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Quest Means Business
Italy's Prime Minister Resigns; Italy's "Demolition Man"; Future of European Economy Amid Italian Political Upheaval; European Markets Post Biggest Gains of 2014; US Stock Markets Rise; "Neknominate" Death Inquest; "Neknominate" Craze; Chocolate Boom; "Captain Marvel" US Visit
Aired February 14, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
PAULA NEWTON, HOST: The market closing on Valentine's Day in the United States. Good evening, it is Valentine's Day, Friday, February 14th.
This man is tipped to be Italy's next prime minister. We find out why he thinks he can do better.
A deadly game of drink or be ridiculed. Social media groups are criticized over a new Internet craze in which people down dangerous concoctions of alcohol.
And I meet Man U legend Bryan Robson as he parades the Premiership trophy around the United States.
I'm Paula Newton and this is QUEST MEANS BUSINESS.
Valentine's Day was a day of heartbreak for Italy's prime minister Enrico Letta. He traveled to the presidential palace in Rome on Friday to tender his resignation after his Democratic Party dumped him as leader. Letta was in office for less than his year -- less than a year, that is. On his way out of his official residence in Rome, he reportedly told staff, "It's true, Italy breaks your heart."
Now, Letta's replacement is likely to be Matteo Renzi, a rising political star and the mayor of Florence. Barbie Nadeau has been following today's developments in Rome and sent us this update.
(BEGIN VIDEOTAPE)
BARBIE NADEAU, CNN INTERNATIONAL CORRESPONDENT: For the third time in the last three years, the president of the republic, Giorgio Napolitano, has accepted the resignation of a standing prime minister.
In 2011, it was Silvio Berlusconi, 2012 Mario Monti, and today, Enrico Letta, the center left leader who's been in charge of parliament, in charge of running the government since April of last year, has stepped down.
One of the things that makes this dynamic that seems so familiar a little bit different is the fact that we know who's going to take his place, 39-year-old Matteo Renzi, the mayor of Florence, very charismatic, newcomer on the political stage, is set to be given the mandate to form a government.
He has never stepped foot in parliament. He doesn't have a parliamentary seat. And he's never run in national elections, but he's popular within his party, and he'll be given the mandate probably this weekend in order to form that government.
What he doesn't have going for him, though, is a new set of parliamentary members to help him along. He's got to take that parliament that Enrico Letta was not able to get to work together and try to form some sort of government to pass very crucial reforms, especially in electoral reforms ahead of any major decisions for the country of Italy. Then he says he'll call elections, hopefully for him as a front-runner, sometime within the next year or so.
This is Barbie Nadeau in Rome.
(END VIDEOTAPE)
NEWTON: Now, we've already told you that he is a heartbreaker, but Renzi is also known in Italy as the "Demolition Man." Now, he was given the nickname for saying he wanted to break up the old guard of Italian politics and swing his Democratic Party towards a more centrist agenda.
Now, if Renzi does take the prime minister's office, he's likely to push for more electoral reform. That will allow the scrapping of the Senate. Now, Renzi also wants to knock down the country's stringent labor laws. He wants to replace them with more flexible hiring and firing rules in Italy, and business has been asking for that for a long time.
Now, he's tipped to take an ax to payroll and business tax, and then, crucially, overhaul public spending. Now, it's strong rhetoric, but so far, he's been vague on the details. Renzi is well-known for his ambition, but one of his fellow Democratic Party members says much-needed change will not come easily. Here's what Giuseppe Civati had to say.
(BEGIN VIDEO CLIP)
GIUSEPPE CIVATI, DEMOCRATIC PARTY MP (through translator): Yesterday, they said that Letta didn't do what he should have done. They said the grand coalition didn't work, that they made many mistakes, and it will be the same. Obviously, now, Renzi's adrenaline and energy, but now that won't be enough to change things.
(END VIDEO CLIP)
NEWTON: The turmoil comes right as Italy's economy approaches a turning point, a key one. Italy's GDP grew in the fourth quarter of 2013. Now, the same goes for all countries here in green. Countries in red, though, contracted.
Now, let's take a look at the economic milestone for Italy. GDP grew 0.1 percent in the fourth quarter. I know it doesn't sound like a lot, but it is significant. This is the first quarter of GDP growth -- get this -- in almost three years.
Now, taking a look at France, GDP grew 0.3 percent. At least you could say it grew. That was better than expected. France avoided recession, which, with revised numbers showing flat growth in Q3. Now, a slight improvement on a previous estimate of a small decline.
Adolfo Laurenti is deputy chief economist at Mesirow Financial. He joins me now from Chicago. You know, we like to say that politics in Italy is quite a sideshow at this point. Certainly, the endeavor seems honorable, a lot of those reforms I just explained are significant.
Is there any hope that this government, one really done with backstabbing from within his own party, you have to say that, is really going -- it's going to happen this time?
ADOLFO LAURENTI, DEPUTY CHIEF ECONOMIST, MESIROW FINANCIAL: It remains to be seen. This is the 62nd government in 66 years of Italian Republic, so some skepticism is always well-founded.
On the other side, make no mistake, this is a major generational change. Matteo Renzi is young, he's not 40 yet. He's a new type of politician, in some way, you can call him post-ideological. He definitely has no strong roots in what has been the traditional division of Italian politics.
He's taking a bigger gamble. Until a while ago, he was arguing for a quick return of the country to new election, to have a new parliament with a new reform agenda. Now, political circumstances are forcing him to take the premiership in a moment in which the economic situation is still very dire. You just stressed that 0.1 is not much, it's an improvement, but Italy has a long way to go.
So, hopes are high, but the politics in Italy are very complicated, and quite frankly, without getting the politics right, it will be very difficult to do any reform on the economic side. But the country badly needs reforms, that's for sure.
NEWTON: And the point of him trying to get any of this through, he's unelected. As we just told about the murky politics in terms of getting him in office, if you had to tell him, you had to give him advice, do one thing for Italy right now, try and get it passed, what would it be?
LAURENTI: Probably the easiest thing to recommend is just be Matteo Renzi. He has received a lot of popularity because of his style and because of his courage to break with some of the traditional stereotypes of Italian politicians.
People loved his exuberance. He can be arrogant sometimes, there is no mistake, but there is a lot of hope. So the recommendation is do not betray the hope that so many Italians are putting on him right now and just go straight for the reforms that he has been advocating.
It will not be easy. He's facing a split parliament. He does not have a very strong backing. He didn't win an election, so he does not have the legitimacy that comes with winning elections. But people really got hope and like his style and his project, this program to reform the country. Just try to do it.
Even if he failed because of the split parliament, people will be willing to back him at the next general election as long as he's not just happy with the status quo, as long as he's really trying hard to offer a change to Italy.
NEWTON: Well, we'll continue watching. You have to watch. It is very critical at this point in time in Europe, but it is quite a drama playing out again in Rome. Thanks so much for joining us there from Chicago. Appreciate it.
LAURENTI: Thank you.
NEWTON: Now, investors appear to be happy about the growth numbers in Europe. European stocks posted their biggest weekly gains so far this year, and that's saying something. Eurozone GDP, as we've said, rose 0.3 percent last quarter. Germany and France posted better-than-expected growth. In the US, consumer confidence for February was higher than expected.
Alison Kosik is now at the New York Stock Exchange. You know, I looked at the market rally today after it had been down. It's now up, and it's a pretty good bump. It's like all the adults left the trading floor, they left the kids in charge, and they had a Valentine's party.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: You know who it was? It was the bargain hunters, Paula. They were out after a big pull-back in January.
Upbeat numbers about the economy, that also helped move stocks higher. We got a consumer sentiment report that topped forecasts. Even though it was unchanged in February, analysts were expecting a decline. We also saw gains today come thanks to some upbeat earnings from Kraft Foods, Campbell Soup, and Hyatt hotels.
Also going to contribute some of the green arrows to maybe a Janet Yellen carry-over effect after the new Fed chairwoman said earlier this week the Fed will maintain continuity in their monetary policy. You know how much Wall Street likes consistency. And with Yellen, it looks like everybody's getting Bernanke 2.0. Paula?
NEWTON: Absolutely. And that forward telegraphing, as they call it, she seems to be a little bit different in that --
KOSIK: Yes.
NEWTON: -- and it gives a little bit more certainty to the markets. We're going into a three-day weekend. Enjoy it, Alison.
KOSIK: You, too.
NEWTON: And hopefully this rally will continue in the next week. Appreciate it.
Now, coming up, the dangerous cocktail of social media and alcohol. We'll explain what "Neknominate" is and why authorities are so concerned about it.
(COMMERCIAL BREAK)
NEWTON: UK police plan to speak to the person who challenged a man to a drinking game, which ended in his death. Isaac Richardson, who was just 20, collapsed after drinking a mixture of a large amount of alcoholic drinks in the name of what they are calling "Neknominate."
Now, it's a drinking game which has gone viral, and it's the pivotal role of social media which makes this game so different and potentially deadly, as Isa Soares now explains.
(BEGIN VIDEOTAPE)
"OAKELFISH," YOUTUBE USER: Cheers. Today, what I've got for you guys for your brand-new, just opened, as you heard, seal of sambuca here, with some wicked as well. And it is a pint, I do believe.
ISA SOARES, CNN INTERNATIONAL CORRESPONDENT (voice-over): This is how it all begins.
"OAKELFISH": OK.
SOARES: A nomination, followed by cocktails of spirits. The game is called "Neknominate," and is thought to have originated in Australia. Now, it's sweeping through Britain.
"OAKELFISH": I Neknominate Joe (name deleted), Jordan (name deleted), Quincy (name deleted). You've got 24 hours, lads. Get it done.
SOARES: But what started for some as a game has already begun to claim lives: four victims, all men under 30.
SARAH JARVIS, MEDICAL ADVISOR, DRINKAWARE: This is a lethal game. The point about alcohol is that it affects your ability to recognize that you're in danger, and it absolutely affects your ability to react to danger. So we have a double-whammy here.
UNIDENTIFIED MALE: Next to the nomination roll.
SOARES: The premise of the game is simple: people film themselves "necking" or downing a large drink. The majority of times it's alcoholic, and of large quantities. Then they post them onto social media via Facebook or YouTube, and then the nominate a friend to outdo them. If the friend denies the challenge, they are ridiculed on Facebook or Twitter.
Each nomination becomes more and more daring and outlandish. It started as exhibitionism, with this woman stripping in a supermarket and downing a drink. But the bravado has escalated into extreme cocktails. This one mixes spirits with a dead mouse, among other things. Not surprisingly, the trend has politicians calling for schools to play a bigger role.
UNIDENTIFIED FEMALE: So, what role does the secretary of state believe that schools have in building resilience in our young people to resist peer pressure?
SOARES: Brian Viner, whose own son has played the game, says responsibility must come from Facebook, which still today displays adverts next to videos of people taking part in the challenges. He told me his son was nominated and pressured to play the game, but drank water instead of vodka so as not to harm himself.
SOARES (on camera): When you found out about it, and when you found out the fact that your son had done something like this, how did it make you feel?
BRIAN VINER, FATHER: Cross with him. But more cross, really, with the social media involved and the way that this game has just spread. The whole thing is madness, and it's -- it needs some kind of sharp and swift action on the part of these social networks to stop it.
SOARES (voice-over): Well, in a statement to CNN, Facebook says, "We do not tolerate content which is directly harmful. For example, bullying. But behavior which some people might find offensive or controversial is not always necessarily against our rules. We encourage people to report things to us which they feel breaks our rules so we can review and take action on a case-by-case basis."
But to stop this once and for all, Dr. Sarah Jarvis says Facebook must recognize its own role in the game.
JARVIS: It's very difficult in this day of personal liberties to say that Facebook shouldn't be condoning this, it should be taking these videos offline. Personally, I'd like to see that happening, because, frankly, if the thrill wasn't there because your mates weren't seeing you, I suspect it would very rapidly fizzle out.
SOARES: Whether it's a fleeting craze or a long-term trend, one thing is clear: this is a game where no one wins.
Isa Soares, CNN, London.
(END VIDEOTAPE)
NEWTON: Now two deaths in Ireland have been linked to the Neknominate craze. I spoke with Frances Fitzgerald, the Irish minister for children and youth affairs, who was in Dublin. I asked her what Irish authorities were doing to tackle the problem.
(BEGIN VIDEOTAPE)
FRANCES FITZGERALD, IRISH MINISTER FOR CHILDREN AND YOUTH AFFAIRS: Perhaps this game started off innocently enough, but has escalated now and is actually dangerous. So I think what we need to do, it's not about censorship, it's about information, education.
But what it also highlights, and we're very conscious of this in Ireland, is an attitude to alcohol, an attitude to binge drinking, so the symptom is the game online, mediated, of course, in the way, so fast as it is on the Internet, and young people posting videos. But it's about an attitude to alcohol and an abuse of alcohol at its core.
So, I think, for example, we're bringing in a public health bill here where we're looking at accessibility issues about alcohol, at pricing, at advertising, at sports sponsorship. I think it's about cultural attitudes to alcohol as well. That's a very key element of this.
NEWTON: And I'm so glad you brought that up, because of course, it's not a coincidence that in areas where young people are having problems with junk -- with binge drinking and have had those problems for years, this is showing up. At what point do you say to yourself, though, that there's only so much we can do, and that, as you say, those attitudes to drinking persist in our countries?
FITZGERALD: Well, you can never give up, I think, because this is far too serious. And what's really interesting is since it became public knowledge and it was reported so much in the media, young people themselves are getting involved in changing it.
So, we've had really interesting examples from the Union of Students in Ireland who've started a campaign with young people to stop this. They're highlighting the dangers. We've had an intervention by scouting organizations and other youth organizations, obviously, using media and using technology, getting the message out there on social media.
And I think that, at the end of the day, is probably the most powerful way of intervening, when young people themselves, realizing the dangers, start to take action and begin to impact on the craze. And in fact, what the young people are saying now is that it has begun to die down. It's not anywhere as prevalent on the media, on the Internet as it was a couple of weeks ago.
So, that information education is a key part, but also tacked in, the underlying causes in relation to the use and abuse of alcohol. And we have evidence in our country that we have serious problems with binge drinking in particular. And this craze really fed into that. And again, peer pressure, as I say.
So, I think it's multifaceted. I think Facebook have a role to play. I've been in contact with Facebook. As I say, it's not about censorship, but they have said they'd review the videos that are online. They're doing that.
They do say that it doesn't breach some of their community standards, but if there's a question of abusive behavior or bullying -- and indeed, in their own guidelines, they talk about emotional distress directly causing emotional distress -- well, certainly some of this Neknominations online have caused deaths and have caused distress.
So, I think they need to look at their thresholds, continue to be alert to it, and when abusive or bullying behavior is reported, then be very clear about taking it down.
(END VIDEOTAPE)
NEWTON: His nickname is Captain Marvel, and now, we know why. Ex Manchester United captain and global ambassador, Bryan Robson, wowed fans on a tour of the United States and, amazingly, many knew who he was.
(COMMERCIAL BREAK)
NEWTON: Chocolate is a massive money spinner. Just ask anybody in my house and they'll tell you. Valentine's Day will see millions of us give us our loved ones chocolate treats, of course. Here in the United States - - I still can't believe this figure -- the average person will spend $133 on candy and cards. That's just according to one survey.
Godiva CEO Jim Goldman joins me right here, now, in the C Suite. Thanks for coming in and bringing us in all these sweets.
JIM GOLDMAN, CEO, GODIVA: Thank you. Happy Valentine's Day.
NEWTON: Valentine's Day, it's been quite a shocker for a large chunk of this country because of the weather. Have you seen problems in sales on what is one of the biggest days of the year?
GOLDMAN: So, yesterday was kind of tough.
(LAUGHTER)
NEWTON: Really was.
GOLDMAN: It was pretty challenging weather, but people are very motivated to buy for Valentine's Day for those that they care about, and certainly chocolate's at the top of the list. And at Godiva, we're part of the tradition for Valentine's Day.
NEWTON: So, you're saying it was a challenging day, but you think you'll hang on to good sales of these things?
GOLDMAN: So, we had good sales yesterday, not great. But today, we have very busy stores. People are lining up for our chocolate and our dipped strawberries, which is really one of our specialties this time of year.
NEWTON: We've all been taking note of the consequences of eating chocolate, certainly more people into a healthful lifestyle. How does Godiva chocolate fit into that? Because it's got to be tough. This is, at the end of the day, something people feel guilty about doing.
GOLDMAN: Well, we don't think people should feel guilty. Oftentimes they reward themselves for their hard work or when they have a challenging day with a piece of Godiva chocolate. Actually, dark chocolate is growing because it's high in antioxidants.
And to be honest, we -- our product is, in fact, less than 100 calories, each piece, and some are as low 50 calories. So, it's a really special treat, it's a delicious treat, and we're not a health food, but we're a special reward for people, particularly at Valentine's Day.
NEWTON: Yes, 100 or 50 calories, I never would have thought that. Every time I eat one, I'm thinking, it's at least 1,000. I'm glad you set me straight on that.
GOLDMAN: Right.
NEWTON: In terms of cocoa prices, we have become more educated in the last few years about what makes good chocolate and --
GOLDMAN: For sure.
NEWTON: -- chocolate that is not so good. A huge ingredient here is an expensive ingredient: cocoa. How has that been affecting your company? There are people who really are betting billions on that cocoa price one way or the other.
GOLDMAN: Well, we look at it very closely, we look at it over the long term. It is high right now, cocoa prices, but it fluctuates up and down, and we try to buy when it's down and buy out, and we watch carefully. But at the end of the day, it's one of a number of drivers of our business that we have to pay attention to.
NEWTON: And paying attention to, you mean you're not going to change the ingredients, then?
GOLDMAN: No, no. We won't compromise.
NEWTON: Because some people will believe there's a temptation there.
GOLDMAN: Not for us. We've put a lot of pride -- we've been around since 1926, we started in Belgium. We pride ourselves on outstanding chocolate that provides the ultimate chocolate experience. So, we don't compromise on that. In fact, our innovation is unparalleled for this Valentine's Day.
NEWTON: OK, Jim, I heard you call this the Super Bowl for Valentine's Day for Godiva.
GOLDMAN: Yes.
NEWTON: Thanks for coming in. Appreciate your time.
GOLDMAN: Thank you very much, Paula.
NEWTON: Thank you.
GOLDMAN: Happy Valentine's Day.
NEWTON: And to you. Now, Manchester United are certainly in the fans' bad books at the moment, in case you missed it. They've been packed off on holiday after an absolutely nightmare season saw them slip to seventh in the league.
Now, however, US followers of the Red Devils have had the chance to show they're still behind them. Man U legend Bryan Robson took the Premier League trophy that the club won last season on tour stateside. He showed off the silverware in cities including Los Angeles, San Francisco, and Chicago. Apparently, the crowds really surprised him.
Now, Bryan admits the Premier League trophy may not be coming back to Manchester this season -- no, it won't. He is, however, positive about the club's ongoing worldwide appeal. I caught up with him earlier right here in New York City.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALES (singing to tune of "Guantanamera"): One Bryan Robson! There's only one Bryan Robson! One Bryan Robson!
BRYAN ROBSON, FORMER MANCHESTER UNITED FOOTBALLER: We're doing 26 countries throughout the world . We've got 660 million fans throughout the world, and so for us as a football club, we like to get close to the fans.
We've done LA, then we did San Francisco, Chicago, and now New York. And we're just getting an unbelievable response from the fans.
NEWTON: Has that surprised you, just to see all these people here?
ROBSON: Yes.
NEWTON: I mean, they've had people lining up for a few hours now, and they look like pretty die-hard fans.
ROBSON: It has, Paula. I just find that soccer in the US is definitely growing all the time.
NEWTON: You've never been on a tour like this in the United States, I'm assuming.
ROBSON: We've always had a really good turnout, but this one has been extra special. Every time we've been in Los Angeles and San Francisco or Chicago, I've been signing for two and a half hours like this, with the cup, and we've had to stop the queue because it's been such a popular demand to have a photo taken with myself and with the trophy.
NEWTON: That must make you feel good after so many years off the pitch.
ROBSON: It does. I'd be standing here like this if there were only two or three fans here.
(LAUGHTER)
NEWTON: You may think there aren't any Man U fans in the United States, and you're wrong. You guys have been lining up here on your lunch hour. How do you feel about how they've been playing lately? Let's face it, it's not been good.
UNIDENTIFIED MALE: It's not been good. It's a transition period.
UNIDENTIFIED MALE: This year is a transition year, and true supporters would stick behind the club in a minute.
NEWTON: Now, you know I'm going to bring it up. Man U not doing so well on the pitch these days. Do you think there's hope going forward? This cup will likely not return to you guys next year.
ROBSON: I think this cup unfortunately will definitely coming back to Manchester with us.
(LAUGHTER)
ROBSON: But I still feel like we're in the Champions League, we're in the last 16, and the Champions League is a big trophy to win. David Moyes is in a transitional period. Sir Alex Ferguson was such a great manager. And so, I think it's going to take a little bit of time for David to put his thoughts on it.
Whether it's sports or whether it's in business, you have to keep trying to improve. And with Manchester United, we've been used to winning things for years. This year, things haven't gone as well as what we would have liked.
But the thing is, is that we keep trying to improve. Because if you don't, then people will come from behind you, and they will overtake you. So, we know that as a football club, and we're going to try to put that right.
(END VIDEOTAPE)
NEWTON: OK, coming up, deadly protests in Venezuela. Both sides blame each other.
(COMMERCIAL BREAK)
NEWTON: Welcome back. I'm Paula Newton, and here's a check of the top news headlines this hour.
Talks are underway to form Italy's third government in less than a year. Prime Minister Enrico Letta resigned on Friday amid infighting in his Democratic Party. He is expected to be replaced by party leader Matteo Renzi. Renzi has criticized the government's failure to push through political and economic reform.
France is sending more soldiers to its troubled former colony the Central African Republic, 1600 French troops arrived there in December, and now, 400 more are to be added. The Central African Republic has been hit by months of religious and ethnic violence.
In Geneva, the second round of Syrian peace talks has ended with no progress to report. Each side is blaming the other for the impasse. The Syrian opposition says it will not impose conditions on a proposed third round of talks.
The royal family got involved in flood relief efforts in the UK today. Princes William and Harry joined soldiers distributing handbags in a hard- hit town. That was sandbags, pardon me. A month's worth of rain has fallen in just 48 hours in some places.
In the US, the snow keeps falling in a winter storm as it continues to push north. It's blamed for at least 16 deaths and nearly 400,000 power outages.
Japan's Yuzuru Hanyu has taken the gold medal in the men's figure skating competition at Sochi. The odds-on favorite was Patrick Chan of Canada, he earned silver, while Denis Ten of Kazakhstan captured the bronze.
Protests continue to cross Venezuela on Friday following several days of unrest linked to the state of the economy. Three people have been killed and dozens injured on the streets of Caracas during anti-government rallies. President Nicolas Maduro is blaming opposition leader Leopoldo Lopez and has issued a warrant for his arrest. Lopez insists it's the government that's responsible for the violence. The president of Venezuelan TV said his office have been terrorized by anti-government protesters.
(BEGIN VIDEOCLIP)
YURI PIMENTEL, PRESIDENT OF VENEZUELAN STATE TV, VIA TRANSLATOR: There's been a siege since yesterday. Last night, these irresponsible people put up a barricade -- these violent hordes. They started a ruckus. Yesterday there was also an injury from a gun fired from the demonstration these people are having here.
(END VIDEOCLIP)
NEWTON: Turning to Argentina now, the government today unveiled a new consumer price index to quell criticism that it has been underreporting inflation. Argentina has one of the highest inflation rates in the world. It runs at about 30 percent annually. The government's new index registered monthly inflation of about 3.7 percent -- that's monthly inflation. Now private economists estimate that prices rose at about 5.6 percent last month alone. So, still a gap but now as drastic as it had been in the past. Alberto Ramos is the senior Latin American economist at Goldman Sachs and he joins me now. You know, it's been troubling just to see the developments or lack of thereof in Argentina. Do you feel now that perhaps the government is beginning to get a grasp about what it has to do going forward to at least get that inflation under control?
ALBERTO RAMOS, ECONOMIST, GOLDMAN SACHS: Indeed, it's definitely a -- an -- important step -- a step forward in terms of regaining their lost credibility and the integrity of the official inflation measurements. But the name of the game here will be consistency. We need to see a sequence of inflation (prins) from the government that are as close as possible to the estimates provided by the private sector which have been very, very reliable handles off the inflationary environment. What they'll offer is also an additional observation. It's important we have accurate measurements of inflation because a number of financial contracts and other contracts are written based on the accuracy of those -- of those -- readings. But more than that, if you have an accurate reading it seems to be now some ownership of the inflation problem that Argentina has been grappling with very high inflation. And what are the authorities prepared to do in order to fix the problem? And that is the important fundamental question. And what I have seen so far, we haven't yet detected that the authorities are ready to embrace the type of adjustment policies that will be needed to disinflate the economy and to basically work on the main sources of inflationary pressures which you identify as widening fiscal deficits that continue to be monetized by a very willing central bank and also by the fact that domestic real interest rates are very, very negative.
NEWTON: Indeed, and in terms of what the government has been doing recently, you know we had the nationalization of the oil company in 2012, perhaps in and of itself not so important, but it certainly showed a signal about what was going on with the government. You know, Argentinians have a great sense of humor about what's going on with them, even though they are suffering through it. You know, and some of them saying that, you know, there are four types of countries -- developed, undeveloped and then you have Argentina and Japan. And the reason that they say that is because Argentina should be so much more than it is economically right now. Is there a sense that perhaps the government will seize the moment there and say, OK, it's not worked, we really do need to move on here with crucial, crucial reform?
RAMOS: It's hard to tell. Time will tell, but so far the track record has not been very, very supportive, and what we're doing you know in dealing today in Argentina has very little to do with global you know microdynamics, global financial markets. This is a lot of self-inflicted biting his ear off, you know, populous policies that created very large imbalances in the economy that are now leading to -- you know -- to very high inflation readings, to pressures on the exchange rate, you know, to distortions in relative prices. So it's about time as you mentioned and rightly so that you know that they embrace the different set of policies to fix those problems. Argentina can be easily fixed, but you have to go about fixing it so we need to see very different policy (mix) in place in order to deal with these market issues.
NEWTON: Do you think the strength is there though in all of South America to kind of pull those economies along? We know that we have Chile doing really well, even Uruguay. But when you look at what we just talked about in Venezuela, also things looking a bit precarious in Brazil -- do you think that in general in that region that we can have some type of growth and going forward that the continent really deserves and has long needed?
RAMOS: Absolutely, there's nothing deterministic about the future in terms of Latin America, certainly exposed you know to the global reality, they are integrated into the global economy. But they are still pretty much masters of their own destiny. But there is a tremendous amount of cross-country (inaudible) in the region. We have a number of populist experiments taking place in Argentina and Venezuela, no different from what we have seen in the 80s and throughout the 90s in Latin American. And while we know where they start, we also know how they end, but we have a number of conventionally-managed economies as you mentioned -- Chile, Colombia, Peru, Mexico and to a certain extent even Brazil -- that are in a much better place, they're much better prepared to deal with the shifting global undercurrents which are turning, you know, turning slightly less (friendly) into emerging markets and general than what they have been over the last decade.
So in a way, you know, the future is still -- it could still be bright, you know, if we you know stick with conventional policies that have worked pretty much you know across the globe.
NEWTON: And that's the big question -- will they return to any of those conventional policies. Thanks so much for giving us that insight on this, we appreciate it. It's what Brits call the bulldog spirit. I've seen it in person. Tonight, British businesses are putting profits aside and stepping in to help flood victims. That's up next.
(COMMERCIAL BREAK)
NEWTON: Japan's e-commerce giant Rakuten is buying the call and messaging app-maker Viber for $900 million. Business correspondent Samuel Burke has been telling me all day how significant this is. I'm glad that I talked to you because I really didn't realize how much people relied on Viber in certain cases.
SAMUEL BURKE, BUSINESS CORRESPONDENT: And I'm surprises someone like you hasn't used an application like Viber -
NEWTON: Oh, don't be surprised at that, Samuel, that's over.
BURKE: Because you're all over the world, so -
NEWTON: It doesn't matter.
BURKE: -- my better half is in Belgium tonight and I'm here in the United States, so we're using Viber to call each other, and this application, it's free calls from one telephone to another telephone and the quality of the sound when you use this app is incredible.
NEWTON: Really?
BURKE: Better than actually a landline. But people also use it as a messaging app. So they're calling on it, and also using it to send messages, and the most interesting thing to me is actually that they've started selling stickers on this app, and they're making a lot of money selling stickers. And this company, Rakuten --
NEWTON: Stickers?
BURKE: -- yes, stickers -- digital stickers. So they're stickers that I -
NEWTON: You mean they're not even -- I can't even hold them?
BURKE: You can't even hold them, but it's become a big source of revenue for these apps. These apps are actually bringing in hundreds of millions of dollars in digital sticker sales. So, Rakuten is actually competing against another Japanese app called Line. Let me just show you that app right here. Look at all these stickers. This company -- more than $300 million dollars in a messaging app last year in revenue. More than $300 million, a lot of it coming from stickers. So, these apps for sending messages to each other are free -- you don't have to pay for a text message like you normally would. They're fun and they're worth almost a billion dollars. So, what I thought was most interesting was what the Rakuten CEO said today when they announced all of this. He said that it's absolutely a no-brainer -- "messaging apps are taking over the world." That he said, he then went on to say that while search is one of the strongest platforms, what is happening in communications is very, very important. So, whereas search is the backbone for a company like Google, Paula, this messaging app has $300 million users -- Viber -- so this could really be the backbone for this Japanese company to bring their services into a lot of other countries.
NEWTON: And about that Japanese company, why would they want to buy something like Viber and what do they -- what are they doing in the Japanese market right now?
BURKE: So, they call this company Rakuten the Japanese Amazon. They sell products on it mainly, but like Amazon which has extended their services far beyond it -- they're competing with Netflix now -- Amazon, that's what this company wants to do. They want to also offer their products to the people who are using Viber -- all around the world this app is very popular, Viber. In Latin America, in the Middle East -- so this mean they have 300 million more clients and they can offer new types of services and their old service too. So, who would -- who would turn down 300 million new clients?
NEWTON: Not $300 million either. In terms of what we're looking at in terms of these apps, and you look at the potential of something like Gliber -- Viber -- how are they monetizing this? Is it really just things like digital stickers?
BURKE: Actually that is the majority for a lot of these apps -
NEWTON: Wow.
BURKE: -- these digital stickers. Sometimes they'll charge you to call landlines the way Skype does, so Skype to Skype is free, Viber to Viber is free, but if I want to call your landline back in Canada, then I would pay what's less than paying on your regular landline, they charge a little bit of money there. But, again, it's kind of like Google where they want to get people in this ecosystem and messaging is a part of it, and don't forget a lot of people are moving away from social networks for some of their messaging because they want things to be more private. So, Viber offers an opportunity for this company to have a kind of private social network, but also they can have a sponsors pay to send people messages over this network. So, think of messaging as kind of the new social network, but a more private one.
NEWTON: Yes, and it was really interesting though what they said about the fact that, hey, apps is the future. We've got the monetizing searches, but apps are there too. Samuel, thank you so much for coming in. We're going to go to Jenny Harrison now who is going to tell us about what is going on with the weather in Britain. We've been following that for several days, and, Jenny, when is it going to be over -- that's what I want to know from you because I am sick of looking at all that video, it's really depressing.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: I know, and for all those people on the ground -- well, you know what, unfortunately, Paula, I just don't have the answer to that. Because what we've been having is what we're going to get more of which is, you know, a day of sort of quieted conditions before the next storm system comes through. I want to start by showing you this because this actually has been the pattern would you believe since December. But this is showing you all this information gathered from the 29th of January up until the 11th of February. There is the U.K., and here come these very large and very intense areas of low pressure. And of course they've been coming across the Atlantic and they just keep coming, one after another after another with as I say a brief lull in between. And that is exactly what we're going to see as we move forward.
We've had some more updates in terms of statistics for the rain from the U.K. Met Office, and now what they're saying for January is some areas have had more than three times their average amounts of rainfall. And back in December into January, some parts of the south in the U.K., they'd actually had five months' worth of rain in literally less than a month. So, another way of looking at it is this -- here's another big graph. But what you really need to notice is this big, long red line that are various different societies and agencies who compile this data from hundreds of different weather observations and weather stations. And all of this data here goes back to 1910, and this is where we are now with the amount of rainfall. That is how staggering it is. That is how much above the average.
Now, the last system -- this is coming through Friday into Saturday, it's been coming through all day long on Friday. It's been causing many, many problems -- the winds have been very, very strong again, Heathrow Airport in London in just the last few hours has had to divert a number of planes away from there because the crosswinds were just too strong. But of course the rain has been coming in as well as you can see. Absolutely (inaudible) some very heavy snow well across northern sections of the U.K. There are now over 1,000 people in the south in the Thames Valley who have been evacuated from their homes. In total, we've had over 5,500 homes that have been flooded, there are 2,000 troops working already on the ground. There are 3,000 more on standby to cope with the situation as we continue Saturday into Sunday. Look at these flood warnings again. More flood warnings and alerts than I have ever, ever seen -- 546 in total coming out of the Environment Agency. Twenty-two of those are for severe flood warnings.
This is what it looked like across the Somerset levels. Back on the second of February 2013 -- look at it now in 2014. It is absolutely amazing. No water here at all, there is where the water normally is -- all of that has expanded. And then look at this area to the north. That is why we've been seeing pictures such as thing. As I say, we've had over 5,500 homes that have been underwater. Some parts of Somerset have been cut off for now going on six weeks. But what we have got is some good news amongst all this. The Environment Agency -- they have brought in -- they've got 13 of these Dutch pumps. They've got four that are working now in different parts of the country -- each of those can get rid of 7.3 million tons of water a day. Unfortunately, this is the next storm system, it comes in Sunday. And guess what, Paula? This storm heading to the U.K. Sunday into Monday -- this is the one that brought the pounding snow and the travel across the south and the northeast of the United States just this week. So, everything is working its way across toward the U.K. Until we see a change in the Jetstream and the weather pattern, this will continue.
NEWTON: Are you kidding me? That storm -
HARRISON: I'm not. I know, I know it's just unbelievable. I mean, we begin to feel bad here. But what I can say, Monday and then again Wednesday would you believe, the storms are not expected to be quite as strong, the winds shouldn't be as strong and the rain shouldn't be as heavy, but there will still be some strong winds and there is more rain coming down on that just incredibly saturated ground. So, yes.
NEWTON: Unbelievable, Jenny. And I know it won't come as any surprise to you that people in Britain though are taking care of each other through this. Businesses are digging deep to help victims of the floods sweeping Britain. Supermarkets including ASDA Tesco and Waitrose are delivering supplies to the worst-hit areas. Tesco has even used its fleet of vehicles to deliver bales of hay to animals cut off by rising water. Now, Jim Boulden spoke to the director of environment and business at the UK Environment Agency.
(BEGIN VIDEOCLIP)
ED MITCHELL, UK ENVIRONMENT AGENCY: We've had a whole series of different storm and weather events, which has caused coastal flooding, river flooding, etcetera, so, yes, we're working flat out at the minute to protect as many people as we possibly can.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Did you know in December that this is what January and February were going to bring us? Because there is some criticism that maybe people weren't prepared enough or told to be prepared enough.
MITCHELL: It's very important that people do keep an eye on their flood risk. We do encourage everybody here to keep an eye on our website and we also have a phone line that you can ring which'll tell you exactly what the latest is in terms of the flood position. I think the winter that we've just had is most likely going to be the wettest since -- well for 250 years.
BOULDEN: Yes.
MITCHELL: And that was not how it was forecast, so I think this caught us all by surprise a little there.
BOULDEN: But the military is now in and have been for the past week. Is that something that you always has as a contingency or does that just show how difficult this one is?
MITCHELL: Well, we're very much part of a multi-agency response. This isn't just the Environment Agency, it's the military, the police, the fire and rescue, etcetera, and that is coordinated through our multi-agency structures. The military are deployed when it makes sense to do so and when they can help as best they can. So, it's great to have them around, they're just on the other side of the river from here. They're helping us put up some temporary defenses which will protect several hundred homes. So, it's great to have their assistance.
BOULDEN: There's been a lot of talk about flood defenses, about sacrificing one area for another area. It makes it very political as well as it makes it very sort of strategic, doesn't it?
MITCHELL: Yes. Yes, I mean to be very clear, we don't sacrifice areas. What we do is we choose where we can afford to spend our money for best effect to defend areas. So, yes, absolutely we can't defend everywhere, and we're careful about where we do defend. But in defending a particular location, we don't sacrifice another.
(END VIDEOCLIP)
NEWTON: Coming up, an Empire State of love. For just one day of the year, New York's iconic landmark allows some lucky couples to tie the knot right at the very top. Two of the newlyweds join us on their wedding day. That's right after the break, and yes, the bride is still wearing her wedding dress. She looks amazing.
(COMMERCIAL BREAK)
NEWTON: I am a pretty cynical person but this story even got me today. The Empire State Building has marked Valentine's Day by giving three couples the chance to seal their love in a way they will never forget. Those couples tied the knot this morning, the only day weddings are permitted at the iconic tower. Now, as soon as it gets dark, the New York landmark with be bathed in pink light to mark the 20th Valentine's Day weddings event. Now, the Empire State Building is the site of dozens of romantic movies -- most famously -- yes -- when Tom Hanks and Meg Ryan meet in "Sleepless in Seattle."
Now, one of those lucky couples is Veronica and Gustavo Espinal, and they spent their first date on the observation deck of the Empire State Building. They say they were excited to get married there exactly where they fell in love. It really is a lovely story. I mean, what was the inspiration for the Empire State Building? Why up there?
GUSTAVO ESPINAL, NEWLYWED: Well, it was the place where we you know - - we just randomly went and wanted to just up for the first time, and you know, just have a good time for the night.
VERONICA ESPINAL, NEWLYWED: He had never been there before, so it was the perfect first date for a memorable moment, and it's one of the most romantic buildings in the world. So, it was perfect.
NEWTON: And in terms of having the idea to get married up there, you guys actually had to go through some hoops to get to this wedding.
G. ESPINAL: Right.
NEWTON: So what did you have to do?
G. ESPINAL: Well, originally she found the contest online, and she mentioned it to me. And being that we were planning a wedding already, she said oh this might be a good idea for us. But since it was such a short notice, I said well we can't do it. So she said, all right, whatever, we'll just throw it away and not, you know, not think about it. And I just went ahead and I created the video myself, and I submitted it as a secret and then told her about it when we won.
NEWTON: Aw, really?
V. ESPINAL: Yes.
NEWTON: That's so sweet. And what did you -- what do you think got them in the video. I mean, what got you about the video?
V. ESPINAL: The song, the baby, just all of the memories just reliving them each time. So, when he first showed it to me, I started crying immediately.
NEWTON: Aw. And what was the day like? I was shocked -- I actually saw Mariah Carey serenaded you guys today up there?
V. ESPINAL: No, those pictures are from yesterday for the lighting ceremony.
NEWTON: OK, but you -- what happened up there then today -- what was it like?
V. ESPINAL: Today was the actual wedding day, so we went. I was blown away by the amazing flowers and the backdrop that ProFlowers had made. So we had a very intimate and private ceremony with our family members and then RedEnvelope showered us with gifts -- so amazing. And then we went up to the observation deck for pictures.
NEWTON: And now tell me you've got a veil on -- it's pretty windy up there.
(LAUGHTER)
V. ESPINAL: It is.
G. ESPINAL: It was hard keeping it on.
V. ESPINAL: I almost fell with the veil, so I had a great bridesmaids who were holding me the whole time and supporting me.
NEWTON: Oh, that's amazing though, it sounds really good. How do you explain to people who may be haven't been up there on the deck? What is it that gets everybody about the romanticism up there?
G. ESPINAL: Just how high in the sky you are, and just you know the view of the entire New York City. It's just so romantic. You feel like you're alone, you know?
V. ESPINAL: On every angle.
G. ESPINAL: In every angle you get every view and (inaudible).
V. ESPINAL: And it's never the same going back because the sunset might be different, the timing, so it's always an experience.
NEWTON: Now, Valentine's Day -- you think you're going to go back on your anniversary every --
G. ESPINAL: Every year.
V. ESPINAL: Every year. I said that we have to go back every single year.
NEWTON: Oh, that'll be so much fun. Now, one thing we want to know about as well -- weddings are really expensive. Was it an extra bonus to get this one -- at least the ceremony part -- for free?
V. ESPINAL: It was, --
G. ESPINAL: It definitely was.
V. ESPINAL: -- it saved us a lot. We had actually booked the venue for July because I was still planning, and then when they told us this, it was like -- oh, my goodness, this is a blessing. Another expense we don't have to worry about or think about.
NEWTON: Have you run into anybody who's just kind of said I couldn't do that -- I'm afraid of heights or whatever -- I mean, did you have that kind of reaction from some people?
V. ESPINAL: We had more in terms of the guest list. They were like 24 people, I can never do that. And we're like, well, that's what makes it intimate and special that it's only the people who are really close to us that were able to attend today.
NEWTON: Oh, that's so lovely. I know you guys are going to your reception right now. Congratulations, I cannot thank you enough for spending even a few minutes with us. And I think everybody will be looking at the Empire State Building a little bit differently, especially tonight. Thanks so much -- really appreciate it.
V. ESPINAL: Thank you.
NEWTON: And congratulations.
V. ESPINAL: Thank you.
NEWTON: We'll be right back with more of "Quest Means Business" -- that's right after the break.
(COMMERCIAL BREAK)
NEWTON: Something that caught our eye today. We all know that getting face time with the men and women at the top can be tough. That's why athletes at the Sochi Winter Olympics have been getting so competitive about getting selfies -- yes, with Vladimir Putin. Now, the America luger, Preston Griffall caught a snap of Putin while the Russian president was visiting Team USA headquarters. Now, you can just about make up -- make out Putin in the background there, and that's to the right of the frame. Now, his teammate, though got a little closer. This time you can see him just about there in the background on the left. But the gold medal for Sochi selfies goes to Canada. No one got as close as the speed skater Brittany Schussler. Unfortunately for her, she missed out on asking him to be her Valentine. You know what, sorry, Brittany, we all would've taken that gold medal from Patrick Chan instead -- he got silver and Japan got the Gold. But no matter, we've got the selfie.
U.S. markets rallied today -- Dow up more than 126 points. The S&P gained more than 2 percent this week and it's a near-record closing high for the Nasdaq. That's all we have for you today on "Quest Means Business." Thanks for joining us.
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