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Quest Means Business
Slowing in China's Growth Not Bad as Feared; Markets Up Slightly; Boeing Shares Rebound; China's Slowing Growth; Spanish PM Under Pressure; Millionaire Bankers; European Markets Up; Dollar Up; IMAX Deal; Royal Tax Probe; Blast from the Past; Britain's Golden Child
Aired July 15, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: It's a slowdown scare. Investors count their lucky stars. Chinese growth scrapes home just about.
Rajoy on the ropes. Spain's prime minister says he won't quit over a growing corruption scandal.
And from hub to housing estate. London's mayor says it's time to close Heathrow.
I'm Richard Quest, the start of a new week, and of course, I mean business.
Good evening. Investors around the world heaved a sigh of relief today as the international recovery dodged a bullet. We learned the economic slowdown in China, the global growth engine, wasn't as bad as we had perhaps feared. Second quarter GDP --
(RINGS BELL)
QUEST: Join me at the wall. Second quarter GDP grew at 7.5 percent over the previous year. Now, that's down just a smidgeon, just a fraction, 0.2, from the first quarter, but it could have been a great deal worse, and it continues to show the world's second biggest economy is slowing down, but the soft landing suggests it's well in line with Beijing's targets.
The Chinese government says it's tackling what it calls a grim and complicated economic situation -- grim and complicated -- as the country's current leadership is trying to restructure China's economy.
The markets, well, here's how they responded. We saw a strong gain in Shanghai, obviously, up the best part of 1 percent. And Shanghai has been so volatile in recent weeks: up 2, down 3, up 3, down 2. Now it's at 1 percent. London's FTSE and the Dow at the moment is just up a fraction.
Alison Kosik is in New York. Alison, the issue of China, along with the Fed, but the issue of China has been -- you told me last week -- has been so much on the market's mind.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It has. But you know, the GDP numbers that come out of China, you're seeing US investors relieved about it. They're not necessarily celebrating, but they're relieved about it, so it's not bringing the markets down, it's pushing them up ever so slightly.
We're not seeing much movement today for stocks, but watch the Dow. The Dow could hit yet another record high, even if it closes at the level it's at right now. You may be seeing the market really waiting on more news coming out later in the week. It's going to be a busy week on the US economic calendar. We're getting reports on housing, consumer prices.
Fed chairman Ben Bernanke, he's going to be on Capitol Hill later this week, and you know how that goes.
QUEST: Right.
KOSIK: It's really not market fundamentals that are moving this markets, it's what central banks say that's really moving this market, Richard.
QUEST: So, we're in the middle of earnings season, and frankly, earning season has been a bit of a -- I mean, nobody's paying too much attention while Bernanke's talking and while we've got these other issues.
Boeing is a stock I do need to know about, because of course we had the 787 fire at Heathrow, rumors that it's actually in the locator beacon or the emergency transmitter. Boeing stock took a hit last week on the back of this.
KOSIK: Right, it did, and we're seeing Boeing shares rebound right now, up 3.5 percent. What's interesting is, you're talking about that report right now being reported by "The Wall Street Journal" saying that it could be that emergency locator transmitter. And guess what runs that transmitter? The lithium-ion battery.
So, right now, we're not seeing any reaction with the stock right now. But what if that report is confirmed? Who knows, Richard?
QUEST: Ah, it's an interesting one. Alison Kosik, who is in New York. Now, we need to talk more about the China number and put it into perspective. There are two big issues in the global economy at the moment. The first, of course, is Ben Bernanke and tapering, when the Fed will pull back. And the second is Chinese growth, which we now know is 7.5 percent in Q2.
To put the two in perspective, I turn to global economist Bronwyn Curtis. And when we talk about China, she agreed, market fears had now been allayed by the Chinese figures.
(BEGIN VIDEOTAPE)
BRONWYN CURTIS, GLOBAL ECONOMIST: Well, that's because it's a consensus number, and it's very clear that the Chinese economy is slowing. Now, it's because they're looking at quality of growth and trying to get -- do reforms, not have so much easy credit, all of those things. But it is causing some tensions, and the question is, can they slow it down slowly rather than --
QUEST: But why should it slow down any more? Because they could pump it up a bit more.
CURTIS: They could pump it up a bit more. Now, actually, the Chinese economy has been slowing since the beginning of the crisis, because of exports, we're growing at 20 and 30 percent. And of course, that disappeared.
They pumped it up with easy money, infrastructure and so on. They could still pump it up with some more fiscal spending, so -- perhaps some more infrastructure. They're already doing IT infrastructure and a few other things like that.
QUEST: If we look at the rest of the world, the one thing that comes up again and again and again, worries about China, worries about China. Does today's number put those worries to rest?
CURTIS: No, but it makes people feel that it's not falling off a cliff, the Chinese economy. Because China falling off a cliff would be a big problem because it's been driving the global economy until recently, when the US has started to pick up. Still slowly, but picking up.
So, there is still fear out there if we got a bad number for the next quarter, all that volatility in the markets would come back.
QUEST: And in this tension between China's GDP number and the Fed's tapering, where do we stand on this? Because we know tapering -- tapering is a done deal. It's coming later this year.
CURTIS: Well, it's probably coming later this year, and I agree with you that probably towards the end of the year, but it depends on the numbers because they've got some targets, and unemployment -- right? -- is one of them.
So -- but we know it's coming. And what's happened now is the markets are now sensitized to slower Chinese growth and tapering will come. But the problem is, once they start withdrawing the taper -- withdrawing that monetary stimulus in the US, of course the economy may sag a bit, and then that will bring back -- people will be nervous again.
QUEST: We're in July, August is around the corner. Is it still a case of just watch and wait? Nothing much will happen over the next few weeks?
CURTIS: Well, August is always a difficult month, and lots of nasty things happen at the beginning of August. That's when the crisis -- the financial crisis really kicked off back in 2007, beginning of August. It's when we had the invasion of Kuwait from Iraq.
So, I think -- I'm always -- I always worried about August, because it's a time when a lot of people go on holiday, the markets aren't very liquid, so if you get a shock, they really move a lot.
(END VIDEOTAPE)
QUEEN: -- talking to me earlier. After the break, Mariano Rajoy of Spain rejects calls to resign, and the country's slush fund scandal continues. QUEST MEANS BUSINESS.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Spain's prime minister says he will not resign over his party's slush fund scandal. Mariano Rajoy is facing renewed pressure to step down after the Spanish newspaper "El Mundo" published what it says are messages of support to the man at the center of a scandal, the former party treasurer Luis Barcenas.
Mr. Barcenas is in custody. He's accused of making secret payments to politicians. And according to "El Mundo," one text from Rajoy reads, "Luis, I understand. Keep courage. I will call you tomorrow."
Al Good man joins us now, live from Madrid. Al, did Rajoy send the text? And if he did, what did he mean by it?
AL GOODMAN, CNN MADRID BUREAU CHIEF: Well, this is what the text looked like. It came out on Sunday in this long-running corruption scandal. And this came out just a day before Luis Barcenas was to testify. He's done that, nearly five hours of testimony in a closed-door hearing this day.
The concern among many here is what other secrets he would spill, having been treasurer or manager of the finances of the Popular Party, the conservative party, for 20 years.
But Mr. Rajoy hosted the Polish prime minister, and at a news conference, he tried to keep it really cool and calm. Here's what he had to say about these text messages published.
(BEGIN VIDEO CLIP)
MARIANO RAJO, PRIME MINISTER OF SPAIN (through translator): The text messages that were published Sunday simply confirm what I have said before, that the rule of law can not be subjected to blackmail, and the institutions, the courts, judicial police, and tax administration office have acted, are acting, and will act with total independence.
This is a serious democracy, and the institutions cannot be subjected to blackmail. I refer you to the evidence.
(END VIDEO CLIP)
GOODMAN: But the heat is rising, the pressure is on, Richard, and as a result of those text messages' publications, various opposition parties, including the main opposition socialists, called for his resignation at that news conference with the Polish prime minister. Rajoy said he plans to serve out his term until late November 2015. Richard?
QUEST: Help me understand, gauge it for me, Al. How serious is this one? Is it a storm in a teacup? Is it politics as usual? Because it's not the first time Rajoy's been involved -- or his party, certainly -- in accusations of this sort. So, how serious?
GOODMAN: Well, it is very serious for him politically, but legally, legal analysts here say that because of Spanish laws on party financing and whatnot, even if Barcenas's accusations are true about the prime minister and the other people who allegedly took the payments, tens of thousands of dollars over years, they may not be held liable judicially, possibly not, that's to be determined.
But clearly, there is a political problem. There are others in Rajoy's own party who are throwing out the knives already and stirring this all up. They see him in a weak position.
And you have the opposition parties and Mr. Rajoy himself saying, look, the priority's supposed to be the terrible economy, the 27 percent unemployment. That's our focus, and everybody here can see that he is clearly distracted, Richard.
QUEST: Al Goodman, who is in Madrid. Good evening, Al, thank you for that. Spain, let's stay with Spain, because Spain's senior bankers are the best-paid in Europe. European banking authorities released a report on bankers who earned more than a million euros.
Now, the extraordinary thing -- join me over at the super screen, and you'll see, if you look at the numbers of high earners, according to the EBA, there were 3,175 of them in 2011, according to the survey.
Now, in Spain, 3,000 -- more than 3,000 of them. In Spain, they earned an average -- an average salary of more than $3 million. That is 40 percent higher than their British peers, bearing in mind, of course, there were many more in Britain because it's the largest banking network or center in Europe.
Investment bank -- look at the others. France, 2.1. Germany, 2.4. France 2.2. Seem to have France twice there. Spain 3.2 and UK 1.9. That's probably Italy, one of them. Investment bankers' bonuses were down overall. The French had the highest bonus-to-salary ratio, roughly eight times basic pay.
The EU brokered the deal to curb bonuses in February. Now, if you look at the way this whole thing's been put together, the UK has opposed the bonus deal, but what is fascinating about this, of course, is it's the UK which has taken the biggest brunt where salaries have come down by the best part of 40-odd percent. We'll have more on that in the Profitable Moment.
Whether or not they are bankers or otherwise, European markets finished higher, lifted by the GDP numbers in China that we've been talking about. The Paris market gains were muted by the Fitch's downgrade, which we told you about, the lowered rating from AAA to AA because of the high debt position.
Tonight's Currency Conundrum. A $2 commemorative coin paying tribute to a TV show has broken a record at an auction in New Zealand. So, which show did it honor? "The Simpsons"? "Doctor Who"? Or "QUEST MEANS BUSINESS"? The answer later in the program.
The dollar's up against the pound and the yen, flat against the euro. These are today's rates --
(RINGS BELL)
QUEST: -- this is the break.
(COMMERCIAL BREAK)
QUEST: We've been talking this evening about the position of China, 7.5 percent growth in the first -- in the second quarter. Pretty much what analysts have been expecting. Well, IMAX is still confident in the country and, in fact, more than just confident.
IMAX today on the very day that we got the GDP numbers, it was announced there was a deal to open 30 new giant screens across the country. One of the biggest ever international expansions, and IMAX's chief exec, Rich Gelfond, joins me now from New York.
Congratulations on this deal. You were just telling me before we started, 650 or so globally, so this is a sizable addition in your fastest- growing market.
RICHARD GELFOND, CEO, IMAX: Yes, it is, Richard, and it continues a trend. If you go back to 2009, when "Avatar" came out, we only had 13 theaters open in all of China. We now have 118 open. Those in backlog, including those we announce today with CJCGV, will bring our total theater count to about 270 in China.
And somewhat surprisingly, if you look at our percentage of the box office in China, for "Man of Steel," the recent Superman movie, we did about 13 percent of the Chinese box office in China. So, we become quite an important point -- part of their entertainment landscape.
QUEST: Why do the Chinese, seemingly, have such a greater affection or aficionado for IMAX? Because on those numbers you've just given me, nearly 30 percent of all your theaters are in China after these new ones are added.
GELFOND: Well, the answer is, I think, twofold, Richard. One is that we grew up with exhibition in China. So, if you back to -- several years ago, four or five years ago, there were only 2,000 screens, regular screens, in all of China, and that's when we had our 13.
Now, there are 15,000 screens in China, and we're growing. So, from the Chinese consumer's point of view, IMAX is really part of the mainstream entertainment landscape, whereas in places like Europe or the US, there was pre-existing infrastructure that we had to break into. In China, we've grown up with the population going to movies.
(CROSSTALK)
QUEST: But do you get --
GELFOND: The second thing would be --
QUEST: Sorry. Did you get the profitability out of China? I mean, the ticket prices and the return out of China that you would get in a mature market, say, the EU or US?
GELFOND: Surprisingly, yes. The typical ticket price in China is $13 to $16 in an IMAX theater, just like it would be in London or where it would be in the US, it's very similar.
The other thing is that the Chinese really like affordable luxuries, especially if you look at the one child policy. So, they may not go out and buy a sports car, that's a lot of money, but if you're going to the movies for the weekend and you could just spend $3 or $4 extra of the yuan and the equivalent, that's an affordable luxury. And those, as you know well, tend to do very well in China.
QUEST: Finally, Rich, you are one of those CEOs, then, that is looking very closely, say for example, at today's GDP numbers in China. You bring sort of business and economics together, because obviously, a slowdown in China, albeit it ever so slight, could impact your business in the future.
GELFOND: You know, Richard, I don't necessarily think that there's that kind of correlation. Because if you look at the entertainment business in general and movies specifically, sometimes when there's a slowdown, that becomes like a rest place where people go. Maybe they don't go on vacation but they don't go to a restaurant, but they go to the movies. So there is less of a correlation.
And I've been there so many times and I've looked at our industry. I just feel like with all the consumer spending turning more inward, less exporting, I think we're going to be fine in China.
QUEST: As they always used to say, candies, cookies, tobacco, and booze. And now we can add IMAX theaters, perhaps, to the counter-cyclicals that we still need to have in times of recession. Good to see you, Rich, lovely to see you. Thank you for joining us from New York.
Other stories, now: Britain's Prince Charles is waiting to become a grandfather for the first time. So the last thing he needs is a tax inquest being held by the British parliament. The accountants who run his estate have been pulled before the same committee that grilled Amazon, Starbucks, and Google in the UK.
His estate is called the Duchy of Cornwall, and it makes $28 million for Prince Charles each year and pays no UK corporation tax. The duchy's finance director tried to explain why that was so.
(BEGIN VIDEO CLIP)
KEITH WILLIS, FINANCE DIRECTOR, DUCHY OF CORNWALL: There were many property companies, she is quite correct, that pay very little corporation tax.
MARGARET HODGE, CHAIR, UK PUBLIC ACCOUNTS COMMITTEE: They avoid it, do they?
WILLIS: They do not avoid it, is distributed to shareholders who pay income tax. So, it's transferred -- it's tax transparent. The burden comes off the little corporation tax onto income tax for the recipient.
HODGE: I have to tell you, Mr. Willis, actually, in the current context, where corporation tax is less than income tax, I don't believe that to be the case. I don't believe the property companies would arrange their affairs in such a way --
WILLIS: You can --
HODGE: I think you're asserting something where there's obviously something else going on.
(END VIDEO CLIP)
QUEST: Now, the prince's first grandchild is not even born but already is contributing to the UK economy. According to the country's Centre for Retail Research, the excitement surrounding the British royals should provide a benefit. In fact, the Centre estimates $366 million --
(RINGS BELL)
QUEST: -- will be generated in sales, and that will include 3 million bottles of champagne ready to pop the cork when the birth is announced. And a 13 percent rise in pram or push chair sales, as parents trade up to match the royal couple, Prince William and his wife, of course, the Duchess of Cambridge.
The expectant mother, Catherine, will no doubt be relieved to discover children's fashion has moved on since 1982. Now, in 1982, these -- when William was born -- well, the internet was nascent and we weren't all buying things online. We had catalogs.
This is the catalog from Mothercare when the young William could have been sporting something like this, or some of these outfits. And these are some of the rather fetching nightwear that mothers used to wear -- well, not those, but those -- that mothers used to wear. I can't see Kate in one of those.
Like any other royal event, there's an appetite for a good souvenir. Companies market the event with special products. Mothercare is one of them, with one strict rule: no royal baby-related product goes on sale until the baby is born and safe. I asked the chief exec why he's waiting.
(BEGIN VIDEOTAPE)
SIMON CALVER, CEO, MOTHERCARE: The most important thing in any birth is a safe arrival of the baby and the mum being OK. And I -- and for us, that is the time when we can start to celebrate, when that happens. So, we didn't want to do anything in stores or with colleagues or anything like that until that situation happens, simple as that.
QUEST: But you did have to prepare, and prepare you have.
CALVER: Right.
QUEST: Tell me about these.
CALVER: Prince-in-training. And princess, and -- actually, the one I particularly like is the Rule the World one, which my 22-month-old would love a t-shirt like that, and I can tell you, he feels like it already.
But the key thing is, this is about having some fun and actually suitable for any young girl who's --
QUEST: I was about to say, did you -- were you a bit of a hostage to fortune? I mean -- I want to be a Prince in Training. If it's a princess, does that all become a waste of time? And similarly, Pretty as a Princess, does that become a waste of time if it turns out to be a --
CALVER: Well, no, because if you ask any parent about their son or their daughter, and especially their newborn, they're going to be as pretty as a princess or like a prince, so I think it's equally relevant.
And you can also have some fun with it. The thing I love about this, for example, if you turn it around, you can see where the crown is --
(LAUGHTER)
QUEST: For a company like yours, where your entire raison d'etre is pregnancy and motherhood --
CALVER: Yes.
QUEST: -- this is a moment, isn't it?
CALVER: I think it's a moment for the nation to reflect. Every mum - - and they are special people -- needs to reflect and celebrate what they go through when they have a birth, and I think that's great.
And I think the beauty of this is that the nation can actually sit down and celebrate with the Duke and Duchess of Cambridge when the new arrival comes, and I think that's just going to be a fantastic moment.
And for us at Mothercare, you're right, we are all about caring for parents. I call it the parallel universe of parenthood, right? When you become a parent for the first time, you've no idea what it's going to be like. And we have thousands of people up and down the country who help new mums at that particular stage go through the early stages of what they need to get ready for their birth.
QUEST: And have you seen any uptick -- it's an awful phrase to use, the stock market jargon when one's talking about pregnancy -- but have you seen any uptick in demand, any -- are you seeing any response to this in your business?
CALVER: I've heard some stories -- and you hear some stories of people who are actually delaying purchase until they find out what he duchess is going to buy as her pram or her clothes, et cetera. I think that's at the large end.
I think that, you know what? When a baby's born, you need clothes for it when it's born, whether it's born a week ago or a week later.
QUEST: Yes. But will you be watching what she wears, what she dressed the child in, and if you see that there's a trend, how quickly can you respond to that?
CALVER: Well, we have a -- quite a long design process and quite a long supply process, so this isn't something that's going to be sort of there in a few weeks. This is something that is a longer-term -- you know, probably six to nine months' worth of trend that we'll have a look at.
But we're always interested in fashion, and in our higher-end design clothes, not just the sort of entry-level price point clothing, the value ranges that we have, fashion is very important, and fashion is all about what people want to wear, or want their children to wear.
(END VIDEOTAPE)
QUEST: I wonder what those people make of it now, back in 1982, that's what they wore. Now, it's all online. But the catalog still survives, I suppose, in somebody's world.
After the break on QUEST MEANS BUSINESS, the name Fabulous Fab. Well, it can only be the former Goldman Sachs trader, who's in a less than fabulous predicament. He's about to appear in a court in New York and facing some extremely serious charges. We explain it all after the break.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN and, on this network, the news always comes first.
(BEGIN VIDEO CLIP)
QUEST (voice-over): Authorities in Egypt have issued arrest warrants for several Muslim Brotherhood leaders. Prosecutors are investigating some Brotherhood members as well as former president Mohammed Morsy over allegations of spying and killing protesters. Mr. Morsy has not yet been questioned in the case.
There's been a strong reaction in the U.S. after the not guilty verdict in a racially charged murder case. Protesters took to the streets of several cities after George Zimmerman was acquitted of killing the African-American teenager Trayvon Martin. Now Mr. Zimmerman's supporters took to social media website in his defense.
The Russian President Vladimir Putin's telling Russian media that U.S. intelligence leaker Edward Snowden seems to be shifting his position. Mr. Putin had said Snowden would have to stop leaking harmful information if he wants to be considered for asylum. The final outcome of an asylum application in Russia is not yet known.
Adidas has suspended its contract with Tyson Gay after the former world sprint champion tested positive for banned substances. In a statement, the sportswear giant said it would presume Gay's innocence until proven otherwise. Thirty-year-old Gay has been backed by Adidas since 2005.
And London continues to keep watch outside the hospital where the Duchess of Cambridge is expected to give birth any day now. The baby will be the third in line to the British throne. Prince William spent the weekend at a game of polo as he awaits the arrival of his first child.
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(END VIDEO CLIP)
QUEST: It's one of the few chances the U.S. government has taken to find someone responsible for the country's financial crisis and the Great Recession. It is the trial of a former Goldman Sachs trader and it's beginning in New York.
The man, of course, is Fabrice Tourre. He stands accused of knowingly selling bad investments. They were packages of real estate debt that Goldman had said and alleged were expected to fail, blow up, if you like.
The famous quote that coined the nickname, "Fabulous Fab," written in an email he boasted to his girlfriend the market was standing on the verge of panic and according to the SEC, Tourre wrote in an email, "the whole building is about to collapse any time now -- only potential survivor: the Fabulous Fab" -- that's him -- "standing in the middle of all these complex, highly leveraged, exotic trades he created."
Maggie Lake is in New York watching the case.
This is going -- I mean, this is all about -- it goes to the heart, not only of what Goldman did or did not do with the abacus issue but also the culture in the markets and on Wall Street at the time.
MAGGIE LAKE, CNN CORRESPONDENT: That's right, Richard, but only if the trial would be as interesting as that email you just read. Unfortunately, that is probably not going to be the case if history is any guide. Believe me, I mean, we have to follow it, that the people we need to pity are those jurors who are going to have to sit and listen to what is going to be a very complicated discussion.
In fact, to give you an idea, the judge already so concerned in a rather unusual move, Catherine Forrest (ph), the judge presiding over this case, in the first day of court today issued a list of words she wants banned from the courtroom, including "synthetic CDO," "collateral," "asset backed," among them, saying it was gibberish, that mere mortals are just going to understand.
And that is the problem with these types of cases. As dramatic as the global financial crisis was, these cases are very complicated about the inner mechanisms of the financial world, very hard for jurors to follow, very hard to get convictions on. And frankly, Richard, it is why we see a young at the time 26-year-old trader as the only person (inaudible). And we're not looking at the CEO of Goldman or any other bank, for that matter.
QUEST: It's a fascinating thing, Maggie. It goes -- there's this idea of how do courts deal with these extremely complicated cases. Of course, in the United States, there is the constitutional right to be tried by a jury of your peers. So taking the jury away is not really an option.
Do we have any idea how long this case is likely to last or -- I mean, I -- obviously the jury is not sequestered in this case, but it's going to on for a serious length of time.
LAKE: It's going to go on for a serious length -- I'll be interested to see if these legal teams, how strict the judge is. And if they can avoid using all this jargon -- you'll remember, Richard, when we sat through those congressional hearings, they were torturous. It was impossible for you and I, who follow this, to understand what was going on.
But you're right. It is a very difficult -- it's why we don't see a lot of convictions and success, even when it comes to insider trading. The fact they've been able to use wiretaps has helped cut through that a little bit, not an option here. And in fact, we'd love to show you the pictures. We can't; it's a federal court. No cameras. And I'll tell you, Goldman Sachs loves it that way. The last thing they want is for this to be in the headlines again.
QUEST: Finally, let's talk about Goldman. It was a black eye for them. The whole abacus, they paid -- they admitted nothing but they paid out, as I recall; forgive me -- correct me if I'm wrong -- I'm going from memory -- they did pay out on those allegations.
But Maggie, but Maggie, Goldman does not want to be reminded of what was a low point in the Goldman history.
LAKE: They don't. They've very much tried to put it behind them, and frankly, Richard, they've done a good job because thanks to the London Whale (ph) and Jamie Dimon, Goldman was off the radar; JPMorgan was firmly back on the radar.
But guess what? None of us are talking about any of that this week because the banks are back out with good earnings, better than expected. Investors are happy. So the chapter does seem to be put behind it. I'll tell you why not completely, though. There's suggestions about forcing to raise more capital and Elizabeth Warren, the foe of Wall Street, the woman who was the head of the congressional oversight committee for TARP, she's now a senator. Her and John McCain want to reintroduce Glass-Steagall. So we haven't quite heard the end yet. But very much not the sort of microscope on Goldman that it once was. We'll see if this changes it. I'm guessing not, because (inaudible) --
(CROSSTALK)
LAKE: -- such a low-level employee.
QUEST: I don't agree.
LAKE: I don't know, Richard. People are sick of it. It's off the headlines.
QUEST: I --
LAKE: It's over. It's ancient history now.
(CROSSTALK)
QUEST: -- come a point in this trial -- there will come a point in this trial, Maggie, you heard it here first, when this will go electric and become Goldman.
LAKE: It -- if he takes the stand and says something, maybe. But he's lawyered up with Goldman's lawyers. So I don't expect that to happen.
QUEST: Maggie Lake, who is in New York, we really do need to get after it a bit more often (inaudible) like this.
Now we need to change direction completely, because when we come back after the break, let's put this all into perspective. You talk about all the money and you talk about what Wall Street is doing and all those sort of high earners that we talked about earlier in the program, well, now picture and pity the poor, the destitute and the desperate. Those people who are often the target of exploitation, the very opposite of the people we've been talking about earlier in this program, the fight to stop the most vulnerable from falling into the hands of human traffickers: the Freedom Project continues.
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QUEST: The millions of women in poverty, the idea of going overseas, working abroad and then sending money, remittances, back home, it's a dream which is hard to resist. All too often the migration overseas doesn't provide the remittances promised and instead results in entrapment, misery and abuse. It's what, frankly, we can call modern-day slavery.
And now International Labor Organization has launched a $50 million program to tackle health and vulnerable women in parts of South Asia and the Middle East. Join me over in the library, and you'll see what I'm talking about.
Human trafficking, the ILO estimates 246 million children are exploited worldwide. Look at that number, 246 million. That's more than the population of Indonesia. They often fall into prostitution, illegal drug use and other forms of exploitation. And even then forced labor conditions are horrific. Research from the UAE suggests domestic workers average work 15 hours a day. Withholding wages is commonplace. In Lebanon, many domestic workers aren't paid at all for the first three months. So it only -- doesn't have to be only the major issues of prostitution and drug abuse. It's also just straightforward modern-day slavery.
The ILO says $12 billion is withheld from workers in South Asia and the Middle East every year and that money should be invested into lifting people out of poverty. No wonder we're taking an interest in it here.
Jim Boulden, as part of our Freedom Project coverage, now looks at the solution.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE (voice-over): Every year, millions of women must leave their loved ones.
JIM BOULDEN, CNN CORRESPONDENT (voice-over): The tears of those leaving and those left behind in order to find work. Migrant workers, mainly women, use agencies to find jobs in other countries. But sometimes migrant workers become forced laborers. Campaigners say it can be stopped by giving women more power.
GUY RYDER, DIRECTOR GENERAL, ILO: Educate them, inform them, empower them -- think of this. We estimate that of these millions of forced workers around the world, they're losing collectively income of $21 billion U.S. dollars.
BOULDEN (voice-over): A new project called Work in Freedom: it helps to give women from Bangladesh, India and Nepal training before they leave home on how to obtain legal documents and get proper wages. It's not about stopping migrant labor; that's a key source of income for families in South Asia. But Work in Freedom means freedom from servitude, freedom to keep pay and documents, freedom to go home.
The U.K. government has pledged nearly $15 million over the next five years to support Work in Freedom in partnership with the International Labor Organization.
LYNNE FEATHERSTONE, BRITISH MINISTER FOR INTERNATIONAL DEVELOPMENT: There haven't been many programs like this that actually seek to find out how you might prevent trafficking and forced labor in the long term. This program will benefit 100,000 women.
BOULDEN (voice-over): A key problem area: those recruiting the women.
UNIDENTIFIED FEMALE (voice-over): Better regulation of the recruitment industry will be vital to weed out illegal practices and extortionate fees charged to migrant women.
BOULDEN (voice-over): But how women end up in forced labor can be complex say those fighting it.
NALINI NAYAK, SELF EMPLOYED WOMEN'S ASSOCIATION: There are some where the family themselves sell them as labor. Then you have agents from families who promise them a better life and take them and then they land into a mess elsewhere.
BOULDEN (voice-over): Another dilemma: women afraid to tell the truth.
NAYAK: The problem is that when migrants come back, they never tell you how difficult it was there because they're supposed to have brought money back to their families. So very few of them really tell the difficult stories they face abroad.
BOULDEN (voice-over): Another way activists say to fight trafficking is to make sure girls up to 16 stay in school and do not become illegal migrants. Education, support and advice: a start to breaking the chain of forced labor -- Jim Boulden, CNN, London.
QUEST (voice-over): Now if you want to know more about this issue, you can read an exclusive opinion piece from the head of the ILO's Guy Ryder. It's on our website, CNN.com/freedom. And there you'll find much more information on how you can get involved. This is our CNN continuing fight in the battle against modern-day slavery.
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QUEST: Now Tom Sater is here at the weather -- with the weather forecast.
Tom, before you even open your mouth, before you say a single word, I'm going to do your job for you.
TOM SATER, AMS METEOROLOGIST: Please.
QUEST: It is hot up there. It is hot down there. It is lovely over there and it's rather pleasant over here.
SATER: Rather. Yes. And dry -- you missed dry.
Hey, Richard, today, St. Swithin's.
QUEST: Hey, St. Swithin's Day. St. Swithin's Day, if it does rain, for 40 days it will remain. St. Swithin's Day, if it be fair, for 40 days it'll rain no more.
SATER: I am finished for the day. Back to you.
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SATER: You're absolutely right.
QUEST: Is it -- is St. Swithin's Day going to be accurate?
SATER: You know, let me tell you this. One of the records, Richard, go back in London, written records back to 1861, since that time there have -- there's never been a 40-day period that it's been dry or a 40-day period that's been wet. But we have weather proverbs and weather lore for every culture in every corner of the world.
This one's from London. Swithin was a former Saxon Bishop of Winchester. All right? Now legend has it that he -- well, he died. This is 862 A.D. He just wanted a humble ceremony, be buried at Old Minster. But over 100 years later, another bishop dug up his remains, gave him a shine -- a shrine at the cathedral and it started raining. And it did. It rained for 40 days. So everyone believed that he was unhappy. So they came up with the weather proverb, Richard had just said it for you. If it rains on this day, it'll rain for 40 more, right? Well, that is not the case. Don't -- it doesn't look like it. It may be warm for the next 40. In fact, already Saturday's high at Heathrow, 31.4, the warmest temperature for the year, in fact already the warmest since 2006, hit 30 degrees on Sunday, hit 30 degrees again today. The average is 23. It's been warmer since July 4th. And it could continue till the end of the month. And that's not the only area. We have a number of high temperatures that are unseasonably warm, even Dublin got in on the action on Sunday, their average 19; today only 21, but notice the 27 in London and Paris. Vienna is 21 degrees, Kiev is 18. I mean, we have the warmth. Sure, it's been in Portugal and unseasonably warm in Spain. But look at the clearing, as Richard mentioned, rather pleasant over here. Kind of warm here. We did have one storm dropped heavy rain in Belarus on Saturday, had some large hail in Torino, Italy, a funnel cloud in Poland. But really, if you get a shower, consider yourself one of the lucky ones, to cool it down. This, we're not going to get any rain out of this. And they didn't --
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QUEST: Tom?
SATER: -- field day as well.
Yes, Richard?
QUEST: Tom, fret ye not, Curse of Quest next week. I am going on vacation. I will be in southern Spain. I guarantee you a little local cloud will follow me, which will drop rain right across the peninsula.
SATER: We will have to write a new weather proverb if that happens, and it will be named after you, Richard, obviously.
QUEST: COQ, Curse of Quest. Many thanks.
SATER: Thank you.
QUEST: Tom Sater at the World Weather Center.
After the break, Boris Johnson's Heathrow housing estate, the London mayor's plan to put a wrecking ball through the city's busiest airport. You'll hear from the man.
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QUEST (voice-over): The answer to tonight's "Currency Conundrum," I asked you which TV show is commemorated on a special coin which sold for a record amount at auction. The answer is QUEST MEANS BUSINESS. No. The real answer, Dr. Who. The coin was the first in a limited edition of 10,000. It sold for just $2,000. If it made a QMB coin, would have sold for a great deal more.
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QUEST: London's mayor wants to buy and then close Heathrow Airport, the world's busiest international carrying airport. Boris Johnson says it's too noisy and congested and it should be turned into a housing estate instead. He's put forward three Heathrow alternatives that you'll see here.
Now Heathrow is out, as you know, to the west of London. The first alternative he's got -- that's Heathrow, which of course, currently, if you look at the numbers, which we got just from ATW last week, it's right number 3rd in the world, but it's the busiest international airport behind Beijing and behind Atlanta for international flights.
If you look at Boris' island, which is over here, it's an artificial island in the Thames Estuary. He says it will remove all noise pollution problems. It will maximize the U.K.'s connectivity and economic benefits. And it's a four-runway solution which he says is essential. Or there is something called Foster Island on Kent's Isle of Grain, named after the architect's Norman Foster, Boris Johnson favors this plan most of all across from the New London Gateway port, still close to London and again, it has the four runways. But a mammoth project. One other possible, Stansted Airport. Stansted, over here in the east -- to the east of London, now Stansted, an existing airport, with one major runway, many have talked about building the second one over there. But again, the question has always been local opposition even though it's a sparsely populated area. I asked Mayor Boris Johnson recently about why he thought Heathrow should go and what should come next.
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BORIS JOHNSON, MAYOR, LONDON: It's an environmental catastrophe for West London. And (inaudible) for (inaudible) of London, of hundreds of thousands of Londoners have had terrible noise pollution, 766 thousands Londoners all react excess noise pollution from aircraft. That's a third of all the victims in all of Europe. So Heathrow is basically really in the wrong place. Even if you've got the third runway in, you wouldn't get the fourth runway that you need just because of the political horror of doing it there. So do the right thing. Be bold. Do what all the European countries have done; do what Dubai has done and is doing. Go for a new four-runway solution.
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QUEST: Now talking of Dubai, the mayor was speaking to me at the New Aviation Experience sponsored by Emirates in London. And the Emirates president, Tim Clark, was there as well. He also recognized that London needed more airport and runway capacity.
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TIM CLARK, PRESIDENT, EMIRATES: London remains on the 126-city network of Emirates, for most potent city in terms of demand for it and in many respects profit that we make. And that's not lost on the airline community that are my peer group and my competitors, most of which want to come to London in some shape or form.
UNIDENTIFIED MALE: That's it.
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UNIDENTIFIED MALE: And that desire will abide.
CLARK: They would rather come here rather than go to other cities in Europe. I don't want to be disingenuous to the cities in Europe, but London is the focal point. It is in the crosshairs of just about every aspirant carrier.
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QUEST: We'll have a "Profitable Moment after the break.
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QUEST: "Profitable Moment" -- a very profitable moment if you're a banker in Spain. The latest numbers from the European banking regulator show that a certain category of Spanish banker was the highest paid in Europe, all at a time when the banking industry has been requiring more and more cash from governments and taxpayers.
The average salaries for high earning investment bankers was over $2 million a year -- what a topsy-turvy world in salaries that banking has become. And even if I don't entirely understand or agree with the proposal to cap bonuses, for once Britain seems to be leading the way, setting an example during austerity. London's bankers saw a drop of 45 percent in average pay while others struggling in countries Spain and Portugal saw rises. A slap in the face to those people struggling with austerity and severe economies.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.
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QUEST (voice-over): The headlines at the top of the hour:
The U.S. deputy secretary of state William Burns has arrived in Egypt for talks with the new leadership. He's the most senior U.S. official to visit Cairo since the military removal of Mohammed Morsy. It comes as Egyptian authorities issue arrest warrants for several Muslim Brotherhood leaders.
There's been a strong reaction in the U.S. after the not guilty verdict in a racially charged murder case. Protesters took to the streets of several cities after George Zimmerman was acquitted of killing the African-American teenager Trayvon Martin, while Mr. Zimmerman's supporters took to social media website in his support.
Adidas has suspended its contract with Tyson Gay after the former world sprint champion tested positive for banned substances. In a statement, the sportswear giant said it would presume Gay's innocence until proven otherwise.
And London continues to keep watch outside the hospital where the Duchess of Cambridge is expected to give birth any day now. The baby will be the third in line to the British throne. Prince William spent the weekend at a game of polo as he waits for the arrival of his first child.
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QUEST: The stories at the top of the hour. Now "AMANPOUR," which tonight, live from outside Buckingham Palace.
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