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Quest Means Business
ECB Launches Stimulus; Stocks Surge; Draghi Calls for Help; ECB Stimulus; US Jobs Numbers Boost Stocks; NATO Summit Under Way in Wales; Lithuanian President Calls Ukraine Crisis a Threat; Make, Create, Innovate: "Garbage Man" Turns Trash to Profit; Lego Now World`s Biggest Toy Company; Dyson Debuts Robot Vacuum; "Internet of Things" On Rise
Aired September 04, 2014 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: Manny Pacquiao ringing the closing bell, giving the market a bit of an old one, two as the closing bell rings on what has
been an extraordinarily busy day.
(GAVEL POUNDS)
QUEST: They always do it three times. You thought you had to get a bit more from him. Just the three -- no, no more. It is Thursday, it is
the 4th of September.
You want action? You`ve got action. The ECB has cut rates again.
Tonight, defending the "Knee Defender." It`s inventor tells me the reclining must stop.
(BEGIN VIDEO CLIP)
IRA GOLDMAN, INVENTOR, "KNEE DEFENDER": But the fact is, the airlines can put me out of business, and I`d be happy with it if they`d simply solve
the problems and protect their passengers from being hit.
(END VIDEO CLIP)
QUEST: And everything is awesome for Lego. It`s built the world`s biggest toy maker.
I`m Richard Quest. We have a busy hour ahead together, and I mean business.
Good evening. Tonight, some fun and games from the European Central Bank. It might look like QE, quantitative easing, and it acts like QE, and
perhaps you might even think the European Central Bank is joining the world`s money-printing club with full-throttle QE, but the ECB president,
Mario Draghi, says the bank isn`t there quite just yet.
But the ECB has embarked on some pretty dramatic and drastic measures to try and get money flowing around the eurozone economy. The central
banks of the US, Britain, and Japan have all done similar, but look at the dates. After seven years of rising unemployment, crises, and near
political collapse in Europe. Just look at the dates
In November, the US finished easing. March the 5th, 2009, the UK finished easing. Japan did its easing in 2010. And now, the ECB is giving
the economy a welcome shot of stimulus on September the 4th by lowering rates, just a smidgen.
It`s lowered the refinancing rate, it`s lowered the deposit rate, and crucially, it`s also increased the amount the banks have to pay to put
money on deposit with the European Central Bank. In other words --
(RINGS BELL)
QUEST: -- negative interest rates in the eurozone. Join me at the super screen, and you`ll see what I`m talking about. Mario Draghi, the
president of the ECB, was nicknamed Super Mario during his stint at the Italian Treasury. As head of the ECB, he needs to take his game to the
next level, and this his how President Super Mario is going to do it.
He`s going to do it by stimulus, and investors were surprised by the ECB buying asset-backed securities. This is not traditional QE as seen in
the US or the UK. The ECB is not buying government bonds.
Instead, it`s buying packages of mortgages, loans, which are put together by banks in the zone, and then sold to the central bank. But it
still has the same effect. It makes borrowing easier and cheaper.
At the moment, there are record-low interest rates in the eurozone. Mario Draghi has admitted there`s nowhere further to fall. And, as I said
earlier, he`s increased the negative rates.
But this is the reason why he`s got to do it, and he has to do it now. Russian. Serious issues with sanctions. Deflation. The latest numbers on
eurozone show inflation at just 0.3 tenths of one percent. Some areas are already in deflation.
Slow growth. The PMI numbers were down. The growth numbers were down. High unemployment. We talked about it last night.
Draghi`s announcement pushed stocks higher across the board. Jim Boulden is with us at CNN in London. I look at those numbers and I see --
talk about Super Mario.
(LAUGHTER)
QUEST: He gave them a boost and a half.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Yes, he sure did, Richard, you can see. Of course, no surprise, green across the board. But
look at the three at the top, the so-called peripheral markets. You can see, Milan up 2.8 percent. Madrid up nearly 2 percent. Portugal up 1.7
percent.
Why does this matter? Well, of course, these are the markets that had so much trouble during the economic crisis, where they needed bailouts,
they needed the banks to be bailed out. The hope is, a lot of the bank shares were a lot higher because they would be able to unload some of their
loans and sell them onto the ECB. So, that really helped here.
But let`s look at what happened earlier in the day, Richard, because this is the close of the markets. But when the ECB came out with a
surprise rate cut, then we saw what happened to the euro. And of course, the euro had been going -- it had been getting weaker for the last couple
of days, but what happened after that is the euro really, really fell hard against the US dollar.
And because of that, we now see a lot of movement throughout the day. But this is where the pressure least came out, the cutting interest rates.
Big surprise. I was surprised. And then, throughout the day, when he started announcing the asset-backed securities sales, as you said.
This makes the euro cheaper. This helps, of course, exports. So that`s another boon, that`s another positive for today that could help
eurozone economies --
QUEST: Right.
BOULDEN: -- especially Germany, with absolutely no growth in the second quarter. Could this be one of the things that helps the exporters
there? We have, of course, Italy, triple-dip recession. Things really anemic in Europe.
As you said, not quantitative easing. This isn`t the final bazooka from the ECB, but boy, we did get awful close, didn`t we, Richard?
QUEST: Jim Boulden with the euro and the dollar and just look at that graph. You don`t see that everyday. And what`s interesting is, Jim was
alluding to, very little -- no recovery by the end.
Mario Draghi says monetary policy alone is not sufficient. It`s necessary, but not sufficient to fix Europe`s problems. Governments,
fiscal policy must play its part.
(BEGIN VIDEO CLIP)
MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: It`s very difficult for us to reach the objective of an inflation rate which is below but close
to 2 percent only based on monetary policy. You need growth. You need to lower unemployment. So in this sense, there isn`t any grand bargain here.
Just that each of us has to do their own jobs.
(END VIDEO CLIP)
QUEST: Joining me now is Gillian Tett, the "Financial Times" US managing editor. She`s with me. Gillian, the -- we didn`t really -- we
know the ECB had to do something, and it was a question of when they were going to do it, but the way in which they did it today, I can`t decide
whether it was full-throttle, half-hearted, or come back next month and we`ll let you know what`s really going on.
GILLIAN TETT, US MANAGING EDITOR, "FINANCIAL TIMES": Well, I think, Richard, you`ve put your finger on it. Mario Draghi, or Super Mario, if
you call him, is an absolute master of pulling rabbits out of the hat. But frankly, he tends to pull paper rabbits out of the hate.
Remember that promise that we will do whatever it takes to keep the single currency together? Luckily, no one really called his bluff, and
simple verbal direction worked.
This time around, he`s pulled out his bazooka, if you like. Not the full quantitative easing, but he has managed to surprised the markets by
cutting interest rates. The reality is, though, at these levels, tiny cuts of interest rates like this really won`t make that much difference.
Yes, he`s certainly raising his asset-backed security purchase program as a new step towards really trying to combat inflation, but the problem,
as he himself knows -- or sorry, deflation. As he himself knows, right now, the power to really get Europe back on the growth trajectory does not
lie with the ECB.
QUEST: But this is a dangerous environment to now be in for the eurozone. Yes, the rest of the world can pull the eurozone into sclerotic
growth. But as we were showing earlier, if we look, the US did it in 2008. The UK 2009. Abenomics in 2010. Right late in the day we`ve got him
coming at 2014. He can`t do full QE because he`s not allowed to do full QE.
TETT: Well, absolutely. With Mario Draghi trying to fire his bazooka, it`s unlike Janet Yellen, he basically has his lieutenant general
standing by his shoulder pulling back his arm in the form of the Bundesbank. There is not consensus right now on the European Central Bank,
and that`s very clear in today`s fudged statement. That`s why he`s producing paper rabbits.
But I will make one point, which is that if you`re sitting in America right now, what`s happened in Europe in some ways is slightly worrying, but
it`s also got a good side, too, in that Europe is actually not falling off a cliff right now. There is hovering on the edge of deflation, it`s not
falling off a cliff.
And precisely because of the ECB doing what it`s doing, essentially the Treasuries market is being propped up even as the US Federal Reserve
tries to move towards tightening itself. So, in some ways, the beneficiary of all this is the US Federal Reserve right now.
QUEST: Last question, and by far the most difficult.
(LAUGHTER)
QUEST: It`s -- what`s he got left that he can now use? Because he`s not allowed to do monetary financing by buying bonds directly from eurozone
governments. So, if he`s going to do something else, what is it?
TETT: Well, frankly, other than pray -- I think praying is probably quite a good strategy right now --
(LAUGHTER)
TETT: But he really hasn`t got a lot left. He could copy the Bank of Japan and just keep announcing bigger and bigger purchase programs until
the numbers become so big that no one has a clue what they actually mean anymore. And frankly, we`re almost at that point now.
Otherwise, he can`t cut rates anymore. He could try and call the bluff of the eurozone governments, but if he gets too tough with that, he
eventually will start creating cracks in the single currency again.
So frankly, he`s got an extremely difficult job. I`ll argue in some ways, he`s got the most difficult job of any major Western central bank
governor today.
QUEST: Thank you. Beautifully put, and put it into perfect perspective, and we`re so glad you joined us tonight. Thank you, Gillian.
TETT: Thank you.
QUEST: Always good to have Gillian Tett on the program.
Look at these numbers. We had this -- interesting, I got my pen, make sure it doesn`t leak. Very strong start to the day. Very strong start,
largely after what it had seen, the US markets stable after encouraging job numbers, the eurozone.
The ADP showed 204,000 private sector jobs were added in August. The main jobs report comes out. But it all dwindled away, and by the close, up
to 3:00, any enthusiasm had evaporated.
When we come back in just a moment, Lithuania`s president brings her tough talk to the NATO summit. And wait until you hear what this modern-
day Iron Lady says when she`s talking about her fellow president, President Putin.
(COMMERCIAL BREAK)
QUEST: France`s president says he may reinstate a billion-dollar warship deal with Russia if a permanent cease-fire between Ukraine and
Russia can be agreed. World leaders are at the NATO summit in Wales. NATO has blasted Russia for its continued aggression in Ukraine. A US official
says both the US and Europe are preparing another round of sanctions against Moscow.
Ukraine`s president says a peace plan is imminent. The president of the European Commission wasn`t overly optimistic.
(BEGIN VIDEO CLIP)
JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: The situation so far has been so volatile, and you have seen so many contradictions between
what some people say and what they do that I cannot, of course, be sure of that. But it will be good news if you have a real cease-fire. At the same
time, of course, in full respect of the independence and sovereignty and integrity of Ukraine.
(END VIDEO CLIP)
QUEST: President Barroso. Now, Lithuania`s president says Europe is undergoing a test of leadership. Dalia Grybauskaite, who is nicknames the
Iron Lady, she says Vladimir Putin is a ruthless dictator. Europe can no longer afford to be pushed around.
(BEGIN VIDEOTAPE)
DALIA GRYBAUSKAITE, PRESIDENT OF LITHUANIA: It is not about direct threat to Lithuania, it is about direct threat to European security and the
world security, finally. And the peace on European soil.
Today, we`re seeing the country, which is becoming aggressive and threatening its neighbors and breaching all international obligations and
agreements. And the NATO and European Union needs to stand against it.
QUEST: What do you think President Putin`s up to? You`re a president, you`re a leader, you sit and talk to other leaders. You have
insight into the minds of others. What do you think he`s up to?
GRYBAUSKAITE: Really, what is going on now in the world and in Europe, also, is a test of leadership. And today is something what we can
see the test of leadership from the Russian leader on other leaders of NATO and the world.
And we need to say -- regardless of the test and to everybody that peace is all our obligation and necessity in the world. In Europe
especially, because Europe was challenged by two wars. And this is not supposed to be weakness or stopping us from the action against new threats
and against the terror and aggression.
So, today, it is the test of leadership for European leaders and for NATO leaders. And Putin knows how long and how much he can go, and we need
to show that he cannot go too far.
QUEST: Only two or three countries in NATO are spending the required by treaty, 2 percent of GDP. So, that means you, too, will have to spend
more money, and all the other members, some of whom are playing pityingly low sums of money for the NATO umbrella.
Do you think there`s a realization? Do you think the moment of truth has arrived for countries to start getting the checkbook out?
GRYBAUSKAITE: Yes. That`s exactly the moment. We need to take first our own responsibility, including my country. And we are doing it. Of
course, it`s not easy. It is after to the economic crisis. But it`s no excuse anymore.
QUEST: You talk about it being a test of leadership. If this is a test of leadership, surely the one thing we can say is that much of the
leadership in the EU has failed in the last few years in that it ever -- this wishy-washy discussions and talks and let`s see where it goes and
let`s, perhaps, mediate a negotiated settlement.
It`s led to this situation, Madam President, let`s be blunt, where the Russian president believes he can wage some form of proxy war in Europe.
GRYBAUSKAITE: Yes, but it is true. And mainly because we still think that we can postpone the inevitable. And the time today is over for the
postponement. We need to be decisive and remain responsible for our decision. There is no way we can postpone the problems anymore. We need
to take decisions.
(END VIDEOTAPE)
QUEST: And that`s the president of Lithuania with some extremely strong and robust views, the sort that you`ll always hear on QUEST MEANS
BUSINESS. Now --
(RINGS BELL)
QUEST: -- when we come back after the break, there`s money in your garbage. In a moment, we meet a man who wants to take your old plastic and
use it all over again.
(COMMERCIAL BREAK)
QUEST: Ah! Now, think about this. Plastic. It is inescapable in our daily lives. Now, this is just a sample of the sort of garbage that`s
been in the newsroom that we`ve been picking up around all the course of the day.
Not only basic plastic and milk bottles, but also high-tech plastics found in our essential electronics. And when all this plastic has outlived
its usefulness, well, what do we do? We pick it all up and then we throw it away. And we probably don`t even think about it again.
And that is where the new garbage man comes in. But this garbage man has a PhD. And he`s dedicated to finding new ways of turning this old
plastic into profit. Nick Glass spoke to him. It`s this week`s Make, Create, Innovate.
(BEGIN VIDEOTAPE)
NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Our mobile phones, our computers, our cars, what happens to them when they become
obsolete and we upgrade to the latest model?
GLASS (on camera): Extracting metals is relatively easy. Getting the plastics out, the more valuable plastics, is much, much harder. But one
man is on a mission to change all that.
GLASS (voice-over): Dr. Mike Biddle is a 58-year-old chemical engineer from California. He spent the last 25 years developing ways of
recycling secondhand plastic.
MIKE BIDDLE, PHD, FOUNDER, MBA POLYMERS: Our invention was figuring out how to mine plastics from the largest waste streams in the world.
GLASS: In the industry, he`s know as the Garbage Man.
BIDDLE: Today, we`re recycling less than 10 percent of the world`s plastics. Most of them are mixed, are in complex mixtures of waste and
hard to separate from that mixture. So I decided to try to solve that problem.
GLASS: The idea came --
(AUDIO GAP)
GLASS: -- company Dow Chemical in the 90s.
BIDDLE: They literally told me, we didn`t hire a PhD in polymer science and engineering to work on garbage.
GLASS: So, Biddle decided to go and do some prospecting on his own.
BIDDLE: So, what we have to be able to do is figure out, OK, why are these plastics different. So, what we`ve done is exploit the reasons they
don`t like each other on the molecular scale, force these materials to separate reliably each and every time. And that`s why it took us 20 years
to get there.
GLASS: His factory in the northeast of England has been operating for three years. It`s the most sophisticated plant of its kind on the planet.
Fully automated, production 24 hours a day, 7 days a week, over 30 processes used to isolate 75 tons of the prized plastic every day.
Biddle`s company, MBA Polymers, has plants in Austria and China, all producing the same product from mounds of plastic waste.
BIDDLE: So, this is a bag of our finished goods. It`s about one ton. And it`s the currency of the plastics industry. It`s plastic pellets. And
this is worth a couple of thousand dollars.
GLASS: Biddle refers to it as the circular economy, recycling all the parts you can and using the rest in energy production.
BIDDLE: We sell to Fortune 100 companies in the electronics, appliance industry, automobile industry, home furnishings, because if they
harvest the materials from their end of life products, they have low cost and reliable feed stock for their new products.
GLASS: And for the Garbage Man, there`s no better feeling than seeing his plastic back on the shelves.
BIDDLE: When I see a product made from our recycled plastic, I guess the best word to say is I feel fulfilled. Because it`s been a hunger
inside of me for more than 20 years. And to see it sitting in a store and knowing that our company made that happen, I can`t think of a more
rewarding feeling.
(END VIDEOTAPE)
(BEGIN VIDEO CLIP)
(MUSIC - "EVERYTHING IS AWESOME," "THE LEGO MOVIE")
(END VIDEO CLIP)
QUEST: Everything is awesome for Lego. That, of course, was the movie by Warner Brothers, which is also owned by Time Warner, parent
company of this network. But Lego, which is not part of Time Warner, parent company of this network, Lego is now the biggest toy company in the
world. Absolutely, I jest thee not.
Lego has bested Mattel in revenue and profit for the first half of 2014. Just look at it, I`m going to show you how better to do it than
this. Now, let`s have a little play.
This is Lego, and think of these blocks in terms of hundreds of millions and you can see exactly how Lego has grown. One, two, three,
four. And then you`ve got Mattel, and if you put the two next to each other, you can see, Mattel was bigger. Mattel was bigger. Mattel was
bigger. Mattel was bigger. Mattel was still bigger. And then suddenly, bing! Lego wins the day.
Lego has $2.03 billion, Mattel at $2 billion. That`s the way it looks in terms -- largely one reason was "The Lego Movie" was a smash hit on the
silver screen. It featured Will Ferrell and Morgan Freeman and found mainstream success for the little blocks.
So, that`s the way it`s all looking for Mattel and Lego, which is better. Joining me now to talk more about this -- let`s put this all
completely into perspective.
Dyson has launched its first-ever robot vacuum cleaner named the 360 Eye. The chief executive, James Dyson, says it took 16 years and nearly
$50 million to develop. The machine can do the housework while you`re out thanks to smart phone app.
Devices are more connected than ever. The "Internet of Thing," of which you are familiar, allows us to get internet access through our linked
objects. Now, the guest that we`re about to meet says the trend is unstoppable.
Jahangir Mohammed is the founder and CEO of Jasper Technologies. He joins me from San Francisco. We know the Internet of Things is here. We
know it`s important. But where is it going?
JAHANGIR MOHAMMED, FOUNDER AND CEO, JASPER TECHNOLOGIES: Well, it`s going just about fast from everything we use, Richard. Internet of Things
is going to become as pervasive as the internet itself, and it`s going to supremely make the devices and the products that we use everyday become way
more useful and way more fun, and way more safer.
QUEST: And yet, at the same time, when we have hacking scandals, iCloud with nude photographs, Home Depot potentially with credit cards,
Target, it begs the question, do I really want my refrigerator, my heating system, connected to the World Wide Web, which can then be hacked?
MOHAMMED: It`s true security is getting a lot of attention recently, and some of the best minds in the world are working to close the gaps. And
it`s a problem that will get solved, for sure. And it`s an into security, and people understand what the problem is, and many people are working to
solve it.
There are ways to make these things truly secure, and we ourselves, in our company, are making some substantial contributions to that end. I
think it`s kind of like a hammer, right? You can use a hammer to build a house or you can use a hammer to hit somebody. It`s like that.
QUEST: Sure.
MOHAMMED: I think the Internet of Things technology is like that. It can provide so much usefulness for everything we use, everyday basis.
QUEST: Right.
MOHAMMED: And the security needs to be solved.
QUEST: Thank you very much, sir. I appreciate you joining us this afternoon by coming in and talking to us.
Still to come on QUEST MEANS BUSINESS, in the past hour, sad news tonight. Legendary comedienne Joan Rivers has passed away. We are going
to spend some time to look back at the decades career of one of the funniest women, if not the funniest woman, of our times.
(COMMERCIAL BREAK)
QUEST: Hello, I`m Richard Quest. There is more "Quest Means Business" in just a moment. This is CNN, and on this network the news
always comes first.
Sad news tonight. The celebrated American comedian Joan Rivers has died. Ms. Rivers` daughter says that her mother passed away on Thursday
afternoon at a New York hospital. Joan Rivers was 81 years old. These are live pictures - these are pictures from the Hollywood star in Hollywood in
California today in the last couple of hours. It`s on Hollywood Boulevard of course. Joan Rivers had a long career in television, films and stage.
She was exceptionally well known for her gossipy and cutting wit.
The NATO Secretary General Anders Fogh Rasmussen says instead of contributing peace, Russia`s fueled the battle in Eastern Ukraine. Mr.
Rasmussen was speaking at the NATO Summit with the Ukrainian President Petro Poroshenko who has thanked the NATO Alliance for its support.
The Dutch Safety Board is to issue the preliminary report on the crash of Malaysia Airlines flight 17 next Tuesday. A statement from the Safety
Board says a final report is expected within the year by the anniversary of the crash and that further investigation is still needed. U.S. Justice
Department`s to investigate the police department in the city of Ferguson in Missouri after last month`s fatal shooting of an unarmed teenager. The
U.S. Attorney General Eric Holder said the inquiry would focus on the use of force by police. The death of Michael Brown sparked days of violent
protests.
In a surprise move, the European Central Bank has cut interest rates to a new record low of 0.05 percent. It`s part of a range of measures
aimed at breathing life back into the Eurozone economy. The ECB will also be buying up some loans, so-called asset-backed securities and mortgages to
make borrowing cheaper.
More now on the very sad news today of Joan Rivers` death announced in the last couple of hours. Most of us will remember the comedian for her
brash and bold jokes, her risque humor. She was certainly no stranger to controversy and outrage, and in do so, she managed to use laughter as a
form of therapy. Nischelle Turner now looks back at Joan Rivers` wonderful career.
(BEGIN VIDEOCLIP)
JOAN RIVERS, COMEDIAN: Can we talk?
NISCHELLE TURNER, JOURNALIST AND CORRESPONDENT FOR "CNN ENTERTAINMENT" AND "NEW DAY": Joan Rivers could always talk.
RIVERS: Do you know what it`s like to go in the morning to take off a facial mask and realize you`re not wearing one? No, you don`t know.
TURNER: With sometimes outrageous jokes, nothing was ever off limits.
RIVERS: I hate old people! I - oh - if you are ***king old, get up and get out of here right, right now.
TURNER: Born in 1933, Rivers says even as she was growing up in the New York suburbs, she wanted to be an actress.
RIVERS: I never had a choice. I always say it`s like a nun`s calling.
TURNER: She joined the iconic Second City Comedy Theater in 1961. As her comedy career was taking off, she married producer Edgar Rosenberg in
1964, who would manage her career and become the focus of so many of his wife`s jokes. The pair had one daughter together - Melissa. In 1965
Rivers saw her career get a huge boost when she appeared on the "Tonight Show" with Johnny Carson for the first time.
RIVERS: He gave all us our starts. My life changed. I went on the show the first time - seven years of struggling, coming out of Second City
- and on the air he said `you`re going to be a star` and the next day my life was different.
TURNER: It was the start of a 21-year professional relationship with Carson and the show. She made regular appearances, eventually becoming the
show`s substitute host in 1983. The Rivers decision to launch her own show on the brand new Fox Network in the fall of 1986 ended her relationship
with Carson and "The Tonight Show."
RIVERS: The minute I became competition, it became out to kill me. Out to kill me. And that`s what came down forever. Never spoke to me
again.
TURNER: The show was canceled in 1987. Just a few months later, River`s husband committed suicide in a Philadelphia hotel room.
RIVERS: I was in the house and some idiot called the house and they said, `Where`s your mother?`-somebody from Philadelphia. And Melissa said,
`She`s not here.` They said, `Well, please tell her your father killed himself.` How`s that for a phone call?
TURNER: Rivers regrouped by doing what she always did - putting her life out in the open.
RIVERS: If you laugh at it, you can deal with it. That`s how I`ve lived my whole live.
TURNER: Her career surged again when her withering take on red carpet fashion - full of biting remarks and celebrity putdowns - exposed her to a
whole new group of fans.
RIVERS: I think I`m working the best I`ve ever worked now because I - it`s all been done to me. What are they going to do? They going to fire
me? I`ve been fired. I`m going - audiences are not going to like me? A lot of audiences hadn`t liked me. I`ve been bankrupt, my husband`s
committed sui - I` mean, it`s OK and I`m still here. So it`s OK.
(END VIDEOCLIP)
QUEST: Joan Rivers who died today.
(COMMERCIAL)
QUEST: Extraordinary story, this. Qantas, the Australian airlines, has introduced new check-in procedures after a very tricky takeoff earlier
this year. Staff are to be reminded and to ensure that children are recognized as children when they check and when they board the aircraft.
Here is what happened - join me at the Departure Board. Now, this is Boeing 737. On this plane was a large group of school children. The
school children were sitting at the back of the aircraft.
Now, there were 87 of them involved. They were mistakenly factored in as adults. Why is that significant? Because instead of 30 or 40 kilograms
of weight each, the dispatcher gave them 87 kilograms of wheat - of weight. What does that mean? It means the pilots were given the wrong weight - the
wrong takeoff weight - because what the pilot was expecting was a - the pilot was expecting - a heavy back of the plane, therefore he had to trim
the aircraft as well to make the plane much heavier.
So, what`s happened with the plane actually tried to take off? That`s what should`ve happened of course, but instead, the nose was too heavy.
Why? Very simple. Because there was - this bit was lighter than this bit, and the pilot was forced to put significant back pressure on the controls
to allow the pilot to take off. The plane - the pilot - was wary of overcorrecting, because what he didn`t want to do was have a tail strike at
the back of the aircraft. Interesting stuff how they managed to get that wrong. It`s all about the center of gravity, which is in the middle of the
aircraft.
Now, once you actually get into the air, the problems continue. It`s all over this little device. Come and have a look at it. This is a very
small little device that has caused a very great deal of trouble. It`s known as the knee defender, and they`ve ignited a debate about the right to
recline. You put the knee defender on the tray table sides in front of you. Bu doing that, it prevents the seat in front from reclining - moving
at all. There`ve been disputes over reclining seats, it`s forced three planes to be diverted in a matter of weeks. Only one case involved the
knee defender. But I spoke to the inventor of this - Ira Goldman -- and asked him to defend his controversial product..
(BEGIN VIDEOCLIP)
IRA GOLDMAN, INVENTOR OF THE KNEE DEFENDER. The flight attended was quoted saying she sees cracked laptop screens all the time. But there was
no concern about that - it was just, oh yeah, we see that happen. Knee defender can stop that from happening. Why wouldn`t the airlines want to
help their passengers protect their laptop computers from being broken?
QUEST: For the very reason of what`s happened when somebody tries to recline, a knee defender is in use, an argy bargy ensues and I realize it
says on the side - be courteous, do not hog space, listen to flight crew.
GOLDMAN: Yes.
QUEST: I realize it says that on the knee defender, but the reality is in the war of economy seats, it`s going to turn ugly.
GOLDMAN: Well, it`s been on the market for 11 years. This is the first incident where it happened - where something like this happened. The
man who was using the knee defender - at first when the flight attendant said take it off, he did. And then, by his own admission, he acted badly.
So, it was an escalation that happened and the knee defender was involved, but that wasn`t the cause of it. Eleven years on the market and this
hasn`t happened. People use it responsibly.
QUEST: Last week on this program, the travel editor of one of the West Coast newspapers, Spud Hilton, he said the knee defender sabotages a
piece of equipment on the aircraft. Now, it`s not an engine, it doesn`t sabotage the avionics. It sabotages a bit of basic equipment which is the
recline on the seat. But he says it is sabotaging a piece of aircraft equipment.
GOLDMAN: Well, that`s - he can say that, that`s his histrionics. The fact is my knees are a device which stop a seat from reclining. Now, is it
better if a seat back can break a laptop screen - that force, I don`t` want it to hit my knees. The man who was arrested in Boston after he was put
off a flight, was hit in the knees by the seat in front of him. He acted badly, but he was first hit in the knees. The woman on the flight to
Florida the other day acted badly. But it started when she had her head resting - she was resting on her tray table, and she was hit in the head by
a reclining seat. Now, I don`t know that it`s proper to say that that`s sabotage when people are simply trying to protect themselves from being hit
by the seat.
QUEST: Is it - isn`t it better practice, instead of using knee defenders or other such tools - isn`t it better practice just to be
courteous when you recline your seat? Do it slowly, look behind, maybe inform the passenger behind that you`re going to be reclining the seat and
do it with a smile. Wouldn`t that be a more courteous and preferable way?
GOLDMAN: It`s also courteous to knock on a door before you enter if it`s the bathroom. But people don`t, so you lock the door. And then
people - and people try to come in, and you say `there`s someone in here.` But when you`re ready to leave, you move - you unlock the door, you move
out. Same thing with the knee defender. It is - people have contacted me numerous times over the years. I don`t want to buy your product, but I`m
buying it because I`ve asked people to pull their seat up just a little bit while I`m eating because it`s resting on my - the seat back`s resting on my
knees. And they say, `Screw you.`
QUEST: Of course, the knee defender might be out of business if the trend in European and some other carriers have no reclining seats as you`ll
be aware from easyJet and Spirit and the like, where the new seats don`t recline.
GOLDMAN: That`s true, and that - hey - that`s capitalism. When they fix the problem, I`m out of business, I have other things to do. That
would be great. That`s what the - that`s why I was inspired to do this. Sure, it`s a business. But the fact is the airlines can put me out of
business and I`d be happy with it if they`d simply solve the problems and protect their passenger from being hit their - and having their equipment
damaged.
(END VIDEOCLIP)
QUEST: The knee defender. And it`s worth just mentioning to you that many airlines which again, most of them in the United States, actually do
ban the use of the knee defender on aircraft. The weather forecast now. Jenny Harrison is at the World Weather Center. You`ll not need -- you`re
probably so far up the front of the aircraft that you don`t - you just need a bed defender.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: (LAUGHTER).
QUEST: You don`t need a knee defender.
HARRISON: Ah, Richard, you`ve hit the nail on the head exactly. If I don`t sit up there, then I don`t fly at all. That`s it absolutely.
Talking of flying of course, you need some pretty good weather. There`s some bad weather I`m afraid around though which cause a few trouble
problems. This is the first one - Hurricane Norbert. It was a tropical storm this time yesterday. Moving very slowly - winds at about 150
kilometers now. There are warnings place along this particular portion of Baha, California - tropical storm watches and warnings - and so far very
heavy amounts of rain - 270 millimeters in the last 48 hours. It will continue to produce some heavy amounts of rain as it works its way up to
the northwest. But it should begin to lose power. It`s going to move into so much cooler water, and when it moves into that cooler water, it will
actually begin to fall apart.
You can see here all the rain and I say it will - It`s fairly widespread pushing off into central areas of Mexico. And then of course as
well, the remnants of what was Tropical Storm Dolly - again in the last 48 hours. A few more totals to show you - 178 millimeters, 273. So some very
wet ground, and there`s always a danger in a couple of days after a system like this that we actually have some mudslides and landslides. So just be
aware of that.
Meanwhile in the U.S., look at this. The first taste of fall coming through as you head through to the last part of the week into the weekend.
Still humid into the Southeast, and pretty strong storm across the Midwest and the Northeast. There are warnings in place here as we go Thursday into
Frida - mainly around the Great Lakes. Again, some large hail, severe winds - just those isolated tornadoes. And you can see the rain - that
line of showers and thunderstorms work its way eastwards. You can also see right down there, look , there it is - that is Hurricane Norbert. But as I
say, it should wind itself down.
Meanwhile, southern and southeastern portions of Europe. Very heavy rain here as well - no tropical systems in sight, but even so, 275
millimeters of rain into Italy in 48 hours, 100 millimeters into Bulgaria. Warnings in place here as well - hale, severe winds, again even the chance
of isolated tornadoes, but really for the most part, it`s just some very stubborn rain that refuses to move. This is it - the heat beginning to
ease across the southwest. Still nice and warm but not as hot as it was
Beginning to warm up actually across central and eastern areas. And when it comes to temperatures, not as hot as it was - Granada 36 Celsius
and then you can see over the next few days. London coming back down to the average, but actually warming up further east into Warsaw, and mostly
dry as well for the next couple of days. Richard.
QUEST: That`s in the World Weather Center. Jenny, thank you for that. One piece of news to bring you. It`s been announced that the
funeral of Joan Rivers will be held on Sunday. Of course of the Jewish faith, she will be buried very soon. Usually if possible within 24 hours,
but obviously not on the Sabbath, and so the funeral of Joan Rivers to be on Sunday at Temple Emmanu-El in New York.
(COMMERCIAL)
QUEST: Forget `in with the new,` it`s in with the old of Bloomberg Limited Partnership. Michael Bloomberg - Mayor Bloomberg -- is back,
taking the helm of the company he founded after 12 years. He was mayor for 12 years in the biggest city in the United States. The current Chief Exec
Don Doctoroff described Bloomberg`s return as an event akin to the Second Coming. Here to tell us what is next for the company, our senior media
correspondent, Brian Stelter. Brian, good to have you. And - the way - it was a surprise because people thought he was going on to philanthropic
work, greater goods.
BRIAN STELTER, SENIOR MEDIA CORRESPONDENT: And because he said he wasn`t going to come back.
QUEST: So why did he?
STELTER: Well, he says he just fell back in love with the place - the place that he founded 30 years ago, an immensely profitable terminal
business with a news organization on the side. But as recently as last October when he was preparing to leave the New York mayorship, he said,
"No, I`m not coming back to Bloomberg LP. So I guess this is how it works. If your name is on the door, you can always come back.
(CROSS TALK)
QUEST: Yes, I think I can see certain (inaudible).
(LAUGHTER)
QUEST: The question though is - he obviously pushed the other guy out.
STELTER: Well -
QUEST: Or the other guy realized (RINGS BELL) the writing`s on the wall.
STELTER: Yes. They`re telling a very good, complicated story and I think the writing on the wall is how they`ve described it, and that`s why
they described Bloomberg as being like God. When God`s in the building, people defer. So how can you be the CEO if God`s walking around?
QUEST: And - as it will a dead heat (inaudible) -
STELTER: Yes.
QUEST: -- the - what`s he going to do? What`s his big challenge? Because he built the company, he`s had a great vision, he ran New York.
But what`s he now got? What`s his biggest challenge going back into this?
STELTER: Well there`s no media company quite like Bloomberg, because most of its profits, most of its revenues, $9 billion in revenue this year
comes from its terminals, its expensive terminals that a lot of clients don`t want to have to pay for. Right now they feel they have to pay for
them, but there are lots of rivals to those companies from companies like Reuters and in some cases from the big banks themselves. So, does he need
to diversify? Well some of the initial efforts to diversify haven`t gone as well as they might have hoped.
QUEST: And if he chooses to diversify into a general news area - a more consumer news area - he`s going to come hard up against the big boys -
CNN, the BBC, Sky - all the others -
STELTER: Here`s a great example -
QUEST: -- NBC, CBS -
STELTER: -- here in the U.S. Bloomberg TV`s had a hard time for years getting onto cable and being able to rival CNBC - the main all-business
news channel in the U.S. What could he do to change that? You know, maybe he can pay more money to get distribution, maybe he can invest more in the
channel. But I`m not entirely sure. I don`t think maybe even he knows. I think he`s taken over and he`s going to figure out a plan now.
QUEST: All right, you`re probably familiar with this. This is the "Vogue" September issue.
STELTER: Bigger than ever.
QUEST: Bigger than ever and crucially important.
STELTER: Yes.
QUEST: Thank you, Brian Stelter, for joining us now. At page 856 I`ll explain why I have a copy of "Vogue`s" September issue. New York
fashion week begins today (RINGS BELL). This is the September issue of "Vogue." It`s a magazine that lives or dies by the success of this issue.
It`s vast - 856. Now, in terms of September issues, in many ways, Mario Draghi, the ECB president, faced the same thing with his September meeting
or issue. The challenge of setting the right trend for the year ahead. He`s got to get the style right in September.
(BEGIN VIDEOCLIP)
ANNA WINTOUR, EDITOR-IN-CHIEF, "VOGUE" MAGAZINE: Fashion`s not about looking back. It`s always about looking forward. Do you really feel that
this the most important message to put in the September issue?
QUEST: Anna Wintour, in this documentary discussing her big September issue. For now, the head of the European Central Bank who also has just
one chance in September. On the cover, it`s the `Russia Effect,` and it`s making for some muted colors this season. There`s talk of a new crisis
leading to a looser style of monetary policy.
CHRIS SIMS, PROFESSOR, PRINCETON UNIVERSITY ECONOMICS DEPARTMENT: The ECB is very worried because despite some continued deficits in the EC - in
the Euro area - the inflation rate continues to drift down.
QUEST: Draghi`s style is on the cover, but he must balance different views inside. There`s a strongly-worded letter from the editor - Francois
Hollande. The "Emperor has no clothes" claimed his National Front opponent Marine Le Pen. Hollande is fighting back, promising bold, new colors.
Think reshuffle and reform.
FRANCOIS HOLLAND, FRENCH PRESIDENT, VIA INTERPRETER: Because the Euro is too high and because Europe is threatened by a long and possibly
interminable stagnation if we do nothing.
QUEST: In the "Up Front" section of course, the German chancellor who still believes austerity`s in vogue, even as the German economy is looking
less than glossy. And people are talking about a newcomer to the middle pages. Matteo Renzi. The Italian P.M. is seeing red this season. Red for
recession, red tape and bureaucracy and his style, unlike the French and Germans, is to spend, build confidence.
For the man on the cover with his September issue, it`s about the right style at the right time. And if he has some difficulty getting his
timing right, heed the advice of a truly experienced hand.
WINTOUR: It`s usually the same kind of minimal approach. And so it would be great if we could break out.
Female: Thanks.
(END VIDEOCLIP)
QUEST: "Profitable Moment" next. (RINGS BELL).
(COMMERCIAL)
QUEST: Tonight`s "Profitable Moment." With due deference and respect, to the board (ph). To recline or not to recline? That is the
question. Tis it nobler to sit upright and suffer or recline those few inches and take legs against the sea of troubles? It is economy`s great
dilemma which has now hit every one of the big three U.S. carriers. These are of course the knee defenders. But it`s not just when they come up
against passengers. There are other occasions where reclining in economy, a lack of courtesy, poor etiquette, bad upbringing - you name it - probably
a little bit too much of the duty-frees -- have it all led to a flack off (ph) onboard.
And so the saga of the seats, the baffles of the backsides seem set to continue until the airlines finally follow the lead of low-costs and get
rid of recline. Thank you, Shakespeare. And that`s "Quest Means Business" for tonight. I`m Richard Quest in New York. Whatever you`re up to in the
hours ahead (RINGS BELL), I hope it`s profitable. I`ll see you next week.
END
