Return to Transcripts main page
QUEST MEANS BUSINESS
Trump Begins Cutting Financial Regulation; Japan Is Preparing U.S. Investment; U.S. Defense Sec'y Is "Firmly" Behind Japan; Trump Approval Rating Historically Low. U.S. Places New Sanctions on Iran; Maltese PM Says Time for EU to Lead; U.S. Economy Creates 227,000 Jobs in January; Romanian Graft Law Faces Legal Challenge
Aired February 3, 2017 - 16:00 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: Popular Organization. Look at that, ringing the closing bell. The American Red Cross on Wall Street. The Dow
Jones over 20,000. It's got a good triple-digit gain as the week comes to an end. Stop ringing the bell and -- good grief. Two. That's what you
call a strong, robust gavel to bring trading to a close on what's been a week. Its Friday, it is February the third.
A financial reform law set to be reformed. President Trump starts the rollback of Dodd/Frank. We'll analyze it tonight.
We used to call the numbers phony. Now the president's embracing the jobs reports. And Europe takes over. Malta's Prime Minister tells me the EU is
now the reluctant leader of the liberal world. You'll hear the prime minister on this program.
I'm Richard Quest. It may be a Friday, but, of course, I still mean business.
Good evening. The program comes to you tonight from London. And what a day. Business came to the White House, and it left with a gift. Chief
executives of some of America's largest companies were there, as members of the president's business advisory council. Mr. Trump wants their help,
advice, guidance in crafting the legislation he hopes will create 25 million jobs.
Hours later, in line with his campaign promise, the president stared the process of dismantling the law known as Dodd/Frank. Dodd/Frank named after
the politicians, Congressmen, and Senators who wrote or sponsored the legislation. It was the biggest financial reform since the depression.
And Mr. Trump told his business leaders why Dodd/Frank couldn't stand anymore, as is.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. PRESIDENT: We have some of the bankers here. There's nobody better to tell me about Dodd/Frank than Jamie, so you're going to
tell me about it. But we expect to be cutting a lot out of Dodd/Frank. Because frankly, I have so many people, friends of mine, who had nice
businesses, they can't borrow money, they just can't get any money, because the banks just won't let them borrow because of rules and regulations in
Dodd/Frank. So, we'll be talking about that in terms of the banking industry.
(END VIDEO CLIP)
QUEST: So, let's get straight to it. There's many aspects. Dodd/Frank is over 1,500 sections. Well over a thousand pages of legislation and rules
and regulations. It has things like the Volcker Rule, which prevents banks from proprietary trading and speculating with their money. It set up the
consumer protection agency, also. But it's one man fearful of ripping up consumer protections is Bart Chilton, a former commissioner at the
Commodity Futures Trading Commission, CFTC. He also helped craft Dodd/Frank. Now, look, Bart Chilton, everybody seems to agree that
Dodd/Frank was, you know, maybe a piece of legislation, enacted in haste, but needs revising. You would accept that?
BART CHILTON, FORMER COMMISSIONER, CFTC: Well, maybe there's a couple of revisions, Richard, but by and large, you know, it was not the regulated
markets, whether or not it was futures in Chicago or stocks in New York, or quite frankly, in London, too. That it wasn't those regulated entities.
It was, as you recall, the over the counter trading that was completely unregulated. Zero, zip, zippity. Nothing. And Dodd/Frank regulated that.
We are safer because of that, and that's why I think it would be a monstrous mistake to roll that part back. Now, there are some things that
we can get into, if you like, that I think could be tweaked, important things. But overall -- and I know people don't like regulation, it's sort
of hip to say you're against regulation -- but when you get down to the details, this protects consumers, protects our country, protects the EU,
too, because they're abiding by many similar rules and regulations, Richard.
[16:05:00] QUEST: All right, Bart, Donald Trump went to the country saying he was going to reform -- I won't say "repeal," because there'll probably
be a lot of Dodd/Frank that will survive -- but things like the Volcker Rule, the capital requirements. Those parts -- you heard him say in that
bit we just heard from the White House, where he was talking to Jamie Dimon, those restrictions that have now become an impediment to bank
CHILTON: Well, that's the story, but it's false. It's a bad narrative. So, capital just means that you have enough money to cover your losses.
And when he increase the capital requirements. And remember, we thought going into the great recession that banks might not have enough capital.
So, we gave them money. It was called a bailout. And so we -- that's why we raised the capital requirements. That's a good thing. So, we don't
have these too big to fail banks.
And on the Volcker Rule, as you rightly described, Richard, that stops the big banks from proprietary trading, prop trading. And what we saw
happening, leading up to the great recession, is that some of the large financial institutions would tell their customers, hey, here's a new fund
that we offer. Get into it, put your money there. Once that was populated with their customer's money, then the banks themselves took the opposite
position. Psych. It wasn't so funny to the customers. So, that's why we had the Volcker Rule. I would hate to see that lost, too.
QUEST: But is there a risk that the Volcker -- that the Dodd/Frank, with its various reporting requirements, with its entire infrastructure of
regulation, I've spoken to many chief executives who say, gosh, just reporting Dodd/Frank requirements is an ordeal these days. Many banks say
that Dodd/Frank requirements, look, we're just not going to write business in the United States anymore.
CHILTON: You got that part right. Look, like you said, 20,000 pages, there's 400 rules, I helped write over 65 of them. So, there's lots there.
Now, I'm convinced that the large financial institutions can handle it. I mean, look, the financial sector continues to outpace all other sectors,
health care, transportation, you name it, financial sector does well. I mean, thank you very much. They're OK. Don't cry for them now. I'm
concerned, however, about some of the smaller banks, the community banks. Those with less than $10 billion in capital. Those guys, even just higher
one or two compliance folks, could put them in a bad place. So, we -- I agree that that needs to be dealt with. You're right on target, Richard.
But with the large financial institutions, I mean, cry me a river.
QUEST: On that note, sir, I'll say thank you very much. We'll talk more about it. Make sure you commit to coming back and talking more about it,
CHILTON: Thank you, Richard. Take care.
QUEST: Now, these orders are just the beginning for what is going to be happening in Washington. There is wholesale reform that is on the agenda.
First of all, you've got tax reform that's going to be coming straight down the line. The president talked about that today. He specifically said
that there would be tax reform sooner rather than later, and certainly before next year, or at least the measures will be brought in.
Then there's going to be reform of the Consumer Finance Protection Bureau, that's what I was just talking about a moment ago. And the reform of the
Dodd/Frank Volcker Rule that we've just been saying. Now, Will Cohan is a former M&A banker. He's also the author of "Why Wall Street Matters" and
he joins me from New York.
So, the other point of view, sir, we've just heard why this whole thing needs to be thrown out of the window. Why, to some extent, it has become
an impediment to what is happening, to what the financial community needs to be productive. Do you agree?
WILL COHAN, FORMER M&A BANKER: Well, Richard, I agree with some of what Bart says, and Bart is a friend of mine, so I hate to disagree with other
parts of what he said, but I think that parts of the Dodd/Frank law need to be retained. Which parts? The parts that require more capital for big
banks, which we have. The parts that require crazy, nutty securities and like derivatives to be traded on exchanges. That Bart said too, and I
agree with him there.
And I think to some extent, we should keep aspects of the Consumer Protection Financial Bureau. But there are other aspects of Dodd/Frank
that need to be repealed. It's much too onerous. There's a lot of paralysis and analysis. I also think that it makes no sense to have so
many people hired internally.
[16:10:04] Do you realize, Richard, for every five people on Wall Street now, there's one whose job it is to look and see what the other four are
doing all I do long. This costs billions of dollars. It's not efficient. Banks aren't making loans. And if banks aren't making loans, our economy
is not going to grow. And this is a worldwide phenomenon. There's too much regulation. Some of it needs to be repealed.
QUEST: So, how -- there seems to be an element of common ground between everybody, that something needs to go. But the issue strikes me as, how do
you prevent throwing the baby out with the bath water? Particularly with an administration that seems hellbent on legislating in haste, repenting at
COHAN: Yes, Richard, I think that is a big concern. You know, Donald Trump has been like a bull in a china shop. And if he throws out the
entire Dodd/Frank law, without any kind of replacement or pieces of it that make sense, that is like giving Wall Street a Ferrari and a whiskey bottle
and asking Wall Street to drive wherever it want at whatever speed it wants. Wall Street needs seat belts, it needs restraints, it needs
restrictions. It needs the right incentives, and Donald Trump, if he's smart, will put those in place. Now, I think, interestingly, that's also
what Wall Street wants. You heard that from Gary Cohn, his national economic adviser. He wants there to be small regulation on Wall Street,
and I agree with him.
QUEST: But on this question of those in charge, if we look at the Treasury Secretary, the head of -- Gary Cohn, former Goldman Sachs, sir, you talk
about Gary Cohn at the economic council, former Goldman Sachser, you talk about Wilbur, as he's now just known, a leading businessman. You look at
all the Labor Secretary, the preponderance of business and bankers, many from Goldman Sachs, is giving cause for concern. Not a malevolence, but
just that government will see things from a very specific point of view.
COHAN: Well, believe me, I worry about this too. I think Donald Trump has gone too far on to that pendulum swing of bringing too many businesspeople
into his cabinet and his government. During the Obama administration, we kind of had the opposite, where working on Wall Street was a negative and
you could not possibly hire anybody who worked on Wall Street.
Now, I think, we've gone too far the other way. There needs to be a balance. And again, if Donald Trump is smart and that seems to be an open
question, still, he will reach that balance. But at the moment, he's attracted too many people from Wall Street. It looks like he's giving away
the store, the candy store to Wall Street, again. And that goes against his very populist message and many of the reasons why people in the
hinterland in America voted for him. Satisfying Wall Street is not a recipe for satisfying main street.
QUEST: We'll talk more about it. We would love to have you with us tonight to put it into perspective, to give it a measured view. Because in
this particular debate, there are those who say throw it all out, and there are others who say, no, keep it all. A measured view is what's called for.
We are grateful you were with us tonight.
Donald Trump's business plans could soon get a helping hand from Japan, as the Prime Minister, Shinzo Abe is due in Washington next week. What's he
going to be bringing with him? The reports say he could be bringing gifts of jobs and investments worth billions. Abe has already met Donald Trump
during the transition. And as part of his preparation for going to Washington to meet the president, he also met the head of Toyota. The pair
of men reportedly discussed how Toyota and government would respond to the demands of rebalancing trade between Japan and the United States.
Will Ripley is our correspondent in Tokyo and has done good duty and got up early in the morning to talk to us. It's funny, we're at 6:00 in the
morning. Will, look, Shinzo Abe met Toyota, the head of Toyota. Toyota is very keen to portray itself if not exactly an American company, but
certainly more American than most.
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: And they would point out that they employ hundreds of thousands of people around the world and in
the United States and have factories operating in the United States. And the strategy that we're seeing, we're seeing the Prime Minister, Shinzo
Abe, very smartly employ this, is any way that a company and a government can demonstrate to President Trump that they are creating jobs in the
United States, that is going to bode a lot of favor from the White House, which is why you have these media reports that the Prime Minister's office
is putting together this package of 750,000 potential jobs, potentially infrastructure development.
[16:15:20] Japan, for a while now, has been saying that they would like to build a Shinkansen bullet train in the Northeastern corridor of the United
States, it's an area that they think is flat enough and straight enough that they could put in a high-speed railway, similar to the fantastic, very
efficient, very safe, and very fast trains that we see here in Japan. And so, these are the -- this is the packet of proposals that you'll see the
Prime Minister and his economic secretary and his finance secretary and the foreign minister bring with them, when they go to Washington next week.
QUEST: OK. There's also been the visit of Mr. Mattis, the Defense Secretary, to Japan. And in many ways, Japan is a very good example, with
South Korea and European Union, of the danger of conflating geopolitics with economics, but somehow managing to bring the two together.
RIPLEY: Well, because during the campaign, Donald Trump said repeatedly that he felt U.S. allies, including South Korea and Japan, were not paying
their fair share for being under the umbrella of U.S. defense. Which is why, when he meets today with the Defense Secretary, Tomomi Inada, here in
Tokyo, she and her team have prepared a packet of documents. They've been poring over the budget to say eve that they believe in fact, Japan is
paying 53.7 percent of the 11 or so billion-dollar financial burden of keeping 54,000 U.S. troops in this country.
Now, the exchange rate and depending on how you add up the budget, those numbers can shift back and forth, but pretty much, Japan believes it's a
50/50 split and they think that's fair. We have yet to see what President Trump thinks. If he thinks that, in fact, Japan should pay more, even
though they claim they're paying more than any other U.S. ally, including South Korea and Germany, by the way.
QUEST: Will Ripley, getting up early, a quarter past 6:00 in the morning in Tokyo. Will, thank you.
What a busy day. In fact, what a busy week. We have gasped our way to Friday. And even on Friday, there was still more to keep us talking. In
this case, it was the jobs report. The first jobs report and the president's move to dismantle regulation, which all pushed the Dow back
over 20,000. Look at the numbers. The Dow ended the day up 186 points. Our guru La Monica is with us from New York, hopefully not tinkering with
too many things on the desk there in New York. Look, what I find interesting is having had two days of triple-digit losses, out of the gate,
it went higher, and it never looked back, Paul.
PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: Yes, and I think it's going to be a busy four years, Richard. To your point about it being a busy week.
What we saw with the market today, it was also the perfect kind of jobs report. Donald Trump can be happy because of the number of jobs that were
added, but people who pay attention to some of the numbers beyond just the payrolls and the unemployment figure, you look at wage growth, it was a
little bit subpar. But the good news there is, that means the Fed may not have to worry as much about inflation, might not have to hike interest
rates as much as everyone thought. And I think that's a big reason, coupled with Trump's deregulation on the financial side of things, bank
stocks flying higher today.
QUEST: Paul La Monica, plenty there. I assure you, sir, I've got a busy four years ahead. So are you.
LA MONICA: Definitely. And your desk, I have not touched a thing. If I had a bell here to ring, I probably would have rung it, though.
QUEST: Just as well we didn't trust you with one. Thank you, sir. Have a lovely weekend.
LA MONICA: You too.
QUEST: In the past few minutes, history has been made. There's a new CNN poll on Donald Trump's approval numbers and the president has broken a 64-
year record. I'm going to explain what that means after the break.
[16:20:00] (COMMERCIAL BREAK)
QUEST: So, how's it going, Mr. President? A new CNN/ORC poll shows Donald Trump has an historically low approval rating for a newly elected
president. Just 44 percent of people said they are happy with him in their first few days. It's the first time any president has gone below 50
percent approval rating so early in the presidency. The survey shows voters are sharply divided over his most controversial actions so far. A
small majority of Americans oppose the recent travel restrictions. 60 percent oppose a wall being built along the entire Mexican border. CNN's
political director, David Chalian, is in Washington. David, there is much to chew over with this. The key first question, though, is for a president
who seems to be obsessed by his public persona, this is the kind of thing that will send him ballistic.
DAVID CHALIAN, CNN POLITICAL DIRECTOR: Yes, in fact, Sean Spicer, the White House Press Secretary today was asked about the polls. Overall,
other polls have been out the there, Gallup, CBS. And he said something quite interesting today at the briefing room. He said, well, it's a
marathon, not a sprint. That is the usual -- that is a kind of concession that the polling the numbers aren't where you want them to be. One kind of
concession that I don't think Donald Trump himself would ever make, I think you're right about that. But remember, he was elected with 46 percent
support. When we measured his approval rating during the transition, right on the eve of the inauguration, when he took office, it was the lowest ever
at 40 percent. Now his first real job approval rating as president, 44 percent, also historic low. He just has not gotten any kind of honeymoon,
any kind of movement towards expanding beyond the people that voted for him in November.
QUEST: So, during the campaign, the president constantly and repeatedly referred to his good poll numbers. It's a bit like the job numbers. He's
constantly criticizing the job numbers. Now they're his job numbers, they're pretty good. He's going to find it -- if he loved the polls when
he was campaigning, he's going to find it very hard to say that these poll numbers don't matter.
CHALIAN: Yes and no. It should be hard to say. But during the campaign when he really loved the poll number was during the primary season, when he
was demolishing all of his Republican competition. Then in the fall, in the general election, which showed polling with him behind Hillary Clinton,
he did not like those polls at all. He just dismissed them and said he didn't believe them. He ended up winning the election. Of course, the
polling nationally did show her head and she won the popular vote. He was right not to believe some of those state polls that put him over those 270
QUEST: David Chalian, I have a feeling we'll [15:55:00] have a lot more polls to talk about. Thank you so much for joining us sir, have a good
CHALIAN: Thank you, take care.
QUEST: The U.S. administration slapped new sanctions on Iran on the back of the White House saying Tehran was on notice after conducting a ballistic
missiles test. President Trump refused to rule out military action. Jamie Diamond is CNN's White House reporter and joins me now. We can jump about
and we can dance on the pin -- on the head of a pin, on this question of whether it's an easing of sanctions or not an easing of sanctions. Whether
it was in the works, whether it was not in the works. But the reality, Jeremy, is, at this time and in this way, it has significance.
[16:25:00] JEREMY DIAMOND, CNN WHITE HOUSE REPORTER: Yes, absolutely, Richard. The United States, the Trump administration, effectively,
announcing today that it is imposing sanctions on 25 individuals and companies connected to the ballistic missile program in Iran. That comes
after Iran test launched a ballistic missile, just recently. You know, the Obama administration had also issued sanctions against Iran's ballistic
missile program after a 2015 launch. So, this is not altogether unprecedented or a step further than what the Obama administration might
have done. But certainly, what we're seeing here is, you know, the response from Iran, for example, was very swift. They said that they're
going to issue some countermeasures against U.S. entities, as well, and they've suggested that this might be a contravention, essentially, of the
nuclear deal with Iran.
Now, Trump administration officials have been very careful to say that this is not -- this has nothing to do with the nuclear deal. They're trying to
separate the issue of the nuclear deal and a U.N. resolution against Iran, testing ballistic missiles capable of carrying a nuclear warhead.
Certainly, there's going to be a lot to watch over the coming days and weeks, particularly as we look specifically for how Iran responds to this.
But this is a worrying step when you look at Iran's ballistic missile program, and potentially a ratcheting of tensions with these sanctions
coming forward today.
QUEST: Jeremy, as we come to the end of week two, just give me a gut feeling. Tell me what it's like in the White House at the moment. And how
different it is.
DIAMOND: Well, you know, this White House has really struggled in its early days to kind of get its act together, right. We saw that very messy
rollout of this immigration ban against seven Muslim majority countries and refugees, suspending that refugee program, for refugees coming into the
United States. So there have been slow starts and there has, as well, been a lot of infighting within the administration, as you know, as certain
advisers try to assert their power. Clearly, we're seeing a lot of influence right now from Steve Bannon, with President Trump's chief
strategist, who is really the driving force behind a lot of these more extreme executive orders, such as the immigration ban.
But really, the White House was patting itself on the back the other day after rolling out its supreme court pick. You know, it kept that pick very
secret, which is a tough thing to do, sometimes, in Washington, particularly after you've seen all the leaks from this White House. But it
seems to be getting its act together. It's unclear exactly whether that applies as well to policy or simply certain things like the supreme court
QUEST: Is it exhausting?
DIAMOND: Well, it certainly has been an interesting couple of weeks here at the White House. You know, people are settling into their roles,
reporters are also settling in here. And certainly, there's been a lot of work going around all over.
QUEST: I'll take that as a White House reporter's diplomatic answer. Good to see you. Have a good weekend, sir. Thank you.
EU leaders lined up to criticize Donald Trump at the MALTA SUMMIT EU Council. The man who was hosting the prime minister of Malta is on this
program next. He's calling Europe the reluctant leader of the liberal world.
[16:30:00] QUEST: Hello, I'm Richard Quest in London. There's more QUEST MEANS BUSINESS in just a moment.
Malta's prime minister tells me Europe has to come to its senses in the age of Donald Trump. And as a political crisis in Romania deepens, the
minister who took a stand tells me why he resigned. Before that, this is CNN, and on this network the news always comes first. French authorities
have opened a terror investigation after a man with a machete charged soldiers who were guarding the Louvre in Paris. The suspected attacker was
shot by a soldier and seriously wounded. Police say he rushed towards a group of soldiers shouting "Allahu Akbar." The Louvre will be closed until
tomorrow on Saturday.
Iran is promising to retaliate after the U.S. government slapped it with new sanctions over a ballistic missile test. Tehran says it will impose
legal restrictions on Americans and U.S. companies that aid, in their words, extremist terror groups in the region. Earlier, Donald Trump warned
Iran was playing with fire.
U.S. Defense Secretary James Mattis says the Trump administration stands 100 percent with Japan. He delivered that message in person to the
Japanese Prime Minister, Shinzo Abe, in Tokyo. Mr. Mattis also reaffirmed America's commitment to its mutual defense treaty with japan.
The relationship between the European Union and the United States under Donald Trump. Well, Malta's prime minister has hosted his European
counterparts at an EU council, and he tonight tells me that Europe is the reluctant leader of the liberal world. Donald Trump's loudly expressed
support for Brexit, he's unenthusiastic comments on NATO, all came under fire from EU leaders. Francois Hollande said that the future of the EU is
at stake, and described Donald Trump's criticisms as unacceptable. Angela Merkel in Germany said the EU's destiny is in its own hands. However,
cooperation with the United States was crucial.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, CHANCELLOR, GERMANY (through translator): I have commented and many others, as well, that based on our shared values, we want a
transatlantic cooperation. We will have issues that we agree upon, for instance, the fight against international terrorism, and we will have
issues that we do not agree upon.
(END VIDEO CLIP)
QUEST: Now, the Maltese prime minister said that there should be no sense of anti-Americanism. Joseph Muscat recognizing the reality of the new
situation in Washington, said, we need to engage. Malta, currently, holds the rotating EU presidency after the first day's meetings the prime
minister joined me on the line and said there was a reality check over dinner.
JOSEPH MUSCAT, PRIME MINISTER, MALTA: There is concern. There is concern, mostly, about the uncertainty of what's next from the U.S. administration.
Nevertheless, there is also the realization that we still need to engage with the United States and that criticism of decisions taken by the U.S.
president shouldn't turn the EU into some sort of anti-American stalwart. Now, we still need to have the best relationships possible with the United
States. So, I think there was a great degree of realism and also, a great degree of realization that now we're coming to an age where the European
Union must stand on its own two feet.
QUEST: How can you suggest, prime minister, that the EU is in a position to offer that leadership on those issues, when the EU, by the admission of
many of its leaders, is facing an existential crisis of its own?
MUSCAT: Well, simply because I am an optimist. Simply because I think that we have faced even more serious crisis. Simply because the fact that
the world we are living in has changed and is changing, and I think has brought Europe to its senses, finally. And has brought European leaders to
realize that, you know, no one owes us a living, we cannot just be sidekicks, and this is not for the sake of saying who's number one, who's
number two. This is for the sake of saying, you know, the liberal view of the world, as we know it, and generally speaking, needs someone to speak up
for it. And we should be there to do that job.
[16:35:00] QUEST: Angela Merkel said Europe has its fate in its hands. Donald Tusk has talked about the united we stand, divided we fall. It
seems, at this juncture in time, that unity has become an end goal in its own right.
MUSCAT: I think if I had to describe the prevalent sentiment today during our discussion with relations on the United States is that Europe has
realized it's a reluctant leader. But it has to reluctantly accept that that leadership post is now vacant and it should fill it in. Yes, there
are issues. There are countries that are concerned about security issues. Countries, mostly those facing the east. Other countries concerned on the
economic front. But, no one in the room is saying that we should take on the United States on some sort of war of words or anything. We should just
speak our mind in the states, as I think we, most of us, always did. Say where we agreed, say where we disagreed, but really and truly, not wait to
que to do other things. Which I think was the case for most global issues, until recently. But we should take initiatives ourselves.
QUEST: That's the Maltese prime minister talking to me earlier. Now, the European Council President, Donald Tusk, says ties with the United States
are at the highest political priority. However, he is not the only leader to concede there are storm clouds brewing when you look at the
relationship. And never mind what's happening in Washington. Let's just think about how Europe is going to react to these very interesting
developments. So, first of all, you have Donald Tusk earlier in the week, calling the Trump administration an external threat to Europe. And today,
the commission president said that there are -- there is room for explanations between the Europe and the United States.
Jean-Claude Juncker says the new administration does not know the EU in detail. Now, as you're listening to me talking about this, bear in mind,
we're talking about the European Union and the United States. The closest, arguably, relationship in the world. Room for explanations. And even the
European weather is causing an entire range of upset. Think about it. There is a lettuce shortage here in the U.K., because of bad weather in
Spain. Whatever next, some say it's a shortage. Quentin Peel tells me it's a spinach shortage. There's something for your weekend for you. Good
to see you. And we're making light to some extent about this, but the reality is, the serious point here is what the U.S. has done has shown the
inability of the EU now to act or to move forward as one.
QUENTIN PEEL, ASSOCIATE FELLOW, CHATHAM HOUSE: I think what the U.S. has done has probably given an incredibly dramatic incentive for the Europeans
to get their act together. Coming on top of Brexit, the British determination to leave the European Union, I think this is the wake-up call
of all wake-up calls. And what Angela Merkel said today I think is very true. She said, our fate is in our hands.
QUEST: But that was the same sort of thing that Donald Tusk said immediately after Brexit, when he said, if we don't hear the message of
this, then we're doomed.
PEEL: That's true. There are 28 states in the European Union and it takes time for them to get their act together. They are facing huge crises.
They're facing an economic crisis, they're facing a refugee crisis, they're facing a Russia crisis, they're facing a Brexit crisis, and now they're
facing a Trump crisis.
QUEST: And none of the structures of the union allow for easy resolution or management of those crises?
PEEL: No, that's absolutely true. Not only that, they've got a whole series of major elections this year. The Netherlands, France, Germany.
This year was described to me, three years ago, as 2017 will be the year of the perfect storm. That was one of Angela Merkel's top advisers who said
that. They knew it was coming.
QUEST: So, if it's coming -- look, they can cobble together consensus, sub-optimal solutions, as Alex Schwab always used to call them, they can
cobble those together on an ad hoc basis, but they can't even agree what the post-Brexit EU should look like, can they?
PEEL: I think that's way down the line. The first thing they've got to do, and this is the nightmare of Brexit, if you like, is work out how the
hell the second largest economy in Europe can extricate itself from this, without actually pulling all the stitches out in the whole process. It's
going to hurt the EU and it's going to hurt Britain.
[16:40:00] QUEST: Do you think that at some point, there will be a reality check, within the EU. Muscat said on this program a short while ago, you
know, the final deal for Britain has to be inferior to full membership of the single market. But at some point, is somebody going to say, frankly,
we've just got to get a deal the best we can, and if it means we have to hold our noses, so be it?
PEEL: Yes, I think everybody's going to dislike the deal that comes out. But it isn't going to be a perfect situation, because you're trying to
unstitch 40 years of common law making. I mean, it's as if California wanted to leave the United States. How the hell do you do that without
everybody suffering? That's what's going to happen in Europe. But I would say this. I think that nonetheless, don't write the Europeans off.
Because what they've achieved in bringing east and west Europe together is fantastic.
QUEST: Let's just show some pictures, Quentin, as we just look. Donald Trump has landed in Florida. The president is there. They're now calling
it the winter White House at Mar-a-Lago. There he is. His wife, who came down from New York earlier. It's the weekend residence at Mar-a-Lago.
It's called the winter White House. As we just take a look at that, give me one final thought. How easy is it going to be, Quentin, for Donald
Trump to divide and rule when it comes to the EU and say, Brexit?
PEEL: It could be easy if the Europeans don't get their act together. I think he will unite the Europeans, surprisingly, because I think they will
be so appalled, they will be so appalled at what he's pulling apart that they will actually be forced to get their act together.
QUEST: We're grateful you came to see out. You're a spinach man, otherwise, I would offer you a bit of lettuce.
PEEL: I wonder if Donald Trump will have any lettuce down in Florida.
QUEST: Good to see you, sir.
As we continue, the U.S. president says he's happy with the first monthly jobs report of his administration, which is somewhat bizarre since he spent
most of the campaign telling us that the jobs numbers were all a fiddle. We'll discuss it with the former Deputy Secretary of Labor.
QUEST: The final snapshot of the U.S. jobs market under president Obama has been released. Today's unemployment data was collected on the final
weeks of his watch and released two weeks after the inauguration. So, 227,000 jobs were created, which is way more than the 170,000 or so that
was expected. Unemployment just ticks up, but that's all to do with the way the numbers are counted and whether or not more people are actually --
more unemployed people are coming back into the labor market. Therefore, the rate goes up.
[16:45:00] And the average pay, this is a significant one, is up 2.5 percent year on year. That 2.5 percent will be watched closely by the fed.
Perhaps arguably more so, because if you look at these numbers, just on the face of them, they paint a picture of full employment with potentially
inflationary expectations and rising job demand. Now, Mr. Trump has previously criticized his predecessor's performance on jobs, and today he
seemed to admit, when you look at the numbers, they're not that bad.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. PRESIDENT: 227,000 jobs, great spirit for the country right now. So we're very happy about that. I think that it's going to
continue big league. We're bringing back jobs, we're bringing down your taxes, we're getting rid of your regulations. And I think it's going to be
really some very exciting times ahead.
(BEGIN VIDEO CLIP)
QUEST: Chris Lu is the former deputy secretary of labor, now senior fellow at the University of Virginia and is with me now. Schadenfreude, there has
been a sort of a slight smile on your face as you hear the president admire a set of numbers, when three, four, five months ago, he was claiming that
the real level of unemployment was 10 or 11 percent.
CHRIS LU, FORMER U.S. DEPUTY SECRETARY OF LABOR: I find today's statement sort of ironic as you pointed out, Richard. These are job numbers from the
Obama administration. This was measured in the second week of January. These aren't ones created under his watch. And mind you, he has called the
official unemployment numbers a hoax. He said the real number may be as high as 42 percent. So, today's statements are a marked difference from
what he has said in the past.
QUEST: Well, let's allow him a little bit of lee room, now he's in government. The bigger question is, the ability of the U.S. -- or the
United States economy to create 20-odd-million jobs, as he's suggesting, when you already have an unemployment rate of 4.8 percent. Now, even if
you raised the participation rate and you get the more people off their back, looking for jobs, how realistic is this?
LU: Well, I think it's not realistic at all. And I think what makes it even more unrealistic is some of the storm clouds you talked about in your
previous segment. Already in the first two weeks, you have a president who is provoking his trade partners, who's shutting the doors to immigration,
who is creating all kinds of geopolitical uncertainty. Tax reform may be great, but when you're dealing with an unpredictable president, that's hard
for businesses to make decisions about hiring.
QUEST: There's one question, though, I keep asking of people like yourself, from the other side, and both sides, actually. I think we'll see
it with Europe. Even if the leaders loathe what Donald Trump is doing, take Malcom Turnbull in Australia, for example, where you'll be familiar
with the argument there. At the end of the day, as long as the U.S. has a $17 trillion economy, it's the largest banana around, you've got to play in
that pool, to mix my metaphors.
LU: Your right. It's not only foreign leaders, but U.S. business leaders, as well. You see Trump today holding a meeting with business leaders. Are
they there because they love tax reform or there because they're afraid he'll tweet about them. And I do think that businesses like
predictability, they like certainty. And when you have a president who on any given morning can see something in a paper or on a cable news station
and start tweeting, that doesn't create the kind of business certainty that corporate CEOs want, where they're making decisions about whether to hire
or locate their businesses here.
QUEST: I need to talk to you about Dodd-Frank quickly. I can save you the first part of your answer. Everybody agrees that some parts of Dodd-Frank
need revision or need to be changed. The issue is the risk of how much should be retained versus being changed.
LU: You're absolutely right. I mean, I remember what -- I'm old enough to remember what happened during the financial crisis, and I suspect Donald
Trump is as well. Today's announcement also exists in a vacuum in which none of those problems happened. Clearly, changes need to be made, but not
rolling back this entire law.
QUEST: Sir, I'm old enough to remember the financial crisis before that one, and the one before that one, as well. Good to see you, sir.
LU: Thank you for having me.
[16:50:00 ] QUEST: Now to more of the woes in Europe, row Romania and the government there facing a legal challenge after watering down its
corruption laws. The move has set off massive protests across cities across Romania. And after this break, I'll speak to the minister who
resigned over it.
QUEST: Romania's political crisis is deepening as the country's legal ombudsman is taking the government to court. It's all over the
government's issuing of a decree that essentially decriminalizes a broad range of corruption offenses. The protests have packed out victory square
in Bucharest, the largest demonstration since the Ceausescu regime was overthrown. They're calling for the decree to be repealed. The prime
minister says that won't happen, and the prime minister's appealed for calm. Romania's business and trade minister resigned on this issue. I
asked him why he's taking a stand against the prime minister and the new laws.
FLORIN JIANU, FORMER ROMANIAN BUSINESS MINISTER: I want to be remembered in the history as a righteous man. I want to be on the right side of the
history. And the problem with the piece of legislation, and I'm not talking about the technical issue, because frankly, is not under my
technical abilities, but what I can tell you is that if you take a piece of legislation without informing previously the members of the government,
without having a media and almost in the middle of the night, that is not right.
QUEST: So, just to be clear, is your main opposition to this the law itself or the way it has been brought in?
JIANU: Well, you know, my main opposition is that when you talk about politics, you talk about emotion. And if you do something like this, as I
told you, without the media, in the middle of the night, without informing and so on, you can expect that everybody will be unhappy. Not only, I
don't know, some of the people, but everybody will be unhappy. This is on the one hand. On the other hand, you cannot expect a better future,
because if it happened once, it can happen the second time again.
QUEST: How much less corruption was there in Romania that now might be at risk as a result of this -- these new laws?
JIANU: I'm pretty sure that Romania is a stable country. You can see on what happened in the economy, the previous years. And I am pretty sure
that we will be a stable country in the future. With the help of the population, with the help of everybody who wants to live freely and to have
a stable economy. It will be a place where investors can think about coming with a safe investment.
[16:55:00] QUEST: So finally, sir, if the government doesn't back down and it looks like they're not going to, and if changes aren't made, would you
call for your European partners in the EU to take actions against Romania and with the government for this?
JIANU: No, no, this will not be the case. You think everybody will solve -- the solution is within Romania.
QUEST: We'll have a Profitable Moment after the break.
QUEST: Tonight's "Profitable Moment." The Maltese Prime Minister on this program said that the EU was now the reluctant leader of the liberal world.
He may well be right, as the United States lurches to the right. Unfortunately, what that leadership means is anybody's guess, because the
EU, itself, can't decide. It seems for the European Union meeting in Malta, facing Brexit on the one side, facing right-wing uprisings in many
countries and nationalist uprisings in other countries with elections in the Netherlands, in France, and in Germany, it seems that unity has become
an end in itself.
Never mind what the EU will stand for or the practical policies thereafter. You can talk about highfalutin principles of rule of law, democracy, values
and tolerance, everybody can agree on that. But the EU 27 cannot agree on what they want the EU to look like after Brexit. And that's why Joseph
Muscat can say that they are the reluctant leaders of the liberal world, but the reality is, they're leaders who can't even lead themselves out of
this mess. 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! I'm off now, for a week.