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Quest Means Business
Dow Falls to End Volatile Week; Central Bankers Meet in Jackson Hole; Too Early to Tell on Rate Hikes; CEO of Ashley Madison Parent Company Resigns; Facebook Hits 1 Billion Users in a Single Day; New Broadband Satellite Network; Shanghai Composite Rallies; Chinese Pension Funds to Invest in Market. Aired 4-5p ET.
Aired August 28, 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)
MAGGIE LAKE, HOST: TGIF. It is the end of a week that traders won't forget in a hurry. It's Friday, the 28th of August.
Tonight, US markets are back in the red. Now, the Fed holds the key to where they go next.
Breaking up is hard to do. The founder of Ashley Madison steps down after its giant hack.,
And a massive milestone for Facebook. One billion people log on in just one day.
I'm Maggie Lake, and this is QUEST MEANS BUSINESS.
Good evening. Tonight, a rocky session for markets brings an end to a week of extreme volatility. The Dow fell right from the open. It went
positive at one point, but quickly entered the red again and, as you can see, it stayed there.
Now, despite the massive swings we saw this week -- and that chart is incredible -- the Dow managed to finish up around 100 points from its
Monday open, if you can believe that.
The Dow wasn't alone. US oil prices managed a second day of strong gains, up more than 6 percent after Thursday's double-digit rise. It ends
the week up $5 a barrel. European stocks rose as well. The DAX ended the day up 1.7 percent.
Others, though, weren't so lucky. The Shanghai Composite lost 7.8 percent over the course of this week, and the euro fell more than a percent
against the US dollar.
Now, those numbers all add to uncertainty to the biggest issue on investors' minds, and that is, when will the Federal Reserve raise rates?
Fed vice chair Stanley Fischer further muddied the picture on Friday. He said it's too early to tell if all the market volatility makes a September
rate hike impossible.
He was speaking at Jackson Hole. The future of the US and the global economy may now hinge on a sleepy mountain town in Wyoming.
(BEGIN VIDEOTAPE)
LAKE (voice-over): Jackson Hole, Wyoming, a beautiful, mountain- capped region of the United States. Every year, central bankers from around the globe gather here to discuss the state of the world's economy
and the future of Fed policy.
Last week, investors saw an almost 50 percent chance of a rate hike in September after Fed chairwoman Janet Yellen hinted liftoff might be close.
JANET YELLEN, CHAIRWOMAN, US FEDERAL RESERVE: If the economy evolves as we expect, economic conditions likely would make it appropriate at some
point this year to raise the federal funds rate target.
LAKE: Now, after days of market turmoil, less than 25 percent of investors expect a rate hike.
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISOR, ALLIANZ: They will not hike in September. They would incur too much risk to the global economy.
LAKE: On Wednesday, New York Fed chairman Bill Dudley gave the strongest hint yet that the Fed might hold its fire. He says the case for
a rate hike in September is, quote, "less compelling."
The crisis in China, the sell-off in emerging markets, and weeks of record stock volatility will all weigh on the Fed's decision and will be
hot topics at Jackson Hole. Another warning sign for the Fed --
DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: What they're worried about is lower inflation from those cheaper imports coming in from emerging
markets and lower oil prices. Although it's a positive, it still is something that lowers inflation. And at the end of the day, the central
bank cares about inflation.
LAKE: The dilemma for the Fed, US GDP and jobs growth are solid. Some say now is the time to take the economy off life support.
DAN STECICH, DIRECTOR OF ECONOMIC RESEARCH, ATHENA PRIVATE WEALTH: We're seeing good growth across the board now, almost in every aspect of
our economy. And the Fed really should be ahead of the curve, not behind the curve.
LAKE: There's one more jobs report out September 4th that could sway the Fed's thinking. Jackson Hole could give the markets more clarity on
Fed policy, but many believe the rate cut decision will go right down to the wire.
(END VIDEOTAPE)
LAKE: Joining me now to discuss this is Anthony Chan, chief economist at Chase, and Rana Foroohar, CNN's global economic analyst. Thanks to both
of you for coming in. Anthony, I want to ask you, not what do you think they will do, but what should the Fed do?
ANTHONY CHAN, CHIEF ECONOMIST, CHASE: I think that right now, I think Stanley Fischer made a good point. There is uncertainty precipitated by
what happened in China. They don't really understand what global volatility means for the overall economy.
So taking a pause in September is not the end of the world, but at the same time, keeping interest rates at zero when the unemployment rate has
gone from 10 percent to 5.3 percent -- and by the way, heading lower is not the right way to go. So I would say pause in September, but be more
serious about doing it in December.
LAKE: So strong hints, then, that it is just a pause. You know, Rana, it's interesting. They're in a difficult position. Can the Federal
Reserve really sit there and look just at the US economy and make a decision based on that? I mean, we know the entire world pegs off this.
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Yes.
LAKE: The Fed's credibility and its influence is huge. Do they have to really -- they have to factor in the global economic conditions, don't
they?
FOROOHAR: Of course they do. Earlier in the year, Janet Yellen had given some pushback about that. When asked about the turmoil in emerging
markers, she said, look, I'm worrying about what's happening in the US. But the truth is, we're all interconnected.
I think that Yellen is very worried about what's happening on Main Street. Bill Dudley, the head of the New York Fed, is worried about what's
happening on Wall Street. Those are two different things.
[16:05:02] But the wild card here really is inflation. And I think the fact that it's still pretty weak could give the Fed a legitimate reason
beyond the market turbulence to say let's hold off and wait a little longer.
LAKE: And you know, Anthony, I hear a lot of people say, well, the Fed shouldn't target the market. They shouldn't be so concerned about the
markets and this volatility.
But I wonder. I heard a lot of people say to me, listen, a thousand points up, a thousand points down, I don't want any part of this. I don't
trust it, I think it's rigged, it makes me feel nervous about the future. Do you think that it has the ability to hurt confidence, have people lose
faith? And should that be something the Fed is taking into consideration? Because it could affect their buying decision.
CHAN: We just saw the consumer confidence numbers slipping a little bit, and I think that that's due to the market turbulence. Remember that
market turbulence to the extent that it influences the fundamentals: consumer confidence, consumer spending, they have to pay attention.
With regard to overseas activity, the reason why they pay attention, it's not so much because they're worried about China. But remember, China
influences many other countries, which in turn can influence us.
So, at all times, a central bank in any given country has to worry about their own country, but just to completely ignore what's happening
somewhere when it can come back and hit you is irresponsible.
LAKE: And consumers are smart, aren't they? We learn from the financial market that -- the financial crisis that markets can really
seriously hurt all of our economic well-being. China seems to be the epicenter.
FOROOHAR: Yes.
LAKE: Rana, what do they need to do now that they are in this central role. They kept saying, I want to be a reserve currency, I want to be part
of this global economy and taken very seriously. They are. They're -- everyone's watching them. What do they need to do now that they're in that
position?
FOROOHAR: Well, that's absolutely true. The changes that they need to make are really profound, and that's the big question mark here. China
has brewed up a debt bubble.
After 2008, Americans stopped spending, China took up the slack. Debt-to-GDP is now about 300 percent, which is more than three times that
of the US. They need to shift to being a consumption society, not one that is led by government investment.
LAKE: But you know, we all have big structural changes that we have to make to deal with this. Do they have to communicate better?
FOROOHAR: Yes.
LAKE: Maybe not have the answer tomorrow, but just communicate their plan better?
FOROOHAR: Well, and I think that that's a big reason why investors were so skittish about what was happening in China.
The last few weeks have seen this very back-and-forth policy response, where you've got several weeks of the government propping up markets to the
tune of $400 billion currency and stock markets, and then suddenly letting the markets fall. And so, there's a sense of wait a minute, what's going
on? What is the plan in Beijing?
LAKE: Yes. It's amazing. At some point, we all had to sort of understand markets whether we liked it or not. Now we have to understand
international markets whether we like it or not.
(CROSSTALK)
FOROOHAR: Geopolitics.
(LAUGHTER)
LAKE: And geopolitics. Thank you both for helping us do that a little better. Anthony Chan and Rana Foroohar for us.
Well, cheating website Ashley Madison is trying to rebuild itself. It wants to keep offering services to customers, but not with the same CEO.
(COMMERCIAL BREAK)
LAKE: Weeks after a hack crippled the company, the CEO of Ashley Madison's parent company is stepping down. Noel Biderman was once hailed
as the king of infidelity and most-hated man on the internet.
In a statement, Avid Life Media says his decision to quit was a joint one. Samuel Burke joins me now on set. And Samuel, this story just keeps
on going. Now, this is a company that had hopes of going public at some point. Now, they lose their CEO?
SAMUEL BURKE, CNN BUSINESS CORRESPONDENT: I want to hold up the headline for you from just a few months ago. "Adultery website Ashley
Madison seeks initial public offering as demand booms."
[16:10:05] This isn't two years ago. Talk about a reversal of fortunes. It's incredible to think about not only that, they were having
booming revenues, sales were growing, there were reports that they were possibly considering acquisition of the app Grindr.
Let me just read you what the company said in a statement not too long ago. Quote, "This change is in the best interest of the company and allows
us to continue to provide support to our members and dedicated employees. We are steadfast in our commitment to our customer base."
And I think another thing people forget about is it's not just AshleyMadison.com, it's a group of other websites that I don't think any of
us have ever used in our dating lives. But it's -- some may say it's hard to feel bad for a company that does -- encouraging cheating. But it's -- a
lot of people suffering.
LAKE: Well, this is -- yes, this is the problem with this, isn't it? It's been -- there have been a lot of people almost gleeful about what's
happening although we see these really dire consequences playing out.
And whether you approve or not, this is a company that hackers took down. The CEO is now gone. I mean, this is sort of incredible. Huge
consequences. Where is the investigation in terms of who did this?
BURKE: It's amazing to think that it's affected cheaters, the CEO, the innocent loved ones, and that it could all be just one person. From
the get-go, the exiting CEO has told Brian Krebs, who is the reporter who first unveiled this story, that he believes that it's actually one person.
Let me just read you what Krebs on security wrote, a quote of his, from the CEO. "It was definitely a person here that was not an employee
but certainly had touched our technical services." Incredible to think that one person may have affected so many people's lives.
And of course, it also makes me think of what may be the biggest hack of all time in terms of media coverage, the Sony hack. Many experts tell
me that they believe just one employee's credentials may have been compromised, and that's how the hackers, which the American government
alleges were the North Koreans, were able to get in.
So, talk about the weakest link in a chain. It may be the only weakness in a chain that lest the hackers in sometimes.
LAKE: And this is the problem, isn't it? And we don't know, by the way, from those details -- or at least I don't -- whether they're implying
that he was a knowing participant or it was a weakness through this one person that they took advantage of.
But this is always been the issue that for all the spending that you may do -- I think Preet Bharara referred to it as the "one unlocked door"
that may gain access. You would think these systems would be better protected, especially for someone whose entire business was built on the
internet.
BURKE: Well, the truth is, so many companies are just now waking up to this and changing their business practices online, intra-company email
as a result of Sony, and now, as a result of this. And a lot of people are investing a lot more money, so it's actually a really good time for cyber
security companies. But it is amazing to think that it could just be one person, and that leaves the door open.
LAKE: And you mention a good point, that is the silver lining. A lot of these cyber security stocks that do trade publicly have seen their
fortunes rise --
(CROSSTALK)
BURKE: Yes, a silver lining for them.
LAKE: -- in just the last few weeks. Right. And some of them are in a basket of ETFs, if you're interested. All right, Samuel, thank you so
much.
Now, if you used Facebook on Monday, you weren't alone. One billion people signed onto the social network on that day alone. That works out to
one in seven people on planet Earth. It's the first time Facebook has hit that milestone, and founder Mark Zuckerberg celebrated -- how else? -- with
this video on Facebook..
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: It --
(AUDIO GAP)
UNIDENTIFIED FEMALE: -- religion, and whatever this is. There's likes, loves, and unfortunately, still some hate.
(END VIDEO CLIP)
LAKE: Facebook was a witness to some of that hate this week. The gunman who murdered two journalists in Virginia filmed the shooting and
posted the videos to Facebook. The social network was criticized when those videos played automatically in front of unsuspecting users.
Now, since its founding more than a decade ago, the social network has grown dramatically. It was born in 2004 in Mark Zuckerberg's now-famous
dorm room at Harvard. By the end of the year, the site boasted one million active users.
Two years later, it had grown up. The Facebook had just become Facebook. Registration was open to everyone, not just high school and
college students, and the company was looking for mobile users. By the end of 2006, 12 million people were logging on each month.
Three years later, Facebook had added chat, and now its iconic "like" button. Users liked Facebook, too. The number of active users had grown
to 360 million. Three years after that, Facebook went public and crossed the one billion users a month mark. Now, that's up to 1.5 billion.
Facebook is doing better than all its friends. It has three times as many active users as Twitter and ten times as many as Linkedin. And
compare Facebook's 1.5 billion active users to My Space, if you remember that name, 50 million.
Joining me now is Jeffrey Cole. He is the director for the Center of Digital Future at the University of Southern California's Annenberg School.
Thank you so much for being with us.
[16:15:02] Before we get going, you have before, at least on our program, been a little bit skeptical of Facebook, or at least the voice of
reason when it came to Facebook. I want to play something that you said during a conversation with Richard on that IPO, if you'll listen for us.
(BEGIN VIDEO CLIP)
JEFFREY COLE, DIRECTOR, CENTER OF DIGITAL FUTURE, USC ANNENBERG SCHOOL: What I said on your show, and I still believe, as I said a year
and a half ago, it's going to grow for the next five years. We think it'll cross a billion. But eventually, we think it begins to collapse of its own
weight, and we're seeing some signs of that. We still think it's like a nightclub and people will go away eventually.
(END VIDEO CLIP)
LAKE: Now, Jeffrey, to be fair, you're not the only person who's worried about all the noise, but now that they're at this mark, do you
still feel the same way, or does this seem like a different picture to you now?
COLE: Well, first, we've always thought it was going to continue to grow, would survive as the phone directory to the planet, the place you go
to communicate with your mother and father and brothers and sisters. So we never thought it was going to die.
What we said eight years ago was like a nightclub when it became too cool -- or the uncool kids started showing up, you were going to be out of
there. The worst thing that could happen to you in a nightclub is your mother shows up. We thought it would lose its primacy among teenagers.
And that we have seen happen. It's still there, they're still members, but if you talk to teenagers, they're on Snapchat, Instagram. One
of the reasons Mark Zuckerberg tried to by Snapchat and did buy Instagram.
So, we don't see it as an indictment of Facebook, but we think it can -- no social network can remain the cool social network among teenagers
forever.
LAKE: And I guess you can't be everything to everyone. Does it matter if the teenagers aren't going to Facebook?
COLE: It matters ultimately, but no. Advertisers are really very much interested in adults who are buying things on Facebook. It's not
affecting their profitability. Facebook's now at 1.5 billion users. We said it would grow.
That's pretty remarkable when you consider there are 7 billion people on the planet, 1.3 billion, the Chinese, can't get Facebook, so they're
reaching 1.5 out of 5.7. And that includes non-users of the internet. The truth is, there's about 3 billion people on the planet can get Facebook,
and they're reaching half of them. That's pretty remarkable, even if they aren't hanging on to the teenage users.
LAKE: Jeffrey, what do you make of Mark Zuckerberg? I think a lot of people, when there was the IPO and they saw the way he behaved, kind of
thought this guy is a little bit of a flash in the pan. Great idea, great innovator. He's not going to be able to manage this company.
He's made what some people acknowledge, pretty savvy acquisitions. He may not be getting the teenagers, but he sort of seems like he's ahead of
the curve in growing mobile, buying Instagram, he's playing with virtual reality. What do you make of him?
COLE: When I met him for the first time eight years ago at a conference at Google, I thought he was young and immature. And -- but of
course, who could have ever been ready for the kind of fame and importance he's gained?
When I saw him four years later, I was deeply impressed, not just on how much he had grown, but on how much he understood the unique role he
plays in the world. And I now find him to be a very shrewd businessman, a man really committed to his audience. I've grown -- I've gone from
skeptical to really impressed.
Last year at a conference in Chinese -- in China, he impressed everybody without any warning started answering questions in Chinese. He'd
been learning Chinese in his spare time. I think he's a really impressive guy.
LAKE: Yes, he's a force to be reckoned with for sure. And you're not the only one who's changed your view. It seems like Wall Street is really
increasingly embracing him as well and has sort of renewed respect for him.
How do they stay on top? If we acknowledge they can't be everything to everyone, how do they maintain this dominant position that they have?
COLE: Well, one of the ways is they open their checkbook all the time. And if you compare Apple, a company sitting on $160 billion, has
never made an acquisition more than a billion until they bought Beats for $3.1 billion recently.
Compare that to Facebook, which has bought Instagram for $1 billion, Oculus, the virtual reality glasses for $2.1 billion, they tried to buy
Snapchat for $3.1 billion, but Evan Spiegel didn't want to sell. And then $19 billion for WhatsApp. Pretty amazing deal that I don't really
understand.
(LAUGHTER)
COLE: But nonetheless, one of the ways they do that is by constantly acquiring and moving, and the other, of course, is through innovation.
LAKE: Well, it's certainly --
(CROSSTALK)
COLE: And --
[16:20:00] LAKE: Jeffrey, I'm going to jump in. It is certainly a remarkable story that we are all watching unfold before our eyes. Thank
you so much for joining us, Jeffrey Cole from USC, thank you.
COLE: My pleasure.
LAKE: Now, Inmarsat has launched its latest satellite from Kazakhstan. In a few hours, the satellite is expected to begin orbiting
and start providing high-speed data connections around the world. I spoke with the CEO, Rupert Pearce, earlier and asked him what the company hopes
to do with this latest satellite.
(BEGIN VIDEOTAPE)
RUPERT PEARCE, CEO, INMARSAT: This third satellite is important to us because it's the one that completes the global coverage. You need three
satellites in orbit to be able to cover the whole Earth. What makes this different is it delivers mobile broadband at 50 megabit-per-second data
speeds anywhere on the planet.
And although it's primarily built as an industrial internet of everywhere, if you like, serving the maritime industry, governments, the
energy industry, aid agencies, and so on, probably the place that consumers are going to see it appear soonest is in the skies because this new network
Global Express is proving to be very attractive to provide air passenger connectivity, broadband to the seatback in the coming years.
LAKE: What about safety? We know that your technology was critical in helping pinpoint the path of the Malaysia Airline flight. What is --
how is this going to change? Is that going to help? Would we expect to see industry-wide changes as a result?
PEARCE: No, this technology is primarily designed at the cabin for airline operational communications, for cockpit communications and for
safety. We already have a state-of-the-art capability called Swift Broadband.
The good news there is that on the back of this awful tragedy with MH370, we're seeing airlines and safety agencies and international safety
groups definitely get behind renewed momentum to track planes more efficiently and more effectively and to access the information on planes
for better situational awareness in times of crisis.
So hopefully, we will see alongside this kind of innovation for broadband, we will see a stronger future for airline safety via satellite
services.
LAKE: And that is certainly a good thing. Rupert, I'm curious, you said this connects the global set you have now of satellites for full
coverage. Is there an area of the world in particular that is really going to feel the difference with this completion? And where do you see the
greatest growth?
PEARCE: Well, I don't know about you, but I don't get 50 megabits- per-second to my smartphone even in London, where I am today. So, to some extent, this is vaulting the mobile satellite industry ahead of even many
terrestrial networks in the developed world.
But I think where this adds enormous value on the ground is in the developing world. We're already doing a lot of work creating new digital
societies, connecting schools and hospitals, creating new border capabilities, that I think will really open up the world to the internet.
We're calling Global Express the internet of everywhere. And of course, the people that benefit disproportionately from that are the people
who don't have access to the internet today. And I think that's really exciting.
I think when we look at the two biggest growth markets, the earliest growth for us will be in our heartland of maritime supporting the
environment of the smart ship, which I think will lower the costs of global trade over time, and consumers will feel the benefit of that as well, in
time, of course.
Probably the two biggest growth markets for us, government markets around the world as governments need to be connected, and the market we
just talked about, aviation passenger connectivity, which is just beginning, but which we think will be worth several billion dollars in
revenues in -- within the next decade.
(END VIDEOTAPE)
LAKE: Chinese stocks rose again on Friday. China's vice finance minister tells CNN about government intervention in the markets, next.
(COMMERCIAL BREAK)
[16:25:38] LAKE: Chinese stocks rallied on Friday, but the Shanghai Composite still closes the week down almost 8 percent. The Chinese
government says pension funds will soon invest over $300 billion in stock markets.
Pension funds have only been allowed to buy stocks directly under new stimulus measures approved last Sunday. Chinese officials are trying to
reassure pensioners, saying the government won't take risks with their money.
(BEGIN VIDEO CLIP)
YOU JUN, CHINESE VICE MINISTER OF SOCIAL SECURITY (through translator): We will realize the protection and expansion of the fund's
value on the basis of insuring its safety. Safety comes first, and safety is our top priority. This is a principle we will always stick to.
(END VIDEO CLIP)
LAKE: China's vice finance minister, Zhu Guangyao, says the government's intervention to stabilize the stock markets is temporary. In
an exclusive interview, he spoke to Kevin Rudd, the former prime minister of Australia, and guest host of "Amanpour."
(BEGIN VIDEOTAPE)
ZHU GUANGYAO, CHINESE VICE FINANCE MINISTER: Last month in China, we only let the stock market, the turbulence, vis-a-vis based on international
experience organize intervention. So, that's -- we follow the basic three- T principles. First T is targeting. Second T is timely. Third T is temporary.
Targeted means the intervention that's to avoid panic rather than risk the stock index. And second T, timely, just means that in the very big
volatility, we must take action beyond just the market behavior.
Third T means that intervention is temporary. After markets stabilize later, market plays the fundamental role.
KEVIN RUDD, CNN HOST, "AMANPOUR": If you still see turbulence in the stock market in the future, do you believe the Chinese government therefore
will continue to intervene in the same way we've seen in recent weeks?
ZHU: If the market is basically related to the investors behavior and big, real damage to the people's confidence and not cause panic,
particularly not cause systematic risk, certainly we will let the market play the fundamental role. And other countries, same thing. You can see
the case in US, in UK, and in other countries.
RUDD: You've seen a lot of commentary also in the recent decision by the People's Bank of Chinas to effectively devalue the renminbi, albeit by
a relatively small amount. Do you believe this could assist Chinese exporters? Is that the primary intent, to promote growth through greater
export performance?
Or is it more that you are concerned about the ultimate status of the renminbi as a global reserve currency and therefore throwing it more open
to market disciplines?
ZHU: Certainly, we just do extreme efforts to reform the renminbi it can redeem. And you just mentioned this case of our Chinese central bank
announced the reform of for middle level price slightly up. And we do believe this is really forward to the full marketplace in the renminbi
price setup.
(END VIDEOTAPE)
LAKE: And you can see that full interview with China's vice finance minister right after this program. Australia's former prime minister,
Kevin Rudd, is the special guest host.
Now, officials across Europe are reporting arrests in connection with the EU's deadly migrant and refugee crisis. We'll be live in Hungary after
the break.
[16:29:33] (COMMERCIAL BREAK)
[16:31:48] 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 problems keep piling up for Brazilian President Dilma
Rousseff . Now the country's economy is in recession.
And stand-up comedians are now selling out entire stadiums. I'll ask a couple of comics if they're laughing all the way to the bank.
First though, these are the top news headlines we are following for you this hour. Hungarian police have arrested four people in connection
with the death of 71 migrants found inside an abandoned truck. It was found by the side of an Austrian highway.
Authorities say the migrants likely suffocated inside. They are presumed to have been Syrian refugees being moved by Bulgarian and
Hungarian people-smuggling ring. The head of Austria's Directorate for Migration told CNN the bodies could be identified.
(BEGIN VIDEOCLIP)
PETER WEBINGER, DIRECTORATE FOR MIGRATION, AUSTRIAN INTERIOR MINISTRY: There is a different process going on as you cannot imagine the people had
been lying already there since one and a half day or two days.
We will check this out and the people and their groups have been brought to Vienna and now we try to identify them. This is the first step
of the procedure and then the second step we will try to get who is the owner of the lorry. We already have the possibility and some hints
regarding this information and also some information about possible drivers and the third step will be try to get in contact with their relatives, with
the families.
(END VIDEOCLIP)
LAKE: At least 84 people have drowned off Libya as two crowded migrant vessels sank. About 200 people were rescued but many more are
missing. At least 2,500 people have died this year trying to cross the Mediterranean to escape war and poverty in Africa and the Middle East.
Twelve people have died on the Taiwi (ph) island of Dominica as Tropical Storm Erika moves through the Caribbean. More than 20 people are
still missing as search and rescue efforts continue. Torrential rains and winds swept away cars, tore down trees and damaged homes.
The U.S. state of Florida has declared a state of emergency as the storm heads for the Southern Coast of the United States.
North Korea's state media has broadcast footage of deadly rain and flash flooding over last weekend. The Red Cross says thousands of people
in the northeastern city were stranded or forced from their homes and 40 people were killed.
The CEO of Ashley Madison's parent company is stepping down weeks after a hack crippled the company. In a statement, Avid Life Media says
Noel Biderman's decision to quit is a joint one. The breach released confidential information from millions of customers of the cheating
website.
Authorities across Europe are taking steps to deal with the record surge of migrants and refugees. Italian authorities arrested ten people
Friday believed to be connected to a boat carrying 52 bodies off the Libyan coast.
[16:35:07] Hungarian officials have captured a Romanian man who flipped a van carrying 18 refugees. And British police arrested 27 people
suspected of illegally entering the U.K.
Earlier this month the European Commission approved a $2.5 billion aid package over six years to countries dealing with the migrant surge. Nearly
have of the funds will go to Italy and Greece. Hungary has complained it is not getting sufficient aid to deal with the problem.
The U.N.'s refugee agency says Europe must come together.
(BEGIN VIDEOCLIP)
MELISSA FLEMING, SPOKESWOMAN, UNHCR: We reiterate our call on European countries to approach the refugee and the migrant crisis in a
spirit of solidarity and cooperation and provide those seeking safety in Europe with safe, legal alternatives to these dangerous irregular journeys.
(END VIDEOCLIP)
LAKE: Arwa Damon is live in Budapest, Hungary for us this evening. And, Arwa, it's almost unthinkable to read the lists of people dying
whether it's by land or by sea. The situation seems to be getting more desperate every day.
ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: It is, Maggie, and it's really a byproduct of the various European nations and other
powerful countries to come together and come up with some sort of cohesive solution to this ever-going crisis.
I mean, just take a look here. This is the train station in Budapest- turned a weigh station for migrants and refugees. Why are they all camped out here? Why are they not continuing on their way?
Well, they're still trying to figure out how to get to Western Europe. They can't board the trains and travel there. The paperwork that they have
will not allow them to cross borders. And also, the Hungarian authorities if they catch them, will then tell them to return back to the various camps
they're supposed to be reporting to.
But people don't want to stay here, they don't want to stay in Hungary which is why they're increasingly resorting to these various smuggling
networks and criminal gangs.
And it is ending up in tragedies like the one we saw with those 71 people - amongst them women and children dead on the highway between
Budapest and Vienna.
Just in the last few minutes since we've been here, we've actually run into a few young men that we met along the way because we've been following
this trail for the last week or so and they were coming up to us and saying, `We don't know how we're going to get to Germany', `We don't know
how we're going to move on.' `What are we supposed to do?' `Why won't they open the route for us?'
`Hungary doesn't want us here, we don't want to stay here. Germany is saying that it will take refugees, so why is nothing dong to facilitate us
being able to access the countries that are at least willing and perhaps more capable and can afford to better host us.'
All very valid questions which at this stage, really don't have an answer. The problems and their result of inaction does end up being (ph),
does end up being desperate measures being taken and it does end up in people having to live in horrific conditions like the ones that are taking
place around us without a shred of dignity - something that they really did not expect to have to deal with once they reached Europe, Maggie.
LAKE: And, Arwa, we're looking at the scene behind you and people can see some tents. It looks relatively calm, but you've been out talking to a
lot of people in different places. I mean, some of the conditions are inhumane.
DAMON: They are. And you know relatively speaking, we were discussing this earlier. Out of all the conditions we've seen refugees in,
arguably this would be the best because at the very least there's some shelter, and other parts of this route, Maggie, we saw things that we
couldn't understand.
We saw for four days pregnant women caught at the Greece/Macedonia border under the rain. Children's clothes would barely dry before the
rains would begin pouring down on them again. And they did not have a tarp, there was no shelter, there was no humanitarian assistance.
We just spent the last few days and in fact this morning as well on the border between Serbia and Hungary. And when people cross into Hungary,
hand them poles (ph) over to the authorities. They are kept waiting in a field under the beating sun for hours and they don't have water.
And they would come in huge waves, walking across these fields begging the Hungarian police for a bottle of water. And for the better part of the
day, they were getting waved off until finally one of the small non- governmental organizations that is operating in that area showed up with a carful of water.
It defies logic what some of these people are going through. Even if countries are struggling to cope, even if they financially afford to host
all of these refugees, many can't understand why it is they can't at least put up a tent, give people a bottle of water and allow them to at least
preserve a shred of their dignity.
[16:40:06] LAKE: Absolutely. They've got to be able to do better than this. Arwa Damon live on the scene for us. Thank you so much, Arwa.
Now many refugees are fleeing one horror only to die in another - suffocating, as we said, on land or drowning at sea. That, while others
claim huge profits.
According to the U.N., human traffickers make more than $32 billion a year. Now Nick Peyton Walsh gives us an exclusive look at that trade, but
first a warning. His report contains some graphic images.
(BEGIN VIDEOCLIP)
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: You've seen where the victims of this continental trade in misery end up in boats
adrift. On beaches drained of life.
But here we expose how the smuggled find themselves in this hell. A CNN producer stumbles into a Tripoli meeting with a smuggler who thinks she
is a Syrian looking to bring more Syrians to cross to Europe. She uses her phone to secretly record his offer.
SMUGGLER: The final, final price is $1,000.
CNN: Each?
SMUGGLER: Usually we do Syrians for $1,500, $1,400 or $1,300. If you have a group with you like 10 people, you get a discount. For every person
you bring you get a $100 discount.
If you brought 10 people you get one free ticket. Everyone knows about this discount.
WALSH: He insists they use satellite phones, GPS, umotus (ph), and a pilot who isn't Libyan but Senegalese. He's from Mali and drives CNN to the
unfinished building that migrants wait in to cross. To enter, she walks over trash, pretending to tell someone in Syria the details on her phone.
Inside this sick underworld there are more than the 80 migrants who they were told would be in their boat.
CNN: But is that a lot of people?
OTHER MAN: She is asking if that is too many people?
SMUGGLER: No, no. We will take two boats.
WALSH: Now may be these people's last days on dry land.
CNN: When is the boat leaving?
SMUGGLER: Soon, inshallah (ph).
CNN: Are we leaving with all those people?
SMUGGLER: Yes.
CNN: How many people in this room?
SMUGGLER: 30. And there is more in the other rooms. 80 people in total will be with you.
WALSH: The TV is always on, the rooms hidden behind curtains. But the trade is so boldly cynical, so patently inhumane. Nick Paton Walsh,
CNN Tripoli.
LAKE: And we will be right back.
(COMMERCIAL BREAK)
LAKE: Brazil's economic problems have gotten even worse. The country is official in recession after the government reported gross domestic
product fell 1.9 percent in the second quarter.
[16:45:03] It is the second quarter of negative growth and GDP's biggest drop since the 2008 crisis.
The shrinking economy is having political fallout. Brazilian President Dilma Rousseff already struggling under the shadow of a massive
corruption scandal has seen her approval ratings fall to just 8 percent.
CNN's Shasta Darlington joins me now live from Rio de Janeiro. And Shasta, we knew that they were struggling but I don't think anyone realized
it was this severe.
SHASTA DARLINGTON, CNN CORRESPONDENT: That's right, Maggie. I mean, we knew we were going to get some bad news but I don't think people were
prepared for this.
Most economists were forecasting a contraction in the second quarter of around 1.7 percent. So, as you said, this came in at 1.9 percent - the
worst contraction in over six years. And I guess in many ways the really bad part is that this is just the beginning.
(BEGIN VIDEOCLIP)
DARLINGTON: Brazil knows how to party and for a good decade it reveled in record foreign investment, big offshore oil discoveries and a
seemingly endless flow of raw commodities to China.
Now it's nursing an epic hangover. Figures released Friday show the economy shrank 1.9 percent in the second quarter, making it official -
Brazil is in recession and it's forecast to last two years.
It's struggling with high unemployment, rising inflation and a currency trading at 12-year lows making it harder for Brazilians to afford
even the most basic of goods.
The economic slowdown coming from China, Brazil's main trading partner, only making matters worse for President Dilma Rousseff whose
approval rating has plummeted to below 10 percent.
Male: She doesn't have the confidence of anyone anymore.
Female, VIA INTERPRETER: They let us down. Those of us from the lower class thought the government was going to help us but it's getting
worse.
DARLINGTON: Hundreds of thousand s of Brazilians have taken to the streets in protest, many demanding the president's impeachment.
They're angry over the economy but also a sweeping corruption scandal involving executives from the state-run oil company Petrobras that's
engulfed dozens of the country's business leaders and politicians, most of them from the now feuding government coalition.
They're accused of a massive bribery scheme. Rousseff hasn't been implicated in the investigation but she was the chairwoman of Petrobras
when the alleged corruption took place.
While the president says she's won't be intimidated and won't give up, with a prolonged recession expected and very few allies left, she won't be
celebrating any time soon.
(END VIDEOCLIP)
DARLINGTON: Now for Brazilians, there's really very little light at the end of this tunnel. They're tightening their belts and yet economists
are saying that this recession is going to drag on through the end of 2016. And for the president, it isn't looking much better.
With such a low approval rating she has so little room to try and get any of these initiatives that might help the economy pass through Congress.
And it really raises the question how's she going to get through these next three and a few months years, Maggie?
LAKE: You know, Shasta, I'm curious. What do you think this is going to do to the environment surrounding the Olympics? We know that there were
protests during the World Cu. There was a lot of anger and things have only gotten worse.
Would you expect that we're going - that this is going to be a real issue as we get closer to those dates?
DARLINGTON: I think it's a really good question, Maggie and one that's hard to answer. For a long time I would have said the Olympics
really don't have anything to worry about, they don't make people angry the way the World Cup did. I think it was a lot easier for people to take aim
at FIFA and bad guy/good guy.
With the Olympics, they haven't come under the microscope the way the World Cup did, but in this context here in Rio de Janeiro, people are angry
about the ongoing public works.
I think the city of Rio has the advantage though that a lot of the investment for the Olympics has come - has been private. So there won't be
any white elephants at the end of it that the state is left paying for.
The people will say, you know, their taxes are paying for. They still are protected to a certain degree but with all of these big works going on,
there is a chance that the people could take aim, get out on the street again, we could see those protests flare up, Maggie.
LAKE: Yes, interesting. Thanks so much, Shasta, who is in Rio for us this evening. Thank you so much . Now forget rock stars with their
leather pants and loud music. Just one man or woman with a microphone will draw 50,000 fans into a football stadium.
The state of comedy is booming. Two comedians will join me to help explain why. First though, highlights of "Make, Create, Innovate."
(COMMERCIAL BREAK)
[16:51:25] LAKE: After the week we've had, we could all use a good laugh. Let's face it - good news for us as we've seen unprecedented
volatility on the markets, comedians are making people laugh in unprecedented numbers.
Comedian Kevin Hart will be taking the stage this weekend at a football stadium in Philadelphia in front of a crowd of 50,000 people.
(BEGIN VIDEOCLIP)
KEVIN HART, COMEDIAN: Throughout my show you'll see a bunch of pointless fire. You're laughing - I'm not playing, I'm being serious. You
think it's a game?
(END VIDEOCLIP)
LAKE: Comedians getting the rock star treatment is a growing trend this October. In the U.K. Michael McNeerney has seven nights booked at the
O2 Arena. Here in New York, only six comedians have filled out Madison Square Garden since it opened 50 years ago. Three have done it just this
year and three more could hit the milestone by December.
Joining me now are Stone and Stone, comedian twin brothers Todd and Adam. So thank you both.
(CROSS TALK)
TODD STONE, COMEDIAN: Glad to be here.
LAKE: It's good news for you guys as you embark on this career. But tell me what you think is behind this? Is this just that the talent is
getting that much better or does it have something more to do with the fact that there are just so many more avenues to get out there?
ADAM STONE: Do you --
A. STONE: I think the latter.
T. STONE: You go for it.
T. STONE: Yeah, well no, I just think that nowadays there - as you said - there are just so many avenues whether its Twitter or Facebook or
Instagram. There's just so many ways to engage with your audience and that's what's happening now and hopefully in a couple of months we'll sell
out Madison Square Garden.
A. STONE: Exactly.
LAKE: Why not?
(CROSS TALK)
T. STONE: But totally I think it's really important - social media platforms. Like one example - we were actually out -
ADAM STONE, COMEDIAN: That's a good point.
T. STONE: -- in L.A. a little while ago. We were performing, an agent came to see us, she really like us, she was laughing hysterically -
probably had a twin fetish - or whatever it is -
(CROSS TALK)
T. STONE: But, yes, OK. But she said come to my office tomorrow, I want to speak with you. We sat down with her and she said, `You know, I
love you guys but I don't see enough Twitter followers.'
A. STONE: Isn't that amazing how -
T. STONE: So that's how significant it was that people are really looking at those numbers.
LAKE: So you're tweeting that you're on here tonight?
(CROSS TALK)
A. STONE: App Stone and Stone --
LAKE: Let me ask you something. It's interesting because the people who are the pop stars now -
A. STONE: Yes.
LAKE: Jon Stewart, we had Stephen Colbert, we have all of these - is that helping? Does that - can you all ride the coattails? Is that sort of
the exposure making comedy more mainstream in a way - especially standup comedy?
A. STONE: I think so. I mean, --
T. STONE: Yes.
A. STONE: -- a good example is there's a Comedy Central show called "@Midnight." And the whole point of that show - it's called "@Midnight" -
you know, the `@' sign -- is that people - comedians and others just tweet in and participate among, you know, and with the guest comedians. So it's
just kind of encouraging -
LAKE: And somebody with a lot of Twitter followers.
A. STONE: Well exactly.
T. STONE: Absolutely, absolutely.
A. STONE: If they like it, they'll retweet it and share and it's a great way to do it. You have to be careful though of course on social
media because every - you know - every little thing --
LAKE: Especially with comedy.
T. STONE: Everything's out there.
A. STONE: Yes, I know.
LAKE: But you lose the nuance.
A. STONE: Exactly. But --
T. STONE: Potentially.
A. STONE: -- also like people you can say something offensive, you know. What's good about us is we share our accounts so they're both called
Stone and Stone, so we blame the other.
LAKE: This brings me to tonight's point. I was suspecting if I'm having a hard time keeping you straight, it's still hard though. Let's not
make it - pretend it's easy because (AUDIO GAP) comedy's so hard. You must have nights where you bomb. I mean, have you experienced that and how do
you keep going?
[16:55:01] A. STONE: He bombs a lot.
T. STONE: I'm the one who takes the -
(CROSS TALK).
A. STONE: Well that happens but that's always been the case.
T. STONE: Yes. When I was more interested in is - with regard to social media - is yes, there are new avenues but there are also thousands
of comedians out there. So there still -
A. STONE: There's more competition.
T. STONE: Exactly. Everyone thinks he can be or she can be a standup comedian. So, you know, it's flooded - these social platforms are flooded
with even more people.
LAKE: So who's your inspiration? Who's your idol?
T. STONE: Him. Yes.
A. STONE: I'm his idol. No, no, comic-wise we have a lot of people - -
(CROSS TALK)
LAKE: It's hard to choose since there are so many -
(CROSS TALK)
T. STONE: The bottom line is follow us on Twitter -
A. STONE: Yes and your kid.
T. STONE: Anyone in the studio.
A. STONE: Even if you don't speak English.
T. STONE: You don't have to read or anything.
A. STONE: Yes.
LAKE: Well it's a great time for both of you. Thank you so much for being with us.
T. STONE: Thank you.
A. STONE: Thank you.
LAKE: And we will follow you.
A. STONE: Oh good.
T. STONE: Likewise.
LAKE: Thank you. We will be right back with "Quest Means Business after the break.
(COMMERCIAL BREAK)
LAKE: At the end of a rocky week, it was a mixed picture for U.S. stocks on Friday. The Dow finished 11 points lower. The NASDAQ and the
S&P saw very small gains.
Just like the week's volatility, all three indices managed to eke out gains for the week if you can believe it. The Dow and the S&P both rose
about 1 percent. The NASDAQ did much better - a 2.6 percent gain from Monday's open.
Stocks in Europe fared better. All the major markets managed solid gains for the week. The one in FTSE and Paris CAC each added nearly 1
percent and in Germany the Xetra Dax finished even higher despite falling on Friday. The Dax ended the week up 1.7 percent.
[17:00:01] That's it from "Quest Means Business." I'm Maggie Lake in New York. Have a great weekend.
END
