Return to Transcripts main page
Quest Means Business
Burger King, Tim Horton's Combo Deal; US Markets Up; European Markets Climb; Sterling Strength; New French Government; Forex Threat to Investors; Amazon Acquires Twitch; E-Cigarette Regulation
Aired August 26, 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: Now, that's a cheer and a half. It is the chief exec of the New York Stock Exchange, Duncan Niederauer, who is retiring,
it's the occasion of his retirement. The entire family is there for the closing bell ceremony.
(GAVEL HITS)
QUEST: One. Just one big hit. And a big hug from the chief exec. That's what you get when you retire as chief executive of the New York
Stock Exchange on Tuesday, August the 26th.
Tonight on the program, have it your way. Burger King heads for Canada and stops for coffee and doughnuts on the way.
It's a French revolution. Francois Hollande has picked a new government.
And declining to recline versus the right to relax. Passengers slug it out at 30,000 feet.
I'm Richard Quest. Of course, I mean business.
Good evening. Tonight, the king has a new crown. Burger King has confirmed its plans to buy the Canadian coffee and doughnut chain Tim
Horton's. The tie-up will turn Burger King into the world's third-biggest fast food company. We think that's ahead of Subway and McDonald's.
But to prove exactly why this deal is more than just burgers, fries and a bit of old coffee, you need to join me in the QMB restaurant, and
we'll show you what each company gets out of this new, giant combo.
So, Tim Horton's is the new $11 billion item on the Burger King menu. I'm going to explain why this is all so important. First of all, you have
the doughnuts from Tim Horton's, the doughnuts and the coffee that have made them so popular.
Burger King, of course, has its own wide range. It has its Whopper, it has its fries, and is extremely large and popular.
Now, by putting these two together, you start to get a much larger potential market. But it's more than just doughnuts, coffee, and a soft
drink along with a burger. Remember, it's all about who else is in the market.
Tim Horton's used to have a tie-up with our old friends Wendy's. Now, that didn't go very well, and they, of course, ended up splitting and going
their separate ways. But now, the battle is all about breakfast, and in the battle for breakfast, it's not Burger Horton and Tim Horton, oh no.
In the battle with breakfast, you've got McDonald's, with its Big Mac and it's McMuffins. You've got, of course, Starbucks, and you've got
Dunkin Donuts. So, put all this together, and you really start to see exactly why this is a fiesta of a meal.
It's a real food fight between these new ones, some old friends, some arch enemies -- "arch" enemies, get it? Arch? I thought that was quite
good. And of course, Dunkin Donuts. And let us never forget Starbucks.
And of course, the hot menu item that everybody is talking about, right in the middle of it all, is the -- ooh -- the Burger King tax
receipt. Burger King makes a huge tax saving in all of this. But he company insists it will not be much lower tax rate than it was in the
United States. Joining me to talk more about all of this --
CRISTINA ALESCI, CNN MONEY CORRESPONDENT: I think you turned Scottish there for a minute during that breakfast routine.
QUEST: Absolutely -- well, with all this -- what now? So, this really does show the battleground, doesn't it? At all different price
points and meal points in the day.
ALESCI: That's right. And Burger King is trying to get an advantage here. Of course, the companies would say, both Burger King and Tim
Horton's would say this is not about taxes, this is about a strategic alliance that's going to help them compete in this very competitive
battlefield here.
But the reality of it is that there are some tax advantages, or at least it creates a tax advantage that they could take advantage of.
QUEST: Do you think the tax advantage is the sweetener, if you like? It's the added advantage? It's the seasoning? But actually, it is to
compete with the McDonald's, the Wendy's, and the Dunkin Donuts and so on?
ALESCI: Yes. So, Burger King would say, look, this combination will make us -- will help us get smarter when it comes to breakfast, when
serving the customers coffee, and maybe getting into that market.
Tim Horton's would say we want to partner with Burger King because we want to be an international company. Right now, we're just focused in
Canada. We want to expand, and we think Burger King has the know-how to do that.
At the same time, what this combination does is it helps Burger King potentially in the future lower its tax rates by a number of different
ways. And they're all fairly complicated. The company would say this does not lower our corporate tax rate, but of course it doesn't lower your
corporate tax rate, right? Because the US hasn't lowered its corporate tax rate.
QUEST: Ah! How very clever!
ALESCI: So, it sort of works the same way as a personal income tax works. You have a tax rate, but that doesn't mean that that's the rate
that you actually pay on your taxes, because you have lots of deductions and credits that you can take to help lower the amount that actually comes
out of your pocket.
What this kind of deal does is it creates more opportunities for the corporate version of deductions and credits.
QUEST: Right. So, in terms of the competitive advantage this now gives Burger King, is the industry's view that it makes -- this is a deal
that makes sense? Because Tim Horton's was in bed with Wendy's, pardon the phrase. Tim is --
(LAUGHTER)
QUEST: -- well --
ALESCI: It's exactly the phrase you should use for it.
QUEST: That's right. Until Wendy's spun off Tim Horton's. And now, they're getting in with the King.
ALESCI: Well, investors are very enthusiastic about the deal. We saw Burger King stock react very positively when news broke about the deal.
But we are not sure how much of that is because investors believe the strategic alliance will work, or because earnings will increase because
there's a tax advantage there. We don't know why, but investors are very enthusiastic about the deal.
QUEST: Finally and fundamentally, away from all the financial shenanigans that'll make it -- they have to make this work. They have to
make this work as a going concern so that they get the synergies and they get the growth aspects of it. Otherwise --
ALESCI: If the US government doesn't get in the way, right? We've had the president talk about these kinds of deals and say it's unfair for
corporations to get an out to the US tax system. Because average people don't. And if corporations don't pick up the bill, then it may -- the
larger burden may fall on the average working American.
So, President Obama knows that he Congress will not act on this in a very timely fashion. So, he's going to make his own attempt -- are you
trying to tempt me?
(LAUGHTER)
QUEST: Have a doughnut.
ALESCI: OK.
QUEST: At the moment --
ALESCI: It's easier than talking about politics, right?
QUEST: No! You -- wait, I would've given you the burger, but it's been around a while.
ALESCI: I don't mind that. I actually prefer the burger over the -- oh, yes. Only if you take a bite first.
QUEST: I have the markets to do.
(LAUGHTER)
QUEST: Good to see you. Thank you. Let's have a look at the markets and see exactly how they -- thank you very much, Cristina, thank you. I
hope she's not going to polish all that off before she's finished.
The S&P -- the S&P, look at that! Ding! Ding! Ding! Ding! It ended up over 2,000 for the first time ever. Didn't notice that. Should
have noticed it before now. A gain of just a couple of points, 2,000 on the S&P. The Dow was up as well. The NASDAQ, a strong session.
Consumer confidence rose unexpectedly in August. It's near a seven- year high. Burger King shares, they were down after rising sharply yesterday.
Amazon shares are up more than 2 percent after its announcement it bought Twitch. We will explain what Twitch is if you don't know. If over
50 and like myself, then perhaps Twitch was something you thought you did after a couple of drinks.
European stocks climbed on Tuesday, adding to a rally on Monday. Speculation of further stimulus from the ECB. The banking shares gained as
well.
The strength of sterling at the moment is hurting the world's biggest advertising company. That's WPP. The founder and chief exec, Sir Martin
Sorrell, reports that a pre-tax profit of 15 percent. That sounds good. He says the strong pound -- because WPP reports in pounds -- is impacting
overseas sales and profits, and not all -- and that's not all. Global impact, geopolitical risk, is having its effects, too.
(BEGIN VIDEO CLIP)
MARTIN SORRELL, FOUNDER, WPP: It's steady growth, it's slow growth, it's sluggish, but we can manage. But it means that clients are very
focused on cost, and it makes it quite tough for us and our people to eke out that growth.
(END VIDEO CLIP)
QUEST: Sir Martin Sorrell, who of course, when he gets to Burning Man, still has to do the Ice Bucket Challenge, which he's promised to do
since I challenged him last week.
After the break, we will return to France . A day after the new government was announced, or at least the old government resigned, a new
government was appointed. We've got a cabinet today. Jim Bittermann is there for us.
And now, this man is in charge of the economy. We'll tell you who he is and why he's now running France. QUEST MEANS BUSINESS, good evening.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: The French prime minister has announced that a vote of confidence will be held in September or early October. Today, a new
government was unveiled, stripped of left-wing dissidents who have vocally called for a shift to pro-growth policies. The move shows that President
Hollande's commitment to austerity was maintained.
Now, this is the man. He's Emmanuel Macron. He's been appointed as the new economy minister. He's 36 years old. He's the deputy secretary-
general at the Elysees Palace, which of course is the president's office.
He served as the top economic advisor to President Hollande. He should know his stuff. He's a multi-millionaire, and he's a former
Rothschild investment banker.
The man he replaces is Arnaud Montebourg, whose comments bashing austerity sparked a crisis in the French government. The Elysees Palace
says President Hollande is demanding respect and solidarity -- that's their words -- from the new cabinet. So, I asked our senior international
correspondent Jim Bittermann what that means in terms of the significance of the new cabinet.
(BEGIN VIDEOTAPE)
JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, I think basically the bottom line is that Manuel Valls, the prime minister, and
President Francois Hollande, got rid of the dissidents within the cabinet.
They had some naysayers who were against their economic approach, which has got more and more centrist. And they basically eliminated those
people within the cabinet who wanted debate every single policy turn as they got a little bit closer to the center in terms of their economic
policy, Richard.
QUEST: But has policy changed, or is policy expected to change? Because those naysayers were exhibiting a view that is quite widely held in
France, that austerity's gone too far.
BITTERMANN: Absolutely true. And in fact, that's one of the problems they're going to have going forward is the fact that the left wing of the
coalition that got Francois Hollande elected in the first place is still pretty well upset with what's been going on.
And with this, they're likely to get more upset as the months go by here, because Hollande has made it clear he's going to hold to this policy
of going more toward the center. He's got this pact of responsibility, which offers big tax breaks to businesses here, hoping to get the economy
going.
And also, they've said that they while they're not going to hold to the 3 percent goal of deficit spending, they are going to try very hard to
get the deficit spending down, which is something that Angela Merkel would like them to do, and which other Europeans are being told they should do.
So, in fact, this is going to be something that was going to get them in trouble -- political trouble on the left, and there could very well be
some demonstrations in the streets this fall as people disagree with the policies they're laying down. Richard?
QUEST: When we look back later in the year and into next year at the this event, will it just be a little foible of the summer heat, or has real
damage been done to Hollande as a result?
BITTERMANN: Well, I think he had to do something. The fact is that you can't have the economics minister criticizing the economic policy of
the country. It just was an absurd situation.
And so, I think it had to be done. The question is, is this the last chance for Hollande to have any credibility at all? Can this government
succeed? Basically, there are people in place now who are the same people in place before, and economic policy has been something of a failure here.
Unemployment continues to rise, and the economy is at zero. So, as a consequence, people are saying on the streets, you're already hearing it
today, even after the announcement of the government, that in fact, things are not changing at all. This hasn't really meant much of a change. And
until things improve, Francois Hollande is not out of hot water, I don't think, at this point.
(END VIDEOTAPE)
QUEST: Jim Bittermann in Paris. Staying strictly with the markets, investors have been warned the biggest threat maybe lies in the foreign
exchange markets. Mohamed El-Erian wrote in "The Financial Times" today that Forex fears will spread as central banks diverge in policy.
And he points to the strength of the pound in the UK and the dollar that the eurozone's economy has stalled. Mohamed joins me now from Irvine
in California. Very interesting piece, but the fascinating part is we do have a directly divergent policy on monetary stance. The US is looking to
tighten -- or at least not -- the UK is looking to tighten, the eurozone's looking to loosen.
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISOR, ALLIANZ: And it is unusual, Richard. We've gone from a situation where everybody was on the
same side to a situation where people were on different speeds, and now they're on different tracks and they're on opposite tracks.
Mario Draghi made it clear last Friday that he intends to step on the accelerator in terms of loosening monetary policy, whereby Ms. Yellin is
under tremendous pressure to lift her foot off the accelerator.
QUEST: We can make a technical argument based purely on interest rate differentials that there is a foreign exchange volatility or shift. If one
interest rate pays higher in one currency than another, then funds. But you're not really saying that's the only reason. You're going for economic
underlying growth reasons and strengths of economies.
EL-ERIAN: Correct. I'm saying the interest rate differential, which has grown tremendously. Just to give you a sense, the ten-year rate in
Germany is about 93 basis points, 0.93. The US is at 2.39. that's 145 basis points.
And the point I'm making is that you cannot expect this differential to keep on getting bigger and bigger to accommodate not only different
policies, but different underlying economic fundamentals.
QUEST: If you're right, then the old adage that exchange rates will find their own natural equilibrium hold, if that holds true, then there's
not a lot that governments can do, because you can't intervene if you've got a monetary policy that's promoting a particular direction.
EL-ERIAN: Yes, that's absolutely right. And the risk is not whether they find a new equilibrium. We all want them to find a new equilibrium.
But it's about the journey. Is the journey to the new equilibrium one of overshoot, where it goes beyond the destination then comes back?
The history of foreign exchange markets is yes. Why? Because of how people behave, because of how companies behave. So the risk is that in the
journey to the new destination, we may overshoot it and then come back, causing volatility that undermines other elements of the financial markets.
That's the risk.
QUEST: And the -- well, there's -- I was going to say the winners and the losers, but of course, that is an entirely inappropriate comment
because it depends on which side of the transaction you're on at them moment. But that would suggest a weakening of the euro, a strengthening of
the dollar further, and an even further strengthening and competitive disadvantage of the pound.
EL-ERIAN: Correct. And I would add one more: also a weakening of the yen. So, if you think of it, you'll have the dollar and the sterling
likely to strengthen even more, and on the other side, the euro and the yen weakening.
And then, in the middle of this, you're going to have the emerging economies that are going to be dealing with a more volatile global system.
QUEST: Let me throw -- and I'm just gratuitously throwing this in, because there's always one viewer out there that insists on wanting to know
what all this means for gold. I have never any -- frankly, I think it's the most stupid investment ever known to man or beast, but does this have
implications for gold?
EL-ERIAN: Not directly, because gold is a safe haven for two things. One is major financial distress and the other one is major inflation.
We're not talking that extremity unless -- unless -- governments react the wrong way. And I think your segment on France shows you just how difficult
it is to break out of this low equilibrium growth.
When you said that we were going to throw something in, Richard, I thought you were going to throw in a burger.
QUEST: It's -- it's molding over there on the back of the studio. I'll send it across. Not that you look like you need a burger, but I'll
send it across. Good to see you, sir. Thank you very much.
EL-ERIAN: Thank you.
QUEST: Mohamed El-Erian. Of course, that burger we'll talk about in terms of burger-nomics or the Big Mac index. As those currencies start to
move, then the Big Mac index on "The Economist" magazine will be reflecting, of course. I wonder what Tim Horton's doughnuts do to the Big
Mac Index?
(RINGS BELL)
QUEST: When we come back, getting the itch to have a Twitch. It's a global gaming phenomenon. Amazon's paying $1 billion betting that we're
all going to join in. After the break.
(COMMERCIAL BREAK)
QUEST: A billion dollars to watch other people play video games. It seems a little crazy. But Amazon's chief exec, Jeff Bezos, has called his
latest acquisition a global phenomenon.
It's called Twitch. It's the second biggest deal in Amazon's history, and it's high time you got to know about it. Twitch is a service that
broadcasters use conquests playing video games online so others can tune in and observe.
Now, Twitch has 55 million unique visitors every month. It makes it amongst the top 15 most trafficked websites in the world, 16 billion
minutes of video are watched each month. In March, it accounted for around 1.4 percent of all internet traffic.
Twitch shares advertising profits with the broadcasters with whom it is involved. Users can earn over six figures a year.
Hubert Thieblot is the chief executive of Curse, which is a gaming information and lifestyle website. We decided we had to be modern about
all of this. He joins me now via Skype from Huntsville, Alabama. Sir, thank you for joining us. All right.
HUBERT THIEBLOT, CEO, CURSE, INC.: Hi, Richard.
QUEST: I freely confess my ignorance of this whole world where you have people tuning in to watch other people playing video games. And
you're telling me that's worth a billion dollars?
THIEBLOT: Yes, it's actually one of the hardest audiences to reach right now on the internet. It's called the (inaudible) male young
audience. And there is only a couple websites that basically have it right now.
QUEST: But what are they watching? They're just watching other people play games?
THIEBLOT: So, I think it's more than this --
(AUDIO GAP)
QUEST: Oh.
THIEBLOT: -- best players. And right now, that's exactly what's happening. You have tens of billions of people watching the best gamers in
the world. They're also watching the best tournaments that have live broadcasts on Twitch.
So, they could go there, they look at them. They -- these gamers have become celebrities. A lot of them have millions of subscribers on YouTube
or on Twitter or any other platforms.
QUEST: So, we really are getting to a situation where you have an entire part of the population, like myself, who have absolutely no idea
about these vast new important growing markets, these new businesses. And an entire younger generation, who are -- or maybe even older -- who are
playing this non-stop and watching it non-stop. Is that right?
THIEBLOT: Hey, let me ask you a question, Richard.
QUEST: Hold on.
THIEBLOT: Have ou ever heard of my -- have you heard of Minecraft?
QUEST: I think we've got a very bad connection tonight, a very bad connection. All right, I'll say no.
THIEBLOT: All right.
QUEST: I'll say no.
THIEBLOT: All right. So, Minecraft, it's kind of like Lego online. They've sold about 15 billion copies. There is billions of video views
every month on YouTube, to which people are watching people play Minecraft. And that's -- that's what's going on, and you just -- if you have kids or
if you -- you probably hear from it.
QUEST: Right. But now tell me, then, why Amazon and not Google? Why one of the other companies involved? What was so special about what Jeff
Bezos offered in this?
THIEBLOT: So, there is a lot of stipulation on what happened. As you might know, Google was the company, the lead, for a long time on the deal.
They -- I think they were worried about getting approval from the regulatory authorities because YouTube has -- they have like an 80 percent
of the video -- actual video market on the internet. So, it's similar at this point. So, I think they were worried about that. Also, Google has
been -- they have very, very strict corporate policies on platform, while Twitch doesn't.
So, Amazon on the other side, they've shown that they want to compete with Google on the advertising space. And what are they getting with
Twitch?
QUEST: Right.
THIEBLOT: They get a lot of video views. They get a very, very engaged community with a huge (inaudible), two hours a day --
QUEST: Good grief!
THIEBLOT: -- average.
QUEST: Good grief!
THIEBLOT: Yes.
QUEST: Two hours a day. Thank you --
(CROSSTALK)
THIEBLOT: So, that's what --
QUEST: Go ahead.
THIEBLOT: Yes, so they also get -- Amazon's been very, very active to get more content on Amazon Prime. And buying Twitch is basically buying a
lot of online content. And the content providers make money from Twitch, and it's a very (inaudible) system. It's an (inaudible) in that it has to
make all of you a lot of money, and Amazon --
QUEST: Thank you very much, indeed, for talking to us.
THIEBLOT: Sorry?
QUEST: Thank you very much. The Skype connection is a little poor. Than, you, I appreciate it, sir. Now, just shows you, a billion dollars,
what people will pay for.
Talking of what people will pay for, how about these? Of course, you'll be familiar with the e-cigarette. Well now, the World Health
Organization is calling for a crackdown on electric cigarettes or electronic cigarettes. It wants governments to ban people smoking them
indoors. A new report next.
(BEGIN VIDEOTAPE)
ARMANDO PERUGA, PROGRAM MANAGER, WORLD HEALTH ORGANIZATION TOBACCO FREE INITIATIVE: E-cigarettes hold some promise and also some health risk.
And therefore, we would like that regulation maximizes the benefits and minimizes the risk.
And we would hope that if we had the choice, that this maximization of benefits and minimization of risk would have been produced before they had
been fully entered into the market with certain marketing elements that we consider untrue.
QUEST: Sir, you have to admire, surely, even in opposition, you have to admire the industry, the nicotine industry, which facing a falling
market share for traditional cigarettes in many markets, came up with this rather nifty wheeze of the electronic cigarette. Like -- sort of like a
magician, they've managed to conjure up a new product.
PERUGA: But it's not the first time that the tobacco industry had what we call a harm-reduction marketing ploy. Big Tobacco has tried before
to market Snus, which is a smokeless form of tobacco. True that they have a lower level of some cancer-causing agents. And they have tried to market
it.
But the purpose that has been documented through research has been not to switch smokers to these products that hold some promise, but rather to
attract non-smokers and non-nicotine users to these new products under the pretenses that they were relatively safe.
QUEST: OK. We're dancing around the point here, really, aren't we, sir? The truth is, that if these are believed to be dangerous, and if
nicotine is believed to be dangerous, and we have finally managed to get smoking on the downward track in many parts of the world.
To allow e-cigarettes seems to be -- governments should have moved faster to have dealt with it. Instead, they're behind the curve.
PERUGA: Indeed, that's why the report is making a call for report is making a call for the regulation of these products that is long overdue.
For example, in the European Union, I will put an example, toothpaste has a regulation that prohibits the use of more than 1,300 chemicals in the
product. And right now, no regulation -- similar regulation about compounds in these electronic cigarettes. So, it doesn't seem to be
holding to the same standards.
(END VIDEOTAPE)
QUEST: The issues of electronic cigarettes, which the WHO is looking into.
This is QUEST MEANS BUSINESS. Good evening to you.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment. This is CNN and on this network the news always comes
first. Israelis and Palestinians have agreed to a long-term cease-fire in the hope of ending seven weeks of war. Palestinians are celebrating in
Gaza. Reaction in Israel is muted. The deal eases port restrictions in Gaza but saves bigger demands, both Israeli and Palestinian, for future
talks.
Ukraine's president says the fate of Europe and the world is at stake. In (ph) peace talks that are being held in Belarus, Petro Poroshenko and
his Russian counterpart Vladimir Putin have met in Minsk. It's the first time the two leaders have come together since June. Poroshenko said peace
depends on the pair making the right decisions.
An American who tried to fight in Syria as a jihadist has been killed. Douglas McCain's uncle, Ken McCain, told CNN that the family was notified
of his death by the U.S. State Department on Monday. Douglas McCain converted to Islam some years ago.
Heavy rains in South Korea caused flash flooding with up to five deaths reported. Rainfall amounts reached between 50 to 100 millimeters
with isolated amounts as high as 250 millimeters. Vehicles were swept away by the flooding and multiple rescues were necessary.
Israel and Hamas announced a ceasefire on Tuesday as we were just talking about. Unlike recent truces, this deal does not have an expiration
date. Both sides have agreed to further talks in Cairo. Ian Lee joins me now from Gaza City. Good evening, Ian. Hopefully you can hear me. The
deal that's being put forward, what's the nub (ph), what's the kernel of the deal?
IAN LEE, FREELANCE CORRESPONDENT: Well, it's fairly general, Richard, but basically what is coming forward is that there will be an easing of the
blockade here in Gaza. What the details of that mean are unclear right now. The borders, though, we are told will be open so that humanitarian
aid can come in, and that is something that is desperately needed here - medicine , as well as construction supplies to help rebuild the power grid
- the water system as well as the sewage system. These are things that need to be addressed right away as well as eventually. You have thousands
of people who have been made homeless by this war. They're going to need some sort of place to go in the near future so they can get them out of
these schools and start classes again. And finally, there is the opening or extension of the seas where they can fish further out, Richard.
QUEST: So, let's just go through some of the issues. The Palestinians then got a - if you like - a relaxing of the border and some
other things. Did the Israelis - is it believed the Israelis have agreed to this because they think they've suitably or sufficiently demilitarized
Hamas?
LEE: Well, the Israelis we're hearing from -- a senior Israeli official - had two options. One option was to completely come into Gaza
and occupy it. The other options was to come with some sort of ceasefire just to stock the rocket fires. Up to the very last minute before the
ceasefire began, we were witnessing rockets fire off. So, the Israelis have not been able to stop all the rocket fire and stop their capabilities.
So, they really had two options. One, go all in or two, hope a ceasefire brings some sort of calm, Richard.
QUEST: Ian, thank you very much indeed. This is "Quest Means Business." We'll be back after the break.
(COMMERCIAL)
QUEST: The investor Jim Rogers who's been on this program more than once is urging young people to look at farming as a future career. He says
we're currently heading for crisis in agriculture. That perhaps we already know. But this crisis, which is the fascinating part as we hear from Jim
Rogers now, will ultimately lead to greater opportunity.
(BEGIN VIDEOCLIP)
JIM ROGERS, BUSINESSMAN AND INVESTOR: Farming - well agriculture's been one of the world's worse businesses for the past 30 years or so. It's
been terrible. One result of that is we've consumed more than we've produced for most of the last ten years. You probably don't many of your
classmates when you were a kid who became a farmer. That's because it's been a terrible business. But since we've been consuming more than we have
been producing, inventories worldwide are near all-time lows - new historic lows.
But the situation is much worse than that. The world is facing a huge crisis and opportunity in agriculture. The average age of famers in
America is 58. In Japan it's 66. Millions of Indian farmers have committed suicide. It's been a terrible, terrible business and nobody goes
into agriculture.
So you can see we have a huge crisis facing us. Either the price of food is going to go much, much higher and draw in capital and labor and
management or we're not going to have any food at any price. I assure you it's not going to happen that way. What will happen is agriculture will
become exciting and profitable. Young people will see farmers driving Lamborghinis, they'll see stock brokers driving taxis and they'll say -
aha. I'm going into agriculture so you would have more production come into agriculture and more people will make money and then the cycles will
start all over again.
And if you look at some of the prices of agricultural goods, you would be astonished at how low they are historically. Rice is down dramatically
over the last decade. Sugar. Sugar is 75 percent below where it was 40 years ago. There's very little you can say that about - any other product
in the world. Learn about agriculture, and the best advice I can give you is learn to drive a tractor.
(END VIDEOCLIP)
QUEST: Jim Rogers. And the thought of the - Jim - on the front of a tractors - that warms the cockles in your heart. Jenny Harrison is at the
World Weather Center for us this evening. Good evening, ma'am.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Evening to you, Richard. I'm going to start talking about Europe. Some very heavy rain of
course has been coming in. What is new? - because we see that of course day after day. But it's a bit of a mixed picture again across in Europe.
We've seen quite a bit of rain come through, work its way across Central and Eastern Europe, so it did produce some rather heavy amounts of rain
across the west. In fact, look at this - in London 38 millimeters. That actually came down in St. James's Park. So right there in central London
and that is the wettest day so far this year. And then across the Channel into Abbeville in France - 39 millimeters -- so some very heavy rain in a
short space of time.
However, Sunday and Monday it was the Notting Hill Carnival. Of course millions turn up to this. And it was a lucky day on Sunday.
Unfortunately the rain came through on Monday. So, there were thousands of rather wet - as you can see - carnival-goers here taking part in the
parade. But it didn't dampen anybody's spirits. Of course not. But you can see this cool weather still work its way across in the central and
eastern areas.
And guess what? There's another system coming in to the northwest. I'm afraid some more rain in your forecast. One or two warnings too - that
next system that works its way across central Europe. We could - into areas as you see here across central areas - Germany for example - we might
see some very heavy rain, large hail and possibly some rather strong winds as well.
Talking of winds, look at this. This of course is showing you the upper-level winds across Europe, but in particular we have got Iceland on
this map. So you can see over the next couple of days, those upper-level winds are taking anything in Iceland up to the north. So, away from
Europe, and of course the reason I mentioned that is because, yes, the volcano. It is still very active underneath the surface. Now, since the
weekend, the level from imminent has gone down to escalating unrest. But there is still a lot going on. In fact, the number of earthquakes actually
has gone up yet again.
Here is Iceland - this is the beige, is Iceland) - and the white areas, those are the different glaciers in the past 48 hours. Look at all
these earthquakes here. On Sunday, there were over 1,300 earthquakes. On Monday, over 1,200 and they have been moving more and more into the
northeast portion of the glacier. But in fact from the early hours of Tuesday morning, there was one of the strongest magnitudes yet - 5.7. And
in fact, that's one of the strongest earthquakes since 1996 alone over the last week.
And you can see what's been happening - everything's being worked its way into the northeast, and so we've got this huge amount of magma now
underneath the glacier. In fact, in just the last 24/48 hours, there's an extra 50 million cubic meters that has actually developed. So, it could
still erupt, but of course it's the ash - and I mentioned already the air is pushing away from Iceland in the next couple of days. This is what
happens with ash - there's an ash cloud. It comes into the first part of the engine. It is melted down very, very rapidly, and then the second part
of the engine, it actually is rapidly cooled as it comes out the other side. That sticks to the engine and actually can stop that part of it
working properly. So that's why the concern of course is for planes - or one of them - flying through ash clouds.
Meanwhile, no sign of that just yet. We'll keep an eye on it of course. So you can see the next system coming into the northwest. But as
I say, the winds are pushing up into the far northern reaches of Europe. Nothing really in terms of delays across at the major airports on
Wednesday. Bit of low cloud - the usual sort of delays. Nothing really to lengthy. And then temperatures - you can see - not too bad actually.
Getting a little bit milder again in London - 21, 22 in Paris and still very warm in Madrid with a high of 35. Richard.
QUEST: I was about to say, it's stonkingly hot in Madrid at 35.
HARRISON: Yes.
QUEST: Jenny Harrison.
HARRISON: Yes.
QUEST: Thank you very much indeed. Now, my question for you. As an airline passenger, what is your right to be able to recline? Even if
you're in economy, the ability to push the button and just knock your seat back a few inches. After all, inches matter. Well, a row over leg room on
a plane caused a United Airlines flight to be diverted. The plane was diverted because at the heart of a fight was the option of reclining. Is
it your right or is it bad etiquette? This is what actually took place.
There was a passenger on a plane - on this flight. A man prevented a woman in front from pushing her seat further back by using something called
the knee defender. It's a $21 plastic device. If you get in there, you'll see exactly what it is. There it is there - you fit it there on one side,
and you fit it there on the other side. And by attaching it to the part of the table that doesn't actually go to the seat, then if it's between the
two and it stops people from pushing back.
What the end result was - a load - rather an argy bargy. The flight attendant told the man to remove the knee defender, he refused. The female
passenger threw water in his face. The plane was diverted. Interestingly, the argument took place in United Economy Plus which actually offers
several inches of extra leg room. One can only imagine the fisticuffs at the back of the plane. Joining me now is Spud Hilton, travel editor - a
veritable guru, sir. I bow before you in this thing. For - travel editor for the "San Francisco Chronicle." The knee defender has been around for a
while. It's not a new gimmick. But this is the first time we've really had such argy bargy over it.
SPUD HILTON, TRAVEL EDITOR, "SAN FRANCISCO CHRONICLE": Well, plain and simple, Richard, this is sabotage. The sole purpose of this gadget is
basically to disable functioning equipment on an airplane. Does that sound like a good idea ever to disable functioning equipment? You are sabotaging
a piece of equipment by using this thing, and the faster that everyone bans this thing, the better.
QUEST: Really - even - we could all agree I think that this is probably a very bad idea because you should never do anything on a plane or
a boat or a train or a bus that impinges on another passenger. That's good etiquette. And that's really what this is all about, isn't it?
HILTON: It really is. The worst thing about travel nowadays isn't the baggage fees, it's not the TSA lines - it's none of that stuff. It's
other passengers and how we treat each other. The airlines have so dehumanized this with the process, that we've decided to take it out on
each other which is ridiculous. I mean, it's a "Lord of the Flies" thinking. And so you're going to see more of this type of thing as people
decide that they're more important than the other guy. Here's the problem with that - is the second that you decide you can take away something from
somebody else - in this case the right to recline your seat - you lose the right to complain when somebody else does it to you.
QUEST: But then surely what this - I mean, we can all say the old - you know - the biblical adage, 'do unto others as you would have them do
unto yourself,' but it's incumbent on both parties - it's incumbent on everybody to show etiquette. For example, the woman in front should've
made sure that he didn't have a meal or a glass of wine on his tray before she reclined her seat. She should've said, 'Are you all right.' Do you
know what I mean? It's a give and take surely, even in economy, it's not winner takes all.
HILTON: Well, it really is a give and take, but it's also it has to start somewhere. If everybody decides they're going to wait for the other
guy to start acting rationally, start acting reasonably, no one ever is. I mean, the last flight I was on, I helped 11 different people get their bags
or other stuff into the overhead. That doesn't mean I'm a terrific guy, it just means there's a whole bunch of other people who weren't willing to
make a really little effort to do it.
QUEST: Spud, how good of you to come in and talk to us about it. Thank you, sir. Very much appreciate it.
HILTON: Absolutely, glad to be here.
QUEST: Now, when we come back from seat-fixing to match-fixing. We speak exclusively to a convicted fraudster about how he was able to swing
the results in football.
(COMMERCIAL)
QUEST: It's been described as the world's most prolific match-fixer. He's a Singaporean, Wilson Raj Perumal, and he's fixed football games
around the world. In a television exclusive, CNN's Don Riddell interviewed a convicted fraudster and learned more about how he fixed the beautiful
game. This is fascinating, Don.
DON RIDDELL, ANCHOR AND CORRESPONDENT FOR "WORLD SPORT": It is fascinating, Richard. It's awful for football and Perumal isn't the only
one, frankly. Investigators believe that he's just the tip of the iceberg, and that's the guy that's fixed around 100 games on four different
continents. We had a fascinating conversation over a couple of days in Budapest. He's currently residing in Hungary because he's trying to avoid
a lengthy jail sentence in his native Singapore. And as he told me, there are so many different ways in which you can fix a game. This is just one
of them.
(BEGIN VIDEOCLIP)
RIDDELL: Let's talk about how you would fix a game. How would you approach this?
WILSON RAJ PERUMAL, CONVICTED MATCH-FIXER: Firstly, we need to know if that particular football match has gotten bets and the books open for
these matches. That is the first thing we have to look at. And then we look at the team. If it is corruptible - if - are they vulnerable in
Zimbabwe or Sintamal (ph) at that time. So when I approach the captain, I brought him out, we had a meal. Before we bid farewell to one another, I
asked him if it's possible - it's like a date. If he bites the bait, then it's OK.
RIDDELL: Does it matter which players? Are there some players on the team you would prefer to have involved in the fix?
PERUMAL: Not exactly. I've fixed matches with just one single player. It is the commitment of the player. But of course we would like
to have the core people -- we would like to have the defenders then the strikers. If you have the strikers, you don't have the goal keeper and all
then (ph). You draw a strategy whereby we are able to achieve the result.
(END VIDEOCLIP)
RIDDELL: Richard, the reason for fixing these matches - guys like Perumal can then confidently gamble on the result, knowing they're going to
win, and he fixed all kinds of games - domestic football league games, World Cup Qualifiers, Olympic games, African Federation Cup games. And the
ways and means he did them were really quite inventive and creative.
QUEST: Don, as a man you are who loves sports - covered it your entire professional life. Live, breathe, eat. The few know more about it
than you. How did you feel having to sit opposite a man who stands for everything that you find repugnant?
RIDDELL: Well, it really quite a strange experience, and I was able to see, Richard, why he's so good at it. Basically, he's a con man. He's
quite a likeable guy.
QUEST: (LAUGHTER).
RIDDELL: The people he worked with he was able to impress them, you know. He - they kind of went along with what he wanted to do. But of
course when you actually take a step back and think about it, it's absolutely horrendous. And the problem is, you know, basically he'd be
bribing or inducing players, referees, coaches, match officials to under- perform . But in the real world, when fixing isn't happening, referees do make honest mistakes, players do have bad games. The problem is, of course
not every game is fixed, but once you know that games are being fixed, it makes you look at football in a very different way. And once you start
doubting what you're seeing out there on the field, it's very, very dangerous for the integrity of the entire sport.
QUEST: Don Riddell in CNN Center, a fascinating interview. Thank you very much indeed.
RIDDELL: I need to update you on one matter that happened of course during the course of the day. The markets had a very strong, robust
session. The S&P 500 actually closed above 2,000 for the first time in its history. The Down Jones Industrials was up just a - nearly a 5th of 1
percent. But it's usually over 17,000. You can see the full interview on "World Sport" tomorrow with Don Riddell - that fascinating interview. And
we'll have a "Profitable Moment" after the break.
(COMMERCIAL)
QUEST: Tonight's "Profitable Moment." The very nasty row over the knee defender in economy where one passenger prevents another from
reclining their seat, the other passenger throws water - argy bargy happens, it's a disaster waiting to happen. What this really goes down to
of course is common courtesy - the recognition that even on a plane - whether in first class, business or economy - it is public transport. You
are sharing the means of transportation with other members of the traveling public. And that means they have to show respect for you and you have to
show respect for them. I'll give you an example. Whenever I'm traveling on an aircraft, I can't believe that you sit next to somebody for six,
seven, eight, nine hours, and you never even say good evening or good morning. The other day I was flying back from Chicago. I sat down in the
chair, I - and I said to the passenger next to me, "Hello, good morning." The poor woman - like I'd suggested something indecent. What is wrong with
people that they don't seem to understand public transport means public courtesy. It means letting senior citizens go first, helping other people
with their bags, keeping babies out of business class. Whichever way you look at it, public transport means you are in public. And that's "Quest
Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, (RINGS BELL) hope it's profitable. I'll
see you tomorrow.
END
