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Quest Means Business
Exclusive Interview With Dominique Strauss-Kahn; Latvia to Adopt Euro; IMF Says Global Growth Remains Subdued; Libor Moves to US; US Markets Up; Dominique Strauss-Kahn on Leadership Crisis in Europe
Aired July 09, 2013 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST: Tonight, exclusive, Dominique Strauss-Kahn speaks to us about the European crisis, the French economy, and what did happen in New York. You'll hear the first clips on this program.
Also, slower growth says the IMF. You'll hear from the Fund's chief economist on this program.
And new life for libor. It's crossing the Atlantic. You'll hear about that on this program.
I'm Richard Quest, live in Paris where, of course, I mean business.
And a very good evening to you from Paris. We are here because this afternoon, just a short while ago, I sat down for an exclusive interview with Dominique Strauss-Kahn, the former managing director of the IMF.
Now, you will hear the full interview in tomorrow night's program. We literally finished it just an hour or two ago. So, until we get to put together for you tomorrow, we're going to tonight give you an indication and a taste of what Mr. Strauss-Kahn has been telling us.
Most notably, of course, the incidents concerning his arrest in New York, his views on the European economy and the euro zone crisis, and crucially, his political prospects and desires for the future. All of that will be in tomorrow's program.
But to give you an idea of the sort of thinking of Dominique Strauss-Kahn, let's start with the arrest in 2011 in New York and the famous perp walk where he was paraded in front of the press. Dominique Strauss-Kahn is still very angry about that time.
(BEGIN VIDEO CLIP)
DOMINIQUE STRAUSS-KAHN, FORMER MANAGING DIRECTOR, IMF: I think it's a terrible thing, frankly, but only because it's difficult to live. Many things are difficult to live with. You have to do.
The problem is, that it's a moment where, in all European, American society, you're supposed to be innocent. You're supposed to be innocent until you're convicted. And the perp walk takes place at the moment where you're supposed to be innocent.
And so what happens, you're just shown to everybody as if you were a criminal at the moment where nobody knows if it's true or not. Maybe you're a criminal, maybe you're not, and it will be proved later on. And so, it's just unfair to put people in that way in front of the rest of the world when you just don't know what they have done.
QUEST: Did you feel that at the time?
STRAUSS-KAHN: Well, I was angry. Because at this moment, I didn't understand what was going on, I didn't understand why I was there. I was just understanding that something was going on that I didn't control.
(END VIDEO CILP)
QUEST: Now, of course, it was a balanced interview, and you'll hear much more, not only on that, but on his political views and economic views. But Christian Malard is with me, joining me from TV3 here in France. Christian, you -- on this issue, first of all, put into perspective: DSK in France at the moment.
CHRISTIAN MALARD, SENIOR FOREIGN ANALYST, FRANCE 3: Well, DSK in France at the moment is trying to get free from this story, which he has been the victim of in the past. DSK has probably no more intention to be a candidate to the presidency.
I think the man has been really suffering from the damage of this story which happened to him. He was so angry, as you alluded to it. He was -- he was not proven guilty of anything at the beginning and he's been treated like a criminal, and he was mad at that.
QUEST: Right. But the French people, we were hearing there about the perp walk, the perpetrator walk. The French people were angry about that at the time.
MALARD: Because in France, it would not have gone that way. He probably would not have been arrested with the handcuffs, pushed into the car, sent to Rikers Island prison with all these kind of prisoners for four days. Nothing would have happened that way in France. And in Strauss-Kahn's mind, the judicial system in the States is blind and rigid, and he is mad at it.
QUEST: So, with that gambit, and bearing in mind that tomorrow we're going to hear many more of his views, how is he viewed now, in fact? Even if he's not going to take -- be president or may not, we'll hear more about that tomorrow -- how is he viewed?
MALARD: He is viewed as the man who has been raping, not raping this maid in the Sofitel of New York, and his image definitely has been tarnished forever. And it's bad for him.
QUEST: Right. Let's talk about what's happening in this country at the moment. Francois Hollande is the victor in some sense from what happened to Strauss-Kahn.
MALARD: Definitely, because all -- you remember, Richard, at the time, all the polls were showing that Strauss-Kahn was easily going to be elected versus Sarkozy, would have been running for president. And definitely after, he was killed politically, and of course, it benefited Hollande. No doubt on that.
QUEST: You were in the interview today. You watched, you saw. How did he seem to you? Relaxed -- he seem to be extremely relaxed, extremely open, extremely willing to speak.
MALARD: I think he has no more idea to become the president, definitely. And I think the man next to me thinks sometimes of Bill Clinton. I think he's very happy to be a consultant all around in the world.
He's a real economy expert after having been a general manager of the IMF, and he wants a lot of people in the world to take advantage of his knowledge and his views on the world economy crisis.
QUEST: Good to see you.
MALARD: Thank you, Richard.
QUEST: Now, and later in this program, you will hear, of course, his views on exactly that issue. Firstly we will hear from him on the European crisis and also about the issues of banks. That's later in the program. Just teasing, of course. The whole interview is tomorrow night on QUEST MEANS BUSINESS.
When we come back, ironically, we will be talking about the IMF, only this time, it's the WEO, the world economic outlook. The chief economist of the Fund joins me from Washington after the break. QUEST MEANS BUSINESS, good evening.
(COMMERCIAL BREAK)
QUEST: Welcome back to Paris. Now, it is a club that is in the clutches of a crisis, and you may well wonder why would anybody want to join the euro zone.
Well, Latvia has now been accepted as to be the latest member of the zone, it'll be the 18th country, when Latvia joins in January of next year. Notes and coins they've set the official rate, it will all take place, Latvia following others to join the euro zone. But why? Surely, who would want to join a sinking ship, some would say. Jim Boulden explains.
(BEGIN VIDEOTAPE)
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT (voice-over): Poland hasn't done it yet, neither has Sweden, Denmark, or the UK. But tiny Latvia will join the euro on January 1st, the 18th EU country to adopt the single currency. Despite the euro's troubled few years, the Latvian government is, in fact, ecstatic.
VLADIS DOMBROVSKIS, PRIME MINISTER OF LATVIA: We believe it's good news not only for Latvia, we believe it's good news also for Europe and the euro zone, showing confidence that despite various speculations on problems in the euro zone.
BOULDEN: Imagine, joining this and, in fact, having to pay to help rebuild the likes of Greece, Ireland, Spain, and Portugal. Each euro zone member has to contribute money to the bailout fund and has to follow all the new rules imposed on euro countries since the financial crisis began in 2008, while losing the independence of a central bank. In return, the idea is, these countries get economic discipline that politicians shouldn't be able to fiddle with.
BOULDEN (on camera): Of the areas from the former Soviet bloc, currently Estonia and Slovakia have the euro. Now, Latvia is now set to join on January 1st. The rest have deferred for now. Some might wait until the end of the decade.
So, give credit to Latvia. It's forging ahead now even though a recent poll shows just 38 percent of Latvians support joining the club.
BOULDEN (voice-over): It's an unusual club. There are plenty of people inside the tent who want out. While, for instance, another former Soviet bloc country, Albania, not even a member of the EU yet, still plans to scrap its currency and join the euro zone one day, as the prime minister recently assured me.
SALI BERISHA, PRIME MINISTER OF ALBANIA: Euro is all to be recovered or to disappear. I believe it will be recovered.
BOULDEN (on camera): OK. So, you're confident.
BERISHA: Yes.
BOULDEN (voice-over): Under the rules, all countries that join the EU since 2004 have to eventually take the euro once meeting the criteria. Things like a budget deficit below 3 percent. Ironically, few euro zone countries could meet that target today.
Now, a Latvian symbol will join those of the other countries on the back of euro coins, a rare celebration in Brussels touting the euro as it expands eastward.
(END VIDEOTAPE)
QUEST: Jim Boulden, there, and Jim's with me now. This is all really about it being a much larger, longer-term project, isn't it? The solidifying of a country into something greater.
BOULDEN: Yes, and you remember, many reasons why the smaller countries in Europe were desperate to join the euro and continue to want to join the euro is to be a member of the big club.
And also, some citizens will say that they think this is a way to keep politicians from fiddling. You have countries where people are desperate to join the EU because they think this would solve some of the problems with corruption, for instance, Richard.
And also, Latvia said again today, the prime minister, when he was in Brussels, you saw the increase that other countries, like Estonia saw with trade and the cost coming down by joining the euro, so simple fact, a very small country inside Europe keeping its currency just really isn't logical, Richard.
QUEST: Jim Boulden joining us with Latvia, and I promise you, Jim, ask nicely and we'll send you there for January the 1st. Latvia in winter can be rather pleasant, actually, all things considered.
Now, the International Monetary Fund has cut its global growth forecast for the year. It's the WEO, which has just been released a few hours ago in Washington. The IMF says global growth will remain subdued at just above 3 percent. That's the same as last year, but less than was forecast three months ago.
The report is warning of new risks, including a longer slowdown in growth in emerging markets, like China, and the expected monetary tightening in the US may also crimp global output. The chief economist of the IMF is Olivier Blanchard, joins me now from Washington.
Mr. Blanchard, the fact that at this stage we are still -- we are still revising downwards, albeit by a smidgeon here and there, is really quite worrying. Growth should be picking up, not slowing down.
OLIVIER BLANCHARD, CHIEF ECONOMIST, IMF: Yes, but it is picking up in some places, although sometimes by less than we expected. I think you have to put it in context. Revisions of 0.2 percent happen all the time. This is well within the degree, the margin of ignorance that we have. So, I wouldn't put too much weight on this.
I think the significant news is the larger revisions in the major emerging market countries. That strikes me as real information telling us something about what's happening in those countries. What happens in Europe, yes, it's now great, but it is probably within the margin of error.
QUEST: But here's the problem, of course, or one of the issues. Those emerging markets -- and I know that it's a very broad brush to tar them all -- their revision downwards is worrying. And why do you think the emerging markets -- is it just predicated on the back of China, India, and Brazil, or is there something else in emerging markets that we need to be concerned about?
BLANCHARD: I think -- the natural explanation is to say, well, they suffer from the fact that advanced economies are not doing well, and therefore their exports are not doing well. That explains some of it, and it's common to the major BRICS, but there is more.
Each country, although on the surface it looks different, there are internal problems, there are structural problems, and I think these countries have been cruising along and they are running into what I would call walls --
QUEST: Right.
BLANCHARD: -- but what we called this morning bumps in the road. It's different across countries, but I think they're all facing probably a lower potential growth than they were earlier, than we thought they would earlier.
QUEST: And -- the bigger knowns remain. Euro zone crisis, tapering and withdrawal of stimulus in the United States, and China, of course. So, if you now look at what we're hearing from central banks, can the global economy at the moment withstand the tapering that's likely to come along if the US does also have the sequester at the same time?
BLANCHARD: Well, absolutely. Because my sense is the Fed is not going to taper if there is no strength in activity. So, my sense is -- and there's a scenario in which, while inflation goes up and then the Fed has to tighten but activity is weak, I don't think that we're going to see this.
What's likely is activity in the US will become stronger, it is becoming stronger, and in that context, the US central bank, the Fed, will basically want to increase interest rates and get out slowly of quantitative easing.
In that context, I think it's mostly good news for the rest of the world. It's stronger US demand. There'll probably be capital outflows from emerging market countries because the euro zone will be more attractive. But on that note, I think it's good news, not bad news.
QUEST: OK. So, pull the strands together, because the WEO was a very long document, and even the summary is quite long. From your point of view, Mr. Blanchard, what's the single biggest worry for you for the global economy at the moment?
BLANCHARD: So, I would say I don't have a worry of the size I had before Mario Draghi last year made his speech in June. The worry was the collapse of the euro. I see nothing like this. But I have a number of worries. I still think that stagnation in Europe is a big worry. It is not an acute risk, but clearly, if it goes on, it's very, very costly.
China, I think there is a sense in which or growth forecast, which is our best guess --
QUEST: Right.
BLANCHARD: -- may turn out to be too optimistic, and China may actually see a decreasing investment, a decrease in growth. It's not going to be catastrophic, but it will slow down China, and by implication, it will affect the rest of the world.
So, if you want to know what's at the top of my list, this is it.
(CROSSTALK)
QUEST: The chief economist of the IMF, Olivier Blanchard -- Sorry, thank you.
BLANCHARD: I'm sorry, I can't hear you.
QUEST: The chief economist of the IMF, Olivier Blanchard, joining me from Washington. It's a long delay by -- even by satellite from Paris to Washington and back again. We thank you, Olivier. Good to see you, as always.
BLANCHARD: Thank you, Richard.
QUEST: When we come back, libor stands for London interbank offered rate. So, when the L is no longer London because it's in New York, what does it mean? We'll explain after the break. QUEST MEANS BUSINESS in Paris.
(COMMERCIAL BREAK)
QUEST: A glorious summer evening in Paris. The weather has been extremely hot today, 29 degrees Celsius, but don't take that from me. Later in the program, we'll get a weather forecast for you.
So, libor, which is the London interbank offered rate, is now going to be handed over to NYSE Euronext of the United States. It was announced in the UK earlier that the British Bankers Association has lost the right to do it. We knew that was going to happen. But we didn't know until today that the Americans would get control.
Alison Kosik is at the New York Stock Exchange. Libor is an international basic interest rate. So --
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Right.
QUEST: -- does it affect anything that the New Yorkers are going to be setting it versus, say, it being set in London.
KOSIK: Well, let me just say, London's not going to be taken out of the picture completely. So, let me back up and sort of walk you through what happened here. This actually involved a competitive bidding process for control, and what the commission chose to do was award this to the NYSE Euronext.
So, the goal here is to restore trust in libor after a series of interest rate-rigging scandals. Now, the British banking authority says the NYSE will employ tighter regulatory controls and improved governance.
And the head of the NYSE global derivatives exchange said -- came out today saying, "we look forward to continuing the process of restoring credibility, trust, and integrity in libor as a key global benchmark."
Now, officials here at the NYSE, where I am, they're not commenting on details. But they did confirm that libor would remain based in London.
Now, there are also, Richard, some rumors going around about a possible name change, maybe going from libor to nyibor, spelled N-Y-I-B-O-R, but the NYSE not confirming anything about that, either. Though that seems a little unlikely that would happen since libor will still be based in London. Richard?
QUEST: Right. Now, it's important -- to emphasize, of course, as you say, that London will still be involved with it, and of course, Euronext is in - - the derivatives arm in the UK, in Europe, but I suppose symbolically, the fact that they won this bid, the fact they won this tender to do this, Alison, is significant, if only for symbolism.
KOSIK: Of course. And the symbolism is there. People here at he New York Stock Exchange, no, it's not -- they're not all a-flutter about it, but it's certainly not a bad feather to have in their cap, right?
QUEST: Absolutely. Let's have one quick look at the market. It has been a difficult market, but the bulls seem to have been running over the last few sessions.
KOSIK: Yes.
QUEST: Update us on where we stand at the beginning of the new week.
KOSIK: And the bulls continue their run, Richard. They're making this the fourth day in a row of gains for the Dow. And you look at the average right now, it's jumped almost 300 points just over the past few sessions. Looking now, it's about, I don't know, less than 150, 175 points away from the most recent record high the Dow set back in May.
So, it's interesting to see the choppiness over the past couple months and then sort of the inching back, back up to that record high for the Dow.
QUEST: Alison Kosik, who is at the New York Stock Exchange for us this evening.
Obviously, tomorrow night's program will have a lot more about Dominique Strauss-Kahn, and you'll hear more about it after the break. The address, of course, the Twitter address where you and I can talk to each other is @RichardQuest. Feel free. As best I can and when I can, we will, of course, converse away from the program.
Coming up after the break, Dominique Strauss-Kahn turns his attention to the issue of Europe. Now, he was one of the architects of the first Greek bailout in 2010, and now he says, Europe is a case of lions being led by sheep. What did he mean? QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: A very good evening to you, and a warm welcome to Paris, where we are, of course, here because of our interview this afternoon with Dominique Strauss-Kahn. We'll have the headlines for you in just a moment or two.
Let's return to that interview, and the real big question, of course, has been the issue of Europe. When it comes to Europe, Dominique Strauss-Kahn was one of the masters of the first bailout of Greece. Four years later, he is under no illusion in many ways of where the problem lies.
(BEGIN VIDEO CLIP)
STRAUSS-KAHN: If you want me to tell you that there is a crisis of leadership, I will tell you, there is. You know, some erratic saying, which is that an army of lions led by sheep will always be defeated by an army of sheep led by a lion. And that's exactly what we are: sheep.
QUEST: We were lions being led by sheep?
STRAUSS-KAHN: I'm afraid that --
QUEST: The Commission's not up to it.
STRAUSS-KAHN: Some -- you can't be that general. Some leaders in Europe are perfectly up-to-date and know what they'll have to do. But mostly, the European system is built in a way that no decision is made, no hard decision can be made.
(END VIDEO CLIP)
QUEST: He makes a really strong point, there, Jim Bittermann. He says the European system is so constructed that no decisions can be made, no hard decisions can be made. And now we have a situation where Francois Hollande does not get on with Angela Merkel -- maybe personally, but there are political differences.
JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: And he made this point in the interview, basically saying that there's no teamwork involved in Europe, that's Europe's got to appreciate that there's a globalized world.
And a lot of these leaders don't understand -- he was very critical on this -- he said don't understand globalization because they're concentrated on their own countries, and they don't realize the kind of global system that they're in, and they don't know how to react to it. They don't know how small Europe is, he said at one point.
QUEST: When he says that Hollande is doing a good -- he's doing his best - -
BITTERMANN: Right.
QUEST: -- would most French people agree, Hollande is doing his best? Albeit maybe a poor best at that?
BITTERMANN: I think he was being kind. I don't think he wanted to outwardly criticize the president. He's of the same party, he's a socialist as well. And so, I don't think he wanted to outwardly criticize the president.
But the fact is, it's almost damning by faint praise. I think, no, he didn't really endorse him at a hundred percent.
QUEST: No, he most certainly didn't. But what do French people think of Hollande? Never mind Strauss-Kahn, though. What's the feeling here? Because every time I come and talk to you on your delightful balcony here - -
(LAUGHTER)
QUEST: -- you've got to admit, that is a million-dollar view.
BITTERMANN: Not so bad.
QUEST: Not so bad. Nice work if you can get it.
(LAUGHTER)
QUEST: What would the French people say?
BITTERMANN: Well, I think that -- you can take the opinion polls, Hollande's ratings have been falling, they came up a little bit recently. But basically, Hollande is discounted by about 60 or 65, maybe 70 percent of the French people saying that he's not up to the job, basically.
QUEST: And Nicolas Sarkozy has been mischievously suggesting he may or may not run again. What was it he said?
BITTERMANN: It just happened yesterday. He was in a party meeting yesterday for the first time, his first appearance with the party chieftains, as they were, mainly talking about debt because his party is now so much in debt over the fact that they didn't get the funding they thought they were going to get.
But in any case, he basically left it ambiguous whether or not he was going to come back and put his hat in the ring again.
QUEST: What's your feeling?
BITTERMAN: Well, I think, you know, it's tough to keep a politician down.
QUEST: It's tough to keep a politician down. Tomorrow night you'll hear what Strauss-Kahn (ph) says about that.
BITTERMAN: Exactly.
QUEST: But you think it's -- he's gearing for (inaudible)?
BITTERMAN: I do, yes, I do (inaudible). I think he's positioning himself in a way that I think is -- and a lot of people in this country think that, too.
QUEST: OK. I want to come back to this relationship between Hollande and Merkel. Merkel has clearly got the upper hand here, but she still has to keep Hollande on side.
BITTERMAN: Well, exactly. And one of the things that happened recently was this youth conference in Berlin and that's probably the first time that the two of them really got together on economic issues.
They both were for this; they were over there in Berlin and they -- you know, endorsed the idea of doing something about youth unemployment. But you know, on other issues, they really don't see eye-to-eye.
I mean, there's a lot of things that are -- a lot of divergences there. And this is what, you know, as Strauss-Kahn (ph) said in the interview, told you in the interview, basically that, you know, they have to get together. They've got to not just Nicolas (ph) and Hollande but you had -- all the rest of the European leaders as well.
QUEST: Good to see you as always. Thank you for lending me your balcony.
BITTERMAN: Any time.
QUEST: Jim Bittermann, our CNN international correspondent here in Paris.
Time for an update on the global situation, not the markets, the world news.
Fionnuala Sweeney is at CNN Center.
Good evening.
FIONNUALA SWEENEY, CNN CORRESPONDENT: Hello, good evening to you, Richard.
Egypt's military says people should feel secure as it will not tolerate any challenge to the stability of the state. The statement was broadcast on state television as funerals were held for those killed in Monday's violence. Fifty-one people died when security forces clashed with members of the Muslim Brotherhood outside the Republican Guard headquarters in Cairo.
Reza Sayah joining me now from Cairo.
Reza, I'm wondering if the tension of the last few days is being replicated this evening in the streets of Cairo and in political circles.
REZA SAYAH, CNN CORRESPONDENT: The tension is not as intense as we've seen over the past couple of days. Thankfully, we haven't seen any violent clashes; we haven't seen any fatalities. But certainly you get the impression that there's still a lot of uncertainty and anxiety about what's to come. This is a country that without question is going through a lot of turmoil and facing a crisis.
Even so, there's strong indications if this transitional government is pushing for it, taking the necessary steps to put forth complete government, a permanent government, two new appointments today for the interim government, according to state media and the interim prime minister, Hazem el-Beblawi, he was appointed today by the interim president.
This is a liberal economist, a former finance minister and deputy minister under the previous interim government that came after the 2011 revolution, an interim vice president was also appointed. And this is a name many of you will be familiar with, Mohamed ElBaradei, the Nobel laureate, the Egyptian diplomat and the former head of the IAEA.
He was appointed the interim vice president. Remember, there was rumors a few days ago that he would be appointments the interim prime minister. That didn't happening because of resistance from the Islamists, the ultra- conservative Islamists Nour Party.
But now you have these two new appointments. And you take this with the developments last night, the interim president establishing a timetable and a timeframe for the new constitution to be voted on in a few months, new presidential elections and parliamentary elections.
So the -- there's all sorts of steps being taken to establish an interim government. But in the way, of course, the Muslim Brotherhood, the angry supporters of Mohammed Morsy, who don't like that this process is moving forward, Fionnuala.
SWEENEY: You know, this has been the same question, I suppose, that's been asked since last Wednesday, when President Morsy was asked it. But you know, as the week has progressed and we've seen this violence and these political developments, what options are open in this evolving situation for the Muslim Brotherhood? Do they know?
SAYAH: Well, when you look at the options, all of them seem unlikely and that's what adds to the drama. They could certainly, this transitional government, reach out and try to make peace with the Muslim Brotherhood. But short of reinstating the former president, they say nothing will satisfy them.
The transitional government with security forces could get aggressive with the Muslim Brotherhood, try to obliterate them with a campaign to sideline them. But this is a movement that, for decades endured and persevered, oppression at its very unlikely that they're going to be completely obliterated from the political scene; they have too much support.
You could possibly wait for them to run out of steam, but at this point, there's no indication that they're planning to stop protesting. They're still out there; they still want their ousted president to be reinstated. So a lot of uncertainty about what's going to happen in the coming days.
SWEENEY: All right, we'll leave it there, Reza Sayah, thanks very much indeed for joining us with that update from Cairo.
Now Lebanese officials say 53 people are wounded after a powerful car bomb ripped through a suburb of Beirut. The area is a stronghold of the Hezbollah Shiite militant group. Lebanon is divided over the war in neighboring Syria, and Hezbollah has been fighting on the side of the Damascus regime.
Nineteen people have been killed in a roadside bombing in Afghanistan, a police official telling CNN that the dead were mainly women and children. It happened in Herat, not far from the Iranian border on the west of the country. Seven other people were wounded.
SWEENEY: Canada and Montreal, Maine & Atlantic Railway says someone may have inadvertently disabled a brake on a train that ended up derailing and starting this huge fire in Quebec. He says he doesn't believe it was done maliciously. (Inaudible) deaths are confirmed with many people missing.
Rupert Murdoch has been asked to appear again before British lawmakers over the phone hacking scandal. It comes after secret recordings emerged in which Murdoch acknowledged that police officers were regularly paid for information. The News Corp CEO has testified to lawmakers over the scandal back in 2011.
And those are your news headlines. Now back to Richard in Paris.
Richard?
QUEST: Many thanks, Fionnuala Sweeney, at the CNN Center.
So as we continue our program tonight, after the break, Asiana 214. We'll bring you the latest, of course, on the investigation, the pilots are being questioned. And also how modern aircraft and the way they are built certainly helped protect the lives and saved those on board.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
QUEST: U.S. investigators, the NTSB, are now getting ready to interview the pilot who's at the controls of Asiana 214, the plane, the 777 that crashed in San Francisco over the weekend.
Transportation safety officials say they've yet to speak to the pilot who was flying the plane when it clipped the airport sea wall and slammed into the runway. So much is known about the last part of the flight, especially, of course, the slow speed at which it was flying.
Meanwhile, the president and chief executive of Korea's Asiana has apologized in person to the families of two Chinese girls killed in the accident. The father of one of the victims made it clear the apology was not accepted.
MR. YE (through translator): I am very dissatisfied. We're meeting with the sort of problems at the very start, very dissatisfied.
YOON YOUNG-DOO, PRESIDENT/CEO, ASIANA AIRLINES (through translator): By offering an apology to the family shocked by the sudden accident.
QUEST: The NTSB says it has not yet confirmed report that one of the girls was run over by an emergency vehicle after the plane had been evacuated.
(BEGIN VIDEO CLIP)
DEBORAH HERSMAN, NTSB CHAIRMAN: There have been a lot of questions about one of the fatalities with respect to an emergency response vehicle. We are still looking at this issue. It is a very serious issue and we want to understand it.
The coroner has not yet determined the cause of death. And so we want to make sure that we have all the facts before we reach any conclusions. We are reviewing video, airport surveillance video, to understand also what happened.
(END VIDEO CLIP)
QUEST: Now one of the flight attendants on board is, quite rightly, being described as a heroine. She told reporters of those moments after the plane crashed. And she, of course, was one of if not the last person to leave the plane, having ensured all the other passengers were off safely.
(BEGIN VIDEO CLIP)
LEE YOON-HYE, ASIANA FLIGHT ATTENDANT (through translator): First, after the plane stopped completely, I went into the cockpit to see whether the captain was alive or not. I knocked the cockpit door; the captain opened it and I asked, "Are you OK, Captain?" And he said, "Yes, I'm OK."
I asked, "Should I perform evacuation?"
And he told me to wait.
So I closed the door and made an announcement because the passengers were upset and things were confusing. I said, "Ladies and gentlemen, our plane has completely stopped. Please remain seated. The plane will not move anymore."
(END VIDEO CLIP)
QUEST: Now of course the captain's words to the flight attendant, asking her to wait before the evacuation got underway, that most certainly will be part of the investigation.
Otherwise, what we look at, when we look at the plane on the ground, it's a miracle that anybody got out and certainly that there weren't more serious injuries and or death. Of course, the advances in modern aviation have made flying so much more safe that this is the worst plane accident as such for more than 20 years.
John Berman explains how aviation is using new technology to make the whole business more safe.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Look at that one.
JOHN BERMAN, CNN CORRESPONDENT (voice-over): It's a moment no flyer wants to experience: a moment the surviving passengers on board Asiana Flight 214 will not soon forget.
UNIDENTIFIED MALE: Oh, my God.
BERMAN (voice-over): But there's a reason most escaped unharmed: major equipment upgrades to planes like the Boeing 777. Aviation experts credit fireproof materials in the cabin with preventing it from immediately catching fire, improved exits and evacuation slides helped passengers evacuate within 90 seconds. In more secure seats kept buckled up passengers anchored.
Experts say surviving a crash also relies on the human factor. This video shows many Asiana passengers carrying their luggage as they escape the crashed plane. Experts say that's a big no-no.
PROF. CYNTHIA BIR, USC KECK SCHOOL OF MEDICINE: It's a natural reaction. But it's always obviously going to impede the progress of people getting off the plane. You know, those items can be replaced. Human lives can't.
BERMAN (voice-over): This video, taken when the Discovery Channel crashed a jetliner on purpose, shows how passengers should also tighten seat belts before landing, a simple move that could have helped prevent spinal injuries for some of the 181 passengers injured in Saturday's crash.
DR. MARGARET KNUDSON, SFGH CHIEF OF SURGERY: Almost 50 percent of the people that we admitted to the hospital have at least one spinal fracture. Not all of them are paralyzed, but some of them are.
BERMAN (voice-over): The Asiana passengers say they were not given a warning before the crash.
The Discovery Channel's experiment shows just how much bracing for impact can help.
BIR: It prevents you from kind of flexing forward very quickly. From what I'm hearing, there were a lot of individuals who were taken to the hospital who did have spinal fractures.
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QUEST: Professor Cynthia Bir ending that report from John Berman.
What a glorious day today was in Paris. Just the right amount of breeze and a delightful temperature.
Well, when Tom Sater told me this last night, of course, I was delighted to hear it on QUEST MEANS BUSINESS.
So Tom, look at the view across the roof, across the Paris skyline tonight. You were absolutely spot on.
What have we got tomorrow?
TOM SATER, AMS METEOROLOGIST: Well, you know what, it looks like it's going to be much like this again tomorrow, Richard. And the day after and the day after. It looks like the stretch of weather will continue for many cities such as yourself trying to, you know, enjoy a little bit of a breeze, much like many of them here at the Louvre, trying to break a -- take a break from the heat.
It's going to continue. The average high in Paris is 23 degrees. You made it up to 28. It's going to continue, high pressure still the dominant feature, which is going to control mainly the sky cover.
We do have what we call popcorn thunderstorms, really no major element; they fire up during the heat of the day. You see the towering cumulus. And count yourselves lucky if you're underneath one and get a brief break from the heat.
But again, for Wednesday, the 26th, actually these are current numbers right now, Athens at 29, 24 in Rome, getting a little sprinkle here and there.
Here's those afternoon thunderstorms. They die down at night. They pick up again during the afternoon heat. But it's only going to be here and there. Most locations will remain dry and slightly warmer than average.
The temperatures, upper 30s, even 40s in parts of Portugal and Spain. We had low to mid-30s from Macedonia over toward Albania. But again, Wednesday's high, much like they were today. So, Richard, another 28 degrees, enjoy it.
Now for business travelers and others alike, we have a big system and it's showing some concern here. We have rapid development in the last 24-48 hours, what was a tropical depression; we have it now in the Philippine Sea. This is a typhoon.
The strength right now is equivalent to a Category 3 hurricane. I think in the next 24 hours, the strength will be equivalent to a Category 4. It has a well-defined eye. It has a energy-rich environment with the temperatures and the sea surface just ripe for development.
As we watch this system, which by the way, is to have as winds right now organize sustained winds at 175, here's why I believe in 24 hours it could get even stronger.
Now all interests from Taiwan up to the coast of China, maybe near Shanghai, we're going to watch this for the possible cone here of uncertainty to have landfall just shortly after 72 hours. So we're going to watch this closely. This is very reminiscent of last August, the beginning of August, when we had Haikui, the typhoon, move in.
And that dropped quite a bit of rainfall. In fact, it was a stationary for some time. So Richard, we're going to keep an eye on that and see if it causes any problems in Shanghai, financial district or for shipping vessels and fishing vessels as well.
QUEST: Tom Sater at the World Weather Center, with a glorious forecast, well, at least for those of us who are enjoying some very pleasant sun in the summer. Tom, many thanks indeed.
Europe's banking system, it's in the worst shape than we think. And not only is it sick, the economies won't (inaudible) on the banks have healed (ph). You'll hear more from Dominique Strauss-Kahn after the break.
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QUEST: Europe's banking system is in a worst state than we first were led to believe. That's the opinion of Dominique Strauss-Kahn. In the final preview of our exclusive interview, he tells me that there can be no further growth or real growth in Europe until the banking sector is healed.
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DOMINIQUE STRAUSS-KAHN, FORMER MD, IMF: The banking system is -- in Europe is sick, very sick, much more than people say. It has to be really cleaned up before growth will come back. And because most of the leaders are unable to make this decision, including the question of how much people, the trailers and so will make, how much money they will make.
But that's only a small part of the problem. If you don't solve the problem of the banks in Europe, you won't have growth anymore.
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QUEST: "If you don't solve the problem of the banks ... you won't have growth ... "
BITTERMANN: You know, he was very critical of the banks. I was surprised at how critical he was of the various problems in the banking sector --
QUEST: He's a socialist, isn't he?
BITTERMANN: He is.
QUEST: He's --
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BITTERMANN: Yes.
QUEST: -- he's not only a socialist, he's from the Far Left.
BITTERMANN: Yes. And he said, you know, they've failed at reform. (Inaudible) banking sector, reform of the depth (inaudible). He's failed at the reform of wealth redistribution, which is kind of a surprising thing for him to say, too.
So I -- you know, he's critical, but you know, he's in a very good position now and I think he told both of us, in the pre-interview and then you with him during the interview, that basically that he feels freer than he's ever felt before because he can express himself as he wants to. He's no longer running for office. He's no longer the IMF chief so he can say what he (inaudible). And I think that came across (inaudible).
QUEST: Do you think he will have been concerned to use a crudity, a pissing off the Elysee Palace here or the ECB or Merkel or the commission or anybody?
BITTERMANN: I don't think so. I mean, I think he's pretty -- he's a guy with some knowledge of the situation and he knows the personalities involved. And I don't think he needs to step on anybody's toes necessarily, but he can still avoid the problem.
QUEST: Finally, France is now coming into the summer and we often don't have the opportunity when we come to France to just take the temperature -- very pleasant tonight. But France is facing this crisis of confidence at the moment.
How is it going into summer? Will the summer change anything?
BITTERMANN: Well, the French will come back after vacation a lot happier but --
QUEST: The grandes vacances.
BITTERMANN: The grandes vacances, but you know what, going into this, in a more depressed state than I think we've seen recently, I think from my memory here, and that's 30 years, I don't remember a time when the country has been so collectively depressed and despondent despite the fact that there's information out today that the French work less than anybody else in the world practically, in the industrialized world and -- but they're more efficient at it.
QUEST: You have been here 30 years. I can honestly say, knowing the amount of work you do, this is not one of the traits of the French that you have -- one of our hardest workers.
Jim, good to see you.
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QUEST: Thank you once again for lending us the balcony.
Now Dominique Strauss-Kahn, you're going to hear the full interview tomorrow night on QUEST MEANS BUSINESS. You'll hear more on his arrest in New York and the question of why he paid off the maid who accused him of sexual assault. Crucially, his decision on whether to run for the French presidency in the future. It's tomorrow night, right here on QUEST MEANS BUSINESS.
When we come back after the break, it's a "Profitable Moment" on why LIBOR might become NIBOR -- in a moment.
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QUEST:
Tonight's "Profitable Moment": so LIBOR might become NIBOR. Nobody who heard the crisis, the way in which LIBOR had been fixed for so long could fail to be horrified by the miscreant deeds that took place and recognizes a root-and-branch operation needed to change LIBOR for the better.
Well, now it's the latest export to the United States, that sadly, the NYSE Euronext is getting very damaged goods. And a change of scenery across the Atlantic will not be enough. There needs to be more. Sure, LIBOR may still be set in the United Kingdom in London, but the whole regime will need to be rethought. Dominique Strauss-Kahn says the banking system is sick, very sick.
So when NYSE Euronext takes over, one of the first things they need to do is get to grips with the morality, the people who actually set it on both sides of the Atlantic. They are the ones that must understand what is right and what is wrong.
And that is QUEST MEANS BUSINESS for this evening. I'm Richard Quest in the French capital of Paris. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you tomorrow.
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SWEENEY: I'm Fionnuala Sweeney at CNN Center; here are the headlines.
Lebanese officials say 53 people are wounded after a powerful car bomb ripped through a Beirut suburb. The area is a stronghold of the Hezbollah Shiite militant group. Lebanon is divided over the war in neighboring Syria and Hezbollah has been fighting on the side of the Damascus regime.
Funerals were held in Egypt for those killed in Monday's violence in Cairo. The country's military says people should feel secure, as it will not tolerate any challenge to the stability of the state. The U.S. government says it's cautiously encouraged by the interim government plans to hold new elections.
Hundreds of residents of the town of Lac-Megantic, Quebec, are returning to their homes after Saturday's train derailment and a massive fire. Transportation safety officials in Canada say they are looking at the train's braking system as part of the investigation.
Rupert Murdoch has been asked to appear again before British lawmakers over the phone hacking scandal. That comes after secret recordings emerged where Murdoch appeared to acknowledge that police officers were regularly paid for information.
And that's some of the stories you're watching on CNN. "AMANPOUR" is next.
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