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Quest Means Business

Global Stock Markets Hit New Highs; Greece May Face Expulsion from Euro; Dow Tops 18,000; GE Shedding Financial Business; Obama, Castro Set for Historic Meeting; Change in the Air in Cuba; Future of US-Cuba Relations; Greece Makes IMF Payment, Doubts Remain. Aired 4-4:30p ET

Aired April 10, 2015 - 16:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[15:59:55] (NEW YORK STOCK EXCHANGE CLOSING BELL)

RICHARD QUEST, HOST: They are getting slack in ringing the bell at the New York Stock Exchange. The market is closed.

(GAVEL HITS)

QUEST: One. Oh, dear. One big one, but quite a strong one, to bring trading to a close. The Dow is over 18,000, and it's Friday, it's the 10th

of April.

Up, up, and away. Global stock markets are hitting records. Why and what does it mean?

GE whiz. Shares are up after a massive shakeup.

And customers size up the new Apple Watch. But what size does a consumer make of it?

I'm Richard Quest. It may be a Friday, but of course I still mean business.

Good evening. We begin tonight with stock markets around the world that are racing to new records as central bankers keep the good times

rolling. Wherever we look, in Japan, for instance, the NIKKEI briefly topped 20,000 for the first time in 15 years.

In Hong Kong, the market roared up to a seven-year high. In Europe, the FTSE Eurofirst 300 rose to levels not seen since the turn of the

millennium. And here in London, the FTSE 100 hit an all-time record as well.

This is an impressive performance, and it's just been joined, if you like, by the United States, where the Dow has closed above 18,000. Not a

record, but look at the way the trading session moved and you really start to see that this is not just a theme, it's a trend, and it may be here for

some time to come.

Investors have central banks to thank. Signs of weakness in the US make it less likely the Fed will raise rates. The ECB and the Bank of

Japan are all pushing ahead. They've got quantitative easing on the brain.

The Bank of England shows little sign of reversing its easy money policy. And in China, the central bank is pumping money into the economy.

Why? But it's boosting prices and also, it's trying to ensure that any bad debt in the banking system don't overwhelm the banking structures.

Ken Rogoff, economic professor at Harvard and the former chief economist for the IMF, he joins me now. Ken, do not be the Grinch on

Friday --

(LAUGHTER)

QUEST: -- and tell me, please, that these markets off to the races aren't a good thing. Or are they not?

KEN ROGOFF, ECONOMICS PROFESSOR, HARVARD UNIVERSITY: No, it's a good thing, and I think the markets are seeing longer-term growth. Of course,

Richard, you're right, a piece of this is that with the central banks bringing interest rates so low, and interest rates even for long-term banks

so low, people are looking more and more to put their money into stocks.

But I also think it's a harbinger of somewhat better longer-term growth than I think many people fear. The IMF's come out with, I think, a

fairly gloomy forecast about the longer term, and the stock market doesn't believe it.

QUEST: We had this bifurcation, if you like, just a couple of years ago in the US and, indeed, in Europe where we saw -- I think we remember

2010, we saw markets again a recovery rally get underway which was out of all proportion -- might have been 2011 -- to what real economies were

doing.

So, do you see this as a danger sign when you, frankly, have so much gloom -- whether it's Greece, whether it's political gridlock in the US,

whether it's in Japan, Abenomics not being successful. Whether it's in China, then, worries about the banking system. But markets continue to

roar?

ROGOFF: Well, I'm more worried about debt loads than I'm worried about the high stock market. I think the economy can adjust much better to

the stock market rolling back 10 percent than to having a lot of debt default.

I think the economy went through this trauma with the financial crisis and it is recovering. Europe, it's really remarkable. The low oil prices,

the low euro is helping. Obviously, the high dollar is hurting the US some, but the US has enough internally-generated growth, it still looks to

have very solid year.

QUEST: Greece has been on everyone's mind in the last week or so, and there's still questions about whether -- we'll be talking more about what

might happen -- but from your perspective on the other side of the Atlantic, the question of Greece defaulting or a Grexit. It's nowhere near

as powerful as it once was.

[16:05:10] ROGOFF: Well, the other European countries have tried to convince themselves of that. I'm not sure it's true. But they have a lot

of options here. They've guaranteed the other banks more, they can protect Portugal and Ireland better. I don't know how far they'll go.

And also, I don't think Greece is really going to leave the euro. It's more likely it'll be cordoned off with capital controls. It's not the

same thing. So, they've thought it through more, markets have become a little more calm about it. I don't know if it's going to be a small event,

but people are definitely regarding it as doable. Then again, they said that about Lehman.

QUEST: Oh. Thank you on a Friday to remind us of Lehman Brothers.

(LAUGHTER)

QUEST: Last thought. It's rumored that Hillary Clinton is about to announce this weekend for -- that she is running for president of the

United States. Seems to me that the biggest open-kept secret anywhere. But regardless of whether she does or she doesn't, the U -- in the US over

the next 18 months as this election takes place, does the economy go onto autopilot?

ROGOFF: The economy's been in autopilot. There's been gridlock in Washington, we had the sequester, all kinds of things where they slash

government spending. And yet, the economy recovered. So, the US economy very market-oriented, doesn't depend as much on the government as, say, in

France. So, I think the economy will continue to do well.

It would help a lot to have a more unified government one way or the other, Republicans or Democrats, but until then, I think not much is going

to happen.

QUEST: Ken Rogoff, have a good weekend. Thank for not pouring water --

ROGOFF: You, too.

QUEST: -- on a market rally on a Friday. Thank you, sir.

Now, Europe EU member states are reportedly preparing plans to kick Greece out of the euro, according to a leaked report from the Finnish

government and a report in a Finnish newspaper. Now, it was a memo, comes from late March that warns Greece may be expelled from the eurozone if it

doesn't come up with a workable list of reforms.

Earlier this week, Greece made a crucial half-billion-dollar payment to the IMF, but there are still many more payments to come, and so far, the

reforms that have been put forward on the table are accepted begrudgingly with a comment, more needs to be done.

Hans-Werner Sinn is the president of the Ifo Institute for Economic Research, joins me now from Paris. Well, sir, do you give credence to the

idea that the other eurozone countries are coming together in a cabal to say Greece, be gone?

HANS-WERNER SINN, PRESIDENT, IFO INSTITUTE FOR ECONOMIC RESEARCH: No, I don't think they will let Greece go. It is very likely that they will

provide another --

(AUDIO GAP)

QUEST: -- now reached Alice in Wonderland where we are lend -- or not we -- the institutions are lending Greece money to repay other debts, where

the other money will have to be repaid? The cycle and circle of debt goes on.

SINN: Yes, it goes on. It goes on. It has been going on for many years now. Five years ago, we had a Grexit debate, and since then, the

public credit given to Greece has in --

(AUDIO GAP)

SINN: -- no one dares thinking about a Greek --

(AUDIO GAP)

QUEST: -- Ken Rogoff a minute ago, saying that that is most unlikely, now that they will probably sequester Greece, do some sort of capital

controls.

Is it Ifo and your view that this is -- that there is something else to come here? That Greece is going to have either capital controls or it's

going to have to have some other measures that's going to keep it in the eurozone but not keep it as a full player at the moment?

SINN: Yes, I think this is likely, and --

(AUDIO GAP)

SINN: -- at first, when --

(AUDIO GAP)

[16:10:17] QUEST: So, my final question, sir, is would everybody be better off grasping this nettle now, say this is what has to happen, start

looking at the options? Even though I accept, of course, you can't say to people that you're about to pull the house down, because they'll all take

their money out.

But otherwise, we're going to go on for weeks and months with this tortured negotiations, when you're telling me what the end result's going

to be.

SINN: Well, I think it is time for the credit --

(AUDIO GAP)

SINN: -- Greece has said that himself.

(AUDIO GAP)

QUEST: -- very difficult issue, and one we can't go into at the moment, sir. Hans, good to see you, sir, joining us tonight from Paris.

To the US stock markets, which started strong and stayed up on Friday. The Dow Jones Industrials topped 18,000 when the market closed. Look at

that. One bit down there, one bit down there, but basically, the Dow finished the day at the best of the session, a gain of the best part of 100

points, gain of half a percent.

Shares of General Electric surged 11 percent. Now, GE is turning the lights out on its financial unit and refocusing on its core business. The

company says it will get $26.5 billion from the sale of its retail and state assets, while it also placed a $16 billion charge on the transaction.

Think of it as the house that GE built, which has grown bigger and more diverse under its legendary leader, Jack Welch. Now, at one point, GE

Capital was the biggest part of the company, GE Capital over there. It's still big enough for US regulators to consider GE Capital systemically

important.

So, how did the house that GE -- that Jack built, how did it change? Well, GE began easing itself out of the financial business, out of capital,

a decade ago. That's when it got rid of the life insurance business.

And last year, it spun off its retail credit card business and the unit, it's not GE's financial units that are going dark. The bank, the

credit card. In 2013, it sold off NBC-Universal to Comcast. The television division went. And then, in 2014, the Swedish Electrolux

company bought GE's small appliances business, and the lights went out there, too.

GE says its core industrial business should bring in 90 percent of its earnings by 2018. To help that along, it's been buying a spree on Wall

Street. Its most recent purchase, part of Alstom's energy business. The house that GE built is more focused: medical, technical, Alstom, engineer.

And all the others have gone dark.

In a moment, we're in Panama, where President Obama is going to interact with Raul Castro. What does that mean? And what will come out of

a summit or a meeting or a handshake or a chat or a talk that's been the best part of five decades in the making?

(RINGS BELL)

[16:14:12] (COMMERCIAL BREAK)

[16:15:44] QUEST: Barack Obama and Raul Castro are expected to cross paths at the Summit of the Americas in Panama. It's the first face-to-face

encounter between the US and Cuban presidents since diplomatic relations were renewed, or at least the prospect of them.

The leaders spoke on the phone ahead of the conference. In Panama, Mr. Obama is expected to announce that Cuba's been removed from the White

House list of states that sponsor terrorism.

Our senior White House correspondent is Jim Acosta, he is in Panama and joins me now. Jim, look, they've shaken hands by accident at Mandela's

memorial service. Now, of course, there's going to be --

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: That's right.

QUEST: -- a meeting. Kerry's already met his counterpart. Are we -- are we making to much of this? Are our expectations too high?

ACOSTA: That was a question I had, Richard, but no. I think when President Obama and Raul Castro come face-to-face at the Summit of the

Americas, they are going to be making history.

And the White House said earlier today that this is the most significant encounter between the leaders of the US and Cuba since all the

way back in 1959, when Fidel Castro met with Vice President Richard Nixon. And here's how the deputy national security advisor for the White House,

Ben Rhodes, put it earlier today.

(BEGIN VIDEO CLIP)

BEN RHODES, US DEPUTY NATIONAL SECURITY ADVISOR: We're in new territory here. And the reason we're here, though, is because the

president strongly believes that an approach that was focused entirely on isolation and focused entirely on seeking to cut off the Cuban people from

the United States of America had failed.

(END VIDEO CLIP)

ACOSTA: Now, all of this doesn't happen by accident, right? So, the White House confirms, as you said, Richard, that the president and Raul

Castro spoke by phone on Wednesday. They were sort of setting up what you're going to be seeing over the next 24 hours, and that is these two

leaders will meet briefly later on this evening when there's a dinner at this summit involving all of the leaders across the Western Hemisphere.

And then tomorrow, what we're told by the White House, is that there will be a much more substantive meeting between President Obama and Raul

Castro. And as you said, speaking of making history, Secretary of State John Kerry met with his Cuban counterpart. That's the first time we've

seen a meeting like that in something like five decades.

And the Cubans know that they're not going to be walking away from this summit empty-handed. They heard what we were reporting all week,

Richard, and that is that the State Department is recommending that Cuba be taken off of the Obama administration's list of state sponsors of

terrorism. It's a notorious list that includes Syria, Sudan, and Iran.

But having said all of that, there is some difficult times ahead for Cuba, and potentially for this relationship between the US and Cuba. As we

saw this week, there's been a series of clashes between pro-Castro and anti-Castro people here at the summit, and that's happened several times,

even happened today.

And President Obama, though, he is taking a bit of a victory lap here in Latin America. As you know, this policy is not a good for him down

here. When he was introduced just a few moments ago -- he's speaking now at the summit -- he was given a round of applause for this policy.

Richard?

QUEST: Jim Acosta in Panama. He'll watch the events as they progress. Now, let us put this into the wider context of the outbreak of

cordiality between Cuba and the US does translate into trade, that's all very well and good for American industry, but it could crowd out some of

the countries which are already doing business in Cuba. The British ambassador told me he's confident that Cuba won't turn its back on old

friends.

(BEGIN VIDEOTAPE)

QUEST (voice-over): For Her Majesty's government, Ambassador Tim Cole is our man in Havana. The ambassador has represented British interests in

Cuba for the past two years.

QUEST (on camera): There are worse places to be ambassador.

(LAUGHTER)

QUEST (voice-over): Britain and Cuba have had diplomatic relations for more than two centuries, and doing business with this Communist country

is still a little like using a courier bird in a Twitter world.

TIM COLE, BRITISH AMBASSADOR TO CUBA: Change will be slower than people think. I think the Communist Party, the Cuban government, the Cuban

regime, is in charge of this country, and they will want to dictate the pace of change.

[16:20:05] QUEST: The Brits, the Europeans, the -- whoever else is here, are they all about to -- come on, be honest. Are they all about to

be shut out by the Americans?

COLE: I don't think so. I honestly think that the Cubans feel -- the Cuban government feels at the moment that they have partnerships with

countries, like the UK, who stood by them through the difficult years, and they will continue to work with those partners.

I think in some cases, the Americans will take over those projects. But what we've seen since December the 17th is actually an increase in

interest from British companies exactly because of the US rapprochement, the change in the policy.

QUEST (voice-over): But can this small island sustain the influx of tourism?

COLE: Yes. Tourism is rising. Havana in particular suffers from that problem. The Cuban government is building hotels. They won't build

it at the rate they would need to to absorb that number of flights from the US. But I think they are very focused on that.

QUEST (on camera): Paint a picture for me of what you think it will be like in ten years' time.

COLE: It won't look like any other tourist destination in the Caribbean. It will still be a Cuba of Fidel and Che and the revolution and

all those sorts of things. The Cuban government at the moment does not want to see McDonald's or Starbucks on the Malecon, in Old Havana, or

anywhere else in Cuba. But who knows? That might be at some stage in the future.

(END VIDEOTAPE)

QUEST: Now, that's the current British ambassador, Her Britannic Majesty's ambassador in Havana. The former US ambassador to the Seychelles

recently met with Cuban officials in Cuba. I asked him how quickly we could see US business setting up shop.

(BEGIN VIDEOTAPE)

MARK ERWIN, FORMER US AMBASSADOR TO SEYCHELLES: I do think that they're making a lot of moves in the right direction. They now have

500,000 people employed in the private sector in Cuba. And three years ago, when our same group of ambassadors were down there, they had less than

50,000.

So, they're making great strides, and so -- but there are a lot of things that have to happen in order to lift the full embargo. That has to

go through Congress. But the president still has some additional things he can do without Congress to lift portions of the embargo.

QUEST: It's always seen as a sort of a one-way street, in a sense, of Cuba has to do this if it wants to lift the embargo. But Cuba has not just

a terrorism aspect going for this, Cuba has legitimate concerns about opening up to a substantial economy like the United States less than 90

miles from its border. How aware does America need to be in that regard?

ERWIN: Well, Cuba, it's sort of -- they're sort of like a bottle of champagne. If you uncork it wrong, you're going to lose half of it. Their

economy will blow up if you release too much economic freedom at one time. Too much capitalism can swamp them. So, that's one of the things that Raul

and the leadership there have been very careful of.

As you know, they've restrained internet access, and they're now starting open that up a little bit. And that's going to open a lot more

communications. The result is going to be that some of the dissidents are going to have a larger voice than they've had. One of the things that they

made clear to us when we were down there was that --

QUEST: Right.

ERWIN: -- they don't want us to be meddling -- us, the United States -- to be meddling in their internal affairs. They're happy to negotiate

anything and everything, they made it clear. But don't meddle in our internal affairs, which means --

QUEST: Right.

ERWIN: -- don't try to rule our dissidents.

QUEST: Finally, Ambassador, the change is coming, I think we an all agree on that. Except, unless, of course, the US election -- presidential

election turns the other way. Do you see the US domestic political situation -- a Republican, for example, in the White House, or just an

emboldened Congress -- do you see that scuppering these talks?

ERWIN: I do not. I think it's too far down the road now. And everybody with common sense these days in America, and I think in Cuba

both, understand that we need to act like neighbors, not enemies.

(END VIDEOTAPE)

QUEST: Cuba and the work to be done

Greece has a lot of hard work ahead. We'll hear from the former president of the ECB in a moment.

[16:25:00] (COMMERCIAL BREAK)

QUEST: Europe breathed a collected sigh of relief this week after Greece made a crucial payment to the IMF. Fears remain, though, about the

long-term situation. Athens is under intense pressure to come up with a credible set of economic reforms to appease the creditor countries.

And after all, there are many more repayments still to come in the next few months. I asked Jean-Claude Trichet, the former president of the

ECB, what concerns him now most.

(BEGIN VIDEOTAPE)

JEAN-CLAUDE TRICHET, FORMER PRESIDENT, EUROPEAN CENTRAL BANK: Well, I think it's, of course, a very, very important and grave issue. And you

have served me right to say that the deal is not done at all, not only vis- a-vis the Europeans, but vis-a-vis the IMF.

Even if it was very good news that the Greek government has promised to repay the $460 million today. So, from that standpoint, it's a sign of

good will.

But we still have a lot of hard work to do to get what is needed. Namely, a good program, a good set of commitments that would have the

confidence and get -- and improve the confidence of the international community, as well as --

QUEST: Right.

TRICHET: -- the Europeans in the future of Greece.

QUEST: Don't you find it somewhat appalling that six years after the crisis, and with many other countries growing, and now having put to bed --

if we look at Greece, we're not just talking about the country recovering. We're still talking about offering more bailout and more assistance.

What's gone wrong?

TRICHET: Well, first of all, you are absolutely right. All countries that were in difficulty made a lot of progress and have regained

competitiveness. It is part of the Greek also, the case of Greece. Greece started seven years ago, six years ago, with 15 percent of current account

deficit in terms of GDP, and also 15 percent of fiscal deficit. And they improved a lot over the years.

So, of course it was very painful, because the starting point was abominable, minus 15 percent. And they had to do very, very hard work.

The paradox is it is at the moment where they are about to be balanced, both as regards their economy as a whole, the current account,

and the fiscal position, that there is fatigue, which is expressed in the position of the new government.

QUEST: From your perspective, where does responsibility now lie to move this forward?

TRICHET: Well, first of all, I think that the main problem we have is not the outstanding debt of Greece. I think that perhaps paradoxically the

debt can be solved because I think -- I trust that the public creditors of Greece, if Greece has a credible program, are likely to do a lot of effort.

So, the problem is the credible program of Greece.

(END VIDEOTAPE)

QUEST: Jean-Claude Trichet talking to me.

[16:29:58] Now, the World Bank president says it's going to be hard, but he thinks the world can end extreme poverty in just 15 years, and

President Kim has a new plan to get it done. We'll hear from Jim Yong Kim next.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment when President Dilma Rousseff tells CNN there's no one above

the law in Brazil, including herself.

And Crazy for Crayons - the best-selling book on Amazon - they're coloring books for adults. Before any of that, this is CNN and on this network the

news always comes first.

The alleged mastermind of the 2008 terror attacks on Mumbai has been freed by a court in Pakistan. Zakiur Rehman Lakhvi, was released on bail this

morning. 164 people were killed when ten gunmen carried out attacks on two luxury hotels, a train station, a hospital and other targets cross Mumbai.

India's called his release an insult to those who lost their lives.

President Obama and President Raul Castro have arrived in Pana. What's being billed as an historic summit of the Americas, delegations from 35

nations of North, Central and South America are there. It's the meeting between Obama and Castro that will get the most attention since a recent

thaw in relations between the two countries.

Former U.S. Secretary of State Hillary Clinton is believed ready to pull the trigger on her 2016 presidential campaign this weekend. On Sunday, she

will launch her second bid or the White House according to CNN sources. She's ditching the pomp and circumstance of large crowds and soaring

speeches. Instead, it will be a video on social media.

United Nations has now delivered 16 tons of medical supplies to Yemen's capital. A UNICEF official says much more aid is needed as the

humanitarian crisis worsens. Heavy clashes and weeks of Saudi-led airstrike at Houthi rebel positions led to shortages of water, food and

basic supplies.

Richie Benaud, the Australian commentator described as the voice of cricket has died. The 84-year-old was suffering from skin cancer. The world of

cricket honored his contribution today. The Australian Prime Minister Tony Abbott even offering a state funeral.

(BEGIN VIDEOCLIP)

TONY ABBOTT, AUSTRALIAN PRIME MINISTER: Richie Benaud has been the voice of cricket. There will be very few Australians who have not passed a summer

in the company of Richie Benaud. He was the accompaniment of an Australian summer.

[16:35:02] His voice was even more present than the chirping of the cicadas in our suburbs and towns. And that voice, tragically, is now still.

(END VIDEOCLIP)

QUEST: The World Bank president, Jim Yong Kim, is rolling out an aggressive new strategy to end extreme poverty by the year 2030. The plan

really comes down to grow faster and more sustainably, invest in education and health in women and ensure the social safety nets against disaster and

disease.

I spoke to President Kim and asked him what the World Bank is saying about poverty that it hasn't said in the past.

(BEGIN VIDEOCLIP)

JIM YONG KIM, WORLD BANK PRESIDENT: Over time the agenda has really evolved and so for the first time we have now given full-throated

endorsement to a three-prong strategy. Yes, economic growth is important and probably in ending extreme poverty, not necessarily our shared

prosperity goal, but in ending extreme poverty, increase productivity of agriculture and infrastructure investments are probably really critical.

The second part - invest in human beings. Health and education particularly and particularly for women and girls. We've always had that

as part as our overall sort of approach, but now we're talking about it as an investment in growth in the future.

The third part is really kind of new for us. We're saying that insuring - in other words, providing conditional cash transfer programs for the

poorest, other social insurance schemes and even helping to insure against the impoverishment of climate change-related events for example and even

pandemics. So grow, invest, insure.

This is a way of thinking about the strategy -

QUEST: Right.

KIM: -- that is really - it's new for us.

QUEST: On this issue of insure - who's insuring what? And at what level are we talking about? Because I can see a situation, Mr. President, where,

if you like, a bureaucracy is created, but actually getting the benefits becomes difficult.

KIM: If you give the poorest women direct cash transfers but then say that you're not going to get your next month's cash transfer unless you do

things like keep your kids in school, make sure that your kids are nourished well, take classes in how to keep your own family healthy -

you're not going to get that next transfer. Those have been tremendously effective. They've improved outcomes for kids, they improved outcomes for

families and they've also been very - had a positive impact on economic growth in those areas.

Now we studied this to death because people inside the World Bank group were wondering, well, what are the possible negative impacts? Are people

going to not want to work then, are people going to, you know, game the system? And what we found is in fact it does not take away the motivation

to work and this is very specific to the poorest people.

In fact, it opens up opportunities for employments - employment - that they wouldn't have had before.

QUEST: Finally, putting this together, when we've talked in the past, you've had targets for the alleviation of poverty. Are you changing those

targets?

KIM: Well, it's going to be hard, Richard. I mean, we're looking at, you know, even our most optimistic projections which suggest that if the growth

rate over the next 15 years is the same as it was over the last 15 or 20 and the relationship between growth and the reduction of poverty remains

the same, we're only going to get to about 8 percent and not the 3 percent that we're looking for. So I really like that situation because that

situation requires that we act differently and the world acts differently and that's the whole point of a target.

A target is supposed to make you rethink what you do and change what you do so that you can have a chance of reaching that target.

(END VIDEOCLIP)

QUEST: President Kim, the president of the World Bank talking to us about poverty. As the corruption scandal in Brazil deepens, President Dilma

Rousseff has been telling CNN she has nothing to hide. Join me at the Super Screens. It's all about what did the President know and when did she

know it.

Let's start with the Petrobras - the oil investigation which is widening. Three former lawmakers have been arrested. The prosecutors say that they

took bribes in exchange for contracts. There've been demonstrations on the street. People are up in arms about what was happening at Petrobras.

But President Rousseff denies any wrongdoing to CNN and she denies any questions about donations to the Worker's Party.

(BEGIN VIDEOCLIP)

[16:40:02] DILMA ROUSSEFF, PRESIDENT OF BRAZIL, VIA INTERPRETER: I'm absolutely certain that my campaign did not receive money from bribes. And

I also want to say that this does not mean that I am above anyone. Any Brazilian citizens is accountable for everything he does. I was. To whom?

To the Superior Electoral Court. I gave them my campaign's accounts, they're audited and they were approved.

(END VIDEOCLIP)

QUEST: Now, on a variety of fronts, President Rousseff denies any wrongdoing, but according to the people - so many are not listening - there

are more anti-government protest plans for this weekend, small pro- government rallies were held earlier in the week. Anti-government rallies are being planned and if you take the totality of the various events,

including the Petrobras scandal, it seems this isn't going away any time soon.

When we come back in a moment, Lufthansa's still reeling from the crash of Germanwings, but as the question of litigation becomes relevant, not

everyone will get the same. Is there fairness when it comes to liability? "Quest Means Business."

(COMMERCIAL BREAK)

QUEST: The German Aviation Authority says Lufthansa acted correctly when it gave Andreas Lubitz his pilot's license. Lubitz went on to crash

obviously as you know the Germanwings plane - the 8320 - into a French mountainside. It killed all onboard.

Lufthansa's chief executive Carsten Spohr held top-level meetings with the authorities this week. The Aviation Auhority says it had no prior

knowledge of Lubitz's earlier episodes of depression.

Gerard Forlin you see is with me. He's a lawyer specializing in corporate liability after these kind of shocking (ph) events. Good to see you.

GERARD FORLIN, GENERAL EDITOR, CORPORATE LIABILITY: Thank you very much, Richard, for having me on.

QUEST: In this situation, one of the most egregious facts of compensation is the differences between, say, the three U.S. passengers - what they will

get - and some from other parts of the world. The law is supposed - the Montreal Convention was supposed to change all that.

FORLIN: In a way it was, and I completely agree with you - depending on where you actually make this claim -- there can be as you know, Richard,

massive disparity between these various claims. In general, for example, the three passengers who will try potentially to get this matter into the

American courts, they will, if successful in front of a jury, get huge damages.

For those that won't be able to get into America, particularly in Germany, the U.K., Netherlands where there is no what they call moral damages --

that you can only get the money in terms of economic loss rather than the bereavement and suffering.

QUEST: Is that fair?

FORLIN: Well, partly it's - it's not for me, I'm just a humble lawyer - but it's for others to say whether it's fair. Personally there was a deal

done on this convention. This Convention was to try and get away from some of the risk of litigation, so everyone knew where they were.

[16:45:04] But in the South of Europe, for example, Richard, Italy where some of them come from, Spain - and my thoughts go out to the families -

and France - they can get some sort of moral damages to try and make up for the fact that their loved ones have died a tragic death.

QUEST: You talk about this idea of two people in the cockpit -

FORLIN: Yes.

QUEST: -- not being the nirvana, not being the answer.

FORLIN: Yes.

QUEST: But, you know, some suggest of course if there had been two in the cockpit, it wouldn't - this might not have happened. We'll never know.

FORLIN: We'll never know, but for example in EgyptAir where we do know that the pilot was able to get in quite quickly but it's still the accident

that happened. And the other issue about this, it depends who you put in the cockpit, Richard.

For example, it doesn't take much for a pilot to decompress the plane, to put the plane into a roll, to attack someone with a fire ax. Unless you

have some sort of major - a Kung Fu fighter -

QUEST: Right.

FORLIN: -- it's going to be very difficult depending on who that person is. I don't think it is the nirvana that everyone thinks. May have

helped.

QUEST: Now, we've got liability into the Montreal Convention up to, I think $150,000 -- $100,000 special drawing rights or whatever.

FORLIN: Among three --

(CROSS TALK)

QUEST: We've got liability there. Lufthansa, to avoid any more liability, --

FORLIN: Yes.

QUEST: -- Lufthansa needs to prove it wasn't at fault or negligent -

FORLIN: Yes.

QUEST: -- or somebody else was at fault.

FORLIN: That's (inaudible).

QUEST: Their employee was at fault.

FORLIN: That's correct.

QUEST: But he was acting so out of the scope of employment, will that give them a defense?

FORLIN: Well, I don't know whether they'll choose to take that defense, but of course under the Montreal protocol as part of this deal, the actions

- vicarious actions of your employees -- you cannot use in technical terms to waive your rights under this Convention.

Having said that, if someone goes so much on a frolic of their own, there is definitely some case law to say that we may need to explore that.

QUEST: Ultimately, Allianz I believe is the insurer here and ultimately Allianz is going to pick up the bill. It won't really be a Lufthansa

argument, it'll be an insurance company argument.

FORLIN: And the lawyers.

QUEST: And the lawyers. Do you expect them to fight this hard?

FORLIN: So far from what I've been able to see, it looks to me that they seem to be taking a very proper line. I don't see any evidence that they

are trying to use their article 21 right defense, but I don't know. I'm not their advisor and I'm not Lufthansa. But it does raise one other issue

- what do we want to do about mental health issues?

We're all told, Richard, that many of us have them some of the time, and one of the big issues is - and I really hope that we look at this very

seriously. We do not want to drive these issues underground.

QUEST: Right.

FORLIN: And if doctors have to give a notice, then will people go to talk to someone, will they take the prescription drugs that they should be

taking?

QUEST: Issues which will be raised in the future. Thank you, sir, for joining us.

FORLIN: Thank you very much.

QUEST: This is CNN. "Quest Means Business" will be back after this.

(COMMERCIAL BREAK)

QUEST: The time has come. Tempus fugit, it waits for no man, woman or beast. The Apple Watch has arrived in stores around the world. Customers

lined up to try it on. To buy it though you need to go online. Preorders began at midnight Pacific time. Some models sold out without minutes and

they're now backordered until June.

The Apple Watch is the company's first major project since Steve Jobs introduced the iPad five years ago, and certainly the first major product

under Tim Cook. You can see the launches taking place all around the world.

[16:50:10] Kit Yarrow is a consumer psychologist and the author of "Decoding the New Consumer Mind" and joins me from New York. This is a

different strategy by Angela Ahrendts to get rid of the lines in the streets. What are they doing here?

KIT YARROW, CONSUMER PSYCHOLOGIST, AUTHOR OF "DECODING THE NEW CONSUMER MIND": Well, I think we're getting rid of the lines in the street for the

watch and also for the computer, but I don't think that'll happen when it comes time for the phone to be re-launched. So really lines are not that

luxurious, right? And they want to elevate the stature of the new watches that are out there.

And so they're taking into consideration the cost that people pay when they stand in line and understanding that that cost compounded with a risky new

product, compounded with the high cost of a computer is maybe perhaps more than consumers are willing to pay. And therefore ordering online is

simpler, easier, less cost.

QUEST: What are you saying - what are you saying in terms of the psychology of all this. I mean, I hear you on the practical point, but the

psychological of a watch is different in many ways. Look, I'm wearing a rather nice watch that I bought some years ago and I have to think very

long and hard before I get rid of it - even for the gadgetry of an Apple Watch.

So how - what's their psychology do you think?

YARROW: You know, it's so interesting because Apple is marketing this as a watch, and yet really what it is, is technology. So the reason why you can

justify spending a lot of money on a watch is because it's going to maintain its value, you can hand it down to your kids. The Apple Watch

first edition might actually maintain its value because it might be a collectible.

However, it's technology. It's not a watch. It's going to be replaced within a year or two with better technology and you're still going to be

stuck with that piece of hardware.

QUEST: Do you see a sizeable difference in the shift of Apple's retailing psychology at the moment?

YARROW: Well I think marketing this watch has been a big shift. Apple has always done a tremendous job of using emotion in order to market its

products. It never really focuses just on the functionality of the product. It really turns technology almost into a fetish. It becomes

something that so much more in imbued with so much more emotion and meaning than actually the functionality of the product.

And I think we're seeing this also with the watch, but the watch they're trying to elevate and turn into more of a luxury sort of item. You can see

that with the change in the stores, with wanting people to - not have to wait in line. With talking about the watch as if it's more of a precious

item and really less about technology. That's a shift for Apple.

QUEST: Kit, have a good weekend. Thank you for joining us.

YARROW: My pleasure.

QUEST: Much appreciate it. Now it's got to be in a while since someone told you to stay inside the lines, at least as it ties to a coloring book.

Well here are two coloring books. This is "My Pirate" coloring book which as you can see has lots of areas for you to do lots of coloring for the

children.

But this is "The Enchanted Forest" by Johanna Basford - "An Inky Quest Coloring Book." Now this one is designed for adults. You have two

different coloring books - a child's and an adult's.

But what we are now seeing quite clearly is that coloring books for adults are now really en vogue. It's number one on Amazon.com at the moment. The

adult coloring book - never mind the children's - are taking over. Claire Sebastian reports.

(BEGIN VIDEOCLIP)

CLAIRE SEBASTIAN, CNN PRODUCER: Carly Herbst knows how to pick just the right color.

CARLY HERBST, BEAUTY BLOGGER: The blues are my favorites.

SEBASTIAN: The 29-year-old New York beauty blogger spends her days reviewing lipsticks and nail polish. In her free time she's discovered a

different kind of coloring.

HERBST: I can color in a couple of flowers or a couple of trees and just kind of shut my brain off after a busy day and not be looking at my phone

or my iPad. This is my dragonfly that I did.

SEBASTIAN: For and old fashioned hobby, it's right on trend.

HERBST: I have friends who are writers, who are CPAs, who are lawyers, who are nutritionists and they're all interested in it.

SEBASTIAN: The author of these coloring books, 31-year-old Scottish artist Johanna Basford could never have imagined such success.

JOHANNA BASFORD, ARTIST/ILLUSTRATOR: Nobody is more surprised than I am.

SEBASTIAN: Her two titles have now sold over a million copies worldwide, topping the Amazon best seller list.

BASFORD: I just wanted to make a book that I myself would like to order and color. (AUDIO GAP) - community online and let it pop up.

SEBASTIAN: Business is blossoming. She's having to print more copies of her first two books and she's already working on three and four.

BASFORD: You don't see very many stressed out seven or ten-year-olds. You know, there is truth that play, you know, does help you relax and be more

productive.

[16:55:02] SEBASTIAN: We wanted to fill in the blanks of this series so we brought one of the books and some pencils to Midtown Manhattan. It's a

weekday, lunch time, there should be plenty of stressed office workers in need of relaxation.

Female: I feel better. I feel more pleasant and positive.

Male: A coloring book for adults? Yes, no.

SEBASTIAN: Do you want to give it a go?

Male: No, no I'm OK. Thanks.

Female: I think everybody who comes to New York needs a coloring book.

SEBASTIAN: It's a craze that goes beyond one author. Several other titles are also selling out online.

HERBST: It takes you back to childhood but on a grown up level. Like you feel like you could do it with a glass of wine instead of a glass of milk.

SEBASTIAN: Claire Sebastian, CNN New York.

(END VIDEOCLIP)

QUEST: It's been a very stressful week, and now I have the answer to this. You get "Profitable Moment" after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's "Profitable Moment." You may wonder about the coloring book fad and trend. Why do we want it? Well look no further than our

program tonight and you'll see the sort of stresses and strains that make people want to color away.

A stock market that rises to unseen heights and then plummets with a correction, giving you heartache over your portfolio. Watches, laptops,

new phones, a digital economy that has us all stressed up the wazoo. And then there's worries about Greece, economies, jobs - you name it. It's

everywhere today's stress.

You think any wonder that in those moment of quietness that we look forward to picking up something we grew up with, something we can revel in,

something that we can spend some time - maybe a bit of coloring. The only problem is things have to get pretty bad before we do it.

And that's "Quest Means Business" for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's

profitable. I'll see you back in New York.

END