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QUEST MEANS BUSINESS

Bank of England Announces QE2; Remembering Steve Jobs

Aired October 6, 2011 - 14:00   ET

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


RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS: Start the printing presses. Britain says it is time for more money.

The governor of the Bank of England tells us why he did it. A former member of his committee says why he wouldn't have.

From iPod to iPhone to iPad to icon, we pay tribute to Steve Jobs.

I'm Richard Quest. I mean business.

Good evening.

We begin tonight, QE2; it might as well have been SOS. Three years on from the financial crisis and the United Kingdom economy is still in need of help. The Bank of England describes the tensions in the global economy that is threatening recovery. And so, the U.K., is creating more money to pour into the British financial system.

Join me in the library and you will see what I'm talking about. It is known by its posh title, the Asset Purchase Program, or basically QE2; $115 billion dollar of QE2. That is roughly-well not roughly, that is 75 billion pounds. Now the first round was-well, let's stay in dollars. The first round was $300 billion. So this is quite a hefty 36 percent increase on what they did last time. When it is finished it will be nearly half a trillion dollars worth of monetary easing that the Bank of England feels is necessary.

And the reason, because even though inflation is twice, heading towards twice, the Bank of England reference rate, Mervyn King, the Bank of England governor, says the pace of the global expansion has slackened. Further, he warns underlying growth has moderated. That is the key word. The United Kingdom economy has, as we saw yesterday, you and I, from those GDP numbers, growth of 0.01 of 1 percentage point in Q2.

A lot of numbers, but what the core of it means, the U.K. economy is stagnant. What it is worrying, of course, Sir Mervyn, is the question inflation. He now says inflation in the U.K. will hit 5 percent, but that is because of tax increases. He expects it to fall back. Slow growth is more dangerous at the moment, than the fast-than the fast inflation.

Obviously, the pound took a tumble against the dollar. Monetary easing of the magnitude of $115 billion; that creates more pounds in the system, more pounds in the system could create possibly more inflation, as the pound goes down.

You are getting a picture of just how complicated things are. Analysts weren't expecting this move for another month, at least. The governor of the Bank of England uses language that suggests he's worried. In a letter to the U.K. finance minister he talks of vulnerability, severe strains, tensions, all facing the fragile U.K. economy. This, as he asks for permission to actually do more quantitative easing.

Sir Mervyn has been talking to Stephanie Flanders. Who began by asking him if we should be worried that this move had come earlier, a whole month earlier than people had expected.

(BEGIN VIDEOTAPE)

MERVYN KING, GOVERNOR, BANK OF ENGLAND: No, we decided today to inject an additional 75 billion pounds of money into the economy. And we did that because the news from the rest of the world in the past few months has been very poor. The world economy has slowed. America has slowed. China has slowed. And, of course, particularly, the European economy has slowed. And that is affecting our ability to engineer a recovery here. So we took action today.

STEPHANIE FLANDERS, CNN INTERNATIONAL CORRESPONDENT: But that does sound like you think there is a serious possibility that we could be stagnating as an economy or maybe even slip again into recession.

KING: Oh, I think it is pretty clear that the world economy as a whole is slowing down much faster than people thought even a few months ago. That is why it is sensible for monetary policy to respond to changes. When the world changes, we change our response.

FLANDERS: Now, a lot of people say this response is more about keeping up appearances. That the more you do of this, the less effective it is going to be. And in a sense is not so much that it is going to achieve anything. But it would really hurt confidence for you to be admitting that there wasn't anything you could do.

KING: I don't think that is true at all. We are injecting 75 billion pounds of money directly into the British economy. That will have an effect. Initially the people who get the money by selling government bonds to us will use that money to buy other things. They could buy goods. They could buy other financial assets. They can buy the securities that companies issue in order to finance themselves. This will raise the prices of assets. It will make people better off in terms of wealth.

This will gradually seep into the economy and raise demand. And it will mean that the slowdown will be less sever than would otherwise have been the case. We studied the effects of the previous actions we took. They worked. And I'm confident that this will work too.

FLANDERS: You talked about the seriousness of the problems underlying this crisis and how long it is going to take to resolve them. By taking this action are you not encouraging the idea that you can simply throw money at this problem? That you don't have to tackle the underlying issues?

KING: Well, no one has done more than me to point out that you can't solve the underlying problems just by throwing money at it. But what we can do-

FLANDERS: But you are now throwing money at it?

KING: The British economy needs to have the right amount of money in the U.K., neither too much, which has always been our problem in the post- war period, too much money, which has created inflation. Now we have too little. The amount of money in our economy actually fell over the past year. In underlying terms, it is probably growing at only around 2 percent a year. That is not enough to support a recovery. That is why we are injecting more money.

But the underlying problems have not been fully tackled. And they can't be tackled by any one country alone. So let me explain what I think the nature of the problem is. For many years some countries had large trade surpluses and other had large trade deficits. Countries with large trade deficits were spending more than they were earning. That meant they were borrowing from abroad.

Countries that borrow from abroad, year after year, are building up debts, which at some point either have to be repaid. Or markets will start to worry that they won't be repaid. The countries in that position were the United States, ourselves, many of the countries in Europe. And at some point this has to be put right. But it can't be put right unless the countries that were the lenders, who built up large stocks of assets, start to spend themselves. So we need to rebalance, not just the British economy, but the world economy.

(END VIDEOTAPE)

QUEST: Sir Mervyn King, governor of the Bank of England, justifying why today the Monetary Policy Committee voted to increase and restart quantitative easing.

One fierce critic of the MPC is one of its former members. Doctor Andrew Sentance is a former member of the Bank of England's Monetary Policy Committee. When he was actually taking part in the meetings, he was, for many months the lone voice that argued for a rise in U.K. interest rates. Believing the inflationary risk was much greater than that of falling back into stagnation. So, far from raising rates, how would he have voted had he been in the rate setting meeting today?

(BEGIN VIDEO CLIP)

ANDREW SENTANCE, FORMER MEMBER OF MONETARY POLICY CMTE.: I wouldn't have voted for more quantitative easing. I don't think the case has been made at all. I actually would not have voted for rises in interest rates, which I had been voting for earlier this year. Because of the uncertainties about the international economy and the instability in the financial markets, but I think announcing more quantitative easing at the moment is a move in the wrong direction. And it is adding stimulus to the economy in a way that is not necessarily going to help.

QUEST: The adding stimulus is exactly what they want to do. And the governor says quite clearly that there is not enough money moving around the economy. If he is right then 75 billion of QE might just sort of get things moving?

SENTENCE: Well, it all depends on what your measure is of how much- you know, what is the right amount of money moving around the economy? If your measure is the ability of companies to push through price increases, British consumers have faced 4.5 percent price increases this year. If your measure is growth, real growth, I would admit that is disappointing. But the combined impact to those is the thing that the MPC should be trying to influence.

QUEST: Except when you get a day like yesterday when we had the second quarter GDP, 0.01 of 1 percent, it was just about half of its previous forecast. And you take over the totality of nine months of stagnation. Surely anything that can be done. I can see that you are not sympathetic to this point that I am putting-

SENTANCE: I've served on the Monetary Policy Committee and one of the things I think was very fundamental to the Monetary Policy Committee is its overall remit (ph) is price stability. Now we are starting from a situation where we haven't had price stability. We have had relatively high and volatile inflation. And the worry must be, for members of the public, and the economy, that that continues. Now, one of the problems with that is that it is actually part of the reason why growth has been so weak. Because consumers, who don't have very much growth in their incomes, are facing high price increases and cannot increase their spending very much, in volume terms.

QUEST: If you then look at where we go now, 75 billion, and we are not, frankly, completely sure that the transmission mechanism for QE2 will work as effectively as QE1. That is fair enough, isn't it?

SENTANCE: Uh-huh.

QUEST: So where do we go from now? Interest rates stay at this level for how long do you think?

SENTANCE: Well, I'm not sure about the future of interest rates. I do think that the case for raising interest rates will come back onto the agenda next year; perhaps sooner than people think. But I think the problem we now face is that the market reaction to this introduction to quantitative easing may actually make the inflation problem worse.

So, we have seen the pound fall today and react to the introduction of quantitative easing. The bank monetary-the Bank of England's inflation report acknowledges itself that the weakness of the pound is a contributory factor to inflation. And therefore, I think there is a risk that this policy won't help in terms of growth and does, actually create more problems in terms of inflation.

QUEST: Whether it is the MPC, or the Treasury, or the ECB in Frankfurt, are policymakers now in the most difficult time that anyone can remember?

SENTANCE: Whether it is the most difficult time that anyone can remember depends on how long your memory is. I think we had some pretty tough times in the U.K. in the late `70s, early `80s, in the ERM crisis. I do think, however, it is a difficult time for the Monetary Policy Committee. I think we have to acknowledge that.

But this is a time when the independence of the central bank should come unto its own. And it does act according to its clear mandate, which is to promote price stability. And from my point of view this is a very risky policy, in terms of price stability, at a time when inflation has been high and volatile.

And it has been the bank's own forecasts have been very inaccurate. The MPC are putting a lot of weight on its own confidence and its own forecast that inflation will come down. And injecting more money and more stimulus into the economy.

QUEST: Did you ever have a difficult moment taking such a position, which is clearly against the weight of the committee? Did you ever-I mean, you stuck to your guns, and you are sticking to them now. But did you ever actually feel the weight of pressure?

SENTANCE: I don't know it is very-ah, you'll have to see what the minutes say about whether, you know, how people have voted and what the current dynamics are in the committee. I felt that the external members of the committee, I have a business background, business experience, our contribution must be to bring an independent perspective. And my independent perspective was going back to the middle of last year, monetary policy was too loose. And it was contributing to some of the problems we faced. And I think this is a move reinforcing that direction. And that is why I am very worried about it.

(END VIDEOTAPE)

QUEST: That is Andrew Sentance, former member of the MPC.

Eurozone ECB met and they kept interest rates at 1.5 percent, but they were taking emergency non-traditional measures to increase liquidity into the financial system and stop it freezing up over the winter. Two lots of cheap financing covered bonds of around a year. It will also spend $54 billion on those covered bonds. The first lot was 12-month money, I should have put it, and then you have the covered bonds, which are assets back by the income from mortgage loans.

This has been done before 2009 after the financial crisis. In his last press conference as president of the ECB, Jean-Claude Trichet looked back at a difficult tenure.

(BEGIN VIDEO CLIP)

JEAN-CLAUDE TRICHET, PRESIDENT, EUROPEAN CENTRAL BANK: We were never in calm waters. But for more than four years now, we have been experiencing turbulent waters, storms, unexpected hurricanes. In demanding times regular rate (ph) and transparent communication is more important than ever.

(END VIDEO CLIP)

QUEST: Jean-Claude Trichet, the outgoing president of the ECB.

Some people change industries, others change generations. The inspired mind of Steve Jobs, next, on QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: So many words have been said about the legacy and the man, Steve Jobs. The changes that he made, how many CEOs could win so much acclaim, so much sympathy on their passing? We have much to look at as we consider what took place. We need to begin though, of course, with a reminder of exactly what he actually did.

(BEGIN VIDEOTAPE)

STEVE JOBS, FORMER CEO, APPLE COMPUTER: And we'd like to show it to you today for the first time. And we call it the iPad.

(APPLAUSE)

DAN SIMON, CNN INTERNATIONAL CORRESPONDENT: An unconventional CEO and perhaps the world's best known, with a motto to fit: Think different.

UNIDENTIFIED MALE: The people who are crazy enough to think that they can change the world, are the ones who do.

JOBS: We're going to talk about three things today.

SIMON: At times his on-stage presentations took on the feel of a rock concert, with some Apple loyalists camping out overnight to get a good seat. And media from all over the world would show up to cover Jobs' appearances, bloggers hanging on to his every word and updating his announcements in real time. Apple became the envy of corporate America.

From the first Apple II machine, to the revolutionary iPhone and the much-copied iPad, Jobs created gadgetry that became iconic; symbols of what is cool and cutting edge. And it is those groundbreaking products that allows Apple to be the world's most valuable technology company. Despite holding only around 10 percent of the U.S. personal computer market.

Product launches became cultural events. Lines that would seemingly go forever, like this one for the iPhone 4. Apple fans couldn't wait to get their hands on the next products. And when they did, it was almost like a religious experience. During one presentation Jobs reflected about what makes Apple products special.

JOBS: Apple is not just a technology company, even though we have and invent some of the highest technology in our industry, it is more than that. It is the marriage of that plus, if you will, the humanities, or the liberal arts.

SIMON: Jobs attention to detail extended to all aspects of the company, like those sleek retail stores, which became landmarks themselves; inside a technology playground.

JOBS: All you have to do is type in your address.

SIMON: But not everything has been a homerun for Apple. By their own admission their TV product is still considered a hobby. Critics panned their mobile me service, and the company was slow to respond to concerns about the antennae and reception performance on the iPhone 4.

JOBS: We're not perfect. We know that. You know that.

SIMON: But with Jobs at the helm, the loyalty of Apple fans always seemed to win out.

JOBS: A whole new line up of Macs, iMacs for '99 that take consumer computing to a whole new level.

SIMON: With an endless imagination and a commitment to blend simplicity and creativity in the technology, Steve Jobs built more than just a company. He built a following, an unwavering passion from Apple customers. A legacy which Apple will dearly hope to continue in his absence. Dan Simon, CNN, San Francisco.

(END VIDEOTAPE)

QUEST: And Sandra Endo is near Apple's headquarters in Cupertino, California, joins me now.

You are being kept some distance from the employees and from the building. But tell me what-obviously a sad mood. But what are people saying?

SANDRA ENDO, CNN INTERNATIONAL CORRESPONDENT: Well, Richard, I can tell you that the employees have been instructed not to talk to the media. Obviously, a very big media presence here, because of the gravity of Steve Jobs and what he has done for the entire industry. Especially, here in the tech world, in Northern California, as well as his innovations that have spanned the globe.

And clearly, you can see the employees coming here, working hard, the workday is in full swing right now. And there is a somber mood, though. We spoke to some employees off camera, Richard, who say that it is a very sad day here. The mood is obviously very somber. Take a look through the trees, though, that is the memorial being set up here outside of Apple headquarters.

You can see people milling about. A lot of people in the community and Apple consumers, have been stopping by to lay down flowers, cards, apple fruit, themselves. All a symbolic gesture to the tribute of the work Steve Jobs has done. And employees also are milling about as well, making sure to stop and recognize for a moment the co-founder of this company. So, certainly a very sad day here. We understand that Apple will hold an internal private memorial to pay tribute to Steve Jobs, just for the employees here. But, of course, they say it is going to be a celebration of his life, not such a said affair, Richard.

QUEST: And, indeed, with the amount of product out there, a celebration indeed. Sandra, many thanks indeed; Sandra in California.

As well as making some groundbreaking products, under Steve Jobs leadership, Apple also made an awful lot of money. The company's rocketing share price and what does one of the company's top investors think of the future? After the break.

(COMMERCIAL BREAK)

QUEST: The brilliance of Steve Jobs is more than just flare and design and innovation. When it came to the bottom line, when he rejoined the company, it was the results, they were nothing short of spectacular. In a moment, we are going to talk to one of Apple's key investors, Prince Alwaleed of Saudi Arabia.

And if you bear with me, now, the prince bought his shares for Apple in 1997 at $9.50 a share. The rest, as they are so fond of saying is history. Because if you look at how the share price moved, well, you can really see, his highness-look, not only did he stay right the way through this period where they dropped down to $3.00 a share. He has now seen that share price rocket all the way up some 4,000, from $9.50 up to $380.

Nice work if you can get it. But it also, of course, came from the hard work of the company involved. And Prince Alwaleed joins me now, on the line, from Saudi Arabia.

Your highness, as you look at what happened, we will talk money in just a moment, but as you look at what happened, what are your memories of Steve Jobs?

PRINCE ALWALEED BIN TALAL, CEO, KINGDOM HOLDING CO.: (SPEAKING A FOREIGN LANGUAGE)

Thank you for having me on your program. When I began buying into Apple, when the price when down to a single digit, I had a meeting with him around 1997, 1998, and that was clearly before the iPod, iPhone, and iPad situation came into being, and he told me, I have a dream, Prince. I want to really to go and conquer the whole world and be competing with the Sony's of the world and have consumer products. And he had this vision a long time before all these products, you know, stormed the whole world recently.

QUEST: Right, now, you then-you kept the faith with him, you saw the price rise, you saw the products. How worried are you that, frankly, Apple was Jobs, Jobs was Apple, and that the company now has some pretty difficult times ahead?

BIN TALAL: Well, clearly, Steve Jobs, the legend, that is not very easy to repeat. And I think that the history, the near history will prove that Apple is on the right track and I believe that his legacy will continue, because as they build a culture inside Apple, that really is to be reckoned with. And I always said that it is a three apples shaped world. It is the Adam's apple, and Newton's apple, and now Steve Jobs apple may have changed the whole world.

QUEST: You are not-I've got to ask you, and forgive the bluntness, with respect to the question. So you are not planning to sell out?

BIN TALAL: No, no, as you know, that when we entered at $9, now clearly as the stock has gone up have sold some. But clearly we still have some that we that we will always keep for a long time to come, for sure. Apple is a force to be reckoned with. And for sure you need to have Apple in your portfolio.

QUEST: Your Highness, we must just talk about one or two other matters, just very briefly.

If you take a look, at the moment, at the global economy, we saw the Bank of England today is increasing-it is printing money. ECB, non traditional, the U.S. How worried are you at what you see in the global economy at the moment, Sir?

BIN TATAL: What is needed now is a well-concentrated and well concerted effort, among all the central banks, and the countries of the world, whether they be the United States, Japan, European Union, to have a cohesive and coherent plan to tackle the crisis, until now is very much international in nature and not be localized to United States, or to Europe, and the Far East, and Japan.

QUEST: Right, and isn't it surprising to you that three years after the start of this crisis, and as it is getting it is getting worse again, there isn't that plan where the wall of money to put it right?

BIN TATAL: Well, I mean, the (UNINTELLIGIBLE) the countries, now it is worse because it is rated sovereign risks. So, think that the European Union has to get their house in order and have Germany, France and Italy, and a certain extend, we can also come in and create a plan and get a this thing moving again.

QUEST: Prince Alwaleed, many thanks. Very nice to talk to you on program. Much appreciate you giving us time this evening and that perspective, not only on the global economy, but of course, as one of the investors or Apple.

Coming up after the break, the central banks are taking those extraordinary measures, $9 trillion, to pour cash into the economy.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest.

More QUEST MEANS BUSINESS in a moment.

This is CNN. And on this network, the news always comes first.

The death of Steve Jobs has led publishers to bump up the release date of his biography. Apple fans will now get to read the authorized story of his life on October the 24th instead of late November. Pre-orders for the book, entitled simply, "Steve Jobs," and already earned it the number one spot on Amazon.com's best-seller list.

Britain's central bank is injecting more than $100 billion into the British economy through quantitative easing. The Bank of England governor, Mervyn King, said the money was needed to protect the U.K. from what he calls "vulnerabilities," including possible fallout from Europe's debt crisis.

"condensed translucent images that give us fresh access to reality" -- that's how the Sweden academy describes the work of this year's Nobel Prize winner in literature, the Swedish poet, Tomas Transtromer. He's known for writing about history, nature and death and using dream like imagery.

Sarah Palin says she doesn't have to be a candidate to make a difference in the upcoming U.S. presidential election. Having announced that she will not seek the nomination in 2012 for the Republican Party. Palin has faced an October the 28th deadline, as well as waning public support. She says she will do her best to help other true public servants get elected.

The German chancellor, Angela Merkel, hinted there could be even more help on the way for Europe's banks, making comments in Berlin on the same day the ECB announced in Berlin emergency measures to provide cheap credit. The chancellor is meeting some of the most powerful people in Europe tonight.

Frederik Pleitgen is in Berlin.

Who is she meeting and what are they going to discuss?

FREDERIK PLEITGEN, CNN CORRESPONDENT: Well, on the face of it, Richard, this meeting is about the world's monetary system. She's meeting Christine Lagarde and Robert Zoellick, as well. So some very important people. And what they're saying is that, essentially, they want to prepare the G-20 summit, which, of course, happens later on -- oh, actually, at the beginning of next month, I should say.

But, of course, in the essence, all of this is about the Eurozone crisis and, of course, Eurozone banks in particular.

Now one of the interesting things that Angela Merkel said today, and she said something similar yesterday, is that Germany is willing to recapitalize its banks, but she feels that experts in the European Union have to make a call on this first.

Let's listen in to what she had to say.

(BEGIN VIDEO CLIP)

ANGELA MERKEL, GERMAN CHANCELLOR (through translator): There is, indeed, a very clear need that there is money that is sensibly invested. And we shouldn't hesitate, because otherwise, there will be a far greater damage to our systems than if we say to banks, listen, we think you ought to recapitalize, we ought to get that money from the -- from the state. But obviously, the first step needs to be for the banks to recapitalize themselves.

(END VIDEO CLIP)

PLEITGEN: And, of course, the main thing that Angela Merkel is worried about is a possible credit crunch here in the Eurozone area with these European banks. And she said that in the first thing, that the banks need to try and get the money from the markets themselves. If that doesn't work, if no one is willing to give them money, that they need to turn to the state. And if those states cannot provide these banks with money and, if, indeed, the euro is in danger, then the EFSF should jump in -- Richard.

QUEST: Fred Pleitgen, who is in Berlin for us this evening.

Thanks, Fred.

Many thanks.

Now, investors cheered the action from Europe's biggest central bank, the BOE, and the -- the ECB -- forgive me. The main markets saw plenty of action. Look at the numbers and you will see robust gains across the board for all the major markets, powered by a huge advantage for financial stocks, mining shares, industrials.

Dexia, which trades in Brussels, well, needless to say, their shares were suspended after reports that the Belgian government is considering nationalizing it.

To the Dow Jones Industrials and how New York is trading at this hour. And this is the market. The U.S. markets are up just 1 percent. Not so robust. The focus is on employment, or unemployment, more precisely. Today, Barack Obama urged Congress to push through his $.5 trillion jobs creation bill and warned that Europe's debt problems could threaten the economy on both continents, it's not the time now for political games.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: And the reason I keep going around the country talking about this jobs bill is because people really need help right now. Our economy really needs a jolt right now. This is not a game. This is not the time for the usual political gridlock. The problems Europe is having today could have a real effect on our entry at a time when it's already fragile.

(END VIDEO CLIP)

QUEST: President Obama, well, no, that's Jim Boulden.

(LAUGHTER)

QUEST: That's Jim.

JIM BOULDEN, CNN CORRESPONDENT: Thank you very much.

QUEST: That's Jim Boulden.

So, were you surprised?

BOULDEN: ECB and BOE?

QUEST: Um-hmm.

BOULDEN: Something has changed. And I'm going to go out on a limb here, but something happened over the weekend in Luxembourg. It may not have come out publicly, but Christine Lagarde is winning the day. Europe is talking now about recapitalizing the banks. We're talking about new stress tests. Dexia changed the rules.

But everybody knew this was going to happen if Europe didn't get its act together. It's just you needed something to happen so that -- that the fear from Dexia, Monday, Tuesday, Wednesday, the terrible markets on Monday and Tuesday. Everybody now talks about something different. And you hear the more bold comments coming out from everyone, including Merkel.

QUEST: So let's talk about the BOE.

BOULDEN: Um-hmm.

QUEST: $75 billion...

BOULDEN: Yes.

QUEST: -- on QE2 that, frankly, no one knows if it's going to work.

BOULDEN: And we don't know that it worked last time, do we?

QUEST: Well, the Bank of England says it added about 1.5 to nearly 2 percent of GDP, or at least supported it to that level.

BOULDEN: But clearly, central bankers are saying we need to do something to help the banks right now. We have to do something. So I wouldn't call it coordinated action, but there certainly is an idea that this needs to happen.

QUEST: So why didn't Trichet and the ECB lower interest rates?

BOULDEN: Lower interest rates, right.

QUEST: I mean not they can't -- look, we know that the Bank of England won't do it because they don't believe under .5 it works. But he's got a good couple of percent under his feet.

BOULDEN: Right.

QUEST: And he's been way -- and he's raised rates.

BOULDEN: They have different rules. The ECB has to worry about inflation first and foremost. And he will never do quantitative easing. He has said that year in and year out. So they have to find ways to do something to help the banks, because that's what everyone is focusing on this week.

So they're doing something to help the banks. Cutting interest rates isn't going to help the banks.

QUEST: Are we closer or -- I mean are -- have we pulled back from the precipice, do you think, this week?

BOULDEN: Well, yes, we have a little bit...

QUEST: Oh.

BOULDEN: -- because what we're doing now -- and I'm going to be bold here -- we are getting close to...

QUEST: Oh, (INAUDIBLE).

BOULDEN: -- we're getting closer to what's going to have to happen with Greece, and we all know what's going to have to happen with Greece.

QUEST: Well, come on...

BOULDEN: Greece cannot pay its...

QUEST: -- come on, come on, come on, come on.

BOULDEN: Greece cannot pay its bills.

QUEST: Say it. Say it.

BOULDEN: The banks have got to be cushioned to get ready for the inevitable, which is a bigger restructuring for Greece that will be supported and everyone knows it's coming.

QUEST: Default, default.

(LAUGHTER)

QUEST: Say the word.

BOULDEN: The D word.

QUEST: The D word.

All right, many thanks, Jim.

BOULDEN: Yes.

QUEST: But you -- hey, you've got to admit, come on, when you and I came into this business all those years ago, we never thought we would see days like this week.

BOULDEN: No, of course. And -- and -- Steve Jobs passing away, it was inevitable, but it's -- it's a milestone that we have to look at, happening the same time you had this huge crisis in Europe. President Obama blaming Europe -- I love when he does that, because it's like blame somebody else for the problems.

It's -- all of this is happening and it just makes it more and more fascinating.

QUEST: What a day.

All right, many thanks.

And it is.

Now, we will return to the question of the visionary nature of Steve Jobs and what he did. We're going to look at others in the same league and find out the qualities that put them there.

QUEST MEANS BUSINESS.

Good evening to you.

(COMMERCIAL BREAK)

QUEST: The iPhone is perhaps the most loved Apple gadget. While I say that, I don't own too many of them. I suspect you would have different views if you're a Mac Book heir (ph) or whatever it might be.

But we only need to look back at the frenzy ahead of the launch of the iPhone 4S this week to see exactly the significance.

Initially a hit for its entertainment qualities. It's now finding its way into the business sector, treading on the toes of Research in Motion's BlackBerry.

(BEGIN VIDEOTAPE)

FELICIA TAYLOR, CNN CORRESPONDENT: And you don't want to go back?

DAVID HOFFMAN, CASSIDY TURLEY: I really don't want to go back.

TAYLOR (voice-over): Commercial real estate executive David Hoffman had a hard time ditching his BlackBerry for an iPhone.

HOFFMAN: I switched kicking and screaming, because my kids insisted on it.

TAYLOR: But now that he's switched, he's a big fan.

HOFFMAN: It's just ease of use and not having to carry around as many devices. It's all in one.

TAYLOR: Hoffman is using his iPhone to access office e-mails, thanks to new equipment installed over the summer by his company's IT department.

UNIDENTIFIED MALE: This is our Internet connection.

TAYLOR: Cassidy Turley's IT manager says offering workers the option of using iPhones and Androids is great for productivity. Fewer BlackBerry users can also save the company big bucks.

MIKE GADALETA, CASSIDY TURLEY: It can be very cost-effective for us. It eliminates hardware and software licensing. It elements maintenance contracts.

TAYLOR: Cassidy Turley isn't the only company that's testing out its options Apple says that more than 90 percent of Fortune 500 companies are also testing out the iPhone. That might give one time industry leader, BlackBerry, something to worry about.

SHELLY PALMER, TECHNOLOGY EXPERT: Apple has done a phenomenal job of telling corporate America iPads are great and iPhones are great and we're going to support all the things you need supported and, not to be outdone, Google and Android have paid specific homage to corporate America. They know that they have a nice toehold now.

So the endangered species here are BlackBerrys. And I don't think that's going to change anytime soon.

TAYLOR: Not everyone thinks Smartphones are ideal for corporate America. Even some Apple fans have reservations.

PALMER: Problems maybe because people are distracted it by it from their work, because BlackBerry has much less things to kill time on.

TAYLOR: And another common complaint, that pesky virtual keyboard.

HOFFMAN: It was challenging for me because I've got big thumbs. So this is really awesome to type on...

TAYLOR (on camera): Exactly. You go like this and you get there. I mean it's easy.

HOFFMAN: But this is better in every respect except for the respect...

TAYLOR: But don't you hit the wrong button?

HOFFMAN: -- except for the respect that you can't type on it.

TAYLOR (voice-over): In fact, many say don't write BlackBerry off just yet.

If all you need is flawless e-mail and flawless texting a BlackBerry device always will make you happy. In a world where people are starting to bring tablets, an iPad and a BlackBerry is a great combination of things to walk around with. So in a two device world, BlackBerry does fine.

TAYLOR: The war for the future of mobile rages on.

(END VIDEO TAPE)

TAYLOR: So the normal Smartphone market actually has shrunk for BlackBerry from about 19 percent to 12 percent. And the one thing that BlackBerry had in terms of cornering the market is no longer there, and that's that encryption safety that used to be, and singularly for BlackBerry, because now everybody basically have it -- has it and they're secure serves.

So it's an interesting thing to think about how the -- the Apple has - - and iPhone and iPad and everything has revolutionized the way people do business; obviously, social media. And most of the people that we talked to in corporate America are saying it's going to be the iPad that's going to make the biggest difference -- Richard.

QUEST: Felicia Taylor, who has that part of our coverage tonight.

Steve Jobs once said his goal was to make a dent in the universe. And as Felicia's report is showing, he's also made a dent in the competition.

In many respects, he succeeded. The products Apple created under his leadership have had a huge impact on the way we interact with technology.

But Jobs isn't alone. He's not the only CEO to be described as visionary.

Let's start with Bill Gates, co-founder, former creative of Microsoft. Windows clearly changed the future -- face of computing from MS-DOS to Windows. And, frankly, if you look at what they did, their computer is in just about every home and office.

Jeff Bezos published and pushed a business model that everybody, myself included, when I interviewed him in the early days of Amazon, I -- I used to say to Jeff, Jeff, when will you ever make money?

You're never going to make money. But obviously, he made money, he expanded. And even now, Jeff is into the opening the tablet market.

On we move to Jack Welch. Former chief executive and chairman of General Electric between '81 and 2001. His nickname was "Neutron Jack" -- no nonsense approach. They used to call G.E. "the house that Jack built." He was named by "Fortune" magazine as the manager of the century.

And then you've got Rupert Murdoch, Rupert Murdoch, a man for whom newspapers, global media, television networks in the blood. He inherited it in 1953. He picked up Twentieth Century Fox and "The Wall Street Journal." It's the world's second biggest media company.

What is it that makes all these men and put them all together?

Robert Kaplan, Professor Robert Kaplan at the man -- management at Harvard Business School.

Professor Kaplan, Robert, look, so they're -- those are our -- and there's plenty more that you and I could -- could argue or discuss about.

ROBERT KAPLAN, PROFESSOR OF MANAGEMENT, HARVARD BUSINESS SCHOOL: Yes.

QUEST: What do you think the common theme is between them all?

KAPLAN: Well, you mentioned one of them. They -- they all had a clear vision about what they were trying to achieve, an aspiration. But -- but more than that, they understood that they couldn't do it all by themselves. When -- and so they were very good at attracting and developing superb people...

QUEST: Right.

KAPLAN: -- and building organizations who shared their vision. And that second thing is what often makes the difference between somebody who's very innovative with a product or a device or service and somebody who actually builds a sustainable enterprise.

QUEST: So the -- the core question, which I suspect -- well, there's no answer to, is really nature or nurture. Any manager or CEO watching you and I tonight who says, can I do that?

Are you going to pour rain on their parade?

KAPLAN: No, I'm not going to pour rain on their parade. I'm going to pour -- I'm going to encourage them. If -- if you -- the part that's probably more nature is the natural creativity. Steve Jobs' creativity, or Bill Gates', is just extremely unusual.

Most of the rest, what's so impressive about these people, and Steve Jobs in particular, is they took that and then they learned. They learned how to do a thing -- a lot of things that were very uncomfortable. Delegating is very uncomfortable. Sharing power is very uncomfortable. Having a sprawling enterprise where you can't be everywhere is very uncomfortable.

And that requires learning and experiencing...

QUEST: OK.

KAPLAN: -- and Steve Jobs tried it once and it actually didn't work.

QUEST: So, when these men leave, through one foot -- method or another, what is the history of the company and its survival rate or its thriving rate?

Because I've spent all day looking back at Fords and Edisons and looking back at Colgate with Reuben Mark and onwards and up. And I can't come to a conclusion.

KAPLAN: If they built a strong team and they -- and they had a CEO that succeeded them from inside, I think you'll see the track record is very good. If they had to go outside, like HP has done, it's very mixed.

QUEST: OK. If you had to give a...

KAPLAN: So I think the key is to develop...

QUEST: Right. Sorry. If you had to give a verdict -- and I know it's invidious that we do ask you, but that's what we're about -- what do you think in Apple's case?

KAPLAN: I think he's -- I think a great testimony to Apple will be he has built a sustainable enterprise. He's got a deep bench of talent. And as much as the iPad or the iPod will be a testament to his legacy, the quality of that organization will be just as much of a legacy for Steve Jobs.

QUEST: Robert Kaplan, wonderful to have you on the program.

Please come back and help us understand these issues in the future.

Great to have Professor Kaplan from Harvard joining us tonight.

Tonight, our Tweets from the Top.

They come from the very top, of course -- a mayor, a director and an actor all reflecting on the life of Steve Jobs.

New York Mayor Michael Bloomberg. He Tweeted today that: "Steve Jobs was a genius who will be remembered with Edison and Einstein. His ideas will shape the world."

The movie director, Spike Lee, continues that visionary thought and says: "Visionaries are always called crazy in the beginning."

And, finally, the actor, Ashton Kutcher.

Now, what's he got to say on this?

Well, it takes us to a different generation. It takes us to a different perspective -- not a government leader or a movie director or, indeed, a CEO. "We have always surfed on the wake of Steve's ship. Now we must learn to sail, but we will never forget our skipper."

You've got to admit, it's pretty good, that one.

If you'd like to Tweet me and read some of the reflections on Steve Jobs, you know where to find it, Twitter.com/richardquest.

Apple says the iPhone is breaking into the corporate sector. We've heard about that.

We'll take a look at the weather and have A Profitable Moment after the break.

(COMMERCIAL BREAK)

QUEST: Guillermo is at the World Weather Center -- excuse me, I'm having a sip of water -- with the weather forecast.

You see, you caught me unawares.

GUILLERMO ARDUINO, ATS METEOROLOGIST: It was the -- the water that you got from the rain outside or was it...

QUEST: Oh, ha, ha, ha, yes. Oh, you are so smug sometimes, Guillermo.

(LAUGHTER)

ARDUINO: No. Wait. I was checking London. It -- it has a -- it rained like for two hours for two instances today, earlier. Now it's fine. It's not raining. But it's a lot cooler. Of course we know that.

And look at the map in general. It's cooling down along the way to the east. So later on, the British Isles are going to be much -- in much better shape.

If you want to envy somebody, we were wrong. We said yesterday, you know what, Madrid is going to be at 30. It was at 31. So we were wrong, but by one degree.

So, cooler conditions, I mean significantly cooler conditions right now. A drop up to 15 degrees. The same thing, always behind the system. So it is the change of air and it is changing everything to the point that we have seen this from yesterday to today -- seven degrees cooler in London, two in Berlin, minus two -- so two degrees less -- in Marseilles.

Actually, I was checking out Berlin. It's not in that bad shape for the time being right now. But it's very breezy because of the passing of the front here in Germany, also in the United Kingdom, close to 100 kilometers per hour.

So we see a big change in the weather pattern, no doubt about that.

The exception would be here, Spain. Barcelona is also like 22 degrees or so. And then some storms popping up in the next two days, even in the Central Med.

So if you are flying out or into these airports, look. This is weather-induced probable delays that we have, Munich. But not -- nothing really bad. Some moderate delays in Amsterdam.

Actually, we see rain in Manheim now, in Leipzig, in Dresden, in Lyons, in Leeds, Coventry and Amsterdam. Rome also with some windy conditions. But the high of the day, again, is much better. So we are comfortable.

London didn't make it to 20 today. Berlin actually did.

And then 25 is the highest we expect to Madrid, Richard. So things are changing in the south, as well. So there's some commiseration over there at the same time.

QUEST: All right. We'll take it on board this time.

Many thanks.

ARDUINO: Thank you.

QUEST: Get ready for the cold weather.

Nice to have you, Guillermo.

When QUEST MEANS BUSINESS returns after this break, I'm going to question, in a Profitable Moment, so much development in the dorm room and the garage. You'll see what I mean after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's Profitable Moment.

To what do we owe the genius that has been created in the world's college dorm rooms and garages?

The death of Steve Jobs got me thinking -- Jobs, Bill Gates, Michael Dell -- all these men created technology change. And they didn't do it in the mahogany board room or clinical labs. They did it on their own terms, in garages and in college dorm rooms

Bill Gates, a Harvard dropout when he formed Microsoft.

Michael Dell started his company in a Texas University dorm room.

And Steve Jobs' dream took its roots in his family garage.

Could they ever have imagined that their companies would become so big and so valuable and so influential?

The next generation of pioneers is following their path. And that's what's exciting -- Zuckerberg with Facebook started at Harvard. It is his millennial generation that most profoundly affects the life works of Steve Jobs and contemporaries. The future generation is being created right now in the college dorms and the garages.

And that's QUEST MEANS BUSINESS for tonight.

I'm Richard Quest in London.

Whatever you're up to in the hours ahead, I do hope it's profitable.

The news continues.

END