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Quest Means Business
IMF Global Growth Forecast; French Economic Plan; Most European Markets Down; Modest Rebound for US Markets; Ukraine in Turmoil; Windows XP Expires; Windows History; Life After XP; Evolve or Die
Aired April 08, 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)
RICHARD QUEST, HOST: Today, it was a market that really didn't know what to do. Up a bit, down a bit, round a bit. But when all was said and done, the gains were small, just up 13 points. Go on -- oh, not exactly a big rousing hammer, but it was Tuesday, April the 8th.
Tonight, new hopes and new risks. We'll be talking to the IMF's chief economist about the uneven recovery in the global economy. The IMF's report is out.
Diplomacy for billionaires. Ukraine's richest man tries to solve the country's crisis.
And XP expires. Microsoft wants you to throw out the old software and throw it out of the Window.
I'm Richard Quest. I mean business.
Good evening. Tonight, the International Monetary Fund, the IMF, says the global recovery will gain strength this year, despite new risks, which could threaten growth. The IMF has slightly trimmed its forecast for global growth in 2014.
(RINGS BELL)
QUEST: 3.6 percent. That's just a smidgeon down from its January forecast. And the Fund predicts the US will grow by 2.8 percent this year, unchanged from the previous report. In the euro area, growth is expected to be 1.2 percent, revised up slightly from January.
If you talk about risks that the IMF says it is seeing, there are several that could threaten the global recover. In Moscow, there's serious geopolitical tensions. Look at the risks as they are seen in there.
Start off with the one in Moscow and -- well, take it from me. The Moscow risk is such that there are rising tensions with Ukraine and the possible impact of the global markets. We talked about that on last night's program. It's the tensions with Ukraine. Although Ukraine is a relatively small economy, it's the possibility of what might happen with the EU and the United States. So much for that.
To Brussels and the eurozone, where growth has turned positive, but it is expected to remain sluggish. Also a major concern, persistently low inflation.
And finally, of course, in Brazil, well, here we have the emerging markets, like the BRIC countries, where the IMF projects weaker outlook than in the second half of last year.
Those are the main areas of, if you like, principal risks and concerns. Let's put the whole picture together. Joining me now is the IMF chief economist, Olivier Blanchard, who joins me from Washington. Olivier, good to see you, sir. Can you hear me?
OLIVIER BLANCHARD, CHIEF ECONOMIST, INTERNATIONAL MONETARY FUND: Yes, I can, Richard.
QUEST: Good to see you, as always. As I look at the WEO this year, and it really is -- it's not really a story about the numbers, is it? It's a story about the -- this year, it's about the tensions underneath and the forces that are moving various economies.
BLANCHARD: Right, forces. Tensions are natural, but forces, right? You have a change in the configuration of the world. Advanced economies being stronger, they complicate the life of the emerging market countries.
QUEST: And if we talk about the risk of lowflation --
BLANCHARD: Right.
QUEST: -- or I don't know whether that's your preferred word, "lowflation." But how serious is that, do you think, going ahead?
BLANCHARD: Well, I actually prefer two words, low inflation, which I think is clear. It's clear that in the euro, inflation is below the ECB target. Our baseline is very -- it's going to remain positive, but we think there is a risk that it turns into deflation.
And if it did, that would complicate the life of eurozone quite a bit, the life of countries like Spain, Portugal, Italy, a lot. And so, we think it's very important to talk about the risk and indicate that whatever can be done should be done to avoid it.
QUEST: You see, this is the interesting part, now, with the eurozone, because there seems to be -- the ECB seems to be waiting. Certainly at the last meeting, the view was it might be at the next meeting. Do you believe action is needed sooner rather than later to stave off the risk of deflation?
BLANCHARD: So, Richard, it's interesting, because in my press conference this morning, I actually said, sooner is better than later, which I think is true. I think the ECB is looking at it. They're sending all kinds of signals that they are, that they are preparing, that there are technical issues they want to solve, they want to understand what they are doing. But again, the sooner the better.
QUEST: The sooner the better, and -- now, the United States is a fascinating economic conundrum at the moment. We have -- tapering underway, the fiscal situation seems to be at least a little bit more stable than it has in the past, and growth is picking up. So, when it comes to the US, what's your principal concern?
BLANCHARD: I don't -- to be honest, I don't have any principal concern for the US. My impression is the recovery is underway, all the stars are more or less aligned. We're not where we want to be in the end, but we're getting there.
The Fed, I think, is acting very responsibly, trying to find the best way to normalize, communicating what it wants to do. Along the way, there'll be some good numbers, some bad numbers. But I am very optimistic about our forecast for the US next year, this year and next year.
QUEST: Right. Which then leaves us with the emerging markets.
BLANCHARD: Right.
QUEST: And there, they've been clobbered when it came around for the prospect of tapering. It looks like they are going to be affected by that stronger growth. But that's the classic, isn't it, Olivier? That's the classic problem, because you want the faster growth in the other parts of the world --
BLANCHARD: Right.
QUEST: -- so that they can sell their goods to it, but at the same time, that has cost-benefit analysis, doesn't it?
BLANCHARD: You got it right. There is a change in the way the world is evolving, and when the emerging markets and the investors realized this last May, last year, they panicked a bit, and we had a few difficult weeks.
I think now, looking forward, you have to effects affecting emerging markets. You have stronger growth in advanced countries. That means high exports, that's very good for them, a very powerful channel.
And then you have the normalization of rates, which makes the US relatively more attractive financially so other countries have to increase interest rates. They face tighter financial conditions. They have to adjust to this. It's not the worst environment to be in, it's just a different one. They have to adjust to it.
QUEST: We've talked --
BLANCHARD: And they can. And they can. And they are.
QUEST: Right. Putting aside the individual risks of Russia or deflation --
BLANCHARD: Right.
QUEST: -- or whatever, or any of those individual -- would you think this is the most benign economic environment that we've seen in recent years, bearing in mind the crises that we faced and the measures that had to be taken? It seems to be at least a scintilla of stability.
BLANCHARD: I agree. When I was preparing this World Economic Outlook, I felt things are better. Things are not great, you have to remember about unemployment and the rest, but I think things are going in the right direction. The risks have decreased. There are still some risks, there are always some risks.
But yes, I would agree with you, it's probably the best WEO that we've had, in terms of spirit, in the past few years, since the beginning of the crisis, yes.
QUEST: Good to see you, sir. Thank you, as always. Olivier Blanchard --
BLANCHARD: Pleasure.
QUEST: -- joining me from --
BLANCHARD: See you.
QUEST: -- Washington. To Europe, where the new French prime minister, Manuel Valls, unveiled his economic plan and vowed to defend French economic policies.
(BEGIN VIDEO CLIP)
MANUEL VALLS, PRIME MINISTER OF FRANCE (through translator): I am for the respect of our commitments for budgetary discipline, not for austerity, not for the challenging of our models, and this necessary balance. We are going to once again explain it to our European partners.
(END VIDEO CLIP)
QUEST: Now, most of the European indices closed down on Tuesday. Investors expected a disappointing earnings season. Fears growing about Ukraine's situation. Those are the numbers.
To New York, now, and Alison Kosik at the New York Stock Exchange. If we look at the graph of the way the day moved, I mean I --
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It's like a roller coaster.
QUEST: I mean, I sense a -- up a bit, down a bit, round a bit, and just eking out a small gain at the end of the day.
KOSIK: Exactly. You know what drove investors today, Richard? Caution. An overabundance of it. But in the end, they really didn't know which way to go. We did see stocks start higher, then they sunk into the red, and then they were up, and yes, they finally closed a little bit in the green here.
You look at the past couple of days, the past three days, the Dow's lost 300 points total. The Dow's in the red for the year. So, this is the start of the first quarter earnings season, and investors are really kind of -- they're nervous about what these reports are going to look like from these companies. So, what you saw today, Richard, were investors wanting to wait and see how --
QUEST: Right.
KOSIK: -- some of these hard numbers look before they make any big moves, Richard.
QUEST: I just had a thought, Alison. Am I to ask for you over the -- maybe tomorrow or the next day, could you have a quick look over the next couple of days and give me an idea of how many companies, what sort of warnings we've had, has there been a plethora of them?
As we get ready for earnings for Q1, are we going into this with a lot of warnings on the table? Let's have a chat about that later in the week.
KOSIK: I'll get those for you.
QUEST: Good.
KOSIK: You've got it.
QUEST: Alison Kosik. Lovely, thank you for that. Now, when we come back, the fight for the future of Ukraine. The punches are thrown in parliament, and pro-Russian protesters -- ooh, dear -- stand their ground in the east. We'll have that story for you. This is QUEST MEANS BUSINESS.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Tonight, Ukraine's government is trying to regain complete control of three eastern cities as pro-Russian protesters continue to disrupt and demonstrate in them. Ukraine's richest man has been attempting to calm the situation.
Rinat Akhmetov, a steel tycoon worth $11.4 billion, has reportedly met the protesters and urged them to negotiate with the Ukrainian government. Akhmetov has expressed sympathy with some of their concerns, but he's warned that separation from Ukraine is not an option. The separatists are calling for a people's republic and demanding a referendum on secession from Ukraine.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE (through translator): We are here for the sake of our families, for our salaries, for our health, for all those people who have already shed their blood. And we hope for the loyalty of those people who are watching me now, because we will not leave this place until we will make a referendum happen.
(END VIDEO CLIP)
QUEST: Russia warns that if Kiev uses force to put down any protest, it could lead to a civil war. Nick Paton Walsh joins me from Donetsk to talk about this. We have much ground to cover. How far -- how deep are these protests, or is it just a bit of agitation by a minority prompted by Russia?
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: It certainly -- they aren't big in number. The local administration here, which is the only sign of this pro-Russian activist movement in this huge city of Donetsk, but about 1500 people there, max, about 300 or 400 inside the building. One entrenched there, behind the fences. They're not going anywhere, but this isn't a mass movement of people. This isn't Crimea.
But, as you said, it's extraordinarily significant because of the geopolitical fixation on this area here, the massing Russian troops on the other side of the border, and the fact this has happened now, coordinated in three cities in eastern Ukraine.
Luhansk, where there's now, apparently, according to Ukrainian security sources, an ongoing hostage crisis. They say the security service building there, taken by pro-Russian activists. They have weapons. They've wired it with explosives, they say, and taken hostages.
That's denied by the protesters speaking to Reuters. A very unclear picture there. Little independent evidence to corroborate a full-on hostage crisis there. And then, in Kharkiv, as well, to the north, concerns there, too, of course.
QUEST: Sure.
WALSH: Police have moved in and cleared the local administration building, but tensions still running high. So, very dicey, Richard.
QUEST: What role does Russia have in all of this? If I read my morning newspaper, it suggests it's all being orchestrated from behind the Russian bear.
WALSH: I think it's reasonably fair to suggest that, perhaps, somebody suggested these protests should happen at the same time in these three key cities, and that could be the same people who've massed 40,000 troops on the other side of the border here. But there's no direct evidence linking any of this.
And in fact, the governor, here, of Donetsk, billionaire Sergey Taruta, put in place by Kiev to try and get the economy running here, and because he's so rich, said to be beyond corruption, he doesn't think Russia's really running this, perhaps trying to take the geopolitical heat out of the standoff. He says it's really locals with genuine economic grievances that he wants to try and address.
So, a mixed opinion, here, but certainly I think most people you ask see the Kremlin's hand behind this somewhere, Richard.
QUEST: And Rinat Akhmetov, the steel man worth billions who's been meeting the protesters. All show and no talk? Or is there something, perhaps -- there's a role he can play?
WALSH: This is a man who rarely ever says anything in public at all, and I think he made three statements during the crisis in Kiev, in which he expressed, frankly, discontented with how Yanukovych was handling the protests, suggesting he simply wasn't acknowledging their concerns fast enough.
The fact that he came out here in public to negotiate suggests the depth of the crisis here. There's a lot at stake financially for these oligarchs here. The businesses, the industrial concerns here, that's where finance really emerges, where so much of the money is made in Ukraine. That's tied into Russia, too. So, some sort of middle path that keeps the country together is certainly what they want.
Rinat Akhmetov, too, I'm sure, working politically, his maneuvers here, to make sure that whatever happens in the forthcoming elections is to his liking. But remarkable to see him on the ground, according to reports, talking to protesters directly, and trying to find some sort of compromise in their minds, Richard.
QUEST: Good to talk to you. Nick Paton Walsh, who is in Donetsk tonight. Thank you, Nick. Keep reporting. Thank you.
Now, when we return, those of us of a certain age will certainly remember Windows XP. Well, it was on life support in the world of Microsoft, and now, Microsoft is pulling the plug. XP is expiring.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Microsoft has killed off Windows XP. Poor Windows XP. So, of course, in memory of, if we've got the Windows -- well, I thought it was quite funny. Windows, Windows XP.
By severing its security updates, it has left the ancient operating system to the mercy of hackers. It hopes XP will become obsolete, like the floppy disks and cassette tapes. It's now a part of Windows history, and what a history Windows has had.
Windows 1, of course, was born in 1982. Just look -- go in there and just remember what it was like. Codenamed Interface Manager, it was renamed Windows because of its windows. It had point-and-click instead of MS DOS.
And very quickly, Windows 3 appeared in 1990 and starts to look more familiar. It had better graphics, it sold 10 million copies in the first two years.
By 1998, Windows is starting to pick up steam. We had ME, the first version, Millennium Edition, to be embraced by the internet age. And, of course, after Windows -- that one, Windows XP. Windows XP, it's had a colorful interface, multimedia storage for songs, videos, and video calling.
We will gloss over Windows Vista -- poor Windows Vista, buggy, boring, and difficult. And then, now, continuing the Windows, we have Windows 8, with its tiles and its touch screens, Windows 8 is, of course, the one that is causing them some grief and trouble at the moment.
But they say they are revising it and rethinking it and going to make it much more like what we are familiar with. Hello.
BRIDGET CAREY, SENIOR EDITOR, CNET: Hi.
QUEST: It's Bridget Carey, the senior editor at CNET, who joins me now.
CAREY: I like that history lesson.
(LAUGHTER)
QUEST: Which Windows did you like best?
CAREY: Oh, everyone loves XP the best because --
QUEST: Why?
CAREY: Well, first off, it was around for 12 years. So, everyone just liked it because it worked. It was easy. Then, of course, then came Windows 7 and now Windows 8. Everyone has their gripes about it.
QUEST: Fundamentally, does it make much difference, do you think? I mean, the operating system -- I remember Windows 95, which was very big. Windows 95. And Windows 2000 and all of those -- those really big ones. And then, Vista, which I used for a week and a half, and I think I've still got the scars.
CAREY: Yes, Vista was very animated. And Windows 8, people are having a hard time with it. That's the one you're finding on the computers now, because it's that new interface, it's very colorful, and it's got boxes. But folks want what they're used to. They want that Start Menu. And now, Windows is starting to bring that back.
QUEST: Let's talk about XP and what actually -- where it's still used. Now, if you look at XP, in the US, 95 percent of ATMs still run on XP. So, the banks have to upgrade. It runs the till software in about 30 percent of all shops, lowering the bar for hacking, like Target, last year.
In Britain, 90 -- sorry, 85 percent of desktop PCs in the National Health Service are still on XP, and the UK will pay $9 million for another year's support. So, why is Windows -- why is Microsoft pulling the plug on XP if so many are still using it?
CAREY: Well, Microsoft gave us plenty of warning, almost seven years' worth of warning, and now everyone is still scrambling to fix their ATMs and fix their back-end systems, because so many businesses are using software that works so well with XP.
And small business users -- owners, they don't want to deal with fixing their computer, they don't have an IT staff, they just want to sell their widgets and keep the doors open. And so, what you're seeing is that they're now going, well, why do I have to worry about XP? But it's a big security issue that has to be addressed.
QUEST: Well, you say that. Nearly a fifth of computers still run on XP worldwide, according to a web analytics firm. It's the second-most operating system in the world. And when you look at it, and compare it, XP -- XP runs on more than 30 percent of PCs in China, where piracy is rife. Developing countries, where people can't afford to upgrade.
CAREY: If you have an XP computer, though, you're now a big target. I mean --
QUEST: You're battling on Microsoft's behalf here.
CAREY: Well, if you think about it, if you were a hacker and you knew that exactly on April 8th, Microsoft was going to lower their defense, wouldn't you wait until then, if you knew that there was something that you could exploit?
So, it's one of those things where, yes, you're computer's still going to work. It's not going to totally blow up on you today. But you have just kind of be savvy about these things. Because it is target for hackers.
QUEST: Finally, on Windows 8, I've used Windows 8, now, on different computers. It's a lot of fuss about nothing. Once --
CAREY: It takes a little getting used to, but yes.
QUEST: Once you find the desktop --
CAREY: Yes.
QUEST: -- you're back to normal.
CAREY: Exactly. But they are adding a few features today, if you do have Windows 8. They're having an update so you can get a task bar again on your desktop, a few other easy-to-find settings tools. So, they're hearing the gripes, they're trying to make a few fixes to make it a little easier to what we're used to.
QUEST: OK, I've got one quick question: why don't they put all the new gadgets and gizmos into these things, but still have a button on that for old fogies like me to say you can get all the benefits, but it will still look the same?
CAREY: You know, that's why they had that desktop mode that they go to in Windows 8. I know, I know. But they're trying to make everything look like their mobile and their tablets --
QUEST: Oh --
CAREY: -- and they want everything to look alike in the same ecosystem.
(QUEST RINGS BELL)
QUEST: Good to see you. Thank you very much.
CAREY: And you.
QUEST: Now, talking of computers, the story of IBM is one of survival in a changing business world. IBM -- Big Blue -- was the multinational monolith until one man rewrote the book when it came to corporate restructuring.
Sam Palmisano shook the business world to the core -- cost-cutting, innovation. Under his reign, earnings quadrupled. He created the globally integrated enterprise, embracing globalization and spreading the talent.
He ditched the headquarters, and now, he's sharing new rules for global business leaders in an e-book called "Rethinking a Path to the Future." I asked him how he managed to tame Big Blue.
(BEGIN VIDEOTAPE)
SAMUEL PALMISANO, FORMER PRESIDENT, CHAIRMAN, CEO, IBM: So, you had a headquarters location, United States, domicile manufacturing research. And then you had country operations, which were primarily sales and distribution, but they were all mini IBMs. So there was a mini UK, IBM UK, IBM Germany, IBM Japan. So, there were all these mini IBMs around the world.
We came to the conclusion that, for lots of reasons, one that the economies of the world were going to continue to accelerate their global integration, that secondarily, you really didn't need to have all that inefficiency, the structure.
You could actually operate it as one company, and then locally, you would do sales, marketing, and service. But globally, you could do all the basic functions of the company.
QUEST: I have a proposition for you, sir.
PALMISANO: Yes? OK.
QUEST: Globalization has had a -- got a bad name.
PALMISANO: It's gotten this bad name because it looks like, well, gosh, jobs moved from wherever to wherever. Now, that was true in the manufacturing sense. A lot of those jobs sought low-cost labor, low-cost production, and you had these big supply chains that facilitated the ability to move your work.
However, the GIE doesn't look at it that way. The GIE thinks about it differently then you've moved the work. It's where do you locate the work based on quality of resource, collaboration of government, access to capital markets. It's other variables that you look at the globe as your marketplace, not your domiciled country.
QUEST: How long were you in IBM?
PALMISANO: Forty years.
QUEST: How long were you CEO?
PLAMISANO: About ten. Nine and a half years.
QUEST: Why didn't you retire and play golf and go to Florida --
(LAUGHTER)
QUEST: -- and lie on the beach with the grandchildren? Why did you feel the need to do all of this?
PALMISANO: Two reasons. The first --
QUEST: You don't need the money.
PALMISANO: No, I'm fine.
(LAUGHTER)
PALMISANO: OK.
QUEST: Good.
PALMISANO: I'm OK. I can even afford my own health care.
QUEST: Right.
PALMISANO: I don't think I'll go to an exchange.
QUEST: Right, right.
PALMISANO: But seriously --
QUEST: Yes.
PALMISANO: -- there were to reasons. During the IBM centennial, which was 2011, I went around the world and spoke to the leading schools of the world. You know, Johns Hopkins, Columbia here, Tsinghua University in China, London School of Economics, all -- MCI, all around the world.
And every time I spoke, kids would come up to me afterwards and say, hey, you need to write this stuff down, because we need to learn, which you have learned in your 40 years of business. And I came to the conclusion that writing it down, or me being a visiting professor, which a lot of guys go and do -- you're talking to 50 to 100 kids.
If it really was something that they needed to do, we should scale it. So, how do you scale it? Well, you've got to form these worldwide relationships, you create a nonprofit think tank center, and you begin to take this learning and you try to scale it to not 1,000 people, but 100,000 people.
QUEST: You can take the man out of IBM, but you can't take IBM out of the man.
(LAUGHTER)
QUEST: You've got to scale it.
PALMISANO: You've got to scale it.
QUEST: It's IBM!
PALMISANO: It's IBM, we scale. It's what we do. People used to ask me, what do we do? We scale things. We go from 100,000 people to a half a million people. We go from ten countries to 170 countries, that's what we do. You're right.
QUEST: Finally, leaders that you admire. Other CEOs or historical leaders, who have you admired?
PALMISANO: Well, there's two dimensions of folks. I have -- I learned a lot from a lot of people around the world. I've learned a lot from mentor Minister Lee Kuan Yew. Whenever I was in Singapore, I'd go visit with him. And he was very, very insightful.
And we would just discuss strategy, and we would be -- if you were a small island between two massive economies, India and China, what would your strategy be? Which really does apply to a company, because what would your intellectual property or innovation strategy be so you don't become commoditized.
Well, you have programmers and you had industrial production. Would you be commoditized, or should you go to innovation? I learned a ton from the time I spent with him. So, I've been blessed, having people that would spend the time with me.
QUEST: Thank you.
PALISANO: Thank you.
(END VIDEOTAPE)
QUEST: Now, a robust discussion. Now, in India, voting is free. Sometimes birth and even death are not because of the cost of corruption. We have a special report coming up.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in a moment. This is CNN, and on this network the news always comes first. A bomb's exploded on a train in Pakistan. At least 14 passengers have been killed. Officials say it happened south of Quetta the Separatists United Baloch Army has claimed responsibility saying it was in retaliation for security raids.
Conflicting reports from Ukraine. Security services say separatist in Luhansk have rigged a building they seized with explosives and they're hold 60 people hostage. But the Reuters News Agency says the Luhans protesters deny having any explosives or that they're holding anyone hostage.
T'was emotional testimony in court from the South African athlete Oscar Pistorius. His murder trial has now been adjourned until Wednesday after the Olympian's sobbing on the stand. He told the court he thought he was firing at an intruder but he shot and killed his girlfriend Reeva Steenkamp.
A day of disappointment in the hunt for the missing Malaysia Airlines flight 370. A special device used to track underwater audio signals has not picked up any new pings since the weekend. The search area has been drastically scaled down. There's still no sign of the plane.
Ireland's president has become the first Irish head of state in history to visit the United Kingdom. Michael Higgins was welcomed by Her Majesty the Queen in London. In an address to the British Parliament, the president said both the U.K. and Ireland have a shared responsibility to find peach in Northern Ireland, and tonight there is a state banquet being held at Windsor Castle.
As Indians continue to vote in general elections, the IMF says the future of Indian growth depends on policy action. The Fund expects India to grow 5.4 percent this year which is up quite a bit from the 4.4 of last. The IMF attributes the jump to stronger global growth, improving exports and investment projects and it credits policy measures which have helped attract new capital. The Indian economy faces many challenges, not least endemic corruption. Sumnima Udas explores this issue from New Delhi.
(BEGIN VIDEOCLIP)
SUMNIMA UDAS, CNN'S INTERNATIONAL'S DELHI-BASED CORRESPONDENT: (Santush Sahi) is a common man with a common story. "From morning to night we get harassed for bribes. I'm sick of it," he says. (Sahi) makes ten dollars a day. But when you factor in expenses and bribes, yes, they're regular expenses, he says he's left with just two dollars. Corruption is age-old in India. But this election year, its issue number one after a state of high-profile scams, costing the government billions in revenue. I'm standing outside a government building. Residents come here for all kinds of paperwork. So the process can often be so tedious, people have to outsource their requirements to these service providers and many often openly complain nothing gets done without a bribe.
Puneet Kumar owns a home furnishing store in Delhi. He says bribes eat into ten percent of his profits. It's a cycle of corruption from birth to death.
PUNEET KUMAR, BUSINESSMAN: If you have to get the birth certificate for your child, you have to pay something extra. And same is the case on the death certificate also because they're making emotional fools out of us.
UDAS: He says people even have to bribe private schools for the children's admissions.
KUMAR: We are so used to it now like we don't find it something out from outside promise (ph). We take it as a routine now.
UDAS: It's ingrained in the --
KUMAR: It's ingrained in the systemics, it's ingrained in the blood.
UDAS: How does it work exactly? Does someone actually directly ask you for money? How does corruption work?
KUMAR: No, no they ask like so, what about me? So, in Hindu they ask (speaking in Hindu). It means what about my predicensus (ph)
UDAS: But, you know, you're in a way paying for that convenience as well --
KUMAR: They're providing them (ph) --
UDAS: Yes, so you're part of the problem in a way, aren't you?
KUMAR: I'm the part of the problem, but like who created this problem? Why this red tape is? Why not the data contraction with the first person and the last person? Why they got so many people in between? Why so many pies (ph) in between? Why so many departments in between?
UDAS: The government acknowledges the problem, passing new laws to tackle it. Every major political party has vowed to clamp down on corruption. One brand new party founded on this very platform, but when corruption is so endemic, change will not come easily. Sumnima Udas, CNN New Delhi.
(END VIDEOCLIP)
QUEST: Sajjid Chinoy is the chief India economist at JPMorgan. We're lucky to have you, sir, with us tonight --
SAJJID CHINOY, CHIEF INDIA ECONOMIST, JPMORGAN: Good evening.
QUEST: to help us understand what's happening. Corruption, corruption, corruption. Focus laser-like --
CHINOY: Yes.
QUEST: -- on getting rid of corruption. You can't argue with that.
CHINOY: U can't -- that's motherhood and apple pie. My concern is with so much focus on corruption in the last couple of years, it's led to a great deal of bureaucratic risk aversion. So while this is a noble goal from a medium-term perspective, it's actually hurting investment, the investment climate and GDP growth in the near term.
QUEST: Very difficult because you want to get rid of corruption, but at the same time, you're saying it could be a -- it could actually be counterproductive.
CHINOY: It has a number of projects today that are stalled at record heights. In part because bureaucrats refuse to make what should have been ordinary bread and butter decisions, because they are accused today of favoring, you know, one group over the other. So we need to be careful what we wish for.
QUEST: I -- you are the chief India economist at JPMorgan. If you do not know or have a very good idea what needs to be done in the Indian economy, we are in trouble.
CHINOY: (LAUGHTER). It's quite clear what needs to be done. I think there are two or three things. The first is you have to change the investment climate on the ground. By that I mean both state government and the central government have to work doubly hard to clear bottlenecks -- land acquisition, environmental clearances, rye coal (ph) linkages, raw material availability. The current government to their credit has done a lot of this over the last year. We need much more action for them to double down on this kind of stuff. You need to recapitalize the public sector banks. You need to facilitate a deleveraging of the corporate sector. These are well-known solutions that have to be focused, but you require governments to persevere with this in the coming months and quarters.
QUEST: I feel like I've heard all this before.
CHINOY: Yes.
QUEST: Before every election. And, yes, there were some changes made --
CHINOY: Yes.
QUEST: -- the last government Manmohan Singh it did open up in certain areas of the economy --
CHINOY: Right.
QUEST: The distribution, the supermarkets, certain amount in energy, but not enough.
CHINOY: Yes. So, and I'll break this up into two categories. There's been a lot of welcome macroeconomic stability over the last year --
QUEST: This is quite good.
CHINOY: -- which is very good. The current account deficits come down from 5 percent, 1 percent, and therefore the Indian rupee has done far better than most emerging markets over the last three months -- South Africa, Turkey, Brazil. The fiscal deficit is under control now for a second successive year. So, from a macro stability perspective, this government's really delivered.
QUEST: But there's no growth --
CHINOY: Of course --
QUEST: -- there's no growth.
CHINOY: Because these are structural issues. The investment rate --
QUEST: But that's not going to change.
CHINOY: Yes. No, what that simply means is that you have to persevere with this. It will take more than six months to jump-start growth in India. You're going to need the last government and the next government to focus on these on these issues with a laser-like approach over the next year or two. Only then will you see a sustainable pickup in growth.
QUEST: The problem of course is it's the BJP as it seems likely or at least the election results, you will end up with a pendulum as one party says 'Let's go in the opposite direction to the previous party' and you could waste a lot of time as the train goes into reverse before it starts in a new direction.
CHINOY: Richard, I'm not so sure. This is not a case of the Democrats and Republicans. Both of India's large parties are ideologically and philosophically very similar. Both believe in start projects, both believe largely with a few differences in FDI, both believe in tax reform, both believe in fiscal consolidation. So I think, no, markets make more of their differences, they're far more similar than they are different. I think you'll see much more policy continuity than stock markets for example uprising (ph) in.
QUEST: Hopefully, sir. The one thing we can be sure of is that you'll come back and help talk us through these things again. Very kind indeed.
CHINOY: A pleasure.
QUEST: Now, the Chinese film industry is worth $3 and 1/2 billion a year. IMAX wants more of it, and the man who wants to make sure he gets more of it is Rich Gelfond. His company's blockbuster deal coming up next. "Quest Means Business." (RINGS B ELL).
(COMMERCIAL BREAK)
QUEST: We've converted the C-Suite to the movie theater for today. IMAX is making a blockbuster deal in the world's fastest-growing film market. The company's selling a 20 percent stake in its China business to two local investors -- around $18 million. IMAX hope the deal will eventually lead to an IP of IMAX China. The chief exec, Rich Gelfond joins me now -- I was going to say in the C-Suite, but I think we're in the theater today.
RICH GELFOND, CEO, IMAX: It looks that way to me for sure.
QUEST: Absolutely.
GELFOND: Although not an IMAX theater.
QUEST: Well, well. I promise you next time --
GELFOND: OK.
QUEST: We will have upgraded ourselves to an IMAX.
GELFOND: I'll hold you to that, Richard.
QUEST: Well we've still got front-row seats --
GELFOND: OK.
QUEST: -- so we will. So, why are you doing this deal? What's the benefit of this deal? We've been in China for about 15 years. We do roughly 10 to 15 percent of the Chinese box office in IMAX. So this last weekend, Captain America II opened. In the whole country it did about $4 million -- in the whole country it did about $40 million. In IMAX it did over $4 million, or 11 percent. So -- only 1 percent of the screens. So we have this real impact in China. Consumers really like it, operators like it, and we only have 170 theaters open. It's going to go to 400 under contract in the next five years.
GELFOND: So here we are, we have this big position, we're expanding in China into in-home theater, but we're a foreign company. And over the last 15 years, we've tried to become more and more Chinese.
QUEST: Right.
GELFOND: So we hired a Chinese CEO, Chinese employees and now it seems to us the next logical step is Chinese investors.
QUEST: Do you think being a foreign company in a cultural area like that -- even though most of your product is Western -- do you think that is a hindrance long-term?
GELFOND: I wouldn't quite use the word hindrance, but I think it's an advantage if you have some local ownership. And I think our content -- by the way -- we play Chinese films as well as Hollywood films -- both of them. So I think the thought we had is -- we had two investors -- CMC and FountainVest. CMC is the most connected media firm in all of China, and we think having someone who understands the government, understands the culture and understands the industry will be an asset as we continue to grow.
QUEST: As you grow, you and I have talked about China on more than one occasion. You love it.
GELFOND: I do love it. I'm going next week again.
QUEST: You love it -- why? I mean, not why do you like China -- there's plenty of reasons to like China. But it's such a growth market for you, why do you think that is?
GELFOND: Because of rising incomes and disposable incomes. So, if you went back 10 years ago, people spent all their money on food and on housing and on clothing. Now, you have this emerging middle class where people all of a sudden have just extra time and extra money, and there aren't sports leagues, and there aren't concerts and there's just not a lot to do. There's a little of that, but going to the movies is something people really like to do.
QUEST: Right, as we now look to the summer. I can't believe it's spring already but -- well spring has sprung even if the weather hasn't. What offerings have you got?
GELFOND: Spiderman, Transformers, Godzilla. And I think not only in China, but I think all over the world, those are poised to become really big movies. I saw some of Transformers with Mark Walberg in it, and it looks fantastic. So I think it's going to be a very good summer. Not just for us, but for the movie industry in general.
QUEST: And if one has to ask what's most on your mind at the moment? Not quite keeps you up at night, but what's the biggest thing that -- the tricky thing that you've got to tackle?
GELFOND: How we can always keep a technological edge. And that is, you look at disruptive technologies. In a way we were a disruptive technology. We got people off the couch, away from their big screen TV, away from the regular theater to go to IMAX. So I always think if I was going to disrupt me, what can I do next? So, I spent some time looking at things like virtual reality --
QUEST: Oh.
GELFOND: -- which is incredible. I'm not sure how the model works long-term.
QUEST: Would you put money into it?
GELFOND: I thought about it you know --
QUEST: Come on.
GELFOND: Now that I saw Oculus Rift sell for $2 billion --
QUEST: Yes.
GELFOND: -- it looks like a better investment than I thought at the time.
QUEST: There's still time.
GELFOND: I think you're right about that.
QUEST: Good to see you as always.
GELFOND: Thank you, Richard.
QUEST: Thank you so much for coming in.
GELFOND: Appreciate it.
QUEST: All right. Leave you in the seats and while go over and find the weather. We're talking about what the weather forecast was. Ms. Harrison. Mistress Harrison of Weather.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: (LAUGHTER). Yes.
QUEST: Well, you could be Dame Jenny, but I'm not sure.
HARRISON: Oh, I like it. Yes, I'm happy with that. You know, but I like the other title. Does it come with a pay rise, that's the question?
QUEST: No.
HARRISON: Oh, OK, oh well I'll have the title anyway. And, listen, we need some sort of celebration, enjoy the fact that weather conditions are very quiet in Europe, Richard --
QUEST: Yes.
HARRISON: -- over the next couple of days. It's not often that I get to say that. We've got a few showers around, even one or two little areas of snow, but for the most part, not too bad. Those temperatures across eastern Europe, they've come back up from where they were. They're below average, and there's been very warm in some other places, actually those temperatures again coming back down to the average. One or two scattered showers across eastern regions, more isolated in the southwest and then it will generally feel like, you know, quite nice spring weather for the next couple of days.
So these are the temperatures. And if you see here -- remember Bucharest has been very warm for the last couple of weeks -- so a bit of a drop Wednesday into Thursday. I have to see (ph) from 23 to 10 Celsius, so it's going to feel quite cold for you on Thursday. And then Warsaw pretty much close to the average for the next few days. And you can see Berlin, a similar story. So finally things are, you know, where they should be for this time of year. The winds, however, quite breezy over the next couple of days and at times in Copenhagen we could have some fairly dusty winds in particular. So, expect maybe some travel delays at the airport there. And it is a fairly unsettled picture. Most of the rain actually across these central and eastern regions, we've got that little area of high pressure across those regions in the west.
So, these are the delays expected as we head off into Wednesday. There is Copenhagen in the afternoon hours, maybe as long as 45 minutes the delays there because of those strong and at times gusty winds. Here are the temperatures -- not bad as I say. Seventeen in London, so still quite nice and mild, 16 in Paris, just 13 in Vienna. But again even so for this time of year, that really isn't too bad. However, it's not all plain (ph) sailing, certainly not across into South America, Argentina in particular. And this particular province we've seen some of the heaviest rains and the worst flooding over four decades to this particular region -- 48 hours in Neuquen -- they've actually had pretty much their annual total rainfall in just 48 hours. So it has meant of course we've seen some flash floods and flooding as well, and also Buenos Aires in just six hours, 61 millimeters of rain. There's some more to come in the forecast. Not that heavy, but it will continue to accumulate about a centimeter across the west and then maybe in these eastern areas we could see a little bit more just on the coastal fringes as you can see there. But obviously, any rain with that saturated ground is not particularly welcome.
And then again, torrential amounts of rain Monday across the Southeast of the U.S. Look at this in Mississippi -- 208 millimeters. That's over 8 inches of rain. And in Birmingham, Alabama 112. Even in Atlanta, Georgia there's 63 millimeters -- that's nearly 2 and 1/2 inches and that was a daily record. Now these systems continuing to really impact much of Florida -- one or two more showers and thunderstorms across the Southwest. And just to show you current airport delays as you can see here -- New York and Fort Lauderdale. It'll clear later on in the day and then be surely better by the time we head into Wednesday. Richard.
QUEST: Thank you, Jenny. Tomorrow could I have a temperature please for where our colleague Becky Anderson has now moved to.
HARRISON: Oh.
QUEST: To Abu Dhabi --
HARRISON: Abu Dhabi.
QUEST: Abu Dhabi and Dubai. I mean, I know often the temperature -- the weather systems are not that different day to day. It's hotter this day. But I would like to know exactly how she's suffering.
HARRISON: You know what? But she's not suffering is she? You know Becky, she loves that hot weather. So I think she'll be quite enjoying it. I think she'll be quite happy out there. But you will -- I will -- indeed come back to you with that tomorrow.
QUEST: Thank you. Jenny Harrison at the World Weather Center. Now, Jean Paul Gaultier says art -- don't call him an artist, don't call him a businessman. Nearly four decades worth of designs on display and London says otherwise. You'll hear from the man himself after the break. I wonder what he's doing in pinstripes this year.
(COMMERCIAL BREAK)
QUEST: A major exhibition devoted to the work of Jean Paul Gaultier opens in London on Wednesday. The iconic designer has been in the fashion business for almost 40 years. He's best known for introducing the world to the man skirt and for creating the iconical bra Madonna wore during her Blonde Ambition tour. Today he's worth around $100 million. There's a lot of money in brassieres. And this prince of fashion knows how to make an entrance. He arrived at the opening of the exhibition with a look-alike of Her Majesty on his arm. And despite his success, Gaultier says he doesn't want to be called an artist or a businessman. And Jim Boulden needed to ask why.
(BEGIN VIDEOCLIP)
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: From 1970s punk to dressing celebrities and pop stars. Jean Paul Gaultier has been shocking the fashion world for 38 years. Gaultier says it was not until his third collection in 1976 that he sold his first piece, and he stresses he has always cared about the bottom line.
JEAN PAUL GAULTIER, FASHION DESIGNER: It was very good like to have clothes that sell. You know because for me the purpose was to sell.
BOULDEN: Yes.
GAULTIER: Even to if it looks like sometime provocative, I didn't do it in a way like to show one fantasy -- my own fantasy or something like that or to show art. We are not artists -- real one.
BOULDEN: Ah.
GAULTIER: We can be inspired by artists.
BOULDEN: OK. Gaultier's retrospective runs in London from now until the end of summer. When looking at the some 165 garments on display here, it's hard to believe that Gaultier says he's not an artist. In fact, the curator respectfully disagrees.
THIERRY-MAXIME LORIOT, EXHIBITION OWNER: When you see his work and you see some of the dresses, I think it's art. I think you can have the same emotion when you see haute couture and when you see a sculpture or a painting.
BOULDEN: Gaultier's outfits for Madonna's 1990 Blonde Ambition tour may have brought him superstardom, but as for the trend of giving away his clothes so celebrities can wear them, no way.
GAULTIER: Honestly, I think -- because you know I from the generation of the people that have the money to pay, they pay.
XXXORA, ARTIST AND FASHION WRITER: I think Jean Paul Gaultier is very important because he's one of the pioneering androgynist styling fashion designers that's out there.
DARCY RIVE, EDITOR, PIGEONS AND PEACOCKS MAGAZINE: He was actually one of the first pioneers that I really began to admire from a very young age. I remember looking at the perfume advert outfit so (inaudible) fashion magazine growing up (inaudible) like Vogue.
BOULDEN: Gaultier often provokes like his chic rabbi collection in 1993. He's also proud to defy the year. His love of most things British like his tartan punk garments, spanned three decades which is easier to grasp while it's all in one place. When I see a retrospective like this, I think someone's coming to the end of their career. You probably don't want me to say that.
GAULTIER: Of course I want you to say that. Me too, I feel the same. It's true that I arrived like to a point where I can see the work I have done, you know, and am still doing, but maybe I will restrain a little.
BOULDEN: Gaultier is still designing eight collections a year. He vows to cut it down to just one. People here doubt that very much. Jim Boulden, CNN London.
(END VIDEOCLIP)
QUEST: Suddenly I feel rather boring having left the man skirt at home. There'll be a "Profitable Moment" next.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." There's been a good debate in the studio tonight when we've been in commercial breaks over the death and dearth of Windows XP. One or two here actually still use it. And what's more, they prefer it to the others, all of which goes to show the importance of our computer systems in our lives. We love them, we use then and when they're gone, we mourn them. When it comes to Windows XP, one might say to Bob, 'Windows XP, goodbye.' And that's "Quest Means Business" for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. I'll see you tomorrow.
END
