Return to Transcripts main page
Quest Means Business
FBI Treating Shooting as Terror Investigation; Greek Prime Minister Shakes Up Cabinet; German Parliament Supports Bailout; Pressure Mounts for Greek Debt Relief; Implementing Deal Will Be Difficult; Krugman Says Greece Still Won't Stay in Eurozone; European Markets Close Flat; US Shooting Investigation; Anniversary of MH17 Crash in Ukraine; Investigation Into MH17 Crash Continues; NASDAQ Pushes Into Record Territory; Google Shares Skyrocket
Aired July 17, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:57] (NEW YORK STOCK EXCHANGE CLOSING BELL)
MAGGIE LAKE, HOST: The Dow fluked at the end of the week. It's Friday, the 17th of July.
Tonight, Berlin backs the bailout. Germany gives the green light to Greece's painful rescue.
Anger and anguish. One year on, the world remembers the MH17 disaster.
And stopped in its tracks. Japan is scrapping its centerpiece stadium for the Olympics.
I'm Maggie Lake, this is QUEST MEANS BUSINESS.
Good evening. Before we get to the day's business news, we need to bring you up to date on the tragic shooting in the US state of Tennessee.
The FBI says it has more than 70 leads, but no motive. Four American Marines were killed, along with the gunman. US attorney William Killian
said the shooting is being investigated as an act of terrorism.
(BEGIN VIDEO CLIP)
BILL KILLIAN, US ATTORNEY: The Department of Justice, the FBI, our local, state, and federal partners, are putting all the resources necessary
toward this effort. We will not leave any stone unturned for the victims of this heinous and cowardly act.
(END VIDEO CLIP)
LAKE: We will have a full update on that later in the program.
Now tonight, the Greek bailout clears a crucial hurdle, while Alexis Tsipras cleans house. In Athens, the Greek prime minister has sacked his
energy minister and deputy finance minister. It's their apparent punishment for revolting against their prime minister and their own party
and refusing to vote in favor of the Greek bailout package.
In Berlin, the German chancellor is facing up to a revolt of her own. The German parliament has voted in favor of Greece's bailout. That's
despite politicians in the chancellor's own party saying German taxpayers shouldn't be forced to send Greece any more money.
Angela Merkel promised to keep a close eye on Greece and warned it would be irresponsible not to pursue negotiations.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): The alternative to this agreement would not be an orderly time out from the
eurozone, but predictable chaos.
(END VIDEO CLIP)
LAKE: Senior international correspondent Fred Pleitgen has more from Berlin.
(BEGIN VIDEOTAPE)
FREDERICK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: It was an emotional debate in Germany's house of parliament in the Bundestag as
Angela Merkel tried to get backing for the German government to start negotiations over another bailout package for Greece.
Now, Angela Merkel is taking flack from two sides as she tried to get the go-ahead to start these negotiations. On the one hand, there are many
people within her own party who are taking flack from their constituencies because many people believe that Germany is spending too much money trying
to bail Greece out, and many also believe that another bailout package also won't solve the problem.
So, one of the things that Angela Merkel did in the debate is she talked about European solidarity and how important that solidarity was at
this point in time.
MERKEL (through translator): No matter how large the differences are, we are going to engage and get involved in overcoming Greece's problem
because the EU and the euro is not only a currency, it is the fundamental concept of European unity.
PLEITGEN: Now, the other big point that Angela Merkel made is she also talked about the responsibility of the Greek government to initiate
tough reforms as part of any sort of bailout package. That is something that's very important for many skeptics to hear, and one of the main
skeptics is, of course, her own finance minister, Wolfgang Schaeuble.
Now, Schaeuble had floated the idea of a temporary Grexit for Greece, saying it might be the best thing for the country in order to get its
finances in order and then return to the eurozone. It's something that on the one had gave him a lot of praise within conservatives in German
parliament, but on the other hand, also got a lot of critics on the barricades.
And most of those critics inside German parliament are of the left- wing party called Die Linke, and today, they took shots at Wolfgang Schaeuble, they took shots at Angela Merkel saying that Germany had
damaged, badly damaged, the European idea and had also badly damaged Germany's standing within Europe and its popularity.
Fred Pleitgen, CNN, Berlin.
(END VIDEOTAPE)
LAKE: Two of the three members of the Troika have now called for debt relief in Greece, raising pressure on the eurozone leaders, who have so far
refused to consider it. Earlier in the week, the IMF labeled Greece's $343 billion debt burden "highly unsustainable."
It said Europe must very dramatically extend the grace periods on the debt or concede to deep, up-front haircuts. It warned that if Greece's
finances are not brought under control, it may not take part in the new bailout.
[16:05:02] On Thursday, European Central Bank president Mario Draghi said it's "uncontroversial" that Greece needs relief. He said the hard
part was finding the best way to do it while staying within the laws and regulations of the European Union.
As for some hardline EU creditors, led by Germany, they're still holding out. Speaking earlier, German finance minister, Wolfgang
Schaeuble, said slashing Greece's debt was simply not on the table.
(BEGIN VIDEO CLIP)
WOLFGANG SCHAEUBLE, GERMAN FINANCE MINISTER (through translator): There are European regulations. The EU Summit declared unanimously in its
statement that a debt haircut is ruled out according to European law.
(END VIDEO CLIP)
LAKE: This issue of debt relief is just one of many facing Greece. Nina Dos Santos explains.
(BEGIN VIDEOTAPE)
NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT (voice-over): After furious demonstrations --
(EXPLOSIONS)
DOS SANTOS: -- endless debates, and round after round of deal-making, Greece finally won the backing of its creditors to ask for more money.
After coming to power in an anti-austerity ticket and bringing back a deal that he himself disagrees with, Prime Minister Alexis Tsipras managed to
convince lawmakers to fast-track the harsh reforms required, despite protests by his people.
(EXPLOSIONS)
DOS SANTOS: But for those that think that a deal is set and done, there is one issue that just won't go away.
DOS SANTOS (on camera): With the banks shut for three weeks, Greece's economy has been grinding to a halt, meaning that its debt is now rising as
a proportion of GDP. In fact, the IMF reckons that this country's borrowings could hit as high as 200 percent of output within the next two
years, a situation it calls unsustainable without some kind of debt relief.
CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: No matter what form it takes, whether it's by extending maturities, providing
a longer grace period, compressing the interest rates on the one hand, or through other options, such as transfer, which I think is not in the cards,
such as haircut, but one way has to be found in order to release the burden.
DOS SANTOS (voice-over): And she's not the only one who thinks that. From Jack Lew at the US Treasury to Mario Draghi at the ECB, calls are
growing for some kind of help for Greece.
ALEX WHITE, REGIONAL DIRECTOR, EUROPE, THE EU: We still have a 60 percent probability of a Grexit in our medium-term forecast going out to
2019. So, on balance, we think it's still likelier than not. We think this has been another camping exercise. I don't think we feel that we've
addressed the underlying issues of debt sustainability and the ability of the Greek state to actually implement what's been asked of it.
DOS SANTOS: But with Germany steadfast in its opposition to any kind of debt write-down, it means that even if Greece gets the funds that it
needs for now, its current crisis is by no means fully resolved.
Nina Dos Santos, CNN, London.
(END VIDEOTAPE)
LAKE: Earlier, I spoke to Nicholas Economides from San Francisco. He's a professor at New York University's Stern School of Business. I
asked him if Greece's new government will be able to get reforms through parliament and implemented, and if they can do it quickly enough.
(BEGIN VIDEOTAPE)
NICHOLAS ECONOMIDES, PROFESSOR, NEW YORK UNIVERSITY STERN SCHOOL OF BUSINESS: It's very hard. This government doesn't have very competent
people, and it will be hard for them to do the reforms without getting some help from outside experts or other parties in Greece.
LAKE: It sounds like you're not too confident that this deal can hold, then.
ECONOMIDES: That's right. I'm not too confident, yes. Well, I'm not too confident about the implementation of the deal. I think the deal is
going to pass through, that will be no problem at all. But then, as many things can go wrong in implementation, it's very crucial to have the right
people. And I don't think they do.
LAKE: What about the banking system as well? Even with the ECB emergency liquidity, this is a very fragile system. What happens when the
banks reopen?
ECONOMIDES: I think the banks will reopen, but the withdrawal limits are going to remain the same. It's just that people are going to be able
to withdraw cumulatively for a week if they haven't withdrawn earlier in the week.
But the crucial thing is that the rest of the banking system will start working, like people are going to be able to deposit checks, people
are going to be able to move money from one corporation to another, and so on.
LAKE: You know, I've often said that this is not like an economy that's trying to restart after a natural disaster. This is an economy that
has real challenges, that has stopped functioning, in many ways, as a regular economy, especially against the backdrop of capital controls. Can
it start to return to some sort of sense of normalcy?
ECONOMIDES: Ah, yes, I think it can. I think one of the aspects of opening the banks is that people are going to be able to take out money
from the safe deposit boxes, which happen to be in the same buildings as the banks.
[16:10:07] So, that by itself is going to create some impetus in the economy, will push it forward. It will allow for more liquidity to be in
the system. But I think the economy will take some time to restart. It won't be immediate. And a lot of damage has already been done, and there
will be some more damage as it restarts.
But I am confident that the economy is going to restart, it's just a matter of time. And of course, capital controls cannot be lifted, because
then everybody's going to take their money out of the banks. So, capital controls probably will have to stay in place, maybe for a year or more.
LAKE: Will Greece get the debt relief that so many economists and officials say is essential?
ECONOMIDES: I think it will. The deb relief will not be an outright haircut of the nominal value of the debt. That's out of the question. But
I think what will happen an elongation of the maturities to the very distant future, let's say, to 75 years or something of that sort, so that
the present value of the debt becomes smaller and smaller.
Also, presently, Greece has a ten-year grace period in paying interest. That is, it doesn't pay interest for over ten years. I think
that can be extended significantly to 20 or 30 years. So, that way, Greece will have a chance to grow. And growth is really the only guarantee that
Greece is going to repay its debt.
So, I think that the elongation of the debt and the grace period, a long grace period, will help Greece grow and then pay its debt.
(END VIDEOTAPE)
LAKE: The economist Paul Krugman had called on Greece to reject the bailout and go back to the drachma. Even with the Greek acceptance of the
bailout, Krugman told CNN's Fareed Zakaria, Greece's days in the eurozone are numbered.
(BEGIN VIDEOTAPE)
PAUL KRUGMAN, COLUMNIST, "NEW YORK TIMES": My guess is -- nothing can ever be certain -- but my guess is, yes, it's -- either in the end, they
will get the sort of enormous debt relief that they're not getting, or they will have to exit. And I guess my money, in some currency or other, is on
exit one way or another.
FAREED ZAKARIA, CNN HOST, "FAREED ZAKARIA GPS": And will that cause a Lehman-like crisis? Because the Germans seem convinced that at this point,
all that debt is on the balance sheet of central banks, not private banks, and so it won't have that cascade that Lehman had.
KRUGMAN: No, I think that's right. We do not see that kind of crisis. We're not -- I mean, even a Lehman event would not cause a Lehman
event now, because there has been a lot -- a lot of buffers have been put up. We know that the public sector will stand behind.
That doesn't mean that a Greek exit is not -- is trivial. A Greek exit would have huge implications for the future of the European project.
And if Greece exits and then starts to recover, which it probably would, that in turn would be, in a way, would be encouragement for other
political movements to challenge the euro. So, it's -- this is not trivial, but no, we're not talking about 2008 all over again.
(END VIDEOTAPE)
LAKE: And you can see Fareed's full interview with Paul Krugman this weekend on "Fareed Zakaria GPS." That airs on Sunday at noon London time,
and replayed throughout the weekend.
The momentum from Monday's landmark agreement between Greece and its creditors is beginning to face on the European markets. The London FTSE,
Frankfurt's Xetra DAX, and the Zurich SMI were all down at the close on Friday. The Paris CAC closed just slightly higher.
Time to return now to the shooting in Tennessee. The FBI says it has more than 70 leads but no motive. Four American Marines were killed, along
with the gunman. US attorney William Killian said the shooting is being investigated as an act of terrorism. We have the latest from CNN's justice
correspondent Evan Perez, who joins me now from Washington.
And Evan, a rather lengthy news conference that just wrapped up a short time ago, I believe. What are we learning about this?
EVAN PEREZ, CNN JUSTICE CORRESPONDENT: Well, so far, we know that they are still looking at the possibility that this could have been
inspired or, perhaps, even directed by a foreign terrorist organization. ISIS is usually the name that everybody thinks of with these types of
events nowadays. That is definitely one of the things that the FBI is looking at.
However, significantly, the FBI also said at this press conference that they have not yet seen any indications that the gunman was inspired or
directed by anyone other than by himself. And one of the things that they're looking at right now is his travel.
[16:14:52] Last year, the Jordanian government has now confirmed that he did travel there last year. The FBI now wants to know who was he
associating with there? Did that visit do anything to change him? Did that have any influence one what -- the events that happened yesterday in
Chattanooga?
So far, none of that information is yet public. But they know -- we do know the FBI is working with Jordanian authorities to try to figure out
exactly all the circle of associations and friends, people he might have associated when he was there.
LAKE: Evan, a lot of people are wondering, was this somebody who was on the government's radar? Is this someone with a history of violence?
PEREZ: There really wasn't. He was not on the -- there was no history of violence, there was no indication that would have brought him to
the attention of US authorities. As a matter of fact, yesterday, when we - - one of the first things that the FBI did was run his name through the databases, and they found absolutely nothing.
There was an arrest in April of this year for driving while intoxicated. And again, that doesn't fit with what we have come to know
about some of these people who may have been radicalized and carry out attacks such as this.
Again, he doesn't fit the mold. This is one of the ones that the FBI is thinking may be that the much-feared person that is off the radar
completely, and then carries out an attack like this.
LAKE: And a lot of people surprised he comes from a sort of -- what looks like it'd be an ordinary suburban landscape. So, a lot more
questions as we dig into this.
PEREZ: Right.
LAKE: Evan, thanks for bringing us up to date with the very latest. Evan Perez for us.
PEREZ: Sure.
LAKE: A year after Malaysia Airlines Flight 17 came down in Ukraine, mourners gathered to remember the victims. We'll have that next.
(COMMERCIAL BREAK)
LAKE: Today marks one year since Malaysia Airlines Flight 17 came down over eastern Ukraine. Separatists in eastern Ukraine are suspected of
having shot this jet out of the sky, killing 298 people. Ceremonies to honor the victims took place around the world.
In Ukraine, around 200 residents formed a procession to a memorial at the site where the wreckage fell. In the Netherlands, flags flew at half
staff. Mourners left flowers at Amsterdam's Schiphol Airport, where Flight 17 originated on its way to Kuala Lumpur.
In Australia, a memorial was held for the 38 Australian victims. Australian prime minister Tony Abbott called the incident an atrocity.
One year on, investigators are still gathering evidence, and families of the victims are still left without answers. A source tells CNN a draft
report points to evidence the jet was shot down by pro-Russian rebels using a Russian surface-to-air missile. CNN's Nick Paton Walsh examines
unanswered questions that still remain, and how families of the victims are coping.
(BEGIN VIDEOTAPE)
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): When 298 souls fell from the sky over Grabove.
(GUNFIRE)
WALSH: They landed in the utter chaos of a war that rages even now. As in the fields, the bodies were slowly, gruesomely gathered and made
their long journey back to Holland, questions mounted. And now, a year later, still remain.
The lead Dutch prosecutor tells CNN they want access to key cell phone masts near this site to establish the whereabouts of, quote, "persons of
interest" at the time of the attack. And that the most likely scenario is that a BUK surface-to-air missile was fired at the plane from eastern
Ukraine.
[16:20:02] Now, a memorial stands with children's toys and a poem that begins, "Stop and pray, feel the minutes run." Dutch police say they
have recovered all the remains from here they can.
For Piet Ploeg, the brother of Alex Ploeg, that is one of the hardest parts of the news. Alex's body will never be found, although those of his
wife, Edith, and son, Robert, were.
His daughter, Sondra and Miriam, didn't leave with them for a holiday in Kuala Lumpur and still now don't want to talk. And instead, they have
had to bury Alex without a body, without closure.
PIET PLOEG, VICTIM'S BROTHER: You want your brother to come back. If there comes a plane with remains of victims, you hope your brother will be
there. It wasn't, but we didn't know that at that time. But you want to be there, because you want to believe that your brother will come home. He
didn't come home.
It's very difficult. It's -- I've got it -- I can't understand very well how it is possible that just two people are vanished, blown away. I -
- it's beyond belief. I -- can't understand it.
WALSH: Incomprehension, too, from Russia, who backed the separatists accused of what Holland says might be a war crime.
SERGEI LAVROV, RUSSIAN FOREIGN MINISTER (through translator): We certainly deem it unacceptable for anyone to assume that they have a
monopoly of the truth before such an investigation finishes. Sadly, attempts at distorting facts and enforcing versions of what could have
happened continue to exist.
WALSH: Dutch prosecutors tell us they believe they will be able to bring a prosecution, but arrest a suspect and put them in jail? That is
yet another tough question that has still no answer.
Nick Paton Walsh, CNN.
(END VIDEOTAPE)
LAKE: QUEST MEANS BUSINESS will return in just a moment.
(SILENCE)
(COMMERCIAL BREAK)
LAKE: A mixed picture as US stock markets round out the week. The NASDAQ pressed further into record territory. That rally is being fueled
by a string of strong earnings reports from the tech sector. The Dow, though, shed 34 points in Friday's session. Paul La Monica joins me now to
walk us through it. Tech on fire, Paul.
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: Yes, Google really lighting things up today, record highs, stock finished up 16 percent, just
under $700 a share. Market values getting close to $500 billion.
And now, we've got the NASDAQ above 5,200, which is an amazing feat, when you consider just how much the NASDAQ fell in 2000. It really is
stunning that we're back at these levels.
LAKE: It is. And a real disconnect, not as much enthusiasm for blue chips.
LA MONICA: Yes.
LAKE: Is this just the momentum story, or -- ?
LA MONICA: I think that might be the case right now. You're seeing definitely with Netflix earlier in the week as well, the tech companies are
wowing Wall Street with these really impressive earnings numbers.
[16:25:05] So, that might be something that reverses itself next week as Apple, which is a blue chip, it is in the Dow, they're going to be
reporting next week. So, if their numbers are good, that might give the old stodgy Dow a bit of a lift as well.
LAKE: Yes, I thought we were supposed to think boring and sex, but I don't know --
LA MONICA: I don't know.
LAKE: -- maybe everybody forgot about that for a minute. I just wanted to circle back to what you were just talking about, Google. It was
the biggest one-day gain for a single stock in history. Google shares rallied by almost 15 percent. That is a huge move for this stock as
investors cheer a strong second quarter earnings report that Paul alluded to.
The rally has seen Google add $52 billion to its market cap in a single day. It is a major victory for Google's new CFO, Ruth Porat, in her
first earnings update since taking the job.
She said the firm will be pulling back on its experimental moon shot projects. Porat's new more conservative strategy may please investors, but
it seems to contrast those of founders Larry Page. They -- and Sergey Brin. They both insisted that moon shots are part of what make Google a
success.
The firm has spearheaded famously ambitious venture products like Project Loon, for example, that is a hot air balloon which provides wifi to
remote areas, not to mention that Google's self-driving car, the ill-fated Google Glass, which may be in itself didn't become a hit, but could lead to
other things.
They all began as moon shots. And that's just scratching the surface. Paul, you and I, we've talked to some of the people at Project X, we know
that they sort of look into all these problems that they think need to be solved for the world. How should we view this? Investors love it, but is
it good for the rest of us if they're pulling back on this?
LA MONICA: I think we need to be careful. I think they probably are going to pull back a little bit, but I think the key thing is that Ruth
Porat probably just wants a little bit more financial discipline.
I seriously doubt that she's going to be able to tell Larry Page and Sergey Brin, who still own a lot more stock than she does and have these
huge voting control of the company that they can't do some of these experimental type of things. I think what they hired her to do was to show
more discipline on the cost side.
But also, she is an investment banker. I think people are wondering whether or not Google will do more acquisitions as well. So, I don't think
it would be right to say that Google's days of being an experimental, rapidly-growing company are over just yet. Their head count was still up
very dramatically --
LAKE: Yes.
LA MONICA: -- in the last quarter. They're hiring a lot of people, so --
LAKE: And no, they hire those people on the promise that they're going to let them --
LA MONICA: Exactly.
LAKE: -- get some 20 percent of their time to pursue whatever innovative, crazy, fantastic ideas they're cooking up in their heads. So,
that's part of their ethos. So, probably good news for all of us if they're going to continue down that road.
When they first started, there was a lot of talk of needing "adult supervision." That's what Eric Schmidt was brought in for. And then, of
course, the company matured, they matured, and it was sort of felt like that time is over.
Interesting now, it seems like a different version of that. A maybe sort of more market-oriented version of that coming back in. Because they
did go seek her out.
LA MONICA: Yes, definitely. And when you think about all the money that she's getting paid, and I think her compensation package about $70
million to lure her away from Wall Street to Silicon Valley, you talk about the $50 billion market cap --
(LAUGHTER)
LA MONICA: -- increase today, and that's largely --
(CROSSTALK)
LAKE: So much for being financially prudent.
LA MONICA: -- largely -- well, largely because people loved how she handled the conference call. So, if she gives them $50 billion of market
cap in one day, $70 million is a pretty nice bargain to get her to come from Wall Street to Silicon Valley.
But no, I think she, much like Cheryl Sandburg at Facebook, as the adult supervision for Mark Zuckerberg, Wall Street likes to see someone in
that operating or financial role that can tell these founders, you know what? Maybe this is a little too crazy.
LAKE: Right. And the thing is, this is a very big now maturing, increasingly large and complex company, so it makes sense that they would
get somebody in that role that is sophisticated and knows what investors are looking to. It's going to be fascinating.
And of course, a woman, too, which we should point out, much needed and talked about in Silicon Valley as well. So looks like they scored on
all fronts with that hire. Paul, great to see you, thank you so much.
LA MONICA: Thank you, have a great weekend.
LAKE: Well, plans for Tokyo's Olympic stadium go back to the drawing board. Spiraling costs and public outcry force construction to shut down.
We'll have that next.
[16:29:26] (COMMERCIAL BREAK)
[16:31:41] MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL FILLING IN FOR RICHARD QUEST ON "QUEST MEANS BUSINESS" SHOW:
Hello, I'm Maggie Lake. Coming up in the next half hour of "Quest Means Business," the ruby World Cup final needs a new home as Japan scrapped an
entire stadium.
And Uber is on a collision course with the mayor of New York after poking fun at Bill de Blasio. Before that, these are the top news
headlines we are following for you this hour.
Authorities in the U.S. state of Tennessee say they are continuing to treat Thursday's attack on two military centers as an act of terrorism.
Four U.S. Marines were killed when Muhammad Youssef Abdulazeez opened fire at a recruitment center and then a naval facility. At a news conference a
few moments ago, the FBI said it was too soon to speculate what his motive may have been.
The chairman of the Homeland Security Committee in the U.S. House of Representatives says the deadly attack was partly inspired by ISIS.
Michael McCaul told reporters that Thursday's attack matched up with intelligence gathered from jihadists online.
(BEGIN VIDEOCLIP)
MICHAEL MCCAUL, CHAIRMAN, U.S. HOUSE HOMELAND SECURITY COMMITTEE: We've seen too much of this traffic, there are too many warning signs. The
targets are identical to the targets called by ISIS to attack.
So in my judgment, in my experience, is that this was an ISIS-inspired attack and it has been open as a terrorism investigation by the FBI which
is a very significant event in this case.
(END VIDEOCLIP)
LAKE: Explosions targeting Muslim worshippers have killed nine people and injured 18 others in Northern Nigeria. The army says a ten-year-old
girl and an elderly woman were used as human bombs to carry out the attack.
Boko Haram has been active in the area. No one has claimed responsibility.
Germany's Parliament has approved further talks on a third bailout for Greece. Lawmakers voted in favor by an overwhelming majority after
Chancellor Angela Merkel said she supported the idea. However, a new poll from broadcaster ARD shows that 49 percent of Germans are against more
talks.
Tributes have been paid around the world to victims of Malaysia Airlines flight 17. It is one year to the day since the plane was shot out
of the sky in Eastern Ukraine. All 298 people onboard the plane were killed. The Australian Prime Minister Tony Abbott described what happened
as an atrocity.
(BEGIN VIDEOCLIP)
TONY ABBOTT, AUSTRALIAN PRIME MINISTER: Our innocent people, living their lives to the full. Advancing careers, celebrating birthdays,
visiting family, enjoying retirement were taking the holiday of a lifetime. They deserved to be welcomed home, not shot out of the sky in a war of
aggression by one country against its smaller neighbor.
(END VIDEOCLIP)
LAKE: Japan is scrapping plans to build an 80,000-seat stadium designed for the 2020 Olympic Games in Tokyo. There was public outrage
over the venue when construction costs ballooned to $2.1 billion.
[16:35:03] Prime Minister Shinzo Abe says the stadium project will have to start over again from the design stage. CNN's Will Ripley reports
from the construction site in Tokyo.
(BEGIN VIDEOCLIP)
WILL RIPLEY, CNN CORRESPONDENT: This empty lot was supposed to be the site of Japan's centerpiece stadium for the 2020 Tokyo Olympics. But Prime
Minister Shinzo Abe just announced he is scrapping plans for the project. He says it's because it's become way too expensive and frankly way too
controversial.
PRIME MINISTER SHINZO ABE, JAPANESE PRIME MINISTER VIA INTERPRETER: The construction cost has been greatly inflated and there were criticism
from the public including the athletes on the plan. This made me believe that we'll not be able to host the game that everyone in this country will
celebrate.
RIPLEY: The original cost of the stadium was supposed to be around $1 billion. The figure has ballooned to more than $2 billion and rising. Not
to mention a fury of criticism over the design - critics calling it glitzy and garish, a disgrace to future generations.
Iraqi-British Zaha Hadid's design has been compared to everything from a giant bike helmet to a turtle to a white elephant. Rivals say they can
build a cheaper, more attractive stadium. Abe says he's been thinking about this for a month and he's confident a new stadium can be ready in
time for the 2020 Olympics and Paralympics.
But his decision comes with a price. Abe says the stadium won't meet the deadline for the Rugby World Cup in 2019, but that Cup still will be
played here in Japan.
So now Japan has to come up with a new plan as soon as possible. The question is what are they going to do? Are they going to build a new
stadium here? Will they refurbish the existing 1964 Olympic Stadium? Critics say whatever they do will be better than that so-called bike helmet
which came this close to being an unwelcome Japanese icon for decades to come. Will Ripley, CNN Tokyo.
(END VIDEOCLIP)
LAKE: Professor Victor Matheson is a sports economist at the College of Holy Cross. He said these mega sporting events such as the Olympics and
the World Cup and their economic impact on host cities and he joins us now. Victor, the dreaded bike helmet I guess is not going to be a reality and it
certainly sounds like Japan might be having second thoughts about this whole thing. Is hosting an event like the Olympics falling out of favor?
VICTOR MATHESON, PROFESSOR, DEPARTMENT OF ECONOMICS AND ACCOUNTING, HOLY CROSS: Well I think you can make a real case that it is. If you look
at the Winter Olympics, those go up for bid here in about a year.
Originally, eight cities were part of the potential bids for that next Winter Olympic Games and all but two of them have dropped out thanks to
basically public outcry.
The remaining two countries that are in - China and Kazakhstan aren't exactly beacons of democracy that tend to listen to what their citizens
have to say as well.
LAKE: So is it just that these events are just costly and no one can afford them? Or are they not being managed right? Is it possible to have
an economic - a positive economic effect from hosting?
MATHESON: Well it certainly isn't possible if you're going to spend $2 billion on a stadium that was going to be the most expensive sports
facility ever built in the world.
If you're going to be spending that sort of money on a facility that you're only going to use for three weeks and that you don't have a whole
lot of use for after the Games are done, then there's certainly no way you can do these on any sort of budget and by any sort of reasonable cost
benefit standard.
LAKE: What separates the winners from losers when you're looking at a successful host? What do you have to do to make it pay off?
MATHESON: Well, so the most clear example of successful hosts might be Los Angeles which was able to essentially do the 1984 Summer Olympics on
a shoestring budget because they were the only bidder and therefore they could dictate the terms of what sort of facilities are going to be used to
the IOC rather than the other way around.
Instead of $2 billion stadiums, they used a stadium that was 50 years old and they dressed it up a little and put a new coat of paint on it for
the Olympics, but not much beyond that.
Another example of Olympics that probably worked quite well was Barcelona where they actually spent a bunch of money on the Olympics but
most of that didn't go into stadiums, most of that went into general economic development in the city to generally revive the overall
infrastructure of the city.
And in the time since the Barcelona Games, Barcelona's gone to become the fourth most popular tourist destination in Europe.
So you can make an argument that if you can really have some legacy effects, really limit the amount of money that you spend on sport-specific
infrastructure, then you might have a chance. But that's been hard to do over the past couple of decades.
LAKE: Yes and especially in the era of austerity we're living in. What does this mean for the sporting events themselves? In some ways
they're getting more popular, more of us are plugging in and tuning in - from out tablets, our phones - to sort of watch this live event. They've
really become these cultural touchstones. Is this going to hurt sports if they can't find host cities that can afford to do it?
MATHESON: Well I think they will be able to find host cities. One thing the IOC very specifically is looking at - they have a new agenda 2020
where one of their big - one of their big goals - is in fact to make the Olympics more affordable.
[16:40:13] Now that's what they're saying but we'll really get a chance here when it comes down to and we decide who's hosting the 2024
Games. The 2024 Games, one of the cities is Boston - that's where I am right now - and they are not projecting a $2.1 billion marquis stadium.
They're actually planning a temporary stadium as the head Olympic venue for track and the opening and closing ceremonies.
Now the question will be whether that bid finds favor with the IOC or whether the IOC instead goes with a bidder from another country that comes
up with another cultural landmark that costs billions of dollars.
LAKE: Yes, we'll see -- certainly changing times. Victor Matheson from Holy Cross. Thanks so much for joining us.
MATHESON: Well thank you for having me.
LAKE: Staying in Asia, in China the government is taking dramatic steps to help stem a stock market crash, but will it ultimately do more
harm than good? We'll have more on that after the break.
(COMMERCIAL BREAK)
LAKE: Asian investors are breathing a sigh of relief after a rebound in the Chinese market continued. The Shanghai Composite ended Friday a
session higher by 3 and 1/2 percent while in Shin Zin (ph ) stocks were up by nearly 5 percent.
Investor sentiment received a major boost after Beijing announced a new $483 billion fund to help prop up the country's ailing stock market.
Today's news is just the latest twist in China's month-long stock market drama.
It seems Beijing is now ready to use everything but the kitchen sink to help stem the collapse. In late June the government cut interest rates
hoping to improve market sentiment, but the descent continued unabated, prompting Beijing to ban any scheduled IPOs and prohibit major Chinese
shareholders and state-owned enterprises from selling their stocks.
On Friday the Chinese government took its most drastic step yet - establishing a $483 billion stabilization fund which will be used to shore
up stock prices. The approach appears to finally be working but at what cost?
Some say Beijing's interventions have undermined China as a free stock market. As one strategist recently put it, China has destroyed its stock
market in order to save it.
South Korea's deadly MERS outbreak claimed the lives of 36 people and created a major decline in tourism. However, with no new cases reported
for nearly two weeks, it appears the worst is over.
Now South Korea's tourism minister says the country is very much open for business. Andrew Stevens sat down with him.
(BEGIN VIDEOCLIP)
ANDREW STEVENS, CNN ASIAN-PACIFIC EDITOR: As you know, there has been criticism of the South Korean government, particularly in its initial
response to MERS. I'm curious - what lessons did you learn from that? Do you accept responsibility that you did make mistakes to begin with and what
lessons have you learned?
[16:45:08] KIM JONGDEOK, SOUTH KOREAN TOURISM MINISTER: Well every country could have this kind of crisis and this kind of disease and we
never know what kind of disease these was. Because it is the first time we had MERS - we have experienced this MERS.
We didn't have this kind of experience before and it goes (inaudible) late. You know, Korean government has swiftly provided support to prevent
that.
STEVENS: Let's talk about the economic impact.
JONGDEOK: Yes.
STEVENS: How significant has it been? How bad has it been?
JONGDEOK: Well we have about $590 million dollar loss in tourist industry.
STEVENS: Just the tourist industry?
JONGDEOK: Yes, just the tourist industry and 130,000 people canceled their tour. It is about more than 40 percent decrease compared with last
year.
STEVENS: How long do you think realistically it's going to take to convince China is that - South Korea - is safe again?
JONGDEOK: Well, end of this month or beginning of next month we're going to announce the MERS outbreak and we can expect that - we discuss
with the expert of tourists and they expect that almost 80 percent recovery of tourists really getting on other stand -
(CROSS TALK)
STEVENS: So expect that 80 percent of those will be coming back within a month basically?
JONGDEOK: Yes, yes.
(END VIDEOCLIP)
LAKE: Traveling to New York this summer? If you want to get from Wall Street to Central Park, Uber has a new option just for NYC. We'll
explain how the company has gone political in more ways than one, next.
(COMMERCIAL BREAK)
LAKE: Users of ride-sharing service Uber now have a new option in New York City. To protest Mayor Bill de Blasio's plan to limit the number of
drivers in America's largest city. They added a de Blasio button. When it's selected, all the cars in the area disappear and a message pops up
saying, "This is what Uber will look like if his new plan is put into law."
It urges users to take action and links to a petition. It's ahead of a vote that would halt the growth of companies like Uber in the Big Apple.
Uber's business model and those of companies like Airbnb and TaskRabbit are becoming a major issue in the United States presidential
election. Earlier this week Hillary Clinton expressed doubts about workplace protections for workers at these types of companies.
(BEGIN VIDEOCLIP)
HILLARY CLINTON, CANDIDATE FOR U.S. PRESIDENT: This on-demand or so- called gig economy is creating exciting opportunities and unleashing innovation, but it's also raising hard questions about workplace
protections and what a good job will look like in the future.
(END VIDEOCLIP)
LAKE: Clinton pledged to clamp down on companies that misclassify employees as contractors. Meanwhile, Republican rival Jeb Bush stood up
for Uber - or rather, took a seat by riding to a campaign event in an Uber car. In an op ed on LinkedIn, he took a shot at Hillary.
[16:50:02] He wrote, "Big government liberals fundamentally can't embrace digital innovation because it threatens the way they govern."
Steven Hill is the author of a book called "Raw Deal - How the Uber Economy and Naked Capitalism Are Screwing American Workers." He joins me
now from San Francisco. And, Steven, from the title of your book, it looks like you have an opinion about this, so let's get that out of the way first
of all.
Do you think these companies are hurting and bad for American workers?
STEVEN HILL, AUTHOR, "RAW DEAL": I think the companies are adding some interesting components to our economy and but because they're so new
and they're using these technology platforms - apps and website and what have you - it hasn't been obvious about how to - what kind of regulations
do you put around them? And so I really think that, you know, we have to look at the good and the bad.
Part of the good is it does allow workers to connect with an employer in an easier way, but some of the bad is that, you know, I mean literally
you have employers now who have a technology at their disposal that allows them to hire independent contractors - freelancers - much easier than they
ever could before.
Why wouldn't an employer just lay off all of their regular employees and go with freelancers and contractors? Because by doing that, they lower
their labor costs by 30 percent.
They don't have to pay for things like social security, Medicare, unemployment compensation, injured worker compensation, paid sick days -
all these sorts of things - healthcare - an employer gets out of that.
And so it really has created some big questions that we have to think about a little more deeply than simply this is innovation and technology,
governments should get out of the way.
LAKE: Yes, absolutely. Of course we know that that model doesn't apply to all industries, you know, where they need workers to be trained
and have some level of expertise - I think we know that.
The other problem is - and Uber used this very well to its advantage - is that all these drivers get on and say we need these jobs, we love these
jobs. We wouldn't have this extra money if it wasn't for Uber.
HILL: Well, you know, there are drivers saying that, but I've interviewed a lot of drivers who don't say that. They say something quite
different - you know, they need the money but it's their last-ditch, you know, effort to get money.
And most drivers on the Uber platform drive for less than a year and they drive for no more than 15 hours a week. So really it's a very part-
time thing and most of them don't last because after a while you realize this company really doesn't care about drivers.
The company is in it to, you know, as much as they can, to flood the streets with cars and they just want a driver in that seat and they don't
care who the driver is, they don't care much about those drivers.
I mean, drivers have been doing some interesting strategies recently where they figured out, OK, if Uber isn't going to pay us very much, then
let's wait for what's called surge pricing where the demand and high and suddenly the price jumps three, four, five times. And so a lot of drivers
now are monitoring the app, waiting for the surge and then they jump in their cars.
And so Uber is desperate for drivers. Down the street from where I live, they set up a table at the gas station trying to talk to males
pumping their gas, seeing if they're interested in driving for Uber. So, I mean there's a lot more there than just simply a few drivers saying, 'Hey,
this works for me.'
LAKE: And it's interesting that - this touches I think at the core of some that economic insecurity people feel which is why we see this rising
to the level of actually being a presidential election issue. Steven, we're out of time. Thank you so much for joining us. Steven Hill.
HILL: My pleasure.
LAKE: Now the days of leaving a message after the tone may well and truly be numbered. For millennials who prefer instant messaging apps and
texting, voicemail has long been considered a dead technology. And as Claire Sebastian reports, more and more of big businesses are also decided
to move with the times.
(BEGIN VIDEOCLIP)
Automated Female Voice: Record your message after the tone.
CLAIRE SEBASTIAN, CNN PRODUCER: We've all heard it hundreds of times - the dulcet tones of the answering machine.
Female: Your call is being answered by Audix.
SEBASTIAN: For the past 30 years, many of those dulcet tones have belonged to Lorraine Nelson. She is the voice of Audix, one of the first
voicemail systems for businesses.
LORRAINE NELSON, VOICE OF AUDIX VOICEMAIL SYSTEM: People were not used to being spoken to by a woman that way. Some people were affronted -
they hung up on the system.
SEBASTIAN: She watched as her voice became part of a revolution in office communications.
NELSON: Grew nationally and internationally. We have - my voice was on like 100 million voicemail boxes. So that was telling a lot of people,
"Please wait."
SEBASTIAN: Fast forward some 30 years and some companies are, well, tired of waiting. JPMorgan says it has reduced voicemail use by 65 percent
in its consumer banking division. The cost saving estimated at $3.2 million a year.
Citigroup also says it's reviewing the use of voicemail among its employees. And Coca-Cola practically eliminated it at its Atlanta
headquarters last year.
[16:55:02] This is what happens when you dial the media line at the Coca-Cola Company.
(DIALING TONE)
Female Voice: Members of the news media, you may also leave a voice message on this line, however, please note that an e-mail to our press at
coca-cola.com mailbox will receive priority handling.
SEBASTIAN: Well I did send them an e-mail and they got back to me and said the cost savings are actually minimal. This is about changing the way
the company communicates.
And it's not just the big corporations. At this so-called co-working space in New York filled with startups and young professionals, the message
is clear.
Female: I've never left a voicemail in probably five years.
SEBASTIAN: Three new messages.
Male: I know, I can't figure out how to make them go away.
Female 2: I have 193 un-listened-to voice mails. My time is better spent just immediately trying to call the person back.
SEBASTIAN: Voicemail is evolving and so is Lorraine Nelson's career.
NELSON: Deleted.
SEBASTIAN: She now records interactive and custom messages for companies, and sometimes she does it just for fun.
NELSON: Claire Sebastian, CNN New York is not available, goodbye.
(SOUND OF PHONE HANGING UP)
LAKE: Twitter is all smiles this Friday. We'll show you why July 17th is a very special date with special significance. That's next.
(COMMERCIAL BREAK)
LAKE: If you've been on Twitter today, you may have noticed slightly more Emojis than usual. That's because today is World Emoji Day.
According to the founder of Emojipedia, it's because of Apple's calendar icon which always shows the date July 17th.
Even the NSA got involved. We'll leave it up to you as to what these three Emojis mean. McDonald's tried to hijack proceedings saying Emojis
are trying to tell us that their fries are the best in America. Taco Bell says the sad face is the most appropriate Emoji for them today. That's
because it has been campaigning for months to get a taco added to the list of Emojis. (LAUGHTER).
And that is "Quest Means Business." I'm Maggie Lake in New York. Have a wonderful weekend.
END
