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QUEST MEANS BUSINESS

Apple Makes Corporate History; Eyes on the Fed; Striking Lonmin Miners Have Until Tuesday to Return to Work; South African Miners Live in Squalor; Lonmin CFO Says Return to Normalcy Best Way Forward; Platinum Price Spike; Lonmin Shares Down; Dollar Slides Against Euro, Pound; Financial Fair Play; Augusta Admits Women

Aired August 20, 2012 - 14:00   ET

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


RICHARD QUEST, HOST: And good afternoon. Apple's score. The company becomes the most valuable company in history.

It's a case of a day's grace. South Africa's striking miners get one more chance to come back to work.

And skills, leadership, and experience. Overall, we review that which it takes to be president of the US.

Today, live from outside the New York Stock Exchange, I'm Richard Quest where, of course, I mean business.

Good evening. We have less than three months, now, until the next US presidential election, and it's just a matter of days until the party convention season gets underway. We decided this was a good moment and a good time to take the economic temperature of what's happening in the United States.

And so, where better to do that from outside, of course, than the New York Stock Exchange at the corner of Wall, Nassau, and Broad. We will explore why America must elect not only a commander in chief, but a chief executive officer. We'll be talking to the strategists from both sides of the campaign, and from the Fed, we'll be looking at the fiscal cliff and looking at the key economic issues.

Well, I have to tell you, from where I'm standing at the moment, there's a bit of a fiscal cliff to be negotiated itself. I'm talking about 15 to 20 feet all the way down. Good place to be here at the moment. Apple set a new corporate milestone here in New York when it became the most valuable company -- valuable most public company of all time.

The company which brought us the iPhone and the iPad is now worth around $622 billion by market cap. It beats the record set by Microsoft at the end of the last century, 1999.

Apple's stock is up around 2.25 percent at the NASDAQ at just over $662 a share. And if you take a look over the last decade, you see how Apple shares have been gathering a seemingly unstoppable momentum.

Now, you have to take inflation into account. Well, you've got the difference between inflation adjusted and the nominal value. On nominal level, of course, it's Apple. Add in for inflation, then Microsoft still remains the most valuable company in history. Perhaps some might arguably say we are playing with the numbers. Inflation adjusted, Microsoft was $851 billion.

Maribel Aber is inside the New York Stock Exchange for us just over my shoulder. If I shout loud enough, she'll hear me. Maribel! They're the most valuable now.

MARIBEL ABER, CNNMONEY CORRESPONDENT: Hello, Richard. And it's great to see you here in our fair city. I feel like we're both bookending the New York Stock Exchange, here.

Let's talk about Apple. Apple -- it's a big day for them. Their shares are up, as you said, just over 2 percent, hitting that $622 billion mark just a couple of hours after the open this morning.

Richard, it's a pretty stunning achievement, just when you think about Apple's journey, what it took to get here. The company was valued at less than $10 billion as recently as 2004. And now, Apple's iPhone business alone brings in more money than Microsoft. So, Richard, I think the crazy thing about this is that the growth shows that there's no sign of letting up here.

And many actually say the company is undervalued. Apple's trading at 14 times price-earnings ratio. So, to put that in perspective for viewers out there, that's far below other tech stocks, which haven't been doing nearly as well, like we're talking about Groupon or Zynga.

And there's a lot of buzz ahead of that expected launch of iPhone 5 in September, and those closely watching Apple are also waiting to see how it will move forward with the TV space.

Another interesting part here: the "Wall Street Journal," they're reporting that the company is working on a device that would allow viewers to start any show at any time through -- this digital video recorder that would store the web shows.

So, Richard, nothing really official on this, but it could be exciting, and it's a big big if, if Apple can be successful like it has been revolutionizing the way it distributes music with iTunes.

QUEST: Thank you very much, Maribel. Revolutionizing the way it does business and the value, and I'm still one of those people who wished they'd bought the stock -- well, come to think of it, I'm probably wishing I'd bought the stock on several occasions over the last five years. But it's one of those stocks you keep wishing you'd bought and you never --

Anyway, all eyes will be on the Fed tomorrow when it releases minutes of its latest meeting. Investors are looking for clues about when quantitative easing may or may not be coming. Joining me, Ethan Harris of the Bank of America, Merrill Lynch.

It's a finely-balanced line, so let's deal with the Fed first of all. The view now is that there really is no greater need -- or there's no pressing need for QE, even though there's a need for something.

ETHAN HARRIS, BANK OF AMERICA, MERRILL LYNCH: Yes, I think the better data in recent weeks has taken some of the pressure off the Fed. But if you look at the broader picture, here, and think about where the economy is in this recovery, we need all the help we can get. And I do think eventually we're going to have to get more help from the Fed.

QUEST: So, what would it do? It can do some of the really exotic stuff on reserves, it can do negative deposit, it can do all of those sort of things. But what else can it really do? Ben Bernanke said time and again, the Fed can only do so much.

HARRIS: Yes. And they're not out of ammunition, but they're down to their brass knuckles and knives right now. They don't have any great weapon for getting the economy going. They need some help from the rest of Washington. They need some sensible stuff coming out of congressmen down there.

QUEST: You're being very polite. What they really need is the eurozone to get its act together and start doing something.

HARRIS: Yes, no question about it. If you talk to corporate executives right now, they're all kind of frozen in place with uncertainty, don't want to hire, expand their businesses, because they just don't trust what's going on in Europe. And to a lesser extent, they don't trust what's going on in the United States. So, if Europe could get it's act together, it would be very good for the global economy.

QUEST: When you balance between the fiscal cliff and the lame duck Congress, which we may see towards the end of the year, and then you balance with the eurozone, which seems to be heating up again, which is the more serious for you, do you think?

HARRIS: Well, from a US perspective, right now Europe is more important, it's more immediate. We've been feeling the pain for two years, now, with these kind of negative headlines from Europe.

But as we go into year end, the fiscal cliff is going to take the lead, I think, here as a problem for the US.

QUEST: But as an American over here and an economist on Wall Street, are you not simply frustrated -- I'd use a ruder word if I could get away with it --

HARRIS: Yes.

QUEST: -- at the inability of the eurozone to get its act together? And, crucially here, Ethan, crucially, it's all starting up again.

HARRIS: Yes, and I think that's true. We've had a lull. We've had a nice quiet August, people on vacation in Europe, no bond auctions, no news is good news out of Europe. But yes, we're all kind of sitting there hoping that they will get much more aggressive in dealing with their crisis.

Unfortunately, don't expect too much. It's going to be more of the same of many crises from Europe.

QUEST: Good to see you. Do be careful of our own fiscal cliff, here.

HARRIS: Yes, I'm well aware of it.

QUEST: Many thanks. And it could be more dangerous for both of us. Many thanks to Ethan Harris, joining me now.

When we come back in just a moment, we'll turn our attention to South Africa, and we'll be live in South Africa. Striking miners are deciding whether to return to work at the world's third-largest platinum mine. It's QUEST MEANS BUSINESS, we're live tonight in New York.

(COMMERCIAL BREAK)

QUEST: Striking South African miners now have until Tuesday to decide whether to return to work at the Lonmin Platinum Mine. Lonmin is the world's third-largest producer of platinum, and it's threatened to fire those who didn't show up for work today. Barely a third of the workforce returned to the mine.

Thirty-four strikers were shot dead by police last week. Our correspondent Nkepile Mabuse reports now from near the mine site in Rustenburg outside Johannesburg.

(BEGIN VIDEOTAPE)

NKEPILE MABUSE, CNN INTERNATIONAL CORRESPONDENT (voice-over): In the shadow of the world's third-largest platinum producer, those responsible for extracting the precious metal live in squalor. Mine worker Cingisile Makhaba invites me into this compound of one-room shacks he shares with eight other families.

CINGISILE MAHKABA, MINER (through translator): We earn very little. We had to build ourselves a toilet, and we share one outside tap. We work hard, but we live like animals.

MABUSE: The father of two makes $500 a month as a rock drill operator for London-listed Lonmin Platinum Mine. The company is at the center of a wage dispute that turned deadly on Thursday.

SIMON SCOTT, CHIEF FINANCIAL OFFICER, LONMIN: Employees told not to come to work, and then that very quickly escalated into an issue of public violence, which was beyond our control.

MABUSE: Thirty-four protesting miners were killed. An inquiry into the incident has been launched. But the underlying reasons behind the workers' dissatisfaction remain. They want to earn more money and say the deaths of their colleagues have made them even more determined.

MAKHABA (through translator): We cannot go back to work until we get the $1500 we're demanding. Otherwise, those who have died will have died in vain.

MABUSE: Under Apartheid, miners were among the most exploited workers in South Africa. Since democracy in 1994, employment policies have ensured mine ownership is transferred from white to black hands. But workers say their conditions have not improved.

Critics claim many of today's mine owners are politically connected, and that some members of the ruling African National Congress have a stake in the fortunes of the industry. Among them, ANC executive committee member Cyril Ramaphosa, whose investment holding company, Shanduka Group, owns shares in Lonmin.

JULIUS MALEMA, EXPELLED ANC YOUTH LEADER: Cyril Ramaphosa is also a shareholder in that mine.

(APPLAUSE)

MABUSE: Expelled ANC Youth president, Julius Malema, launched a scathing attack at Ramaphosa, who he accuses of turning his back on poor blacks who voted the ANC into power.

MALEMA (through translator): Cyril Ramaphosa bought a bull for 18 million rand at an auction, but he can't give you the 12,000 you are demanding. Those are the kinds of the leaders you have today.

MABUSE: Ramaphosa who, as an ANC activist in the 1980s, helped form a union that fought mine owners has called the deaths a tragedy. He declined an on-camera interview, but his company issued a statement that says, "Shanduka Group supports a full and thorough investigation into the circumstances that gave rise to this incident."

Meantime, the company has donated a quarter of a million dollars to cover the funeral costs of the dead miners. Cold comfort, Makhaba says, for the families of his slain colleagues.

MAKHABA (through translator): Where is this money coming from? They should have used it to increase our wages. It's of no use now. It won't bring back the dead.

MABUSE: Lonmin has lost more than a week of production and is demanding that miners return to work Monday or face being fired. The standoff continues.

Nkepile Mabuse, CNN, Marikana Mine near Rustenburg.

(END VIDEOTAPE)

QUEST: Now, Lonmin's chief financial officer says returning to work and to a form of normality is the best way forward for the miners and their families and also for the company. CNN's David McKenzie spoke to Simon Scott earlier. David McKenzie joins me now from Rustenburg in -- just outside Johannesburg.

David, did the issue really now is how for the miners and for the company to get to any form of normality, bearing in mind the horrendous events that took place last week.

DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: Well, certainly those horrendous events have painted a very bleak picture of the platinum industry here around Rustenburg, Richard. And also, the fact that you have this big, bitter infighting between various unions in this area, particularly between the National Union of Mine Workers and the upstart AMCU, which is -- says they are representing a portion of those mineworkers.

That deadline of today has been shifted to tomorrow from Lonmin. I spoke to the CFO, now the acting CEO of that company, and I expressed it was really shocking to see that this protest action was so brutally squashed, in the view of many of the mineworkers, in the new South Africa.

(BEGIN VIDEOTAPE)

MCKENZIE: I have to ask the question: do you feel that your company has blood on its hands from what has happened?

SIMON SCOTT, CHIEF FINANCIAL OFFICER, LONMIN: I don't think so. I think we all as South Africans feel exactly the same way that you feel. We've done -- we've made sure that any of our employees that have been directly affected, we're doing as much as we possibly can.

We put in place counseling for the families, we're assisting in the arrangement, appropriately, with regard to the burials that need to take place.

MCKENZIE: So, whose fault is this?

SCOTT: It's -- there's a commission of inquiry that has been set up to -- look at whose fault it may be. At this time, we're not pointing fingers. We're saying let's get back to work. Let's get our operations running smoothly. And then, if there is blame to be apportioned, let's do that as a later stage.

MCKENZIE: Could the mine company have done more to avoid this by sitting down and talking to the strikers?

SCOTT: What we had was an illegal work stoppage where workers chose not to come to work, and it quickly escalated into one of violence. We weren't at any stage -- didn't have that opportunity of engagement. Our structures are there and they're in place and they're recognized by all. And all of the time leading up to the illegal stoppage, we didn't receive any of those demands.

MCKENZIE: A lot of people have been shocked at this, likened to a time in the past in the mines in South Africa in the mid 80s, late 80s. Do you think that comparison is fair?

SCOTT: The scenes of public violence shocked us all. It wasn't something that any of us relish. But I think within the mine, the situation has changed quite considerably.

(END VIDEOTAPE)

MCKENZIE: Well, Richard, Simon Scott, there, of Lonmin. He says that the best that can happen is that people get back to work. They say, as you said, a third of the workers have gone back to the large platinum mine here, but it really is academic. They're not able to get that ore extraction going.

He fears that if this drags on, it should have a significant impact for the company and, in a greater sense, a major impact on the country's finances here in South Africa.

But of course, the mine workers who are on strike -- an illegal strike, according to the company -- they say now that their colleagues, friends, and family have been killed, they won't be going back until they see those wage increases.

QUEST: David McKenzie, who is in Rustenburg outside Johannesburg for us tonight. David, thank you.

Lonmin accounts for about 12 percent of the world's platinum output, and it's now lost more than a week's production. It's driven metal prices for the metal to a three-month high. Spot Platinum is up one and a half cents today to just over $1409 an ounce.

Lonmin's share price continues its fall. It's the sixth straight day of falls. Despite a little bounce back, it's now down 30 pence, more than 4.5 percent.

QUEST MEANS BUSINESS, live tonight from New York. And now for tonight's Currency Conundrum. The United States' oldest and largest local currency system was started right here in New York. So, on the street -- on the steps of Federal Hall, was it the Ithaca hour, the Manhattan mint, or the Rockefeller round? We'll have the answer for you later in the program.

The dollar's slide against the euro eases after the ECB brushed off reports of government bond yield caps. The pound is gaining against the dollar. The yen is almost unchanged. Those are the breaks -- those are the rates --

(RINGS BELL)

QUEST: This is the break.

(COMMERCIAL BREAK)

QUEST: Wonderful day here on Wall Street, absolutely glorious, not too hot. The American football season may be a few weeks away here in the United States, but in Europe, of course, the association football season is up and running. And all this week, we are taking a closer look at the money behind the beautiful game.

And the world's richest teams now face a new era. It might seem odd in -- on Wall Street, where you have such ebullience and such spending and such profligacy. Well now, in the world of soccer and football, there's a new era of sustainable spending, thanks to UEFA's financial fair play rules.

Clubs are now only allowed to run up a loss of $55 million between 2013 and 2015. That target will get even harder for the three years after that. The maximum loss then will only by $37 million.

Now, let me put this in context. Manchester City lost $300 million last year alone. There will be tighter rein-in on wages, no more than 70 percent of turnover can go on paying the players. And if net debt exceed total revenues, the club will be in breach of the rules.

The punishment, anything from losing out on tournament prize money, restrictions on new players, and then you have the nuclear option, banning teams from UEFA's most prestigious competition, the Champions League.

Stefan Szymanski, professor of spots management at the University of Michigan and an expert in football finance, he joins me now via Skype from Ann Arbor in Michigan. Stefan, these rules sound wonderful. Why am I skeptical they're going to do the trick?

STEFAN SZYMANSKI, PROFESSOR OF SPORTS MANAGEMENT, UNIVERSITY OF MICHIGAN: Well, the real problem is that insolvency is a major issue in European football, but it just isn't a problem associated with the big teams like Manchester City.

It's really a problem associated with teams in the lower divisions, not competing at the highest level. Teams that are trying to get promoted to that level. And those teams are not really going to be affected by UEFA's financial fair play regulations.

QUEST: You see, the problem with the financial fair play regulations, which is what you've just said is they will do whatever they can to find their way around them, won't they, Stefan? You know that and I know that. You're not suddenly going to get clubs that have become addicted to high spending on players or running losses or running poor balance sheets suddenly becoming fiscal virgins.

SZYMANSKI: No, that -- that's absolutely right. They're -- many owners wish to invest in -- football clubs not because they're trying to make money, but because they're trying to raise their own profile, indulge their own ego, or even just because they're fans of their team and they want to support them.

But the other point is that these clubs, Manchester -- as I say, clubs like Manchester City or Chelsea or Paris Saint-Germain are not the problem. It's the fact that insolvency -- excessive indebtedness is a problem at the lower levels of football around the world, not a problem at the highest level.

QUEST: Finally, Stefan, Augusta golf course has admitted women for the first time in its history, I suppose following on from the Olympics when we had so many marvelous stories on women and women athletes. It was inevitable, they could no longer hold the line. But they've only admitted two, and they're all the elites. We shouldn't get too excited too quickly, should we?

SZYMANSKI: No, it's a bit of a side show. Remember, they only have about 300 members anyway. It's a very exclusive club, and a few women coming in aren't going to make that much of a difference.

The really big difference in sports in the United States has been Tile IX, whose 30th anniversary is this year, which forced colleges and schools in the United States to give equal access to sports to girls as well as to boys. And that really has made a big difference here.

QUEST: Stefan, good to join -- good to talk to you and thank you for joining us from Ann Arbor this evening.

And over the course of the week here on QUEST MEANS BUSINESS, we'll have more on the business of the beautiful game. A new report out today shows English Premier League wages have gone up 1500 percent in 20 years, 10 times the increase for the rest of US couch potatoes. We'll compare their wages to the sports stars on this side of the Atlantic on tomorrow night's program.

Ahead, the race for the White House. So now, they've rolled up their sleeves and they're getting down to the business of getting elected. Why America's leader must be the chief executive as well as the commander in chief. And being the CEO means being fiscally prudent.

(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 Lonmin platinum plant in South Africa has given striking workers another day to return to their jobs. The mine had said the workers would be fired if they didn't come back today. Forty-four people have been killed during the 11-day strike over job cuts, many of them in a police shooting that took place last Thursday.

President Obama says he will change his response to Syria if the Bashir regime begins to use or move chemical weapons. The U.S. president says such a move would have enormous consequences. At least 100 people have been killed in the conflict so far today -- that's Monday -- according to opposition groups.

In China, the wife of a disgraced former Communist Party leader could avoid the death penalty if she doesn't commit any crimes for the next two years. Gu Kailai was convicted of murdering the British business man Neil Hayward and has been given a suspended death sentence.

Police says there's nothing to suggest that Tony Scott's death was anything more or other than a suicide. The coroner hasn't commented on reports that a suicide note was found in the film director's car. He has directed box office hits, including "Top Gun," "Days of Thunder" and "Man on Fire."

And the prestigious home of the golf Masters Tournament is about to welcome women members for the first time. The former U.S. secretary of state, Condoleezza Rice and the business woman Darla Moore are to be admitted to Augusta National Golf Club in the autumn.

(MUSIC PLAYING)

QUEST: So the Eurozone crisis has once again started to raise its ugly head and on both sides of the Atlantic, the effects are being felt. Let me tell you about the power of optimism, though. The mere rumor that the ECB was going to cap peripheral bond rates has pushed Spanish and 10- year bond yields down.

Investors are hoping the ECB will limit the costs to the indebted country. And even though the ECB has denied the report, it made little difference to the numbers. Spain's yield is up 6.3 percent, Germany's notched up a tick.

European markets ended the day in the red. Eventual disappointment about the ECB on bonds, on the FTSE, the Ebraps (ph) Mining Company lost 4 percent British land was the greatest gainer. We'll still in thin markets with, of course, it being the middle of the summer.

So as you heard Ethan Harris earlier on the program, talking about how the Americans are a little bit disappointed and frustrated, when we talk about the European side, I turn to Bob Parker of Credit Suisse to see how Europe was going to react to the ECB.

(BEGIN VIDEO CLIP)

BOB PARKER, SR. ADVISER, CREDIT SUISSE: The ECB is currently working out ideas and a plan which hopefully it will agree to at its next meeting on the 6th of September. And one of the ideas is that it will set an interest rate cap on how much Italian and Spanish bonds yield. It will intervene in their markets.

And obviously we've had this statement from the Bundesbank, which says that the German Bundesbank does not like the idea of unlimited intervention in support of Italian and Spanish bond markets.

QUEST: In that scenario, it is extraordinary, isn't it, as we come out of the summer, very little progress seems to have been made. And there's still an inordinate amount of confusion.

PARKER: There's an inordinate amount of confusion, I think, for one very simple reason, which is that we have not had a detailed, coherent plan set out by the ECB as to what it will do to intervene in Eurozone bond markets.

No, we have had some very bold statements from the ECB, saying for example, they will do whatever it takes to defend the euro. They will intervene in government bond markets. What investors want is the detail, and that is what we are lacking.

QUEST: Would investors here on Wall Street, in the American market, which, frankly, if you look at the U.S. economy, is much more resilient and performing better than many had expected, particularly manufacturing, haven't they got a right to be pretty angry and pretty annoyed at the inability of Europe to actually get its act together now?

PARKER: Well, I'm totally sympathetic with that statement and, you know, it -- although there are a number of forecasts suggesting that the weakness in the U.S. economy will continue, actually I think for the next three to four months we will see better American data.

Now obviously we have got, as shown by the recent quarterly GDP numbers from Europe, an ongoing recession in Europe. And there's a recession in countries like Italy and Spain, shows no real signs of letting up.

So the economic background is dire. That is bad for American exports. I think what is worse, however -- comes back to our earlier discussion, which is the lack of progress in dealing with the Eurozone crisis.

QUEST: But if you then have to balance the Eurozone crisis with the potential of the fiscal cliff which the U.S. will suffer by the end of the year, and even the policy paralysis between now and the election and the lame duck Congress, which is more serious?

PARKER: I would argue that the U.S. fiscal cliff, as it is called, is actually potentially more serious. You know, that doesn't minimize the problems that we've got in Europe. But I think the message on Europe is that slow, muddling through progress is being made.

(END VIDEO CLIP)

QUEST: Bob Parker there, talking about the fiscal cliff.

Now here's an interesting thing. I'm standing on the steps of Federal Hall, and it was actually here where originally, of course, there was the battle that took place, the political battle, over whether or not the U.S. Capitol would be in New York or in Washington. Well, when we come back after the break, we will take you from New York all the way to Pennsylvania and the battle for the White House.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

(BEGIN VIDEO CLIP)

QUEST (voice-over): The answer to the "Currency Conundrum" now, what is the United States' oldest and largest local currency system called? The answer is the Ithaca hour.

It was started by the Philadelphia business man, Paul Glover -- and to remind his New York employees, he was paying them for their labor. For every hour his staff worked, Glover paid them one Ithaca hour, roughly $10 U.S. He spent several million dollars of hours have been traded.

(END VIDEO CLIP)

QUEST: I wonder how we go about earning a few Ithaca hours here? In just 78 days Americans will go to the polls, and they will choose who will sit in the Oval Office for the next four years. That much you know already. Barack Obama and Mitt Romney both want the job. The American people will decide who gets to sit in the Oval Office.

And the voters badly want jobs, which means they're not only electing a commander in chief of the Armed Forces, they're electing the chief executive officer of America Inc.

CNN's Maggie Lake now looks at how each candidate's CV stacks up.

(BEGIN VIDEO CLIP)

MAGGIE LAKE, CNN CORRESPONDENT (voice-over): It's a race between the man who holds the Oval Office and the man who sat in the corner office. Mitt Romney and Barack Obama, two men who say they have the best CV to fix the U.S. economy.

FORMER GOV. MITT ROMNEY, R-MASS., PRESIDENTIAL CANDIDATE: I've spent 25 years in business. I know how business works. I want to use that experience to help businesses grow again.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Where we were losing 800,000 jobs a month when I was sworn into office, we've been creating jobs now for almost three years straight.

RYAN LIZZA, "THE NEW YORKER": The Romney campaign's closer to the sort of austerity point of view that some countries in Europe are trying.

OBAMA: And vote with me.

LIZZA: Obama, for the last few years, has been more about priming the pump and stimulus.

LAKE (voice-over): It's a tough job the candidates are applying for. U.S. economic growth has slowed to an anemic 1.5 percent in the spring. The jobless rate has been stuck over 8 percent for 42 straight months. And spiraling government debt has undermined business confidence.

LAKE: Most hiring managers have stacks and stacks of CVs to choose from when trying to pick the right candidate to fill a key position. But in this election, the American people have a choice between just two men who have very different ideas on how to fix the U.S. balance sheet.

First, the Obama CV.

LAKE (voice-over): The president's campaign points to his success at saving the U.S. auto industry, his plan to overhaul the health care system and the creation of more than 41/2 million private sector jobs. But critics question Obama's sometimes rocky relations with Wall Street, and what they call his commitment to big government.

UNIDENTIFIED MALE: Under Obama's plan, you wouldn't have to work and wouldn't have to train for a job. They'd just send you your welfare check.

LAKE (voice-over): As for Mitt Romney, the GOP says his time as governor of Massachusetts and head of the 2002 Winter Olympics shows he can manage budgets. And as former CEO of private equity firm Bain Capital, he amassed a fortune.

But that private sector experience has proved a rich target for the Democrats.

UNIDENTIFIED MALE: He took our benefits. We didn't have any more retirement. And Bain, Mitt Romney, they did not care about us as workers. They were looking at the mighty dollar.

LAKE (voice-over): While Obama and Romney battle it out on the campaign trail, it may be the ability to reach across the political divide that voters should be most focused on.

LIZZA: If you want to get something done in this country, it's a president who can move members of the other party to his position.

LAKE (voice-over): A tough job, indeed, in these days of divided government. But the stakes couldn't be higher -- Maggie Lake, CNN, New York.

(END VIDEO CLIP)

QUEST: Joined now by Maria Cardona from Washington, who's the principle of the Jewish Square Group as well as a CNN contributor and Democratic political strategist.

And from New Orleans, CNN contributor, Republican political strategist, Mary Matalin.

Starting with you, Mary Matalin, isn't the problem with the Republican economic plan so far on the table, the truth is if it was that easy it would have been done now already? It's long on facts and short on details.

MARY MATALIN, REPUBLICAN STRATEGIST: Richard, the major difference, the significant difference, the huge contrast between the liberal and the conservative economic philosophy and plan is a public sector versus a private sector. So that's a giant philosophy.

We know what all the elements and policies that flow from a private sector free market, free enterprise economy, and those will be part of the Romney-Ryan --

QUEST: But --

MATALIN: -- administration.

But we've seen in Western Europe, in your home, what happens with the public sector economy. You take money out of the private sector --

QUEST: All right --

MATALIN: -- to fund the public sector and that drives down jobs and growth.

QUEST: Maria Cardona, she's got a point, hasn't she? If you look at the way the European mechanism of solving the problems, it doesn't look to be terribly successful. Maybe there does need to be a little bit more of the private sector here.

MARIA CARDONA, DEMOCRATIC STRATEGIST: Well, the problem, Richard, is that we are not looking to emulate what the Europeans are doing. In fact, what Barack Obama has always said is that small businesses are -- is the engine of economic growth in this country, and that's why he has worked so hard to give small businesses almost 20 now tax breaks.

And many of them, frankly, the Republicans were trying to block. Why? Because simply this president was offering. The big differences in the (inaudible), Richard, is whether you are for growing the middle class or whether you are for giving those who are the wealthiest and the biggest corporations tax breaks who really don't need them.

QUEST: OK. But let me ask you, Maria, isn't the truth of this that neither leader is prepared to say -- and we'll start with you, Maria -- that, frankly, it's going to take years, it's going to be painful and austerity is going to be coming, whether America likes it or not?

CARDONA: Well, you know what, Richard, if you look at President Obama's inaugural speech, he says exactly that.

He tells the American people exactly what he has told them, even from when he was on the campaign trail, that this will not be fixed overnight, that we got in this over eight years of failed Republican trickle-down economic policies, which, frankly, are the same ones that Mitt Romney and Paul Ryan would put into place.

He said very clearly he won't be able to fix it overnight. This is not going to be easy, that everyone has to have some skin in the game. And Republicans don't want the wealthiest to have skin in the game. And that's the problem here. That's why he's asking for four more years, because he knew he couldn't do it overnight.

QUEST: All right.

MATALIN: Richard, Richard, I'm going to give Maria a little history lesson --

QUEST: Mary --

(CROSSTALK)

QUEST: -- (inaudible) --

MATALIN: -- because this does work. They'd like to malign these policies --

QUEST: Go ahead.

MATALIN: -- but at this point in the recovery, in 1980, which was the far worst recession than the one that Barack Obama has been subjected to, the rate of growth and the rate of job creation was three times and five times faster than what's going on right now.

In the 17 states that are -- were won by Republican governors in the last cycle, already they're growing their economies at twice the rate. So there are policies. They work. They're not vaporous, hope and change. They're real. There's empirical data --

QUEST: But Mary --

MATALIN: -- that --

QUEST: -- Mary, I -- that -- I'm going to jump in here, come what may. I'm going to get me word in.

What -- at some point, Republicans are going to have to accept tax hikes. We've seen it in Europe. We've seen it in Asia. It's got to be part of a -- of a measured way of closing the deficit. Surely you can accept that.

MATALIN: No, I don't, Richard, because -- see, how is that working out for you in Europe? What tax hikes -- all tax hikes and tax cuts, for that matter, are not created equal. You have to have a tax reform and a tax structure that incentivizes growth. You have to incentivize savings. You have to incentivize capitalization and innovation capital.

So just giving a tax cut or raising taxes on the rich as Barack Obama would do would raise $30 billion over 10 years, which would be $3 billion a year. Three billion dollars a year, we spent $10 billion a day. Does that work? Does that add up? No, not in anybody's math.

QUEST: (Inaudible).

CARDONA: But it's got to be balanced; it's got to be humane. It's got to be --

QUEST: And then --

CARDONA: -- where everybody has skin in the game, not just middle class and lower income earners, which is exactly what Mitt Romney and Paul Ryan are asking for.

QUEST: Maria, Maria and Mary, I'm going to invite you both back as we go through this election process to talk more about me -- to give me a beating-up every now and again --

(CROSSTALK)

QUEST: -- as we head towards the election. I thank you -- I thank you both for joining us.

After the break, we'll be taking the temperature on Wall Street. Time for another beating-up, this time Ken Polcari, who's going to tell me why Europe is the problem and America the solution. (Inaudible) tells me. In a moment, QUEST MEANS BUSINESS, good evening to you.

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QUEST: Exhausting is the only word for all that discussion on politics. So let's move it back to markets and economics.

Ken Polcari is here, always good to see you. If we're going to do the program from Wall Street, we have to have a big of Polcari on it as well.

Can you -- have been on QUEST MEANS BUSINESS many times, in which you basically have said the Eurozone is still the problem.

KEN POLCARI, ICAP CORPORATES: Right, well, it continues to be the problem, certainly for investors in this country as well, and I would imagine investors all over, because there's so, so much uncertainty that's still surrounding it. I mean, dragging Tim (ph) out with some very great comments a couple of weeks ago, it excited the market. You see what's happened. The market's rallied.

QUEST: But if you take away the Eurozone crisis, fundamentally, this market could rally --

POLCARI: Absolutely.

QUEST: Do you believe?

POLCARI: Absolutely. No doubt about it. If the -- if investors around the world and (inaudible) get the sense that they've solved this problem, this market's going to take off. And I would imagine the global market is going to take off.

QUEST: So what's keeping this market at 13,000 and change?

POLCARI: The uncertainty at the moment. You know, listen, he came out -- Draghi came out a couple of weeks ago and made the comment the markets loved it. But now we're in this holding pattern until September 12th, when the German high court passes on whether or not the legitimacy of this bailout fund is -- they're going to be there or they're not. So we're all held in check as a result.

QUEST: If we look at corporate America and we have the Q25, which we look at, this balance between corporate profitability of the S&P 500, you know, they were lower than expected. But expectations had already been lowered.

POLCARI: Right. That's right.

QUEST: I mean, you know --

POLCARI: They beat the lowered bar, right? And it's frustrating. Listen, it's frustrating for a lot of people. But my sense is that you see the market rallying here because it is also anticipating massive central bank signals from around the world. Whether it's Asian, whether it's European, whether it's U.S., that's what the market is expecting.

If it doesn't get it, I'm going to see the market will come under some pressure.

QUEST: Central bank intervention, the (inaudible) the ECB, the BOE, the Swiss, the (inaudible), what are they waiting for, do you think?

POLCARI: Honestly, I think they're really waiting for, again, Europe. They're waiting on Germany and they're waiting on the European Union to come out with a plan. Draghi said he's got a plan that's going to knock the socks off. And the world is waiting to see what happens.

And quite honestly, if he comes out with it, I think you're going to see the markets around the world and here also just explodes the upside.

QUEST: Well, let me thank you. You're always good to be on QUEST MEANS BUSINESS. It's always great to see you.

POLCARI: Always a pleasure.

QUEST: And when we get that Fed action, we will --

POLCARI: Call me up.

(LAUGHTER)

QUEST: The man on the Fed.

The weather forecast now, Tom Sater, is at the World Weather Center.

Tom, it is a delight -- let me do your job for you. Have a few sky hatted (ph) -- sky clouds and otherwise it's rather pleasant and rather warm.

TOM SATER, AMS METEOROLOGIST: Well, I have nothing more to say, then, Richard. Back to you. Thank you.

No, it's absolutely beautiful. You're absolutely right. Welcome to New York City. I mean, you've got the sun coming through, passing clouds. New York's 25 degrees after a very warm July, in fact, about 5,000 high temperature records, getting a break.

Need rain in the middle of the country, need it out west where we have the fires. Most of the rain in the U.S. down to the deep South, but I can report no major flight delays for anywhere in the U.S., only a 20 percent chance of rain in New York for Richard for the days ahead, but 26 for Tuesday. Here are your numbers across the U.S. That looks good.

Into Europe, things have been heating up. In fact, we even have some storminess. Parts of the Alps and northern Italy, all the way up toward areas of northern Poland, in fact, the warmth is starting to spread toward the east. It was 38 in Paris on Saturday, 37 on Sunday. That has moved all the way to Bulgaria, Ukraine getting in the action, 36 in Berlin. So the heat starts to spread, 32 in Vienna.

This is for Tuesday, still above average in Paris; Madrid, you need to catch a break. You're going to be flirting with 40 for the next several days.

This is where we have too much rain and again a very active tropical season, Typhoon Tembin makes its way towards Taiwan, and it has a brother - - there were three systems. These two kind of gathered strength here.

And Bolaven is going to follow the same path as Tembin. So in about 50-55 hours, we're going to watch landfall right around to central Taiwan and most likely this tropical storm will follow suit.

Any flight delays in parts of Asia, could be in New Delhi on Tuesday to the Korean peninsula and possibly thunderstorms will slow you down in Singapore. But enjoy your stay up there. It's going to be a beautiful couple of days for you, Richard.

QUEST: Thank you very much, Tom Sater at the World Weather Center.

This man recognized the tie that I'm wearing, isn't it?

UNIDENTIFIED MALE: That's my tie.

QUEST: It's your tie? I bought it right here last year.

Here's another $20. And I'll choose another three ties.

Oh, that looks -- would you choose me three ties? Choose me three ties that look good on television. I'm a firm believer in cheaper ties look best on TV. A "Profitable Moment" after the break.

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QUEST: Tonight's "Profitable Moment" from New York, in two weeks from now, Wall Street will be closed. It will be the Labor Day holiday and the United States marks the end of a long, hot summer. From now on, it's probably all downhill towards the presidential election in November. It's a fascinating period in U.S. history.

The economy may be growing slowly, but at least it's still growing. Jobless numbers are falling and there is something of a manufacturing naissance. It may not be rising like a grand souffle with the right conditions, but the economy could turn into something like the good old days. The problem lies 3,000 miles away, I think probably in that direction.

Europe, old Europe, as one minister once said. What's happening here is jeopardy because of what's going on on the other side of the Atlantic. And that's why traders here are nervous, and that's why this year's presidential election is so very important. It's a time for politics, economic, markets and the wider economy to all come together.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable. (Inaudible) in New York.

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QUEST: The headlines at the top of the hour, an explosion in Turkey has killed seven people, according to media reports. This Reuters video is from the southern eastern city of Gaziantep. The agency says several people have been killed, and dozens more have been wounded, including a police officer.

The Lonmin platinum mine in South Africa is giving striking workers another day to return to their jobs. The mine had said the workers would be sacked if they didn't come back today. Forty-four people have been killed during the 11-day strike over job cuts, many of them in police shooting last Thursday.

Barack Obama says he will change his response to Syria if the Bashir regime begins to use or move chemical weapons. The U.S. president says such a move would be in language comport him to use U.S. military force. At least 100 people have been killed in the conflict so far.

In China, the wife of the disgraced former Communist Party leader could avoid the death penalty if she doesn't commit any crimes for the next two years. Gu Kailai was convicted of murdering the British business man Neil Hayward and has given a suspended sentence -- suspended death sentence.

You're up to date with the news headlines. Now staying in New York, here's "AMANPOUR."

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