Return to Transcripts main page
Quest Means Business
Eurozone Finance Ministers Meet; David Cameron: Brexit is a "Leap in the Dark"; Cameron: Isolationism is Bad for Britain; Eurozone Ministers Discuss Greek Bailout; Trump: No Plan to Negotiate Debt Write-Down; Trump: I Would Buy Debt Back at a Discount; Trump: U.S. Won't Default, It can Print More Money; Saudi Arabia Replaces Oil Minister Ali al-Naimi; U.S. Government Versus North Carolina; Department of Justice Files Civil Rights Suit Against North Carolina; North Carolina Sues U.S. Government Over Bathroom Bill; Lynch: Law is "State-Sponsored Discrimination". Aired 4-5p ET
Aired May 09, 2016 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00]
[bell ringing]
RICHARD QUEST, HOST: Closing bell is ringing, start of a new week. The Dow has been down for most of the day, not hugely, just of round about 30 or 40
points, 17,700 being held on the level. And the gentleman in the red tie, I think we just caught a firm gavel to bring trading, an unexciting gavel on
Monday, it's May the 9th.
(BEGIN VIDEO CLIP)
QUEST: In Trump they do not trust. Economists are scratching their heads over the Republican nominee's latest debt flap. The surprise turn-around in
Brazil's impeachment process sends stocks falling, but what's the likely result?
And from Mossack Fonesca's offices to your fingertips, now you can explore the trove of secrets that's open to the public.
(END VIDEO CLIP)
QUEST: I'm Richard Quest, we're starting a new week together, and I mean business.
Good evening. The self-proclaimed king of debt says the U.S. will never default because it can always print more money. The man poised to be the
Republican Party's Presidential nominee is Donald Trump, and he told CNN's Chris Cuomo his approach to managing the U.S. debt would be to look at ways
to buy back the debt at a discount if interest rates made that possible.
(BEGIN VIDEO CLIP)
DONALD TRUMP, REPUBLICAN PRESIDENTIAL CANDIDATE: You never have to default because you print the money, I hate to tell you, OK, so there's never a
default. But the point is it was reported in "The New York Times" incorrectly --
CHRIS CUOMO, CNN CORRESPONDENT: That you said you would go to creditors and make them take less.
TRUMP: It was reported in the failing "New York Times" and other places that I want to default on debt. You know, I'm the king of debt. I
understand debt probably than anybody. I know how to deal with debt so very well. I love debt, but you know -- debt is tricky and it's dangerous and
you have to be careful and you have to know what you're doing. But let me just tell you, if there's a chance to buy back debt at a discount, in other
words, interest rates go up and the bonds go down and you can buy debt, that's what I'm talking about.
(END VIDEO CLIP)
QUEST: So Donald Trump is talking about buying back debt at a discount, U.S. debt, if interest rates rise. And also pointing out that the U.S. can
always print money so therefore it can never default.
There are a variety of issues in relation to that. Economic and political and we will stick with the economic here on Quest Means Business.
Because that very printing of money, as we have seen in many occasions, Argentina being one, I mean we can go back to Germany and Weimar Republican
and obviously printing money inevitably leads to inflation on the grandest of scale. We've seen that in Zimbabwe and there are risks in Zimbabwe they
may be about to do it again with their new currency that they're about to create.
But Donald Trump, stick with the U.S., has denied that he implied he would try to renegotiate debt and write off with the government's creditors as
has being reported.
He is saying that's not what his plan is. Instead, he says he would buy back debt when the market conditions made it possible. Of course suspected
economists say that even discussing renegotiation of debt puts the full faith and credit of the United States, as is put in the Constitution, at
risk.
And although Mr. Trump says he'll cut the debt, well, the problem, of course, is how that fits into his wider tax plan. At the moment he has said
he may do a variety of things. He estimates that the tax plan could add $10 trillion in deficits over the next decade. Spending increases on defense,
infrastructure, no cuts in social security, Medicare or Medicaid at the same time as middle class tax cuts does make one wonder how the books get
balanced.
Mohamed El Erian is The Chief Economic Advisor at Allianz, he joins me from Irvine, California. Mohammed, look, I'm going to try desperately here not
to take you into deep political waters and I shall allow you to swim to the shores of economics instead. When we talk about economics, did what Mr.
Trump say make sense?
MOHAMED EL ERIAN, CHIEF ECONOMIC ADVISOR, ALLIANZ: So his thinking has evolved. In terms of what you quoted, is he correct in saying that the U.S.
need never default because it can print money? Yes.
(BEGIN VIDEO CLIP)
EL-ERIAN: The U.S. has issued dollars denominated debt, but as you point out there's a collateral damage of doing so. Is he right in saying that
when interest rates go up, the price of debt comes down. Yes. But then the next step of saying I can buy it back and make money, that doesn't quite
work because buy back with what? He would have to issue new debt in order to get the money to buy back the old debt, so net-net that wouldn't work.
[16:05:08]
(END VIDEO CLIP)
QUEST: Right. So I mean, but one's left wondering to some extent, what he is seeing in his experience with corporate debt that doesn't work when
you're dealing with sovereign debt. Because here you have the Fed -- I mean you know, as I understand the Fed prints the money. Yes, treasury issues
debt, which is a version of printing money, but it can only - it can only issue so much debt that the market effectively will stomach.
EL-ERIAN: Yes. So, and you made the critical distinction, corporate debt versus sovereign debt. I suspect that Mr. Trump's approach so far has been
heavily influenced by corporate debt. And initially he said we could pay it all off within a very short amount of time.
(BEGIN VIDEO CLIP)
EL-ERIAN: And then he evolved to saying that perhaps I can renegotiate it. And now he's evolved to saying that maybe I can use financial engineering.
That is a very corporate mindset. If you take a sovereign mindset, which is what you need here, the reality is there isn't much you can do quickly.
Very slowly you can do somewhat better debt management, but the best way to deal with debt is to grow faster. And that's going to be the best way to
deal with the U.S. debt issue is to make sure that the economy grows faster.
(END VIDEO CLIP)
QUEST: Now, the last time that the U.S. went on a large scale debt re- purchase, I believe, was the 1990s when the U.S. was running a surplus, a budget surplus, therefore, it needed to debt manage through re-purchase of
debt in the market so as to provide - so as -- the primary and secondary market. What this shows, Mohammed, surely is that you've got to be very
careful when you're talking about debt management.
EL-ERIAN: Oh yes, there's certain things you've got to be very careful. One is you never want to put in play your sovereign reputation when it comes to
issuing debt.
(BEGIN VIDEO CLIP)
EL-ERIAN: Why? Because that results in higher costs and you don't want to do that. Secondly, you've got to be very careful on the currency. So I
think as Mr. Trump continues in this process, he'll realize that this is very different from the corporate world. When you are dealing with the
sovereign balance sheet and when you're dealing with the currency, be careful of what you say because markets tend to react.
QUEST: Mohamed El-Erian, wonderful to have you on the economics of it.
(END VIDEO CLIP)
QUEST: I think we've managed to keep suitably to the right side of the line. Thank you, sir. Good to see you.
EL-ERIAN: Thank you.
QUEST: Now, on another issue, talking about debt, a very different story but one perhaps that's a harbinger of warning of what can happen when it
goes wrong. Greek leaders have taken a step towards securing debt relief from their creditors as they try to break a cycle of crisis after crisis.
(BEGIN VIDEO CLIP)
QUEST: Eurozone Finance Ministers have met in Brussels, they agreed to discuss forgiving some of the debt that Greece owes. Remember Greece is on
to bailout three and that could well be coming off the rails.
On the streets of Athens protesters threw Molotov cocktails, chanted anti- austerity slogans. Now it came as lawmakers are debating unpopular reforms which narrowly got a parliamentary approval. It involves slashing pensions
and raising more taxes. The Prime Minister has been forced to adopt the austerity measures to appease the creditors.
(END VIDEO CLIP)
QUEST: The Belgian Finance Minister, Johan Van Overtveldt is on the line now from Brussels. Minister, how far were the discussions today? How
detailed were they on the sort of range of debt relief that the Eurogroup will consider?
(BEGIN VIDEO CLIP)
JOHAN VAN OVERTVELDT, BELGIAN FINANCE MINISTER: Well, as a matter of fact, we got quite deep into the discussion. As you remember last night in
Athens, there were measures adopted equal to 2% of GDP, a tax reform and a pension reform. Now we need Greece to do four more things. First of all,
extra measures in terms of VAT savings in the government rates bill equal to 1% of GDP. We need a clear plan on nonperforming loans in the bank
sector. We need as a third element more fine tuning on the privatization and third, we need contingency measures for when Greece is not holding on
to the budgetary (inaudible) up to 2018. If all these conditions are met, then we can start talking debt relief.
(END VIDEO CLIP)
QUEST: Right. But you know, it's the - it's the same point or we seem to be in the same position to some extent that we were last year. We've all known
that debt relief has to be part of the discussion. It's a question of when it begins. And as the Managing Director of the IMF said in her letter to
Greece that needs to happen sooner rather than later.
[16:10:11]
(BEGIN VIDEO CLIP)
OVERTVELDT: Yes, but let's not do it unconditional. What we first of all need to do and what is of the utmost importance in the discussion is that
we get economic growth growing again in Greece. And for that to happen we need a lot of structural reforms in the economy, in the labor market,
pension reform, energy market, you name it. And once these things are in operation or are getting started, then of course debt relief might be quite
helpful. But in itself debt relief will not change the Greek economy.
(END VIDEO CLIP)
QUEST: The measures being put -- I mean, you know, I take on board what you say about structural reform, but the measures passed by parliament in of
themselves slashing pensions, raising taxes, already at a denuded tax base, that's more austerity and that on its own can be just as harmful, would you
agree?
(BEGIN VIDEO CLIP)
OVERTVELDT: No but it's a -- you call it austerity, I call it trust building because the measures that we - that have now been voted and the
additional measures that we ask will increase confidence. We are at a very low point of confidence in the Greek economy and the Greek government and
these measures will increase confidence of the international investment of Greek citizens themselves. And that's the kind of thing that you really
need in order to get the economy growing.
(END VIDEO CLIP)
QUEST: Minister, thank you for joining us. I have little doubt that you and I will be talking I hope, more about this as the process continues. Thank
you this evening for joining us.
Now, the Quest Means Business newsletter. I've been writing about Greece and basically making the point that at the end of the day it is going to be
debt relief that will lead the day. The newsletter comes to you at this time every day, just after the New York market closes, before the Asia
market begins. Sign up at cnnmoney.com/quest.
Protests on the streets of Greece, the looming debt deadlines that we've just been talking about and those talks with creditors, you'd be well
forgiven for thinking it's deja vu all over again.
However, Clare Sebastian explains what's changed as we look forward with some trepidation to Greek crisis in another summer.
(BEGIN VIDEO CLIP)
CLARE SEBASTIAN: Both of these images show protests in Athens over planned pension reforms. Spot the difference. The faces and banners, of course, but
there's more. This photo was from April 2015 when pension reform was a major obstacle to unlocking the final slice of Greece's second bailout. And
this one was a year later in April 2016 and we're now talking about unlocking part of the third bailout.
VICKY PRYCE, CENTRE FOR ECONOMICS AND BUSINESS RESEARCH: Pensions have been cut back very, very severely already through the whole of the bailout
period. And you've also got of course huge unemployment in Greece at present and the two have combined in such a way to make it very, very
difficult to pass this particular law.
(END VIDEO CLIP)
SEBASTIAN: Greece's creditors want assurances Greece can meet its budget targets before they will release more bailout money. And Greece has
billions of dollars in existing loans coming due this summer. Sound familiar? Just like last year the IMF still wants one extra element to any
deal.
CHRISTINE LAGARDE, MANAGING DIRECTOR, IMF: There has to be sustainability of the debt, significant reform, debt relief.
SEBASTIAN: Some say what happens next hinges on the ruling party's Syriza waning popularity. This was last September's election result and this
recent poll.
MICHAEL JACOBIDES, LONDON BUSINESS SCHOOL: You see this no longer politically dominates Greece. A year ago Syriza literally had command of
the entire population. Right now looking at the polls Syriza comes with a substantial difference behind new democracy.
SEBASTIAN: Greece may though have a stronger hand in Europe. The E.U's management of its migrant crisis depends on the stability of Greece. And of
course "Grexit" is no longer the biggest fear.
PRYCE: The last thing the Europeans want is to have Britain exiting and also Greece leaving as well because that would lead to a serious re-
configuration of what the E.U. is all about.
SEBASTIAN: One thing just as true last year as it is this year, the longer you're in a debt crisis, the harder it is to get out.
Clare Sebastian, CNN Money, London.
(END VIDEO CLIP)
QUEST: As we continue this evening, we'll be looking at the latest impeachment maneuvers against Dilma Rousseff and why a decision in
parliament might have them revisiting the vote.
(BEGIN VIDEO CLIP)
QUEST: A vote that could be annulled. Will it make any difference? We'll be in Rio after the break.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[16:17:02]
QUEST: Surprise announcement, the acting speaker of Brazil's lower house of parliament says an impeachment vote against the President has been
annulled.
(BEGIN VIDEO CLIP)
QUEST: Last month's votes went overwhelmingly against President Dilma Rousseff. The upper house or senate was set to hold its own vote on
impeachment this week. Now that would have led, if successful to her being suspended for 180 days as President. Well, the Brazilian stock market fell
sharply recovering just after later into the session, it was off 1.4%. Shasta Darlington is in Rio.
(END VIDEO CLIP)
QUEST: How much of this speaker saying the original impeachment vote, how much of it is realistic, how much is politics? What does it mean?
(BEGIN VIDEO CLIP)
SHASTA DARLINGTON, CNN CORRESPONDENT: Richard, it's a whole lot of posturing. Not even the politicians most effective knew off the bat what
this meant. They're scrambling to understand it. But what we just heard from the President of the Senate is that he's not going to recognize this
motion, he's not going to recognize this annulment, he's going ahead with that senate vote on Wednesday. So that means it still stands, President
Dilma Rousseff could be forced to step down as early as Wednesday if senators approve the trial so that she can defend herself.
So, at this point the senate is just bulldozing ahead and ignoring the whole thing, Richard.
(END VIDEO CLIP)
QUEST: Right. And even - even if the house did have to have another vote to try and legitimatize the annulment, it was so overwhelming that the result
is not in doubt.
DARLINGTON: Absolutely, Richard. And that's what all these lawmakers are arguing. More than two-thirds voted in favor of an impeachment trial. Why
would we go back and vote again, we know what the outcome is going to be.
(BEGIN VIDEO CLIP)
DARLINGTON: So they're appealing to the Supreme Court, hoping to get it overturned there. They're also saying let's just take it straight to the
plenary, let's take it straight to the floor, we'll vote tomorrow. You'll see, the outcome will be the same.
So while there is a bit of stalling here and obviously causing a headache for the people just waiting in the wings to step in, it really doesn't look
like this is going to affect the outcome, Richard. That we will have Vice President Michel Temer, stepping in likely at the end of the week.
(END VIDEO CLIP)
DARLINGTON: And we could see President Dilma Rousseff doing a defiant march down the ramp of the presidential palace, vacating that, again, sometime
this week, Richard.
QUEST: On that point, how aware is the vice presidency or other organs of government that you know, the writing is on the wall so the significance
now is to show clear, clean transition of government and not panicked chaos?
DARLINGTON: That's the absolute priority, Richard. And what we've seen from the Vice President, he's really sort of kept in the shadows. We had one
exclusive interview with him but he hasn't been talking to the press. But what they have been leaking is who their economic team will be. That's
crucial here. As we know, the country has been in this prolonged recession, more than 10 million people unemployed.
[16:20:13]
(BEGIN VIDEO CLIP)
DARLINGTON: So he's sending out signs who his finance minister is going to be, what some of his economic proposals will be, really trying to calm
markets, calm investors, even before he steps in. And he says that he will try to unite Brazilians behind him.
(END VIDEO CLIP)
DARLINGTON: I see that as being a pretty tall order. He's no more popular than the outgoing President, Dilma Rousseff. In fact according to polls
even less popular, so that likely won't happen. But if he could turn the economy around and get that back on track, that would certain get more
Brazilians behind him, Richard.
QUEST: Shasta, you've got your work cut out for you as the week moves on. We'll be talking to you at various stages. Shasta Darlington who is in Rio
tonight.
Now, if you want to know which politicians, celebrities and business executives allegedly kept wealth hidden in anonymous offshore accounts, the
secrets leaked from the Panama's most notorious law firm are now at your fingertips.
(BEGIN VIDEO CLIP)
QUEST: The International Consortium for Investigative Journalists, the ICIJ, has launched a database of hundreds of thousands of ties between the
companies, the individuals and the offshore entities.
(END VIDEO CLIP)
QUEST: Gerard Ryle is the Director of the ICIJ and joins me now. I look at this, what's the significance of this very full, if you'll pardon the
phrase, ability to search by name and see the links but not see the underlying papers?
GERARD RYLE, DIRECTOR, ICIJ: Well it's, Richard, it's the kind of thing that actually governments have been promising for years but have not
delivered. So what we're doing is we're doing what the governments said should be done.
(BEGIN VIDEO CLIP)
RYLE: David Cameron, British Prime Minister, three years ago said this is the basic kind of information in the offshore world that should be made
available to the public. So what we're doing today is exactly that.
(END VIDEO CLIP)
QUEST: Why is there -- why haven't you put the documents online? I'm sure you've answered this many times, but you know in a sort of -- maybe I'm
just being prurient in a Wikileaks sort of way that I actually want to see the documents and read the original e-mails and the memos and see the sort
of thinking that was going on by those involved.
RYLE: Well, we think a lot of the information is very private. I mean those passport details, bank accounts, passwords to bank accounts. And we don't
think that's the kind of information that should be made public, certainly not in this kind of fashion.
(BEGIN VIDEO CLIP)
RYLE: It's still available to all the journalists who are working on the stories and there are hundreds of journalists around the world in more than
80 countries still working away behind the scenes to bring out the stories that are in the public interest. But in terms of the publicly searchable
database, it's just the basic information, the kind of information, as I say, that world leaders have said they were going to do anyway.
(END VIDEO CLIP)
QUEST: How much more do we stand to learn from this database and from these documents? What I'm saying here is you know the general thrust of the
activities is now clear. But is there another smoking gun, another shoe to fall?
RYLE: Well, we only - I mean we did work in 80 countries, but we have information on 200 countries. So where I think the next big revelation is
going to come from is in one of the countries that we have not looked at extensively. And I think it might come from this database, the publicly
available database, because I think people will see names and tell us things that we missed.
QUEST: And the alleged whistleblower, the person who released -- put out a statement, first of all, earlier in the week, is it your understanding this
is the right person?
RYLE: Oh, there's no doubt it is. It's John Doe, it could be a man, it could be a woman. And what we've got from the statement is a clear
intention of why the person did it. And clearly they're saying that it's because of economic inequity and we're starting to see for the first time
that this is a normal person who's angry at the system and is trying to basically put things right.
QUEST: Gerard Ryle, Director of ICIJ, thank you for joining us sir, thank you. We appreciate it.
Twitter is cutting off the CIA. The social media company has barred American Intelligence Agencies from using a service known as Dataminr.
(BEGIN VIDEO CLIP)
QUEST: Now, Dataminr is part-owned by twitter. It analyzes tweets and generates alerts of breaking news. All sorts of organizations use Dataminr,
CNN has a contributing with them which is why we're able to bring you often such fast breaking news.
(END VIDEO CLIP)
QUEST: Twitter is reportedly concerned about appearing to be too close to the intelligence community.
(BEGIN VIDEO CLIP)
QUEST: It says, and this is their quote "We have never authorized Dataminr or any third party to sell data to a government or intelligence agency for
surveillance purposes."
(END VIDEO CLIP)
[16:25:00]
QUEST: CNN Money cyber security reporter, Jose Pagliery is here with me now. I look, there's no -- I'm at a bit of a loss here. There's no
suggestion that twitter was in bed with the CIA, is there?
JOSE PAGLIERY, CNN MONEY CYBER SECURITY REPORTER: Right, there wasn't. And here's what's most interesting about this. This is why it's so off-putting.
Define surveillance. Because what news organizations like us use Dataminr for, the reason we search through twitter is so that we can surveil what
everyone is talking about and then bring those important things to light. That's what the CIA was doing. That's what the NSA has been doing. That's
what these intelligence organizations have used twitter for. So it's a little weird -
QUEST: -- But obviously they could -
PAGLIERY: -- they're getting cut off.
QUEST: Can they not use - I mean is twitter saying they can't use Dataminr, they will no longer grant them access to it? I mean what is twitter saying?
PAGLIERY: So they're saying you can't use Dataminr for surveillance but that's what's so strange; because these tweets are public, so intelligence
agencies could access them, they could build their own tools to do that. What Dataminr had was a special tool, they had special access to everything
that's public on twitter.
And so what's -- the reason that this sounds confusing is because this is almost no different than if, say, Toyota, right, or GM said we're not going
to sell our trucks to the U.S. Government for military purposes. We're just not going to do it. They're discriminating against the government.
QUEST: Yes, but some companies do say that on arms ground, they say we're not going to supply because of -
PAGLIERY: I mean, but are the tweets that people send out publicly, is that a weapon? I mean that's what's so confusing about this. How is this being
weaponized, it doesn't quite make sense.
QUEST: But twitter admits in its statement it's all about the optics doesn't it? It actually says this is really about perception. The
perception that twitter, which has got more than enough problems of its own, is in bed with the CIA or the NSA.
PAGLIERY: It's strange that a company like twitter that's having such difficulty in their business is turning away giant customers like the U.S.
Government, all right. I mean if this is about optics, twitter's already come out publically and said we don't want to give the government access to
private messages. We're going to fight these secret requests in a secret court. We're going to fight that. What's confusing here is why they're
refusing to sell this to governments when they do this program for media and for banks and others that you have --
QUEST: -- and there's no suggestion that the government was getting anything more than our good selves.
PAGLIERY: If it was, twitter should come out and say it.
QUEST: But they didn't.
PAGLIERY: No, they didn't.
QUEST: Excellent. Anyway, good to see you, sir.
PAGLIERY: Absolutely.
QUEST: As we continue our discussion tonight, the British Prime Minister, David Cameron, says he's making a patriotic case for the U.S. to stay in
the European Union.
(BEGIN VIDEO CLIP)
QUEST: We're going to talk to the former head of the European Central Bank, Jean-Claude Trichet to give us a continental perspective after the break.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[16:30:00] QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. I'll be talking to the former president of the
ECB, Jean-Claude Trichet, as the British Prime Minister is issuing a warning of Britain's Brexit.
We'll be in the North Carolina where the state is suing the U.S. government for the controversial bathroom bill. But before any of it this is CNN and
on this network the news always comes first.
In Brazil, the interim speaker of the lower house of parliament says last month's vote to impeach the president was invalid. It's not clear if the
upper house, the Senate, will follow and go ahead with its impeachment of Dilma Rousseff anyway. The Rio Olympics begin in less than two months.
A Mexican judge has ruled a drug lord, known as El Chapo, can be extradited to the United States. The US Department of Justice is asking for Joaquin
Guzman to be put on trial in New York. Guzman 's legal team says he wants to be extradited as soon as possible because the conditions in his prison
in Mexico are making him ill.
The controversial mayor who is set to become the next president of the Philippines. But Rodrigo Duterte main rival conceded that Duterte had won
the presidential race shortly after voting was over. The official results won't be announced untill next month. Duterte has been criticized over a
succession provocative comments, including jokes about rape and promising to murder criminals.
The Chancellor of Austria has resigned. A spokesman for the Chancellor, Werner Faymann, says that he quit because his party did so badly in the
first round of Austria's presidential elections last month. Faymann had been chancellor for nearly eight years.
Donald Trump has denied he's going to renegotiate debt write-offs with the U.S. government creditors if he becomes president. Clarifying his
comments, the presumptive presidential nominee was speaking to CNN's Chris Cuomo. Instead he said he would look for opportunities to buy back U.S.
debt and said the government would never default, it would simply print more money.
(BEGIN VIDEO CLIP)
DONALD TRUMP, U.S. REPUBLICAN CANDIDATE: You never have to default because you printing the money, I hate to tell you, OK, so there's never a default.
But the point is it was reported in "The New York Times" incorrectly --
CHRIS CUOMO, CNN ANCHOR: That you said you would go to creditors and make them take less.
TRUMP: It was reported in the failing "New York Times" and other places that I want to default on debt. You know, I'm the king of debt. I
understand debt probably better than anybody. I know how to deal with debt very well. I love debt, but it's -- debt is tricky and it's dangerous.
You have to be careful and you have to know what you're doing. But let me just tell you, if there's a chance to buy back debt at a discount, in other
words, interest rates go up and the bonds go down and you can buy debt, that's what I'm talking about.
(END VIDEO CLIP)
QUEST: A leap in the dark, that's how the British Prime Minister David Cameron is describing the prospect of a Brexit. The PM's is campaigning to
remain in the EU. It's a public vote, a referendum takes place on June the 23rd. Mr. Cameron said, the only certainty about a vote to leave is that
it would spell uncertainty.
(BEGIN VIDEO CLIP)
DAVID CAMERON, BRITISH PRIME MINISTER: Those advocating it, some of them have spent many years preparing for this moment. And yet they seem unable
to set out a clear and comprehensive plan for our future outside the EU. Some admit there would be a severe economic shock. But assure it would be
a price worth paying. Others are in denial that there would be a shock at all, and they can't agree what their plan for post Brexit Britain would
look like.
(END VIDEO CLIP)
QUEST: The former Mayor of London, Boris Johnson, who's also a member of the Cabinet and who's in favor of Brexit says, leaving the EU is not the
same as leaving Europe. In a speech in a statement called liberal cosmopolitan case he says Britons who love Europe and are fed up with his
anti-Democratic observities should vote to leave.
[16:35:00] (BEGIN VIDEO CLIP)
BORIS JOHNSON, FORMER MAYOR OF LONDON: Our gross contributions to the EU budget are running at GBP 20 billion a year and the net contribution is GBP
10 billion. And it is not just that we have no control over how that money is spent, no one has any proper control, which is why EU spending is
persistently associated with fraud.
(END VIDEO CLIP)
Jean-Claude Trichet is the former president of the European Central Bank. He joins me now live from Paris. I know you're having some difficulty
hearing me so I shall speak up, Mr. President. Look, the balance of arguments is very narrow now. How worried are you that the U.K. might vote
Brexit?
JEAN-CLAUDE TRICHET, FORMER PRESIDENT, EUROPEAN CENTRAL BANK: Well, I have to say that I was very impressed by the last poll indicating that it was
50-50. Of course it always is a close call. I expect really the U.K. to vote for staying, of course, which is obviously in its interest. I was
very, very impressed I have to say by all the arguments, including those of Prime Minister and those of the previous Prime Minister, Gordon Brown. He
embarked on a very, very, very strong plea. So I hope that they will convince the people. But again, it's a close call obviously.
QUEST: There's a poll that suggests maybe up to 40 percent of French people would actually like to see the U.K. out of the European Union,
because the U.K. has always been so troublesome. There are many people who Europe who would not be sorry to say good-bye to Britain.
TRICHET: It seems to me that you do not have, really in France, a constituency, which would be happy to see the U.K. not being in. There is
a very strong call for the U.K. to stay in France. It is the same in all other countries, I have to say. So the U.K. is welcome in Europe, of
course. It was not always the case. Again, there was a time when they were saying we don't want the U.K. in so we are in a very strange
situation, obviously, we will see in any case the people has the last say and they will decide. If they decide against their own interests, they
will do it, OK.
QUEST: How damaging, how destabilizing, how unsettling do you think it will be economically both for the U.K. and for the union as it then goes
into this two-year negotiation process?
TRICHET: Well, first of all, the U.K. would be, of course, the country that will lose a lot. For the rest of Europe, we will see. I mean it's --
the rest of Europe is big in comparison to the U.K. you have to remember that. You have to remember that even the EU alone has more population than
the United States of America so the U.K. is quite small in comparison to Europe as a whole. But of course it will have an impact. It's not a good
one, that goes without saying. But it's more -- it's not economically that it is that dramatic. I would say it's a question of values. A question of
Democratic values. A question of having, you know, the market economy values that are praised in the rest of Europe and the U.K. is important in
this respect.
QUEST: Mr. President, I want to ask you before we finish about Greece, if I may, sir. You're aware of the talks that took place today. Debt relief
has to happen for Greece. Do you agree that it's time to start talking about serious debt relief for Greece?
TRICHET: I think it is time, because important decisions were taken yesterday and even this morning by the Parliament, so we have something
which is a proof of, I would say, good faith from the government and the parliament. And I was happy, I have to say, to hear from a number of
ministers that met today that they consider that there was the likelihood of a deal, a first deal, I would say, on debt reduction in the next meeting
of the Euro Group on the 24th of May. So this is good. But the main problem remains, of course, that confidence has to go back. Investors in
Greece and external investors, foreign investors have to be convinced that Greece is really playing reform and I would say heartedly and not in
dragging its feet.
QUEST: Mr. President, good to see you, sir. Always in fine form. Nice to see you. Thank you for joining us from Paris tonight.
[16:40:00] Saudi Arabia's Oil Minister Ali Al-Naimi was considered the de facto leader of OPEC. Now that he's gone, the markets reacting to a new
reality. The Saudi Kingdom is trying to reengineer its economy. It has new leadership at all levels, and the question, of course, what next?
(COMMERCIAL BREAK)
QUEST: A 19 trillion problem and Donald Trump tells CNN he is the man who can solve the U.S. debt problem. Now Mr. Trump told us that basically the
debt of the United States was $19,188,102,413,248. It's probably gone up a couple of pennies since then. He said the U.S. will never default because
it can always print more money. He said he'd try to buy back U.S. government debt at a discount if interest rates went up. He won't ask debt
holders to take a haircut. What does it all mean? This is an extremely unusual situation in a political campaign. You talk about deficits and
debt, but nobody ever really talks about finagling the debt management issue. Which is highly technical.
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: And I'm going to make it easy for you.
QUEST: What did you make of what Trump said?
FOROOHAR: It's amazing for starters. No presidential candidate in U.S. history has ever said, you know what, we just may not pay back our debt.
You're coming out and saying we may break a contract. What's ironic is that what he's proposing to do, this buying back debt at a lower rate,
because presumably we would be downgraded and defaulting is ridiculous. because then your borrowing costs would go up and you'd have to keep
borrowing at higher rates.
QUEST: Well Rana, I going to put his point of view. He said he's not talking about renegotiating, he's not talking about default, he's talking
about exactly what you and I would do -- or a corporation would do -- you buy back the debt at a lower level. You take your money and you buy back
the debt.
FOROOHAR: But again, the U.S. government has to borrow just to keep its daily business going, right? We run a deficit. We have to borrow to pay
that back over time. History shows in 1979 we had a brief technical glitch where we were a little late paying back. We had to pay many billions of
times what that amount of money was in interest payments, because interest rates go up, borrowing costs go up. You cannot become a debtor nation and
not pay for it.
QUEST: Do you think he doesn't understand --
FOROOHAR: I think this was a very off-the-cuff remark.
[16:45:00] QUEST: But you can't make off-the-cuff remarks about --
FOROOHAR: Well, actually the whole campaign has been about off-the-cuff remarks which is worrisome.
QUEST: What about this thought that you can print money, therefore you can't default if you're the U.S.
FOROOHAR: Well first of all, think about what does that, Zimbabwe, the Weimar Republic in the 1930s. This is not a club you want to be in. But
putting that aside, what you're really talking about, if you just say, hey, we'll just print tons of money, you can only do that within a certain
amount of time within the Treasury Department, and then you have to start asking the Fed to do it. One of the reasons that we're not still in a
recession is that the Fed was not political. When Washington was gridlocked, the Fed came in acted rationally, helped to get us out of the
great recession. God forbid you should have a political Fed acting just as crazy as the rest of Washington.
QUEST: Janet Yellen is gone according to -- at the end of her term. President Trump will not -- it's very interesting, though, isn't it, even
suggesting and saying he would not reappoint. Effectively if it looks like he's the president, she's a lame duck.
FOROOHAR: Think about how worrisome this is to foreign governments. Because we look around, and you know, as Mohamed El-Erian that you had on
earlier, says, central bankers have been the only game in town. They're the only rational actors in a crazy world. You get rid of them, bad news,
very bad news.
QUEST: Good to see you as always.
FOROOHAR: And you.
QUEST: Oil prices down more than 3 percent today. New uncertainty seems to be hitting the oil market after Saudi Arabia replaced its energy
minister. He wasn't just any energy minister. Traders are also trying to weigh upon what impact Canada's catastrophic wildfires will have on the
global supply of oil price down to 43.60. The firefighters in Alberta say the battle against fires could soon turn a corner. Temperatures dropped on
Sunday and that helped slow down the fire. It still hasn't been brought under control. Fort McMurray is the central of Canada's oil sands region,
and firefighters there say they have stopped the blaze from reaching oil camps north of an evacuated city.
In Saudi Arabia, which sacked its long-serving oil minister on Sunday, now his replacement says the kingdom will remain the world's most reliable
supplier of energy. CNN money's emerging market editor John Defterios reports from Abu Dhabi.
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN MONEY EMERGING MARKETS EDITOR (voice-over): Ali Al- Naimi was the most powerful man in the oil business for two decades. He was the de facto leader of OPEC, the club of oil exporters, since he
controlled the largest proven crude reserves in the world. Since late 2014, he has been leading a tough battle, putting market share ahead of
higher prices, challenging U.S. shale producers and others to a showdown.
ALI AL-NAIMI, FORMER SAUDI MINISTER OF ENERGY: If they want to cut production, they are welcome. We're not going to cut. Certainly Saudi
Arabia is not going to cut.
And this is a position you'll hold for the first six months of 2015?
AL-NAIMI: The position will hold forever.
DEFTERIOS (voice-over): But many saw the minister's position waning. Since last month's meeting of OPEC and non-OPEC ministers in Doha.
DEFTERIOS (on camera) Al-Naimi was forced to change course on a plan to freeze production to help lift prices. The Deputy Crown Prince, Mohammad
Bin Salman said the kingdom wouldn't budge unless Iran did the same. So by decree the young power broker reshuffled the cabinet and also the 80-year-
old minister out of a job.
DEFTERIOS (voice-over): The changes are part of a wider plan to shake up the economy, called vision 2030. It includes floating up to 5 percent of
the country's crown jewel, Saudi Aramco. The newer prime minister with a wider portfolio, Khalid Al-Falih, is well known. He's the current chairman
of the Energy Behemoth having spent three decades there. Back in January he told a CNN energy roundtable at the World Economic Forum, that the
kingdom was well prepared for the Saudi-led fight for market share.
KHALID AL-FALIH: If prices continue to be low, we will be able to withstand it for a long, long time.
DEFTERIOS (voice-over): investors will appreciate his steady hand as Saudi Aramco make a move to go public. But perhaps more importantly, internally
he's trusted by the Deputy Crown Prince, the man calling all the shots. John Defterios, CNN, Abu Dhabi.
(END VIDEOTAPE)
QUEST: As we continue our nightly conversation on business and economics, to North Carolina where the Justice Department threatens to sue the state.
And now the state is suing the federal government. And it's all about the bathroom bill.
(COMMERCIAL BREAK)
[16:51:48] QUEST: The U.S. Justice Department just filed a civil rights lawsuit against the state of North Carolina the very same day that North
Carolina said it was suing the federal government. Back in march, North Carolina passed its law that forbid transgender persons from using a
woman's public bathroom if they were born male and vice versa. A short time ago the U.S. attorney general, Loretta Lynch, explained the DOJ's
position.
(BEGIN VIDEO CLIP)
LORETTA LYNCH, U.S. ATTORNEY GENERAL: They created state-sponsored discrimination against transgender individuals who simply seek to engage in
the most private of functions in a place of safety and security. A right taken for granted by most of us.
(END VIDEO CLIP)
QUEST: North Carolina State Representative, Paul Stam sponsored the law. He joins me now from Raleigh, North Carolina. Thank you, sir, for joining
us. Inevitability has been reached. The DOJ IS suing the state and you're suing the federal government.
PAUL STAM, NORTH CAROLINA HOUSE SPEAKER PRO TEM: Yes.
QUEST: Well, it doesn't bode well for either side here, so let me ask you, what concessions are you now prepared to offer up on this bill to get this
thing over and done with?
STAM: None. You have to understand that the law we have today is the same as the law we had two months ago, two years ago, 20 years ago and is true
in almost all the United States of America. There's nothing outlier about it or really different about it. The difference is that president Obama is
trying to impose this new idea about bathroom and locker room uses unilaterally on the entire nation. 80 percent of the employees in America
would be affected by this.
QUEST: All right. But let me ask you then, sir, how much damage, economic damage, are you prepared to see happen to the state in favor of this matter
of principle that you put forward? Because the number of companies who are against it is pretty much universal. There are a number of artists that
have cancelled concerts is large and growing. So I wonder how much damage are you prepared to suffer?
STAM: You may not realize that a week ago the census bureau said that North Carolina was the fastest-growing economy in the United States and
last week site selection magazine said we were tied for first in the desirable places to be. We have the same policy on discrimination as at
least 28 states. There are a hundred cities that have this sort of strange bathroom thing but there are 10,000 cities that do not. So if these folks
decide they want to boycott North Carolina, which is the best place to do business, they're not going to find very many places to go.
QUEST: Finally, sir, the perception of North Carolina globally is being hurt by this dispute. Rightly or wrongly, the perception is that you are -
- that it's discriminatory, anti-transgender, whichever you want to say. How do you respond to that?
[16:55:00] STAM: Well, the law doesn't mention transgender people. And if you read it and understand it, you realize it's exactly the same as the law
that we had two months ago and two years ago and there was no problem. It's the same as most of the United States of America. So we do have a
perception problem created primarily by media lack of information. We'll put it charitably.
QUEST: Sir, thank you for joining us. I appreciate your time.
STAM: Thank you.
QUEST: And I hope you can come back again and discuss it in the future. Thank you, sir.
STAM: Thank you, sir.
We will have a Profitable Moment after the break. It's QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment, when Donald Trump made his comments about debt management, paying down debt, renegotiating the U.S. federal
deficit, whatever it might have been, economists around the world scratched their head and for good reason. First of all, yes, you can print money so
you can't default, but it's the Fed, not the Treasury that prints the money. And, yes, the Treasury can print money by issuing more government
bonds, but that as a deleterious effect on the market if the market believes it can't be repaid. Anyway, there's something known as the
Federal Debt Ceiling, which Congress controls, not the government. And then you've got the idea of buying back debt at a discount. The only
problem is in the U.S. case you would be issuing more debt at higher interest rates to buy back the debt at the lower price. It could end up
being a wash in the rain or you might end up worse off. So you're left asking, what did Donald Trump mean when he was talking about his debt
management strategy? The answer is I have no idea. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up
to in the hours ahead, I hope it's profitable. I'll see you tomorrow.
END
