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Quest Means Business
Judge Orders U.S. State Department to Release Ukraine Records; Protesters Block Roads and Demand Reforms in Lebanon; Bolivian Government Requests Election Audit Amid Protests. Aired 3-4p ET
Aired October 23, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:07]
RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: Well, the day turned a little bit strange. The market had a really nice rally at about
11 o'clock and then it all dwindled away, and now just off 23 points, not a huge fall by any means. Earnings and all the usual things.
We can't get excited by 26 points off on the Dow. The markets and there are many reasons and undercurrents going on today.
Mark Zuckerberg makes his pitch to House lawmakers. They are skeptical about Facebook's plan for global cryptocurrency and political ads.
Boeing says it expect the 737 MAX to fly again by the end of the year. Families of many of those killed in two major crashes say it should stay
grounded.
And not so fast -- IBM pushes back against Google's claim that it has cracked quantum computing.
Tonight, we are live in London on Wednesday, October 23rd. I'm Richard Quest, and of course, I mean business.
Good evening. We start tonight, President Trump has announced he is lifting all sanctions against Turkey, after it agreed to stop fighting the
Kurds in Northern Syria. He was at the White House, and the President took credit for the decision Turkey ultimately made after striking a deal with
Russia.
The President called it an outcome created by the United States and nobody else. Donald Trump warns that if Turkey does not honor its pledge for a
permanent ceasefire, he will not hesitate to re-impose sanctions.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: If Turkey failed to honor its obligations including the protection of religious and ethnic
minorities, which I truly believe, they will do, we reserve the right to re-impose crippling sanctions, including substantially increased tariffs on
steel and all other products coming out of Turkey.
(END VIDEO CLIP)
QUEST: Ryan Browne is with me from Washington. Ryan, forgive me, there's no evidence is there that these sanctions were crippling or otherwise, or
indeed that they had taken effect?
RYAN BROWNE, CNN PENTAGON REPORTER: Well, that's absolutely right, Richard. In fact, many on Capitol Hill and elsewhere criticize the White
House's sanctions when they were first announced for being much too lenient.
In fact, they had very little impact. They were actually waivers granted. So some of the items that might have had impact on foreign military sales,
for instance, the sale of arms to Turkey, there were waivers granted for that so they could avoid those.
So again, there was a lot of criticism about those sanctions when they were first announced, that they weren't tough enough. It's not clear at all
that this is what changed Ankara's calculus.
Now, in Capitol Hill, lawmakers are pursuing much stronger sanctions, much tougher sanctions that they still think they may want to impose on Turkey,
unless Turkey returns to its positions before it launched this operation, something Turkey has said it will not do.
QUEST: I was struck by the fact in that whole conversation, that whole statement in which he didn't take questions, the President -- I'm not sure
the word Russia passed his lips.
BROWNE: Well, that's right, Richard. He seems to not be willing to acknowledge that Russia has benefited from the U.S. decision to pull back
in Turkey's incursion. Russia has already taken over several former U.S. military installations in Syria, something that is featured within Russian
propaganda.
And so the President not willing to acknowledge that Russia has struck this deal with Turkey. He did make a broader comment about countries in the
region, kind of sorting it out. So he seems -- but he doesn't seem particularly concerned, unlike many U.S. military leaders, lawmakers in
Capitol Hill about Russia's growing influence as a result of this situation. President Trump does not appear to be particularly concerned
about that either.
QUEST: Ryan, thank you. Good to see you tonight. Boeing says it expects American regulators will allow the 737 MAX to fly again and by the end of
the year. A plan in the company -- to gradually increase production in 2020. But they are running out of places to park the planes at the moment.
The MAX has been grounded since March after two fatal crashes that claimed 346 lives. U.S. airlines have removed the MAX from their schedules until
into next year. And in doing so, of course, the planes are now building up at various parking lots around the world.
If they don't get them moving soon, then Boeing will have to cut production or at least cease production of the 737, with all the ripple effects into
the economy.
Ralph Nader wants to make sure that Boeing 737 doesn't fly again. He is a longtime consumer safety advocate, whose grandniece died in the 737 MAX
crash in March. He joins me by phone from Washington.
[15:05:05]
QUEST: You, sir believe that there is something fundamentally wrong in the design of this plane, such that the reengineering of MCAS, this computer
system, won't be sufficient to make it safe.
RALPH NADER, CONSUMER SAFETY ADVOCATE (via telephone): That's right. The reason why the software package is constantly being revised and refined
after miscuing and killing 346 people in Indonesia and Ethiopia is the inherent, unstable design of larger engines put on the old fuselage of the
737 and doing it in a way that changes the center of gravity or the aerodynamic results.
And that increases the risk of stalling. It's a stalling problem that has to go back to the problem of the overloading by the big engines.
QUEST: Now, the regulators, of course say that the technology, MCAS, when it's being -- MCAS when it works properly will solve that situation. Are
you worried, though, that what we've heard from Boeing, right away after these latest messages creates a lack of trust in their ability.
NADER: That's right. A software fix for a hardware defect is not the way to go in terms of Aerodynamic Engineering. And Boeing is misleading its
investors -- its institutional investors. They're already being investigated by the Securities Exchange Commission with a too rosy view and
saying that the planes will be undergrounded in the year, by the end of December is a fantasy.
They're in trouble on all fronts with their airlines. They're in trouble with the unions, they're in trouble with their own whistleblowers. More
shoes are going to drop. More firings are going to occur. They just finally fired the head of their Commercial Aviation Business, Mr.
McAllister.
The whole top crew of Boeing has to go. They have a vested interest in not admitting mistakes and they're jeopardizing the future of the Boeing
Corporation itself. So Muilenburg and the Board of Directors need to be replaced.
QUEST: Right, but you'd agree that Boeing has been making planes safely for the best part of a century, therefore, what do you think went wrong?
NADER: Well, it used to be a very highly praised engineering firm and then when the McDonnell-Douglas merger occurred with Boeing, the McDonnell-
Douglas mindset heavily shaped by commercial contracts with the Pentagon took over Boeing and changed an engineering company into an investment
stock market hyped company with huge bonuses for the top brass and that led to increasingly controlling the F.A.A., which is underfunded and
understaffed because of Congress and the White House under both parties over the years.
And so here we have this bizarre thing, Mr. Quest where you have this massive delegation of regulations to self-certification by Boeing itself.
And there's no penalty. There are no fines by the F.A.A. The F.A.A. could impose fines, $400,000 per violation.
QUEST: When the regulators in the U.S. say it's safe to fly, and we know that other regulators for the first time pretty much in modern aviation,
they're not -- the J.A.A., I.A.T.A. and the F.A.A. are not going on the same path. The Europeans are going to go later and Asia will go later and
China will probably go later since.
But once all regulators globally say, yes, we are happy with this plane, then surely that's good enough.
NADER: It's not good enough unless they bring the planes back and dismantle the problems that caused it. They are prone to stalling and
crashing in Indonesian the first place. This is a patchwork Band-Aid, fix -- this software and everybody is afraid in the industry because there are
only two major manufacturers.
As you know, there's Airbus and Boeing. I know the Chinese, Brazilian, and Japanese are coming to compete shortly. But this is what happens when you
just have two manufacturers. And the one in America controls the regulators and gives all kinds of campaign contributions to over 300
Members of Congress. But the hearings coming up may surprise you.
QUEST: Ralph Nader, good to have you, sir. We'll talk more about this as it progresses. I appreciate your time. The ongoing sector crisis with the
737 has made Boeing more reliant on its other models, and the trade war is hurting demand across the board.
Boeing is cutting production of the Dreamliner, the 787 and that's adding to concerns of the global economic slowdown and Caterpillar today reported
a surprise drop in profits. Sales slumped in nearly every part of the world which might be China led, of course, it's crucially important, but
it's clearly transmitting that weakness to other parts of the world.
Martin Wolf is with me, good to see you, Martin.
[15:10:17]
MARTIN WOLF, CHIEF ECONOMICS COMMENTATOR, THE FINANCIAL TIMES: Good to see you.
QUEST: The Chief Economics Commentator at "The Financial Times." This is the evidence -- the canary in the mine, if you wish -- Caterpillar, Boeing
absent, its individual problems, the earnings that we are seeing. Companies are saying it's not just difficult, it is now troublesome.
WOLF: What we really have is a very significant slowdown in world manufacturing. And the companies you mentioned are all manufacturers, and
that is clearly linked to the slowdown in China, which has transmitted itself in a very big way to Germany and so to Europe.
It is affecting major American manufacturers, you mentioned them and of course, the trade war is also playing a significant part in this story.
Whether that -- well manufacturing is still quite a small part of the world economy -- whether that will transmit to the whole economy is the big
question.
QUEST: But what is slowing us down? I mean, people sort of say, well, a bull market of over 10 years is just exhausted and tottering around on its
last legs. It has to be more than that. Why is there this malaise in the world economy?
WOLF: I think there seem to be three major factors. One, I think the trade war itself, but not a huge one. Second, the rise in uncertainty
which has affected investment, which is a huge driver of manufacturing demand. And finally, a real slow down in China, which is partly investment
related, and partly due to the fact that the Chinese have decided they want to stop the credit boom, on which they used to depend. And these three
things have come together in my view.
QUEST: This is pretty much the first time, the Chinese economy has been sufficiently large and systemically involved to be able to cause this sort
of issue.
WOLF: It did the inverse in 2009, when it --
QUEST: Induced it.
WOLF: It really pulled our world economy out of the crisis with the staggering growth boosts that they managed immediately after the crisis.
But yes, China is now the second largest national economy and unbelievably important imports, particularly for investment goods. So yes, it affects
the world.
QUEST: And Brexit momentarily, if we may. The Armageddon scenario for the U.K. economy hasn't hit in the way that it was forecast, but the underlying
rumblings are there, that the economy is suffering. You still believe there should be a second confirmatory referendum on the final whatever deal
is put out there.
WOLF: Well, first of all, the economy is certainly smaller than it would otherwise have been. There's no real doubt -- there is a recent estimate
perhaps 60 billion pounds a year smaller, which is a couple of percent -- two and a half percent?
Yes. I think the deal we are about to do, which is not clear, and we don't want to go into all the parliamentary shenanigans, I don't know what's
going to happen. But if we do this deal, it is going to be immensely damaging.
QUEST: Why? What part of it because I've looked at the deal, which bit of it offends in your view?
WOLF: Well, the major one is very, very simple. At the best, and this is not clear, we will move from a complete integration in the European
economy, single market, Customs Union, our most important trading partner, close to half our trade, a little bit under to a free trade agreement,
which is worse probably than Canada's.
That's an immense shock for our trading goods. Our service sector with lose all the benefits of the single market. That's a huge part of what we
do. The movement of our people in commercial services will be stopped. And of course, all the industries like cars, which have been completely
integrated in the European economy, I expect in terms of their relation with Europe just to die.
So this is going to be a very substantial reduction in our trade with Europe, and it's likely to have knock on effects through investment demand
and so forth.
Now, there are lots of estimates, but my estimate is that probable, a GDP - gross domestic product in 2013, might be between 50 and 70 percent.
Smaller than -- the growth would be 50 to 70 percent smaller than it would otherwise be.
So instead of growing maybe 11 percent in GDP per head, we might grow only three to five percent of GDP per head. Yes, we will be better off, but
that's a very big if.
QUEST: But you don't -- to those who say of course, well there are those new trade deals, the United States, Canada itself, Australia. I can see
your --
[15:15:16]
WOLF: There are two problems here.
QUEST: Yes.
WOLF: First, there's only one new trade deal that would really make a difference. That's the U.S. Because the US is a much smaller trading
partner in the E.U., but it's close to a fifth. And the problem is that if we --
We can't, I think, do a trade deal with U.S. until we've done a trade deal with the E.U. because that will set a lot of the terms on which we can do
the trade deal with the U.S. and there will be some crucial areas which the U.S. will be really interested, which will cut across what the E.U. will
want because the regulatory requirements are so different. So I think they will be followed.
At the best, if you have the normal timetable for trade deals. Let's assume we reach a deal this year, it will probably take four years, five
years, never mind the transition year to agree a deal with you. That's what it normally takes. And then we would do the trade deal with the U.S.
and I think we might have sorted this all out by, I don't know 2025 to 2027.
And then -- but the other --
QUEST: Well, we'll still be around. We'll still be around.
WOLF: The others are trivial -- and Australia, these are all completely trivial. So the net effect over the next decade will unambiguously be, we
will be worse off and that's what we're doing.
And I think the public should be told, this isn't what the Brexit has promised in the lead. Right? They said there will be a deal very much
like what we have now. This is not what we're going to get. So I think the public should be asked is that really what you want?
QUEST: Good to see you, sir. Really appreciate it. Thank you very much indeed.
WOLF: Thank you.
QUEST: Now, we'll hear more from Martin later in the program. Meanwhile, U.S. markets are trading flat. The Dow components, Boeing and Caterpillar
posted disappointing earnings. Companies are warning the global slowdown and trade tensions are hitting profits. Investors are encouraged. We're
down 34 points. It is fairly well talking about it.
Overall, the earnings are better than expected. Europe closed in a bit betwixt and between. Couldn't really decide what was happening. Small
gains little losses overall. Investors remain cautious.
As we continue tonight, we will have more in a moment. This is QUEST MEANS BUSINESS.
Libra -- we will be talking about the cryptocurrency extraordinaire, and why Facebook may not be the right people at the right time or indeed ever.
In a moment.
(COMMERCIAL BREAK)
QUEST: Mark Zuckerberg is on Capitol Hill. He is making his boldest pitch yet that Facebook should be allowed to launch a global cryptocurrency.
Live pictures from Washington.
In testimony to the U.S. House of Representatives, he said if Washington blocked his Libra plan, then the U.S. risks falling behind countries like
China and could lose its standing as the world's financial leader.
(BEGIN VIDEO CLIP)
MARK ZUCKERBERG, CEO, FACEBOOK: I just think that we can't sit here and assume that because America is today the leader that it will always get to
be the leader if we don't innovate.
(END VIDEO CLIP)
QUEST: Innovate -- well, the prospect of a Facebook cryptocurrency has raised alarms. It could upend the global financial system, make the
company even more powerful. Zuckerberg has been on the charm offensive hoping to change powerful minds.
Private meetings have been held with the Democrat, Maxine Waters, who chairs the Financial Services Committee in the U.S. She has drafted a bill
titled Keep Big Tech Out of Finance Act.
In her opening remarks, she left no one in any doubt about what she thinks of Libra.
(BEGIN VIDEO CLIP)
REP. MAXINE WATERS (D-CA): Perhaps, you believe that you're above the law, and it appears that you are aggressively increasing the size of your
company, and are willing to step on over anyone, including your competitors, women, people of color, your own users, and even our democracy
to get what you want.
All of these problems I've outlined and given the company's size and reach, it should be clear why we have serious concerns about your plans to
establish a global digital currency that would challenge the U.S. dollar.
(END VIDEO CLIP)
QUEST: Martin Wolf is with, Chief Economics Commentator at "The Financial Times." You've been writing on this. What's wrong with Libra?
WOLF: Well, first of all, it's a very intriguing idea. He's gone about it I think in an incredibly unwise way. He put forward a proposal, which was
very unclear in many important ways, which was bound to raise the hackles of regulators, central banks and governments and sort of put it -- and he
has done this again, this sort of take it or leave it. If you don't accept what we do, the Chinese will take over. The Chinese are not going to have
Libra, I can tell you that for free.
QUEST: What's wrong with Libra? From a monetary point of view? I'm not so much worried about drug trafficking or money laundering or all those
sort of things, which I know are legitimate terms. But as an economics correspondent, tell me what you see as the economic reasons against it.
WOLF: Okay, so I think those reasons are important, very important. But I think they're essentially -- the essential point is, we don't know how
Libra will be created. We don't know how it will be backed and because of that, we don't know at the moment, I think we can discuss some of the
possibility -- we don't know how it will impact foreign currency markets and the payment system globally.
It could -- but I think this is a less important reason -- affect the values quite significantly the major currencies that it will hold if it
gets big enough. I don't think that's a huge issue.
The bigger issue is that if it's used as a more convenient form of dollarization in developing countries, it would tend to destroy the
domestic, the fiat currency of that country. It will undermine their ability to do monetary policy.
You could say that's a wonderful thing. It will allow their citizens the chance to have a better form of dollarization. But the governments of
these countries, probably reasonably think, well we have a currency for a reason why should we let this American billionaire destroy it?
QUEST: Why is this different to say PayPal, Venmo in the United States; Monzo -- which are essentially, we all put money into them and then when we
go to pay the bill, I Venmo to you and you Venmo to the restaurant and -- why is this hard?
WOLF: It is different because it's a new currency. And it's a new currency that is not pegged to another one. It's a floating currency which
is essentially Facebook's currency. It's going to be backed they say, but it's a new currency.
The other -- the PayPal operates in Sterling or it operates in dollars, it operates -- it is just part of the payment system over monetary areas that
exists. This is effectively a new monetary area, privately run. Now how that would work? We don't know, but it is something different.
QUEST: Isn't the reality, though, and this is the problem regulators have and monetary authorities, this is going to arrive someday in some form. So
-- and I know you were at the IMF last week, you know, this this idea of which legitimate Central Bank, collectively or individually is going to
come up with their own version of crypto?
WOLF: Well, there are two questions there. One, Central Banks will issue their own digital currency.
But I think that something like Facebook could operate as a currency without regulators agreeing that it should be allowed to exist. It will
need authorization of some form. How that authorization will work and there might be conflicts among regulators on this, the Swiss are the
keenest, that's where it seems to be established. So maybe they'll operate in Switzerland.
[15:25:25]
WOLF: But I think that it will not be as easy for Facebook to upend the monetary system as it's done everything else. Just being a very large and
powerful company will not be enough.
QUEST: Doesn't it excite you?
WOLF: Well, there's one aspect if it does, which is very important that it could facilitate cross border payments, massively; make the border payment
system much more efficient, and that will be a huge benefit to poor people.
So in principle, there's a very good idea here. The question is before principle, it is not enough, like the Boeing 737 you were talking about.
You want to know it's going to fly.
QUEST: Good to see you, sir. Thank you.
WOLF: Pleasure.
QUEST: As we continue, from Chile to Lebanon, mass protests are spreading across the globe. The cause that connects them all, inequality and the
distribution of fairness. In a moment.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. A lot more QUEST MEANS BUSINESS in just a moment. Look at how rampant inequality could destabilize economies
around the world, including in the U.S. Netflix wants to crack down on password sharing. Millions of users could be affected.
As we continue, this is CNN and on this network, the facts always come first.
British Police are investigating the deaths of 39 people discovered in a truck container outside of London. Some politicians are speculating the
case could be linked to human trafficking.
The driver from Northern Ireland has been arrested on suspicion of murder. A local official is describing him as a 25-year-old, a man called Morris
Robinson.
[15:30:00]
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Called Morris Robinson. The quest includes communications between the Secretary of State Mike Pompeo
and Donald Trump's lawyer Rudy Giuliani. The motion was filed by the ethics watchdog group American Oversight under the Freedom of Information
Act.
Chilean authorities say the death toll in the week of unrest now stands at 18. One of the victims has a 4-year-old child who was run over when a
vehicle rammed into the protesters. The president has announced a new social and economic agenda aimed at quelling the unrest. Pope Francis is
calling for a dialogue to end the violence.
And in Lebanon, protesters outraged by the economic crisis are once again on the streets. It's the seventh day in a row. The protests have
paralyzed Beirut and other major cities in the country. They've blocked roads and they've shut down the banking system and the schools. Reform
package announced by the Prime Minister Saad Hariri has failed to calm the anger.
And in Bolivia, there's also tensions over suspected electoral fraud. Protesters in the opposition are accusing the authorities of rigging the
vote-count in favor of incumbent President Evo Morales. Bolivia's Foreign Affairs Minister has requested an audit.
So, as I was just describing to you, unrest around the globe is growing. The protesters are battling different causes in the various countries. For
instance, in Lebanon, the touch paper, the blue touch paper was a tax on WhatsApp calls that sent everybody into the streets, the tax was rescinded.
In Chile, it was an increase in subway fares.
In Ecuador, a decrease in fuel subsidies. But if you look for the common thread, the longer-term anger over political and economic inequality. And
that gap is growing. It's a growing problem in the United States for instance where a new study finds that for the first time in history, U.S.
billionaires are paying a lower tax rate than members of the working class.
And the 400 richest families have more wealth than the bottom 60 percent of households. It's all to do with President Trump's corporate tax cuts in
2017. One of the authors of this new report, Gabriel Zucman is an economics professor at UC Berkeley. It's called the "Triumph of
Injustice". He joins me from New York.
I apologize that I'm not able to be in New York with you. Blame Brexit. Sir, just how bad is the situation and how quickly is it getting worse?
GABRIEL ZUCMAN, PROFESSOR OF ECONOMICS, UC BERKELEY: Yes, thanks, Richard for having me. You know, income and wealth inequality has increased a lot
in the U.S. The top 1 percent used to earn 10 percent of national income in 1980. And today earns about 20 percent of U.S. national income. And at
the same time, the tax system has become a much less progressive.
The tax rates of the very rich have collapsed. The situation today in 2018 is that when you take into account all taxes paid at all levels of
government, everybody pays around 28 percent, every income group pays around 28 percent of their income in taxes, except the ultra wealthy.
Billionaires, the top 400 richest Americans who pay less than every other income group. They --
QUEST: But --
ZUCMAN: Pay 23 percent.
QUEST: They do that because they are able to employ a multitude of shell companies, trusts, write-offs, everything -- I mean, you know, the
president himself has been one of the biggest offenders, according to the research from the "New York Times". But what they do, it might be immoral,
but it's legitimate.
ZUCMAN: Well, you know the frontier between what's legal avoidance and illegal tax evasion is pretty thin. You know, generally, if you're doing
something with the sole purpose of avoiding taxes, there's a provision in the U.S. tax law like you know, tax law of other countries that says that's
illegal. You know, transactions need to have economic substance, and what we're seeing these days is lots of transactions that don't have economic --
QUEST: Right --
ZUCMAN: Substance.
QUEST: Well --
ZUCMAN: Like multinational companies who create corporations in Bermuda where nothing happens, that could be qualified as tax evasion.
QUEST: But when it comes to raising tax revenues, you know, sir, that you make most of your money in the middle bit. I mean, I remember -- I'm old
enough to remember the U.K. which had a top rate of tax if you added on investor surcharge of 98 percent. But the truth is, most -- and indeed the
treasury, when the U.K. lowered the tax rate from 50 back to 45 percent, pointed out, you didn't actually raise that much money at the higher
levels.
[15:35:00]
ZUCMAN: Well it depends. You know, it depends if governments tolerate tax avoidance or tax evasion. You know, if you have this big industry that
helps the wealthy dodge taxes, and if you have loopholes in the law, then yes, you're not going to collect a ton of money by increasing tax rates.
But these things change over time, you know, look at the U.S.
The U.S. used to have a very progressive income tax system where the wealthy paid 55 percent, 60 percent of their income in taxes in the 19 --
no, in the middle of the 20th century.
QUEST: Right --
ZUCMAN: Because the social norms were different. No, avoidance, evasion were not tolerated at the time.
QUEST: Gabriel, do you fear we will see more evidence of inequality spilling out into protest? The sort of which we've only really had a taste
of.
ZUCMAN: Yes, that's the main risk. You know, if globalization means ever lower taxes for its main winners, multi-national companies and their
shareholders, and ever higher taxes for those who don't benefit a lot from it, then it's not sustainable. We're going to see more and more social
unrest. And that's why if we want to make globalization and democracy more sustainable, we need to fix tax injustice.
We need to make sure that those who benefit the most from economic growth, instead of seeing their taxes --
QUEST: Right --
ZUCMAN: Fall, pay more in taxes.
QUEST: I'm just curious. What do you think -- and I -- this is -- this is a classic how long is a piece of string question. What do you think is the
right tax rate for a billionaire?
ZUCMAN: Well, it's not for economists to say. You know, we developed a website, taxjusticenow.org where people can simulate their own tax reform
and make up their own mind. You know, it's for the public to decide through democratic deliberation and the vote, what should be the right tax
rate?
Where economists like me can help if there's a demand for her distribution and for a more progressive taxation, we can make sure that taxes work. We
can fix the leaks in the tax system and help you know, improve the tax system --
QUEST: Good, very glad to have you with us, sir, I appreciate it, we'll follow up and we'll talk again in the future, please come back --
ZUCMAN: Thank you so much --
QUEST: Again on QUEST MEANS BUSINESS. Now, Google has hit light speed, IBM says not so fast. Quantum computing is at the center of a big tech
tiff. Who actually has actually done quantum whatever it is. And does it matter even if they haven't? In a moment.
(COMMERCIAL BREAK)
[15:40:00]
QUEST: Google says its new quantum computer has the fastest processing speed in existence. And this machine needs only 200 seconds to solve a
problem that takes the world's fastest computer 10,000 years. Here's how it works. Are you ready for this? Yes, come on. Regular computers use 1
and 0, as well, we all like that score, 1 and 0, switching on, switching off. Google uses quantum bits or qubits. It allows any combination of
numbers simultaneously.
Google CEO says the breakthrough has made the impossible possible.
(BEGIN VIDEO CLIP)
SUNDAR PICHAI, CHIEF EXECUTIVE OFFICER, GOOGLE: For many years, practical quantum computing was only theoretically possible. Google's team has
proven it can work. This is the halo world moment for quantum computing that many of us have been waiting for.
(END VIDEO CLIP)
QUEST: IBM says not so fast, Google. A regular computer would need only two and a half days to solve the problem. The former "National" editor-at-
large Lance Ulanoff joins me from New York. All right, let's both admit to being in deep water here. At least, I am on the whole issue of quantum
computing. But what was this thing that Google got the computer to do that would have taken everything else so long?
LANCE ULANOFF, SOCIAL MEDIA & TECH EXPERT: I mean, it's just -- it's a kind of -- it's a processing task. I mean, they didn't really go into
tremendous detail on exactly what the processing task is. It's just the kind of task that gets exponentially larger very quickly. And that a so-
called large-room computer or super computer that IBM has, they said would take 10,000 years to compute and they took 200 seconds.
Now, of course, that's why IBM is saying hold on, our regular giant room computer can now do it in two and a half days. But it's all about -- you
know, this is not so much what problem did it solve, this is proof of concept because the idea is that when we finally get quantum computing in
our hands, you're working on these big problems, it's going to change things in a very --
QUEST: Right --
ULANOFF: Significant way because it can solve problems that you can't do with these regular super computers.
QUEST: Right, but IBM, big, blue of old. Super computers, extraordinaire, I mean, they must be seething at the idea that this upstart called Google
could beat them at something like this.
ULANOFF: They're in a race. Look, you know, IBM has worked out quantum computing as well. You know, it's not just the number of qubits, because I
think Google has 53 qubits. But it's also, you know, keeping temperatures down. I mean, these systems work at a whole different level. I've
actually --I mean, I've seen an IBM quantum computing, it looks like nothing I've ever seen in my life.
So, you know, they work out just as hard, they just don't like that Google is kind of going out there and stealing their thunder and saying -- you
know, and also the way they set it. You know, they said quantum supremacy. Which I think people took to mean that Google had achieved quantum
supremacy.
That's not actually what I think they were trying to say though. They were trying to say, quantum computing is supreme over standard supercomputing.
But in any case, you know, it's fun just to watch them, you know, battle it out because in the end, we're going to be the benefactors because quantum
computing is a whole new way of computing.
QUEST: How will it change our lives? I mean, Google obviously wanted bragging rights and Google's spat with IBM and you can throw in Cisco and
everybody else who might someday get involved. But come on, how is it going to change you and me getting up in the morning and brushing our
teeth?
ULANOFF: All right, well, you know, they're going to apply to things like machine-learning and chemistry. So, let's just say chemistry for a moment
and think about, you know, the big problems behind biology and chemistry, cancer treatment. You know, working out real problems that are affecting
real people where at some point.
Because as you're trying to run through permutations or you're trying to figure things out with really difficult problems, it can take a long time
or maybe you reach a limit even with the best computers, and quantum computing is going to go beyond --
QUEST: Right --
ULANOFF: That. And I know people get excited when we talk about this is not about laptops, this is not about your phone. This is about big
computers solving big problems at least in, you know, maybe a decade from now.
QUEST: All right, that's it. That was going to be my last question. So, finally, I guess for IBM this morning, it was a bit like, you know, when
the U.S. woke up and found Russia had put Sputnik into --
ULANOFF: That's right --
QUEST: Orbit. You know, Houston, we got a problem, and the problem is --
ULANOFF: Yes --
QUEST: They just did it first.
ULANOFF: Yes, IBM was very quick to say hold on a moment, not 10,000 years, two and a half days. And I'm sure that they'll follow with their
own quantum announcement very shortly.
[15:45:00]
QUEST: Good to see Lance, as always, I appreciate it, thank you --
ULANOFF: Good talking to you --
QUEST: Now, the U.S. Justice Department on Wednesday has sued the state of California after it signed an agreement with Canada to limit greenhouse
gas emissions. The Drax power station in Yorkshire, England has been combating its own emissions for many years.
It proves the way forward arguably. Formerly, the biggest polluter in western Europe. Drax says the plant now generates 15 percent of U.K.'s
renewable energy. CNN's John Defterios in more in the latest installment of the "GLOBAL ENERGY CHALLENGE".
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: The biggest power plant in the U.K., Drax was built nearly a half-century ago to burn coal, looming
large over the North Yorkshire landscape, change is in the air.
WILL GARDINER, CHIEF EXECUTIVE OFFICER, DRAX GROUP: We've actually reduced our emissions, I think quite fair to say more than any other utility in the
world. And not by selling things, et cetera, but by really transforming the way that we actually generate power.
DEFTERIOS: Once the biggest polluter in western Europe, Drax has converted four of its six coal-generating units to biomass, and now produces 94
percent renewable electricity. Biomass describes plant and agricultural matter that generates energy from the wood humans have burned for millennia
to modern reinventions like Drax compressed sawdust pellets.
GARDINER: What we wanted to do was actually conserve the assets, the jobs and the livelihoods of the people here by moving away from coal to
something else. And so biomass was a very sort of effective way to do that.
DEFTERIOS: While biomass has helped keep the lights on as the U.K. moves away from coal, the claim that burning biomass is carbon-neutral is a
divisive issue in the scientific community.
RAPHAEL SLADE, SENIOR RESEARCH FELLOW, IMPERIAL COLLEGE, LONDON: Whether the biomass is a fuel is carbon neutral, carbon-beneficial or not really
depends on the time scale in which you look at it.
DEFTERIOS: Time is the critical factor. Even if trees are replanted, some scientists estimate it can take a century for the carbon dioxide to be re-
absorbed into the atmosphere. Technology will be key to guarantee the place of renewable biomass in a low-carbon economy.
Drax says helping pioneer a system to capture the carbon that the biomass emits on an industrial scale.
GARDINER: What we're doing here is we're capturing one ton of CO2 a day. And just to give you a sense of scale, this pipe is carrying enough blue
gas to capture one ton of CO2 per day. This very big pipe is carrying the flue gas from one biomass unit. If we captured all the CO2 from that gas,
it would be 10,000 tons of CO2 a day or as much as 4 million tons of CO2 per year.
And that's really what we were hoping to do by the middle of the 20s or maybe the late 20s to have one biomass unit up and running with carbon
capture and storage.
SLADE: The technology works, but scaling it up and rolling it out and financing it are going to be really significant challenges.
GARDINER: Biomass looks set to be part of the transition away from fossil fuels. But until we can make biomass with carbon capture sustainable at
scale, it's hard to see the wood for the trees. John Defterios, CNN.
(END VIDEOTAPE)
QUEST: Right, simple question. Do you use, beg, steal, borrow, glom off somebody else's Netflix account, Spotify, streaming, newspapers? In other
words, are you freeloading? There at cnn.com-slash-join because after the break, we'll talk about Netflix that wants to stop people like you from
borrowing and using your parents' Netflix account. After the break.
(COMMERCIAL BREAK)
[15:50:00]
QUEST: Netflix wants to know exactly who is watching their streaming service. The company says it's considering limiting how users share their
passwords, nothing official yet, but this mere suggestion has sent panic and fear through most of my producers, most of whom are still using their
parents' accounts.
Netflix executives said they're looking for customer-friendly ways to crack down on account sharing. Are you going to admit publicly, never mind
Netflix. Any account, any streaming, Spotify, newspaper, magazine, where you pay or somebody else pays and you log on at cnn.com-slash-join. I
don't -- I think we've got a load of honest people -- or I don't know, 55 percent of you say you do not share passwords.
Brian Stelter is with me in New York. Brian, why is Netflix doing this?
BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT: I think Netflix is paying very close attention to this because it's getting a little bit harder for
Netflix to grow -- actually it's getting a lot harder for Netflix to grow in the United States because it is so tapped out and it's getting harder to
grow around the world as well. And so, it makes sense for Netflix to pay attention to this issue.
It is notable, Richard, the reaction to the mere suggestion that Netflix is going to think about doing something. You know, there's you know, the
comment on the recent earnings call was we continue to monitor it. We're looking at the situation, we've got no big plans to announce in terms of
doing something differently.
But just the notion that they're thinking about it did cause a ruckus. And I can understand why. It actually speaks to the power and the prominence
of Netflix that this matters so much to people.
QUEST: But it's not just Netflix. I mean --
STELTER: That's true --
QUEST: I share somebody's -- I share somebody's Spotify. I know at least a few people who have -- might have used my ft.com account.
STELTER: I was going to say --
QUEST: In the past, in the past --
STELTER: Give it up for newspapers -- my mom just e-mailed me two days ago asking me for my "Washington Post" log-in. Now, some of these sites do
have family-sharing options. So there's some level of that it's OK to be sharing. But I think the reality is when you're --
QUEST: Yes --
STELTER: Giving away your Netflix password or your ft password to a dozen people, then you are starting to get into a situation where those companies
could be making more money than they are -- and I'm surprised we only have 53 percent of people saying yes, they share accounts, I suspect everybody
has done it once or twice.
QUEST: Well, I suspect they're still doing it, and certainly even the QUEST MEANS BUSINESS office is anything to go by. Streaming -- the various
streaming services are now virtually ready to launch --
STELTER: Right --
QUEST: "HBO" is there, "Disney" is there, everybody is there. I mean, who knows what "Verizon" and all those are going to do. I mean, they seem to
have got lost somewhere down the road. Who do you like the look of the most in terms of --
STELTER: Well, it's a --
QUEST: As a business model?
STELTER: I was speaking with Netflix executives in Hollywood yesterday, they feel like it's kind of a late arrivals. So these other companies --
QUEST: Yes --
STELTER: Are finally joining the party. In fact, Ted Sarandos just mentioned that on stage at an event today, you know, where he said, you
know, he was surprised that it's taken this long for other companies to create serious challenging streaming --
QUEST: Right --
STELTER: Rivals. I think it's a situation where the pie is so big, there's plenty for everybody. People are addicted to their phones and
their tablets --
QUEST: Right --
STELTER: And we watch five hours of TV a day, that means there's going to be a lot of winners in this race.
QUEST: Brian, you've been moonlighting. You haven't admitted this, but you have been moonlighting, I did not realize that you spent your spare
time as the Defense Secretary of the United Kingdom. Look at the picture, you clearly, I saw you in the House of Commons yesterday answering defense
--
STELTER: I've never seen that picture --
QUEST: Questions.
[15:55:00]
STELTER: But wow --
QUEST: Yes --
STELTER: I think he has better fashion sense than me though. I need to get that jacket. It's a good-looking jacket.
QUEST: Yes, you're even wearing the same tie. I mean, this is -- this is -- this is by the way -- for viewers who are worried. This is Ben Wallace
who I saw yesterday --
STELTER: Turn this way --
QUEST: Yes --
STELTER: Should I go that way --
QUEST: Maybe you'd like to answer questions in the House of Commons. Good to see you, Brian, thank you --
STELTER: Oh, yes!
QUEST: Great to see you, thank you. Last few minutes of trade on Wall Street. Have a quick look at how things are going. The market is set to
close pretty flat. Join me over at the wall and I'll show you exactly what I've got, 24 points, well, you know, we were down about 30 points. So, now
we're up 24 points, that really tells you small trades are moving this market.
It's hard to get excited about a market that is -- if you look at the Dow 30, and you realize what's happening with economic bellwethers like Boeing
and Caterpillar. All of whom posted disappointing earnings. Nike is at the bottom, down 3.4 percent after it announced the CEO Mark Parker will
step down and will be replaced.
Merck is at the top, but not by very much. The market is doing very little. Profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. Facebook really has set the cats amongst the pigeons with its cryptocurrency Libra. You heard the arguments
and they do call -- basically fall down to either one of worrying about money laundering, drug trafficking, money being transferred through Libra
for illicit purposes, all of which is a pretty serious stuff.
And then you have the issue of monetary, the ability as Martin Wolf beautifully explained tonight, the ability of some governments and smaller
countries to operate a monetary policy when most of their public are using Libra to exchange, and that in itself can create economic activity that
could lead to inflation. It could lead to an inability to control interest rates.
That's why Libra is so dangerous. This is not dangerous -- maybe this is so worrying. It's not that it is bad in and of itself. Somebody somewhere
is going to do a cryptocurrency. But unlike Venmo, unlike PayPal, this is an independent currency. It's not merely a payment mechanism. And no
wonder of course, the regulators are going to be so hard.
They're not clamping down because they're being mean, they're clamping down because there's a real risk that this could get out of control. And that's
QUEST MEANS BUSINESS for tonight, I am Richard Quest in London. Whatever you're up to in the hours ahead, I hope it is profitable. I will be back
in New York tomorrow.
(BELL RINGING)
BlackBerry, good, there they are, still on the move.
END
END
