put some money there. They also have to ensure that you, their designated point where you can throw the waste.
CURNOW: But that's the key, isn't it? I mean, I travel around Africa a lot, and there's sometimes either it's just sort of filth in a very poor area. It's just dirty, or you have these dump sites, like in Maputo, Accra, of major, major kilometers of land, just getting bigger and bigger as people and trucks just come and literally dump the (inaudible).
WANYAMA: Yes. The -- one of the major problems of waste management in Africa is poor legislation or lack of -- complete lack of legislation. And when --
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CURNOW: And if there is legislation --
WANYAMA: (Inaudible) --
CURNOW: -- implemented (inaudible) --
WANYAMA: -- enforcement capacity is completely lacking. That is a problem. The second is lack of the infrastructure to ensure that those interested in assisting can actually be involved. We must have business people who (inaudible), who will buy the waste so that as I collect, I can, you know, bring it to you so that you can give me money.
(Inaudible) that way it becomes a viable income (inaudible).
CURNOW: Such as recycling the waste, you're starting to create like you say a whole industry around it.
WANYAMA: A whole industry around it.
CURNOW: Why hasn't it been done? Because as we say, when we travel around Africa, people don't want to be living in dirty places, you know, that is not a human instinct, in a way. I mean, why is there this problem around waste? And why haven't people (inaudible), this is a good business opportunity?
WANYAMA: I think it's not seen as something that is good to do. It's left for the poor. If you look at the waste industry, most of the people (inaudible) are actually your poor people. They -- those who are -- who have nothing else to do.
And yet in the -- in the more urban setup, more than cities, waste has become part an asset of life in the cities. It has been overlooked for a long time. It -- you cannot not -- no leader, no urban manager can afford to do that because waste if overlooked would have a lot of consequences.
CURNOW: I mean, are you -- are you -- you're bagging, you know, the drum for a change of mindset, for an urgency, for political will. How do you -- how do you get that politician to take your message there?
WANYAMA: There -- politicians need to know that waste management is a viable source of income.
CURNOW: But they've got to make money out of it.
WANYAMA: They will make money out of it. They will use it to eradicate poverty. They will address the problem of unemployment. And it's something that you can't (inaudible).
CURNOW: That's the carrot you're dangling. You're saying, listen, if you get into this business --
WANYAMA: Sure.
CURNOW: -- take it more seriously, it's some serious money to be made.
WANYAMA: This is some serious money to be made. You're going to reduce the cost of treating people (inaudible) all the time.
CURNOW: So you're hopeful?
WANYAMA: I am hopeful that this (inaudible) will change. The challenge, however, is for government, private sector, community to realize that waste will never go away. It's here to stay. And the sooner they get together to come up with an elaborate program to address that the better.
Otherwise, it may be too late. You know, we -- by the time we think about that, the situation may have gotten worse.
CURNOW: Like you said, (inaudible) suffocating under its own weight.
WANYAMA: Exactly. Exactly. So that is, I think, (inaudible) work to be done. But I think there is -- I'm optimistic that the more people talk about it, the more the demand will start thinking and perhaps coming up with ways of addressing that.
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CURNOW: That's Henry Wanyama there, a Kenyan environmentalist. You can catch that interview and many more at CNN.com/MarketplaceAfrica. I'm Robyn Curnow. Please do join me again from another African marketplace next.
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