Return to Transcripts main page


Dow Rallies as Wall street Halt Global Sell-Off; IMF's Christine Lagarde Faces Trial; Clinton Campaign Didn't Reveal Pneumonia Until Sunday; Samsung: Note 7 Users Should Power Down and Stop Using; Ceasefire Begins in Syria; Barroso Stripped of EU "Red Carpet Privileges"; EU Probes Ethics of Goldman Sachs' Barroso Hiring; Marshall: Some Businesses Are Pausing Investment in U.K.; Saudi Arabia, Iran Boost Oil Production. Aired 4-5p ET

Aired September 12, 2016 - 16:00:00   ET


[16:00:00] RICHARD QUEST, CNN ANCHOR: From Friday a rip roaring session on Monday. The Dow Industrial has more than 240 points at the closing bell,

and Cal Atlantic -- oh, yes, a very robust gavel that brought trading to an end on Monday, September the 12th.

Christine Lagarde will stand trial. A French court has ruled. The head of the IMF is to appear in court.

Samsung pulls the fire alarm as shares plummet, and the European Commission closes the door on its former president, Jose Manuel Barroso. There's no

red carpet treatment. I'm Richard Quest and we have an hour together and I mean business.

Good evening, it was very much a story of different markets on different sides of the Atlantic as you have just seen at the start of the program.

The Dow Jones Industrials had a strong session in New York, but there was a global selloff that seems to have stopped at the American shores, and this

perfectly shows you the way the sea of red that spread around the world. It starts off in Asia, of course, where we had falls in the Nikkei. The

Chinese market, the Shanghai Composite, and the Hong Kong, Hang Seng, down 3 .33 percent. The worst losses there.

Europe's stocks were down. The FTSE as well, all the major Europeans. However, the United States market, the Dow fell 100 points in the first few

seconds of trading. Then as there were more comments from the Fed governors that suggested the Fed will be prudent on interest rates, traders

on Wall Street went for the rally. And you really see it. You see that opening, that, to some extent, is the hangover from Friday and the question

of what will interest rates do going up sooner rather than later.

As the day moves forward, and Fed governors start speaking, then you see the rally kicking in, and the volatility over the last three months, the

VIX is near record lows through July and August. Take a look at the volatility index. This is July when you hit this big peak up here. Again,

it's all Fed related, but now the volatility as you expect to some extent, you would not see too much volatility over the summer months when trading

volumes are low, but that spike on Friday of some 40 percent, and then it falls back again. And that really was all about worries that the Fed was

going to move. It follows what Chair Yellen said. It follows what Fed governors had said, and it follows this idea of the economic data dependent

Fed moving rates before the end of the year.

Tim Anderson, is the managing director at TJM Investments. He's on the floor of the stock exchange. So the Fed governors, particularly Lael

Brainard, has been speaking and what she said suggested that prudence, that it does seem to still hold sway?

TIM ANDERSON, MANAGING DIRECTOR, TJM INVESTMENTS: Well, I think we have to put that into perspective. Because there's no doubt that Lael Brainard is

probably the most dovish Fed member. She probably makes Charlie Evans look like a moderate hawk. I don't think the markets should really be too

surprised that she was not saying yes, I think it is probably time for us to start raising rates.

Now all of that being said, you would have to have probably three quarters of the voting regional Fed presidents to vote for a hike to really get a

hike in September. So maybe what the Fed is doing they're really setting the table. They're big on gradualism and they're setting the table for a

raising the probability of a hike in December.

QUEST: September, it would be bizarre although not unthinkable, perhaps to raise in September just a few months before an election when there is no

need to enmesh yourself into the deep political deep nasty waters. Is that right?

[16:05:00] ANDERSON: I think that's right, although I really doubt that if they raised rates to 25 basis points that it would have any impact at all

on the election. You're talking about rates that would be very, very historically low.

QUEST: You had Donald Trump complaining again about the Fed saying the Fed is doing President Obama's work by keeping rates artificially low to

artificially stimulate the economy. It is that view that holds sway on Wall Street?

ANDERSON: It depends on who you ask. There is no doubt that some people feel the Fed is too politicalized. And I think the timing of Trump making

those comments today is very intriguing given the fact that it is very public knowledge that Fed governor Brainard has been a consistent

contributor to Hillary Clinton.

QUEST: OK, now, as we pull this together, we know the fed, they've said it often enough, is data dependent. As I look at the data there is a wealth

of it. Everything from purchasing managers, to unemployment, to inflation, the big numbers are showing one story. How much data are they still going

to want to see?

ANDERSON: You know, they -- there is probably some data they see that is not publicly disseminated. I think that in pockets of the economy and

areas of the economy there is some growth and pent up demand. And there are even those that are starting to push the argument that a rate hike from

near zero would be stimulative on the economy. You've even started to hear banter around the globe from in Japan, and within the ECB, that these

negative interest rates are dysfunctional, and in fact, that that Japan is going to come out within a couple of weeks on their long study as to their

effectiveness of monetary policy over the last couple decades.

QUEST: Tim, good to see you on the exchange. Thank you for bringing us the upside on a date which was quite remarkable in a sense of over 200

points. Investors are looking at to the Fed's next policy meeting. It is September 21. The likelihood is that they won't actually move, but we'll

be hanging on to every word that we get for a clue as to interest rates as governor Brainard said, policy should be kept loose and that the Fed needs

to maintain that policy. That policy should be kept loose. The Fed needs to keep moving forward throughout the course of the prudent.

Stephanie Flanders is in London for us this evening. You heard the view from the exchange. We know what president Draghi said last week about the

ECB, so pull the strands together for me if you would be so kind as to the macro picture.

STEPHANIE FLANDERS, CHIEF MARKET STRATEGIST, JPMORGAN ASSET MANAGEMENT: Well, we've had a slight disconnect in the macro picture, which has been

good for markets over the summer, but maybe was set aside for a bit more bumpier times as we've seen in the last few days. Because you remember,

Richard, straight after the Brexit vote, and concerns around that. There was a question about whether this was going to be really bad for the global

economy. What policymakers were going to do. And then markets were surprisingly buoyant after that on the basis that there wasn't going to be

much of an impact on the global economy, but policy makers were still going to ease policy and keep policy, particularly monetary policy, looser than

they would have done just to be sure.

I guess there was always a tension there. When would the policy makers and certainly the Fed going to notice that actually things were going OK, and

they didn't need to be necessarily pushing forward endlessly this idea of a higher rate. So I think we're now going to have this sort of period where

people are trying to square that stronger economic data, it has been generally stronger in the U.S., although, not uniformly, incredibly robust.

I think we've got to square that with the idea that, yes, rates are going to go up, but the big story is were still going to have the peak of rates

probably much lower than in the past. I think that is something that could be quite supportive for the markets.

QUEST: How difficult then, Stephanie, in your view, does it become when you do have -- once rates move again, the second movement in the United

States at a time when the ECB is still having to think about what it might do next. Unlikely to push too much further into negative territory. The

Bank of England certainly is almost going to have to think of what to do next. This divergence of policy, how difficult is that make it?

[16:10:00] FLANDERS: I think it's a challenge that you have now. This real skepticism about how much more this extreme monetary policy can do.

When they talk about beyond the lower bound. This negative interest rates. The fact that markets now really have this low opinion of that policy does

put the challenge on Europe and on the Bank of Japan, and you see why, yes, they would love to have rates go higher in the U.S. Maybe that could add a

bit more strength to the dollar and make it easier for them to get that weaker currency they want to try and push up inflation. But it's a

challenge I think going forward. Because what the Fed is saying is, yes, we're going to raise rates, but were not going to raise them that quickly,

and guess what, we may stop quite soon after we may be reached only 2 percent.

QUEST: Fundamentally -- I want to stay in Europe for a second if we may, Stephanie -- fundamentally even with this unbelievably accommodative

interest rate policy, monetary policy, as tweak as it is possibly to be, and yet growth still is not picking up. What do they need to do?

FLANDERS: Well, I mean one of the questions around this is what is a good growth rate for the Eurozone? I mean, I'd love to see over 2 percent

growth. That would certainly make a bigger dent on unemployment. But when you look at this continent that's got, as you know, shrinking labor force

in many countries. It may be that their potential growth rate, there sort of default growth rate is now not very high. And so to achieve maybe a 1.5

percent -- may be a bit more than 1.5 percent growth. Maybe they should think that that's not too bad. The real challenge is they have not been

able to push up inflation close to target. And that was something that Mario Draghi admitted last week. That after all of this they're really not

much closer to that target than they were.

QUEST: Let me take a punt on this quick question to you. See what you actually think. Do you think and is there a discussion in economic circles

as to whether the 2 percent inflation target is the right target in this post great recession world where we may not get to 2 percent inflation?

FLANDERS: Well, it's an interesting one, I mean, you know Richard, there has been a lot of debate about whether the target should be higher. But if

you're not going to meet it and you're going to reduce the credibility of central banks in the process, then it probably would be a risky move to try

and increase the inflation target. They talked about that in Japan, for example. But I think they have to be trying to aim for that 2 percent.

That's the 2 percent which keepings things ticking over in the economy. We know it's really hard when you're below that for a long period. It becomes

hard for wage growth, for all of these things in the economy. You need that friction. You need that 2 percent.

QUEST: Good to see you. Thank you very much for joining us tonight from London. We appreciate it, thank you.

Now in the latest twist in a long running saga. Christine Lagarde, the head of the IMF, will stand trial. She'll have to face a French court, a

special French court in December over allegations of fraud. It's a special court that is convened for hearing accusations and charges against

ministers for misdeeds when they're in office. Jim Bittermann has been following this story out of Paris for us. Jim, is this -- when we hear

she's going to face trial. Explain, is Christine Lagarde going to be the dock where she's going to be expected to plead guilty or not guilty?

JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, in fact, her lawyer said she would be there for that court case when it opens up on

December 12. That's about the only comment that we've heard out of her today. That was through her lawyer. Basically this special court, six

members of the lower house of parliament, six members of the Senate and three magistrates, it's a very rare day when this court gets in session.

In fact, it's only been used about five times over the last few years. And so it's not the kind of thing that happens every day here.

What she's charged with is negligence in the use of public money. That carries a one-year prison term and a _15,000 fine if she were to be found

guilty and sentenced to the maximum sentence. But there's every reason to believe that won't happen. Nonetheless, the trial is going to go ahead

starting on December 12th, Richard.

QUEST: OK, and is the view, and let's be real here rather than theoretical, that even in convicted, Christine Lagarde is unlikely to go to


BITTERMANN: I think it is pretty unlikely at this point. It seems that she'd be exonerated in some way or another, either found not guilty or

given a minimal sentence or no sentence at all. Basically the court has accepted that the things she is charged were basically predated her term as

the economics minister, by the arbitration panel that awarded 400 million euros to Bernard Tapie, and that those members of arbitration panel were

predetermined before she got into office.

[16:15:00] So that there's a this feeling that perhaps this is being loaded off on her for political reasons. But that in fact, when the special court

comes into its verdict, is going to somehow find a way to not put her into prison for a year.

QUEST: Jim Bittermann, please, we know you will be there on December the 12th to watch the proceedings, thank you, sir.

So, Hillary Clinton has pneumonia, and the question becomes not only about her health and her speedy recovery, but damaging video like this, being

carried into her own secret service van. Then claiming to be fine. Feeling great, but looking awful. The effect on the election.


QUEST: Donald Trump has promised to release specific information about his health after wishing Hillary a speedy recovery from pneumonia. The Clinton

campaign is in full damage control mode after acknowledging it kept her diagnosis secret for two days, fueling concerns about transparency. CNN's

Jeff Zeleny reports from Washington.


JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT (voice-over): Hillary Clinton off of the campaign trail this morning as she recovered from

pneumonia. Canceling a two-day trip to California. Her health thrusted in the spotlight after aides said she became overheated and dehydrated while

attending a 9/11 ceremony at ground zero. This video shows Clinton leaving early, and when she tries stepping into her van, she wobbles and slumps.

Secret Service agents and aides quickly grab her and hold her up. Two law enforcement sources telling CNN, she appeared to faint. Clinton then taken

to her daughter Chelsea's apartment three miles away.

More than an hour later, Clinton emerged smiling. Even taking a picture with a young girl before climbing into her motorcade and heading home. Her

campaign says she was even playing with her two grandkids inside. Yet more than five hours later her doctor revealing the 68-year-old was diagnosed

with pneumonia two days earlier. After an evaluation of her prolonged cough.


HILLARY CLINTON, U.S. DEMOCRATIC PRESIDENTIAL CANDIDATE: Every time I think about Trump I get allergic.


ZELENY: Despite the diagnosis on Friday, she continued a grueling schedule. Holding two fundraisers in New York City, a large national

security briefing, and a press conference. Along with an interview with our own Chris Cuomo and other media outlets.


UNIDENTIFIED REPORTER: Her health incident this morning.


Donald Trump, just feet away from his rival at Ground Zero, unusually quiet over her diagnosis, after speculating about her health for months.

DONALD TRUMP, U.S. REPUBLICAN PRESIDENTIAL CANDIDATE: I think she doesn't have the stamina. Hillary Clinton does not have the stamina.

I watched Hillary, who doesn't have the strength on the stamina.

ZELENY: Trump addressing Clinton's health this morning and toeing a respectful line.

[16:20:00] TRUMP: Something is going on, but I just hope she gets well, and gets back on the trail, and we'll be seeing her at the debate.

ZELENY: Telling reporters that he is planning to release records about his own health soon.

TRUMP: It was last week I took a physical and I will be releasing, when the

numbers come in, hopefully they're going to be good, I think they're good, I feel great. But when the numbers come in I will be releasing very, very

specific numbers.


QUEST: CNN's chief political analyst, Gloria Borger joins me now from Washington. Whilst wishing Mrs. Clinton well, how serious is it

politically that they didn't disclose on Friday? What were they supposed to do? Come out and say, "By the way that allergy is a bout of pneumonia.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: I would actually argue that it would have explained a lot of things. That if they had disclosed that she

had pneumonia, she'd had this cough. She had Donald Trump constantly saying she didn't have stamina, that she was resting too much. We all get

sick on the campaign planes, right? You know that. So I would argue that if they had disclosed on Friday that she had in fact some kind of pneumonia

that she was walking around with, that it would have solved all of the conspiracy theories about what was really wrong with her. And it would

have stopped a problem that they instead, intensified, when they were forced to disclose after she stumbled and left the 9/11 memorial.

QUEST: But clearly she would not be the first person, or president, if she makes it's that far, to have been unwell in the office.

BORGER: To hide it.

QUEST: Thank you, to actually hide it. I mean, Ronald Reagan was diagnosed with Alzheimer's after his second term in the oval. John Kennedy

struggled with Addison's disease. Roosevelt, I mean the American people didn't know that Roosevelt was in a wheelchair. I know times are

different. I guess I need to understand from you, Gloria, how serious this is.

BORGER: Let's look back to when Barack Obama first ran for president, we got a little note about his health. Of course, he was young and very

vigorous. Mitt Romney, 65, looked very vigorous. We got kind of a note about his health. But I go back to John McCain in 2008. He was a cancer

survivor. He was 71 years old at the time. And he sent a bunch of medical reporters including our own Dr. Sanjay Gupta into a room with over 1,000

pages of documents and said go read them, here, have at it. So I can put all of these things to rest.

You have Hillary Clinton with a complex health history. You have Donald Trump who is 70 years old. I think all of these factors all factor into

it, and that the American public is entitled to know how healthy these people are for different reasons.

QUEST: In the great scheme of things, and this is impossible question to answer, Gloria.

BORGER: So ask it.

QUEST: In the great scheme of things, how damaging, you've got the transparency bit, which I understand is damaging. Because it reinforces

the idea that the Clinton campaign is always hiding something. But just the raw fact that she has collapsed. She has pneumonia. She is 68, and

frankly she doesn't look very well last week. How damaging is it?

BORGER: I think people get pneumonia, they recover from it. I think the transparency is a larger issue. And by the way, let's be fair about this.

Transparency is an issue on both sides. We don't know much about Donald Trump's health other than a letter he got from a doctor saying his labs

were astonishingly excellent or whatever. And he has said he took a physical, and we'll get the results from that. But that's just a snapshot.

We know more about Hillary Clinton's health, but I would argue we still don't know enough, and they're going to release more.

The problem for Hillary Clinton here is that this plays into a pre-existing narrative about her, and that is the secrecy as you point out. And so that

becomes a larger problem. I would also say that Donald Trump has not released his tax returns. And when you want to call for Hillary Clinton to

be transparent, you have to be careful if you're Donald Trump, because he has not been transparent on his taxes.

So today, instead of dwelling on the health issue, he was very nice to Hillary Clinton. It sounded like he wanted to send her flowers, right? In

fact, he was focusing on some of the things she said about his supporter. The basket of deplorables, right, if you will.

[16:25:00] So he didn't want to focus on that either, because he realizes that he needs to leave that alone and that he does have his own

transparency problems. So if you're an American voter out there and you're looking at this and you're going, Ok, what do I know? Not much.

QUEST: basket of deplorable's, pneumonia and tax returns.

BORGER: Stay tuned.

QUEST: And we still have eight weeks to go. Good to see you, Gloria, thank you.

BORGER: Good to see you.

QUEST: Shares of Samsung fell very heavily as a company is struggling to contain a crisis involving the flagship phone it only just launched. The

stock was down 7 percent in South Korea. 14 billion gone off its market value. Now Samsung is urging customers to stop using the new Galaxy Note 7

and bring it in for a replacement. So far there have been 35 incidents of the phone battery exploding or catching on fire. Pete Pachal is the tech

editor at digital media company, Mashable. It doesn't get much worse than this. God forbid short of actually somebody being killed or maimed. But

just as a branding, this is --

PETE PACHAL, TECH EDITOR, MASHABLE: Yes, bad for Samsung, good for Apple. Because would not think of a better Christmas gift for Apple who just

released their new iPhones. Of course, Samsung, their new flagship, right, just came out and suddenly it is mired by the worst thing you could --

products get recalled for defects all of the time, this is a safety issue, which goes even beyond that. And you know, fortunately there haven't been

many reports of people getting hurt. Although there was one just over the weekend.

QUEST: The boy in New York.

PACHAL: Yes, yes.

QUEST: And we've also had the reports, the FAA has basically said to people, you can't charge your Samsung's in the air in case they overheat.

PACHAL: Yes, and they're scourging people to use them. I'm kind of suspect of what sort of screening process or how they're going to tell who

is using what phone. But I mean, when the airline starts stepping in and other airlines worldwide have actually banned the phone, you know this is

pretty serious. Not that people, I think are all that excited to use their Note 7's in the first place.

QUEST: So what is the answer for Samsung? They're now facing the largest reputational crisis that a company can face at the highest form of


PACHAL: Yes, if you think about what this is going to do to their brand as a smart phone vendor. I mean, yes, they're going to fix this problem.

They're going to send replacement phones to people who want them, but long term, I mean you think to next year's flagship phone launch that they have,

this is going to be on everyone's mind. This is going to be like, honestly, it's incalculable what this is going to do to their brand. It

could be in the billions in terms of what they suffer.

QUEST: The number of incidents, 35, give or take, it's -- it is not in the hundreds. It is relatively small, are we --

PACHAL: And if you think about how many phones they actually make.

QUEST: Are we blowing this out of proportion?

PACHAL: When it comes to batteries, it's very hard to blow it out of proportion. Because it's kind of like the S35 out of how many million, you

kind of like, you might think I like those odds, but I really don't think that many people are thinking that. Especially when you have other brands

whose phones, pretty much every other brand, don't explode at all. I mean I wouldn't say they're 0 percent for not exploding. The thing is lithium

ion batteries, I mean there a tricky thing. And it took a while to get them right. I don't know if you remember, about 10 years ago there were

laptop battery issues with certain batches from Sony. They fixed a lot of these QA issues. And I'm not exactly sure what happened this time around.

I think it was a new subsidiary of Samsung that supply needs. But I mean - -

QUEST: Something tells me they will not be lasting much longer.

PACHAL: Yes, it's basically that the one thing you cannot get wrong in making electronic today is making sure those batteries are safe. And they

didn't do it this time out.

QUEST: And we're grateful to you sir, came in to talk to us about it. Thank you. And come back and give us an update, please, when we know more

about it, thank you.

PACHAL: Absolutely.

QUEST: Perhaps more in hope than expectation, a period of relative calm begins in Syria. Officially that's the position. While the cease-fire

that's in place for just a few hours now. Arwa Damon will be with us to update us on it in just a moment. It's QUEST MEANS BUSINESS after the

break. Wrap


QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. We're going to tell you how Brussels is going up the red

carpet for its former president. And the director of the British Chamber of Commerce insists the U.K. companies are not fat and lazy. Before we get

to that story, this is CNN, and here on this network the news will always come first.

Thousands of Syrians are hoping a cease fire will allow them access to aide what they so desperately need. It's the idea behind the truce which was

brokered last week by the United States and Russia. The cease fire started a few hours ago at sunset. There had been defiant words from the Syrian

president Bashar al Assad is vowing to take back every piece of land from who he calls "the terrorists. And we will be talking to Arwa Damon who is

covering the story immediately after this news.

Pyongyang is responding to deadly flooding in North Korea's northeast with a rare public appeal for help. The state media is reporting that tens of

thousands of buildings have been destroyed. It's being described as flooding from the heaviest downpour since 1945. The United Nations citing

the government data says 133 people have been killed.

Hillary Clinton's presidential campaign is facing criticism for not revealing earlier that she was suffering from pneumonia. Mrs. Clinton as

you see here was seen stumbling into her van on Sunday as she left the 9/11 memorial. The doctor only then revealed that she'd been diagnosed with

pneumonia two days earlier. Hillary Clinton has canceled a campaign trip to California while she recovers.

The former British Prime Minister, David Cameron has decided to resign as a member of Parliament. He says he risked becoming a divergent for the

important issues facing the government. Mr. Cameron was prime minister from 2010 until July of this year. He stepped down after the U.K. voted to

leave the European Union.


DAVID CAMERON, FORMER BRITISH PRIME MINISTER: Have I thought about this moment hard over the summer? And I've decided that the right thing to do

is to stand down as the member of Parliament for Whitney. They'll be a by election. I will give the conservative candidate my full support. But in

my view with modern politics, with the circumstances of my resignation, it isn't really possible to be a proper backbench MP as a former Prime

Minister. I think everything you do will become a big distraction and a big diversion from what the government needs to do for our country.


QUEST: Let's return to Syria. Our senior international correspondent, Arwa Damon has the latest on the story. She joins us now from the border

between Turkey and Syria. Arwa, there is so much hope riding on this ceasefire agreement. And why should we have any further belief it's going

to hold more than the previous ones?

ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: I don't think the issue is and the reason why there is so much hope is that anyone really

believes it is going to hold. But that is that people inside Syria have left is hope.

[16:35:00] And even if all they get is a few hours or a few days, at least that is a brief period of time where they feel they have something that is

eluding them. That is this relative sense of security and a window that could allow that humanitarian aid to move in the besieged areas.

But I think what is key here that when talk about calm descending upon Syria, it is very relative and even now in the first few hours of this

agreement being implemented we have instances of artillery being fired, helicopter gunships being deployed, most of it in an around the area of

Aleppo, but this is part of a pattern of ceasefires past.

Leading up to them you do see an intensification and bombardment and you do see these kinds of violations taking place on a smaller scale. What a lot

of people are going to be looking toward is are they going to get the aid and this going to last longer than previous cease fires?

QUEST: Where is the aid coming from and is there any sign of it arriving?

DAMON: Most of the aid will be moving through the Turkish border to the besieged areas in Aleppo. The trucks were being packed and readied at the

border. Major aid organizations waiting see how the situation on the ground plays out.

Because the areas that they cross through are not controlled by just one group, they are controlled by multiple different rebel groups. As well as

the regime itself. And the other issue too, Richard, is not just whether or not aid arrives but what happens over the next few days, the rebels very

reluctantly signed on to this agreement. That is by and large because the Russians and the Americans want to maintain the ability to confront the old

Al Qaeda affiliate.

In a lot of areas, the groups are heavily intertwined with other rebel groups, and if they're taken out of the equation, that means the well-

equipped -- they're afraid that will swing the battlefield in the direction of their regime.

QUEST: You have covered this conflict since day one. I need your assessment of the situation tonight.

DAMON: I think that that the world said never again, and it would never allow massacres to happen again. I think global leaders have a greater

burden of responsibility on themselves to push their proxies in Syria. I think a lot of nations are focused on what their own personal interests

are. They failed the Syrian population years ago by not putting them and their security first and foremost. We cannot emphasize how imperative it

is that every leader and nation that has the ability to influence the nation influence it to the max and put aside their broader interests.

QUEST: Thank you.

As we continue tonight, Jose Manuel Barroso is the former president of the European Commission. Now to become the chairman of Goldman Sachs

International. And perhaps persona non grata in Brussels.


[16:41:07] QUEST: Traditionally, the European Union, the commission has put out the red carpet for the arrival even of former leaders. Now they're

rolling up the red carpet for Jose Manual Barroso. He is the subject of an ethics probe for his involvement with his new job, Goldman Sachs.

And as a result, now there are many questions about how he should be treated and the questions of conflict of interest. Let me remind you, so

as they roll up the red carpet, let's remind ourselves about him. He was the European Commission president for ten years and he led the commission

through the financial crisis.

Many say he was doing the work of Wall Street and the financial community maybe even Goldman Sachs as he made the austerity measures. Once he

resigned. He waited the minimum 18 months before moving from the public to the private sector. And he was hired by Goldman Sachs.

Now Jean Claude Juncker the new president has said he wants to revoke the red carpet privileges for returning leaders. He will no longer be received

in Brussels as a former president. He is to be treated as just an interest representative.

In other words, from president to chairman to lobbyist. He is to be treated like everybody else. Jose Manuel Barroso is no longer a member of

the red carpet. Sven Giegold is a member of the European Parliament who says this is also a shameful symbol of Brussels revolving door.

He joins me from the EU Parliament in Strasberg. The truth is that Barroso himself has done absolutely nothing wrong, he's followed the rules, he

waited the required length of time, and he has another job.

SVEN GIEGOLD, MEMBER OF EUROPEAN PARLIAMENT: He has done things wrongly, because the treaty says clearly that in particular, former commissioners

have to be very careful which jobs they take up. He might have followed the detailed rules, he certainly has not fulfilled the spirit of the

treaty, and more and more European people have severe questions about whether European institutions really follow the common interest. And these

revolving door cases are really a slap in the face of everyone that tries to hold up integrity of the institutions.

QUEST: So there are two sides to the equation here. First is what behavior he might have done when in office to, if you like, further the

Goldman Sachs cause knowing he would join them afterwards. I don't anyone is seriously suggesting that he behaved in that way.

So tell me what is wrong with him joining Goldman Sachs after he left office.

GIEGOLD: First, I would like to tackle the first issue you raised. If people who are in the public interest, acting in the public interest can

expect they can take up later a much better paid job exactly in the services and the areas of industry that they were regulating before.

[16:45:00] Then the citizens have good reason to assume that regulation will be less tough because people don't want to close the door toward a

better paid job later.

That is why we should close the door. Even if Barroso himself didn't behave that way,

Or we can't prove that at least, still it is a case which simply should not happen.

QUEST: It will be very difficult and some would argue a breach of his human rights to say after you have been president, you can never work for

x, y, or z, or never work in a particular industry.

GIEGOLD: I would disagree, that's not a human right, there are lots of contracts in the private sector that have a lot of clauses. They do not

ask to move without a certain period of time to a competitor and for the knowledge you have gained. Why should we not protect the public sector in

that way.

QUEST: That's right, a nondisclosure or non-compete clauses are usually limited by courts in some cases in fact very few courts have ever allowed

them to go much beyond a year or 18 months.

GIEGOLD: I doubt this is a global standard, and we can see how sensitive that is if you look at the American finance ministry and the revolving door

between big investment banks and the treasury. This has been clearly one of the links that made the financial crisis possible.

And we should learn from that case. And try really to separate better the public interest and the private interest. If we do not separate these two

spheres more we have a true problem of potential conflict of interest and respect of the citizens.

QUEST: Do you not fear in all of this that if you do close the revolving door -- and I agree with you, sir, that you should have a revolving door

that moves a lot more slowly. But do you not agree if you shut it completely you will never get that top quality executive that says I will

work in the public sector, but yes, thereafter, I will make money in the private sector.

GIEGOLD: I must say I have seen a lot of top quality public sector in Germany without any revolving door offers involved. I don't think this is

needed. But I agree with you we should not ban everything because it is such a lot of fun. But when there is potential conflict of interest there

should be long revolving doors, if you move into a sector which you haven't regulated before I don't see any problem. But if there was potential

conflict of interest this revolving door should really be closed.

QUEST: We are very grateful, sir, that you've come on tonight and talked about it, it is an important issue, I'm glad to have your perspective,

thank you, sir.

As we continue tonight, by the way, my views on this, it is in our newsletter tonight.

It is where you can subscribe to it. My view on this is don't blame Barroso for the bad rules of the European Commission.

Now as we continue, the British Chambers of Commerce has cut its forecast for the U.K. in light of the Brexit vote. It cites weak consumer spending

and a fall in investment. It scaled back for three years, its forecast, and this year it is down to 1.8 percent from 2,2 percent, with deeper cuts

in 2017. The BC's acting director told Nina Dos Santos Britain will avoid a recession and bounce back in 2018.


ADAM MARSHALL, ACTING DIRECTOR GENERAL, BRITISH CHAMBERS OF COMMERCE: What you do know right now is that whilst individual businesses are doing well,

there are a lot of companies out there pausing invest and waiting to see what happens. The weak pound is hitting some consumers here in the U.K. as

well. Because of course imported goods are starting to get more expensive, too.

NINA DOS SANTOS, CNN MONEY EUROPE EDITOR: Are you starting to hear from some of your members that they are having to absorb those price increases,

because the input costs of goods they use, and manufacture from or sell from, they will be more expensive because they're paying for them in pounds

and the value of the pound is falling. Do they transfer that to the consumer?

MARSHALL: Absolutely. It is a mixed picture. When you have an exporter that is part of a global supply chain is importing in dollars or euros or

in another currency, they are feeling that squeeze. So they don't get as much benefit from lower sterling.

[16:50:00] As an exporter for example who sources their goods here in the U.K. and then send them further afield. So I think what businesses really

want from sterling is stability, they don't want low sterling or exceptionally high sterling. That is where they're most comfortable.

DOS SANTOS: Now speaking of exporters, Liam Fox the new business secretary has come under a lot of pressure lately because he made some very

unfortunate comments about how apparently according to him, "Businesses in this country are fat and lazy and a lot of people spend too much on golf

course and not in the board room." This seems to be rather unhelpful comments coming from the person that will be helping to negotiate the

U.K.'s position on business as it negotiates its way out of the EU.

MARSHALL: I'm in a pretty privileged position. I work with shows thousands and thousands of really, really committed businesses. All of

whom are out there trying to do more business be that in the U.K. or overseas. I think the important thing to take away from this particular

set of comments is this, businesses and government need to work together. This is a big transition. Let's do it as constructively as we can on both


DOS SANTOS: Do you see any evidence of businesses you deal with being lazy?

MARSHALL: I certainly do not, I visit chambers of commerce up and down the country. And while the mood at the moment is decidedly mixed, some are

incredibly optimistic, and some are a little more uncertain. What I don't see is anyone taking their foot off of the gas., I see then working

incredibly hard.

QUEST: Hundreds of thousands of Japanese young adults are withdrawing from society and living reclusive lives. Why? After the break.


QUEST: Oil prices are recovering from a losing streak that started last week and continued rather through early Monday trade. Look at how Brent

crude is trading, it fell 2 percent because of the new data coming out of Saudi Arabia and Iran. Those two OPEC members are pumping more and more

oil. Our emerging markets editor John Defterios reports on the oil position.

JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Richard, the oil market is getting the jitters yet again. The issue is not demand, which is actually

rising, but it is supply coming from major hitters. In the monthly outlook, OPEC said crude output remains near a record. Over 33 million

barrels a day.

The headline here is that regional rivals, Saudi Arabia and Iran continue to produce even more barrels. Saudi Arabia 10.6 million a day, Iran now

over 3.6 million a day after the lifting of sanctions, Iran added 800,000 barrels from the 2015 level.

It is a high stakes geo-political game within OPEC ahead of an informal meeting of the world's largest producers later this month in Algeria.

Saudi Arabia and Russia recently floated the idea of energy cooperation and a potential freeze of their already high levels of output, but a formal

deal has not materialized. As prices rose to $50 a barrel twice in the last three months, U.S. oil companies decided to add more rigs.

[16:55:04] The so-called rig count rose to 414 the most since February. Meanwhile, the market is growing more skeptical by the day. The

international benchmark North Sea Brent has traded in a range of $40 to $50 a barrel since June. And now the view is there is no good reason to push

it higher.

QUEST: John Defterios in Abu Dhabi. We'll have Profitable Moment after the break.


QUEST: Tonight's Profitable Moment, so Jose Manuel Barroso has cause a fire storm over joining Goldman Sachs and now everybody wants to impugn the

man's dignity and integrity. Questioning whether the decisions he took as president of the commission during the great financial crisis, were they to

further the cause of Goldman, knowing that he might join them afterwards when he ceased to be in office?

I can well see the argument that says you have to guard against conflict of interest. That is certainly true. And the correct and proper

restrictions, or restraint of trade after you leave a job is the way you go about it. The EU has done that with an 18-month waiting period.

Maybe you need to take it to 24 months or 36 months. But I promise you this, if you tell people they can never work in a particular industry if

they go into public life, you will never get the top executives and the top echelons of society. Reality is, the revolving door works, you've just got

to make sure it revolves at the right speed.

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.

We'll do it again tomorrow. Goodnight.