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QUEST MEANS BUSINESS

U.S. Senators Cancel July 4th Recess; Interview With John Lipsky

Aired June 30, 2011 - 15:00:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: No rest for the indebted. The U.S. Senate works the week of the Fourth of July.

Sold for a song. We'll be speaking to the new chief of MySpace.

More than eight years, several ash clouds and a brutal recession, IATA's chief, Giovanni Bisignani, joins me tonight. It is his last day on the job.

I'm Richard Quest. Back in London, where, huh, I still mean business.

Good evening to you. We will have our business agenda in just a moment. First, though we want to show you the pictures in Canada. The Duke and Duchess of Cambridge, better known as Prince William and Kate, Wills and Kate, their plane of the Canadian aircraft has just landed on Ottawa, at the start of a 10-day trip that will take them coast to coast in Canada. And also take them down to Los Angeles, in the United States.

Judging by the look of it, the plane is trying to fly the flag. Don't forget, of course, William arrives in Canada, not just as the Duke of Cambridge, but also heir to the throne, which one day will of course, is part of his dominions and realms, that will include Canada. And Catherine will indeed become queen of Canada.

The plane has some more taxing to do. We will move on. And just keep a look at the screen. We will always show you those pictures when they come down the stairs.

U.S. senators are paying for America's debt crisis, with their holidays. Lawmakers will forego a traditional week off for July the Fourth, Independence Day, instead they will get just the one day, the Fourth, itself. They will return to work on the Senate floor on the 5th of July. It is a measure of how serious the budget deficit crisis is and the raising of the U.S. debt ceiling. The

Senate Majority Leader Harry Reid says there isn't a moment to waste. If lawmakers don't agree to the ceiling, the U.S. won't be able to pay its bills.

(BEGIN VIDEO CLIP)

SEN. HARRY REID, (D-NV), MAJORITY LEADER: That is why the Senate will reconvene on Tuesday, the day after the Fourth. We'll do that because we have work to do. We'll be in session that week, that is next week, with our first vote on July 5th. We will determine what time that vote will be on July 5th. Likely in the afternoon with the travel plans (ph) with Fourth of July, the previous day. There is still so much to do to put Americans back to work.

(END VIDEO CLIP)

QUEST: Some are calling this a publicity stunt. Senators don't need to be in session to do a deal on the debt ceiling. President Obama said most of the work is done behind closed doors. Jill Dougherty is at the White House and joins me now.

Jill, all right, it may be window dressing of the most nakedly opportunistic type. But it is symbolic and sends a message.

JILL DOUGHERTY, CNN WORLD AFFAIRS CORRESPONDENT: Well, it is. I mean, it is important. I think everybody would feel it is important. But the question is how long can this debate continue? And the president would say, very clearly August 2 is the deadline. In fact, Richard, just at the briefing here, we have had at the White House with Jay Carney, the spokesman for the White House. He said that they actually have already technically surpassed that deadline and that they are running out of tools in the tool box, as he put it. And the final thing, the president is criticizing and the White House, criticizing Republicans and some who say this isn't really a big. There are not really going to be any serious consequences. Here is what Jay Carney said.

(BEGIN VIDEO CLIP)

JAY CARNEY, WHITE HOUSE PRESS SECRETARY: It is not at all reasonable to play chicken with the full faith and credit of the United States government. I mean, you know, you hear some folks saying that this is not a serious issue. That this is not something to be alarmed by; that somehow as the president said yesterday, that we should-that it would be OK to pay interest on the debt, to pay bondholders, the Chinese government, or others who old Treasuries, but not pay something else, maybe Social Security checks, or veteran's benefits. I mean, that is just not acceptable. That is not a good alternative. And there is no question, I think, according to outside economic analysts that the markets would not view a decision to default charitably.

(END VIDEO CLIP)

DOUGHERTY: And as we all know the president, himself, is now leading these negotiations with Republicans. And just today, in fact, there has been quite a lot of brinkmanship. And, Richard, the latest one was Mitch McConnell telling the president, almost quoting Mr. Obama from yesterday, saying, hey you guys should work really hard. Mitch McConnell said why don't you come up here to Capitol Hill, and we'll talk with you about this. The president turning that down via his spokesperson, who said, that this is a maximalist position that the Republicans have. We have heard that before. It is not going to work.

And so the president is going off-and he's going off, in fact, to do some fundraising, Richard.

QUEST: Jill, many thanks. Jill Dougherty at the White House putting the overarching political picture together. Well, August the 2nd is their cut off point. The day on which America could run out of cash, a so-called technical default. Bills aren't paid, but actually everybody knows that America could pay when the debt ceiling is raised.

That technical default, I asked last night, you will have heard of former U.S. Treasury Secretary Larry Summers what did he make of the prospect of technical default?

(BEGIN VIDEO CLIP)

LARRY SUMMERS, FMR. U.S. TREASURY SECRETARY: I trust it won't happen. It would be financial Armageddon, if it did. Quite likely it would make the events after Lehman Brothers failed look like a picnic. It is not something that any rational individual would contemplate, permitting. And I believe that while there may be some drama along the way, that we will not see a default. That is something that is so horrible, it would be beyond my imagination.

(END VIDEO CLIP)

QUEST: Something so horrible, beyond Larry Summers imagination. We'll continue that horrible specter in just a moment, as we look at what the U.S. debt position will be. But we will go north of the U.S. border, and let's join to Canada, to Ottawa, and the pictures of the plane. It is now arrived carrying Prince William and Princess Catherine, the Duke and Duchess of Cambridge. Married just two or three months, 100 days, plus. And they are on their first joint royal tour. They choose a fairly safe place to visit, Canada, still heavily monarchist. More than 50 percent of the population there do still like the monarchy as being the head of state. So-and William actually hasn't been to Canada for some years. This, of course, will be a chance for him to renew his acquaintances with the Canadian people.

This trip starts in Ottawa, which is the capital. It then goes slightly east out toward the maritime federal states of Canada. Then cross country, north up into the wilds of Canada, and out to the west. Several days later, William and Catherine go south to the United States, to Los Angeles, where they will-to Hollywood, frankly. Where they will attend various receptions in aid of the British BFTA, the British Film Television, Arts organization.

The Canadians, needless to say, were delighted that Canada was the first tour. And from what we understand, certainly on the agenda today, the laying of a memorial wreath. Many thousands of people have been gathering there. The crowds have been gathering to see exactly-well, to meet and to greet, Catherine.

Interestingly, as we wait fort hem to come off the plane, these things are always interminable. You do wonder what-ah, there they are. She has changed on the plane. I don't know what she is wearing. But obviously, Prince William gets off first, Catherine behind. And greeted at the bottom of the stairs.

The Mounties, there, the Royal Canadian Mounted Police; of course, the governor general of Canada, the queen's representative to the country. In many ways, throughout all of this, it is William's grandmother, of course, that he is to some extent representing, the queen, herself. The queen has said on many occasions, and indeed on her tour there just last year. The queen said whenever we come to Canada, it is like coming home.

But this, of course, is not about Prince William, or indeed the queen. It is about the woman standing three paces behind, that we can barely see. That is who they have come to see. And it will be interesting to note the differences between the way William handles Kate's popularity on these tours. And the way in which Prince Charles clearly, his father, had such difficulty with Diana's increasing popularity, which often seem to put Charles into the shadows. Unlike Diana, though, Kate has been among the royal family, and around the royal family, for many years.

And I'm feeling slightly inadequate to you, dear viewer, because I feel sure I should be able to wax lyrical about who made that dress, and- but I'm afraid-maybe one of my producers will be finding out who the dress maker was. So we can bring that to you, since I'm sure that is-the next thing, of course, they will be doing is going on to lay a wreath at the memorial service, at the war memorial.

So, let's return to our agenda, more normal material. We were talking, when I left you, about the-or when we went to Canada-about the debt ceiling and the risk of a technical default of a U.S. debt. Now the International Monetary Fund says the U.S. debt is unsustainable. That is the budget deficit. In its regular report, Article IV Report, on the American economy, it says it is a difficult time for the country.

Yesterday I was in Athens, as you know, and I was joined by the acting IMF managing director John Lipsky. And I asked Mr. Lipsky how serious and dangerous the situation for the U.S. was.

(BEGIN VIDEO CLIP)

JOHN LIPSKY, ACTING MANAGING DIRECTOR, IMF: Well, Richard, let's take a broad look and recognize that on both sides of the political aisle the goal is who has the better plan for fiscal consolidation. That is a debate that wasn't taking place even a year ago. So, in broad terms, this is very positive. Because we recognize, the U.S. authorities, as I say, both political parties and the United States' key partners all recognize the importance of establishing credible, medium-term fiscal adjustment in the U.S. It doesn't have to get all solved today, but there needs to be credible progress. And in this context, a debt default in the U.S. government bond market would be a seriously disruptive event. And I'm sure both sides of these political discussions recognize that, and will act accordingly.

QUEST: So, if we pull together, the U.S. strands, we know that there is no more QE coming on, after the month. We know that to some extent inflation is now the serious, or at least, it is starting to become-you talk about it hardening. So, John, where do you stand? And where does the fund stand on the question of when it is time to tighten in the U.S.?

LIPSKY: Well, good question, Richard. Given our forecast, which is for a moderate acceleration of growth in the second half, just somewhat stronger performance in 2012, about 2.75 percent growth. That we don't foresee serious inflationary challenges, or even a sign of any significant deterioration in inflation expectations. So the Fed has to continue to thread the needle, as it were, between its current accommodative position and to begin a gradual-eventually begin a gradual, normalization of rates. More critical, right now, is progress on the fiscal side.

QUEST: Let's talk about Christine Lagarde. Madam Lagarde is the new managing director and takes over in just a week or so. What do you hope she brings to the fund?

LIPSKY: Well, I know she brings real talent, expertise, and someone who, as finance minister of France, is absolutely on top of all the key issues that face the fund. We look forward to-I personally look forward to welcoming her on July 5, which will be her first day on the job, here in Washington.

And I'm sure she will provide energetic and skillful leadership for this important institution.

(END VIDEOTAPE)

QUEST: The acting managing director of the IMF, that is John Lipsky. He was talking to me, of course, when I was in Athens, yesterday.

Tonight, the U.S. completes is program of printing money. Let's see how the market is trading as it looks ahead to that. It is also the end of the first half of the year. The Dow is up 130 points, a really strong, rollicking session. Up 1 percent, 12,391. So we need to factor that in. Let's just look at how Dow has traded over the period of quantitative easing, with our super screen. The super screen will show the map as to where we start. This is the beginning, QE2 starts at 11, and the Dow is at 11,215.

The Dow-get rid-we should be able to get rid of that. Oh, there we are, look.

Then if we touch that, we see the low point, immediately after this one. There are a lot of worries about the U.S. economy. The low point is 11,006. As you can see from the way the graph continues, it rose very sharply. And many people say this rise was the result of QE2, pumping money into the economy, giving cheap cash to banks, to boost, and so on. But we had a really a very serious shortfall here. And that, of course, was because of the Japan tsunami, the earthquake and the tsunami, and the very real fears of what was going to happen to the economy.

But look at what has happened, ever since. A very nice rise in the Dow, up to a high point of 12,810. I'll show you, in a moment, on the board, where the Dow is at the moment, 12,810. And as you can tell, for now, the Dow is just falling off. This is a correction that is believed to have taken place over the last few. The Dow is currently up 125 points, at the moment, 12,387, which as you can see, is quite just about 500 or 600 points, about 4 to 5 percent off its recent highs.

When we come back in just a moment, it is a painful process but they are getting there, inch by inch. Greece is edging closer to the bailout. We will be in Athens after the break.

(COMMERCIAL BREAK)

QUEST: Greece has taken another important step toward securing a new bailout and won crucial support from the private sector. Parliament approved the bill on how the austerity measures will be carried out. It was the same vote, 155 members cast the ballot, in favor, same as for yesterday. The vote clears the way for negotiations on a bailout. German banks are stepping up to play their part. They finally agreed to postpone repayment dates on more than $4.5 billion worth of Greek bonds.

In a much quieter day on the streets of Athens, Elinda is in Athens for us tonight.

It is quieter, but the protestors are still there. So I am wondering, what do they hope to gain?

ELINDA LABROPOULOU, JOURNALIST: Well, as you say it is a lot quieter after the scenes of rioting that we saw for the last 24 hours, non-stop. The square is very quiet today. The protestors are in a very different mood. They are saying that they are here for a long wait, so they are prepared to wait it out until the government goes. Just a few minutes ago one of them was talking. They were saying we'd like to thank the police, because by what happened yesterday we now have the opportunity to clean the square and to see an even nicer square in Athens. So there is a little bit of humor. Things have calmed down a lot but the protestors are saying that they are here to stay because they are not happy with the measures that have been voted through.

QUEST: Elinda, we will follow this in the days ahead. So stay safe. Elinda Labropoulou joining me from Athens tonight.

The U.K. has seen austerity protests of its own. Hundreds of thousands of public sector workers went out on strike. They were striking over pension cuts. Dan Rivers was at the protests here in London.

(BEGIN VIDEOTAPE)

DAN RIVERS, CNN INTERNATIONAL CORRESPONDENT (voice over): Who would have thought pension reform would have provoked this. But the anger across Britain at plans to curtail generous public sector retirement schemes has reached boiling point. A small minority clashed with police near Downing Street.

UNIDENTIFIED MALE: Move back! Move back!

RIVERS: But elsewhere the rally was peaceful. Teachers, some with their own children, together with university lecturers, civil servants and immigration officials, all people not used to striking; 750,000 walked out across Britain. Some unions going on strike for the very first time.

UNIDENTIFIED MALE: We are public servants. We are going to have a modestly comfortable salary, some of which we don't get paid each month, because it goes into our pension pot. And we will then have a modestly comfortable pension, that pact has been betrayed and teachers today are angry.

RIVERS: Across England 12,000 schools were shut by walkouts. From action at a prison on the Isle of Wight, in the south, to a closed art gallery Liverpool, in the north.

(CROWD CHANTING)

RIVERS: All furious with government plans to change their pensions, meaning they'd receive less and pay more into their plans, to retire later. Proposals put forward to deal with a massive government overspend, which many here feel was caused by the bailout of the banks.

UNIDENTIFIED FEMALE: It is about who being asked to foot this bill, really, for a mess that has been made by-not us.

UNIDENTIFIED FEMALE: You know, I'm just an ordinary teacher, that just feels like, like we're being picked on, really. And I don't think it is fair.

RIVERS: The government says state sector pensions are unsustainable and wants to bring them in line with often less generous private schemes. And people here fear other cuts will follow. It might not be on the scale of Greece, but it is all caused by the same problem. Who pays for the overspend.

(On camera): Until now the age of austerity has been a phrase that has been widely used without, perhaps, people understanding what it means in practice. Now, suddenly it seems very real and people here don't like it one bit. Dan Rivers, CNN, London.

(END VIDEOTAPE)

QUEST: Stay with austerity. In the last 20 minutes Italy's cabinet approved a new austerity budget. It would mean $68 billion of cuts. Parliament still needs to approve that plan. Department budgets will be slashed and a public hiring freeze continued, in an attempt to rein in its huge debt, 120 percent of GDP.

When we come back in just a moment, look pathetic profit margins in a very fragile industry. That is no my view-it's his, IATA's outgoing director general, Giovanni, is never one to mince his words. It is his last day on the job and we are pleased he is joining us tonight on QUEST MEANS BUSINESS.

(DESK BELL CHIMES)

(COMMERCIAL BREAK)

QUEST: IATA says passenger traffic in May jumped nearly 7 percent from year earlier. Airlines won't be cracking open the champagne yet. IATA's Director General Giovanni Bisignani says the profit margins are pathetic. It is his last day on the job and Giovanni is with us now.

Many thanks for joining us. Let's just talk about the current state of play in the industry. Before we look back over what you have done so far. It is pretty bad, isn't it? It is still bad out there, the economies?

GIOVANNI BISIGNANI, DIRECTOR GENERAL, IATA: The recovery is there, but it is very fragile. This year we will have $600 billion in revenues, but our margins are peanuts; a $4 billion profit, 0.7.

QUEST: You say the margins are peanuts. Let's just listen to some of Giovanni's most colorful phrases over the years that you have been at IATA. Have a listen.

(BEGIN VIDEOTAPE)

QUEST: Now there is not a lot we can do here. This is all just straightforward.

BISIGNANI: This is an easy line. You can unpack our, or see the checks, if you have to check something. Bu the most important thing is have certain kinds of standards. Because passengers does not know that he has to take out his computer, the belt in, the belt out, shoes in, shoes off.

It was a European embarrassment. You know, safety is our number one priority and the figures that track safety in the industry is very clear to everybody. But we assess our decision with risk management and with figures and facts. We cannot base, as the European have done, just on a mathematical model that was not correct. But in the emergency situation, Europe did not-was not fast enough. It took five days to arrange a conference call.

QUEST: What do you want to do here?

BISIGNANI: We want to get rid of this, of the passport. My idea is to try to go with your fingerprint. It is possible. We have the right technology. It is a matter of coordination and harmonization (ph) with governments.

QUEST: But are you happy for every airline, every airport, every government agency, to have your fingerprint?

BISIGNANI: As a passenger I would be much more pleased to be able to board quickly and I have no risk and no concern and use my fingerprint.

Using just economic measures, it does not solve the problem. We are fixated on this emission ratings scheme. It is not the answer.

It is time to say bus stop, shorten the route, reduce the delay, these are areas in which Europe would have to face. It is not just thinking green and taking cash.

(END VIDEOTAPE)

QUEST: Giovanni, it has bee a long 10 years. What are you most proud of, of what has happened? Because the industry is not in good shape.

BISIGNANI: Probably the fact that despite the crisis, the financial crisis, we were able to manage $2.7 trillion, cash. With a successful rate of 99.99 percent.

QUEST: That is the money that the airlines pay each other. During your time, obviously, you picked up after 9/11. You had the security crisis of liquids and gels, and the shoe bomber, and the underwear bomber. What do you make of it all now, the security?

BISIGNANI: Security has improved a lot in the sense that flying is much more secure. It is expensive. We pay $7 billion, but we have to take away the hassle. That is the reason why in Singapore we presented the check points of the future. Going through a tunnel without unpacking, without stripping, just in a normal way.

QUEST: Are airlines in good shape today? And should they be allowed to consolidate more?

BISIGNANI: Absolutely, they are not in good shape. The financial situation, as I mentioned before, it is very, very fragile. We have to go on consolidation. It was good. The consolidation that happened in Europe, in the States, but we need big consolidation between a big European airline and a big Asian.

QUEST: Now that you are leaving IATA, you have been in the aviation industry most of your life, are you going to continue to do something in aviation? Are you going to keep speaking out forcefully?

BISIGNANI: Well, I have become a bit more wise and I shout less.

(LAUGHTER)

But I'll be involved in boards, and teaching, and writing a book.

QUEST: And you'll come on this program and help us understand what is happening in the industry?

BISIGNANI: With great pleasure.

QUEST: Giovanni, thank you as always for coming in an talking to us, and being with us.

After the break, believe it or not there are some countries out there that are not stuck in crisis mode. Chile's finance minister explains that his nation can escape the fall out. That is next, good evening.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. QUEST MEANS BUSINESS this is CNN. And on this network the news always comes first.

(NEWSBREAK)

QUEST: All around the world, contagion is the word on the lips of finance chiefs. Chile's finance minister thinks his country has little to fear. Filipe Larrain says Chile can dodge the effects of the crisis in Europe, helped in part by its strong growth. He explained why his country is in such good health, to Jim Boulden.

(BEGIN VIDEOTAPE)

FELIPE LARRAIN, CHILEAN FINANCE MINISTER: All the projections are now between 6 and 7, and closer to mid-range. In fact, the central bank's projection is 6.5 percent growth. Well, it is between 6 and 7, so the mid- point range is 6.5. And I think that we don't see, you know, overheating. We have had some price pressures. But mainly coming from foodstuffs and oil.

JIM BOULDEN, CNN FINANCIAL CORRESPONDENT: So, it is the imports, like other countries are facing.

LARRAIN: You know, which is imported inflation. It is not an inflation which is driven by internal demand, but mainly driven by international prices of oil and gasoline, and food stuffs. If you take that a part, and we are starting to see that inflation expectations and the actual measures of headline inflation are receding, are declining.

BOULDEN: Let me ask you about quantitative easing, then. QE2 in the U.S. is coming to an end. You would definitely not want to see, then, QE3 coming from Mr. Bernanke and the Fed, I'm taking that.

LARRAIN: Absolutely. We hope not, because this is part of the problem that we are facing right now. It is part of the problem is QE and the other is, you know, if the dollar needs to weaken, against which currencies should it weaken, or would it weaken? It should weaken against, for example, the Renminbi. But the Renminbi doesn't move according to market forces, and so where are the other currencies? And then you find the euro, with a problem in Europe, and then the euro is not the currency against which the dollar will depreciate. So then, what is left? A bunch of currencies of either fast growing emerging markets, or small developed economies that are doing well. And I think those currencies are the ones that are under attack-in a different way. The attack used to be

BOULDEN: Now it is like a-

LARRAIN: The attack used to be-

(CROSS TALK)

LARRAIN: Now you have the counter attack.

BOULDEN: Right.

LARRAIN: Which is, they want to be there when things are going well. One of our big challenges is if things go well in an economy. Then you are more attractive.

BOULDEN: And the capital inflows come.

LARRAIN: And the capital inflow is coming to your country.

BOULDEN: Are you, as the finance minister of a fast-growing economy, do you worry about Greece? Do you worry about a default there? Do you have to prepare for anything? Are you worried about a euro crisis? Does that change anything that you do?

LARRAIN: Well, it is a concern. It is a concern, but let me tell you, about half of our exports go to Asia, right now. China is our main trading partner, 25 percent of our exports go to China; a quarter of the total. Well, of course, a lot of that is corporate. But I would also say- of course, we are concerned about it. And we are following very closely what is happening here. We have, in fact, a committee with the a presence on the central bank. We meet very often. And one of the things that we discussed is the situation in Europe.

Of course, first of all, we wish the Greek people well. We wish them to solve their problems and we hope that things could get better in Europe. But having said that, the Greeks' default, if that happens, will not derail our development and our growth prospects.

(END VIDEOTAPE)

QUEST: That was Chile's finance minister talking to Jim Boulden.

We will take a short break. From disco chic to hotel boutique, one man is breaking the mold. The Studio 54 co-founder, Ian Schrager, on why following your dreams is the key to success.

(COMMERCIAL BREAK)

QUEST: From night clubs to hotels, this man is renowned for ripping up the rule book. He is Ian Schrager, who co-founded the legendary Studio 54 nightclub in New York, even before my time, disco decadence, it was an icon of its era. He also came up with the idea of boutique hotels, particularly in New York. This is one of the recent ventures, in partnership with Marriott, the Waikiki edition. "Travel & Leisure" say that he single-handedly reinvented the hotel as a sight of electrifying cultural significance.

Ian Schrager, gave us the boutique hotel. He is 64 now, he is still breaking the mold.

(BEGIN VIDEOTAPE)

IAN SCHRAGER: I followed the traditional route, because I picked up the baton that my parents handed to me. You know, after I practiced law for a couple of years and I didn't really love it because I thought I was an agent rather than a principal. And it wasn't until I got into the nightclub business that I started to realize that I was creative.

You can't create something new by asking people what they want. Because they will only tell you what they know. In the case of most creative people, it is because of what they like. Studio 54, for instance, was the kind of club that I would have wanted to go to. The hotels I've done are the kind of hotels I wanted to stay in.

I think by breaking the mold is the only way you can do something that resonates with people, or else you are handing them the same thing, but maybe in a different package, or in a different color. But to provide something truly original, to make a true contribution, you have to break the mold and do something that hasn't been done before.

I am voracious reader of magazines and newspapers, because I think they are all windows to popular culture. When I see a magazine picture, or article, and something resonates with me, I take it out, I call it a tear sheet. And put it up on the bulletin board. Not because I want to do anything literally with what I'm seeing, but because there is something there that means something. There are psychological, sociological reasons why some people become creative and some people don't, but I think it is in all of us. It is a human element.

I'm not afraid of making a mistake. No guts, no glory. You know, you have to go for it. You want to take the safe route and get the gold watch after 25 years, it is fine. But I think you have to try and you have to have, you know, a little bit of the audacity to give it shot, to try to accomplish something that you think might make you happy and follow your dream.

(END VIDEOTAPE)

QUEST: Ian Schrager, breaking the mold.

Breaking the weather, Guillermo is at the World Weather Center. I was trying to think of something catchy and witty, and in the spur of the moment and it all went horribly wrong.

(WEATHER REPORT)

QUEST: Interrupting you. I'm sorry, Guillermo. Good though you are, Prince William and Princess Catherine come first.

GUILLERMO: More important.

QUEST: Absolutely. Well, prettier, certainly.

(LAUGHTER)

Let's show some pictures. That is William, that is Catherine to the left, obviously, in her Erdem dress. They are being greeted by the Prime Minister Stephen Harper. The crowd are absolutely ecstatic. What's lovely about this is Catherine is so new in many ways, to this royal life, even though she had done visits with him, there is a naturalness, and an energy, and a vibrancy and a delight with her that is really, you don't often see on royal occasions. She is delightfully fresh with the public. (UNINTELLIGIBLE)

They are going to be laying a memorial at the war memorial in Ottawa. Very large crowds. I promise you this, if William was on his own, I don't think there would be quite so many people. There would be a good crowd, but not that many. With the Prime Minister Stephen Harper, and his wife, walking the customary three paces behind.

We have a lot more to talk about. We are going to talk technology after the break.

(COMMERCIAL BREAK)

QUEST: Let's go back to Ottawa, in Canada, where the Duke and Duchess of Cambridge are honoring Canada's war dead in a special ceremony of remembrance. They are laying wreaths at a war memorial honoring soldiers who had died in conflicts dating back to World War I.

(BEGIN LIVE FEED, IN PROGRESS)

QUEST: This is the Duke and Duchess' first visit, official visit, as a married couple. As you can see there, the bugler playing.

(BUGLER PLAYS)

QUEST: Canada played such a major role in the conflicts of First World War, 1914 to 1917, the Second World War (UNINTELLIGIBLE).

And of course, as head of state, the queen still has a large role. It is the Royal Canadian Air Force, it is the Royal Canadian Mounted Police, it is the Royal Canadian Navy. The Duke will one day be King William. And as Canada is still part of his realms, he'll be King William of Canada, too.

(BAGPIPES PLAY)

A moment of silence there by the Duke, the Duchess, the prime minister, and the veterans at the war memorial in Ottawa, in Canada. They will now lay their wreaths, in their name, and in the name, of course, representing Her Majesty the Queen.

The laying of wreaths, of course, will be an act extremely familiar to Prince William. Not only in his own role, as a member of the royal family, which of course, he has laid wreaths (UNINTELLIGIBLE) during Remembrance Sunday, in London. So Prince William, trained, of course, with blues and royals, is now part of the Air Sea Rescue Corp.

But for Princess Catherine, this is indeed a completely new way of life. She has watched the annual wreath laying ceremony in London, from the balcony overlooking White Hall, but now of course, as the wife of the heir, the ultimate heir, not the heir apparent, but the ultimate heir to the throne, she takes part in these ceremonies.

(BUGLER PLAYS)

This is unusual. The two of them laying wreaths, simultaneously.

(CROWD CHEERS, APPLAUSE)

Now that is an important moment in the history, if you like, of Prince William and Princess Catherine. Let me explain why. Normally, it would be the queen who would lay a wreath and then the Duke of Edinburgh, after her. It would be Prince Charles and maybe, the Duchess of Cornwall, Camilla, but not necessarily. But for William and Catherine, together to lay the wreath sends an important message. That they are a modern couple, this is a modern marriage and it is a new form of royalty. He laid it first, and she laid her flowers afterwards.

They will now sign a book of remembrance. And duty done, then things can move into a completely different direction. The thing about this trip, this chore, they want it to be informal. One royal courtier said, if they want to call them Wills and Kate, that will be fine, too.

Your Royal Highness, the Duke, Prince William, Wills and Kate, this is very much going to be a happy tour. One that our royal correspondent Max Foster is following and will culminate in 10 days' time, seven to 10 days, in Los Angeles, California. Kate's first visit, incidentally, to Los Angeles.

So, there we will leave the royal tour, well and truly underway. You have been watching live coverage from Ottawa, in Canada, where William and Catherine have now started their tour.

I'm trying to find the e-mail. Erdem, for those of you who want to know, it is what she is wearing. Erdem is the designer of her dress. I suspect we are going to learn a great deal more. She is a Canadian designer, by the way. I suspect we'll learn a great deal more about those dresses, before we are finished.

Leave you with the pictures. That is QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Thank you for your time and company. Whatever you are up to, I hope it is profitable. Piers Morgan is ahead. First, those headlines.

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