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QUEST MEANS BUSINESS

First 2012 US Presidential Debate; Focus on Economy; Housing Sector Rise Could Be Boost for Obama; Exclusive Interview with Jeffrey Immelt; Quiet Day on Wall Street; T-Mobile to Merge With MetroPCS; Unrest in Iran; Mixed Markets in Europe; Age of Austerity; Italian Anti-Austerity Protester Scales St. Peter's Basilica; Dollar Rises; American Airlines' Shaky Seating; American Airlines Angst

Aired October 3, 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: Down to business. The US presidential candidates get ready. Tonight, they debate.

Portugal pays, the finance minister announces sharp tax rises. We'll be tracking Europe's rising tide of austerity.

And wobbly seats, worried passengers, American Airlines.

I'm Richard Quest, I mean business.

Good evening. The stage is set.

(RINGS BELL)

QUEST: Tonight, the US presidential candidates put their economic case to the world. The president and his challenger have only met three times in person before, so tonight, in front of an audience of more than 50 million people, they will pit their manifestos against each other.

If you'd like to join me in the auditorium, you'll see what it's all about. This is -- remember, they will be each standing behind a podium that will have been carefully measured for height and for size so that you get it just about right.

The first debate focuses on domestic policy, and number one issue bar none is the economy, which is jobs, health care, and housing. New jobs numbers that we got today from ADP, the payroll people, showed that 162,000 jobs were added in the private sector. But we know that job creation is slowing, although it's still better than expected.

There'll be a bitter, bitter divide tonight. Health care -- expect health care to be well and truly front and center. Obamacare, as the Republicans call it, and the Republicans have been attacking with ads on heath care insurance.

And on housing -- now, according to economists surveyed by CNN Money, housing sector may have turned the corner. The big domestic issues. Maggie Lake is in New York. Jobs and housing are the two pillars that could make or break this debate tonight. Maggie, if -- if it does come down to housing and these issues, who's on the shakiest ground?

MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: Well, that's interesting, Richard, and you've got to say that -- I'll phrase it a different way -- that Obama could really benefit from the housing argument.

Listen, you know the statistic that's bandied around all the time: no incumbent since Franklin D. Roosevelt has won when unemployment is 8 percent. But what Obama does have going for him is this housing recovery that's really picking up steam.

You mentioned the CNN Money survey. The majority of economists say the recovery is for real, it's here to stay.

Take a look at some of these other numbers that have been coming in. There has been a drum beat of really good news on housing. Prices up 4.6 percent, according to Core Logic. Biggest year-on-year jump in six years.

If you look at Case-Shiller, home prices up six straight months, all 20 cities now participating in it for the third straight month.

This matters to consumers. Housing and their pensions, their stock funds, two of the biggest elements of their personal balance sheet. It's feeding into consumer confidence.

QUEST: Ah, so --

LAKE: So why, you might wonder?

QUEST: Yes. Forgive me, I --

LAKE: Why?

QUEST: Yes, why?

(LAUGHTER)

LAKE: Why isn't Obama talking about it more, Richard? That's the thing that we've all been saying. If you have something to brag about, jobs aren't good. Why aren't you making more of the housing recovery?

Here's the problem. Check out these other statistics. This is where he's vulnerable, and it's as much of a risk as it is a benefit or a positive. Even though the recovery is here, homes still down 30 percent compared to the peak.

Ten million owners, 22 percent of people, still owe more on their mortgages than their houses are worth. In good times, that should only be about 5 percent, and a lot of people have said Obama's housing policies have been ineffective. The critics say that. So, he can't really take credit for it himself.

Still, when you're on the ropes and jobs aren't delivering, we'll see tonight if he starts to pivot and mention that housing recovery.

And this is what's critical, Richard. Are people going to vote for how they feel right now, or is he going to use housing as an example of "give me more time, the momentum is swinging."

QUEST: All right.

LAKE: "We see it in housing, it will come in jobs." That's going to be what to watch for tonight.

QUEST: The housing, of course, got us into this mess in the first place, so -- and I saw numbers today showing that as a result of QE3, you'll have seen these numbers, the number of refinancings is going up dramatically because long-term rates are being pushed down since, effectively, the Fed is the only game in town and is scooping up all the mortgages -- all the mortgage-backed securities.

LAKE: That's right. And this is where, even though Obama's policies per se have not been responsible for this, then you sort of -- this is where Romney's vulnerable on housing, because maybe Romney himself hasn't come out and said this, but he has -- Paul Ryan has been an extreme critic of Ben Bernanke. The Republicans want to fire Ben Bernanke.

Well, it turns out that the Fed programs actually seem to be kicking in, despite all that criticism, and they are helping housing. So, even if it was benign, the fact that Obama has been supportive of the Fed and allowed these policies to happen is creating, he might argue, an environment where housing is finally recovering. But you know, it's going to be a hard sell. It's not an easy win for Obama.

QUEST: Maggie Lake in News York with the housing sector, and Maggie will be watching the debate live tonight, as indeed most of us -- or the rest of us will be up late into the night, at least those of us in Europe.

Jeffrey Immelt says the US economy needs new investment as well as new ideas. The General Electric chief exec is also the chairman of President Obama's jobs council. In an exclusive CNN interview, he told John Defterios, the US economic picture is improving.

(BEGIN VIDEOTAPE)

JEFFREY IMMELT, CEO, GENERAL ELECTRIC: I actually think the US economy is getting a little bit better each year. And then, John, we've just got to get this financial fiscal deficit behind us. We've got to get decisions made. There's capital on the sidelines.

I've always believed that this needs to be an investment-led recovery. In other words, the consumer was the engine of growth, not just for the last decade, but for the last 30 years in the United States. I think if we want our economy to reach potential again, we've got to get more investment in the United States, more CAPEX.

The other thing I'd say is, if you walk through a factory in Ohio, people know what they want. They're not divided. If you walk through a factory in Illinois, people know what they want. They're not divided. So, I just think there's a real disconnect, in many ways, between what is in the spirit of the people I see every day, and what gets reflected in public policy.

JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: There's been a huge debate in America about offshore earnings for companies like GE. So, your capital at the end of the first quarter of 2012 was about over $100 billion. What is the correct policy to want to have GE bring that money back? The correct tax policy to bring that money back and reinvest in America? Or is it just politics?

IMMELT: Look, I think every other economy in the world has what's called a territorial tax system. Everyone. We are the outlier. So, they all basically have -- I believe in tax reform, I believe the tax rate should be maybe 25, somewhere in that range, take away the deductions, and allow this territorial system so that companies can repatriate their earnings back to the United States.

That's the way Germany does it, that's the way Japan does it, that's the way the UK does it, it's the way every other economy --

DEFTERIOS: Based on where you earn that money?

IMMELT: Based on where you earn the money.

(END VIDEOTAPE)

QUEST: Jeffrey Immelt, the chief exec of GE. Now, later in this hour, on this program, we'll be talking to the former Massachusetts state treasurer, Shannon O'Brien. She has firsthand experience of debating Mitt Romney. She took him on in the race for the governorship or the gubernatorial race in 2002. We'll be asking her what we can expect from the Republican candidate later in the program.

Now, to Wall Street and the market and how they are trading as they move through the midweek session. Ooh, well, look. Everyone's waiting for the debate, it's a quiet sort of day, there's not a lot of news around in terms of the market news anyway, so we're just up ten points, ten points, barely -- unchanged, I think we can agree.

There was one bit of corporate news. T-Mobile's to merge with MetroPCS. It's a ten -- it's a $1.5 billion company. The new company will keep the T-Mobile name.

Now, when we come back after the break, Portugal is tightening the purse strings and hiking its taxes. Europe's age of austerity and the prospects for growth. QUEST MEANS BUSINESS, good --

(RINGS BELL)

QUEST: -- evening.

(COMMERCIAL BREAK)

QUEST: Pockets of unrest erupted across Iran as Iran's currency fell further. Demonstrators clashed with riot police at a bazaar in central Tehran, where many exchange bureau are located. The US State Department says economic sanctions have caused the sudden fall in the Iranian rial.

The president, Mahmoud Ahmadinejad says people within the country are manipulating the market. From Islamabad, CNN's Reza Sayah reports.

(BEGIN VIDEOTAPE)

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: We are seeing the first signs of unrest in Iran over the staggering decrease in the value of Iran's currency. Authorities on Wednesday shutting down Iran's main bazaar amid reports of protests by merchants.

(CROWDS CHANTING)

SAYAH (voice-over): Several video clips posted on YouTube showed shops were closed and protesters chanting slogans against the government. It's hard to say how many people were protesting, but crowds looked to be in the hundreds, maybe the thousands. Witnesses reported seeing some clashes with police and some trash bins being burned.

SAYAH (on camera): All of this coming as Iran watches the value of its currency tumble. Imagine every dollar in your pocket over a span of several weeks decrease in value to almost 30 cents. That's what many Iranians have had to face recently.

SAYAH (voice-over): The drop in currency coincided with the economic sanctions imposed by the West against Iran in an effort to get Iran to drop its nuclear program. May Iranians fear that the country is running out of foreign cash reserves, they're buying up dollars, which is killing the value of Iran's currency.

SAYAH (on camera): Some say this fear is a real outcome of the sanctions. Others say now, this fear has been manufactured by powerful and shady players in the black market currency exchange industry who are making a profit.

SAYAH (voice-over): Access for CNN in Iran is restricted. We did try to reach out to some Iranians. They didn't want to give us their names, but they said life is getting more difficult. And they also said the economy and the sanctions aren't impacting the government, it's the people who are suffering, they said.

UNIDENTIFIED FEMALE: The prices are amazing. They are so high, you just -- it's crazy, it's so high.

UNIDENTIFIED MALE: This uncertainty with regards to the foreign exchange rate has made everything very, very, very difficult, and I'm very, very upset.

UNIDENTIFIED FEMALE (through translator): Everyone is very worried and concerned about the high prices. I'm a taxi driver myself, and I've been under so much stress lately that I'm getting migraine headaches. I'm worried about my future, my daughter's future.

UNIDENTIFIED FEMALE: The most important thing is that people can't make sense out of it, and they don't know what's going to happen next.

UNIDENTIFIED MALE: This uncertainty is causing a lot of panic. As far as people are running around and jumping out of windows, et cetera, no, nothing like that's happening.

SAYAH (on camera): Some analysts say the challenges in Iran could lead to a mass uprising by the people against the government. Most people we spoke to today say that's probably not going to happen. But again, the big story on Wednesday, what appeared to be pockets of protest. Far from a mass uprising, but significant nonetheless.

Reza Sayah, CNN, Islamabad.

(END VIDEOTAPE)

QUEST: In Europe, a mixed session for the stock markets. If you look at the numbers and you see the way the markets finished, you end up with two up and two down, and they weren't huge moves in any direction.

IAG, owners of BA and Iberia, were up nearly 3 percent, and they saw traffic rise quite sharply up, led by British Airways. Deutsche Bank up 2.3 percent. Banks were some of the worst performers in Spain, Banco Popular down nearly 5 percent, Bankia off 2.3.

The market eurozone composite PMI, the eurozone contracted further. According to analysis, it seems inevitable the region will have fallen back into recession in the third quarter.

Portugal has announced they're raising taxes across the board to rein in the runaway budget. The finance minister, Vito Gaspar, said the increases were necessary to meet the conditions of Portugal's $100 billion bailout. The average income tax rate will rise to 11.8 percent from the current 9.8. That's the average, the average, of course. There'll be also a new 4 percent surcharge on wages.

Now, you can look at Europe's austerity, if you join me over in the map room. You can have a look, you'll see exactly where the austerity is starting to bite and where the effects are.

In Portugal's terms, you're talking about tax rises. It'll be about - - the austerity's about 3 percent of next year's GDP. Now, Eurostat is saying that the economy will shrink by 3.3 percent. So, what we don't really factor in, or can't necessarily, is how this year's fall in GDP along with the austerity, the real lack of confidence that will move forward into next year.

We know about Spain. You and I have talked about it many times in the last few days. $51 billion of austerity in their budget announced last week. And even though that was moved towards one side rather than the other on spending cuts versus taxes, even so, the 2012 GDP will still be off the best part of 2 percent. And Spain, as we saw last night, has the highest unemployment in the eurozone.

To Greece, where we have austerity of about $15 billion in two year's time and a dramatic -- the fifth year of the contraction, 4.7 percent GDP contraction in this year and more next.

The troika talks continue. They're said to be going well, but that's all relative, and there are demonstrations, and there have been upset and unrest in Greece.

And finally, of course, Ireland. A smaller number of austerity, you'd expect that, and a GDP -- but this is interesting -- the GDP will actually rise this year of about a half of a percentage point.

So, let's put this in and factor it together. Joining me now to talk about this from Nomura, Silvio, good evening to you.

SILVIO PERUZZO, EUROPEAN ECONOMIST, NOMURA INTERNATIONAL: Hi, good evening. Good to be here.

QUEST: Silvio. The austerity -- we've seen it on the numbers. But are we fully seeing the extent of it translated into the economies yet?

PERUZZO: Not yet, not yet. We believe that some weakness will materialize in the coming years. If you look at the budgetary consolidation plans, of all the countries that you just mentioned, you will see that most of the austerity is still to be delivered. It will come after 2015.

QUEST: And on this balance between austerity and what I think we used to somewhat nonsensically call growth-led austerity, which I'm not sure you can even have that.

PERUZZO: Well, obviously, we are in a very unfortunate situation here, because we need to make sure that investors believe that public finances are sustainable, but the economies are very weak. So, what policymakers are doing, they're calibrating austerity on a scenario which is different from what we used to have.

QUEST: Do you believe that there is too much austerity and not enough pro-growth policies at the moment?

PERUZZO: I do believe that to some extent that we are shortening too much the time during which we are implementing this consolidation. I should say, it should be smoothed over a larger number of years.

QUEST: And if we continue down this road -- Greece can't take much more. It's five years of -- four, five years of recession. Spain, 50 percent youth unemployment. Italy, high youth unemployment. I wonder from your perspective, what's the one policy that you think needs to now come forward?

PERUZZO: Obviously, we've got a part of the eurozone which is extremely weak. But there are some countries which can continue to support, right? So, at the end of the day, it's just about political will.

What I think a good combination of policy could be is I think further support from the European Central Bank in a way which is maybe less conditional, and also probably allowing countries to deliver the austerity in a longer period of time.

QUEST: One quick word -- we're just about out of time, but one quick one -- is it your fundamental belief that Spain will have to ask for sovereign help?

PERUZZO: Yes. We do think that that's nearly a done deal. It's just a matter of time. By the end of the month, I think, there is a very high chance that the support will have to be requested.

QUEST: Many thanks, Silvio. Many thanks, indeed.

An anti-austerity protestor perched precariously on a Vatican church building and now looks set to spend a second night there. This is the Italian small business owner Marcello di Finizio.

He dropped from a window onto a narrow ledge on the edge of St. Peter's Basilica on Tuesday. He's holding a banner that says "Help, no more Monti, no more Europe, no more multinationals." It's not the first time he's scaled the dome. He did the same thing back in July.

Let's stay at the Vatican for today's Currency Conundrum. In 2002, the Vatican issued euro coins featuring Pope John Paul II. The face value of the completed set is 3 euros 88 cents, around $5. Now, our question is, how much could you expect to pay for it now, not the face value? $85? $850? Or $8,500? Today's selection. We'll have the answer later in the program.

The dollar's up across the board. Private sector job service all pushed the currency higher. Those are the rates --

(RINGS BELL)

QUEST: This is the break.

(COMMERCIAL BREAK)

QUEST: American Airlines is inspecting its fleet of Boeing 757s after problems with seats coming loose during flight. The problems were reported aboard three planes earlier this week. So far, six planes have been found to have incorrectly-installed seats. As George Howell reports, it's the latest in a string of problems for a deeply troubled and now, of course, bankrupt airline.

(BEGIN VIDEOTAPE)

GEORGE HOWELL, CNN CORRESPONDENT (voice-over): It's happened on three separate flights with passengers onboard, twice on the same plane: entire rows of seats came loose on American Airlines 757s. And according to this passenger who did not want to be identified --

UNIDENTIFIED FEMALE: The seat slipped backwards. It was actually a complete nightmare. And so, people were essentially on the laps of the passengers behind them.

HOWELL: American Airlines says the root cause of the problem came down to clamps that were installed backwards. It's the latest in a series of setbacks for the airline, which filed for bankruptcy nearly a year ago and has been battling recently with its major unions over contract terms.

The union points the finger to outsourced maintenance work as the reason for the problem. David Campbell with American Airlines says crews are getting to the bottom of it.

DAVID CAMPBELL, AMERICAN AIRLINES: We have guys who work with seats every single day, they're engineers, they're tech crew chiefs. They've gone in, they've believed -- they've determined what they believe is the -- a potential failure. But beyond the failure, we're focusing our attention on making sure that they're properly installed.

HOWELL: The problem prompted an inspection of seats on nearly half of American Airlines 757s. Seats that were first pulled out and reinstalled in a plan to give passengers more leg room. Workers have already inspected 36 planes with 11 yet to be inspected. So far, they've discovered a total of six planes that all had the same problem.

Campbell dismissed the idea that the loose seats could somehow be linked to the ongoing labor dispute.

CAMPBELL: I really have a difficult time believing that it was -- that it's actually sabotage. I just don't believe that it is.

HOWELL: As American Airlines promises to fix the problem, many passengers we spoke with say that while the issue with loose seats is troubling, it doesn't necessarily shake their confidence in the airline.

UNIDENTIFIED MALE: It seems kind of trivial.

DINERA BEORRERO, AIRLINE PASSENGER: I'm a frequent flier. So, it would be hard to change. But I would have to look into that to see if they took care of it.

HOWELL: Instead, passengers say it's the flight delays and cancellations, about 12,000 flights delayed just in the past month, and more than 1,000 flights canceled that could make loyal customers like Carl Geuther think twice.

CARL GEUTHER, AIRLINE PASSENGER: If the current labor process drags on and there are current flight delays, that could change my mind.

(END VIDEOTAPE)

QUEST: And of course, that is exactly the issue that now affects American Airlines, the delays, the cancellations and these other snafus. And some high-profile passengers have already changed their mind on American.

The author Gary Shteyngart wrote in the "New York Times" of an horrendous trans-Atlantic trip that ended up 30 -- taking 30 hours from Paris to New York, it ended up coming down in London.

"You, American Airlines, should no longer be flying across the Atlantic," he wrote. "You do not have the know-how, you do not have the equipment."

Shteyngart also says he had problems with lack of communication from American and staff. He says -- and this is damning -- "Your employees have clearly lost interest in the endeavor."

The article that he wrote has caused a firestorm. The airline says staff are staging a deliberate slowdown during the labor dispute. But in the airline industry, what's happening at American is now the big talking point. The airline is clearly safe, but there are service problems.

In August, I spoke to the chief exec Tom Horton and asked him if his employees were now facing a stark choice.

(BEGIN VIDEO CLIP)

TOM HORTON, CEO, AMERICAN AIRLINES: We've been very focused on trying to get to consensual agreements that will create the best outcome for the company, a successful, profitable, growing company. And we think that represents the best outcome for the people of American.

And I'm pleased to say that we have reached tentative agreements with all of the work groups, and they are in various stages of ratification.

QUEST: Are you confident that those that are waiting to be ratified, or is it fingers crossed?

HORTON: I think we'll have to wait and see. It's a very individual decision. Each member has a vote, and we'll have to wait and see how folks vote. The people of American want this company to succeed. I feel about American like I feel about America. Success is the only option.

(END VIDEO CLIP)

QUEST: Tom Horton, there, talking to me earlier in the year. We'll follow this story up.

Coming up, how do you pit your wits against Mitt? The secrets of debating Mitt Romney from someone who's been there and got the t-shirt, if not the result, after the break.

(COMMERCIAL BREAK)

RICHARD QUEST, CNN HOST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in just a moment. This is CNN and, on this network, it is the news that will always come first.

(BEGIN VIDEO CLIP)

QUEST (voice-over): President Obama and his political challenger, Mitt Romney, are gearing up for their first debate ahead of the election. It'll be held tonight, Wednesday, at the University of Denver in Colorado. It is domestic issues that's the focus of the first debate. This will only be the fourth time the two men have actually met face to face.

A Syrian opposition group says a series of car bombings has killed dozens of people in Aleppo on Wednesday. Activists say most of the casualties were government troops. State media blame what it calls terrorists for the violence. The apparent targets were a military officers' club and the Chamber of Commerce.

NATO says it's greatly concerned over an attack on a Turkish border town. The town's mayor says at least five people were killed when a shell fired from Syria struck a house. Ten others were wounded. It's not clear what military force or group is responsible.

Iranians are protesting outside the country's biggest bank as their country currency plunges. Demonstrators clashed with the riot police at a bazaar in central Tehran, where several exchange bureaus (ph) are located. Iran's currency has lost more than a third of its value in the past week or so.

Nigerian troops are hunting for the people who carried out a massacre at a student dormitory near a university in the northeast on Tuesday. The attackers killed at least 25 people using guns and knives. Ethnic tensions related to a recent student election may provide some clues as to the motives for the attack.

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(END VIDEO CLIP)

QUEST: Barack Obama has only met Mitt Romney three times before. Tonight when they debate it'll be the fourth meeting. Our next guest knows just how good a debater he is. Shannon O'Brien ran unsuccessfully against Mitt Romney in the race to be governor of Massachusetts in 2002. Shannon O'Brien joins me now live from Boston.

Wonderful to have you with us, to give us some insight. What would be -- well, first of all, have you been asked to give the president or anybody any tips on how to handle a Romney debate?

SHANNON O'BRIEN, FORMER MASSACHUSETTS STATE TREASURER: No, I haven't been asked to give any advice to the president. But I certainly have had a lot of experience. I had about five debates with Mitt Romney, several of them one-on-one. And I think I'm the last person who's had a one-on-one debate with Governor Romney almost 10 years ago.

QUEST: So -- and I love a debate. I was -- I did debating in college and so on. I know it's a different type of a debate rather than a this house believes type of debate. But when -- what is the sort of -- what's his stock in trade? What -- with Romney? What does he do?

O'BRIEN: Well, the most important thing for Mitt Romney -- and I think folks all around the world have seen some of his gaffes, whether it was when he went to the London Olympics or recently in the United States, where he made, you know, these off-the-cuff remarks about betting $10,000 with one of his Republican opponents.

When Mitt Romney is sort of freeforming, he can make mistakes. And so this is the most important debate of the campaign. It's probably the most important point in the campaign as to whether or not he can come back and possibly beat President Obama. So he will leave nothing to chance. He's practicing and practicing. He will be well prepared for tonight.

QUEST: So what does Obama have to do and what did you do that got him to freeform, that got him off the script? Do you needle him? Do you attack him? Do you belittle him? What's the technique?

O'BRIEN: Well, in my first -- and I think in my situation was very different, Richard. I came across very aggressively in the first two debates, and ultimately I think that was not a good thing for me as a candidate.

But what I think President Obama has to do to keep him, you know, off- kilter is to make sure that he continues to focus on the fact that it is President Obama who will support the middle class, will support the majority of Americans and who has the right plan. Mitt Romney has been all over issues.

You know, they won't tell us what his tax plan is. That's a secret. He won't really come clean about whether or not he really will support tax deductions that are very important to the middle class. So I think that Obama can keep him off his feet by focusing on the different positions that Mitt Romney has taken over the course of this campaign and over the 10-15 years he's been running for office.

QUEST: I heard one comment about Mitt Romney from somebody who knew him well, talking about the London Olympics gaffe that he made. And actually, what this person said, is, no, that answer was classic Romney. Romney is a consultant from Bain Capital and therefore he will give an honest albeit unpolitic (sic) answer because that's the way he's built. He thinks like a consultant.

O'BRIEN: Yes, and the problem is he has made so many -- he has so many positions in his head that aren't really coming from his heart, that that's what makes it so hard for him to be genuine. It's why the numbers have shown in the polls that he's really not very popular with voters. And it's why in this difficult economy in the United States that President Obama is doing so well. Romney --

QUEST: Whoa, whoa, whoa --

(CROSSTALK)

O'BRIEN: -- because when he wants to tell the truth, he can't tell the truth. It's not popular.

QUEST: Finally, when all is said and done, no president -- I mean you know the statistics -- 8 percent unemployment; it's a very -- it's a serious uphill struggle.

Surely, really all Mitt Romney has to do or one of the things he has to do with the president would find it very difficult to rebut is simply say, "You failed."

O'BRIEN: And the fact is President Obama has helped create -- he came into office during one of the most difficult times in our country's economic history. We have 5 million new jobs. The stock market is up. People are feeling more confident. We're not where we need to be. But he has made progress.

And Romney would take us back to the policies that got us in this mess in the first place. That's ultimately where the president goes and ultimately I think the argument that's going to win the presidential election.

QUEST: Shannon, would you like one more chance to debate him, if you had the chance? Would you like a rematch against Romney?

O'BRIEN: I don't know if I'd like a rematch. But I just hope that President Obama, who I'm a Democrat; I hope President Obama does well tonight. But Romney's been practicing. He's going to be a tough opponent. This is going to be the debate of his life. I think all of America will be watching and it'll be exciting.

QUEST: (Inaudible) America watching, we'll all be watching.

Thanks very much, Shannon O'Brien; joining me from the U.S. And of course, (inaudible), I mean, we make no bones about it. Shannon O'Brien was, of course, a Democrat and, well, she doesn't wish Mitt Romney personally ill, she wishes him political massacre tonight, I suspect, by President Obama, at least in the world of politics.

CNN's your destination for full coverage of all the debates. We're live in Colorado for tonight's first head-to-head battle between Barack Obama and Mitt Romney. It is a debate and stay with us and watch it live starting early Thursday at 1:00 in the morning -- 1:00 in the morning; we'll all be up late -- 4:00 am in Abu Dhabi, 8:00 pm in Hong Kong.

If you miss that, then we'll be replayed, four replays throughout the times right here on your screen, and we'll probably need an abacus to work out what time it is where you are.

In a moment, the breakfast revolution and the battle to ban the bland breakfast (inaudible). And not a moment before time.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

QUEST: I truly believe one of the worst aspects of business travel is the buffet breakfast. Now there may be plenty of choice, but what a choice. There's nothing worse than starting the day with anemic eggs and lukewarm juice and coffee that's been sitting around for hours.

Of course, others disagree. You may well love the breakfast. But you can imagine my delight when I discovered that across the world, particularly in the United States, with the major hotel chains, there is now a breakfast revolution taking place.

(BEGIN VIDEO CLIP)

(MUSIC PLAYING)

QUEST (voice-over): I loathe the hotel breakfast buffet, and I don't care who knows. Congealed eggs and the relentless getting up and sitting down. Hotel groups recognize the problem with breakfast. It's the one research shows we really care about, a key decider if we'll come back.

BETH SCOTT, V.P., FOOD AND BEVERAGE, HILTON WORLDWIDE: We need to change our approach and our philosophy of how we provide the most important meal of the day to the guests.

QUEST (voice-over): Now after two years of research, Hilton are relaunching breakfast along with a planned revamp of the Hilton New York.

SCOTT: Guests are like (inaudible) eat. We know how to eat. Just give us fresh, healthy food and we'll figure out what we want.

We all don't like the scrambled eggs sitting in the dish.

QUEST: You tried.

SCOTT: I tried.

QUEST: (Inaudible). of the scrambled eggs. Right? What happened when you tried to do that?

SCOTT: Yes, guests were not very happy with me.

QUEST (voice-over): Overall, Hilton has taken it back to basics. Less variety, better quality.

Hyatt went further. They handed almost total control to the hotel chefs, and insisted on seasonal local produce and sustainable farming.

SUSAN SANTIAGO, V.P. OF FOOD AND BEVERAGE, HYATT HOTELS & RESORTS: We'd asked our chefs, talk to their local farmers and ranchers, and find out what it is that they can source locally.

QUEST (voice-over): But the Wall Street Andaz, a luxury Hyatt brand, have even opened up their own farmers' market.

SANTIAGO: Each chef at the Hyatts here in New York come here on Wednesdays and Thursdays and buy their produce from here. We expected costs to go up; ironically enough, we've seen costs are going down.

CHRISTINA GOLDIE WILLIAMSON, SENIOR DIRECTOR, BRAND STRATEGY, CHOICE HOTELS: We're actually talking about not the CEO in the corner office; we're talking about the vast majority of business travelers, who stay (inaudible) hotel.

QUEST: (Inaudible).

(LAUGHTER)

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QUEST (voice-over): A free breakfast is essential to budget travelers. Three-quarters of hotels offer it. And while the offerings remain perhaps simple, choice have dramatically expanded the menu.

WILLIAMSON: They wanted more hot items. Americans love our eggs and meat for breakfast. They also wanted some healthy items.

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QUEST: Now here's the interesting point. We tend to choose where we stay by the quality of the breakfast. And if there's one place you're likely to gorge yourself silly on breakfast or any meal, it's on board a cruiseliner. The industry's indulgent image is at odds with these austere times, some might say. But that has not affected business. Quite the contrary.

Join me up on the deck, on the boat deck. Royal Caribbean has 22 cruise ships. They call at more than 270 destinations across 72 countries. This cruiseliner is a behemoth of the industry, operating the world's two biggest liners and two more on order.

I spoke to the chief exec and president, Adam Goldstein, and I began by asking him how he's navigating through the tides of economic crisis.

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ADAM GOLDSTEIN, CEO, ROYAL CARIBBEAN: Like most industries and companies, we feel macroeconomic troubles. But there's a great resilience in our business. The consumers really want to have their cruises. And the cruise lines are able to move ships around the world and put them in attractive places so that we're able to get through even challenging times.

QUEST: People may want you, but they can't often afford to. So are you having to, I suppose, discount, reduce prices? You're going to have to stimulate the market.

GOLDSTEIN: Well, there's a great value to cruising, and we need to get the word out all the time, everywhere. But we have, in this year, and especially in Europe as a source market, had to do more discounting of price than we would have liked for them we thought we would have to do in January in order to keep the ships full.

QUEST: How did the Concordia crash and disaster, how did if -- we know it had an immediate effect. But traditionally, disasters don't have a long-term effect. Is that what you saw here?

GOLDSTEIN: We thought that this tragedy would have a waning effect as the year unfolded. That is pretty much what appeared to be the case. It certainly had more of an impact in Europe, where it occurred, than in the other markets.

But fortunately, we've been able to work together well as an industry and with the regulatory authorities to remind the public market that this is a very safe industry; that was a very anomalous event and we still have to continue to move safety forward.

QUEST: On the trend for cruises, what is the fundamental thing? And I know you -- and it's growing, the number of people who are going on cruises is increasing. It's a more popular vacation. But what trends are you seeing within that fact?

GOLDSTEIN: Yes, the fundamental trend in cruising in this era is the globalization of demand. In 1970, 500,000 people cruised almost entirely Americans. In 2011, 20 million people cruised from all over the globe.

People in Asia, in South America as well as in Europe and North America are catching onto the value of the product and its appeal. They know what these great ships have, from surfing machines to rock climbing walls, to ice skating rinks to fabulous pool areas. And they're coming to cruise.

QUEST: And to those who still have the horror vision of being on board a ship -- and I know some viewers out there who will be saying, "I cannot imagine being on a ship with 6,000 other people, locked up for days."

GOLDSTEIN: It's a fact of our life that there's still millions of people who would absolutely love this experience, who have the wherewithal to buy this experience, who are sitting on the sidelines thinking misconceptions like that.

But when they actually get on board and we have a satisfaction rate that apparently exceeds what people think of eating chocolate, then they realize there's just so many things to do or to do nothing. It's your choice.

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QUEST: One thing I love about the cruise industry is love it or hate it, it's growing pretty much at a huge rate of naught (ph).

The weather forecast now, Jenny Harrison's at the World Weather Center.

Good evening, ma'am.

JENNY HARRISON, CNN METEOROLOGIST: Yes, (inaudible), Richard, I've just got one question. How did your waffle come out in the hotel? I just want to know.

QUEST: Oh, oh, plenty of waffling around.

HARRISON: Yes, that's you all over.

OK.

Now, listen, if you aren't traveling a little bit in the next few days, you need to know what's going on weather wise. I can tell you what, there's some very nice weather building across the south of Europe, high pressure will be in control from the lovely sunshine, feeling warmer. You can see quite quickly, look at on the satellite.

Probably not quite like that across northern and western Europe. The rain has been coming across the U.K., some heavy bursts from time to time across more northern areas. And then it's sweeping across western Europe, too. So the low countries in particular, western Germany, some very heavy amounts of rain, some thunderstorms in the mix.

And then you can already see across the south, as I say, a bit of a dividing line there. It's much better weather over the next few days, high pressure is building in across the central Med. It'll bring up the warm air from the south. And it'll feel very nice indeed. Meanwhile to the north feeling a little bit more like autumn with those scattered showers and breezy conditions.

It does (inaudible) on Thursday might be a few delays at some of the major airports. So either because we've got some brisk winds or because we've got some low clouds. So Brussels, Frankfurt, Berlin as well and then Paris as well in the morning hours on Thursday. Quite a bit of low cloud then as well causing some problems. This then as you can see, the rain coming in across the northwest.

There's that next area of low pressure. But you'll notice as well we are going to get rain across much of the U.K., but in particular, the south. That means London so you can easily experience the rain in London.

But if you'd like to experience (inaudible), well, maybe you just aren't really sure, well, look at this. This is something very different, I believe, than been done before, (inaudible) can see it in London. It is a rain room, hundred square meters and it's a big field of falling water for all the visitors to walk through.

And apparently you can experience how it might feel if you could control the rain, because as you enter it, you hear the sound and then it actually, the droplets respond to the presence and the movement of the people in there.

And apparently this has been put on by the head of the art galleries in the Barbican Center and the idea is that people are suddenly put on a stage and monumental installation. And you can get all creative and do what you like and people watch you and Richard (inaudible) what do you think, Richard? Enough rain in London I think they should have come up with a sun room, but, hey, a rain room.

QUEST: There's one born every minute.

(LAUGHTER)

QUEST: There's a bridge you could sell this lot over the -- (inaudible).

HARRISON: I know. It's so funny, what, yes.

(CROSSTALK)

QUEST: Jenny Harrison. Rain room (inaudible). Padded cell, more like.

Jenny, thank you very much indeed.

After the break, talking of fiascos, Britain's rail fiasco in a moment.

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QUEST (voice-over): The "Currency Conundrum" answer tonight, we asked you how much would you expect to pay for a set of 2002 Vatican coins featuring Pope John Paul II? The face value was 3 euros 88. We worked out the average online price, $850.

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QUEST: Talk about fiascos on a grand scale, the British government surprisingly announced that it was ditching the decision on who will run the country's most lucrative rail services. They had awarded the West Coast Main Line to a company called FirstGroup against Richard Branson's Virgin trains.

And then, at the last minute -- I mean this -- this is beggar's belief -- they say there were significant flaws in the bidding processes.

Officials have been suspended. Taxpayers will end up with a $64 million bill in compensation. FirstGroup, who thought they had won, their shares looked -- lost a fifth of their value.

And not surprisingly, Richard Branson says the whole thing has been a fiasco.

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RICHARD BRANSON, CHAIRMAN, VIRGIN GROUP: We weren't shocked. We've been through this three times with the East Coast Main Line, actually under a Labour government, but the same department.

We came runners-up. The company people who were given the licenses went bust. We should have taken them to court then. We didn't. We finally decided to draw a line in the sand and take them to court over the West Coast Main Line.

I'm very glad we did. I'm glad we didn't have to go to court; appreciative that the secretary of state, you know -- you know, acknowledged that it was a complete cock-up the day before the court case.

And, hopefully, we can now move forward and, you know, get back to work with the West Coast Main Line and look after our passengers.

(END VIDEO TAPE)

QUEST: Sir Richard Branson, talking to me from New York.

"Profitable Moment" in just a moment.

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QUEST: Tonight's "Profitable Moment," just a few hours away from the first debate of this year's presidential election. Barack Obama and his challenger, Mitt Romney, arguing their case for the art of debate. It's cruel, it's fascinating and it's a science. Both candidates have obvious strengths; both have weaknesses that can and will be exposed when the going gets tough.

Those of us in the cheap seats, we want fireworks and gaffes. Tonight, though, the stakes are too important for pantomime. It's the most powerful, most important economy in the world, and recovery's at stake. So what we need to look for tonight are policies about who will do what and who is the best hope to give the leadership that the rest of us also seek.

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

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QUEST (voice-over): The headlines at this hour:

Barack Obama and Mitt Romney are getting ready for their first debate, as you just heard, ahead of the election. It'll be on Wednesday night at the University of Denver in Colorado. And domestic issues will be the focus. It's only the fourth time the two men have actually met face to face.

A Syrian opposition group says a series of car bombings has killed dozens of people in Aleppo on Wednesday. Activists say most of the casualties were government troops. State media blame what they calls terrorists for the violence. The apparent targets were a military officers' club and the Chamber of Commerce.

NATO says it's greatly concerned over an attack on a Turkish border town. The town's mayor says at least five people were killed when a shell fired from Syria struck a house. Ten other people were wounded. It's not clear what military force or group is responsible.

Iranians are protesting outside the country's biggest bank as their currency continues to fall in value. Demonstrators clashed with riot police at a bazaar in central Tehran, where several exchange bureau are located. Iran's currency has lost more than a third of its value in the past week or so.

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QUEST: You are up to date with the news stories at this hour. Now, live, "AMANPOUR" with Ali Velshi.

END