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QUEST MEANS BUSINESS
Paul Ryan Says He Won't Defend Donald Trump; Buffett Hits Back at Trump Over Taxes; Lagarde: Respect Women and One Another; Lagarde: Everything is Better with Growth; Dow Rises as Investors Digest Bitter U.S. Debate; Samsung Stops Producing "Exploding" Phones; Hungarian Newspaper Abruptly Closes; Contact Theorists Awarded Nobel Economics Prize; Tecate "Beer Wall" Ad Combats Debate Rhetoric. Aired 4-5p ET
Aired October 10, 2016 - 16:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN ANCHOR: The start of a new week, the Dow was out of the gate and never looked back. Gains the best part of 100 points.
Just over 90 points on the large earnings industrials a very busy hour ahead. The gentleman of the podium will do the business.
That, sir, was a wimpy gavel to end trading at the beginning of a new week on Monday. It's October 10. Tonight, you're on your own, speaker of the
house says he won't support Donald Trump any more. Warren Buffet gives Mr. Trump a fact-check in the battle of the billionaires, and explosive scandal
that keeps on giving literally. Samsung's phones are still blowing up. Will they blow up the company? I'm Richard Quest, we start a new week and
I mean business.
Good evening, tonight Republicans have been given the green light to drop Donald Trump or at least remove themselves as far away as possible. From
the man who is regarded as toxic for the rest of the Republican party slated. The party's top man in congress is the house speaker Paul Ryan,
and he said today that he will no longer defend or campaign with Mr. Trump, and he is telling his colleagues they have no obligation to do so either.
Any hope that last night's debate performance could piece the tattered Republican party back together again, evaporated with Ryan's comments, the
controversy over Trump's lewd remarks about groping women have proved to be a deal breaker for speaker Ryan.
It was an emergency conference call and he told his fellow Republicans that you all need to do what is best for you and your district. And the latest
polling numbers show voters are flocking to Hillary Clinton after Trump had what must be the worst weekend, that is an understatement, it was the worst
weekend for any political campaign in living memory.
A new NBC Wall Street Journal poll is now giving the secretary an 11-point lead. So Mark Preston, the executive editor of CNN Politics. First of
all, so much to get to. Let's start, speaker Ryan, he says he is going to be entirely focused on other races. Are we reading too much into this, or
has he literally said that is it?
MARK PRESTON, EXECUTIVE EDITOR, CNN POLITICS: That's it. Well, what he has done is basically a couple things for our viewers who don't know who
Paul Ryan is, he is someone who is a family man. He is known to have a very good reputation. He's young. He also has a future political career
running for the White House himself. He did run as Mitt Romney's vice presidential nominee in 2012.
He's all but let go of Donald Trump. And by doing so what he hasn't done is come out and say, I am taking back my endorsement of Donald Trump, he is
still leaving that on the table for those Republicans who still want to back Donald Trump. But as you said, so accurately at the top, he is
telling all his Republicans break loose from him, get out, go and win reelection.
QUEST: Is he doing that because he has a visceral dislike of Trump and what he has done, or is it doing it because he recognizes that Trump is
very likely to lose at the moment if that's the way the polls are going at the moment, and therefore he has to protect candidates lower down the
PRESTON: You're right on both fronts, Paul Ryan does have a political future ahead of himself, and what will happen in two, three, or eight years
from now, Republicans are going to look at themselves and say where were you when Donald Trump brought those four women into the debate hall.
QUEST: And that was going to be my point. Are we heading to a situation for the Republican party to paraphrase the old saying, daddy, what did you
do in the war?
QUEST: In three years' time, the question will be, did you support Donald Trump? And if you did, why?
PRESTON: Right, we might even be four or five months after November, so talk about the New Year, get us into March, April, May months when Hillary
Clinton will, assuming she wins, so correctly the bottom line is Hillary Clinton right now is going to win the presidency, but by April, May, June,
when she is in the White House, Republicans are looking at themselves saying how did we let her in the White House?
[16:05:00] QUEST: Isn't this an example of what Barack Obama said in his first major speech in support of Hillary Clinton when he said are at what
point are Republicans going to say, "enough is enough?
PRESTON: Yes, you know the interesting thing about Donald Trump which is so misinterpreted is that people say that he has the support of the people
but that is not necessarily true. He had the support of the far end reaches of the Republican party and disaffected folks who looking at the
economy and felt left behind. But that is a far cry from winning the overall general electorate.
QUEST: I need to take you back to last night. I was saying to you earlier I sat on my sofa watching it and it was a toe curling, cringing experience.
Let's remind ourselves of what it was like.
(BEGIN VIDEO CLIP)
DONALD TRUMP, REPUBLICAN PRESIDENTIAL CANDIDATE: But if I win, I will instruct my attorney general to get a special prosecutor to look into your
situation. There have never been so many lies or so much deception.
HILLARY CLINTON, DEMOCRATIC PRESIDENTIAL CANDIDATE: It is just awfully good that someone with the temperament of Donald Trump is not in charge of
the law in our country.
TRUMP: Because you would be in jail.
CLINTON: OK, Donald, I know you're into big diversion tonight. Anything to avoid talking about your campaign and the way it has exploding and the
way Republicans are leaving you.
TRUMP: Honest Abe never lied, that is the good thing, that is the difference between Abraham Lincoln and you.
(END VIDEO CLIP)
PRESTON: He also called her the devil.
QUEST: He did, but he called her that before. He used that before, he said she is the devil.
PRESTON: But just so our viewers know around the world here, this is one of those stages where you're supposed to be respectful of one another.
There are very few of them left. This debate hall is supposed to be sacred.
QUEST: How long have you been covering politics?
PRESTON: Wow, 30 years, 25 years.
QUEST: Give me that feeling as you sat, where ever you were watching it, how did you feel?
PRESTON: Let me answer from the standpoint as a parent, with an 11 and 12- year old. Where are we going? How do we get here, how do we turn it around? And quite frankly again for everyone around the world who is
looking in here at us, Richard, saying what is going on with the United States? They're supposed to be a leader.
Now, Donald Trump, you may support his policies but this has nothing to do with Trump's policies, but it has to do with his actions and the way he has
been acting is kind of embarrassing.
PRESTON: Good to see you, sir. Thank you. Now Warren Buffett has rubbished Donald Trump's claims that he is avoiding taxes in the same way
as Mr. Trump. Trump himself finally admitted during the debate he has avoided income tax for years, and he said that Warren Buffett was up to it
(BEGIN VIDEO CLIP)
ANDERSON COOPER, CNN ANCHOR: Did you use that $900 million loss to avoid paying personal federal income taxes.
TRUMP: Of course I do and so all of her donors or most of her donors. I many of her donors, her donors took massive tax write offs. I pay hundreds
of millions. Many of her friends took bigger massive deductions. Warren Buffett took a massive deduction, Soros, who is a friend of hers took as
massive deduction. Many of the people who are giving her all of this money that she can do many more commercials than me,
took massive deductions.
(END VIDEO CLIP)
QUEST: Now Warren Buffett has responded saying he paid close to $2 million in federal income taxes last year. And this is his statement. He said Mr.
Trump knows more about taxes than any other human, he has not seen my income tax return, but
I am happy to give him the facts. I have paid federal income tax every year since 1944.
I have been audited by the IRS multiple times and I'm currently being audited. I have no problem in releasing my tax information while under
audit. Neither would Mr. Trump, at least, he would have no legal problem. Oh boy. Mark Preston just took the politics of it, Warren Buffett, you
don't attack him. He is the granddaddy of the financial world.
PAUL R. LA MONICA, CNN DIGITAL CORRESPONDENT: You are correct. I think it is a big miscalculation on the part of Donald Trump to attack Warren
Buffett because Buffett is not going to sit idly by. Obviously he hasn't and what he has pointed out as you already said, he has been under audit
and is still disclosing some of these tax numbers, also Buffett pointed out $2.85 billion or so in charitable contributions and he doesn't try to take
deductions. Has Trump contributed anything alone those lines to charity?
[16:10:00] QUEST: Let's put this back into some reality then. If Donald Trump was entitled, under the tax code that goes back to Herbert Hoover,
1918 is when this tax provision that allows you to a non-operating losses carry forward for 18 years. If he is entitled to do that, why should he be
blamed for doing it?
LA MONICA: That is a great question and you could argue that he shouldn't be blamed for legally taking advantage of the tax laws. I think the issue
that many people, American voters, obviously Hillary Clinton and her supporters have is that if there is nothing for you to hide, why are you
not disclosing all of your tax returns in the way that all candidates have done in the past? If you're really going to say hey, I'm allowed to do
this, then show us the numbers. He hasn't done that.
QUEST: And, I can go further, even if he doesn't want to release them under audit, there are many years pre-audit that could be released.
LA MONICA: Yes, there are plenty of tax returns that he could release, not the ones that are in dispute. Also people talk about the gold standard
that John McCain set when he was running for president where he sat down everyone that was covering him and went through pages and pages of his
documents. Trump could do that if he chose and he hasn't.
QUEST: I am not asking you to take sides, but if you were to look and see in the battle between Trump versus Buffett as a result of last night's
altercation, who won?
LA MONICA: I think you would have to say Warren Buffett. He usually does win and in this case, he has numbers backing him up, Trump does not.
QUEST: We're delighted you're here as always. Thanks. Now we continue.
Christine Lagarde tells me she is shouting because I wondered whether anyone is listening. The managing director on how monetary policy has done
its bit. Fiscal policy now needs to work harder, and why she says everything is better with butter.
QUEST: One of the world's most influential women, Christine Lagarde, says she has no interest in anyone with does not respect the dignity of women.
Over the past year, the IMF chief has responded to Donald Trump's anti- trade, anti-immigration, and anti-globalization messages always with fact based rebuttals. This time speaking to me at the annual meetings in
Washington. She reacted to the caught on tape comments.
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, MANAGING DIRECTOR, IMF: I spent a lot of my time, energy, in my life to defend women. To fight for women, to make sure that
women are respected, to make sure people understand how much they contribute. Including in this institution the IMF, and I think anything
that is not in that category of respect, dignity is of zero interest to me.
[16:15:03] QUEST: I obviously understand and appreciate that you are not going to involve yourself in the U.S. political system or make a political
comment, but the fact that this has been said in this way, coming out now, as one of the world's most influential women, what message do you send as a
result of that?
LAGARDE: Respect women, and the dignity of human being to actually respect one another.
QUEST: Taking that forward then, how does the process factor in these sort of events? The political process factor in these sort of events, do you
think? Obviously everyone has to work out what happens next. And again I realize you don't want to comment on the U.S. political process, but it
feeds into this bigger issue of what is happening in society at the moment, don't you think?
LAGARDE: I think all of us -- I'm trying to look at things from where I stand and what I have to do as a mission for the IMF. I think our job is
to explain in intelligent, understandable terms the things we see about life, about jobs, about the economy, about security, about climate change.
About corruption and inequality.
And propose solutions to remedy the problems that we are observing. I think people critically want to get jobs. They want to be integrated in
society. They want to be respected, they want dignity. There are lots of economic ways to address that, they are all sorts of other ways.
Political, sociological, blah blah blah, you name it. But from my perspective, I think our duty is to propose solutions that address real
problems that we have today. And there are plenty of them, but there are also plenty of solutions. And that is what I want to work on.
QUEST: You have described your -- the mantra I come away from the meetings. Growth has been -- what's your phrase?
LAGARDE: It is too low, for too long, benefitting too few.
QUEST: Is anyone listening to you?
LAGARDE: They better listen, because I'm going to shout this morning.
QUEST: I'm sorry, you're going to shout?
LAGARDE: I'm going to be a lot punchier, and I would like them to go away thinking what can I do? I can do something even if I'm in this fiscal
constrained environment, even if I have exhausted my structural reforms, even if I think that monetary policy exhausted, we can do something, that's
what I want to say.
QUEST: OK. So with that shouting as much as one does.
LAGARDE: I will be firmly explaining on that.
QUEST: Firmly. Firmly explaining, right. As you firmly explain, do you think the leaders, finance ministers, prime ministers, presidents, people
you meet, do you think they get it? That they're in a new environment of angry populous who are prepared to rebel?
LAGARDE: They know they need to create economic conditions that respond to people's expectations. What is my future, what will be my job tomorrow, do
my kids receive the right education for the job that's will be out there tomorrow? Am I secure in my day to day life? Those are the concerns of
people, they have to answer, the best way from an economic point of view is to answer is to have some growth. They can create collectively, they can
collectively create the conditions for more and better growth.
QUEST: As your grandmother said --
LAGARDE: Everything is better with butter, everything is better with growth.
QUEST: There you have it, everything is better with butter. Everything is better with growth. You knew what she meant by that, didn't you?
Wonderful to see you by the way. You know what she meant by the butter reference?
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: Without growth, you cannot get other things better, which is the politics, the social element.
And if you don't get growth, it's not just bread without butter, it's very sour bread. Things start to break down and we're starting to see that.
QUEST: You were at the IMF as we were last week, what do you come away from the meetings, you heard what the managing director -- what did you
come away from it feeling?
EL-ERIAN: I came away with three things. One is recognition that we really have a problem. The slow growth has now evolved into a political
problem, a social problem, and financial problem. Second, recognition that the policy response needs to go beyond central banks. That central banks
cannot be the only game in town, and we actually have consensus on what is needed. But third and unfortunately very little hope that the economic
thinking will be translated into political implementation. Because the view of the system is that it is just dysfunctional politically.
[16:20:02] QUEST: If you're right, on your third point, what happens? Do we just end up with sclerotic growth for the foreseeable future with
occasional bursts Trump, Brexit?
EL-ERIAN: The consensus is that we continue with this, it's called secular stagnation, the new mediocre, the new normal. I believe this consensus is
wrong. I believe you cannot maintain low growth for so long. Already we have negative interest rates eating away at the integrity of the system.
We have the politics getting complicated, I think we tip, but where we tip is not predestined. It depends on the decisions that are going to be made.
QUEST: By tip what do you mean?
EL-ERIAN: By tip I mean either low growth becomes recession, and artificial financial stability becomes unsettling instability or we take a
good turnout of what I call the T junction and we get to higher inclusive growth.
QUEST: If we have not managed to get growth with interest rates at de facto zero in the developed world, what is it going to take? The MD talked
about structural reform. You've talked about structural reform. The leaders tell me -- the finance minister of Spain says they have done the
EL-ERIAN: You need four things, and we haven't done them all. This is not a great engineering problem. Most economist agree. One, you need
structural reforms and we can go further. Infrastructure spending, corporate spending, labor market free fall. Better education.
Two, a more balance among management. Not just monetary policy but fiscal policy, too.
QUEST: But does fiscal policy have room. Some countries do, arguably, but you mention the idea of more fiscal spending to Wolfgang Schaubler as we
did at the IMF and he starts getting excited.
EL-ERIAN: And I think that is a mistake. I think he has got room, and I think it is absurd not to be investing in infrastructure in Europe when
interest rates are negative. It makes no sense. We're hostage of a view of the world that is outdated.
QUEST: That would rely on more deficit spending. And to run -- larger budget deficits and certainly worsen the debt to GDP ratios for example
outside of Maastricht.
EL-ERIAN: So why do we worry about debt? We worry about debt sustainability. That is a fraction. Up here is debt, down here is growth.
So if through investment you can promote higher growth, you can improve your debt situation.
QUEST: But how long will that take? Interest rates are at six to nine- months lag. And we always thought that was slow. Fiscal policy can be quite quick if you cut taxes, but infrastructure spending as a way of
developing growth could take months if not years.
EL-ERIAN: Here is the good news. Right now risk taking by companies is down here. And the reason is they don't see clarity. If you get a
political response, you can unleash trillions of dollars that are currently sitting on sideline and they will do the heavy lifting for you.
QUEST: Are you worried by what you saw last week with sterling and the level of uncertainty with the pound?
EL-ERIAN: I'm worried about a prime minister coming up with three comments -- she is not running for office. She is in office. One, criticizing the
Bank of England, that is a mistake --
QUEST: This is her comment about Mark Carney saying we're going to change it?
EL-ERIAN: Saying monetary policy has had too much side effects, she's right but she shouldn't say it. Two, importantly, she signaled hard
Brexit. That is why sterling fell. And sterling will fall further, if it is a hard Brexit.
QUEST: Isn't she just being realistic when she signals hard Brexit which most people now are starting to think that is exactly what it will be. The
sooner we all get used to a hard Brexit the better.
EL-ERIAN: It need not be. It can be a soft Brexit. The U.K. can maintain quite a bit of its free trade and financial prosperity
arrangement, why, because it is also in the interest of Europe. But if both sides insist on a hard Brexit, both sides will suffer.
QUEST: Did you see the debate last night?
EL-ERIAN: I did.
QUEST: What was your in-the-gut reaction when you watched the two of them at it?
EL ERIAN: I thought it was very sad that we got to this point, that the divisions are so deep, that we can't have a coherent discussion on what is
QUEST: Wonderful to see you and to have you here and a rare event. We have the master of global economics, sir, please, have a ding --
EL-ERIAN: What an honor.
QUEST: The grace and dignity by which you did it. Wonderful to see you. The presidential debate, Hillary Clinton and Donald Trump might have been
bitter, investors on Wall Street were singing a sweet tune on Monday.
[16:25:00] Good to see you. Look at that up .5 percent, 88. Heather Long is here with the good news for the Secretary Clinton economic indicators
showing that she won last night's debate. And I was going to ask you about the Dow, why did the Dow go 88 points? Just because it didn't go down?
HEATHER LONG, CNN MONEY SENIOR WRITER AND EDITOR: There was certainly wasn't any economic news today, right? U.S. government is closed. A lot
of people are saying this is the Hillary Clinton bounce. However, after the first debate, the Dow was up 133 points. Not quite as good of a
performance today but still very positive for her.
QUEST: Let's look at these barometers. Which one are we going to focus on? Remembering how this works, the barometer shows whether the movement
of the asset class is good for secretary Clinton or Donald Trump.
LONG: Let's hit that stocks one first.
LONG: So you're probably saying is it broken? Why did it go to Trump? We just said, wait a minute, isn't that showing a Clinton bounce? Stocks went
up today. However, the time tested stock market test for who will win the election, you to look at the change between August first and October
thirty-first. And right now the stock market is slightly below where it was on august first, so that leans towards Trump. So it went up today, but
the overall change from the past several weeks is lower.
QUEST: And that should suggest, though, if this is going to follow the polls, this needle over the next few weeks will move in this direction?
LONG: Yes. We certainly saw that today.
QUEST: Or the barometer is wrong? Next one. Gold prices.
LONG: Very good for Clinton. Gold has been dropping in price. When do people go buy gold? When they're nervous. They were nervous around
Brexit. Gold shoots up. We saw that again throughout the summer as Trump narrowed in the polls. Last week, it fell below that magic $1300 an ounce
number, and it certainly doesn't seem to be getting anywhere close.
QUEST: So one of the big things we've all been looking at is the Mexican peso and the Mexican peso index. On the first debate the peso did
extremely strongly on the back of a very strong performance by secretary Clinton. Now if we look at the peso now, it didn't -- it was only up --
LONG: Maybe it should be over here.
QUEST: It makes the point.
LONG: It makes the point but it was interesting because it surged before the debate even began. So a lot of people were saying, OK, that 2 percent
jump in the peso, that was actually a reaction to the bombshell tape that came out Friday night. But by the time the debate started, it still ended
higher but it was only just over a percent.
QUEST: Finally, I want to go back to stocks, just mind our dear viewer joining us what we need to look for in the stock market over the next few
weeks that will be the potential for barometer for who wins.
LONG: That's right if the stock market increases and keeps rising, that is a very good sign for Hillary Clinton. It means people are bullish, they
want to keep going on the track that we are one. If not, maybe they are nervous like you and Mohamed El-Erian
were just talking about, they're a little bit nervous about what is going on in the United States. Why is the growth slowing down?
QUEST: Good to see you, you'll be here again to help us understand it. QUEST MEANS BUSINESS as we carry on tonight, in the next half hour, it is
the other story we're covering where the subject is literally going up in flames. It's not figurative, it's
not political. Oh, I assure you it is quite literal. And on this occasion, not everything is better with butter.
[16:30:00] (COMMERCIAL BREAK)
QUEST: I'm Richard Quest, more QUEST MEANS BUSINESS in just a moment. When a Mexican beer company is trying to bring together American voters. I
will be talking to the president of that company. And the winner of this year's Nobel Prize for economics tells me how he will be celebrating this
All of that and more, this is CNN and on this network, the news always comes first.
The Republican party in the U.S. appears to be bracing for the possibility of a presidential election loss in November. The house speaker Paul Ryan
who endorsed Donald Trump is now telling Republican congressmen on Monday he will no longer defend the candidate. He said instead he is focusing on
maintaining GOP majorities in congress.
The running mate, Mike Pence, says he is not abandoning Trump. Even though dozens of his fellow Republicans have withdrawn their endorsements.
Governor Pence told CNN that any rumor he was dropping out was simply not true.
(BEGIN VIDEO CLIP)
MIKE PENCE, REPUBLICAN VICE PRESIDENTIAL CANDIDATE: Well, you know, I always keep my conversations with Donald Trump and my family private, but
it is false to suggest that at any point in time we considered dropping off this ticket, it's the greatest honor of my life to have been nominated by
my party to be the next vice president of the United States of America.
(END VIDEO CLIP)
QUEST: The U.N. high commissioner for human rights is denouncing a deadly airstrike on a funeral in Yemen's capital. The attack om Saturday killed
more than 150 people, the commissioner is calling it outrageous and demanding an international inquiry of the Saudi led coalition that many
blamed for the attack, says it will hold its own investigation.
Health officials are warning of a severe cholera outbreak in Haiti as rescue teams are struggling to reach all of the hard hit areas. Entire
villages have been destroyed in hurricane Mathew. People are now forced to sleep outside of their damaged homes. The United Nations has estimated
750,000 people need immediate assistance.
If you were thinking it could not get any worse for Samsung after their flagship smart phone started exploding in people's pockets and on
airplanes, it can get worse. The replacement Galaxy Note 7. They are reportedly also catching fire. Carriers around the world from T-Mobile to
Telstra have no stopped issuing the replacement phone to customers, and Samsung itself is temporarily halting production of the phone.
Samuel Burke is following the events from London. Do we know definitively that the replacement phones are exploding?
SAMUEL BURKE, CNN MONEY CORRESPONDENT: We have reports and Samsung is no longer pushing back on them. I think that is key here, Richard. We have
been reporting on this for almost two months now. Back on August 19th, the phone was launched and people said it was the best smart phone ever made.
Little did they know that just a few days later August 24, we would be already seeing reports on social media and that has been key here. Without
social media we would never have been able to piece that together of the phones catching on fire.
September 2nd that recall is announced. They say it is just a problem with one of the batteries. They have two different battery makers. Not a
problem with the phone. Just one of the battery makers, really. There is a big period there between the second and the 21, Richard, they finally
start this recall, but just in certain countries.
But immediately then we start to see problems with replacement phones and in other countries. By October 5th we have this evacuation of a Southwest
Airlines flight in the United States, thankfully it wasn't in the air. And by the 10th, today we have now what they are saying is a temporary halt of
production of the Note 7. I have never seen a product fly so high and then go so low.
[16:35:10] QUEST: For Samsung, I'm reading various analyst estimates that say it could cost billions. They have other phones in their armory, and
they have many other products as well, but this is catastrophic, would you say?
BURKE: This is absolutely disastrous for Samsung. This the biggest smartphone maker in the world. A company which had been struggling, they
get a phone that gets these great reviews and suddenly it looks like they're on their come back and what I'm hearing from analysts, Richard, is
they're telling me, what are they going to do if this really is a problem with the second -- the replacement phone, the second
iteration of the phone? It can't launch a third one they tell me. How do you re-launch a product for a third time that's it for the Samsung 7, many
of them assume.
And then they have to roll out the Samsung 8 but you can't roll out a phone overnight, certainly not a new model, a new name. So there is going to be
a gap that puts at a serious disadvantage to the iPhone 7 that seems to be going very well for Apple and now Google just announcing their line of
Pixel phones. So it is hard to see where the Note 7 goes from here if it even survives.
QUEST: And is there any schadenfreude -- I'm just looking at Apple's share price today, it was up nearly 1.75 percent, Apple again of nearly 2. How
would they be responding or what are they saying? Or they just keeping schtum?
BURKE: They're just keeping quiet and riding high at this point. Knowing that this has hit Samsung. I think the real problem here, Richard, and I
am still scratching my head, how is it that this is only a halt in production? They have not recalled the replacement device that is having
problems all over the world, Richard. The carriers, ATT, T-Mobile are saying you can bring it back to us, we are not selling it anymore. So the
carriers are taking the lead while Samsung seemingly tries to evaluate this floundering situation.
QUEST: Samuel Burke in London, watch this closely, please, thank you.
Now to Hungary where the country's largest opposition newspaper has closed down quite spectacularly over the weekend. Now normally we wouldn't
necessarily be covering just a newspaper closure in a relatively small country in central Europe, but in this case it's very different. Two
thousand demonstrators gathered outside parliament to protest against what's happened. They believe that the left-wing papers demise is entirely
politically motivated, and stems from the right-wing Prime Minister, Viktor Orban.
The paper's owners say the closure is temporary and the paper has been losing money and readers, and is the result of years of poor financial
losses in a poor business model. It is more than a story about the newspaper going broke or going out of business. It goes to the heart of
the issues and Hungary at the moment. Joining me now is Gabor Horvath, he's the editor of the recently closed paper. Sir, I would try to mention
the name of the paper, except I would fail spectacularly. So please tell me what the name of the paper is.
GABOR HORVATH, EDITOR, NEPSZABADSAG: Yes, the name of the paper Nepszabadsag. And let me tell that it's an honor to be on one of my
favorite shows at CNN.
QUEST: We're delighted to have you, sir. So the question simply this, do you believe that this closure is entirely politically motivated because
this newspaper was a threat or a thorn in the side of the government?
HORVATH: Yes, sir, yes. That's our strong belief. Probably the company's owner is being under pressure from the government to do something about it.
During the last few weeks, we came up with a few scoops. One of them the chairman of the National Bank hiring his long-time lover for triple
salaries. She happens to be a yoga teacher. Everybody wonders why the National Bank of Hungary needs a yoga teacher in a high paying job. And
this other one was a cabinet minister flying on a helicopter to the countryside wedding with his family and then trying to lie about this. So
we came up with a few stories which were very unpleasant, but I guess, the main problem of the prime minister was losing the referendum on migrants.
QUEST: He says he won it. He says --
HORVATH: I watch your show, Mr. Quest, I know.
QUEST: He says he won the referendum because even though it didn't get to 50 percent, most of those who voted were in favor.
HORVATH: I know. I saw our foreign minister. I saw the government spokesman on your show before.
[16:40:01] Of course they tried to put up a brave face, but as a matter of fact they lost. And probably they got very upset about this.
QUEST: How serious is losing this newspaper -- whose name I won't attempt to butcher -- how serious is losing this newspaper to the freedom of the
press in Hungary? Bearing in mind there are plenty of websites that one can go to.
HORVATH: Just imagine the United States of America, when not only NPR, PBS, and C-Span being owned by the government -- I know they're not -- but
also NBC, CBS, and ABC belonging to them, and CNN, and Fox News also. Then just try to imagine that the "New York Times" shuts down all of a sudden.
That is the effect. As a matter of fact, Hungary very much needs an opposition newspaper. A free independent voice, and they've been trying to
do that for six years.
QUEST: Even if it is losing money. This paper was losing money and losing readership.
HORVATH: Yes, as all the newspapers, not only in Hungary, but all over Europe and North America, too. Yes, we know that. It did not lose that
much money. As a matter of fact, as much as we know, we don't know too much because we're employees and we don't see the books. But we would be
losing about, let's say, less than a million euros a year. For a company with a revenue of 80 million euros, it should not be that much. Actually
they came up with glorious reports about their revenues and profits. So probably they could have found a solution to this program.
QUEST: Sir, we're very grateful to you coming on tonight. We look forward to talking to you again about the situation in Hungary in the future. We
appreciate it, good to see you sir, tonight from Budapest.
HORVATH: Thank you very much.
QUEST: Coming up next from Hungary to the Nobel Prize for economics. And it couldn't be more topical. It's about executive pay. I've been talking
to one of the winners of the prize. And you'll hear it in a moment. We'll talk about contracts. Will hear about it and we'll talk about contracts.
QUEST: Ever since the global financial crisis, executive pay has been the subject of much public debate. Now it's also a subject tackled by this
year's Nobel Prize winners in economics. It is the work of Britain's Oliver Hart and Finland's, Bengt Holmstrom. It addresses a host of
questions from how best to reward executives and as to whether schools and prisons should be privately owned. I asked the chairman of the Nobel
economics committee to tell me by contract theory, as it's known, is so important.
(BEGIN VIDEO CLIP)
[16:45:00] PER STROMBERG, CHAIRMAN, NOBEL PRIZE IN ECONOMICS SCIENTISTS: Whenever we have an economic transaction, or so many economic transactions
we have are really contracts, you know? When we work for a job we have employment contract that tells us what you're being paid and what you do.
When we take out insurance, it's a contract between us and the insurance company, and so forth. Even if you think about little institutions in
society, you can think about those as contracts. The constitution is a contract between the citizens and the state. This is just very, very
fundamental theory to understand lots of different phenomenon in society.
(END VIDEO CLIP)
QUEST: A panel of judges said the winners have laid an intellectual foundation for policies in areas such as bankruptcy and legislation. Now,
one of the winners, Bengt Holmstrom, explained that not only was he delighted to have the recognition after working for decades. He was doubly
thrilled to be sharing this honor with his good friend Oliver Hart.
BENGT HOLMSTROM, 2016 NOBEL ECONOMICS PRIZE WINNER: I could not be happier, I got two prizes today. One for myself and the fact that Oliver
got a prize. It was a new area when I started in the 70s, 80s it was a discipline field, and I would say that I contributed in various ways to
develop that field and develop above all, perhaps, what the right questions are.
QUEST: We were talking to the president of the committee, the Noble committee, and he was telling us that your work has very practical
applications across a wide range of the economy. And that was one of the reasons, or partly, or whatever, that they were most impressed with the
real life application of your work. That must be very rewarding.
HOLMSTROM: Yes, I got into these problems as an assistant CFO of a big company in Finland. I did not start off as an academic.
QUEST: And so now you have the Noble, and now you are recognized in that respect. How do you celebrate?
HOLMSTROM: That I don't know yet. It's too close to say. But I'm going to celebrate with my wife tonight. We are going out for dinner.
QUEST: I guess if you can't take your wife or your husband out for dinner when you just won the Nobel Prize, when can you.
Christine Lagarde's comments about butter, growth in the future of economic growth is what we're talking about. Why Christine Lagarde is shouting at
countries. It's at our newsletter. It arrives as the closing bell rings, but before Asia trade gets underway. CNNMoney.com/quest where you can
subscribe. And incidentally there is a link, a hyperlink, whatever you want to call it, where you can click on it if you want to email me
directly. And I promise you it goes directly to my Blackberry, which is that one. We can keep in touch. I still have this for the time being,
until they take it away.
As the campaign rhetoric goes down into the gutter, the debate ratings follow even lower. One beer company is trying to bring people together
around the election. The vice president of Tecate will join me next. QUEST MEANS BUSINESS.
[16:50:00] (COMMERCIAL BREAK)
QUEST: Now we thought initially that there would be absolutely huge, but the ratings from the first presidential debate showed America's interest in
the election. The second faceoff, they actually showed America's revulsion. Viewership dropped by 20 percent on Sunday night as the race
between Hillary Clinton and Donald Trump has grown nastier and more divisive. At exactly the moment when you thought it might have gone the
other way. Tecate is a Mexican beer. It's owned by Heineken, and it's released a commercial that spoofs the ugly rhetoric and promises to bring
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE, TECATE BEER COMMERCIAL (voice-over): The time has come for a wall. A tremendous wall. The best wall. The Tecate beer wall.
(END VIDEO CLIP)
The Tecate beer wall. Joining me in the C-suite, is the vice president of Tecate, good to see you, sir.
FELIX PALAU, VICE PRESIDENT, TECATE: Great to meet you, thank you.
QUEST: It takes a certain courage to decide to make a commercial about something as politically toxic as the issue of the wall, doesn't it?
PALAU: No, this is a big and bold idea for sure. But we really saw a big opportunity to insert ourselves in a conversation that is current and that
is relevant to many of us. And being a Mexican beer, the idea of a wall is close to us. We wanted to tell a story with a lighthearted approach of how
Tecate, in this case, being a beer can bring people together of two bordering towns over a Tecate beer wall.
QUEST: But are you mocking Trump's plan of building a wall?
PALAU: We're playing on this conversation and we strategically --
QUEST: Oh, no, no, no. You can't have it both ways. You can't talk make an advert about something that is politically sensitive, and when people
pointed out, try and say no, that is not us. Oh, no, no, we have no intention of that. We were just having a bit of fun.
PALAU: You look at the spot. I mean, it's lighthearted, it's fun. We just want to make a twist of a story. We know that beer brings people
together. That's the role that beer plays in society. It brings us together. It opens conversations about all things happening. In this
case, Tecate is a protagonist of this story, and we strategically developed this conversation or this spot to trigger this conversation in a healthy
way. And the results so far have been very positive.
QUEST: Tell me about the results.
PALAU: I think we have difficult metrics. First of all, we wanted to increase our awareness as much as possible. So we reached as many
consumers as possible with this spot. We reached more than 27 million consumers through the national media. But also I think very important, we
created a very healthy conversation through social media.
QUEST: A conversation about what?
PALAU: About this topic that can be poignant. But at the end of the day when you look at the sentiment, 89 percent of the conversations are
positive. So in a way consumers understand the nuance. They in a way appreciate the tone and humor. And they get the message.
QUEST: When you say 87 percent are positive, positive in the sense of let's all love each other and let's not have walls that divide ourselves.
So are those 87 percent anti-Trump wall?
PALAU: Across all the different ideologies whether you are conservative or liberal. Our strategy was to reach as many people as possible. We don't
have any ideology or any affiliation. This is the perfect timing for us. This is the super bowl of our efforts. Because we are an emerging brand.
This was a perfect opportunity.
PALAU: You are an emerging brand with very deep pockets from Heineken. Who had to convince somebody at Heineken -- let's face it, the corporate
suits at the top, that shy away from their own shadows, who had to convince them that this was not going to be a career killer?
PALAU: Again, we were very careful about the message. Strategically on brand and I would say neutral from a political standpoint. So, yes, it
went through all the different approvals of the company. The first time that we saw this story we really felt that it was really going to trigger a
very healthy conversation. The facts are there. The results are there. It's not me talking its consumers talking.
QUEST: Good to see you, sir. I suspect my colleagues here will never forgive you. Because here we are in a studio talking about beer, and I
don't see any beer, let alone walls --
[16:55:00] PALAU: You know what, sir? Our biggest, I would say, objective of all is that no matter who wins, that he celebrates with a Tecate.
QUEST: Get the advert in. We sell advertising time. We'll get you the bill on the way out. Good to see you.
PALAU: thank you so much for having me. It's a pleasure.
QUEST: Will have a Profitable Moment after the break. He didn't bring any beer.
QUEST: Tonight's Profitable Moment. Christine Lagarde told us last week, everything is better with butter. It was a comment that her grandmother
used to say it. But she interpreted it as meaning everything is better with growth. And on this program tonight you heard Mohamed El-Erian
basically say, that's absolutely right. Things are better with growth, and growth simply doesn't exist at the moment.
But what we learned at the IMF over the weekend is that monetary policy, central banks are just about done. Interest rates are negative in many
countries. There's some QE is nowhere near as effective as it was in 2008, 2009. Now it's really up to fiscal policy and our old friend structural
reform. The problem with structural reform is that it's very difficult to do. Everybody talks a good talk. View actually get on with it. And
that's why the current situation is so serious. It's not catastrophic or calamitous, but it will certainly get worse if growth doesn't pick up, and
everybody feels there taking part. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York, whatever you're up in the hours
ahead, I hope it's profitable. I'm off for the rest of the week. I'll see you.