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Quest Means Business
European Ministers Speak After Migrant Conference; EU Agrees on Temporary Plans to Relocate Refugees; Fed Uncertainty Hits US Markets; Alibaba Demands Apology Over Critical Article
Aired September 14, 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: US stocks retreat on the first trading day of the week. It's Monday, September the 14th.
Europe searches for a solution to the migrant crisis that is exposing deep divisions between the states.
An economic pinch and an election upset in Australia.
And you're terminated. Arnold Schwarzenegger replaces Donald Trump on "Celebrity Apprentice."
I'm Maggie Lake and this is QUEST MEANS BUSINESS.
Good evening. Tonight, as European ministers hold emergency talks, the migrant crisis is dividing the continent. There is no sign the flow of
refugees will slow anytime soon, and some states are taking matters into their own hands.
In Brussels, the EU's interior and justice ministers are holding a news conference after today's emergency summit on the continent's migrant
crisis. Let's listen in.
JEAN ASSELBORN, LUXEMBOURG MINISTER OF FOREIGN AFFAIRS AND IMMIGRATION (through translator): The presidency attempted to come up with operations
(inaudible) -- decisions that we need to look after the reception of people and to manage forthcoming migratory flows. Now, the presidency conclusions
will be made public very shortly, and you'll be able to see them very soon, indeed.
First of all, the Council decided to increase the EU's aids to the UNHCR, the UN High Commission for Refugees, to help them manage efficiently
these refugee camps in a way which is humanely acceptable, notably in countries bordering on Syria.
We heard a report from Mr. Gutierrez from the UNHCR the situation in the refugee camps is dramatic, and the UNHCR is dramatically short of funds
to do their work properly. The majority of this money will come from the EU's budget, as well as from the budgets of member states.
Now, I would welcome in particular the initiative taken by Norway, which attended our meeting. They will organize a donor's conference in
favor of Syrian refugees and to support the UNHCR. Similarly, member states in the Commission have agreed to continue developing resettlement.
As you know, the United Kingdom has made a considerable effort there.
As for the relocation of refugees, those already present on the territory of the European Union, we have two texts on the table. One, a
Commission text to relocate 40,000 persons from Italy and Greece. As you know, the JHA Council of July the 20th agreed on the text of the decision.
The European Parliament adopted its opinion at last week's plenary.
With Parliament's opinion, the JHA Council today was able to adopt formally this decision, which will enter into force tomorrow. It's a very
important political message. In practical terms, it means that relocation towards member states will be able to start very quickly.
Hot spots will start operating in Italy and Greece. In Italy, Minister Alfano reported to us on developments in his country, and he has
promised that he would do everything to ensure that the hot spots would be up and running very quickly. Some of the facilities are in place already.
As for Greece, Greece requested the assistance of the Commission, from the EASO and from member states. Obviously, we weren't prepared to give a
positive response to that request, so as of tomorrow, substantial measures will be taken in terms of financial resources and logistical support to
Greece so that Greece is able to operate these reception centers for refugees.
I would also repeat that the hot spots are a basic requirement, a precondition for a relocation mechanism. And on that basis, therefore, the
mechanism will be able to start operating and provide the basis for discussions of further relocation mechanisms.
[16:05:05] Now, you'll remember that in July, the Council wasn't able to reach agreement on the distribution of a total of 40,000 persons.
Nonetheless, the first cases of relocation can start on the basis of the numbers that we had agreed on, roughly 34,000.
In July, the ministers did, however, agree to come back to this in order to reach 40,000 very quickly, and we are looking for further
commitments, at the very latest by late November, early December.
Then there's the second Commission proposal to relocate 120,000 persons. This text has been on the table of Council since last week, and
although we're looking at an emergency, procedures must be respected.
This text will have to be examined in detail in council bodies, and we must obtain an opinion from the European Parliament. That is the
democratic procedure enshrined in the treaty, so it was too early for a decision to be taken today.
Nonetheless, a large majority of member states have committed today to this principle of the additional relocation of a further 120,000 people who
deserve international protection as part of these massive migratory flows.
The Commission proposal will serve as a basis for an agreement. The presidency will give this work top priority, and we are aiming at adoption
at the JHA Council on October the 8th.
Now, these two relocation mechanisms are clearly of a temporary nature. The provisions of the Dublin regulation will remain in force.
Nonetheless, the Commission will be presenting an assessment of Dublin and possibly a proposal for a revision thereof.
The JHA Council examined -- or will examine the other Commission proposals, and we are ready to start formally the process of examination of
these proposals. We call upon the Parliament to do the same.
There's a proposal for a list of safe countries. That is a reaction to our conclusions from July the 20th. We have committed to reaching
agreement rapidly on the idea of such a list, and then as soon as possible, we can initiate negotiations with Parliament.
Now, to answer a question someone asked in Council, at this stage, Turkey will not be considered as a safe country because of the domestic
situation in particular with the Kurds. Our meeting also stressed the importance of return and readmission policies. We shall return to those in
detail at the JHA on October the 8th in Luxembourg.
I can tell you, as of now, there is agreement on the need to address these issues and also on the need for Frontex to play a more active role.
The JHA Council has also stressed the importance of effective controls at external frontiers in order to manage migratory flows.
In particular, it has been decided to use rapid border intervention teams. This is a European mechanism which already exists, and they will be
deployed where needed.
Greece, by virtue of its geographical location, is in the front line when it comes to the arrival of migrants. And the challenges that Greece
is facing are European challenges.
Now, on top of the relocation mechanism for Greece, Council also decided today to support Greece in developing its whole reception capacity
system and the controls of its external frontiers. I think the Commission has done a remarkable job of work so far, and we can count on them to
continue doing something which is so useful for Greece and for Europe.
Council also decided to give active support to the countries in the Western Balkans who find themselves on the main transit route.
Given its geographical location, Turkey is a very important country both of first reception and of transit, and it's important to recognize the
prime importance of Turkey as a partner. We have, therefore, committed ourselves to developing out cooperation with Turkey in many areas.
[16:10:09] In international terms, we examined strengthening cooperation with the relevant third countries. Federica Mogherini was
present at our meeting and gave us explanations of that subject.
As you know, in the very short term, there will be two big meetings, the Valletta Summit with the African states and the conference of the
challenges posed by the Western Balkan route. Preparations for both meetings are at hand.
As representative of the presidency, I would also stress the importance of full implementation of the act key to avoid confusion with
introduction of border checks.
To conclude, let me stress the fact that the situation is urgent and dramatic and time is of the essence. A common problem requires a common
response, and throughout our presidency, we will do everything we can in order to enable Europe to make progress in the right direction.
Now, for those who weren't there at the beginning, I would simply recall that the Council sometimes produces Council conclusions. Sometimes
it is the presidency which presents presidency conclusions. And all of the things that I have explained to you today have been agreed upon and
supported by a very large majority in council.
Let me now give the floor to the first vice president of the Commission, Mr. Frans Timmermans.
FRANS TIMMERMANS, VICE PRESIDENT EU COMMISSION: Ladies and gentlemen, last Wednesday, which is not long ago, President Juncker in the European
Parliament painted a dire picture of the situation in Europe. He was very clear about that. We're in trouble, and we need to get out of trouble.
He immediately followed on by presenting proposals how, in the view of the Commission, the European Union, by joint action, could face this
refugee crisis. Let me just recall that the principle of this was to start with solidarity and responsibility in a very precise equilibrium between
the two.
Because to say, let's shut all the borders and keep everybody out is unrealistic, populistic, and simply impossible. To say, let's open all the
borders and let everybody in is equally unrealistic because it would seriously harm the European social model.
So, we need to find a way to combine our collective responsibility before our conscience and before the law to make sure that people who
deserve asylum because they are refugees get asylum in Europe. And at the same time, we have to make sure --
LAKE: Let's break away there. Hala Gorani, host of "The World Right Now," is in Brussels, and she joins us live right now. And Hala, that
speaker really laying out the dilemma that's facing Europe right now.
HALA GORANI, CNN INTERNATIONAL CORRESPONDENT: Yes, that was the vice president of the European Commission. But before him, we heard from the
foreign minister of Luxembourg, Jean Asselborn. Luxembourg holds the rotating European presidency.
Several interesting lines out of what he said, that the EU was going to increase its aid the United Nations High Commission for Refugees in
order to help in camps outside of Syria.
Also, agreeing on the relocation of 40,000 migrants and refugees from Italy and Greece, and the establishment of so-called "hot spots," centers,
refugee camps, essentially, increasing the amount of aid to Greece, increasing the logistical support to Greece as well.
This is a major frontier country, it's been taking the brunt of the migrant and refugee flow, and it's been having a really tough time dealing
with it. Because unlike Italy, Maggie, as you know, it hasn't spent the last several years processing and managing the arrival of these migrant
ships. It's only been in the last few months, quite recently.
And we saw some terrible tragic scenes of migrants that were held in football stadiums and not being able to -- being sort of confronted with,
you'll remember,, water cannon, et cetera, and that was an embarrassment to Greece and certainly a wake-up call to the continent that Greece in that
particular instance certainly was not prepared. The EU is acknowledging that and saying they will help.
But here's the big headline. You'll remember that the European Commission president, Jean-Claude Juncker, said he wanted to propose this
big plan of increasing the number of relocation spots to 160, so 120,000 more than they've agreed today.
[16:15:00] That didn't happen. That was not agreed today. What we do know is that decision was not made, and that the -- Jean Asselborn, the
foreign minister of Luxembourg, was saying we hope that that would be taken into account in a document that will be presented to ministers at an
October 8th meeting.
So, it has to be said, in not uncommon European Commission diplomatic style, things don't happen quickly, agreements don't happen right away,
especially on such a divisive issue across Europe as relocating refugees. And it appears as though we're going to have to wait at least a few more
weeks.
But precious time, many refugees say, they just don't have, and time they don't want to wait lost in corners of Europe or at border checkpoints,
Maggie.
LAKE: That's right, Hala. And it also, as we've discussed throughout the day, they're talking about these numbers, they seem small compared to
what we are seeing and what we know the reality is on the ground. This will put them even further behind.
They weren't able to come to an agreement. He said at the time that although we're facing an emergency, that procedures must be respected.
This has to go to committees, it has to go to groups and weave its way through the European bureaucracy.
Do we think it's really that, just that the process is slow? Or should we be more concerned that they just cannot come to an agreement
because this issue of quotas and who takes -- which country takes how many has been such a divisive issue?
GORANI: Well, for those who consider this to be a humanitarian emergency, of course, the slow pace of change and discussion and
negotiation here in Brussels might seem frustrating. Because we see -- and our journalists across the region have covered at border crossing points
desperate --
(AUDIO GAP)
GORANI: -- holding babies, unable to move forward when they want, so desperately and badly to reach countries like Germany.
And we're seeing also at these border crossing points scenes right now that will become worse inevitably when you have Hungary closing its border
with Serbia, when you have Germany closing its border to non-documented refugees with Austria.
So, yes, indeed, there has to be a combination of factors, but one of them being that this is just the way that this body operates. The other
one is, you have 26 members, if you take the two members that can opt out of some of these agreements, that need to come to a unified solution.
And it's difficult. It's difficult in the best of cases, and even more difficult when you have an issue here where you have two clear camps,
one saying we don't want mandatory quotas, and the other saying very clearly, we must divide these numbers equally across the continent.
Maggie?
LAKE: Absolutely. And all the while, these people are going to continue to come when they see such a desperate situation at home. Hala
Gorani for us, live on the scene in Brussels. Thank you, Hala.
Now, we want to turn now to the day's business news. The tough open to a crucial week for US markets. The Dow closed down 62 points when it
was all said and done. On Wednesday, the Fed meeting will begin. Thursday, a decision on interest rates will be announced.
Paul La Monica, CNN Money's digital correspondent joins me now. And Paul, there -- I can't remember the last time people were so divided about
what the Fed's going to do, at least when you ask them. The markets are telling us something with Fed futures, but when you talk to people, they
really don't know.
PAUL LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: It does seem still to be a tossup whether or not the Fed is going to hold tight again or
finally raise interest rates for the first time since 2006. So, there's a lot of drama going into Thursday.
We might just have more market quietness. Because even though the market was down today, it was a pretty dull day. There wasn't a lot in the
way of new news. The Jewish holiday as well, trading volume was light. I think we might have that until Thursday.
LAKE: Yes, maybe just getting to the sidelines. What's the debate around the Fed table? We know that Janet Yellen for so long it was really
focused on the employment picture and focused on growth.
I've heard some people say, let's just get it over with. Let's just do it and get back to some sense of normal. And I've heard other people
say, why do you do something just for the sake of doing it? This could really not only roil US markets, but more importantly, have ripple effects
around the globe.
LA MONICA: Right, and I think that's going to be the key thing. Even though the Fed officially only needs to be concerned about full employment
and price stability in the United States, they definitely are also watching the financial markets, not just on Wall Street, but globally as well.
So, I think the key question is going to be, will a rate hike, even if it is a tiny, tiny one, will that freak out everyone investing around the
world? The argument is there for a rate hike when you look at the unemployment rate, it's pretty low right now, job growth has been decent.
But wage growth hasn't been that strong, and wage growth is what really fuels inflation. So, the lack of inflation has got to be a concern
as well for the Fed.
LAKE: And this time around, maybe not so much just what they do, but the press conference, because it's going to be so important. And again, a
real test for Janet Yellen with so much riding on this decision.
LA MONICA: Definitely. Because regardless of what happens, if the Fed does raise rates, she's going to be grilled about why they decided to
do it and is she concerned that this is going to lead to further market volatility.
[16:20:04] If the Fed sits tight, she's going to be asked nonstop about when are they finally, then, raise rates? Are they going to do it in
October even though there's no press conference currently scheduled? Will they do it in December? Do they wait until 2016? Do they sit out the
entire year because they don't want to inject themselves into a presidential election debate?
(CROSSTALK)
LAKE: Who wants to be the Fed chairwoman?
LA MONICA: There's really so many questions.
LAKE: Who wants this job, is the question? It's tough.
LA MONICA: I do not envy Janet Yellen in the same way that I never envied Ben Bernanke.
LAKE: That's right, its a really difficult situation, but a major change with no road map, we shouldn't forget there. We are still in
unprecedented territory when it comes to this. Paul, we're going to watch it together. Thanks so much.
LA MONICA: Definitely. Thank you.
LAKE: Well, Alibaba is unhappy with the treatment it's getting from some parts of the media. We'll have more on their share price slide next.
(COMMERCIAL BREAK)
LAKE: As the volatility continues in China, one of the country's most famous companies is struggling to impress investors on Wall Street. Shares
in Alibaba finished 3 percent lower in New York. They are already down 40 percent this year, if you haven't been keeping track.
The latest cover story, Barron's magazine says shares could fall 50 percent more as competitors eat into its market share. Alibaba was so
upset with that story, it's written to the editor and asked for a correction.
Joining me now is Max Wolff, chief economist at Manhattan Venture Partners. Fifty percent more? That's a pretty gloomy forecast. Do you
think that that's possible?
MAX WOLFF, CHIEF ECONOMIST, MANHATTAN VENTURE PARTNERS: I mean, look, anything is possible. I think it's highly improbable. The company's
already at 50 percent of its peak. So, it's peak was about $120 a share, a little bit less than that, and it's just a little bit more than $60 a share
now.
So, I think it's -- we've seen a lot of the carnage here, but it's still not a beautiful story, and probably still a little bit longer to go
before the market is convinced that they've turned the corner.
LAKE: So, what is it that has people so worried? Is it -- I mean, I know so much, there's so much focus on China right now leading a lot of
threads of business stories. Is Alibaba's fate tied to the Chinese economy?
WOLFF: Yes. So, as of the last time we really checked in, about 90 percent of their earnings are Chinese. So, this is the biggest China
internet story out there on a market tap basis for a while. I think it's still a good story. I think the internet economy and e-commerce in China
is still a growth story.
People have a tendency to forget. We see the numbers, and they certainly are impressive, of 600 million people almost online. But there
are 600 million people in China who've never been online, and that's the growth story here.
So, we still like the growth story. But look, the company probably got a little bit over its skis in valuation, and when you get a little bit
over your skis, sometimes the way you right yourself is not so beautiful.
LAKE: Yes, that's true. I mean, some people look at this and say it's a sign that things were too frothy and getting too crazy with some of
these names, and this is looking more reasonable, maybe even with more to go.
Other people say it's getting caught up in so much of the market volatility that maybe this is one of those opportunities, I have to get in
when it's at a discount and then ride it back higher. What do you say?
WOLFF: There's always going to be kind of a tug of war between fear and greed here, right?
LAKE: Yes.
WOLFF: But if you don't have a better story than just plain old greed, you're probably better off yielding to fear until you have a good
lay of the land.
(LAUGHTER)
WOLFF: I mean, I do think it's a bit unfair, to be fair to Alibaba, that it's getting the same brush -- tarred with the same brush as China
writ large, because what about the numbers, what about the future?
That being said, they still have a pretty rich valuation. We're still talking 25 times forward, right? So, they're not being asked to take a low
valuation. If you really believe lower evaluations, you've got to wait. And if you really believe in the future, you've got to jump now.
LAKE: What about those competitors? He seemed -- Jack Ma seemed so untouchable.
[16:25:01] WOLFF: Yes, so JD, and there's a bunch of other companies that have done their business model differently. Part of what made people
so excited about Alibaba was these ridiculous margins. And the truth is, if you're in a competitive market, and China really is a very competitive
market, and you're trying to grow really quickly, you're not going to sustain those kind of margins.
But they still have great margins, and JD and other companies will do well. But it's still kind of protected from outside companies, the Chinese
economy. It's still growing quite quickly. And the truth is, the slow growth in China story going forward is a pivot to consumption, and no one
is in a better situation for that than Alibaba.
LAKE: And that is very interesting, and I have heard that before as well. So, that means you've also got to be betting on Alibaba and the
Chinese leadership to get it right.
WOLFF: Yes.
LAKE: That remains to be seen. Max, always great to catch up with you. Thanks so much.
WOLFF: Thanks for having me, it's great to be here.
LAKE: Now, Australia's economy could be headed for a recession, and the country's prime minister has paid the price. There's another change
over Down Under, and an investment banker is the new man in charge.
(COMMERCIAL BREAK)
LAKE: Hello, I'm Maggie Lake. Coming up on the next half hour of QUEST MEANS BUSINESS, Tony Abbott is out of a job as Australia gets yet
another new prime minister.
And he'll be back! Arnold Schwarzenegger is stepping into Donald Trump's boardroom shoes.
Before that, these are the top news headlines we are following for you this hour.
European Union interior ministers have made an agreement in principle to relocate tens of thousands of refugees. They say they expect to adopt
the measures at the next meeting on October 8th. No agreement was made on how the refugees would be divided among the member states.
Police are searching for a gunman following a deadly shooting at a university in the US state of Mississippi. A history professor was shot in
the head while in his office at Delta State University. The school tweeted earlier that the campus was on lockdown. Classes have been canceled for
tomorrow.
British prime minister David Cameron made an unannounced trip to Lebanon and Jordan Monday to meet Syrian refugees. His trip comes after he
announced a plan to resettle 20,000 Syrian refugees to the UK. The prime minister visited camps in both Lebanon in Jordan and said the UK is doing
its part to solve the crisis.
(BEGIN VIDEO CLIP)
DAVID CAMERON, PRIME MINISTER OF BRITAIN: Well, I wanted to come here to see for myself and to hear for myself the stories of refugees and what
they need. Britain is already the second largest donor to refugee camps and to this whole crisis, really helping in a way that many other countries
aren't with serious amounts of money.
We'll go on doing that, including increasing the amount of money we're giving to educate Syrian children here in Lebanon and elsewhere. And I
think that's absolutely vital.
(END VIDEO CLIP)
[16:30:05] LAKE: Survivors of an attack on a tour group in Egypt are describing the moment that they were fired on, saying it involves a
potential airstrike. It happened in Egypt's vast western desert. At least 2 Mexican nationals are among the 12 people killed. Mexico's foreign
minister spoke earlier.
(BEGIN VIDEO CLIP)
CLAUDIA RUIZ MASSIEU, MEXICAN FOREIGN MINISTER (through translator): Ambassador Alvarez Fuentes personally interviewed six Mexicans in the
hospital who told him separately there had been an air attack with bombs dropped from a plane and helicopters. They had been evacuated by civilian
and military vehicles and were then transferred by ambulance to the hospital.
(END VIDEO CLIP)
LAKE: The minister went on to say the group is visiting an oasis where they had stopped for a meal and that's when the attack happened.
In a stunning political coup, Australia's ruling party has forced out the prime minister and replaced him with a former investment banker.
Malcolm Turnbull will be the new prime minister after the Liberal Party forced out Tony Abbott over fears he was mishandling the country's
economy.
Our Asia-Pacific editor Andrew Stephens has more on a remarkable night for Australian politics.
(BEGIN VIDEOCLIP)
ANDREW STEVENS, CNN ASIA-PACIFIC EDITOR: Politics is a brutal business in Australia. In the space of less than five dramatic hours, the
country watched as Communications Minister Malcolm Turnbull became the new prime minister when he defeated Tony Abbott in a vote for the leadership of
the ruling Liberal Party.
After losing 44 to 54, Abbott left Parliamentary HQ without a word to reporters. To Turnbull, a wealthy former businessman and investment
banker, his key message after the ouster, "We'll be a government of consensus."
MALCOLM TURNBULL, AUSTRALIAN PRIME MINISTER ELECT: We need to have in this country and we will have now an economic vision, a leadership that
explains the great challenges and opportunities that we face, describes the way in which we can handle those challenges, seize those opportunities and
does so in a manner that the Australian people understand so that we are seeking to persuade rather than seeking election.
STEVENS: It may have been shocking in its suddenness but analysts say Turnbull had been plotting a challenge. Abbott was seen as a soft target,
lagging in the opinion polls for more than a year, a divisive figure for many Australians and gaffe prone -- never more so than when he awarded the
country's highest honor, a knighthood, to the Queen's husband Prince Phillip - a decision that was widely criticized.
And just a few weeks after that, the Prime Minister survived a vote of no confidence from his own party but it opened the way for Turnbull.
The new leader is on the left of the party on social issues. Unlike Abbott, economically he's a conservative. And around Australia today
there's also a sense of deja vu.
In the past five years, two former leaders got the top job through backroom deals rather than the popular vote and now Turnbull has joined
that group.
He will have to face voters by the end of next year at the latest. Andrew Stevens, CNN Hong Kong.
(END VIDEOCLIP)
LAKE: Fears that Australia's economy was stagnating may have been a factor behind Tony Abbott's demise. The fear inside Australia's Parliament
is that it could be headed for its first recession in more than 20 years. The Chinese slowdown has hurt the economy.
It's Australia's biggest trading partner by far, accounting for almost a quarter of all trade. Australia's commodities have been the main driver
of that trade.
Mining is one of the biggest industry but now falling prices are hurting economic growth.
The Central Bank is hoping to weaken the currency to try to help it recover. The Australian dollar is near six-year lows against the U.S.
dollar, down 12 percent this year alone. The new prime minister says confidence needs to be restored.
(BEGIN VIDEOCLIP)
TURNBULL: A key element is confidence. And you build confidence by explaining - as I said earlier - explaining what the problem is, making
sure people understand it and then setting out the options to deal with it.
And you've seen in my portfolio the - of - communications, right. I've had to deal with very big - very big - business problems whether it's
with the NBN or indeed with Australia Post. That's the approach I've taken.
(END VIDEOCLIP)
LAKE: Well Professor Steve Keen is head of economics at Kingston University in London and he joins us now. Thanks so much for being with
us.
Confidence is great, but Australia's economic problems are not because of mismanagement, it really is because of the ties with China.
What is Turnbull going to be able to do to change that?
[16:35:02] STEVEN KEEN, PROFESSOR OF ECONOMICS, KINGSTON UNIVERSITY LONDON: Not a lot because Australia managed to avoid the financial crisis,
first of all by a very large fiscal stimulus under their previous Labor-run (ph) government.
And then which actually caused a huge housing bubble that kept the finances ticking on for a while until China' s own housing bubble caused
immense demand for our exports and a huge investment burn (ph) which is not running out of course with huge capacity to produce a China's demand
diminishes and as prices plummet.
So there isn't really any easy answer for the problems the Liberal Party now finds itself in economically.
LAKE: Well, easier not, especially because he is taking the post now, he's going to have to come up with some as is the ruling party, what should
they be doing? Are they going to be able to avoid recession and what should they be talking about doing?
KEEN: Well I think what they'll have to do is stop living in bubbles. So a good colleague of mine has a pseudonym as a blogger. It's called
"Houses and Halls" and that really summarizes the Australian economy. Halls out of which we dig our oil to sell overseas, and the houses we build
with the proceeds of the overseas sales.
Now both of those are going to be challenged. And the only thing the government can really do is let the currency fall. It's been massively
overvalued for a long, long time.
Let that continue and make it possible to compete domestically and then attempt to replace the housing bubble which is all being financed by
huge (inaudible) and mortgage lending by the four major Australian banks with some government spending. Which of course goes against the overall
philosophy of the party he now leads.
So I think Malcolm is going to find himself with a very difficult balancing act.
LAKE: He is a business leader and investment banker and he's popular in the business community. Will that help him?
KEEN: To some extent but ironically he's made enemies who are going to be sitting behind him on his own benches because in a philosophical
sense, he's certainly not a member of the Labor Party. His politics in the social front are quite progressive.
And most of the so-called Liberal Party in Australia is similarly conservative as - not quite as conservative as the religious right of the
Republican Party -- but they're more at home there than they would be sipping lattes. And that's going to be a major force destabilizing
Turnbull from behind.
I have a feeling that Scott Morrison who was the immigration minister and is now Social Security minister and maybe I think has become treasurer
under the most recent changes is more likely the party that the rest of the Liberal Party is likely to try to strengthen.
So we're going to see I think political struggles between a prime minister who is popular with the public but not with his own party and a
treasurer who's unpopular with the public but quite popular with his own party.
So I think political instability's going to continue in Australia.
LAKE: Political and economic challenges ahead certainly. Steve Keen, thank you for joining us today helping us understand a little bit better.
Now the corruption case against FIFA is probably only going to get bigger. That's the message from U.S. Attorney General today. Loretta
Lynch says new charges are very likely against members of football's governing body as the investigation with the Swiss authorities continues.
World Sport's Alex Thomas has more from Zurich.
ALEX THOMAS, CNN INTERNATIONAL SPORTS CORRESPONDENT AND ANCHOR: The symbolism was more powerful than any of the statements. The attorney
general of the United States here in Zurich, FIFA's backyard four months after the dawn raids and arrests that overshadowed May's presidential
election.
It was a chain of events that ultimately has led to Sepp Blatter announcing he'll stand down although Blatter denies any wrongdoing and
hasn't been charged with anything.
And neither Loretta Lynch nor her Swiss counterpart Michael Lauber mentioned FIFA's president by name except in a passing response to a
question about Blatter's travel plans.
The pair did update us though on their parallel investigations into football corruption and promised more charges and arrests would come.
MICHAEL LAUBER, SWISS ATTORNEY GENERAL: Our searches have been conducted in the Western part of Switzerland and further evidence has been
collected. Very proportional and needed financial assets have been seized including real estate - for example, flats in the Swiss Alps.
As of today, 121 different bank accounts have been brought to the attention of our task force by the Swiss Financial Intelligence Unit MROS.
Banks in Switzerland are fulfilling their duties of the law by filing suspicious transaction reports.
LORETTA LYNCH, U.S. ATTORNEY GENERAL: To anyone who seeks to live in the past and to return soccer to the days of corruption and bribery,
cronyism and patronage, this global response sends a clear message - you are on the wrong side of progress and you do a disservice to the integrity
of this wonderful sport.
[16:40:01] THOMAS: Of the two it was Switzerland's attorney general who gave us more details, talking about the obstacles facing his taskforce
saying that they've been denied access to certain sealed documents or they wouldn't elaborate and mentioning the 11 terabytes of data they're having
to sift through after 121 suspicious bank accounts were reported to them.
But as for the key question of who might next be arrested and when, we were given no precise timeline. Alex Thomas, CNN Zurich Switzerland.
(END VIDEOCLIP)
LAKE: As the Donald tries to get America's top job, Arnold Schwarzenegger will take over one of Trump's roles. As Arnold says, "We'll
be back" after the break.
(COMMERCIAL BREAK)
(VIDEO CLIP
I'll be back
LAKE: Arnold Schwarzenegger is making good on his big screen promise the Terminator is set to replace the Donald on "Celebrity Apprentice."
NBC put the franchise on hold when Trump began his run for the White House. Executives say Schwarzenegger is the epitome of a global brand in
entertainment and business.
Brian Stelter joins me now. And, Brian, I have to say when that news crossed (inaudible), a lot of people were like, `What?'
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: That was a surprise.
LAKE: It's just because of the `hasta la vista' - you know that that's going to be the line at the boardroom, right?
BRIAN STELTER, CNN SENIOR MEDIA CORRESPONDENT: (LAUGHTER). Or, you know, "I'll be back," `you won't be back.'
LAKE: Yes.
STELTER: That could be a line. Lots of options I suppose, lots of possibilities. But his name did not come up when NBC started saying they
were going to come up with a new apprentice.
People talked about Mark Cuban or Martha Stewart -
LAKE: Yes.
STELTER: -- you know, the Arnold didn't really come up in the conversations about replacing the Donald, so it was a surprise today. But
it does make a lot of sense.
We're talking about a former movie - well actually sellout movie - star and former politician going into a reality show at the same time we
see a reality show star, Trump, trying to run for president.
So there's this revolving door perhaps between politics and entertainment that's on display in the election cycle.
LAKE: And it may be confusing a lot of people, upsetting a lot of people -
STELTER: Who?
LAKE: -- and to make matters worse, we're also now hearing that you mentioned Mark Cuban -
STELTER: Right.
LAKE: -- so maybe he's running for president.
STELTER: Yes, he was dropping hints, musing about the idea today to CNBC. I just talked to him actually. He said, `I have no intention of
running,' but his point is that he could crush Trump, he could beat Trump.
He thinks that all the Republicans are too weak in the general election. He also thinks Hillary Clinton's time has gone. He says that
time has come and gone. He thinks any other Democratic nominee would easily beat the Republican nominee, even himself. (LAUGHTER).
LAKE: There does seem to be some dissatisfaction - overall dissatisfaction - with the whole process that is kind of feeding and
influences the polls. It's been fun to watch -
STELTER: And influencing these billionaires who fantasize about running.
LAKE: Right. It's been fun to watch -
STELTER: Yes.
LAKE: -- but is it taking away from the sort of seriousness of the issue at hand? Do people think it's hurting the process that you have all
these celebrities saying they're going to run, maybe they're going to run. We can't even figure out if it's real or not. I mean the whole thing feels
like a reality show.
STELTER: Look at Donald Trump on Fallon the other night saying maybe Kanye West will be my vice president. Those sorts of moments are funny but
they also can feel like giant distractions and can feel like a degradation of the process.
[16:45:04] LAKE: But we are a long way away from - I mean - I think we're all assuming that it's going to sort itself out.
STELTER: People call it the silly season - people call it silly season for a good reason and we are in some ways still in that silly
season.
But the fact that you do see these billionaire, egotistical celebrities sitting on the sidelines making jokes even about running for
office shows the value of celebrity when trying to seek public office.
LAKE: Yes.
STELTER: Trump is succeeding for many reasons, but one of the reasons is because he had practiced for a decade on NBC.
LAKE: Right.
STELTER: He had to practice being a television star and now he's starring in this Democratic - this Republican - debate process.
LAKE: Right and that's really like excelling at the campaign - that one aspect of the campaign. But there is a lot of policy behind it. It'll
be interesting to see when the conversations start to drift to more serious -
STELTER: Yes. And now as of today, the door is closed at NBC, right? So he can't go back to "The Apprentice."
LAKE: Yes.
STELTER: If anybody thought that was a possibility -- no it's not.
LAKE: You've got to be taking it seriously, right. Brian, thank you so much for bringing us up to date. It's such a fast-moving story always.
Another businessman jumping into the race to be the next United States president - John McAfee says he'll win because unlike Trump, he's not
attached to a party.
Now you may - if you don't recognize the face, McAfee made millions with his anti-virus software company and cashed out when he sold it to
Intel back in 2010. In 2012, he fled Belize after police tried to question him about a murder.
Now McAfee has created his own political party named the "Cyber Party." That's a clue to the issues that he's focused on.
Our tech correspondent Laurie Segall asked him how he changed the state of U.S. surveillance.
(BEGIN VIDEOCLIP)
JOHN MCAFEE, U.S. PRESIDENTIAL CANDIDATE, CYBER PARTY: Obviously the surveillance is pointed inward far too much in America. The NSA I don't
think was designed as the agency to spy on American citizens, but to help us secure ourselves from foreign agents.
I would simply demand that the NSA stop spying on American citizens without massive oversight of some kind.
LAURIE SEGALL, TECHNOLOGY CORRESPONDENT FOR CNN MONEY: I want to talk about cybersecurity when it pertains to other candidates in the race.
We have seen issues in cybersecurity already. We look at Hillary Clinton's use of private e-mail server.
MCAFEE: Well number one, it's an honest enough mistake. I mean, Hillary Clinton and other candidates like her, are completely unversed in
cyber sciences and cybersecurity. That's got to stop. We cannot have people in government who do not understand the fundamentals of
cybersecurity.
With all due respect to Hillary Clinton, she has spent her life in the world of politics which is the world of fantasy. The only other
presidential candidate who might see the world as it is Donald Trump and I fear that Donald Trump will end up like every politician because he is
attached to a party which is a machine.
His party is based on hundreds of years of political manipulations. Donald Trump, please go back to being an entrepreneur because you've
created a lot of jobs and you did great things for America.
Hillary Clinton - a school for the deaf maybe because clearly you're a brilliant woman and your husband for eight years didn't hear a word of
advice that you may have given him. So that would be appropriate.
The rest of you, go home, look in the mirror, come back tomorrow and get behind me and let's save this country. Please, for God's sake.
SEGALL: It's easy to say you've got a very colorful past, you describe yourself as an eccentric millionaire, you were arrested in
Guatemala, you were named as a person of interest in association with questioning for a murder in Belize.
I think you were recently arrested for a DUI. These are all things that have happened. So will this be an obstacle in gaining the public's
trust?
MCAFEE: No. You can't sling any mud at me that I have not slung at myself and answered on the air many times over. Number one, I was never
accused of murder, I have not been accused, am not accused now.
The Belizean government really wanted to question me. The DUI? Well that was for a prescription medication that I had just gotten that day for
something I'd never taken before.
I experiment a lot, I have a very healthy appetite and I won't apologize to that.
(END VIDEOCLIP)
LAKE: The U.S. Republican presidential candidates face off in back- to-back debates. Watch live on Wednesday starting 11 p.m. in London, midnight in Berlin. You can see the whole broadcast again at 8 p.m. on
Thursday London time. That's 9 p.m. central on Europe only on CNN.
Belvedere meets James Bond, the chief exec of the vodka brand explains his hope for the partnership.
(COMMERCIAL BREAK)
[16:51:10] LAKE: Few films resonate in popular culture the way that James Bond does. Belvedere Vodka is hoping the iconic brand will push its
Vodka to the forefront of popular culture as well.
(BEGIN VIDEOCLIP)
Male Actor: Of course.
STEPHANIE SIGMAN, ACTRESS: Shaken, not stirred.
(JAMES BOND MUSIC)
(END VIDEOCLIP)
LAKE: That's the latest advert from the vodka maker. It's partnering up with the Bond Movie "Spectre" out in November. Richard Quest spoke to
Belvedere president Charles Gibb and the new Bond girl Stephanie Sigman.
(BEGIN VIDEOCLIP)
RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: Ah, and so we have the beauty and the chief exec.
(LAUGHTER)
QUEST: And when we put this together with 007, we end up with a very rich mixture. Tell me why it was important, Charles, for Belvedere to be
involved in this project.
CHARLES GIBB, PRESIDENT, BELVEDERE VODKA: I think, I mean, first and foremost, you know, Bond is such a man of style, substance, an amazing
character and of course a man of excellent taste.
Belvedere Vodka, a Polish vodka, with authenticity and character is now available in 120 countries around the world. We wanted something that
was going to resonate in all those countries to all our consumers and be able to -
QUEST: Is it really worth it? I mean, I often wonder when products get involved with a movie, what does it take you to - I mean I've seen your
comments that it takes you to the next level.
GIBB: Yes, absolutely. I think it takes us to the next level in terms of awareness. It also gets us, most importantly today, it gets you
talked about in popular culture at a moment when everybody's going to be talking about Bond and "Spectre" and the release of the movie.
And obviously they're going to be talking about what he drinks during the movie and obviously at that time. So we really want to be talked about
in popular culture at those times.
LAKE: You may want to be, but ah. You're being talked about. Now, you're an actress -
SIGMAN: I am.
QUEST: -- and this was a challenging part, not only because you are with Daniel Craig but also with the commercial that we've just seen. What
was the challenge for you in this?
SIGMAN: I get to be part of this legendary, iconic thing, but it's a Bond martini - Belvedere martini. So it's -
QUEST: So when they said Bond girl, Belvedere, martini, James Bond and you finally meet Bond, what was it like.
SIGMAN: I was very surprised. He's a very charming guy and very nice and it was very easy to work with him.
QUEST: Very easy.
SIGMAN: Yes.
QUEST: Did you actually drink much real vodka or was it all stage vodka.
SIGMAN: After work (LAUGHTER). Not during work.
QUEST: So you say. We'll take your word for it. How much did you pay for all of this?
GIBB: Oh, I can't tell you that.
QUEST: It was worth - it was worth a try. Look, if I give you some more vodka --
(LAUGHTER)
QUEST: -- you might be able to sort of do that.
GIBB: It's our largest global investment ever is what I can say.
QUEST: Right.
GIBB: That's for sure. And it will be, you know, present in at least 35/40 countries in a major way within the Belvedere universe.
QUEST: You don't go into something like this - you know - sort of lightly, do you? Even for a company like LVMH, your parent, to actually
embark on branding and connecting yourself to something like Bond.
GIBB: Most certainly you don't go into anything lightly these days and you've really got to make the right decisions.
[16:55:00] And it's about making sure that our DNA - the Belvedere DNA - is able to marry in an authentic and real manner with Bond and with
"Spectre," and with all the activation (ph).
I think, you know, the iconic martini and the ad and having the wonderful Stephanie working with us has just been - has just meant that
this whole thing's come together beautifully.
QUEST: You are most welcome to come back next year and give us a report on that.
GIBB: Fantastic, I'd be more than happy to do so.
QUEST: On one condition -
GIBB: (LAUGHTER).
QUEST: She has to come with you.
SIGMAN: (LAUGHTER).
GIBB: That's the easy part.
QUEST: Here's to "Spectre."
(LIFT THEIR MARTINI GLASSES)
GIBB: Cheers.
SIGMAN: Cheers.
(CROSS TALK)
QUEST: And it's shaken -
SIGMAN: Not stirred.
(END VIDEOCLIP)
LAKE: We'll have a final check of the markets right after this.
(COMMERCIAL BREAK)
LAKE: U.S. stock markets fell Monday, not exactly how you want to start the week. Investors are feeling cautious ahead of the Federal
Reserve's decision on interest rates. It's going to be a two-day meeting. The decision will be announced on Thursday.
The Fed Open Market Committee of course begins that meeting Wednesday. The Dow closed lower -- 62 points. The S&P 500 dropped about a
1/2 of 1 percent.
Alibaba shares finished about 3 percent lower in New York. The stock is down around 40 percent this year. The company has written to the editor
of "Barron's" magazine. It's asking the publishers to correct an article which said shares could fall 50 percent or more as competitors eat into its
market share.
European markets mostly fell Monday as investors look ahead to that Fed announcement. The FTSE rallied more than 1 percent during the day but
it did end in the red. Only the Xetra DAX in Frankfurt managed to eke out a small gain.
And that is "Quest Means Business." I'm Maggie Lake. Stay with CNN, more news ahead.
END
