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Quest Means Business
Turmoil in Turkey; Eurozone Growth; Europe, US Markets Close Down; Russian Growth Slows; Concerns Over Ukraine; Illegal Sports Betting; Brazil World Cup Challenges
Aired May 15, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
PAULA NEWTON, HOST: The animals helping to close out what was a wild day on Wall Street, and yes, it just seemed like a bit of an animal house as Wall Street continues to have their doubts about earnings and the recovery going forward. It's Thursday, May the 15th.
A nation in mourning and seething with anger. Trade unions strike over Turkey's mine disaster.
Europe's disappointment. Economic growth loses momentum.
And Cisco's chief executive tells me the internet has much more potential.
I'm Paula Newton, and this is QUEST MEANS BUSINESS.
Tonight, grief and anger in Turkey. As the dead from Tuesday's mine disaster are laid to rest, one official appears to deliver his condolences with the toe of his shoe.
These images allegedly show the assistant to the prime minister kicking a demonstrator by a visit by the premier to the site of the disaster earlier on Wednesday. Now, the man, as you can see from this picture, is being held down by two security officers when the kicking started.
Two hundred and eighty-three are now confirmed dead in Soma. The funerals have begun while the search for bodies continues. Dozens of miners are still trapped underground. Hope of finding them alive is fading.
Earlier today, President Abdullah Gul visited survivors of the disaster. He promised an investigation into safety standards will begin immediately.
(BEGIN VIDEO CLIP)
ABDULLAH GUL, PRESIDENT OF TURKEY (through translator): There are recommendations of the inspection committee. I'm sure this will shed light as to what needs to be done in terms of regulation to avoid going through such huge sadness again. Whatever is necessary will all be done.
And also, I've received information a little while ago, and every necessary work process has been started in respect of judicial and administrative methods.
(END VIDEO CLIP)
NEWTON: Now, anger against the government spilled onto the streets of Istanbul and Ankara. Police responded to the protests with water cannons and teargas. In response to the disaster, labor unions called for a one- day strike. They say working conditions have become more dangerous since state-run mines were privatized.
Ivan Watson is live for us once again in Soma in Turkey. And Ivan, again, we can't make too fine a point of it: there are still miners trapped there, families still keeping that painful vigil. Anything new you can tell us about the search?
WATSON: Not really. A couple of hours ago, the energy minister announced that the death toll had risen to 283. We've had reports that they were flooding parts of the mines with water to put out fires that had raged 48 hours after the initial fire began, which has led to the loss of so many lives. We've had visitors from the Turkish president coming to express his condolences.
But the government really sending very mixed messages right now, on the one hand, declaring three days of mourning. On the other hand, when the Turkish prime minister came here to visit, we have this incredible image of one of his top aides kicking a protester in the stricken mining town of Soma, where people are just beginning to bury the dead from this incredible disaster.
The aide, who is known as Yusuf Yerkel, who had studied for about a year at the University of London before pulling out. That's according to a statement from the University of London today, distancing itself from this top Turkish official.
Mr. Yerkel issued a statement saying, quote, "I'm sad I couldn't keep my calm in the face of all the provocations, attacks, and insults." Not quite an apology.
Meanwhile, astounding footage, also, of the Turkish prime minister, after being heckled and booed by residents of the town of Soma, walking with his security detail into a supermarket, and then appearing to have some confrontation with a bystander, there, who turns out to be a miner, who has spoken to the Turkish media and said yes, he was actually slapped by the Turkish prime minister.
And then there is video that has emerged of the prime minister's security detail punching this man on the ground, who has since asked for an apology.
So on the one hand, you have Turkish government officials coming here expressing their condolences and sorrow and promising to investigate this, and on the other hand, allegations that the top officials, the prime minister and one of his top aides, were slapping and kicking miners and locals in this stricken town. Paula?
NEWTON: You can't underscore too much just the contempt and disdain, literally, that officials had been displaying when they're questioned about why this happened, how this could have happened, and what the safety was.
And I can't help but sense, Ivan, that through it all, the people that have to actually mourn their relatives, who are burying these people, it -- they must feel so beside themselves to see it so politicized this way.
WATSON: The controversy, the debate over responsibility doesn't really matter when you go to the cemetery in Soma, Paula, and you just see coffin after coffin brought to dozens of open, freshly-dug graves, and you see the sheer grief there. It was personally a very moving and just an awful experience to see a community hit this hard. Take a look at this report.
(BEGIN VIDEOTAPE)
WATSON (voice-over): They are carried into the cemetery one by one. Some of the hundreds of victims of the worst mining disaster in Turkish history. There are so many fresh graves here that this coffin-bearer has to ask where to go.
(CROWDS SHOUTING)
(WOMAN CRYING)
WATSON: This tragic operation, heartbreaking to watch. Little plastic flags identify the graves of men who toiled underground for the equivalent of $500 to $750 US a month. Friends and mourners leap into action, using picks and shovels to bury men who used to dig for a living.
WATSON (on camera): This is grief on mass scale, and for some, it's clearly overwhelming. The sad thing is that the announcers here, the organizers, have been urging mourners to move on because they have to make space for new victims, for the burial of more coal miners, and they simply don't have enough time and space to get this all done.
WATSON (voice-over): It's hard to imagine how --
(AUDIO GAP)
WATSON: -- must be to say good-bye to a loved one amid the chaos and frenzy of this mass funeral. Bayram Ilki tells me he chose not to bring his grandson and granddaughter to see the burial of his son. "I didn't want his children to witness this," he says. "My son worked as a miner for 25 years. He saw many deaths and injuries," Ilki adds. "But he never expected anything like this."
As more coffins are brought in, Ilki takes a quiet moment, bidding a humble farewell to his son, a victim of one of the deadliest industrial accidents in modern history.
(END VIDEOTAPE)
WATSON: Paula, a stunning thing, when you talk to some of these miners who survived this, who didn't happen to be in the mine over my shoulder when this terrible accident took place, one of them said he would never go into a coal mine again. That is finished.
Another man I spoke with said, "I have no choice. I have to go back to this job. How else am I going to feed my kids?" Paula?
NETWON: Yes, Ivan, making that contempt that we were talking about that the government happens to be showing or seems like it's showing all the more difficult to swallow. I want to thank you for your report. As bracing as it was, it was certainly an important one. Thanks so much, Ivan. Appreciate it.
Now, earlier today in an exclusive interview with CNN's Christiane Amanpour, Turkey's foreign minister said there will be a thorough investigation, and that the Turkish government has nothing to hide.
(BEGIN VIDEO CLIP)
AHMET DAVUTOGLU, TURKISH FOREIGN MINISTER: Of course, this is a very sad event, one of the most tragic accidents which happened during our republican era. All the things -- all the efforts will be done to -- check what was wrong, if there was anything wrong during this disaster or before, how it happened.
Turkey is a democracy and all the -- we have a transparent system. All measures will be taken, if there are new steps needed to be taken in the future. But before, there was a system of check and control for this type of mine fields. But everything will be checked.
(END VIDEO CLIP)
NEWTON: You can watch the rest of Christiane's exclusive interview with Turkey's foreign minister on the next addition of "Amanpour." That starts in about 45 minutes. That's 10:00 PM in London, midnight in Istanbul, only on CNN.
The eurozone economy is shuffling along at a worryingly slow pace. We'll examine what it's going to take to make policymakers act. That's after the break.,
(COMMERCIAL BREAK)
NEWTON: The eurozone failed to gain any momentum in the first quarter. GDP grew 0.2 percent, half as much as economists had predicted. Now, in honor of last weekend's Eurovision Song Contest, here are the economies that were on song, and those that are in dire need of a tune-up.
This is the lineup for Q1 GDP growth. Let's take a look at a few of the key countries now. France, growth was completely flat. That's nil points, France, in case you were wondering.
Germany. 0.8 percent, stronger than expected.
The Netherlands, usually good at these song contest things, contracted by 1.4 percent, and this worried a lot of people. It is the worst in the eurozone.
Now, the head of fixed income and economists -- and economics, sorry -- at ING Investment Management says the ECB has no choice now but to ease monetary policy.
(BEGIN VIDEOTAPE)
VALENTIJN VAN NIEUWENHUIJZEN, HEAD OF FIXED INCOME AND ECONOMICS, ING: There's very little room now to argue that the economy is strong enough to prevent them from acting in fighting this inflationary trend. So yes, this is really this final nail in the coffin for an ECB rate cut.
NEWTON: And yet, they haven't done it so far. They may wait until June. Have they really missed the boat here? Should they have been acting so much sooner than this?
VAN NIEUWENHUIJZEN: There's absolutely no question in my mind that they clearly should have acted before. I think the ECB and its staff has really been surprised by the degree to which inflation has undershot the previous forecasts for inflation.
Their models are less reliable than they thought they were. And a result of that, they are now acknowledging that also their current forecasts might well be undershot by reality. So, I think they have come to this point.
Obviously, there was political resistance also from the Germans and from other bankers in the -- central bankers in the north. But by now, finally, Draghi has sort of convinced them that they can no longer wait.
NEWTON: And so, if we look at those GDP numbers and we delve a little bit deeper, as Germany obviously chugging away, strong as ever. They'd want to grow a little bit stronger, but decent numbers there.
Italy and France just absolutely abysmal. But even in places like Holland, we're seeing such weakness. What is it going to take to get those European economies motoring along?
VAN NIEUWENHUIJZEN: Well, you're absolutely right. It is a big downside surprise, not only in the usual suspects, like France and Italy, which will be a drag for European growth going forward, probably not only the next couple of quarters, but the next couple of years.
But also, those areas where there was more hope that they would really rebound and join Germany. The Netherlands is a clear example, but also the peripheral countries -- Portugal, Greece -- are really disappointing.
And in that sense, it's just underscoring that the deleveraging forcing both in the public but certainly also in the private sector are still weighing strongly on European growth. Maybe austerity is a little bit less, but these forces are continuing.
So, to some extent, you really need strong external demand, the rest of the world to pick up, or a shift on the fiscal policy stance, which is really, really unlikely. So, modest growth for Europe at best is what we're looking at.
NEWTON: Yes, and not out of the woods yet by a long shot. I want to talk to you for a second about the euro. It's been quite strong, stubbornly strong. I've always argued that there isn't much that's going to happen in some of those export-driven economies unless that euro devalues a bit. Is it going to work? Is that euro going to come down?
VAN NIEUWENHUIJZEN: Oh, yes, so far, the first vote of confidence of the market on the news that the ECB would basically start to cut rates and bring the deposit rating to negative territory has been a good one. The currency has weakened a bit.
But then, it's by far not enough. The euro is still strong compared to 3 months ago, 12 months ago. It's still creating disinflationary pressures. And you're right, it's still preventing the export part of the eurozone economy to start contributing to growth.
In the current numbers, net exports contracted from growth for the eurozone economy. So, that is a key factor going forward, to see some light at the end of the tunnel.
(END VIDEOTAPE)
NEWTON: Weak GDP numbers, as you can imagine, took a toll on stocks. Markets across Europe closed lower. Italy's economy contracted in Q1. In Milan, the FTSE was down more than 3.5 percent.
Now, fear returned to Wall Street Thursday. Stocks were down across the board. The S&P 500 and the NASDAQ both dropped about 1 percent in afternoon trading. And as you can see there, it pretty much was down all day, and it marks a significant shift from recent market trends.
The Russian economy, meantime, has slowed sharply. GDP grew at an annualized rate of 0.9 percent in the first quarter. That's far slower than the previous quarter.
President Vladimir Putin today warned Ukraine it will have to pre-pay for its gas starting in June. Now, tension is high between the countries as Ukraine prepares for elections at the end of the month. In a meeting of the Friends of Syria in London, US Secretary of State John Kerry told Russia there would be consequences if it interferes with the vote.
(BEGIN VIDEO CLIP)
JOHN KERRY, US SECRETARY OF STATE: We agreed this morning that if Russia or its proxies disrupt the election, the United States and those countries represented here today in the European Union, will impose sectoral economic sanctions as a result.
Our message is really quite simple: let Ukraine vote. Let the Ukrainian people choose their future. And let them do so in a fair, open, free, accessible election.
(END VIDEO CLIP)
NEWTON: Now, Ukraine's foreign minister, meantime, Andriy Deshchytsia, says he believes voting may be disrupted in some areas of the country. Now, I began by asking him about concerns Ukraine is slipping into civil war.
(BEGIN VIDEOTAPE)
ANDRIY DESHCHYTSIA, UKRAINIAN FOREIGN MINISTER: There are some places in eastern Ukraine that are really in chaos, and the hot spots are quite limited, for there are many of them. I think that the anti-terror operation that was launched by the Ukrainian government is -- it will end with the restoration of the order, actually, the aim of this operation.
And we believe that we will have the elections all around Ukraine. However, we do understand that in some places, the elections might not take place because of the separatists and extremist groups that are seizing the buildings and seizing some of the election committees.
NEWTON: Which is quite a capitulation, when you think about the legitimacy of your government being able to organize in those regions.
I want to ask you about Vladimir Putin and what he said just a little while ago about the fact that any new gas imports that Ukraine gets, it's going to have to pay for in advance. That will start in June. Is your country in a position to be able to handle that, or do you think you can still negotiate out of that?
DESHCHYTSIA: Look, we are ready to pay for the gas if Russia will consider the market price for the gas. And we are ready to pay even to have the advance payment. However, it's still far too early to agree with Russia on this.
Let's wait until the beginning of the June to see what would be the Russian position, as according to the Russian prime minister, Russia is waiting for Ukraine's decision to pay at least something of its debt.
And if Russia will agree on the price, the market price, which is less than $300 US, then we might pay even some of our debts before June.
NEWTON: How have you found Russia's position in the last couple weeks? Have you found them to be more hopeful and more conciliatory, or have you found it to be as destructive as ever?
DESHCHYTSIA: We consider Russia is not committed to the Geneva document, and it's all the decision and statements made by Russian politicians and especially the decision to hold the military exercise on a day of the elections does not help to stabilize the situation in eastern Ukraine. Also, the support of the extremist groups in Ukraine create a lot of disturbance.
(END VIDEOTAPE)
NEWTON: Up next, gambling with the future of professional sports. A new report says illegal betting could tarnish football, cricket, and many more games.
(COMMERCIAL BREAK)
NEWTON: A new report claims that $140 billion a year is laundered through sports gambling. The International Center for Sports Security has sponsored independent experts to compile what they say is the most comprehensive study into the problem of sports corruption.
Now, researchers claim that 80 percent of sports gambling worth up to $500 billion annually is carried out and is illegal in unregulated markets. Now, cricket and football are the sports at most risk, with most illegal bets placed in Asia.
"World Sport's" Alex Thomas spoke to former FIFA anti-corruption chief Chris Eaton, who's now director of sport integrity at the ICSS. He says this is much bigger than just small wagers.
(BEGIN VIDEOTAPE)
CHRIS EATON, DIRECTOR OF SPORT INTEGRITY, ICSS: We're now looking at figures up to $600 billion, $700 billion US gambled -- identified, anyway - - gambled in the sports betting market worldwide.
This is an amazing figure, really. And when we find out also, the Sorbonne's conclusion that $120 billion of that is money laundering.
ALEX THOMAS, CNN SPORTS CORRESPONDENT: Why is it that Europe and Asia seem to be particularly badly affected?
EATON: Well, Europe has always been a very popular gambling location for sports. Asia, also, for the same reasons. But in fact, Asia, because they have, let's say relaxed regulations -- we call them under-regulated or gray gambling markets.
THOMAS: Part of the summary of the report says that in Asia, certain championships have been found to be almost entirely manipulated. Can you tell us which ones?
EATON: I can tell you that certainly Singapore, Malaysia, Vietnam, Cambodia, Laos, these sorts of countries have always had problems with football or soccer match-fixing.
But let's not focus on the match-fixing. The purpose of this report isn't -- what this report shows is that we've been focusing on the wrong end of the problem. We've been focusing on the fixing of sporting competitions when we should have been focusing on betting fraud.
THOMAS: Is there a problem with the betting industry per se, or is it just a problem with its relationship with sport?
EATON: No, there's a problem with the betting industry per se, really. And this is because governments collectively have not regulated global betting. We have a situation right now where massive amounts of money is gambled on sport with an under-regulated, under-supervised market. And this market is an attractive element for criminals to defraud.
THOMAS: Does the betting industry care about corruption?
EATON: The betting industry is a business. It's about making profit. Understand this: sport is under serious threat today. Governments have to do something about it. This report form the Sorbonne has shown that they must act very quickly to stop criminals essentially stealing the soul of sport by this sport betting fraud market.
THOMAS: The summary of your report lists football and cricket as being two sports particularly vulnerable, and you also list measures to reduce the risk of manipulation, including the integrity of sports leaders must be guaranteed.
Look at the two leaders of football and cricket: Sepp Blatter and Mr. Srinivasan. Do you think they fulfill those criteria of integrity?
EATON: No sport organization fulfills the international business practice on integrity. But right now, sport has been proved to be a massive business. Therefore, sport needs to conform to general international business practices of transparency, due diligence. These are normal. It's not normal in sport, but it must be.
(END VIDEOTAPE)
NEWTON: Mr. Eaton, there, telling our Alex Thomas exactly how it is. Now, demonstrations, strikes, are disrupting preparations for the World Cup in Brazil, with just a few weeks until kickoff. CNN's Shasta Darlington was in front of the World Cup stadium in Sao Paulo.
(BEGIN VIDEOTAPE)
SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: Things are really heating up as we get closer to the World Cup, not only protests against the sporting event, but a number of special interest groups that are using it as a platform to fight for their own ideas, to fight for their own causes.
If you can see right behind me, this is Arena Sao Paulo, where the first game will be played on June 12th, Brazil against Croatia, and right now, I'm surrounded by thousands of people fighting for low income housing.
They've come out here to say why are we spending money on stadiums and not low-income housing? And in fact, they say they're going to keep coming back until the day of that first game to demand what they view as their rights.
We're also seeing police protests, we're seeing teacher strikes. These are the kinds of complaints we can expect for the next few weeks.
Shasta Darlington, CNN, Sao Paulo.
(END VIDEOTAPE)
NEWTON: Coming up, remembering the 9/11 terrorist attacks. We'll take you inside the museum devoted to keeping the victims' memories alive.
(COMMERCIAL BREAK)
NEWTON: Welcome back, I'm Paula Newton, and these are the top news headlines we're following this hour. At least 283 people have been confirmed dead in the worst mining disaster in Turkey's history. Smoke and fumes are hindering efforts to reach those still missing. More than a day has now passed since the last survivors were pulled out.
A ferry carrying about 300 people has sunk near Dhaka, the capital of Bangladesh. At least 12 victims' bodies have been recovered so far. Police fear the death toll will rise.
Doctors Without Borders says five staff members held in Syria have now been freed. The staff members were taken in northern Syria in January. Doctors Without Borders says the abduction forced the closure of a hospital and two health centers in the Jabal Akrad region.
Meanwhile, Syrian rebels claim to have triggered a huge explosion at a government military base by burying tunnels underneath. CNN has not been able to independently verify this amateur video. Rebels claim the explosives were planted underneath the base.
In London, the United States agreed with a group of European allies to impose new sanctions on Russia if it interferes with this month's elections in Ukraine. Speaking to me on QUEST MEANS BUSINESS, Ukraine's foreign minister admitted there are places where votes would not be able to take place because of violence from pro-Russian separatists.
Almost 13 years after the September 11 terrorist attacks on the World Trade Center Towers, the 9/11 Memorial Museum is now open.
(BEGIN VIDEOCLIP)
Female, SINGING: Amazing grace, how sweet the sound that saved a wretch like me. (SONG CONTINUES IN BACKGROUND) --
(END VIDEOCLIP)
NEWTON: Oh, it's hard not to get chills really when you hear her beautiful voice. This was - this was a dedication that took place earlier today at Ground Zero in New York. Politicians, survivors, rescue workers and families of those who perished were on hand to witness the opening. Among the speakers were former New York City Mayor Michael Bloomberg and United States President Barack Obama.
(BEGIN VIDEOCLIP)
CHOIR SINGING: Somewhere, a place for us. Peace and quiet and open air wait for us somewhere. There's a place for us (MUSIC CONTINUES IN BACKGROUND) --
MICHAEL BLOOMBERG, FORMER NEW YORK CITY MAYOR: In the years to come the 9/11 Memorial Museum will take its place alongside the fields of Gettysburg, the waters of Pearl Harbor and the Vietnam Veterans Memorial as a sacred marker of our past and as a solemn gathering place. A place we come to remember those who died, and to honor acts of courage and compassion that saved lives and lifted spirits - the true spirit of 9/11.
BARACK OBAMA, U.S. PRESIDENT: Love, compassion, sacrifice and to enshrine it forever in the heart of our nation.
(END VIDEOCLIP)
NEWTON: Was a poignant day which we hope brings some relief to the victims and their families. Now, the museum opens to the public next week and CNN's Jake Tapper was given a personal tour by Michael Bloomberg.
(BEGIN VIDEOCLIP)
JAKE TAPPER, CNN ANCHOR AND CHIEF WASHINGTON CORRESPONDENT: Where once 110 stories of twin towers reached out to the heavens, today cascading water falls into the void that remains. This week, 12 and a half years on from that horrific day, the National 9/11 Memorial Museum will be dedicated and open to the public on May 21st.
BLOOMBERG: What you have here are pictures of the recovery.
TAPPER: Former New York City Mayor Michael Bloomberg is now chairman of the memorial. He gave us a private tour.
BLOOMBERG: -- as you go down, every - there are lots of little stories of people who, they came for a rescue, they stayed for the recovery, and sadly a lot of them got sick from what they had to breathe and have since died or are in the process of battling cancer.
TAPPER: Built with private and public funds, the mostly underground museum takes you through step by step from the planning of the attack to the years-long recovery efforts. You can see the massive foundation walls that once held up the towers, a fire engine, the front of which is twisted beyond recognition, scraps of what survived from inside the offices and the steel beamed cross that became a symbol of hope in the midst of despair. There is also a short film titled "The Rise of Al-Qaeda" that came under fire recently from interfaith leaders who said it did not draw a clear enough distinction between practicing innocent Muslims and the Islamic extremists of Al-Qaeda.
BLOOMBERG: I looked very carefully at the film before we put it up and then afterwards when people raised the issue. But we have a responsibility to describe what happened. There's no question that these terrorists evoked God, they - we could hear their tape recording on the airplane. We've got to be very careful. You cannot use this as an excuse to do exactly what they wanted us to do. They wanted us to walk away from giving people a right to practice their religion.
TAPPER: So you have a responsibility of the facts as well.
BLOOMBERG: Yes. This is a museum and the facts are the facts. To take and brand a billion people with responsibility for what a handful of people is ridiculous.
TAPPER: It was a harrowing, traumatic day for millions of Americans. At the time, Bloomberg was a candidate for mayor.
BLOOMBERG: And I was reading a newspaper and having a cup of coffee and somebody said, 'Oh, look at the television that was on.' Small plane had hit the World Trade Center, and I looked up and I'm a pilot and you could see the gash all across the building. And I said that is not a small plane. That had to be a big plane. The primary was pushed a few weeks and then the general election.
TAPPER: Did you ever think, wow, this is going to be a bigger challenge than I thought?
BLOOMBERG: Your first thought on that day was for the people. All you could then think of my God, there're people in those buildings and somebody said to me there's going to be a lot of firefighters killed in that building.
TAPPER: Did you ever get concerned that in the tension between liberty and security, did you ever get concerned that maybe things swung too much to the security side?
BLOOMBERG: No. I don't remember doing that. I - security is one of those things that you never know whether you have too much, but sometimes you can find out you had too little. And I'd rather err from the other side.
TAPPER: The remains of more than 40 percent of those who were killed on 9/11 have still not been identified. Behind this wall the medical examiner's office will continue the daunting work for the families. On Saturday the remains were taken solemnly through Manhattan to the memorial, a move that some 9/11 families are unhappy about for any number of reasons.
Female: It's barbaric, it's inhumane, it's really un-American.
TAPPER: Mayor Bloomberg disagrees.
BLOOMBERG: Ah, but this is where they belong. This is where it all started, and I can't think of a better place to have the Office of the Chief Medical Examiner's laboratory. We can't bring the people back. To the extent that you can assure the survivors that we did everything we could to be respectful of those we lost, I think that's our obligation.
TAPPER: What are the hopes for this museum, what do you want visitors to come away with?
BLOOMBERG: I want the families to say this was a place to grieve. But the vast bulk of the people here will not be families, they will be people from around the world and you want them to understand the terrible tragedy that 3,000 people were taken from us by a handful of people who didn't like our freedoms and that we cannot let that happen again.
(END VIDEOCLIP)
NEWTON: We'll be right back after a short break.
(COMMERCIAL BREAK)
NEWTON: Cisco shares finished sharply higher after the firm beat expectations with its third-quarter results. Now, the tech giant is the world's biggest seller of networking gear, however facing a tech market that is rapidly changing. Earlier I asked the chairman and CEO John Chambers if he still had doubts about where the new growth.
(BEGIN VIDEOCLIP)
JOHN CHAMBERS, CEO, CISCO: Well, Paula, we've done this over the 20 years I've been here as CEO three or four times already. This will probably be the fifth time we've done it. We've been very successful at taking a step at a time. The issues that affected our growth were first emerging markets, secondly a high-end product transitions in both routing and switching and then service providers. The high-end products are coming in line, emerging markets are still challenging, and service providers we made progress in but have a ways to go. What's going well for us is the enterprise marketplace. It's going extremely well. The U.S. is indicating good growth, and we're gaining share in many new markets as we go forward.
NEWTON: When you say you're getting share of some new areas you want to move into, you have been moving into, what is most promising to you for Cisco right now?
CHAMBERS: I think the biggest opportunity in front of us and the whole industry is this internet of everything. It's where you're going to connect to all the unconnected. There are ten billion devices connected to the internet today. It'll be 50 billion by the end of this decade. It's $19 trillion in profit potential or cost savings for business and government. It is probably the equivalent of the introduction of the internet to today times five or tenfold. We're the leader there, now we got to execute on it. We're moving into areas such as inner Cloud which is how you begin to connect together. Hybrid Clouds with the public Cloud. Cisco's leadership here is going to be pretty exciting if we execute well. And if you watch what we're doing moving to outcome space selling off of architectures where we tie our products uniquely together to be able to achieve business goals at lower costs, all of those look pretty promising. So that's probably the concepts that I'm most excited about are market transitions.
What I'm personally excited about is collaboration. Watch the new hot products we come out with over this next year and watch how they tie together to bring a flavor of an Apple device and a Cisco device in terms of ease of use and user interface in an exciting way. So that's probably one I'd stay tuned for in terms of new excitement.
NEWTON: And in terms of your company being in that security space, there are two sides to this coin - one, is your company being involved in certainly providing that security that everyone's look for, especially after the security breaches that we've had in the last few months. But also the other end of the coin - your equipment being used as part of surveillance on everyday Americans and people around the world. What are your concerns in that space and how do you think Cisco can provide going forward on that?
CHAMBERS: Sure. So the two issues - first of all, Paula, we made a decision about a year and a half ago to try to become the number one security player in the world. Because as you move together where everything moves through the internet - all those devices I talked about, electricity - you're going to have to have a security architecture not just individual products. And that's the only way you're really have true security. Secondly, our capabilities and products -- we give no unique capability to any government in the world including our own. And so we do not enable our products nor are we aware of any flaws in our products that will allow people to misuse those products. And we're very upfront in that approach. Tour around the world, most people trust us very, very well in terms of its capability and we have the track record to back that up.
(END VIDEOCLIP)
NEWTON: General Motors' recall nightmare rolls on. The company is recalling three million vehicles, bringing the total for the year up to nearly 13 million. Now, let's go through this. GM said 2.4 million cars have a wiring problem that could prevent brake lights from turning on. Now, the fault is blamed for 13 crashes and two injuries. Now, GM also warned of a braking defect in 104,000 Chevy Malibus, and now the smallest of the recalls, but this could be clearly potentially the most serious - nearly five hundred pickup trucks have a flaw that could cause a loss of steering altogether. GM is warning owners do not drive these cars until they've been repaired. Now, all told, GM expects to take a 200 and million dollar charge this quarter to fix those problems and that's on top of the $1.3 billion it spent in the first three months of the year.
Now, the most serious recall announced this year was the ignition switch defect blamed for 13 deaths. Now, in a separate recall, GM warned of a power steering issues in 1.3 million cars. Now, if you're still with me, we have one more recall to go through. The company also found airbag flaws in 1.2 million of its Crossover SUVs. My gosh, that is incredible when we actually go through it that way. Now, CNNMoney's Peter Valdes-Dapena joins me now. I mean, Peter, you've been following this story for several months now. We just had an update on more vehicles being updated before we came on air. Are they being extra cautious at this point and basically recalling everything because of the controversy that they landed themselves in or do they have an integral quality problem that still exists on the plant floor?
PETER VALDES-DAPENA, SENIOR WRITER, CNNMONEY.COM: Well two things, GM did have a quality problem for a long time, there's no real question about that. They've gotten much better on that issue. But what they're doing now is going back and looking at the issues they've had in the past and saying 'Let's deal with this stuff. Let's start doing actual safety recalls where there's a safety issue.' Not trying to handle it by just casually fixing it at the dealership and really getting out in front of this stuff.
So it's both. There is a past quality issue and there's a current attention to wanting to fix these things so they don't have that Cobalt issue again where it took them ten years to recall those cars.
NEWTON: Mary Barra, the head of GM, saying, 'I can't believe it took' - even she herself was saying 'I'm disappointed that it took ten years to fix this.' But she said they'd had to move - GM had to move - to a customer culture. Is it going to be - I don't want to say it's going to be easy, but what do they need to do? What are the nuts and bolts of this, using the term, on the factory floor they have to make this better? Or is it management that, you know, had -
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NEWTON: -- here.
VALDES-DAPENA: Well the issue - really it to be fair to those autoworkers, this is not a problem on the factory floor. Problems like this come from engineering and design. These are designed-in issues. It's not about how the cars are put together. So the first thing that they need to do is to start look - keeping closer track of when there are issues with the cars, get in on top of them more quickly if there's even the slightest chance it could cause a safety problem and getting out ahead of that stuff. Cars are extremely complex. I doubt we're going to see a day where there's never going to be a recall, never going to be a safety issue, but they need to do what they're doing which is get out in front of it.
NEWTON: Well that's important perspective, Peter. I thank you and you know you and I covered the New York Auto Show a few weeks ago. We heard that same thing from every CEO. So important to point out GM not the only one dealing with recalls and quality issues. Thanks, Peter, appreciate it. Now, a major firefighting effort is underway in Southern California. Wildfires have charred now nearly 10,000 acres in San Diego County. Thousands of residents have been told to leave their homes. The cause of the fires is under investigation. Now, Jenny Harrison is at the CNN International Weather Center. Jenny, really the extreme weather continues in many parts of the world. It is kind of shocking actually to see what those spring rains can be all about.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Well, yes, that as well but also those fires, I mean, Paula that the fury of these fires of the last few days is just quite unbelievable. There's at least nine fires burning right now out in California. And this is why. You've got all the rain across the east, some very heavy amounts of rain as well, some thunderstorms. There've been reports of suspected tornados at this particular Thursday (ph) and out across the West. Look, we have just got nothing - there's no cloud - you know, moisture, and in fact the humidity is one of the main problems. But it's all been to do with the strength and the power of the winds as well. So, this particular fire, this is being called the Poinsettia fire and this one - well, it broke out on Wednesday morning sort of mid-morning. No reason yet as to why. So far it's 60 percent contained. There are hundreds of firefighters fighting this and you can see it's right within all of these houses. So, again, very, very concerning. At least 20 structures have been lost, and so far the damage assessment just for this one fire is about $22 and 1/2 million. So, it is a big deal and of course it's that time of year as well where you start to see these fires. But this year has been unusual.
The last few hours, you can see - look at all this white here. This is all the smoke coming from the fires, and you can see it's all blowing offshore because with the winds have been the Santa Ana winds, they're are very hot, they're very dry and coming from the interior. And these fires spread very, very rapidly. This is how spot fires are started. So you've got the one main fire, but these really strong gusting winds of course coming along and then literally it's very straightforward. You just have these embers that are blowing, potentially quite a long way. And wherever they land of course, that can then set off another fire. So a huge job for the firefighters.
In an average year, it is September/October that we actually see the peak of the fire season or certainly the fire threat. But this year, look at how it started off. So it really has been tremendous and it's really down to the drought, particularly in California. The entire state - all of the state - is under a severe drought. These areas in red are extreme, and look at this - nearly25 percent of the state is in exceptional drought. So, it really is a severe condition. It is improving as we head toward the end of the week. The winds will come down, it'll begin to change direction, we'll see an increase in the humidity as well.
Now, this is where we could do of course in seeing the rain. But just look at these pictures - just astounding. The worst floods for over 120 years into Sarajevo you can see, also across into Serbia. The rain has been coming down steadily for the last several days. But look at this - 157 millimeters into Serbia, 117 into Sarajevo. We've got some more pictures to show you what it actually looks like on the ground. And as I say, there's just been a tremendous amount of rain over several days. We were talking about this yesterday and I did say it could lead to localized flooding. This is what it's done. At least three people have died as a result of these floods. Dozens of villages and towns are actually cut off. There's thousands of people without power, and unfortunately the rain is set to continue. And just look at this one last picture, Paula, because this just really shows you the scale and the size of it - this huge mountainside, a huge mudslide and landslide just come all the way down and that's just thick, thick water mixed with the mud and the debris. So not a nice situation at all.
NEWTON: Absolutely not. I wish we weren't right all the time, Jenny. You did tell us yesterday that this was a risk, and there you have it. Hopefully it won't last that long. Appreciate it, Jenny.
HARRISON: It is improving as we head through the next couple of days.
NEWTON: OK, good to hear. Now an iconic rock band makes a comeback. How Blondie is staying current. That's next.
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NEWTON: Forty years old and still going strong. Pioneering punk band Blondie is back with a new album and a new world tour. Maggie Lake looks at how the band is keeping up with the times, one way or another.
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MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: In its heyday, few rock bands were bigger than Blondie. Forty million albums sold worldwide, four U.S. number one hits and an induction into the Rock and Roll Hall of Fame. As they celebrate their 40th anniversary, Blondie is back with its tenth studio album - "Ghosts of Download" and a new single "Sugar on the Side." With the music business changing at dizzying speeds, co-founders Debbie Harry and Chris Stein see themselves as survivors.
You have been doing this for such a long time. What do you think the key is to your longevity, Debbie?
DEBBIE HARRY, BLONDIE: I guess (LAUGHTER) - I don't know whether it's stubbornness or stupidity, but, you know, I think we sort of got a second chance. I think that we always really enjoyed doing music. I mean, it doesn't seem like such a, you know, horrible state really.
LAKE: On the new album Blondie looked outside the band for inspiration. Key tracks feature guest appearances from artists as far away as Columbia and Panama.
HARRY: This is a big, you know, collaborative effort for us and we - I don't think we've ever gone this far afield.
LAKE: Keeps it fresh, right?
HARRY: Keep it fresh, I don't know. It just seems like the right thing at the right time.
CHRIS STEIN, BLONDIE: I think my ego's a little less, you know, pronounced, so it's easy to take ideas from other people.
HARRY: It's always been sort of a collaborative effort but basically within the band and now it's sort of spreading out.
LAKE: New material is important to bands but today albums sales are collapsing. Streaming services like Spotify are transforming the music industry, and bands like Blondie are having to adapt. There's a lot of discussion these days in the music industry about technology, things are changing. The way people listened to their music certainly has changed from when you guys started out. How do you feel about that?
HARRY: Well, I think that it's clearly made you know playing live very, very important. And the record industry as far as we're concerned, you know, really doesn't exist.
STEIN: You know it's true it used to be a real struggle to get yourself on television, even - and before MTV even more so. And now it's just completely secondary. You can just press the button, you can watch anybody from anywhere doing anything.
HARRY: Yes.
STEIN: YouTube is the new radio.
LAKE: For the anniversary, Chris is displaying his collection of vintage photographs from the early days. And as they begin a new global tour, Chris and Debbie promise to deliver. So many people look to you as a pioneer. What do you think of today's young female musicians and some of the power they have?
HARRY: I say, go for it.
NEWTON: Yes.
HARRY: Yes. I mean, I always felt that it was an idea whose time has come and I am very fortunate that I was there at the beginning.
NEWTON: If Blondie has their way, they'll remain center stage one way or another. Maggie Lake, CNN New York.
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NEWTON: From Blondie to the banking system. After the break, Tim Geithner tells CNN why he got it right during the darkest days of the financial crisis.
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NEWTON: The former U.S. Treasury Secretary Tim Geithner says his handling of the financial crisis has supported the U.S. recovery. He told CNN's Fareed Zakaria that new regulations on American banks have helped, not hurt the economy.
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TIMOTHY GEITHNER, FORMER U.S. TREASURY SECRETARY: It is true that we have - we've definitely brought some substantial changes to the economics of the financial system. And those were disruptive and they definitely changed the economics, but that was a necessary and just thing to do. And this recovery, if you look at our experience against the record of the last 100 years of recoveries following bad financial crises, is a - it's a moderate - is a moderate recovery. But it looks pretty good in relative terms.
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NEWTON: Now, you can see that full interview this Sunday on "Fareed Zakaria GPS." And that's "Quest Means Business" for tonight. I'm Paula Newton. We'll see you again tomorrow.
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