New York - This week’s "Profitable Moment" is being written in New York where I am on assignment. It is interesting to see how those who live in the world’s financial capital are dealing with coming out of a recession. Much of what I report to you now is observational and anecdotal; often the best way to gauge the real economy and what is going on.
My initial impression was of a city still going through the economic grinder. A ride on the subway showed me passengers that were glum. Faces looked tired. The dark clothes of winter are still being worn and for good reason. Winter has made its ferocity felt in recent weeks, with the city digging out of record-breaking levels of snow. And temperatures still are cold, even if the sun shines. There is a muted air about New York. Chatting to friends and contacts and it is clear there is more going on than just winter.
Just this past weekend the New York Times lead its Sunday edition with the headline :“Despite Signs of Recovery, Chronic Joblessness Rises,” which wrote about how “the unemployed face years without jobs, exhausting savings and benefits.” According to the Bureau of Labour statistics, quoted in the article, 6.3 million Americans have been unemployed for more than six months – the highest number since records began. It’s not surprising people are still looking glum.
People feel economically battered and bruised and can see no real light at the end of the tunnel. Across the city, stores that closed early in the recession remain shut and have yet to find new tenants.
In a city which likes to boast that it welcomes the world, many international tourists are thinking twice before coming here, especially those from the Euro zone. The Euro has fallen 5 percent against the dollar since the start of 2010. Even that old-standby - the UK tourist – isn’t offering much succour. Cheap hotels and bargain fares can only go so far against a falling pound, higher taxes at home and worries about jobs.
My hotelier told me his aim was keep the hotel as full as possible, even if that meant heavily reducing the rate. January and February are traditionally slow months, but this year he said business from Europe was down around 40 per cent. Only Fashion Week and a few conventions have saved the months.
Some may wonder when it will get better, for others it already has. The bankers of the city are clearly feeling the benefits of a stock market volatility and bonus time. I had coffee with an overseas banker who was also visiting New York. His business was getting back to pre-recession levels. Deals are being done, fees are being earned. It left me realising the gap between the beneficiaries and sufferers is getting larger.
To test my theory I went to the shops on Fifth Avenue. At the flagship Diesel store there were T-shirts costing more than $100 each and cardigans at $150. Lovely clothes but clearly expensive in troubled times. Perhaps some can still pay these prices.
A trip to the more modestly priced H&M also on Fifth Avenue revealed a different picture: colourful T-shirts selling at $5, long-sleeved shirts at $19 and a store doing brisk business. Guess where I spent my dollars converted from pounds?
None of this is should surprise anyone. The global economy is still recovering from the drastic surgery of the last 18 months. Like any patient it is going to take time to recover. My overriding impression from the Big Apple is that the recovery is not here just yet. Next, I am visiting the mothership of my television network; the headquarters of CNN in Atlanta. It will give me a chance to report back to you whether the glumness of New York is unique to the United States.
Whatever you may be up to in the week ahead, I hope it’s profitable.
We follow fashion designer Osman Yousefzada as he prepares his line during London's fashion week.
A victory for figure skater Kim Yu-Na Thursday night gave her gold on the ice, but she is already raking in her fair share outside of the rink.
The 19-year-old is wildly popular in her native Korea, with nicknames like "The Queen" and "The Fairy of the Ice." That status has yielded her $10 million in sponsorships and endorsements deals, according to her representatives, IB Sports Management.
Forbes magazine ranks Kim as the top earning Olympic athlete this year, tied with U.S. snowboarder Shaun White.
Nike has created a Just Do It campaign around the young skater, showing her overcoming the pressure and challenges of Olympic-level competition. Though the campaign is only in Korea, Nike believes it will be seen around the world. "We are getting a lot of great response from our consumers and know that through our campaign, she is touching the lives of aspiring athletes, young people and fans throughout the world," Nike said in a statement.
Samsung Electronics has created the Yuna Haptic, a cell phone branded around the skater. In the accompanying ad campaign, she goofs around like an average teenager, using her phone to take pictures and listen to music. Samsung says more than one million Yuna Haptics have already been sold.
South Korea has never before won a medal in Olympic figure skating. Kimmy Kim, a reporter for SBS TV in Seoul, says many average Koreans believe Kim's victory would help reinvigorate the country. "The Korean economy is not as good as it used to be. They hope that she wins and gives strength and hope to everyone in Korea."
IB Sports Management hopes a gold medal could lead to even more deals for the young skater. This is Kim's first Olympic games and a gold would go a long way towards extending her fame beyond her native country.
A day after covering the British Airways strike ballot, I have landed in Greece to find out why many Greeks are calling for a national day of strikes and thousands will march on Parliament in Athens.
While that satisfies the stereotype of angry middle class workers in Europe who don't like the governments cutting pensions and raising taxes to battle budget deficits, I am also hearing many Greeks actually support the measures to bring down the budget deficit.
They know that the pain will be felt around Europe this Spring and Greece will be watched closely by the markets and by Brussels.
Wednesday will tell us a lot about how tough it will be for the government here to push tough fiscal measures.
This is something governments around Europe may face soon. Are they on the right course?
As if the Olympic games weren't drama enough! Now we can mix in the potential foreclosure of a world class ski resort. The irony is almost painful: Whistler Blackcomb on the verge of foreclosure, at the height of its visibility to the world.
Chasing this story is a tough one because the parent company, Intrawest, will not confirm the reports. Financial restructuring negotiations are complex, legal affairs, so traditionally, the parties are obliged not to speak publicly until they have a resolution. But Intrawest has recently sold some of its other ski resorts including at least one in the United States.
For now, Intrawest will only say that "serious discussions with Intrawest's lenders are ongoing regarding refinancing and the Company continues to operate business as usual." That's all well and good, but the company did miss a payment last year on a 1.4 billion dollar loan. Unconfirmed reports this week suggest that a foreclosure auction could be just days away-- possibly before the games are done.
No one close to the situation expects a resort the size and caliber of Whislter Blackcomb to close down, with or without bankruptcy. Vancouver's Mayor, Gregor Robertson, told me in an interview on World Business Today, that "something is going to happen with Whistler." He won't say, or doesn't know exactly what, but everyone seems to know something disruptive is coming.
The town of Whistler itself has already wrestled with significant tax increases, necessary in part, because of the financial burden of hosting the Olympics. The Mayor there sent me a statement saying, "discussions with Intrawest lenders are ongoing and while we continue to follow the situation closely, we remain confident in the fact that Whistler Blackcomb is North America's number one ski resort and with over two million visitors a year it's not going anywhere."
In other words, even if the talks fail and the resort is sold, it won't be hard to find a buyer, and the region's largest employer will continue to provide jobs and amazing ski experiences for its visitors. It's the kind of optimism you might expect from public officials in the midst of such a grand event.
But the dollars and cents of these games may be as much a part of their legacy as the competition itself. Already dubbed "The Recession Games," organizers say sponsorship is down, and revenues have been lost because of cancelled tickets and crazy weather.
When Vancouver bid for the games more than a decade ago, the estimated cost of staging the games was less than a billion dollars. The actual cost, according to Mayor Robertson, will be "several billion," and some analysts say 8 billion would not be out of the question.
Robertson is confident there will be lasting economic benefits down the road, but admits the immediate price tag is huge. For years, people will debate the merits and the legacy of the 2010 Olympic games, but for now, the potential foreclosure of their premier venue seems to say it all.
Lufthansa pilots may have reported back to work at midnight, but labor unrest continues to roll across Europe Tuesday as French air traffic controllers are expected to go on strike.
Half of Tuesday's flights at Orly Airport in Paris, France, were expected to be canceled, along with 25 percent of flights at Charles de Gaulle Airport, as a result of a planned strike by four civil aircraft staff, including air traffic controllers, for Tuesday through Saturday.
The action comes a day after German-based Lufthansa and its pilot's union agreed to suspend its standoff and return to the bargaining table. The suspension will expire on March 8, barring an agreement before then, both sides said in a Frankfurt labor court.
The industrial action has plunged much of the continent into chaos and it doesn't look like it will end soon.
We want to know what you think?
Do you think that Europeans have an outdated work ethic that makes them less competitive?
London (CNN) - As I stood outside the fence of Heathrow in the rain, it all looked like business as usual on the runways. I even saw two Lufthansa branded planes land. They told the whole story of the pilot's strike. The strike – which was called off after one day when German courts intervened – involves one of the world's biggest airline, but not all of it.
The two planes that landed at Heathrow were: Lufthansa Italia and Lufthansa Regional. These two arms of the carrier, along with its subsidiaries BMI, Swiss and Austrian all have different, and more importantly, cheaper deals with pilots. Lufthansa's pilots are mad that the German carrier is moving routes to these and other parts of the company to cut costs.
Meanwhile, British Airways planes keep taking off and landing, full of cabin crew who have spent the last month voting on a strike ballot. Of the 80 percent who voted, nearly 81 percent voted to strike.
Though BA's press release noted the carrier's disappointment, it must be said the Union got a more than 90 percent vote last December. Also the union had yet to announce a date or length for this strike. The last one, to be 12 days over Christmas and New Years was blocked by a British Judge.
BA says recent talks have yielded progress. The union agreed but went ahead with the ballot anyway.
BA has said all along it must make the changes to cabin crew pay and conditions to cut costs, with or without the union's help. This vote is not likely to change the mind of CEO Willie Walsh who has told me many times cuts must come to save this airline in the face of tough economic conditions and increased competition from low-cost carriers.
Meanwhile, French air traffic controllers are expected to walk off the job Tuesday. Why? Just like Lufthansa pilots and BA cabin crews, the issues largely boil down to one: Job security.
Judging from the fears of labor unions, job security is one thing that appears to be taking flight in the airline industry.
More than four thousand Lufthansa pilots began a four-day strike on Monday, forcing the world’s second largest international airline to cancel 800 flights.
I spent the day at the German flag-carrier’s Frankfurt hub before witnessing the drafting of the agreement that secured a suspension of the strike.
The early morning show producer was pretty clear about what she wanted. “Off the top,” she emailed the team on the ground, “we want passenger chaos.”
Terminal 1 at Frankfurt Airport at 6:30 am on a dank, dark, damp Monday morning in February is probably nobody’s first choice. But it turned out to be the backdrop of the first of two major surprises in the course of the day: as my field producer Naomi McMullan and I stepped out of our taxi into the drizzle, what we saw was anything other than chaos.
Inside the building, people were to be seen, but only in moderate numbers – nothing out of the ordinary. Check-in clerks sat behind their counters, many idle, while Lufthansa officials circulated on the concourse offering help and advice to those few passengers who had shown up in hopes of taking one of the airline’s 1,800 daily flights.
The hushed calm, orderliness and decorum extended even to the ranks of television journalists and photographers deployed to Germany’s number one developing story: they had lined themselves up in a neat row opposite a bank of neglected electronic check-in stations, meekly awaiting news and interviews.
What we were witnessing was the outcome of some assiduous work behind the scenes by Lufthansa. Using email, SMS and even social networking, it had successfully communicated with the vast majority of those customers hoping to use its flights on Monday, getting across the messages about the strike’s impact, booking alternative flights or train journeys and even using direct messages on Twitter to reassure would-be passengers that any lingering concerns would be addressed.
There were exceptions. A 14-month-old boy can be an awkward travelling companion, as Valérie Dardignier was painfully reminded when she stepped off her overnight Lufthansa flight from Miami, expecting just a single short hop to Brussels, her final destination. But that connecting flight had gone the way of about 800 others, and Naomi found her trying to feed and look after her overtired and upset son while swearing she would never fly on Lufthansa again.
And then there was the couple originally booked on a flight to India. Their alternative flight booking would indeed get them there in the end – but take them to Bangkok, Thailand first.
By the middle of the day, things had settled into a pattern. The “passenger chaos” had not materialised, and some Lufthansa flight were leaving as normal. Terminal 1 was a busy place – but then it always is.
Then Lufthansa’s tall and dapper Corporate Communications Chief Klaus Walther appeared with the first real news for hours: the company was seeking an injunction against the pilots’ union on the grounds that its action was causing disproportionate damage and disruption.
Fast forward a few hours to a bland white-walled hearing room in the centre of Frankfurt, the headquarters of the local employment tribunal. Lawyers and representatives from the two sides shouldered their way to their desks past a heaving posse of journalists and photographers hanging on their words.
Right on time, a door opened and the panel filed in, headed by a youthful career judge, Dr Silke Kohlschitter. What happened over the next two hours had a great deal to do with her personality, legal precision and good humour - and her ability to cut through to the core of what divided the two sides and what could bring them together.
Those used to, say, British legal proceedings would have been astonished at the informality of the way Kohlschitter mediated between Lufthansa and the striking pilots’ union.
The detailed background, the arguments and the issues were not easy to follow, and proceedings were adjourned twice to allow the two sides to huddle and refer back to their colleagues back at headquarters. But in the end the presiding judge had cajoled Lufthansa and its pilots’ union into accepting an agreement which she had largely drafted for them in open court.
It was an impressive process: just two-and-a-half hours after the tribunal had convened, it had secured a fortnight’s suspension of the biggest strike in German aviation history. Pay talks will now resume as soon as practical – without preconditions.
It’s been a long day but the two surprises have taught me two lessons. First, the effective use of modern communications helped prevent what could have been an angry gathering of frustrated passengers at the airport. And second, anyone who might have been seduced into some stereotype of German judges as legalistic, inflexible and unimaginative had better think again.
British Prime Minister Gordon Brown did not scream or swear at a political consultant who worked for him, the speechwriter told CNN, rejecting allegations published by a top British political journalist Sunday.
"The Prime Minister did not 'scream' at me, blame me or direct a profanity at me. The author who has now written this made no effort to check it with me. I would have told him it was false," American political operative Bob Shrum said in an e-mail late Sunday.
He was responding to claims in a forthcoming book by Andrew Rawnsley published by the Observer newspaper.
The Observer charges that Brown engaged in "abusive behavior" and "volcanic eruptions of foul temper."
Brown and his allies denied the allegations.
"These malicious allegations are totally without foundation," Brown's official spokesman said in a statement Saturday. The spokesman is traditionally not quoted by name.
The Observer claimed that Brown's behavior upset staff at his office, 10 Downing Street, so much so that the head of the civil service launched an investigation and "ordered" the prime minister "to change his behavior."
The allegations raise important questions over the issue of bullying in the workplace.
We want to know what you think.
Have you ever been a victim of bullying at work? How have you dealt with the situation? Do you think there are enough opportunities to make your complaint known?
Many Europeans were quick to blame America for starting the global recession. It's true that too many US homeowners over borrowed from overzealous banks, but we've since discovered that whole countries in Europe could be accused of doing a similar thing.
To get through the financial crisis, many governments borrowed more. Some may have gone too far. Greece is now struggling to keep up with its debts, and that's shocking to investors who didn't expect to hear that from a Eurozone country.
They would normally be more than happy to lend to a country like Greece by buying bonds. Now investors are thinking twice because they see a risk in getting their money back. Not only that, they are wondering if other countries are just as risky.
You don't have to go far to see that Portugal, Ireland and Spain all have very high deficits. Even the UK, a major world economy, may have been cavalier with its finances.
So far, the Greek debt crisis is just that – Greek. But if neighbouring countries go the same way, it will be a huge test of the Eurozone.
How do you set one interest rate across a zone where one part is sinking into recession whilst the other is trying to recover?
Eurosceptics have long argued that if you are going to have one interest rate you also need to set one central budget. In the Eurozone you have one interest rate and many budgets. That's why a single currency works in the US and why it doesn't in Europe, as Greece is proving.
We want to know what you think.
Do you think the Euro was a bad idea?
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