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Quest Means Business
Dow Suffers Worst Day of 2014; IMF Disappointed by Global Growth; Global Economic Debate; Students' Economic Concerns; World Bank Warns Ebola Threatens Future of Africa; Make, Create, Innovate: Pioneer of Laser Eye Surgery
Aired October 09, 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: The closing bell is ringing, it is a dreadful day on Wall Street. We'll wait for the final numbers, but it looks like it
could be the worst day of the year so far in terms of the fall of more than 300 points. It is Thursday, it's October the 9th.
Tonight, the markets are down, the Dow, the NASDAQ, and the S&P. It's the worst day of the year so far, you see the number on your screen, it's
off nearly 2 percent.
Also in our special economic debate, the head of the IMF tells politicians, do more in the name of growth.
And the World Bank president tells me the United States and many other countries simply haven't done enough to stop the spread of Ebola.
I'm Richard Quest, live from the IMF annual general meeting in Washington where, as you'll see over the next hour, I mean business.
Good evening from George Washington University -- you have to get that part right or the crowd around me will lynch me and run me right out of
town --
(LAUGHTER)
QUEST: -- beforehand. We are at the university because we're going to be gauging the views of the youngsters -- well, put it this way, most
people are youngsters compared to me -- as the program goes forward.
It's the annual meeting of the IMF and World Bank, and the issues are, of course, jobs, growth, the very serious issue of Ebola, the Middle East,
the question of divergent growth. But tonight --
(RINGS BELL)
QUEST: -- we add one more thing: uncertainty, which is ruling the markets. It's been the biggest single day of gains in 2014, that we had
yesterday. Now the Dow has given it back and then decided to ladle in some more: 334 points down. It's the third day of a triple-digit move in a
row, and as you can see, off nearly 2 percent.
Ben Willis from Princeton Securities joins me from the floor of the stock exchange. Ben, the short, simple question: what drove the market
down?
BEN WILLIS, SENIOR FLOOR BROKER, PRINCETON SECURITIES GROUP: Mr. Draghi. Simple. It's been a dance of the central banks for the last
month. You are watching the generals in a currency war trying to figure out how to align their troops.
And what we've discovered in the last few days is Mr. Draghi actually is the, if you will, the emperor with no clothes. He continues to talk
about his big bazookas -- there's nothing there. And that's why the market reacted.
Again, he came to the microphone today with an explanation of being ready, but having nothing to be ready with, quite frankly, and that's --
the market did not take that well. Yesterday's rally was really based on - -
QUEST: Right.
WILLIS: -- our own federal government, Janet Yellen and crew saying, you know what? You're right, we understand Europe's in trouble, we don't
need our dollar to rise that quickly, our inflationary situation is under control, so we're going to dance a little bit longer with our European
allies to help them from where they are, and we're not seeing much on your side.
QUEST: The issue, though, of course, to have 120 at one day, 250 down the next, then back up again 200 points, and now this. These are levels of
volatility that are not justified by the economic scenario. Nothing's really happened to make the market fall out of bed like this, Ben.
WILLIS: Absolutely, you're 100 percent right. The volatility is being driven by the volatility in the currency market. If you want to take
a good look at the way -- why these markets are moving, do an overlay of what's called the DXY, which is a basket of currencies against the US
dollar, and watch what that has done. As the dollar has strengthened, it had an inverse impact on the stocks in the United States.
But again, we go back to Europe and the European markets and the way they are reacting. You've had stories out of Germany, which is the
stalwart of all of the European Union, showing disappointing numbers. That is really what started the move to the downside.
It's Mr. Draghi that hit the accelerator when he came to the mic and had nothing to offer the world as far as what the ECB is willing to do
QUEST: All right.
WILLIS: That's my opinion.
QUEST: Ben, good to hear your views, and thank you for joining us this evening at the start, down over -- or nearly 2 percent. It's weak
growth from Europe, which is just one of the problems in the global economy that it faces at the moment as the IMF meets. And indeed, we'll be talking
to our students shortly about what's on their minds, what's their biggest concern.
But if you take the geopolitical situation, well, Ebola seems to be the most urgent of several of the big crises facing the world. Christine
Lagarde also warns the global economy is facing threats from political upheaval in parts of Asia.
There's instability, of course, in the Middle East, notably Syria and Iraq. And a possible escalation in the crisis of Ukraine, which could
disrupt commodity crisis, financial markets, and pull it all together with trade.
So, here at the IMF, speaking to me at the CNN Global Economic debate, the International Monetary Fund's managing director, we had Christine
Lagarde, who told me both politicians and central banks need to play their part to bring the world economies to full recovery.
(BEGIN VIDEOTAPE)
CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: What we see, which is fairly fragile and uneven, could actually be helped a
great deal if the policymakers were doing their bit in addition to what the central bankers are already doing.
QUEST: We have plenty of central bankers here that we will duly beat up in the course of the next hour. Talking of central bankers, Stanley
Fischer, the WEO -- the report is depressing again that at this point -- I'm going to ask you the same question -- in the recovery cycle, there is
so much fragility. And we'll come onto the Fed in just a moment. But in a global context, there's not a huge amount to be cheerful about.
STANLEY FISCHER, VICE CHAIRMAN, US FEDERAL RESERVE: Well, there's a considerable amount to be cheerful about. We're fundamentally -- except
probably for Europe, which is a couple of years behind, but moving in the right direction -- we've fundamentally survived this crisis far better than
we survived a crisis that could have been of equal depth to the Great Depression last time we suffered it.
And so I think that countries learned a lot of lessons. They have many more lessons to learn. But you can summarize what was achieved this
time, I suspect if we ask the central bankers and probably the finance ministers and former finance ministers on this stage what they felt in
October, December -- October through December 2008 whether they thought we were heading for a Great Depression, I certainly did.
In the Great Depression, the US unemployment rate reached 25 percent. We just squeaked above 10 percent this time and came down. It was a very
different world. It's an uncomfortable world, but it's a better world than we would have had without the policies that were implemented. And now,
we've got to concentrate on getting back to growth and higher growth. But we're growing.
QUEST: Getting back to growth at higher levels. Minister, you're the problem
(LAUGHTER)
JEROEN DIJSSELBLOEM, DUTCH MINISTER OF FINANCE: Really?
(LAUGHTER)
QUEST: Well, I mean, I don't want to be too personal about it --
(LAUGHTER)
QUEST: -- but if you look at the WEO, it's Europe that's the problem.
DIJSSELBLOEM: I would dare to disagree with you. I think that's much too gloomy. I think that we've taken a number of measures coming out of
the crisis, both on the monetary side, fiscal consolidation, structural reform agenda, at least in the majority of countries, has been pushed quite
far, and economic growth is picking up in the majority of the countries and will be higher next year, even when I look at the IMF figures.
There are a couple of countries that have to do more. And they know what they have to do, and it's about getting things done.
QUEST: Which countries?
DIJSSELBLOEM: Well, as you know, there's France and Italy, who have now a government who's more ambitious than others before on a reform
agenda. And I hope they have the political stamina to get it done.
QUEST: But the latest economic numbers out of Europe are very worrying.
DIJSSELBLOEM: No, they're not very worrying. They're a little less good than they were --
(LAUGHTER)
DIJSSELBLOEM: Well, there you are.
QUEST: Well, that must be worth a round of applause.
(LAUGHTER)
DIJSSELBLOEM: I don't think that you have to be very gloomy if you know what you have to do, and I think we've done a lot on all the fields.
And a number of the measures that we've actually taken, a number of the measures that the ECB is taking, are yet to take effect.
The banking union will start as of this month, reopening again the investment channel through our banks, which have been holding back too much
and too long. So, all of these measures will take effect. We know what we need to do, we need to continue the consolidation path in a growth-friendly
manner, and on top of that, get some of those reforms done.
And when I look at Europe, I see a group of countries who've done a lot, and they have returned to growth, and growth is picking up in those
countries, and let that be an encouragement for the other countries to do the same.
QUEST: Governor, in Malaysia, you've taken many actions to put the economy onto a stronger, more firm footing. But are you now worried about
what you see elsewhere in the world?
ZETI AKHTAR AZIZ, GOVERNOR, BANK NEGARA MALAYSIA: Actually, emerging markets are more positive in the outlook. There has been moderation in
growth, but the -- it is due to temporary factors of restructuring, rebalancing.
And the economies are supported with solid fundamentals, resilient financial systems that are able to support the growth. Therefore, we see
future growth potential in subsequent years.
QUEST: Right, but the problem is, of course, every bit of your growth is dependent to some extent --
AZIZ: Yes.
QUEST: -- to some extent on what they do at the Fed and what they do in Europe.
AZIZ: Most certainly.
QUEST: And that's cause for concern.
AZIZ: Emerging markets, particularly in Asia, are now better able to intermediate volatility because we have stronger financial systems, we have
more developed financial markets. And this is able to really deal with the volatility that we expect as a result of changes in the direction of
policies.
QUEST: Oh! Changes in the direction of policies.
(LAUGHTER)
QUEST: We'll come to that in a minute.
(LAUGHTER)
QUEST: Governor Carstens.
AUGUSTIN CARSTENS, GOVERNOR, BANK OF MEXICO: Yes?
QUEST: Changes in the direction of policies. The wind is blowing.
CARSTENS: It is. And it always will. I have to say that, in the case of Mexico, things have been looking better. I think that a very
positive sign for us and I think for the rest of the world is that the US is also doing much better. The growth in the second quarter is very
encouraging, growth in the third quarter is also encouraging. Investment is going on.
Yes, there has been some volatility in the markets, but I think that that can be handled. And you put --
(CROSSTALK)
QUEST: But you talk about the markets. I just noticed today, up 100, down 100, up 100, down 100. I think we're down a couple of hundred today
on the US markets. That level of volatility is the norm? Or should it be of concern?
CARSTENS: Well, as a matter of fact, just very recently, two or three weeks ago, we were at an all-time level of volatility in many markets.
Now, that probably is not sustainable, and that lends itself for mispricing and excessive risk-taking, and that's something that probably at the -- in
different latitudes, it will have to be taken care of.
Now, one thing, you started with growth. I think that for emerging markets, what is important is to realize that even if the US is doing much
better, most advanced economies will be growing potential for a relatively long period of time.
And that means that emerging markets need to find new ways to engineer growth, probably internally. And the only way to do that is by doing
structural reforms. And precisely that's what we have been doing in Mexico.
QUEST: Right.
(END VIDEOTAPE)
QUEST: Those are the various central bankers that we were talking to here, and of course, the issue being one of growth, one of what happens
next?
Now, what do these students here at George Washington University, what are their major concerns as we continue to look at these issues? Sir,
what's your biggest -- your number one concern at the moment?
UNIDENTIFIED MALE: I think my biggest concern is the rising cost of higher education and the access for low-income families to higher
education.
QUEST: Right, higher education and the cost of higher education. Your biggest concern at the moment in the world?
UNIDENTIFIED FEMALE: A potential energy crisis if there's a fallout between Russia and Germany and how that could affect future US oil exports
to Europe.
QUEST: You're worried about that?
UNIDENTIFIED FEMALE: A little bit, yes. I have family over there.
QUEST: All right. What's your concern?
UNIDENTIFIED FEMALE: Veteran health care and how the VA is taking care of veterans --
QUEST: Veteran health care.
UNIDENTIFIED FEMALE: Yes.
UNIDENTIFIED FEMALE: Employment after college.
QUEST: Employment after college. How many of you are worried about getting a job after --
(LAUGHTER)
QUEST: -- after college? How many of you have got serious financial debt that you're running along at the moment?
UNIDENTIFIED FEMALE: Way too much.
QUEST: How much?
UNIDENTIFIED FEMALE: $60,000.
QUEST: $60,000.
UNIDENTIFIED FEMALE: A year.
UNIDENTIFIED FEMALE: Yes, $60,000 a year.
QUEST: $60,000 a year. But if you really want to get depressed, forget the $60,000 a year. Forget all these other issues. Just remember,
this chap was born in 1996.
(LAUGHTER)
QUEST: And I had been covering the World Bank -- you can go back -- I had been covering the World Bank and IMF meetings for five years when he
was born.
When we come back after the break, we turn our attention to the very serious business that they've been talking about here in Washington. An
extraordinary summit was held. The president of the World Bank says the West's reaction to Ebola is stunningly inadequate.
(BEGIN VIDEO CLIP)
JIM YONG KIM, PRESIDENT, WORLD BANK: Right now, people are saying, well, let's have more checks at the airports. This is like trying to put
wet towels under your door when your house is on fire. You've got to put the fire out.
(END VIDEO CLIP)
QUEST: We'll have an interview with President Jim Yong Kim, that's after the break. QUEST MEANS BUSINESS in Washington.
(COMMERCIAL BREAK)
QUEST: The world's top diplomats and bankers are throwing out the rule book in the fight against Ebola. They're meeting here in Washington,
and the goal is to build real practical support for a global response to the outbreak.
Too little, too late, many are saying. This meeting is not about high-minded policy. It literally -- the summit was about practical action.
The leaders were given two minutes each to say what practically they were going to do. The leaders of Sierra Leone, Guinea, and Liberia have issued
urgent pleas for doctors, drugs, treatment centers, and of course, dollars to pay for it all.
To date, the outbreak's claimed more than 3,800 lives, 8,000 people have been infected. As the West African leaders focus on treatment, the US
and the UK are boosting their efforts to keep the disease out. The British government is to begin screening passengers arriving at London's Heathrow,
Gatwick, and Eurostar terminals.
The United States has already announced plans to screen passengers at five major airports. As the African leaders said, the outbreak is
beatable. The consequences of failing to contain it are catastrophic.
But when I spoke to the president of the World Bank, Jim Yong Kim, he criticized the global response as not being big enough, and also he went on
to start of and tell me about why it was taking so long for the world to take any sensible action and urgency over Ebola.
(BEGIN VIDEOTAPE)
KIM: Until Mr. Duncan came to the United States and until the nurses were infected in Spain, it almost didn't seem real to people.
But let me tell you, right now the conversation's very dangerous because the only way to stop these cases from coming over is to get a fully
adequate response in those three countries.
And you know, right now, people are saying, well, let's have more checks at the airports. This is like trying to put wet towels under your
door when your house is on fire. You've got to put the fire out and the fire is in these three countries.
The only way to stop it is to continue to step up our response and provide humane, effective care and prevent new infections in these three
countries.
QUEST: The head of the CDC today said something that I'd never heard somebody say about this outbreak. He compared it -- he said in his
experience it was the closest thing he'd seen was to AIDS.
KIM: Yes.
QUEST: Do you agree with it?
KIM: Well, in many ways, it's more complicated than AIDS. AIDS is a sexually transmitted infection. So it's actually more difficult to
transmit HIV than it is to transmit Ebola. And it -- you know, for AIDS, it was really a matter of identifying the cases and getting them onto
chronic, long-term treatment.
Ebola is different. You have to have almost intensive care services available, so it's more complicated and there's a potential that it'll have
an even larger economic impact if we don't get the control on the ground.
QUEST: Right. I -- you keep talking about this control on the ground and getting into the country. I need to understand what it is you need to
do, because give me some practical example. I mean, do you want a country to say, fine, we're sending in 5,000 troops that's going to lead the way,
that's going to allow a convoy to come in? What is it you need?
KIM: It's not the troops. The troops can come in and build facilities. And they're doing that, which is great. But what we need is
health workers, people who understand, one, how to prevent infection, but, two, how to treat people.
So let me put you in the mind of a person from Liberia. So let's say you've helped a poor woman. You know, the woman -- and this is Mr.
Duncan's case. The woman was rejected from the hospital, so Mr. Duncan did not know whether or not she had Ebola. But you're a person, thinks I might
have been exposed to Ebola.
What's the most rational thing for you to do if you want to live, which is the most important thing? It's to get out of Liberia, because
right now treatment's not available, and go to a place that has treatment.
So what we need is hospitals that are fully equipped and have great staff, coming from both inside, but also we're going to need a lot of
people coming from the developed countries, people who know how to do IV fluids, people who know how to take laboratory tests, people who know how
to prevent infections.
And we'll need to do a little bit more training of them. But if we get those staff in place, not only in the big cities, but out into the
communities, then people will understand that the best chance of survival is to stay in your country, because that's where the services are going to
be.
QUEST: The prime minister of the Ivory Coast said on my program yesterday he believes that this crisis will be contained and effectively
over by June of next year.
KIM: I certainly hope that's the case.
QUEST: But you don't think it will be?
KIM: Well, I'm not sure. And it all depends on whether we get through the current roadblocks, one of them being silly things like
hospitals in the United States have not yet stepped up and made commitments that the people and resources to help stop the epidemic.
You know, there are plenty of workers, health workers in the world, if we can get them to these three countries, it would be stopped. We've just
got to just every day fight through all the blockages that are preventing that from happening.
QUEST: When I hear one of the speakers this morning talking about it's time to put together a coalition, it's time to have some meetings to
put together -- to -- a force to move it, too little too late and what have you been doing so far is what -- it's about sort of response.
KIM: Well, you know, we're going to have a lot of time to look back. And we're going to have to think about why the response wasn't quicker.
One of the things I'm going to talk about at this meeting, Richard, is we have the IMF when there is a financial crisis. Where is that kind of a
fund or something that will help us respond immediately to pandemics?
We didn't have it. We didn't have billions of dollars made available immediately. We didn't have a plan. We didn't have a reserve workforce
ready to jump in. We've got to put that together going forward.
But right now, you know, there's going to be time to think about that. But right now we've just got to get the systems in place on the ground.
QUEST: Did you ever think you'd sit in a meeting -- and I'm not being facetious when I say this -- and have the UN secretary-general say this is
not a time for consultation, for the managing director of the IMF say this is not a time to worry about deficits?
KIM: Wasn't that great? These are new developments that came out of the meeting this morning, Richard. Not only do we have a medical
evacuation, but Christine Lagarde is taking it upon herself to say we'll live with the fiscal deficits; let's respond.
This is great. And that's what gives me hope, that we're now beginning to come together as a global community to fight this together.
(END VIDEOTAPE)
QUEST: The Ebola crisis, which is very much on the minds of those delegates, leaders, politicians at the IMF in Washington. That was the
president of the World Bank.
When we come back after a very short break, three decades ago, one man saw clearly how a weapon could be used to heal sight. We'll have the story
of an uncanny vision and steely determination. This is QUEST MEANS BUSINESS. We're live in Washington, DC.
(CROWD CHEERS)
(COMMERCIAL BREAK)
QUEST: Thirty years ago, the idea of a James Bond weapon in the operating room, well, that was just pure ridicule. Yet, there was one
pioneer who saw the potential. CNN's Nick Glass has his story. It's today's Make, Create, Innovate.
(BEGIN VIDEOTAPE)
NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Our eyes. Our beautiful, intricate, irreplaceable eyes. So delicate, so precious.
GLASS (on camera): Everybody's eyesight deteriorates in some way or other over time. Every single one of us. It's been one man's life's work
to halt this and give us all better than 20/20 vision.
GLASS (voice-over): Josef Bille is a physics professor from Heidelberg in Germany. For the last 45 years, he's been the great pioneer
of laser eye surgery.
JOSEF BILLE, PHYSICIST: I really brought a new way of applying lasers to improve vision of humans into the world.
GLASS: Back in the 1960s, lasers meant weaponry, something a villain from a James Bond movie might use. But Bille saw another potential
application.
BILLE: I was the only man in the world speaking about using lasers to improve visions, to make human eyes supernatural. The ophthalmologists
initially rejected it. It was thought as something like an atomic bomb exploding inside the eye. And so, they rejected it for many, many years.
GLASS: Bille and a succession of his PhD students made their breakthrough in 1986. Basically, they developed a way to scan the eye and
create a 3D map of the cornea, the outermost layer. This reveals imperfections or bumps that affect our vision.
In surgery, a flap is cut in the cornea and peeled back. The bumps, the imperfections, are then smoothed by a second laser, commonly known as
LASIK. Bille, hampered by poor vision himself, volunteered to be the first person to be treated this way.
BILLE: It was done -- I cannot tell very loudly, but it was done in the States, it was not FDA-approved. I did on my own risk.
GLASS (on camera): I'm astonished. You're the guinea pig.
BILLE: Yes, I'm the guinea pig, and I like to be the guinea pig in this way, because I would like to be convinced before I offer it to
somebody else.
GLASS (voice-over): The procedure has since become relatively routine. Some 28 million people have had it, with a 95 percent success
rate.
GLASS (on camera): When you see it again, still has a sense of marvel, or what?
BILLE: Yes. In this particular five minutes, as this action takes place, are very special for the patient. The patient is frightened, and --
but it's a wonderful thing afterwards.
(LAUGHTER)
BILLE: Eyes! What did you do? Eyes!
GLASS (voice-over): The professor, the effervescent man that he is, is continually excited by his ongoing research. His latest target is the
back of the eye, the retina, using his lasers to prevent diseases that cause blindness.
BILLE: There shouldn't be any blind person anymore in some ten years from now in the world.
GLASS: The optical future is bright, very bright. The once short- sighted professor has proved himself a visionary that never loses sight of his goal.
BILLE: People tell me, I failed a number of things in my life to try to do new things, and they couldn't be done. But everybody knows, this is
the man who never gives up. And finally, it was successful.
(END VIDEOTAPE)
QUEST: Magnificent story of prospects for the future. Talking about the future, I asked the students here what they want to be when they grow
up, and this gentlemen wants to be --
UNIDENTIFIED MALE: President of the World Bank.
QUEST: The president of the World Bank! Ah, bless!
(LAUGHTER)
QUEST: Considering he comes from the United States, under the current regime and doctrine, it's entirely possible. Good luck, sir.
When we come back, our economic debate continues. Europe struggles for a recovery. The geopolitical risks loom large. The European Central
Bank faces pressure from those who want it to do more and those who want it to do even less. What's next for the ECB? QUEST MEANS BUSINESS, we are in
Washington.
(CROWD CHEERS)
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment. This is CNN, and on this network, the news always comes
first. At a special meeting in Washington, the World Bank, the IMF and the Centers for Disease Control are all demanding the world governments do more
in the battle of Ebola. The World Bank president said the disease is a threat to the entire African continent. Speaking to me on "Quest Means
Business," Jim Yong Kim said the U.S. response to the disease had been inadequate. The United Kingdom will begin screening passengers arriving
from countries affected by Ebola. Officials will perform checks on passengers arriving in London's Heathrow and Gatwick Airports and the
Eurostar terminal. The U.S. has announced similar plans for several major airports.
Witnesses inside the Syrian town of Kobani has told CNN the situation is there is getting worse. They say a large number of ISIS reinforcements
arrived overnight and have joined the battle. A Syrian opposition group says ISIS now controls a third of the town which borders Turkey.
On Wall Street, the Dow closed down 335 points. That makes it the worst day of the year and it follows the best day of the year so far. In
the CNN debate on the global economy in Washington, the Bank of Mexico Governor Augustin Carstens told me the current level of market volatility
is not sustainable.
A very good evening to you from Washington, D.C. where the International Monetary Fund has now set the scene for a very downbeat
meeting with a downbeat report which says the global economic recovery has been weak and uneven, and using words like growth being `mediocre'
according to the latest WEO - the world economic outlook. The U.S. will see faster growth in the year ahead, Latin America has seen sluggish growth
but will rebound next year. There'll be strong growth in emerging and developing markets in Asia. China is expected to slow down. North Africa
sees a fragile recovery. Sub-Saharan Africa sees strong growth which indeed varies by country.
So that's the good news. In Europe, the Eurozone has to deal with lingering fragilities. The European Central Bank has already taken
unprecedented steps to boost the European economy. And the Eurogroup President Jeroen Dijsselbloem told me the ECB's critics - they need to be
patient.
(BEGIN VIDEOCLIP)
JEROEN DIJSSELBLOEM, PRESIDENT, EUROGROUP: I'm always surprised at the lack of patience that we seem to have. The operations that the ECB is
now starting to operate, is starting to unroll the TLTRO, buying up asset back qualities, securities will come into effect over the period in this
autumn and the beginning of next year. And --
QUEST: But everything I've read in the last three months or two weeks or three weeks, whatever, about these measures - everybody says it won't be
enough.
DIJSSELBLOEM: No -
QUEST: (Inaudible) have to be bond-buying, government bond-buying. So I ask you, why not get on and do it?
DIJSSELBLOEM: Because not everyone is saying that it won't be enough, and actually all those people that are absolutely sure that it's not enough
don't know what they're talking about because how can we know the effect when these operations are yet to take place? I think it was the day after
the June decisions of the ECB Governing Council, the FT already said in its newspaper, `It's not enough - you need to do more, you need to go all the
way.' My problem with that would be that if the only monetary policy that we can do effectively is going all the way, that would be quite
problematic. I think there are well-designed, proportional programs to take place, and that's exactly what the ECB's doing, and the effects of
those we will see over the next couple of months, and it's much too early to say, `Oh, it's not enough, let's go all the way.' I can't see the point
in that.
AUGUSTIN CARSTENS, GOVERNOR, BANK OF MEXICO: Earlier Turntha (ph), you mentioned there were markets where (lights started even these) (ph)
questionable markets. I think what is really difficult, I think certainly I dare to say for the Fed, for the ECB or in other central banks is the
fact that they have done unprecedented policies, and therefore, I mean, they really - there was a very strong crisis in advanced economies. One
that had a slight prelude (ph) with one that happened 60 or 70 years ago, but not with the modern financial system. So they really had to go out of
their way to stabilize the situation, establish conditions for growth. As the restoration process has gone on and growth is going on, they face/faith
(ph) of the need to normalize the policy, and it's very difficult to really know how will that proceed. Because there is no parallels. And that is an
uncertainty that the markets have to live with.
QUEST: Are you feeling, Minister - Governor, forgive me - are you feeling caught in the middle? Do you think too many countries - whether
you want to call it the spillover, the spillback, whatever you were talking about this morning (inaudible), do you think your country and others are at
risk because of this difference of policy?
ZETI AKHTAR AZIZ, GOVERNOR, BANK NEGARA MALAYSIA: At this point we are already experiencing the effects. So the very suggestion of a change
in the policy direction is already having repercussions on the financial markets. So we are going to experience multiple repercussions. And we are
already seeing reversals, inflows. But we believe that for many of the emerging markets, particularly those in Asia where the fundamentals are
positive, we believe that in the end, fundamentals will prevail and we will see inflows coming in again. So --
QUEST: So this comes back to the idea of look after your house, --
AZIZ: Exactly.
QUEST: -- and everything will be OK.
AZIZ: Yes.
QUEST: Rather than worrying about somebody else's.
DIJSSELBLOEM: Well, you seem to make a problem out of the fact that the monetary policy in the U.S. is now in a different phase than it is in
Europe -
QUEST: But -
DIJSSELBLOEM: -- I don't think, I don't think that's the problem at all. I think that's fitting for the economic situation even in the U.S.
QUEST: Well, hang on a second, Minister. The fact that the two largest trading blocs can engineer themselves into such a situation that
one is going in one direction on monetary policy, the other is going in the other direction -
DIJSSELBLOEM: Yes.
QUEST: -- at the point after six years of a major crisis, that's a bit of a problem.
DIJSSELBLOEM: No, it's not a problem, it's fitting for the difference in economic situation and the different where we are in economic cycle in
the U.S. and in Europe. And it will be very strange if we had exactly the same monetary policy going on in the U.S. and in Europe at this moment.
That would be very strange. So I simply disagree with what you're saying.
CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: Jeroen has a point. Those two policies are unprecedented, they are
accommodative, but they're not synchronized. The Fed is many quarters ahead of the ECB. So you, Richard, are right in saying that there will be,
you know, variations, arbitrage to be had for those who are playing with markets, because there will be different moments in the same cycles, if you
will. I think we're seeing it in the currency variations.
QUEST: What - I guess none of you want to touch the currency. You want to touch the currency, Stan?
STANLEY FISCHER, VICE CHAIRMAN, U.S. FEDERAL RESERVE: Yes, you know, exchange rates are changing to reflect what's going on in these - in the
European block, and in the United States. That's fully appropriate. I think if we were both blasting ahead to higher growths, you'd be telling
the rest of the world, ooh, you've got inflationary problems. Wouldn't you like them to calm down? Well, they're actually dealing with a - two
groups of - the United States and the European Monetary Union, which between them will provide a fairly stable background for the countries to
deal with.
DIJSSELBLOEM: I think the key issue is certainly in Europe that we are expecting so much from the ECB, and I think also Christine has made the
point over and over again - perhaps we should expect a little less from the central banks and a little more from the politicians. And I certainly, as
a politician from Europe, know for a fact that that's true. When I look across Europe, I see major differences between countries now and it
basically proves that in those countries that have their house in order, to quote you, that they can pick up economic growth that they can get things
done, and that they should look less as the central bank. I think that is the key.
(END VIDEOCLIP)
QUEST: Look less at central banks so says Jeroen Dijsselbloem. Our guests here to George Washington University. Now remember, we've already
established that they are spending - how much a year is it in tuition?
Male: About $60,000 a year leads to about a quarter of a million over four years.
QUEST: A quarter of a million dollars for education.
Male: Yes.
QUEST: What do you want to do when you `grow up'?
Male: Like to be a travel writer for "The New York Times."
QUEST: A travel writer for "The New York Times" Yes, what do you want to do?
Female: Work for CNN.
(LAUGHTER)
QUEST: That is the weakest application for a job I've ever seen. What about you - what -
Female: I'd like to be an attorney or a judge.
QUEST: Doesn't want to get far - a quarter of a million gets you from attorney to a judge. What about yourself?
Male: I'm not sure yet.
QUEST: You're spending a quarter of a million dollars on an education. It might help to know how you're going to repay it.
Male: I know, I'm just surveying all my options. I'm still not sure.
Male: I want to be a commodity trader, specifically in copper.
QUEST: I guess that's all you get when you come to this sort of school.
(LAUGHTER)
QUEST: When we come back, perhaps the thorniest issue of our panel and maybe for this lot in the future is reform. How do you carry it out?
It's "Quest Means Business" in Washington.
(COMMERCIAL BREAK)
QUEST: The IMF managing director Christine Lagarde said that one size does not fit all. The one-size-fits-all mentality cannot be used when it
comes to economic reforms. I asked the governor of the Bank of Malaysia a simple question - how does structural reform actually get carried out?
(BEGIN VIDEOCLIP)
AZIZ: Because structural reform always involves a cost to growth, it is very important that it be accompanied by pro-growth policies. And this
is important in financial policies, access to financing, specific target sectors and so on or - and small and medium-scale enterprises. All this
can help and generate jobs and growth to offset the cost to growth of structural adjustment. In structural adjustment, gradualism is probably
the way to do it. Because -
QUEST: Gradualism?
AZIZ: Yes. To do it skip sequence and gradually, rather that -
QUEST: But you want to get on with it.
AZIZ: -- Yes, so long as there's the direction and the commitment, that is the way to do it. Because otherwise it can also plunge the country
into a sharp economic slowdown which makes it difficult to come out of.
DIJSSELBLOEMI: Would say that it's key to take the decision as quickly as possible, --
AZIZ: Yes.
DIJSSELBLOEMI: -- and if necessary, you can do the implementation gradually. If necessary. But it very much depends on the design. It's
not actually true if you don't mind me saying so that all structural reforms take away growth or a negative on your budget. For example, we've
done a number of pension reforms, pension age as well as pension premium, the way that we designed the premium pension system, and it has put money
back into the pay package of people and therefore directly supported demand, and that has helped economic recover.
So it very much depends on what kind of reform you're talking about and how you design it. To give you a second example, Augustin also
mentioned it, Mr. Fischer mentioned it - tax reforms. If you redesign your tax system, shifting away from the tax pressure on labor that immediately
helps the functioning of your labor markets and allows for economic recovery. So design is the key word for structural reforms.
CARSTENS: My sense is that, I mean, certainly from an economic point of view, it would be desirable that your economy adjusts and reinvent it
selves continuously. But politically that's very hard to do. And I think that usually what happens is if their vested interests in keeping the
status quo and you really need to have a very important moment to defeat those vested interests. And let me just say one more thing. I think that
if you do several structural reforms at the same time, the impact on growth can be much higher because usually there is synergies between the reforms.
LAGARDE: And if several country do it at the same time, for instance in the Eurozone, the effects could also be significant. You know, what it
shows, Richard, is that there will be a different recipe, a different method for each country. And that's what we're seeing more and more. We
are more and more interconnected, and yet all the solutions are going to be very country-specific. Pension reform is critical, most critical in the
Netherlands - they did it. Telecommunication and energy reform was - were - critical in Mexico - they did it. So, it's not a one-size-fits-all.
It's going to be really granular, detailed and the path at which it is done is going to be country-specific.
QUEST: Right. But the danger is - I hate to sort of pour water here, but the danger is the commitment starts off brilliantly, and everything
peters out further along the way, because the fire - the good old central banker has come along and put out or at least doused the flames, and then
they're not as bad as they were. And everybody else has got election cycles to be worried about, and that reform never happens.
AZIZ: Yes.
LAGARDE: Yes, which is why you often - I mean, that's the case in the United States where clearly we need a medium-term anchoring of the solid,
sensible fiscal policy, that is really anchored so that it cannot be challenged down the road because of political bickering or whatever. And,
you know, you can't put that in a constitution, so there has a - there is an - element of confidence that needs to grow sufficiently in the system so
that something that is decided by a particular government is going to be honored down the road.
FISCHER: Well, two things, first of all, when Christine said this depends on the situation in each country. It depends importantly on the
political situation as well. It's not just the structure of the economy. And if you think, say, that to reforms in the - following the breakup of
the Soviet Bloc, the Polish example stands out. There was a finance minister who emphasized there is a limited time to get these things done.
And they went flat out for it - it was called shock treatment and led to a massive criticism. It is by far the most successful of the reform
programs, and I think that's because they got a lot of measures done very quickly. And it depends on the politics in each country as to - as to -
what you can do. And I'll stop there.
QUEST: Fine. I -
DIJSSELBLOEMI: There's also the negative side of postponing things that society knows need to be done. If people know, if investors know, if
consumer know that there are reforms coming up, but politicians don't get them done, it takes away confidence in the economy. It postpones - it
leads to the postponement of investments. And as soon as you give clarity - this is what we're going to do, we're going to take three years, but this
is what we're going to do. Then people know, OK fine, I can now make my calculations, I can decide whether I will reinvest again in this country,
etc. And that's what we need.
(END VIDEOCLIP)
QUEST: So the leaders there talking about what they are going to do and what they think. What do you think leaders today lack?
Female: Transparency.
QUEST: What does that mean? Sounds pop, but what does it mean?
Female: (LAUGHTER). It means letting the government of other nations and letting their own people know exactly what they're doing.
QUEST: Right, what do you think it is?
Female: Accountability.
QUEST: Accountability.
Female: Yes.
QUEST: To whom?
Female: To the people they're serving.
QUEST: They get elected, what more do you want?
(LAUGHTER)
Female: They want - they have to do a good job.
QUEST: Oh, well that's what it like -- goes with the job. And what about yourself? What do you think leaders lack? What do you want to see
more of in the future?
Female: Innovation, new thinking.
QUEST: New thinking.
Male: Parties working together.
QUEST: Parties where you want consultation and coalition.
Male: Yes.
QUEST: What's wrong with the current system?
Male: Well, people just blame each other based on the party that they're in instead of actually working together for a fix.
Male: (Inaudible).
QUEST: Thank you very much. We'll talk more about them in a moment. When we come back, we're going to turn our attention to the Gates
Foundation. It's aiding the fight - the serious fight - against Ebola. It's come up with a hefty donation. You're going to hear from Melinda
Gates about how to put $50 million to good use. After the break.
(COMMERCIAL BREAK)
QUEST: The U.N. secretary general says we need a 20-fold increase in international aid to help fight Ebola. The Gates Foundation's doing its
best to help. Last month it donated $50 million in the fight in West Africa. The money is targeted at places like Sierra Leone and will go to
international aid groups and governments to buy supplies and improve emergency operations. CNN's Poppy Harlow spoke to Melinda Gates and asked
her next step forward.
(BEGIN VIDEOCLIP)
MELINDA GATES, GATES FOUNDATION: I think we need to move supplies very quickly, I think we need to educate communities very quickly on how
they can make sure they don't contract Ebola. I think we need to actually draw blood from people who've had Ebola and recovered from it so we can use
their blood or their antibodies to give those to other people. And then back home we need to be working on the right drugs and vaccines for a long-
term strategy against Ebola as well.
POPPY HARLOW, JOURNALIST FOR CNN: The fact that there is no more ZMapp, at least right now supplied that experimental drug and there really
is very little - nothing approved by the FDA to treat - to treat Ebola patients. What does that tell you about our pharmaceutical industry. Some
have said, well, you know big pharmacies didn't get into this game because frankly there wasn't the huge need for it. It didn't make sense to send
all the R&D dollars. I mean, it is a business too. So where's the line?
GATES: Well I think this is what we're waking up to as Americans is part of what our foundation has looked at for a long time is that there are
these vast inequities in the world. We do work where there are markets. We work where there's lots of disease, and so those typically are diseases
you see in the United States, the United Kingdom, and yet people suffer from other diseases like malaria but we don't get much here, and so we need
to make way that public and private partnerships that we - it's in the interests of pharmaceuticals to actually invest in those diseases. And
they are doing it. I mean, if you look at the investments going into malaria now or into childhood vaccines for diseases that we don't really
get in the United States - that actually has been happening. But Ebola was one that was behind.
(END VIDEOCLIP)
QUEST: That's Melinda Gates talking to Poppy Harlow. We'll have a "Profitable Moment" next.
(CHEERS)
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment." It was an extraordinary day here in Washington. It's not every day that you hear the secretary general
of the United Nations tell countries don't wait for consultation. Or that you have the managing director of the IMF, Christine Lagarde, saying to
countries don't worry about fiscal deficits. Spend what you need now. In other words, the crisis with Ebola is so serious, that the rule book is
being thrown out the window as the West and the developing countries try to get to grips and offer what resource they can to try and solve this
solution now.
And if you needed any warnings about the consequences the deep, fragile situation in the world at the moment, just look at what happened on
the Dow Jones Industrial today. The market down nearly 2 percent. The worst performance of the year so far. Let there be no doubt about it,
whether it's the Middle East, whether it's Ebola, whether it's the Eurozone growth, whether it's a slowdown, whether it's tapering coming to an end,
there are so many risks and what-ies out there at the moment, that there is only one thing of which we can be sure - volatility is the way forward on
the market. And as they say, that's "Quest Means Business" for this Thursday night. I'm Richard Quest at George Washington University in
Washington, D.C. Whatever you're up to in the hours ahead, (RINGS BELL), - -
STUDENTS, GEORGE WASHINGTON UNIVERSITY: I hope it's profitable!
QUEST: I think they'll go far!
(LAUGHTER)
END
