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Quest Means Business
Germany Under Fire; US Spying Allegations; European Markets; US Markets Down; FAA Relaxes Electronics Restrictions; Facebook Shares; Trending With Teens; Future of Facebook; Scary Economic Skeletons
Aired October 31, 2013 - 17:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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RICHARD QUEST, HOST: Something wicked this way comes, and the market gets spooked. Stocks have fallen on Wall Street, Telkom Indonesia rang the closing bell, and tonight, it's Halloween because it is Thursday, October the 31st.
And there's a grave warning for Germany. The United States says you're holding Europe back and slowing the recovery.
A treat from the FAA: now we can use mobiles and devices during take- off and landing.
And Facebook gets a fright as its young users take flight.
I'm Richard Quest. I mean business.
Good evening to you. The United States has accused Germany of holding the rest of Europe back and, in many ways, endangering economic growth. The US is accusing Europe's biggest economy of sitting back, enjoying its exporting power, and leaving all the other countries to make painful adjustments.
Join me at the super screen and you'll see this remarkable tit-for-tat row that's taken place. And forget spying, we'll come to that in just a moment. The US Treasury has used its semiannual currency report, usually a fairly staid document that beats up China, to criticize Germany's economic policies, and it does so in very strident terms.
It says -- have a look. "Germany," it says -- "Germany's anemic pace of domestic demand" -- that's people living there -- "the domestic demand growth and dependence on exports have hampered rebalancing." In other words, Germany is so busy exporting to everybody else that it's a real, in the language of the street, beggar-thy-neighbor policy.
It was a point echoed by the US Treasury Secretary Jack Lew, who said Germans need to start buying things, too.
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JACK LEW, US TREASURY SECRETARY: Growth in Europe remains weak, with domestic demand particularly anemic. It's critical that surplus countries contribute more to demand as deficit countries undergo adjustment.
Europe must also press forward on other measures to address high unemployment and the formation of a strong banking union.
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QUEST: Now, Germany hit back within hours, saying the trade surpluses reflect the strong competitiveness of the German economy and the international demand for quality products from Germany. It's an extraordinary row, because it comes at the moment that the two countries are not on the best of terms because of allegations that the US spied on the German chancellor Angela Merkel.
But if you look at numbers out today, they do underscore the disparity between Germany and the rest of Europe. Look at unemployment. I want to show you these numbers. We had unemployment rates from the European Union and the eurozone.
In Germany -- you've got to get right in there and see -- Germany, the rate is down at 5.2 percent of the working population without a job. Follow it up to France, the eurozone overall at 12.2 percent. The highest, by the way, on record: Italy at 12.5 percent and Spain comes in at 26.6 percent. Compare that to the United States, where the rate is 7.2 percent.
I spoke to Christian Schulz, the senior economist at Berenberg Bank, and I asked him why the US -- after all, bearing in mind the spying scandal -- why the US should choose now to bash Germany over its economic policy.
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CHRISTIAN SCHULZ, SENIOR ECONOMIST, BERENBERG BANK: Now, usually this is a report which bashes country which artificially depress their exchange rate, which do beggar-thy-neighbor polices.
And the fact that Germany features in it is quite ironic because the euro, Germany's currency, is currently trading way below -- way higher than its long-run average. So, Germany's surely not artificially depressing its foreign exchange rate.
QUEST: The timing is unfortunate, obviously, with the spying scandal. But even if it wasn't the spying scandal, to launch this sort of broadside and effectively say Germany is responsible for holding back European growth, it's not going to win friends and allies.
SCHULZ: No, this is a long-standing argument. Germany has been accused of beggar-thy-neighbor policies for a long time, and this has intensified during the euro crisis. But the fact that it has intensified doesn't make it more right.
Germany is, of course, part of the eurozone. I think it's very important that it's part of the eurozone. It has contributed a lot to the rebalancing within the eurozone because Germany's trade surplus with the rest of the eurozone has declined considerably since 2009. But of course, Germany is facing criticism due to its success, and this is just another instance of that.
QUEST: So, the question becomes, does it do any good, this? Because Germany's already said no, that they deny the charge. And one man's meat is another man's poison. So does it make any difference, other than to annoy somebody you don't really want to annoy at the moment?
SCHULZ: I think it does turn the heat up on Germany to do, maybe, more to stimulate growth in the eurozone, and maybe it will, ultimately, have a positive impact on the economic governance in the eurozone as well. So, it may have a positive impact.
But it does come at an unfortunate timing where it looks a bit like tit-for-tat policies where the Americans accuse the Germans of something after the Germans have accused the Americans of doing something.
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QUEST: Christian Schulz. Now, Germany's foreign minister has given his reaction to the US spying scandal. It is the first response on English-language television from a German government minister. Guido Westerwelle spoke to Christiane Amanpour.
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GUIDO WESTERWELLE, GERMAN FOREIGN MINISTER: We addressed our message in a very clear and in a very frank way. I understand that it is necessary to fight against terrorism, but you cannot fight terrorism by taping the chancellor's cell phone.
CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Do you think your phone has been tapped?
WESTERWELLE: I cannot exclude it. But I'm prepared for everything.
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QUEST: Germany's foreign minister. In the markets, the main story in Europe, a profit miss from the Royal Dutch Shell company. Shares were down 5 percent. It dragged the FTSE and the energy sector lower.
In Paris, BNP Paribas, Alcatel-Lucent made big gains on better-than- expected results. You can see London was down, the rest all rose.
And so to Wall Street. The collywobbles for the markets. The Dow finished 73 points lower, down just about half a percent. For October, the Dow gained just around 3 percent, so a small clawback is not extraordinary, bearing in mind the gains that have been seen.
When we come back, the warning to turn off all electronic devices during takeoff and landing. Now, that warning's about to be jettisoned in the United States. The FAA is changing the rules on gadgets on planes. We'll talk about that from Reagan National Airport after the break.
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QUEST: In the United States, the Federal Aviation Administration, the FAA, is lifting most of its restrictions on electronic devices. Now, travelers will be able to now -- well, think about it. You'll be able to watch videos, play games, read e-books, do all the sort of things that have really infuriated fliers ever since the old rules came in.
Now, the old rules, of course, were -- there was a red zone, and that red zone was below 10,000 feet or 3,000 meters, during which no electronic devices were able to be used even if they were in the safe mode, the aircraft mode or airplane mode. It just wasn't allowed from gate to gate.
The rule change means that the red zone now turns green and you can use electronic devices above and below 10,000 feet. Of course, not all devices are approved for use. You still can't make phone calls when the plane is in flight. You still won't be able to do anything with data transmission unless it's connected to the plane's wifi, and then, of course, you'll have the restrictions once again.
The airlines say they'll put these changes into effect as soon as they can. Delta, Jet Blue are hoping to update policies as soon as they are allowed to.
You'll be aware, of course, that these rules will only affect the United States. So, in -- for example, in Europe, where it might be the CAA or the JA, the Joint Authority, or in Asia, where it will be the individual governmental authorities, the 10,000-foot rule would probably still apply.
The FAA announced these changes at Reagan National Airport. Christ Lawrence is there for us. Chris, so, this is going to be a -- as a frequent flier myself, there is nothing more annoying than being told to turn off an e-book when you know it's having absolutely no effect on the plane.
CHRIS LAWRENCE, CNN PENTAGON CORRESPONDENT: Richard, how many times have you been in the middle of a great novel on your Kindle, been told to turn it off, while the guy next to you is reading an old-school hardcover and he keeps right on reading?
Or someone who's got their pad out, their iPad out, and browsing through, maybe, some reports that they are working on for that business trip when they land. They also would have to turn it off.
Well, not anymore. As you mentioned, now you can play games on your iPhone, you can read a book on the Kindle, you can watch a movie on your iPad, and basically, once the airlines prove to the FAA that on these specific airplanes there's not going to be any interference, it's going to be OK for you to do that during taxi, takeoff, and landing.
As you mentioned, still some restrictions out there. Not going to be able to place any cell phone calls on the plane.
QUEST: And I'm guessing some things, like watching a movie with headphones, won't be allowed, or listening to music with headphones, because there the restriction is still on headphones, so you wouldn't be able to hear the announcements if there was an emergency or something.
But here's the problem, Chris. We are now going to move into some very interesting areas, because you're going to have passengers from overseas coming in where the ban still applies. You're going to have even more Americans going overseas and flying foreign carriers who are all going to say, "But I'm allowed to do that. The rules have changed." Could be a little bit of chaos here.
LAWRENCE: It could be. Some good news and bad news on that front. I talked to a flight attendant who said that's what she's worried about, that there are going to be different legs of your flight in which different rules may apply.
And she said look, we're on the front lines of that. We're the ones who have to deal with these frustrated travelers when they say, "I just used this on my last flight, and now you're telling me I can't use it now."
But the flip side to that is there were several European flight officials who were involved with this FAA review, and I think there will be some revision or some new guidelines, perhaps, put out by the Europeans, at least, to sort of --
QUEST: I'm --
LAWRENCE: -- try to bring in line as much as possible.
QUEST: I'll have a little bet with you. I won't say Christmas, I'll say Easter. By Easter, I'll bet the Europeans --
(LAUGHTER)
QUEST: -- have followed. You going to take the bet?
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LAWRENCE: I -- wouldn't take that bet, I'm sorry.
QUEST: No.
LAWRENCE: If it's for $1, then I'll take you up on it, Richard.
QUEST: A wise man, indeed. Chris Lawrence joining me from Washington Reagan National.
Now, in the past few hours, Facebook shares have rocketed, plummeted, and now rebounded. Here's were Facebook shares stand at the moment. They are up 5.6 percent so far, which is quite remarkable, $51. Remember, the low point of Facebook shares was $17, an IPO price of $38, now $51, a gain of 5.6.
The strong results on Facebook's mobile business after the bell yesterday, and that's what's pushing the shares higher. Now, the dip came after the company's chief financial officer admitted that young teenagers were losing interest in the site.
Samuel Burke took to the streets of central London to find out if the youth of today are losing interest in Facebook and what they're using instead, and they are not sites their parents are likely to visit.
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UNIDENTIFIED MALE: I am not a Facebook fan. I am on Facebook. That's where I keep in touch with people, but it's not -- it's just like a basis. I used it when I was a kid.
UNIDENTIFIED FEMALE: Both my parents are on Facebook. They keep telling me to get it. I'm like, no, I can't be bothered for it.
UNIDENTIFIED MALE: I use Twitter, Instagram, Facebook, everything. Everything.
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: So, which one do you use the most?
UNIDENTIFIED MALE: Probably Instagram.
UNIDENTIFIED FEMALE: I think the buzz from Facebook has gone down a bit recently, so more people are using Twitter.
BURKE: What is it about Twitter that's better than Facebook specifically?
UNIDENTIFIED MALE: Most of my friends are on it and it's just more enjoyable, and more celebrities are on it and you can interact with them more.
BURKE: And what do you like about the other ones that Facebook that doesn't offer?
UNIDENTIFIED FEMALE: I like Instagram because you can just put your pictures straight up. And Twitter's good because it's quite newsworthy. And Pinterest is good just for ideas and inspiration.
UNIDENTIFIED MALE: For example, MySpace, really big hit.
UNIDENTIFIED FEMALE: Yes.
UNIDENTIFIED MALE: Downhill so fast.
UNIDENTIFIED FEMALE: MySpace went so quick.
UNIDENTIFIED MALE: MySpace was heavy. Facebook came in, and then Twitter, then Instagram, and it's all kind of just moving on.
BURKE: And are your parents on Facebook?
UNIDENTIFIED FEMALE: Yes.
UNIDENTIFIED FEMALE: No.
UNIDENTIFIED FEMALE: No.
UNIDENTIFIED FEMALE: My parents love Facebook.
BURKE: And what about your parents? Are your parents on -- are they on Facebook?
UNIDENTIFIED MALE: My parents aren't on Facebook. My grandparents are, so that can get really creepy.
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QUEST: That has to be the best quote of the day so far. Jeffrey Cole, the director for the Center of Digital Future at USC Annenberg. "My parents aren't on Facebook. My grandparents are on Facebook." Jeffrey, you forecast this on this very program that that was going to be a problem.
JEFFREY COLE, DIRECTOR, CENTER FOR THE DIGITAL FUTURE, USC ANNENBERG: Yes. We've basically -- we watched the rise and fall of MySpace, and we knew that, and we said on your program that to a teenager, an online community is like a nightclub. And when the nightclub becomes too popular and the uncool kids show up, you're out of there.
And the worst thing that can happen to you as a teen in a nightclub is your mother shows up, and now your mother wants to friend you on Facebook.
QUEST: Right.
COLE: So, we -- this isn't an indictment of Facebook, this is a natural part of relying on teenagers.
QUEST: So, if you're Facebook --
COLE: And I --
QUEST: But hang on. If you're Facebook, you're still growing revenues, you've got people moving to mobile, and you're doing well. But how do you handle that conceptual issue now?
COLE: You can try to be cool, but you're not going to throw the mothers and grandmothers off of Facebook.
Now, Facebook's not going away, and you're absolutely right, we see tremendous growth in the developing world. It's already at 1.1 billion, going to 1.5. Keep in mind, 1.3 billion people on the planet, the Chinese, can't even get Facebook. But there's no way to stay cool after your mother --
QUEST: Right.
COLE: -- or as your guest said, your grandmother --
QUEST: So --
COLE: -- is on the site. And in January, we saw it was Tumblr that was more popular among American teens. I would argue today, it's probably Snapchat.
QUEST: Right, now let me --
COLE: And that's --
QUEST: Let me ask you, then -- if that's the idea, does Facebook have to create an alter ego that it can bring young people on? Because at the end of the day, it cannot risk losing the high-spending developed world teenagers that may shun it.
COLE: I think it's going to be really difficult. They have an alter ego. They spent a billion dollars to buy Instagram. And that is -- that is sort of their alter ego. But we think Facebook does survive forever, but it -- they hate it when I say this -- it ends up as the place you go to communicate with your mother and father and aunts and uncles and becomes the phone directory to the planet.
But if you want to stay cool, you're dealing with the most fickle audience in the world. And there's no way to stay cool when mom is trying to friend you.
QUEST: So, Facebook's going to be around for a long time. But these older -- these younger teens will not find it as acceptable or pleasurable or usable.
COLE: They'll still go to it to find people, because it does become the directory to the whole planet. But if they want to have a relationship in 2013, they move it to Instagram or to Twitter or to Snapchat. 2014, who knows? That's the nature of appealing to teens. How long do boy bands last? Ask One Direction in a year from now.
QUEST: Right. Well, I think on that particular question, we'll leave it just where it lies. Have a good weekend. Thank you very much, indeed. Joining us now, Jeffrey Cole joining us.
Now, coming up after the break, it is Halloween and there are skeletons lurking in the dark corners of the economy.
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QUEST: QUEST MEANS BUSINESS, we will rattle your bones in a moment.
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QUEST: Welcome back to QUEST MEANS BUSINESS, and welcome back to the Haunted House.
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QUEST: Good grief! Be it ghosts or ghouls or goblins, almost nothing it the past few years has been scarier than the financial collapse. The global recovery is tepid and loose. It's gaining ground, but there are skeletons lurking around that could wreak havoc!
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QUEST: So, for instance, over here, the staircase to the debt ceiling. The deadline is approaching again in February. It brings out the inner witch and devil in Washington politicians.
Ooh! Now, just like kids with too much candy, there's candy and sweets everywhere --
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QUEST: -- in the global economy. The global economy's being pumped with sugar, easy Fed money, ECB money, Bank of England money. And --
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QUEST: Ooh! We know what happens after a sugar rush, comes the sugar crash. So -- ah!
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QUEST: A banker! We know in the C Suite the banks have been the backbone of the global economy. Banks are still in hot water. The stress tests in Europe, and now some bankers seem like dinosaurs in their views of the future.
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QUEST: Finally, to the most pitiful of all: the lost generation. Here we have the lost souls all over the world. Millions of workers have disappeared like ghosts, jobless, unable to find work. The EU unemployment rate, 12.2 percent we reported just today. And the International Labour Organization, the ILO, sees unemployment globally 200 million people without jobs.
Put it all together, wherever we look, there are skeletons --
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QUEST: -- waiting to be found. Which is why we've got Alan Valdes with us.
ALAN VALDES, DIRECTOR OF FLOOR TRADING, DEM SECURITIES: Happy Halloween, Richard.
QUEST: The director of floor trading at DEM Securities. Whoo! Well!
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QUEST: We've got the skeleton of the debt ceiling, we've got QE and easy money, bankers, jobless. Anybody who thinks we are out of the woods is barking mad.
VALDES: Oh, no question about it. You just mentioned the jobless, but if you look at the youth unemployment in Europe, it's Depression era. In Spain, it's over 50 percent. In Greece, it's almost 60 percent. So things are getting not better, but worse.
QUEST: These skeletons that we talk about, do you expect the skeleton of debt ceiling and budget negotiation to come back and fight another day?
VALDES: No question about it. I think the Republicans were so embarrassed they're going to make a stand now, and it's going to happen this January. They have nothing to lose right now. They're like a wounded animal, their backs are against the wall.
You've got the midterms coming up. These guys are probably going to make a real big issue out of this.
QUEST: And what about banks? Stress tests in Europe. Capital limits. It's boring, tedious stuff, but European banks are still a bit weak. US banks are a lot better. Is it worrying?
VALDES: Yes, it is, because it is too big to fail. They've gotten bigger, actually. You're 100 percent right. That is the problem with the banks in Europe and here in America also. And if you look at QE, all that -- we're close to $4 trillion now, that has not gone to where it went. It's sitting in these bank vaults, $800 billion worth, only maybe a million -- maybe a billion are in circulation.
QUEST: So, what for you, as you look forward now on this Halloween eve, what for you is the biggest skeleton of worry?
VALDES: It's the unemployment. At the end of the day, you want people working.
QUEST: But US unemployment's falling. It's down to 7 -- 7 and change.
VALDES: Yes, but that's a bogus number. If you look at the underemployed, we're at the lowest level of participation rates since 1972. So that unemployment number, we don't take real serious, because it's not the real number. It's more like, probably, 12 percent if you take everything into consideration.
QUEST: And are you worried about the -- the withdrawal of QE?
VALDES: Yes.
QUEST: I mean, the market surely has got used to this idea that next year, Janet Yellin is going to take away the punch bowl from the party.
VALDES: Well, we don't know about that. She's dovish of all dovish - -
QUEST: Oh, come on! You don't --
VALDES: Oh --
QUEST: You don't believe she's that dovish.
VALDES: I -- well, the problem is, look when they just talked about tapering what happened in Brazil, what happened in India. Their markets just totally collapsed, so I think she has that on the back of her mind.
Plus remember, if interest rates shoot up, they're $4 trillion in the hole right now with interest rates at zero. What's going to happen if interest rates tick up for the Fed? Who bails out the Fed? US taxpayer.
QUEST: I think that's worth a scream or a noise of some sort. Who bails out the Fed?
(WOMANS SCREAMS)
QUEST: There! Thank you! Good to see you.
VALDES: Thanks, Richard. Happy Halloween.
QUEST: What's your costume going to be tonight, sir?
VALDES: I don't know. That skeleton looks pretty good over there.
QUEST: Alan Greenspan. All right, many thanks, Alan Valdes joining us. Now, when we come back after the break, we will talk about Cuba and their currency conundrum. The island nation's two pesos and one ailing economy. What authorities have planned next.
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QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes first.
A US official has told CNN Israeli warplanes have struck a Syrian missile storage site. The source says Israel believes missiles at the site were intended for Hezbollah. The Israeli government isn't commenting.
The organization for the prohibition of chemical weapons says Syria has destroyed all its declared equipment for making chemical weapons and it says all of Syria's declared weapons are now under seal so they can't be used. The deadline for Syria to destroy its entire stockpiles is middle of next year.
CNN has confirmed that Kenyan military planes have bombed targets held by the al Qaeda-linked Islamist al-Shabaab in Somalia. The Kenyan Defense Forces tell CNN they targeted a training camp near Dinsoor, which is west of Mogadishu. The attack is reportedly in retaliation for al-Shabaab's four-day siege of the Westgate Mall in Nairobi.
Google and Yahoo! say they never allowed the US government access to their communication links to service abroad. The latest revelations about the scope of the NSA's spying program came in a report in "The Washington Post." The head of the NSA is denying "The Post's" allegations.
It's alleged that two of they key players in the phone-hacking scandal were having an affair. Prosecutors in the trial of Rebekah Brooks and Andy Coulson say the pair were romantically involved for six years. The two former "News of the World" editors have denied conspiring to hack voice mails. Right now the officials in Cuba are working on plans to end the country's jewel currency system, and hopefully boost the island's ailing economy. Cuba uses both the Cuban peso and the convertible peso. The authorities are trying to decide how best to unite the two and when to start this process. Our correspondent in Havana is Patrick Oppmann.
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PATRICK OPPMANN, CNN's HAVANA-BASED CORRESPONDENT: This market in Havana is geared towards foreign visitors wanting to take home a few trinkets. Most of the prices here are in pesos convertibles, also called CUCs. Pegged to the U.S. dollar, the CUC is the stronger of Cuba's two currencies. It's also the money most Cubans don't have easy access to unless they work in the small private sector or tourism industry.
SUHARMY RODRIQUEZ, VENDOR, VIA TRANSLATOR: It's something vital here in Cuba because of the two currency systems if you want to get a certain item, you need to have CUCs.
OPPMANN: A few miles away, Rogelio Esperon shops this government-run vegetable stand that accepts Cuba's other currency -- the peso Cubano. The CUP as they are known, are worth about 4 cents each. Most government employees, about 80 percent of the work force, are paid in CUPs which most government stores don't accept.
ROGELIO ESPERON, SECURITY GUARD, VIA TRANSLATOR: I myself make 360 pesos each month, so about $12. What's that worth? Not much. When you go to a store, maybe you buy three little things. Maybe if things were priced in pesos, that would be different.
OPPMANN: But Cuba's economy may be changing. For the first time since the near economic meltdown caused by the clefts of the Soviet Union, Cuba is moving to a single currency. The shift appears to be an acknowledgment that the dual-currency system included haves and have nots in a country where at least in theory everyone was supposed to be equal. The goal, economic planners say, is to have a single currency with purchasing power. But there's no timetable for the changes. And officials admit they're moving cautiously to keep already rising prices from spiking.
MARINO MURILLO JORGE, CUBAN VICE PRESIDENT, VIA TRANSLATOR: It's important to see the social impact this could have. Technically, we know how to make the change, but it has to be done so people's standard of living isn't affected.
OPPMANN: But outside this currency exchange office, many people say what they really need is to be able to earn a living wage.
FELIX CHACON, CUBAN HEALTH WORKER, VIA TRANSLATOR: Unifying the currencies and having a single money is important. But I also think they need to raise the salaries. Because if you have a single currency and the prices are raised sky high, it won't be good for most people.
OPPMANN: Neither currency is accepted outside of Cuba. Economists say a major step towards rescuing Cuba's ailing economy is to figure out a way to make all this money actually be worth something. Patrick Oppmann, CNN Havana.
(END VIDEOCLIP)
QUEST: Now then, Patrick Oppmann in Havana there. Jenny Harrison's at the World Weather Center. Good evening, Jenny. Now, for those like myself who are on a broom tonight, across the --
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Broom.
QUEST: Across the -- all right, a trip (inaudible) across, yes, across the Atlantic. What I can expect when I get to Europe tomorrow?
HARRISON: You know what, the next 24 hours, not too bad, but I have to say to go through the weekend, there's actually a number of storms systems and a number of storm systems are going through. So the winds are likely to pick up not like we saw last weekend -- that has to be said, but you can see all of this stream of cloud coming through. Well it's all being fed along on the jet stream which is still staying fairly active, and of course, we're seeing quite a few showers. Not really thunderstorms, but some very sort of blustery active weather. So the jet stream as I said is very active, so it's feeding all these storm systems through, and there are quite a few more to come. It's really all across the northwest, because elsewhere in Europe it's actually a fairly quiet picture as you can see. So this is the wind forecast Friday onwards, in fact taking you all the way through into Monday. I'll pause it a couple of times. This is Saturday, 15:00 hours GMT. Look at that -- 107 kilometers now, that's in Cork, that's actually wind gusts so you can see there. Moving on a little bit further, we head off into Monday. This is the early hours of Monday morning -- 84 kilometers now in London, 83 in Portsmouth, over in Cherbourg, we've got 80 kilometers an hour, and on it goes, the system working its way across into Central Europe. And so, as I say, we've got a few systems coming through, and at times, you're going to see some very strong, gusty winds. So, not the best weather forecast for the next few days, and the rain is coming as well. With that system, some fairly heavy rain. In the next 48 hours across the U.K. and also that little system still sitting in the southwest over the Med. So, when it comes to delays Friday at the airports. Not too bad apart from Brussels. Maybe an hour delay there in the overnight hours because of low cloud. Amsterdam some brisk winds there picking up there in the overnight hours as well. And also Paris, quite a bit of cloud around. Temperature-wise, not bad. It's certainly feeling colder in some spots. Just 9 Celsius in Paris, but look at that for you in London on Friday -- 13 degrees, so, again, not too bad certainly for this time of year. Now, this time yesterday, I showed you this picture, and I said I'd talk to you about it. Well, you can see what it is -- it's China -- and it is a vineyard, and a lot of vines are growing there, my goodness. But the problem is this -- there's not enough wine in the world, Richard, not for all the people that want to actually be drinking it. In fact, this much -- 300 million cases per year -- that is how the deficit is when it comes to wine. But about a million wine producers worldwide, half of those -- actually come in Europe, I should say there's 2.8 billion cases produced each year, and they come from Europe , half of that does. And it's actually Europe, particularly France, also Argentina where the bad weather has been one of the reasons for the production being down. It's been down as you can see, certainly in 2012, also the year before as well. And the weather is really one of the main reasons for this, Richard, not so much the sun of course, we can certainly grow the vines if there isn't enough sun, but also too much rain and also frost a very dangerous -- and hail. We've had a lot of that and that is why there is a problem. Not enough wine to go around.
QUEST: For you.
HARRISON: For me. You know what? Even I don't drink 300 million cases a year, but -
QUEST: A small portion lemon for Ms. Harrison over in the corner in the snug. Many thanks, Jenny Harrison, at the World Weather Center. Now, the White House has been getting into the mood. These are pictures, live pictures from Washington. That's -- obviously that's the President of the United States and the First Lady. They're handing out trick or treat candies and they are -- well, that's jugglers on the White House lawn. They've decked out the whole of the White House in true spirit. Look, I know what you're thinking. There is no nation on earth that gets into these holidays more than the United States, be it Mother's Day, Halloween, you name it, everything that they -- not a particularly flattering picture of the First Lady at that particular moment. Time for us to talk about the costumes. Quit while you're ahead is what I always believe.
KODI MADRICK, MANAGER, ABRACADABRA NYC: Yes, yes.
QUEST: That's hair-raising decorations, scary costumes and candy corn. This year Americans are expected to spend $7 billion to celebrate Halloween with costumes, $1 billion less than last year. It works out to $75 per celebrant according to the Retail Federation. Kodi Hadrick is with me, the manager of Abracadabra, a superstore here in New York. What's the hot costume this year?
MADRICK: A lot of people are going back to their old time -- like the classics, so what's really popular is the Wonder Woman this year. Lynda Carter is Wonder Woman. We have the cape -- it's absolutely gorgeous. We actually designed this at the store too as well, so that one's really popular this year.
QUEST: I would put it on but I fear that would be creating a YouTube moment.
MADRICK: (Creep it).
QUEST: (Inaudible).
MADRICK: There we go.
QUEST: Right, so we've got Wonder Woman. What else do we have?
MADRICK: Wonder Woman. Egyptian has been really popular this year. We did a lot of Cleopatras, a lot of Pharoahs, so I brought you one of these. Has a really nice head piece.
QUEST: Oh, do put it on. What works best for a costume, do you think?
MADRICK: I think something you're going to be comfortable in all night because you're going to be out probably really late, so you know you have to have fun with it. You definitely want a lot of pictures taken in New York City, so you want people to come up to you.
QUEST: The people want the most extravagant, don't they?
MADRICK: Oh, my gosh, yes.
QUEST: They want to look like Cleopatra, they want to look like, you know, the (Screwed Monkey Scream). They want to do anything they can. What do you tell them when they say, 'I need to look like-'.
MADRICK: We have -- we do a really nice body (inaudible), like we do makeup for the bodies and we paint the -- like literally we paint their whole entire costumes on. So right now that's going on in our store. We have over 25 makeup artists that can just be whatever you want to do.
QUEST: We went to your store earlier today --
MADRICK: Yes.
QUEST: -- to look at some of the things that people were painting and were doing, and this is also quite popular. This is 1920s I believe, isn't it?
MADRICK: Yes, this is from the 1920s.
QUEST: Looks a little Gatsby-esque.
MADRICK: Yes, very Leo. Everyone's been coming in for Leonardo Decap -
QUEST: I've got to say, Kodi, none of it's terribly original, is it? Where is the witty, the satirical -- I remember going to Halloween parties a few years ago where people -- everyone said it was Barbara Bush.
MADRICK: No, a lot of people are getting bored with the whole president thing, or the robber, the pirate and everything. They want to go something that's a little bit different, something that's in the media, something that's you know like Miley Cyrus, all of that's been really popular. We've done so many costume jobs for Miley Cyrus costumes, so. That's what people want.
QUEST: And what's out this year -- completely out?
MADRICK: Witches. Witches have not been very good for the last three years --
QUEST: Back luck, dear, you're out of business. Sorry. Witches are out.
MADRICK: Yes.
QUEST: I think it's -- it's amazing Americans -- I've never seen -- I've never seen a country more into this sort of thing. Thank you very much for joining us this evening.
MADRICK: Thank you so much.
QUEST: Which is your -- which is your costume?
MADRICK: Mine is the Wonder Woman costume. Lynda Carter.
QUEST: Let's see -- model it.
MADRICK: There you go. It has hot pants, is has of course the cape makes it definitely.
QUEST: I thought it'd be racy. (Inaudible). Happy Halloween. Have a safe one --
MADRICK: Thank you, you too.
QUEST: -- as well. A final "Profitable Moment" thought. As I say, it is Americans that perhaps know the best way to spend money. They've been doing it in large sums for many years. And now, when it comes to Halloween, well, even if the economy isn't the strong as it might be, they're going to have a go and keep it moving. And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, hope it's profitable. "Marketplace Europe" is next.
(BEGIN VIDEOCLIP)
This month on "CNN Business Traveller."
Female: There's a tendency for you to need to slow down.
QUEST: We're learning how to chill out.
Female: Music.
QUEST: With experts in packing.
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QUEST: Organization.
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QUEST: And meditation.
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QUEST: It's the road warrior guide to the art of (inaudible). Good night.
(END VIDEOCLIP)
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NINA DOS SANTOS, NEWS ANCHOR AND LONDON-BASED CORRESPONDENT FOR CNN: Hello, welcome to "Marketplace Europe." From the Dutch city of Maastricht, I'm Nina Dos Santos. Twenty years ago, this picturesque place went down in the history books with the introduction of this treaty. It's goal, to create a blue print for a modern, integrated Europe, one with its own currency now shared by some 330 million people. In this week's program, we reexamine the very foundations of the E.U. and ask, did they cause the Eurozone crisis? Or perhaps protect us from a state far worse? Coming up, I traveled to Brussels to meet the man who helped write the treaty -- Jim Cloos.
JIM CLOOS, COUNCIL OF THE EUROPEAN UNION: It makes me feel proud because I think the Maastricht Treaty was a major piece of work. It was a very important moment in European history and it's a lasting legacy.
DOS SANTOS: And a visit to a Maastricht start-up which uses the power of 3D printing to transform people's lives.
MAIKEL BEERENS, CEO, XILLOC: I see nowadays new generations are like world citizens, so it's very important to act as one -- as being Europe.
DOS SANTOS: Many of us have heard of the Maastricht Treaty, but how many of us really understand this iconic document? Here's a crash course. When the Maastricht Treaty was ratified in 1992, it wasn't until November 1993 that the treaty itself finally came into force, and had much fanfare and fury. Even at the time, much of the paperwork was difficult to fathom. Maastricht was the birthplace of the E.U., a framework which went well beyond the original design of the former European Economic Community. The new treaty established three basic pillars -- a stronger block, new powers to foreign and security policies as well as better cooperation in justice and criminal affairs. As you can see, this copy of the Maastricht Treaty is being drafted in the nine official tongues of the 12 founding member states of the European Union, but really it wasn't a language barrier that was the problem, but rather the complicated legal jargon contained within it. That meant it was quite difficult to get everybody on the same page. Countries like Denmark and the U.K. negotiated major concessions which still apply to this day, the biggest being exemption from the new single currency, the euro, the most ambitious part of the plan. Revisions to the treaty followed in Amsterdam, Nice and Lisbon, and they all created a bigger market for the free movement of goods and labor, the original purpose of the E.U. One company that owes its roots to Maastricht is Xilloc Medical. It's a start-up based in the city and specializes in 3D printed body parts. Techniques like these are revolutionary to the art of reconstructive surgery. Take for instance this patient who had to have a large section of their skull removed after a brain injury. Within 48 hours, the replacement (fill up) part was ready to be fitted, and research like this of course just wouldn't be possible without funding from the E.U.
BEERENS: I think science is one of the driving forces behind the economy globally, so I think for the European Commission, it's really important to keep on investing in that because that will create future entrepreneurs that create growth, it creates more employment, that create more innovation, so it's like a snowball falling down a hill. But you need to keep on feeding it snow because else it will not grow.
DOS SANTOS: Maikel was only eight when the Maastricht Treaty was ratified, but it's provided his fledging business with the keys to a marketplace which once seemed unimaginable in scale.
BEERENS: I think if I look into the full chain of creating Xilloc, two parts of that were European projects. And I think when they would never have been initiated, this idea might have never really became a thesis project, and if I had not become a thesis project, it will never have become a company. So, so in a sense it definitely makes sense with European projects.
DOS SANTOS: More Europe or less Europe -- which one would you prefer?
BEERENS: I prefer more Europe.
DOS SANTOS: Why?
BEERENS: I think nowadays new generations are like world citizens, so it's very important to act as one -- as being Europe, especially regulation-wise, I think it -- like regulations should not be implemented per country by like on a larger base in Europe, so it's very -- or it's more easy to do business internationally towards other countries.
DOS SANTOS: So, as Maastricht turns 20, there's still room for greater European unity for companies like Xilloc. Coming up, I travel to Brussels and pour over these very pages with one of the authors of the Maastricht Treaty.
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DOS SANTOS: The Maastricht Treaty -- you helped draft this iconic piece of legislation, and how did it make you feel 20 years on?
CLOOS: It makes me feel proud because I think the Maastricht Treaty was a major piece of work. It was a very important moment in European history and it's a lasting legacy.
DOS SANTOS: Which begs the question, did a document like this set us on the path for the Eurozone crisis or did it save us from the Eurozone crisis -- what could have been even worse?
CLOOS: That's a very difficult question because this was done 20 years ago. My personal conviction is that without the euro, the crisis which broke in the United States in 2008, that which engulfed us to some extent, would have been far worse. In fact, in my view, would've been worse. Now, that does not mean that everything which was done at the time was right. For instance, I am saying, I think now we all agree that we need more economic coordination. We need a stricter system to enforce discipline.
DOS SANTOS: Well, this is the thing, if you take a look at the pages of this document, it has all sorts of important criteria that you're referring to.
CLOOS: Yes.
DOS SANTOS: For instance, debt to GDP ceilings, deficit ceilings, the deficits couldn't exceed 3 percent of GDP. The real problem is, is that it hasn't been implemented properly. Even countries like France and Germany weren't sticking to those rules.
CLOOS: Well, that's a bit of an over-simplification. I think the criteria the -first of all -- the criteria, I know that's rigid as you just said, I mean, it's -- for instance, the 3 percent deficit or going towards it in a structural way. So, it's of course not because you cannot be purely mathematical on things like that. So where there's more leeway there, and of course we've created a (inaudible) growth back to be a bit more precise about what's being required and things like that. But Maastricht basically fixed the general framework for that criteria and they still live, and on this basis we've created the currency. And so of course no, it has been implemented.
DOS SANTOS: Europe has changed an awful lot since this document was produced. It's not just West Europe, it's incorporated Eastern Europe, we've had subsequent provisions to treaties like this in Amsterdam, Nice and Lisbon -
CLOOS: Yes.
DOS SANTOS: -- each but those of course bearing the cities' names. Is it time for another one?
CLOOS: I won't go into speculations about new treaties. The only thing I would say is that the Europe and the European Union is a living body, so you can never say the end of history has been reached. I mean, we're not Fukuyama, and I think even he has changed his mind since then. The end of history isn't there, there is no end of history. European Union's a living -- but so I cannot say whether we will have -- when new treaties, but it's never finished. The other thing I'd like to pick up is I think the integration of -- in the last few years -- of 12 new countries, some of them former Soviet Union countries, is just fantastic. And it actually creates new boost, a new impetus. Eastern Europe is one of the most dynamic economic regions in the world. No one talks about it.
DOS SANTOS: I don't know how much you know Monty Python, and whether you like them, but one of their famous lines was "What have the Romans ever done for us?" In the life of (inaudible), what has Maastricht done for young people?
CLOOS: It's a great line, actually. I love Monty Python, I studied in the United Kingdom in the 70s, so I'm very familiar with him. I actually use this example quite frequently when I talk to young people -- what has the Union brought us? It has brought us peace. Now this might look a bit grandfatherly, but it's still very important, you know. It has brought open borders, it has brought investment possibilities, it has brought a much bigger market, it has brought huge contacts between the people -- we've just created a (common) asylum program. I mean, it is massive effects. It has brought also rising prosperity for the poorer regions. We have a whole program of helping poorer, less developed regions and countries with massive transfers. For instance, some countries at some stage -- Ireland for instance -- received 5 percent of GDP, and that transfers for years. So, there's a lot of solidarity in this system. The problem sometimes is that it takes Europe more time to explain this than to have a catch phrase saying how stupid they are in Brussels.
DOS SANTOS: Has the Eurozone crisis left us closer together, would you say?
CLOOS: It's difficult to know what the effect of the crisis is. My personal assumption is that it will bring us closer together as far as the Eurozone is concerned, because we were obliged to. I also think that once you step back, we will actually emerge stronger out of this crisis because we've taken a certain number of reforms which are absolutely major. I was in Portugal recently and I was talking to the man who was responsible for negotiating with the Troika and I said, "How difficult is this -- I mean, those people coming and tell you?" And he said, "Well, it's very important we use this, we have reforms to do and we're now doing it." I know the time is very difficult, but I also think once we emerge from this, European Union will emerge stronger. The European Union has a good record of weathering crises and learning from them and getting out stronger. And that is why the premature announcement of the death of the European Union like Mark Twain would said have always proved wrong.
DOS SANTOS: Jim Cloos there, one of the original architects of the treaty. Well, since Maastricht was drafted 20 years ago, the Eurozone has faced its most pronounced crisis in its young history as more countries are still joining the queue to sign up for E.U. membership. That means that reform will remain high up on the agenda. It could also mean we could see more of these in the years to come. Well, that's it for this edition of "Marketplace Europe." Join us again next week if you can. But in the meantime, from Brussels, it's goodbye and thanks for watching.
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