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Quest Means Business
US Jobs at Pre-Recession Level; Market Recovery from Great Recession; Week of Records for US Markets; Europe Markets Close Higher; State of the US Recovery; D-Day 70th Anniversary; Lessons from D-Day; Vodafone Reveals Government Snooping; Your Own Internet; CIA on Twitter
Aired June 06, 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)
MAGGIE LAKE, HOST: It's the grand finale of a week of records on the markets as the closing bell rings on Wall Street. It's Friday, June the
6th.
Six years on, the US job market finally bounces back.
Democracy's beachhead. Lessons from D-Day 70 years on.
And a thoroughbred investment. One horse gears up for the hat trick.
I'm Maggie Lake, and this is QUEST MEANS BUSINESS.
Good evening. A major milestone for the US jobs market. All of the jobs lost in the Great Recession have been recovered. Take a look at the
labor market's journey since 2007.
The recession claimed 8.7 million jobs in just two years. It officially ended in 2009, but it's taken more than four years for those
lost jobs to be regained. That is the slowest recovery on record, and those records date back to 1939.
I spoke to US labor secretary Thomas Perez about concerns that the jobs that the economy has added since the recession pay less than the ones
that were lost. First I asked him about the state of the recovery in the United States.
(BEGIN VIDEOTAPE)
THOMAS PEREZ, US LABOR SECRETARY: We had a really deep hole to dig out of, and we continue to move: 51 consecutive months, now, of private
sector job growth to the tune of 9.4 million jobs. Over 200,000 jobs in each of the last four months. That's a good trend.
I look at the types of jobs that are being created, and I'm heartened. You look at durable goods, for instance. Jobs in auto plants, things in
that nature, moving in the right direction. Auto sales last month were the highest since February of 2007. So, a lot of things moving in the right
direction.
At the same time, it's undeniable that we want to pick up the pace of growth, because too many people are being left behind, including all too
many long-term unemployed, roughly 3.4 million long-term unemployed.
So, we have a lot more work to do, and this president is -- this is -- job creation is job one in the domestic agenda.
LAKE: Let's talk about the quality of those jobs. You say you're encouraged by what you're seeing, but it seems like a lot of the growth is
still concentrated in what we might call those lower-range sector jobs, the lower-paying jobs. Do you think it is just a matter of time before that
changes, or is this more of a structural problem with the economy?
PEREZ: Well actually, if you look at the -- where the job growth is, that's not actually accurate. You look over the past few months --
actually, the past year -- you see areas of growth are business and professional services, education and health care.
Those were -- last month, those were the two highest, and those have been the among the highest over the last year. Actually, the health sector
has been basically recession-proof. Even during the recession, we were seeing job growth in that area.
There is growth in low-wage jobs, where we see the slowest level of growth is in the middle-wage jobs. And let me give you an example. The
construction industry, we've had a solid month and a solid year, but when you look at the aggregate, only 25 percent of construction jobs that were
lost have come back. Those are good middle-class jobs.
(END VIDEOTAPE)
LAKE: Now, that's the jobs picture. Now, let's take a look at how the Dow has fared since 2007, and if you look at this chart, markets
recover from the Great Recession much faster than jobs. The red dot that you're looking at marks the end of the recession in June 2009.
The Dow regained its losses by March 2013. It has, in fact, passed, its pre-recession peak and is currently, once again, sitting at an all-time
high.
Well, US investors celebrated the jobs report. Alison Kosik is at the New York Stock Exchange for us. And Alison, I have a feeling this was
another case of not too strong, not too weak, sort of right in the middle there, and that is the lane that Wall Street likes right now.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Exactly. So overall, Wall Street saw this as a good number, Maggie. Others saying, look, it's not an
over-the-moon report, that it's hardly shock and awe because it met expectations. That's five years -- it took five years out of the recession
to get these job numbers, that some are saying they should be even stronger.
But you can't doubt the trend. The trend is, it's pretty strong, that the job market's holding its own. We've seen these triple digit gains for
a while, and Wall Street recognizing this. You're seeing that confidence play out in the action today, with the Dow ending up 87 points, 80 points
away from 17,000.
Did you know on February 1st, even, just not very long ago, the Dow was at 15,300? Now we're 80 points away from 17,000, S&P 500 hitting yet
another record close today, Maggie.
LAKE: Those round numbers are going to make some people nervous about whether we've come too far, but right now, with the Fed on the sideline, it
seems like that is the trend. Alison, thank you so much.
KOSIK: Sure.
LAKE: Traders in Europe were also looking at the US jobs numbers. Europe's main stock markets closed the week higher. The Paris CAC 40 added
7 percent. Traders also enjoying the afterglow, of course, of Thursday's ECB policy moves. I asked Mohamed El-Erian, chief economic advisor at
Allianz about the state of the US recovery.
(BEGIN VIDEOTAPE)
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISOR, ALLIANZ: The good news is that we're back above the peak that was reached in January 2009. And
that's important. And the other bit of good news is that we're still creating jobs above the last 12-month average.
However, it took us 51 months to get back. That's twice as long as a normal recession. Secondly, long-term unemployment remains too high.
Thirdly, wages are still stagnant. And finally, the participation rate is at a multi-decade low.
So, it's good news that we have created so many jobs, but there are still problems facing the labor market.
LAKE: Are we stuck here in this low gear? What has to happen?
EL-ERIAN: So, I think we can have further gains, in terms of the cyclical unemployment component. The long-term unemployment component's
going to prove much harder. There, we need a major policy response from Congress.
We need issues that deal with productivity, competitiveness, infrastructure, education. And it's unlikely that Congress will step up to
the plate anytime soon.
LAKE: So Mohamed, what should investors make of that? We have bond yields low and falling in the US and we have stock markets hitting record
highs. Those two things are not supposed to happen at the same time in a recovering economy. Which market should we watch?
EL-ERIAN: So, they are happening because there's something different this time around, which is the central banks are very engaged. They have
become the markets' best friend, every market's best friend.
And this report will signal to them remain engaged, because there's no sign of inflation, there's no sign of wage inflation. So, the Fed will
feel comfortable to continue doing what it's doing, the ECB feels comfortable doing what it's doing, and it has stepped up its game.
And the markets for now love it. So, both the bond market and the equity market are going to continue to feel that the Fed is their best
friend. Further down the road, Maggie, there's going to be some big issues. But for now, this speaks to the so-called Goldilocks scenario that
the market is in love with.
LAKE: Yes, but this is no fairy tale, Mohamed, and we know these stories don't usually end well. Everyone can't be right. Given what we
know and the challenges we face -- and if you're right that the responsibility to get us to another stage of recovery lies with Congress,
does that make the US a good place to invest?
EL-ERIAN: I would be more cautious because we really are dependent on the equity market on a hand-off from policy-assisted growth to genuine
growth. And that requires a lot more than just the private sector healing.
So, I would be cautious on an absolute level in terms of putting more money at this stage. Valuations have come a very long way, Maggie, both on
the equity side and on the bond market side.
(END VIDEOTAPE)
LAKE: Seventy years ago, these men were soldiers, fighting on opposite sides on the beaches of Normandy. We will be remembering D-Day
when we come back.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
DWIGHT D. EISENHOWER, GENERAL, SUPREME ALLIED COMMANDER: Soldiers, sailors, and airmen of the allied expeditionary force, you are about to
embark upon the great crusade toward which we have striven these many months. The eyes of the world are upon you. The hopes and prayers of
liberty-loving people everywhere march with you.
(END VIDEO CLIP)
LAKE: The eyes of the world return to the beaches of Normandy Friday on the 70th anniversary of D-Day. Leaders and veterans gathered to
remember the military offensive, the courage of the soldiers, and the diplomacy that made it possible. This is how the day unfolded.
(BEGIN VIDEO CLIP)
(BAND PLAYING FRENCH NATIONAL ANTEHM, "LA MARSEILLAISE")
FRACOIS HOLLANDE, PRESIDENT OF FRANCE (through translator): More than 20,000 soldiers left their lives here in Normandy. 20,838, because I do
not want to forget a single one.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: By daybreak, blood soaked the water, bombs broke the sky, thousands of paratroopers had
dropped into the wrong landing sites, thousands of rounds bit into flesh and sand.
Entire companies worth of men fell in minutes. These men waged war so that we might know peace. They sacrificed so that we might be free. They
fought in hopes of a day when we'd no longer need to fight. We are grateful to them.
(APPLAUSE)
(CANNONS FIRING)
(BAND PLAYING)
(APPLAUSE)
HOLLANDE (through translator): Our duty is to fight against fanatics, to fight extremists, nationalists. Regardless of where we stand in
society, we must have the same vision, courage, and bravery as those who came to these beaches 70 years ago.
(CHOIR SINGING BEETHOVEN'S "ODE TO JOY")
(CROWD CLAPPING TO MUSIC)
(END VIDEO CLIP)
LAKE: Well, D-Day left us with much to aspire to, lessons that can be applied beyond the war and the military. The largest seaborne invasion in
history took meticulous planning and expert vision. Every detail needed to be accounted for to avoid disaster as men from different nations were sent
against terrifying odds and in the chaos of war.
Leadership and the right resources were crucial, and of course the courage and innovation of men who landed should be envied and emulated.
Leonard Kloeber is the author of "Victory Principles," where he outlines seven leadership lessons we can take from D-Day, including the
three we just mentioned. And he joins me now.
Leonard, thank you so much for being with us today. It's quite striking that we celebrate this anniversary at a time when I feel like a
lot of ordinary people feel like we lack leadership in many different areas of life. We're going to talk a little bit about business today.
And you heard in those speeches the idea of vision mentioned over and over again. And I have to tell you, when I talk to CEOs, a lot of them
tell me they feel like they don't have any vision into the future, there's so much uncertainty. Why is that so important?
LEONARD KLOEBER, AUTHOR, "VICTORY PRINCIPLES": Well, Maggie, thank you for having me on to help commemorate the 70th anniversary of D-Day.
You mention vision, which is one of the key leadership attributes of any leader. A leader must know where they're going, otherwise any road will
get you there.
So, in the case of Normandy, General Eisenhower and his senior leaders had a vision for how the invasion was going to be conducted, and they
planned that down to the minute detail, so every leader through the chain of command down to the privates and sergeants and lieutenants down at the
lowest levels knew exactly what the goal was and exactly what the plan was.
And they needed to do that, because they knew they were going to take casualties, and when leaders were wounded or killed, others needed to step
up, and they did. And that's one of the reasons why the Normandy invasion was ultimately successful.
LAKE: And of course, we know for all the planning, there are going to be things that you can't expect, and we know from the many stories that
have come out of D-Day, that is certainly what happened, despite all the meticulous planning. You say another key lesson that can be learned from
this event is innovation and learning.
KLOEBER: Yes, absolutely. And that's true in any endeavor in life. So, no matter how well you plan things, as soon as you execute the plan,
things are going to go wrong. In fact, there's a military saying that no plan survives the first contact with the enemy, because the enemy gets to
do something, and they get a vote. And so, things go haywire, usually, after the first shots are fired.
So, the leaders need to be able to learn and adapt. And so, learning agility is a key skill for all leaders. They need to be able to quickly
assess what's working, what's not working, and then apply the lessons learned so that they can adjust their plan to successfully have a good
outcome.
LAKE: And I want to -- I'm going to jump down all the way to the last one on your list, the Y for your team. Some of the pictures we showed
today of the soldiers, I think the thing that moves us so much when we see this is the camaraderie between those men who served and suffered together.
This is an era where there's a lot of controversy about compensation centered at the very top, the era of rock star CEOs. What should we take
away from the idea of building and looking after a team?
KLOEBER: Absolutely. And I'm glad you jumped down to that, because success in any endeavor requires teamwork and cooperation. And all too
often, I think, especially in the United States, we put a lot of emphasis on competition. And competition has its place, but with any organization,
you have to have cooperation so that all the people and the resources are combined to a successful outcome.
So, in the case of the military invasion in Normandy, General Eisenhower and his team trained their soldiers, they made sure all the
soldiers were not only trained, but they had the right resources and they were ready to go.
And that's the job of any leader is to make sure that they have the right people, that they're trained, and they take responsibility for their
team.
LAKE: Leonard, I hope that is a message that gets through to the C Suite. I think there's a little bit of that team spirit and looking out
for those at the bottom in today's business culture. Leonard Kloeber, author of "Victory Principles," a must-read for anyone who needs to exert
that kind of leadership. Leonard, thank you for joining us.
KLOEBER: Thank you.
LAKE: Well, Vodafone says someone else may be picking up its customers' calls and messages, and there's nothing it can do. We'll tell
you who's behind it when we come back.
(COMMERCIAL BREAK)
LAKE: Vodafone says governments in six countries are tapping directly into its network to snoop on customer phone calls and messages. The firm
says law enforcement officials have installed secret wires that bypass any controls from the carrier.
Jim Boulden joins me now from London with more on the story. Jim, this sounds very alarming. Why are we hearing about this now from
Vodafone?
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Well, what's interesting here is Vodafone has decided to report on this in an annual
report that it put it out today, and it decided to let its customers and all of us know exactly what's going on in all of its different markets.
And if we look at a map, we should be able to see that the reason I think people could be really interested is that Vodafone, unlike some of
the US carriers, actually, of course, is around the world. It operates in Asia, it operates in Africa, it operates in the UK, of course, very big in
Germany as well.
In fact, it -- a lot of the European Union countries as well, and in fact it said that Italy had the most requests for information. But what we
don't know, Maggie, is which one of these six countries are the ones you just mentioned. Vodafone will not tell us and did not disclose which of
the six countries has bypassed all of the normal controls and tapped right into the networks.
But of course, the laws in these countries allow it to do that, says Vodafone, so it means no warrants, no legal issues to go into these
tapping. And so, Vodafone itself doesn't know who's being tapped, who's being listened to, what data's being collected, because the governments are
doing it themselves, Maggie.
LAKE: That's, I think, what worries so many people. There is no filter. It's going directly in at a source, which means we don't know how
much information they're gathering. I presume, Jim, we also don't know why they're looking for this information and what exactly it is that they're
taking from these -- from either files or the stream of data.
BOULDEN: Yes. Well, we don't know, but they can listen to phone calls live. They can record phone calls. They could be tapping all the
phones, if you think about it. They could be getting data communications, getting text messages, and listening in at anytime that they wish.
Unlike in other countries, where we know Vodafone and its competitors have to comply with the laws in each country. And that's what Vodafone
says. But let me read to you what they have also put out in their release today.
They said that "We believe that the government should amend their legislation and take steps to discourage agencies and authorities from
seeking direct access to an operator's communications infrastructure without a lawful mandate." And I think that's the important part, the
lawful mandate.
In all the other countries we know, the US, the UK, for instance, they can get this information, but they need to go through some legal steps.
You can debate whether those are good or bad. But the six countries that aren't named don't even have to take those steps, Maggie.
LAKE: It's amazing, and I have a feeling it's the very beginning of this complicated story, and we will stay on it at CNN. Thank you so much,
Jim Boulden.
Well, one way to avoid snooping online: create your own Internet. It's possible on a limited scale thanks to a company called Open Garden.
Their technology allows users to create their own grids or connect to the wider Internet through other users' devices. That means you can get online
even if you're seeing this no service.
Micha Benoliel is Open Garden's chief executive and he joins me now from San Francisco. Micha, thank you so much for being with us today.
This sounds sort of mind-boggling, that you would be able to do this. Explain to me -- I understand the technology has been out there for a
little while. Why do we seem to be getting so much traction? What's changed lately?
MICHA BENOLIEL, CEO, OPEN GARDEN: Thank you, Maggie, for having me today on the show. What has changed lately is now you have in your pockets
a smartphone, and these smartphones can not only have connectivity through a cellular tower, but they can also connect to other people and devices
around them.
So, what we do with Open Garden is we provide connectivity through the people and devices around you.
LAKE: Micha, so this is done through your app, I understand, correct? FireChat, the app. So, if you download it. This sounds fantastic for
people who can't afford the internet or don't have the infrastructure where they live. Is there a trade-off? Is it slower? Is it -- does it work?
Am I able to stream in the same way I would be and get the same amount of data or pictures as if I were on a traditional wifi?
BENOLIEL: So, we have two applications. With Open Garden, the benefits you get is you can get access to the internet when normally you
wouldn't have access to the internet. So, the trade-off is giving some of your bandwidth to other people in exchange for you being able to access to
the internet when normally you don't have access to the internet.
The other application, FireChat, is a messaging app, and it enables you to send messages with people around you even when you don't have any
cellular connection or internet access.
LAKE: So, it seems that this would allow people, especially coming out of the story we just reported on, to operate off the grid, not be
subject to the kind of surveillance we were just talking about. Is that true? How do we know that you can't be tracked and that you're really off
the grid with this kind of technology? The government is no stranger to this as well.
BENOLIEL: Absolutely. So what happens with -- in the case of mesh networking and FireChat, for example, is the application is creating a
local network and connects with people around, it's dynamic mobile, so it makes it much more difficult for someone to be present when there is a
local network emerging.
We have an example of what happened in Taiwan a few weeks ago with the student protests when the government wanted to shut down the internet. So,
all the students downloaded FireChat to remain connected, and they use it for people to connect with students who were inside the parliament and
outside the parliament.
LAKE: Micha, it's fascinating, and I'm sure it's catching attention of a lot of people where you are on the West Coast in Silicon Valley.
Micha Benoliel, thank you so much for being with us today.
BENOLIEL: Thank you, Maggie.
LAKE: Well, if anyone knows about secrecy, it is the CIA, so it may come as a surprise to you that some of the organization has just joined
Twitter. This is their first tweet. It reads, "We can neither confirm nor deny that this is our first tweet." @CIA is their handle, if you want to
follow. At least they have a sense of humor.
Well, Ford's turnaround king is heading for the exits. What's next for Alan Mulally? We'll have that right after this.
(COMMERCIAL BREAK)
LAKE: Welcome back, I'm Maggie Lake. These are the top news headlines we're following this hour.
World leaders and veterans of the second World War have marked the 70th anniversary of the D-Day landings in Normandy. French president
Francois Hollande expressed his gratitude to soldiers who died during the operation, saying their sacrifice allowed Europe to live in security today.
Meanwhile, Russian president Vladimir Putin met with Ukraine's president-elect on the sidelines of the commemoration. The French
government said their conversation included plans to discuss a cease-fire in the next few days. Mr. Putin also held an informal meeting with US
president Barack Obama.
At least six people were killed in an unsuccessful attempt to assassinate Afghanistan's presidential frontrunner. Abdullah Abdullah
survived the attempt, although dozens were wounded after two explosions in Kabul. An Interior Ministry spokesman said one blast was a suicide attack.
In Germany, doctors say the US army sergeant Bowe Bergdahl is not yet healthy enough to travel back to the United States. Bergdahl has been
accused of deserting his unit in Afghanistan before being captured by the Taliban. US national security advisor Susan Rice told CNN that Bergdahl is
innocent until proven guilty.
The US labor market has recovered all of the jobs lost in the Great Recession. The recovery took more than four years. It is the slowest ever
recorded. The economy added 217,000 jobs in May. The unemployment rate was unchanged at 6.3 percent.
Just as the U.S. job market returns to pre-crisis levels, the man who steered forward through the recession is preparing to depart. Poppy Harlow
has been speaking to Ford's Alan Mulally and she joins me now. Poppy, Alan Mulally really played such a crivit - pivotal role really through the
crisis -
POPPY HARLOW, CNN: Yes.
LAKE: He steered Ford as the only auto company that didn't seek a government bailout, but he's getting ready to leave. It's really a
changing of the guard -
HARLOW: It's an absolute changing of the guard. Mark Fields is taking, an insider at the company. Mulally thinks this is the right time.
You know, this is a guy that managed to, as you said, not bring this company on its knees to need a government bailout. Pretty astonishing what
he did that he testified on behalf of his competitors in front of Congress - GM and Chrysler. He also took out a $23 and a 1/2 billion loan, a really
big risk. They even put up the famous blue oval right behind my shoulder as collateral - betting even that and they paid back in full. So it's been
a major turnaround stories. He is riding a wave high, and of course we were interested in what he's going to do next.
(BEGIN VIDEOCLIP) *
HARLOW: You're not a car guy. I mean, you weren't a car guy. You were a plane guy. You come into Ford not working in autos before. What is
the biggest bet you made - the biggest risk you took for you internally, Alan, didn't know if it was going to work. You thought it was but you
weren't sure.
ALAN MULALLY, FORD CEO: I remember the story when I first arrived and one of the journalists said, `So, Mr. Mulally, you know the industry's in
trouble and you clearly are not a car guy and the vehicles are very complicated. What do you think about that?' And I said - I rubbed my chin
and I thought a bit and I said, `Well, I think you're right the vehicles are very complicated. The average car has around 10,000 parts. You think
of the quality, the fuel efficiency, the safety and the systems integration. I might point out that the triple 7 airplane has four million
parts and it actually stays in the air.'
HARLOW: Which you were the chief designer of.
MULALLY: Exactly. And from that moment on, everybody embraced me and thought I was able to help.
HARLOW: What was the hardest thing you had to do during your tenure at Ford? Was it the layoffs? Was it closing down plants?
MULALLY: Well, I think a few. As you pointed out, Ford and the industry had a lot of overcapacity. So we had to right-size the industry
which is very, very tough. The neat thing is we did with compassion and we were able to help people move on to, you know, their future careers. I
think another one was deciding to testify on behalf of GM and Chrysler when they clearly were bankrupt, and they needed debtor adjusted (ph) financing
and going through bankruptcy. And that was very surreal for us. In hindsight, I would do it again because at that time if they would've gone
into freefall, we could've taken nearly 15/20% of the U.S. GDP from recession into a depression. So even though that was hard, I think we
actually did the right thing at the time and I would do the same thing again today.
HARLOW: Do you have one more turnaround left in you?
MULALLY: My focus has been to focus on this transition and I can't wait to graduate and then decide what am I going to do next? But I do love
serving.
HARLOW: That's not a no, so I'm going to ask - Target needs a new CEO.
MULALLY: It's amazing to me the people that do want leadership - and it's going to be fun to see what happens in the future going forward.
HARLOW: My colleague and good friend at CNN International, Maggie Lake, is convinced that you may just go into politics. And she wants to
know, Alan Mulally, are you going to run for office?
MULALLY: Well, I'm really looking forward to what I've - what I'm - going to do after I trudge ahead to go forward.
(LAUGHTER)
HARLOW: It's not a no, though. This is not a no.
MULALLY: Well, you know I love to serve, but I really want to focus on this new transition that - I do love serving.
HARLOW: 2016? Presidential bid?
MULALLY: I can't wait to see what the future is going to bring.
(END VIDEOCLIP)
LAKE: Poppy, look how big that smile got!
(LAUGHTER)
LAKE: I'm spearheading the campaign - you know this because he really does epitomize the leadership that we're lacking -
HARLOW: Yes.
LAKE: -- and the ability to bring people together which Washington is sorely lacking. I want to move on though --
HARLOW: You got it.
LAKE: -- because we're out of time, but we're going to have some fun with that off camera. There's a change of leadership - GM -
HARLOW: Sure.
LAKE: -- now a new leader in the spotlight.
HARLOW: Right.
LAKE: Tough week for Mary Barra. Did he comment at all as somebody who's been at the very top of an auto industry about GM struggles?
HARLOW: Yes, I asked him numerous times. This is not something that they want to talk about. He kept bringing it back to Ford. But we did
talk about the fact that GM has changed the game, and having all of these recalls - they're recalling things that automakers didn't recall for before
or after that it changed the process at Ford. Because Chrysler - Sergio Marchionne of Chrysler, the CEO - said that it's changing the game for
them. They're recalling more as a result and looking at their process. He said quote, "I am very pleased with our process at Ford." But he did say
we're going to keep a close eye on GM, and if we do see something we should change, we are going to. It's interesting because Sergio Marchionne at
Chrysler said that if everyone is doing this, in recall more, that eventually is going to pass the costs right on down to the consumer. So I
think you're seeing a real shift -
LAKE: Yes.
HARLOW: -- in the industry here. Also, Maggie, I should point out - just within the last hour - GM issuing four new recalls. This makes it 34
total recalls for this company - about 16 million vehicles worldwide this year alone.
LAKE: It is extraordinary. And one thing Alan Mulally did at Ford and we see Mary Barra thinking about doing it - is breaking down those
silos and Mulally created a system where people flag problems right to the very top -
HARLOW: And that's --
LAKE: -- so that's going to be --
HARLOW: -- what Mary Barra has asked for --
LAKE: Yes.
HARLOW: -- I mean, she said yesterday when they released this internal report - if you see a safety problem, you bring it right to me --
because this was 11 years of what they call it - GM -- incompetence and really neglect -
LAKE: Right.
HARLOW: -- that cost lives.
LAKE: Right. Amazing stuff. All right, it's going to be tough going, so, Poppy, thank you so much -
HARLOW: You got it.
LAKE: -- for that. I was great fun. And Alan, call me, call me.
(LAUGHTER)
LAKE: Well, entrepreneurs are driving global growth, that's according to Ernst & Young. The accounting giant says the number of entrepreneurs
planning to hire workers this year is more than double that of CEOs. EY chairman and CEO Mark Weinberger told Charles Hodson why.
(BEGIN VIDEOCLIP)
MARK WEINBERGER, CEO AND CHAIRMAN, EY: Entrepreneurs, Charles, have always been one of the leaders in growth and jobs throughout good and bad
economies, but particularly as we're coming out of a down current - turn - they're optimism seems to carry forward in translating into more hiring.
So, for example, of the 250 entrepreneurs that have been winners for the last three years from us, they've had 60 percent increase in hiring in a
very down or very slow growth job market. When we look at our current winners of entrepreneurs from around the world in 50 different countries,
two-thirds of them are talking about hiring 20 percent or more of the workforce over the next couple of years, which is much higher than when you
look at the larger companies which you're only looking at about - a much smaller increase.
CHARLES HODSON, ANCHOR OF CNN INTERNATIONAL'S "WORLD BUSINESS TODAY" SHOW: But is that so very encouraging when it comes to the jobs market?
Because after all, entrepreneurs typically employee people in relatively small numbers whether - whereas - big companies will employ a much larger
numbers. For those who are concerned about the jobs market, this isn't necessarily particularly good news, is it?
WEINBERGER: Well, but actually when you look at the total number of jobs created, the smaller companies create a larger percentage of the
overall jobs - both in direct, you know, to market with consumers but also in the B to B (ph). Remember these large companies need the supply chain -
these smaller companies to be able to produce the goods and the ideas as well as the technology for the larger companies to prosper. So, if you
don't have a strong pipeline of innovation, of technology and ideas from these smaller companies, the larger companies would have even a harder time
hiring more people. So, I actually think it's very good news that the entrepreneurs are thinking about optimism and hiring.
(END VIDEOCLIP)
LAKE: When we come back, turning Chrome into the Triple Crown. This horse could make history and its owners stand to make a lot of money too.
(COMMERCIAL BREAK)
LAKE: Here in New York, horse racing sensation California Chrome is getting set to run in tomorrow's Belmont Stakes for the Elusive Triple
Crown. Should he be first across the line, he'll become the first to complete the Crown since 1978. Now, it would be the ultimate glory in
horse racing, but for Chrome's owners, it would be the ultimate return on investment.
California Chrome was bred for this paltry amount -- $10,000. It sounds like a lot of money but it's not in the sport of kings. Now the
horse owners say he could be worth around - look at that -
(SOUND OF HORSE NEIGHING)
LAKE: -- $30 million. Thirty million dollars - that's a lot of money. CNN's Richard Roth is at the racetrack in Belmont -
(SOUND OF BUGLE CALL)
LAKE: -- on the eve of the biggest race that we could see in so many years. Richard, I was at Belmont one of the last times a horse had a
chance of winning. Of course it ended in disappointment. What about horse's chances?
RICHARD ROTH, CNN'S SENIOR U.N. CORRESPONDENT: Well, he's the betting favorite, and I've been here seven times, Maggie, since 1997, and seen a
potential Triple Crown go down in flames. Regarding all of those lucrative amounts you just mentioned with sound effects, I'm happy that I just won $2
on a race a few moments ago. The run for this Belmont Triple Crown, though, it's still pretty historic. There's going to be over $100,000
people here with a chance to see history.
(BEGIN VIDEOCLIP)
ROTH: California Chrome has been training fast for the Triple Crown, even at 6:30 in the morning.
(CHEERS)
Male: I'd love to see it -- it's history in the making.
ROTH: California Chrome was quickly installed as the heavy early betting favorite for the third leg in the Triple Crown - the Belmont
Stakes. He has already won the first two pieces of the Crown, including America's most famous race.
Male Announcer: -- but California Chrome shines bright in the Kentucky Derby!
ROTH: In the Belmont he will start from post position number two, the same gate that racing immortal, Secretariat, shot out of en route to a
Triple Crown romp in 1973. Do you expect him to win Saturday?
STEVE COBURN, CO-OWNER, CALIFORNIA CHROME: Yes, I do. Yes, I expect him to win Saturday, I really do.
ROTH: California Chrome and his connections are not Kentucky bluebloods. The horse was bred for a paltry $2,500 in California. The
owners of California Chrome reportedly rejected a $6 million offer for the horse. The 77-year-old trainer grew up in Brooklyn.
ART SHERMAN, TRAINER, CALIFORNIA CHROME: If we can win the Triple Crown, it'd be a dream come true for me.
ROTH: Dreams of a Triple Crown have been crushed in the homestretch at Belmont many times before - seven times in just the last 17 years.
Male Announcer: It's going to be very close - here's the wire! It's too close to call!
ROTH: It's been 36 years since Affirmed won the last Triple Crown in 1978, making this the longest drought for racing glory ever.
JERRY BAILEY, BELMONT WINNING JOCKEY: You have to have speed to win the Derby and the Preakness and stamina to win the Belmont. And usually
it's very rare to have that package in one horse.
ROTH: California Chrome also loves cookies and media attention. But there are competitors who will try to spoil the party.
BILLY COWAN, TRAINER, RIDE ON CURLIN: Been trying to spoil him for the last two races.
(LAUGHTER AND APPLAUSE)
ROTH: California Chrome will earn much more than the $600,000 share of the Belmont if he finishes first.
Male: (Inaudible), thank you.
ROTH: A jackpot of future breeding rights for his offspring which will make his small business owners California bluebloods.
(END VIDEOCLIP)
ROTH: If California Chrome wins the Belmont, the prize money for the winner is $600,000, but as you indicated, the money is going to be down the
road. And there'll also be sponsorships. Skechers Company - the colors of that company will be worn by Chrome tomorrow New York time, and there will
be likely many others. It's just been, Maggie, so long since we've had a Triple Crown winner. The eighth race here at Belmont is off in a few
seconds. If you have any picks, Maggie, I'd be happy to -
LAKE: (LAUGHTER).
ROTH: -- conduct some business here on the show.
LAKE: Richard, I got to go - we got to go with the people's horse. I know it's probably not going to pay out, but everyone is rooting for
California Chrome. In fact, I heard that people may not cash in their winning tickets because they're going to be worth more later than they will
for that. Richard, we got to run, but thank you so much. Have fun - supposed to be a beautiful weekend. Richard Roth for us.
Well, from the track to the stadium, there are six days to go until the World Cup kicks off. The manager of Team USA, Jurgen Klinsmann,
explains how he prepares for the games.
(BEGIN VIDEOCLIP)
JURGEN KLINSMANN, HEAD COACH, UNITED STATES NATIONAL TEAM: I think my background hopefully helps me prepare the American team in the best way
possible for a very extreme tournament. As a little boy, when people asked me, say, `What do you want to be one day?' I always said pilot.
Male: Copter 2-6 alpha flight of two at the coliseum.
KLINSMANN: It feels good because for those type of hours I can go up in the air, I can't think about soccer, I can't think about players or the
World Cup because I have to think about right now and be in charge of it.
Southern California for me was always a special place. I bumped into an Californian wife, you know, in Europe at my time (ph). Being here since
16 years and seeing the game grow, I got a much better understanding about soccer in the United States. I grew up in a family bakery where I saw my
dad working long hours every day - 12, 14, sometimes 16 hours and he barely could get sleep. I've fulfilled a lot of my kind of dreams by working hard
and always going for the next challenge.
Facing Germany always is for me, personally, will be a very emotional situation. And having, you know, both anthems playing before the game and
looking over to their bench, yes, it's going to be intense, but once, you know, the game starts, then I'm down to work and to compete. But before
the games, certainly there will be a lot of emotions.
(END VIDEOCLIP)
LAKE: Time for a check of world weather. Jenny Harrison is at the CNN International Weather Center. And, Jenny, when we spoke it looks like
it's been unbelievably warm weather in Europe. Is that continuing?
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Well, not only is it continuing, Maggie, we're actually going to see some warm weather in
more central regions too of Europe. So, the heat that you're mentioning of course that was across the eastern regions, but central area if you get
ready for a very warm weekend ahead, the only area not seeing the nice weather really is under all this cloud. And as usual it is the U.K.,
Ireland and western fringes there of France, and maybe just pushing into Porch (ph) in Northern Spain.
But for the most part, high pressure very dominant and setting those temperatures sky high. Certainly a good ten, even more, degrees above the
average for this time of year. But with that high pressure there, it's doing the usual thing which is blocking all these systems which are coming
in across the Atlantic. So, unfortunately that rain is going to just be sticking around across the northwest. When it moves away, it should head
further towards the north. So, when it comes to temperatures this Friday, look at some of these highs - in particular Saint Petersburg. Not the
warmest location but at 30 Celsius, that is, as you can see, 12 degrees above the average, at 32 in Moscow and so it goes on.
And it is going to be a warm weekend ahead. However, you can see in the last few days it really has jumped quite spectacularly, particularly in
Kiev - 20 Celsius on Wednesday and by Friday 30 degrees Celsius. Bit more of a gradual climb in Saint Petersburg, although Wednesday the
temperature's above the average, and it's a similar story in Moscow as well. The temperatures have been above average for more than three days.
And as I say, it will stay warm although you'll see here by Monday in most cases actually coming back down to the average. So, from 31 in Moscow on
Saturday to 22 on Monday. So if anything, feeling a little bit cool after the heat of the last few days.
Now, this is showing you the temperature trend of the next 48 hours. And so what you can see here is this yellow and the orange shading pushing
into central areas. That means the temperature is on the rise. And this is what that will do, so Prague's 31 by Monday, the average is 20, 31 also
in Budapest against an average of 24 and in Berlin 33 against an average of 21. It does mean despite the weather across the West, that we've got some
very nice weather - certainly on Saturday for the ladies' final at Roland Garros for the French Open. Sunday a little bit more mix - could be
cloudy, could be showery, both days it will be warm - it's hard to say - just keep an eye on that to see if it improves any at all. Any time before
then for Sunday. Maggie.
LAKE: Excellent, we will do that. Thank you so much, Jenny. Still to come on "Quest Means Business," the CEO of Qatar Airways says air travel
isn't what it once was.
(COMMERCIAL BREAK)
LAKE: Qatar Airways adds a new destination to its line up next week - Miami, Florida. The airline has already added seven destinations in just
the first five months of this year. Richard asked Qatar Airways' chief executive Akbar Al Baker how air travel has changed the world.
(BEGIN VIDEOCLIP)
AKBAR AL BAKER, QATAR AIRWAYS CEO: World would have never been what it is today if it was not for aviation because literally the world shrank.
And today you can go from A to B at the fastest possible time which means you can produce more, do more business, deliver more to your economy and of
course let people get together.
RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: For you, what was the most remarkable or what's the
best part of the aviation revolution, do you think?
AL BAKER: Well, it is the age of jet travel, really. And I really still wish that we had Concorde operating, fuel price to remain low in
order for this kind of supersonic transport to be still happening in the world.
QUEST: Will we ever see supersonic again in our lifetime?
AL BAKER: I think we may. There are still research, there will be alternate fuel that will still be able to operate supersonic with
reasonable cost.
QUEST: There is no question that the center of aviation has shifted to the Gulf.
AL BAKER: Definitely. This is why we are worrying so many Western airlines that see that the whole shift of travel pattern coming to this
region that was in the past the monopoly of Europe.
QUEST: And for those that talk about the question of fair competition, what would you say?
AL BAKER: I think this is all a farce - this fair competition is just nonsense being created by people who cannot live up to the quality and
standards that we provide to our passengers - good value for money. You know, when you look at our seat mile cost of being just 7 cents/6 and 1/2
cents, whilst our competition have 16 and 17 cents, this is what is the issue. It is not the issue of our growth because others are also growing.
But they want to have their cake and eat it them self. And this today is not possible.
QUEST: What can we look forward to next in aviation?
AL BAKER: It is not all about providing seats and providing fancy interiors in an aero plane, it is bringing the right number of people,
looking after them, exceeding their expectations but at the same time always making sure that we make money.
QUEST: You don't have to make money. You've got a government as your owner. They don't require you to make money.
AL BAKER: I think this is an absolute misperception on your part, Richard. We have to make money, and I have my own dignity. I don't want
to serve my country and every time put my hand out for assistance. We run as an absolute commercial company like any other company and we have to
make money. I know that we don't have shareholders but we have one shareholder that is very demanding and we have to deliver.
QUEST: What still amazes you about the whole experience?
AL BAKER: It is the smell of the fuel that comes out from the engine that keeps me motivated to do more and more for these passengers that are
really our guests. These passengers are the catalyst of our growth.
QUEST: Do you still get impressed when the plane rotates and lifts off the ground? Does it still have a sense of wonderment for you?
AL BAKER: Absolutely. You know, I don't have to wait for the plane to rotate. I have the fortune of walking under my airplanes and I still
can't believe that these machine can get airborne with all the people in it and all the fuel that it carries, all the cargo that it carries. I mean,
it's amazing. It is a real miracle of science - an aero plane.
(END VIDEOCLIP)
LAKE: Stephen Covey's best-selling guide on being a highly-effective person is the book of choice for the man about to run one of the world's
busiest airports. In "Reading for Leading" on this weekend's "Best of Quest," the book called "Seven Habits of Highly-Effective People" is top of
the list for John Holland-Kaye.
(BEGIN VIDEOCLIP)
JOHN HOLLAND-KAYE, CEO-DESIGNATE, HEATHROW AIRPORT: The thing I like about "Seven Habits" is that you don't even need to read the whole book,
although it's not a very long read. It's enough just to read the headlines and the summary just to remind yourself of some of the things one ought to
be doing. They're good, good touchstones for business life. So it's very uncomplicated, it's something that I sometimes use to explain to people in
my team about what my values are and what I hold dear and just make sure, for example, we are developing our pipeline of talent. That's one of the
things that comes out of "Seven Habits" and which I have tried to do throughout my career, particularly here at Heathrow.
(END VIDEOCLIP)
LAKE: Catch the full interview on the "Best of Quest" at 1 p.m. Berlin time Saturday, and it is repeated throughout the weekend.
Commendable calm following the D-Day landings. We'll show you how the financial press reported the events of 70 years ago when we come back.
(COMMERCIAL BREAK)
(BEGIN VIDEOCLIP)
(COMMEMORATIVE MUSIC PLAYS)
(END VIDEOCLIP)
LAKE: You're looking at some of the images from today's D-Day commemorations in Normandy, France. As we told you, around 1,000 veterans
of the Second World War made the journey to remember those who never made it home. Now, CNN wasn't around to cover D-Day 70 years ago. "The
Financial Times" was. This is the newspaper's front page from June 7th, 1944, a day after the Allies invaded Normandy. The lead story? The
markets. The paper reports interest was centered on the invasion as you might imagine rather than investments. It says the tone was normally calm.
The paper carries an advert for Haig whisky for 25 shillings and 9 pence a bottle, about 33 pounds or 56 dollars accounting for inflation. "The FT"
itself is rather more modestly priced at 2 pennies, equivalent to around 33 cents these days. And that's "Quest Means Business." I'm Maggie Lake in
New York. Thanks for watching.
(END QUEST SHOW)
END
