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Quest Means Business
LAPD: Two Dead in Murder-Suicide on UCLA Campus; Investigators: EgyptAir Black Box Signal Detected; Trump To Visit UK On Day of Brexit Vote Results; OCED Defend Significance of Brexit Numbers; Brazil Recession Worsens Ahead of Rio Olympics; Japan Delays Tax Hike As Economy Struggles; Report: ISIS Extortion Money Skyrockets; Esports To Become $1 Billion Industry By 2019; World's Longest Tunnel Opens. Aired 4-5p ET
Aired June 01, 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] MAGGIE LAKE, CNN ANCHOR: The New York red bulls are ringing the closing bell on Wall Street. Not too many bulls on the trading floor
though, by the look of today's market close. It's Wednesday, the 1st of June.
Tonight the biggest discovery yet in the search for EgyptAir 804. Investigators have detected a signal from one of the black boxes. Time for
some Aussie rules. Brexit campaigners want an immigration overhaul. And Brazil's economy looks out of breath. Its recession gets deeper just
before the Olympics. I'm Maggie Lake, and you're watching QUEST MEANS BUSINESS.
Good evening. We will continue with our usual business agenda in just a moment. First, two people are dead on the campus of UCLA after an apparent
murder-suicide. Hundreds of students were forced to cower in buildings away from windows as the Los Angeles University went into lockdown. Large
groups of police with long guns could be seen patrolling the streets as authorities investigated the incident. A short time ago the Los Angeles
police chief, Charlie Beck, said there was no longer a threat to students on campus.
(BEGIN VIDEO CLIP)
CHARLIE BECK, CHIEF LOS ANGELES POLICE DEPARTMENT: I think the important thing for people to take away from this is that the campus is now safe.
The issue that has occurred has been contained. We are in the process of releasing the campus back to the students. They are in their finals. This
is a very stressful time for them, and we're trying to alleviate that. We do not believe there are -- there is no evidence to support outstanding
suspects at this point. But we are out of an abundance of caution going to continue our search of several of the buildings adjacent to the crime
scene.
(END VIDEO CLIP)
LAKE: CNN's Kyung Lah, joins me on the line now from Los Angeles with all of the details. Kyung, it was a very tense and very long police operation.
What can you tell us?
KYUNG LAH, CNN NATIONAL CORRESPONDENT (via telephone): It certainly was some very harrowing moments of this entire campus and frankly the entire
west side of Los Angeles. What happened was shortly before 10:00 a.m. local time an alert went out. There were multiple reports of gunshots
being fired in the engineering building which is in the center of UCLA's campus. An alert went out warning students to steer clear of the
engineering building, but if they were in an engineering building to shelter in place. Those are now familiar words as America grapples with
the active shooter scenario. And the reports that came out very slowly at first, minute by minute, were that there were at least two people who were
killed.
The LAPD confirming to us now that two men are dead in what appears to be a murder-suicide. We are hearing that there are no other injuries. There
are no apparent outstanding suspects. Much of the west side where I'm still at has us starting to return to normal life. It's the lunch hour
here. You can see sort of emergency personnel still wrapping things up. You can hear the helicopters overhead, but much of this scenario now,
Maggie, in many cases this is something that could have been far, far worse. That's what we're hearing as people sit here at the table
discussing some very, very scary hours here at the UCLA conference. Maggie?
LAKE: That's right. And a lot of experts that we have on our air all too often frankly were saying that is exactly what police do now. You have an
amazing show of force as they try to get to the bottom of it. Kyung, the fact that they were able to determine that this looks like a suicide-
murder. Does that mean that they have an idea about who the perpetrator was and perhaps his victim? Have we gotten as much information as to the
circumstances surrounding this?
LAH: We don't know the identities yet. We don't know if there is and what the particular motivation was. We know that they were in a small office in
the engineering building. We don't know the relationship between these two. We don't frankly know if they were students or instructors, so much
of this still has to be investigated. The police say they will not be releasing anything until coroner releases the identities so at this point
we just don't know yet.
But you addressed something about all the experts talking on our air. There have been a number of campus shootings, the University of Oregon, the
Oregon campus shooting, where there were a large number of victims. So the reason why there is such a show of force, the reason why we saw dozens of
officers carrying those long guns, wearing tactical equipment is because this happened. This is something that happens in America, and so what law
enforcement and what students now know is when this does happen they know how to behave.
LAKE: They certainly do, and this is a very large territory that they had to try to make their way through very quickly. Kyung, thanks for the
update. We'll be tracking that in the hours to come.
[16:05:00] Another big story for us tonight. Investigators are one step closer to finding out what brought down EgyptAir flight 804. The French
aircraft investigate committee has confirmed signals received by a French navy ship are from one from the plane's black boxes. Flight 804
disappeared from radar two weeks ago over the Mediterranean while in route from Paris to Cairo. And the clock is ticking. The batteries on the data
recorders are expected to last 30 days. Once investigators locate the wreckage, a specialized vessel will be sent in to retrieve the data
recorders. From there they will go to Cairo. Egyptian authorities are leading the investigation with French investigators offering technical
assistance. For more on the search I'm joined by David Gallo. He senior adviser at Columbia Lamont-Doherty Earth Observatory. David, thank you for
your being with us.
DAVID GALLO, CENTER FOR CLIMATE AND LIFE, COLUMBIA UNIVERSITY: My pleasure, Maggie.
LAKE: Clearly this is the break that everyone had been hoping for. How difficult is the task now in terms of retrieving these boxes?
GALLO: Well, you know, I'm very surprised and pleased that they were locate them, hear the pinger. It's not easy in deep water. This is a deep
water search. The next part should be relatively easy, even if the batteries run out. They know they are close and the ship on the way out is
very experienced at surveying the bottom. So they should be able to find the wreckage and the black bottoms fairly quickly, might mean a week, two
weeks. Hopefully it will mean a couple of days.
LAKE: And in terms of priority, I've got to assume that trying to find the black boxes is first and foremost, even if it's not the first thing they
see. Will that be what they try to focus in on?
GALLO: Well I think there's two, maybe three issues. One is the human remains, of course, for the sake of the families, what a horrible thing.
Two is to retrieve the black boxes. Because therein lies the witness to what happened that night, and the third part might be to do a forensics
study in place of the wreckage so they can actually look at control surfaces, the cockpit and settings and that kind of thing.
LAKE: Would we expect, once they are able to locate this or they might this initial sighting. Does that mean that they will be able to find all
of these parts? What do we think in terms of the area that they will be searching?
GALLO: With Air France 447 we learned lessons from "Titanic" actually, to go wide and slow and cover a bigger area than the wreck itself, so you
don't really miss anything. And then go back in with that map in hand and then pick out individual things that you want to find. So handing all the
information over to the forensics investigators and having them guide the survey is the best way to go here.
LAKE: What do we need to look for in terms of cooperation from mother nature? How important will weather currents to be this?
GALLO: The group that I understand that's going fairly capable in deep water, that's always an issue. You've got to have the right equipment, the
right team, and the right game plan.
LAKE: Sounds obvious. But it's not always where you needed to be. When you needed to be.
GALLO: None of this is really routine. In fact, it's kind of frustrating to watch this. Every time it happens to bring all the disparate pieces and
people from around the world. It takes weeks to get them assembled and to come up with a plan, it's crazy. But in this case I think they are pretty
well organized, so when they get to the scene they can already go right to the sport and begin their underwater survey. But as routine as it might
be, it never goes exactly the way you want it to go. You do have to have the weather just right and the visibility just right, currents just right.
LAKE: Lots of variables.
GALLO: Lots of variables.
LAKE: I'm curious. We've been through an extraordinary period of missing planes that we can't find.
GALLO: Right.
LAKE: Or planes that are in more remote areas. I think when this happened, as tragic as it was, there was sort of the thought that, oh well
at least, it's in an area that's accessible. That doesn't mean that you can get to it easily, does it?
GALLO: No. Air Asia too. How could you not find it right away? But it's not easy. Anyone who has been out on the open ocean or anyone done any
kind of underwater work, knows a mile this way or mile that way, even 50 feet one way or another and you can miss it completely. It's very
difficult going.
LAKE: Difficult, dark and dangerous work. We should underscore as well, a lot of people putting themselves on the line to get some closure for the
families. David, thank you so much for sharing your expertise we always depend on it.
GALLO: My pleasure.
LAKE: So there are two so-called black boxes, a flight data recorder and cockpit voice recorder. The data recorder gatherings information from the
plane's sensors, including air speed, altitude and the engine performance. The cockpit voice recorder captures conversations between the pilots along
with the background noise that experts can use to determine if the aircraft stalled. Joining me on the line from Paris now Jean-Paul Troadec, the
Former President of BEA, that's the French government's investigative arm for aviation safety. Thank you so much for being with us. So critical I
know for authorities to get their hands on the black boxes. What sort of information will they be looking for, will you be looking for, right from
the outset?
JEAN-PAUL TROADEC, FORMER PRESIDENT, BEA PARIS (via telephone): Well, from the cockpit voice recorder we expect to understand what the pilot have
noticed and what they were doing after the accident. And trying maybe to prevent the accident.
[16:10:00] And from the data flight recorder we expect to have many data on the aircraft, for example, the engine, maybe an explosion, fire and so on.
So, of course, it's critical to find these recorders, but we can be quite optimistic that the recorder could be found maybe in the next two weeks
also.
LAKE: Jean Paul, will we be able to get a definitive answer if they are able to retrieve the boxes and they are intact? Do you believe the answer
will lie on them?
TROADEC: Yes, I'm pretty confident that you have so many data contained in the recorders. But you have not only the recorders, of course you have
also the data from the communication between pilot and control and radar and so on and, of course, all the data -- if there's a technical issue, of
course, ballet will most probably find the answer, I'm sure.
LAKE: And so many people wondering why there wasn't a distress call. What went on during that time? It's going to the Egyptian authorities first.
The French are offering their technical assistance. How important is it, that cooperation?
TROADEC: Well, you know, the French are working in the context of the IKO, international rules, that as a manufacturer of the Airbus, the French gives
assistance to any country or anything on an accident. So the Egyptians, they are conducting the investigation and the French are helping in the
investigation and so for the underwater searches.
LAKE: Jean Paul, we just heard David say how important it is that people with experience in this situation be on hand so this can move as quickly as
possible.
TROADEC: Yes, of course. It's important. As you know, the most priority today is to find the black boxes and to find the black boxes by 3,000
meters. That deep it's not so easy and fortunately -- or unfortunately the BEA Aeronautics tell us, thanks to the AirAsia accident, there are many,
many accidents where the airline crash in the sea.
LAKE: We're all hoping that this is a breakthrough we've been waiting for and that you are one steps closer to get closure for the family members of
the 66 people that were on board. Jean Paul Troadec, thank you so much for joining us.
As investigators close in on the wreckage of flight 804, the biggest players in the aviation world with gathered for this year's IATA summit.
It's the last meeting for the group's director general, Tony Tyler. Richard Quest was there and he asked Tyler why planes haven't yet been
equipped to send data constantly?
(BEGIN VIDEOTAPE)
TONY TYLER, DIRECTOR GENERAL, INTERNATIONAL AIR TRANSPORT ASSOCIATION: I think everybody is agreed that something should be done to improve the
speed with which we can find aircraft when they are lost in the way that EgyptAir has been for the last couple of weeks. But, unfortunately, it's
not as easy a problem to solve as you might think. If you're talking about wanting to have streaming, data streaming, full time data streaming,
100,000 aircraft, 100,000 flights every day, streaming data all the time. That takes up a lot of spectrum bandwidth. It's a lot of data. It's got
to be managed and handled. If it's easy and simple to do, it would have been done already.
QUEST: The critics say the reason airlines don't stream data is because of the cost it would take.
TYLER: It's not a matter of cost. Of course, it will cost money and costs all need to be justified, but it's not a matter of cost. It's a matter of
practicality and capacity for the industry and to cope with all this -- all the data that should be -- that could be captured. What we need to do is
to work out what data needs to be captured and how often do we need to capture it. How much capacity is that going to take and how are we going
to hand it.
QUEST: You must agree though, Tony, that it is unacceptable, six years or so after 447, air France 447 we are still, and two or three years after MH-
370, we are still searching sea beds for important machinery that will give vital clues and answers, particularly since the answer won't -- for us
won't come until 20 or 2021 with new rules.
TYLER: I'm not saying it's a good situation, but I am saying that it's being worked on. The industry is working on it. The government is working
on. ICAO is working on it.
[16:15:00] These things are more complicated than amateurs like us and that fully understand. The experts are working on finding permanent solutions
to this kind of thing. As you say, ICAO was setting standards within five years and airlines and aircraft will have to find a way to deliver data on
the flight without the -- what we call the black box being found necessarily when it's gone under water, so different processes and
different technologies are going to have to be deployed and that's what's coming.
(END VIDEOTAPE)
LAKE: Basic English just won't cut it. Britain's campaign to leave the EU has revealed its immigration policy. We'll discuss the details after the
break.
(COMMERCIAL BREAK)
LAKE: Fair, more humane and better for the economy. That's how the "Vote Leave" U.K.'s pro-Brexit campaign is describing his plan for a new
immigration system. If Britain votes to leave the EU, it's promising an Australian style points system. So migrants will be accepted on the basis
of their jobs skills and the ability to speak, "good English." The system is already used for Britain's non-EU migrants including 53 commonwealth
countries seen here in red. Vote leave says this will pull all migrants on level pegging, regardless of whether they are from one of these blue
countries you are seeing on the map. CNN's International Diplomatic Editor, Nic Robertson, joins me now from London. And Nic, this really is
one of the core issues for the leave campaign, isn't it?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: I mean, it is. They look at this and think it's an Achilles' heel for the remain campaign, for
David Cameron's government. And you can look at it this way. He's made a case, David Cameron has made a care, an economic case. That there were too
many uncertainties. If we leave that message that's sort of resonated and sort of settled in David Cameron's favor. The security issue may be the
same shading slightly in his favor. But the immigration issue is vulnerable, and the leave campaign field, why?
Because part of his election campaign for the general election last year, he promised to bring immigration down to tens of thousands, the latest
figures, 330,000 and in the past year 184,000 of those coming, you know, from the European Union. And so a lot of people here kind of equate, you
know, immigration as they perceive it as it's told to them, high, not in control. As meaning that they are longer lines at the hospitals. That
they can't get their kids into the schools that they want, that, you know, it's harder to get jobs. Whether or not that's true, there's a perception
out there about it, and that fear factor that the immigration is out of control, David Cameron can't control it, that's what the leave campaign
thinks is going to resonate for them and that's why they are pushing this particular issue right now.
LAKE: It's interesting because you say that's how they perceive it. Is this an issue that breaks on generational line, Nic, where older voters may
be more fearful of the immigration issue? How do young people feel about it? Because there are some who have suggested that they like the free flow
of movement and want to go work in Europe as well and don't mind if some of their peers come over and work.
ROBERTSON: Certainly as a generational breakdown. I mean, the older generation are more likely to vote to leave. Some of those perhaps because
they voted in, you know, when there was a vote on this in the 1970s and they kind of feel, well, it's not going the way that they opted for back
then. So there's a feeling amongst older people that this isn't what they signed up to and it's not going in the direction that they want. That is
their chance, you know, it's a once in a lifetime for many people who are voting, many of the younger voters now. And it is those younger voters
that do tend to look at the European Union as more of an opportunity and less of a negative. So that is one way that it breaks down.
[16:20:00] It breaks down along educational lines. People who are better educated tend to see the benefits of remaining in the European Union.
Those without such an extensive education or those are sort of more inclined to vote to leave. There's a concern that the vote to leave voters
are more sort of energized and they are the ones that will come out to vote. There's worries when you get to the polling day that the younger
voters are the ones who are more apathetic when it comes to coming out and going to vote even though they would vote to remain in the European Union,
but they might not come out. So, you know, there are a lot of ways that it breaks down at the moment but really, when you look at the way the polls
are going. It's too close to call. You even had some polls in recent days, you know, not isolating cases, that are putting the leave campaign
ahead at the remain campaign.
LAKE: And that has to be a serious worry for David Cameron. Add to that that we're just learning today that Donald Trump is coming the day after
that vote. I mean, that is shaping up to perhaps be the worst day ever for David Cameron.
This is -- you know, it's possible, you know, depending on how close the vote is, that when Donald Trump is in visiting his golf resort Turnberry in
Scotland in the early hours of the 24th of June. That all those ballots cast on the 23rd of June, the day before, may still be being counted.
Look, people are expecting results 4:00 or 5:00 in the morning, but can you imagine for David Cameron that's going to be potentially a very tense
night, that he will be waiting until the morning and so much would change. You know, and it's just not clear which way it's going to go. So Donald
Trump is arriving at what is potentially a huge, potentially a huge turning point, not just for Britain but for Europe as well, and he'll be walking
right into the middle of what could be a sort of a political morass on that day. On the other hand, David Cameron might be hearing the results in his
favor. He will be breathing a sigh of relief. And number 10 at the moment isn't saying there's a meeting fixed between the two of them, but at the
same time they're won't rule it out. But it seems a stretch at the moment, to think that David Cameron would really want to entertain Donald Trump
with all that uncertainty.
LAKE: It's amazing how life works and turns out and can you imagine other leaders would try to stay out of the fray. But knowing Donald Trump he'll
probably have one more thing to say about it. One more thing to put on the radar. Nic, thank you so much. Nic Robertson for us.
Now a new report by the OECD says that Brexit would be negative for Britain, Europe and the world. Its financial forecasts have been hit by
criticism from the leave campaign, yet the head of the OECD, and how Angel Gurria, told our Nina dos Santos the numbers shouldn't be ignored.
(BEGIN VIDEO CLIP)
ANGEL; GURRIA. SECRETARY-GENERAL, OECD: We been 54 years, you know working on numbers and now it happens that people put in doubt our figures
because they don't like the results. The numbers are out there. They are objective. All the calculations and the formulas are for people to see,
you know, and we are together with the London School of Economics, with the Confederation of British industry, with the IMF, with a number of leaders
of industry and leaders of thought, so we're not alone. All these different analyses have in common is they all come out negative. Why
should we go in that direction when we know there's going to be a net cost?
(END VIDEO CLIP)
LAKE: Well, one former top economist at the IMF says his ex-colleagues are guilty of group think. Ashoka Mody is visiting professor at Princeton and
he joins me now. We just heard Gurria there saying that the numbers are objective and they are all the same. Do you agree with that, or is there a
sort of, you know, overreach on the doom and gloom scenario here?
ASHOKA MODY, VISITING PROFESSOR, PRINCETON UNIVERSITY: Yes. The numbers are all the same because they all use the same models and the same ideas.
So they are not independently arrived at. It's not a surprise they are the same, but they make such large assumptions and they create such fantastic
scenarios that it seems to me that at the very least they are hugely exaggerated.
[16:25:00] LAKE: Ashoka, one of the big warnings that we hear is that -- is on the trade front, that there would be so much loss for the U.K. in
terms of trade.
MODY: Yes.
LAKE: Do you see that?
MODY: Yes. So, there are two dimensions to the trade aspect. One is, will Britain trade less? And if Britain trades less, how costly will it
be? And the argument that Britain will trade less it is that if it exports less to Germany it will not be able to make up by exporting more to the
United States and China and other countries. And I find that that's possibly true for the next two, three years if there is Brexit, but I don't
think that is true in a more medium term sense.
Because in any case, British trade has been shifting away from Europe to the rest of the world. Because the rest of the world is growing faster.
That shift will occur quicker. So I don't think that even that basic idea that Britain will trade less is valid to such a large extent, but the more
important thing, the reason the OECD and others get such large numbers is not because Britain will trade less, but because they add on a huge loss
because they say Britain will become less productive. And I don't see where that number comes from. That's just put into the black box and it
shows a large loss.
LAKE: There has been criticism that it's hard to handicap the future. If economics was that good at forecasting the future we'd never have a crisis,
but how can you also say it's not going to happen? That's sort of the problem with this. I mean, how can either side see into the future when it
comes to the economy?
MODY: Yes, so, I don't think we can see into the future, but I think particularly we cannot see into the future. We need to be very modest and
humble about what we can and cannot see and I think, you know, in your previous segment you were discussing migration and that's a political
minefield. And I think in part what is happening is that this seems like an easy political way to achieve Prime Minister Cameron's objective.
And on double that, not only the trade issue but the Bank of England has jumped in to this whole process and it has made even more dire claims.
That not only will Britain suffer in the long run, but it's already suffering. And if in fact Britain was to leave the European Union there
would be so much panic and such Lehman like moment, I think that the right thing for the British authorities and the Bank of England is to just play
calm. Because if they feed a narrative of loss and panic, that they could become self-fulfilling.
LAKE: Absolutely, and we certainly have seen that before. I have to say, Ashoka, as we're covering this it's very nice to get a reality check and a
different perspective on this economic discussion because it is so important to the issue. Thank you so much for joining us today, Ashoka
Mody from Washington.
MODY: Thank you very much. Thank you very much.
LAKE: Political upheaval, and a growing concern over Zika virus and now year number two with a deep recession. With just over two months to go
until the summer Olympics, we'll be live in Rio.
(COMMERCIAL BREAK)
[16:31:25] LAKE: Hello. I'm Maggie Lake. Coming up in the next half hour of QUEST MEANS BUSINESS we'll go live to Rio where Brazil's recession gets
worse and worse.
In the CNN's exclusive. ISIS has found new ways to make up for lost money. Before that, these are the top headlines that we're following on CNN at
this hour.
Somali police say ten people have been killed after a car bomb detonated by the Ambassador Hotel in Mogadishu. A siege situation is ongoing after
gunmen stormed the building. Al Shabab has claimed responsibility for the attack. One gunman has been killed and two others remain in the hotel
according to a security agency.
Investigators say a French naval vessel has detected underwater signals from EgyptAir flight 804. The flight data and cockpit voice recorders
could reveal what caused the crash of the plane on May 19. So far search teams have only found small pieces of debris, human remains and personal
effects from the plane.
Two people are dead on the campus of UCLA after an apparent murder-suicide. Students cowed in lockdown for hours as a large group of police
investigated the incidents. The Los Aneles police chief now says the situation is contained, and there is no ongoing threat.
The United States Treasury is taking new steps to stop American banks from doing business with North Korea. The U.S. is accusing North Korea of
being a hub for money laundering and says it poses a significant threat to the global financial system. The new measures will limit Pyongyang's
access to U.S. banks.
Hillary Clinton has accused her Republican rival Donald Trump of trying to scam America. Referring to his training program Trump University, Clinton
says the scheme took advantage of vulnerable Americans and that his White House bid is equally fraudulent.
Sixty-five days until the summer Olympics and Brazil is diving deeper into recession. Fresh figures show the economy shrank .3 percent in the first
quarter of 2016. We looked at data going back to 1976 and found the Brazilian economy is in unprecedented territory as we get closer to the
games in Rio. Taking the bronze medal for the worst economy before an Olympics is the United Kingdom. GDP contracted by .2 of a percent in the
quarter before the 2012 London Olympics. The silver medal goes to Spain where GDP shrank 1.3 percent in the quarter before Madrid in 1992. And
after five quarters of negative growth, Brazil takes the gold. It's the only country we could find that will be in a full-blown recession while
hosting the Olympic games. The interim President Michel Temer says he's well aware Brazil is facing enormous challenges.
(BEGIN VIDEO CLIP)
MICHEL TEMER, BRAZILIAN INTERIM PRESIDENT (through translator): The country is not going to ignore the fact that it is swimming in one of the
greatest crises of its history. It is a conjunction of serious problems created by diverse errors over time and compromising the govern ability and
the quality of life of our people.
(END VIDEO CLIP)
LAKE: Shasta Darlington is in Rio, and joins us now. Shasta, this is a difficult situation for a host country, especially one that was really
counting on Brazilians to help fill those stadiums.
[16:35:00] SHASTA DARLINGTON, CNN CORRESPONDENT: Exactly, Maggie. You know, one of the other figures that's just come out is more than 11 million
people are unemployed. Of course, with the high inflation and that unemployment, their purchasing power is pretty limited and one of the
things they are not buying is Olympic tickets. That means that they've sold only 67 percent of Olympic tickets so far. That's considerably lower
than what we saw in London just two months out from the games, and it's just adding to a whole laundry list of problems that Rio de Janeiro is
facing things that we've talked about, everything from the Zika virus, pandemic, which can scare away not only international visitors, but also
athletes to this political chaos, and, of course, this recession.
The organizers here continued to try to put a happy face on this, a positive spin saying Brazilians are traditionally late buyers. We know
they will come out buying. But it was interesting, we went to Copacabana beach today, Maggie, the place where there was a huge party back in 2009,
the day that Rio won its bid. And the outlook there, the mood there, I have to say, is very uncertain. We talked to Brazilian vendors, we're
hoping this all turns out well. They want to do well. But it was really pretty hard to find anybody who bought tickets, Maggie.
LAKE: I think the other concern for people, Shasta, with the government facing this kind of recession do they have the money that they inevitably
need to spend at the last minute. Yes, maybe some of the venues are already in focus. But security, will they be able to get the police force
out necessary to ensure the safety of all the people who are going to turn up?
DARLINGTON: It's a great question, Maggie and it's the same question that we put to the security chief here in state of Rio just a few days ago. He
admitted, he is scrambling. They made promises, he said, from the very beginning that they would have a total of 85,000 police and troops
available to secure the games, and he's going to stick to that promise. But what that means is he's going around to the army asking for more
soldiers. He's going around to the different states to see if they can send in police, because the state budgets have been hit hard by this
crisis. They have less money to spend on police salaries, to spend on ambulances, to spend on armored cars, so he says he really is hitting up
all of these different ministries and people that he hadn't expected to and even going and basically begging money from local legislators to pay for
things like ambulances, Maggie.
LAKE: Well we know, when it comes to the Olympics, Shasta, we all like to cheer for the underdogs and in this case it seems like the host country
might be the biggest underdog that we end up cheering for if they're able to pull this off. Shasta Darlington watching for us from Rio.
Now earlier I was joined by Alberto Ramos, the senior Latin American economists at Goldman Sachs. I asked him if we should expect Brazil's
recession to get even worse.
(BEGIN VIDEOTAPE)
ALBERTO RAMOS, SENIOR LATIN AMERICA ECONOMIST, GOLDMAN SACHS: It certainly went off one of the longest deepest recessions in memory. We've seen a
brutal contraction of final domestic demand. In just eight quarters we've seen a decline per capita GDP approaching 9 percent. And this is more
damage than what it took in the so-called "lost decade of the `80s," in terms of the destruction of GDP. Just for you to have an idea. We have
now ten consecutive quarters of declining investment and an average quarterly annualized rate approaching 12 percent. We have five consecutive
quarters of declining private consumption at an average quarterly rate approaching 7 percent. And as you mentioned, there are no indications that
the recession is over. We expect another contraction in the second quarter. Hopefully we see some signs of stabilization in the second
quarter. And hopefully we'll see the economy staging a shallow recovery through 2017. But that will require a lot of policy-making to overcome
some of the current imbalances in the economy.
LAKE: And that's why am guessing I hear the skepticism in your voice. How much of this downdraft is due to the collapse of the commodity prices?
Certainly not the only country hit by that, and how much has to do with the political crisis?
RAMOS: I would have to say that this is mostly self-inflicted pain. Certainly the decline in commodity prices did not help, but to a certain
extent this is unnecessary. We did not have to see another contraction with the severity.
LAKE: And we have an interim government that's already seeing two ministers resign in the space of three weeks. How is the government going
to regain the trust of the people, the confidence of the people in order to get that economy moving?
RAMOS: Trust and confidence will be regained by fixing the economy. If you deliver the right policies to lower inflation, to lift sentiment, to
attract investment. To create jobs and opportunities, I think that will define in the end how successful this transition administration will be.
LAKE: Alberto, is this a time to stay away right now from Brazil? Would you recommend investors, avoid it until we get more clarity, or is this a
buying opportunity?
RAMOS: There are certain opportunities, and nothing lasts forever right? One day we'll be talking about something different and the Brazilians will
overcome the current challenges. We just don't know when the day will arrive. But when you look at asset prices, they already reflect that
uncertainty. They already reflect the weak microeconomic picture we're have seen today.
[16:40:00] If the right poll advice delivered and that helps the economy to overcome the current imbalances I think prices will react very quickly to
that, but there's a significant amount of uncertainty with regards to how successful this administration will be. There's a lot of hope invested in
the notion that this will be an administration that will be more inclined to adopt policies that the economy needs. And also perhaps, also more
capable from a political standpoint to build the bridges and concessions that are necessary in congress, to approve the structural adjustment
measures that the economy needs.
(END VIDEOTAPE)
Japanese shoppers can breathe a sigh of relief. The Japanese government has put off a sales tax increase again. Prime Minister Shinzo Abe says the
rise will not kick in until late 2019. Economists say that's a sign the country's recovery isn't going as planned. As CNN's Money Asia-Pacific
Editor explains, there's more stimulus ahead.
(BEGIN VIDEOTAPE)
ANDREW STEVENS, CNN MONEY ASIA PACIFIC EDITOR: Maggie, Abenomics was the big bold blueprint launched in 2013 to end the 20-plus years of lost
economic prosperity in Japan. Now at its heart was lifting Japan out of deflation. That's a vicious circle where in anticipation of falling prices
consumers delay spending, which causes prices to fall further and so on. The goal in Japan, was to achieve 2 percent inflation, which the thinking
went, would spur spending and lift the economy, but so far not so good.
Japan's growth stays sluggish. HSBC says next year it will be just 1.1 percent. Without the tax delay it would have been .4 percent. Mr. Abe
said at his news conference, the time has come to accelerate Abenomics. To focus directly on consumers, apart from postponing the consumption tax
hike, watch out for a big stimulus package. The whisper number is a $100 billion deal, but even then economists say it will be a long road to travel
before the lost years are finally a thing of its past, Maggie.
(END VIDEOTAPE)
LAKE: As its oil revenue falls, we'll look at how the so-called Islamic state is adapting its business model after the break.
(COMMERCIAL BREAK)
LAKE: Coalition forces continue to bomb ISIS. Targeting its financial arteries such as oil. Yet the Islamic state is making up for lost cash.
Joining me with an exclusive report is CNN Money, Jose Pagliery.
So they are losing money in one direction, but finding a way to replace it, Jose?
JOSE PAGLIERY, CNN MONEY CORRESPONDENT: Right, and what it shows is that this terrorist organization is absolutely nimble. I mean, that's what's so
mind-boggling to me. That we've got a terrorist organization that acts like a state, but manages its finances like a corporation.
[16:45:00] And so when the United States and its Arab allies and others in the region are bombing its oil production facilities, ISIS has made a
decision, a very conscious decision, that, all right, we can't produce more oil. We can't sell it on the black market. Instead we'll squeeze further
the people stuck in our territory. And that's 8 million people in Syria and Iraq. That's a lot of people they can squeeze money from. Because
these people have jobs. They have companies, and so they are putting as much pressure on them as they can.
LAKE: You know, it's interesting that -- we call it taxes. I know it's also extortion --
PAGLIERY: Sure.
LAKE: -- we sort of lump it in the same thing. I think it shows an enormous amount of central command, by the way, if they act that quickly.
But can they continue to do that? They've got near term they're able to do it. But if they're extorting this money from people that they are
occupying, you know, at some point does that run into a problem?
PAGLIERY: There has to be a breaking point. That's something I asking the authors of this report that we look at. At what point will the people who
live in this territory say, "Enough, I don't have any more money to give." And in their response to that was fascinating, because they said, "All
right, it's not like everyone who lives in ISIS territory does not support ISIS." There is a sizable portion of the population that actually supports
what ISIS does. Because ISIS gives them food and medicine and all sorts of support. But there's another aspect to this, which is at the border around
ISIS tear industry it's porous. There's not a U.N. embargo that blocks off this territory. And so we've got Jordan and Turkey and Lebanon and
others that are inroads that allow them to trade outside of their borders. And so given that porous border, these businesses can keep conducting
business and getting money that ISIS will tax and so that breaking point won't be reached yet.
LAKE: That inevitably will come up in discussions when you're talking about the best way to get at the financial flows. Tricky though because
there's civilians are living in there. And I'm sure the U.N. and other organizations are afraid the to cut things off. What else do you think
authorities looking at as they try to figure out, OK, they are adapting around what they are doing. They bomb the refineries and find another way.
What are they going to take away from this report in terms of the best way to get at ISIS?
PAGLIERY: That's interesting because what this report did is it actually criticized how allies have cut off is from the banking system. But not
actually hit them in the way that they are transferring money outside their borders. A very interesting, intricate system where it's peer-to-peer
contacts that -- it's a very complicated system, but within ISIS territory someone will give a money handler $10,000 and then there's a promise to
somebody outside of the territory to give somebody else $10,000. And so it's not enough to just cut them out of the global financial system. The
real answer that comes out of this report is that we have to deny ISIS land, and that's tricky. Because the only way to do that is with an army
that goes in, takes the land, reclaims it and doesn't let is get to the people there, the oil, the wheat, the minerals.
LAKE: And that is something that there's not a lot of appetite right now for in the international community.
PAGLIERY: Right. The answer is hard.
LAKE: Very enlightening report. Jose, thank you so much for bringing it to us. Jose Pagliery for us.
We'll be right back in a moment. First though a highlight from "MAKE, CREATE, INNOVATE."
(COMMERCIAL BREAK)
[16:50:10] LAKE: All this week we've been showing you stadiums packed screaming fans and star players battling to overcome rivals and win the
game. It certainly sounds like a sports event, but is it? As we take an in-depth look at the high-stakes of the world of Esports. Don Riddell asks
are these players really athletes?
(BEGIN VIDEO CLIP)
DON RIDDELL, CNN ANCHOR AND CORRESPONDENT, WORLD SPORT: This is a sport. And these are the athletes. Neither concept fits comfortably with a
generation which regarded video games as anti-social and sedentary. But a new and digital generation, the millennials see things very differently.
CRAIG LEVINE: CHIEF EXECUTIVE OFFICER, ELECTRONIC SPORTS LEAGUE OF AMERICA: It's about dexterity, decision-making, reflexes, teamwork. All
goes into sort of being the best in the world.
There's real competition that happens here and that's what is makes it so exciting for the fans. You know, if you talk to any of the top players
here, I think if you asked them everyone would just say look around.
RIDDELL: This was the scene at one of the biggest Esports tournaments in world Intel's Extreme Masters in March. The world's best gamers going
head-to-head in team-oriented computer games like League of Legends and Counterstrike. 15,000 fans were packed into the arena in Katowice, and
millions more were following the action online.
UNIDENTIFIED ANNOUNCER: Beautiful stuff as he gets up to play.
GREGORY, BRYANT, CVP, CLIENT COMPUTING GROUP INTEL: There are people lined up outside and around the block and down the street probably half a
kilometer, waiting to get into the event. The energy is palpable. I mean, it's as exciting as any professional sporting event that I've ever been to,
whether that's football, basketball, you know, pick your sport.
MARTIN VETTORI, PAYSAFECARD.COM, ESPORTS SPONSOR: There are the same emotions like in traditional sports. They really put some emotional effort
into it and really they built the customs around it. And I thought, OK, there's so much power, so much engagement with the fans.
RIDDELL: You only have to look around this bar called, Battle and Brew, to see that Esports is going mainstream. The whole place is a haven for
Esports fans. But now that it's reaching the masses, what do we call these young men and women? Are they gamers, players or athletes?
United States immigration has already decided. In 2014 Korea's Choi Seong Hun, was one of the first to enter the country on at athlete's visa.
CHOE SEONG HUN, AKA, POLT, PROFESSIONAL STARCRAFT PLAYER: When you first stop playing for one or two days, your hands kind of get like slower, so
you have to play it every single day, even if it's not much so I usually try to play it consistently and the rest of time I just do whatever I want
to do.
RIDDELL: just like real sports, they have had to deal with doping and match-fixing scandals in Esports, but unlike other professional athletes
they are far more committed to their craft.
SAM MATHEWS, FOUNDER AND CHAIRMAN FNATIC ESPORTS TEAM: You just have to think about the amount they train. These guys are training eight hours a
day and sometimes training themselves another two hours on top of that on their own time and up to 10, 12 hours a day of gamin, just-to-perform that
one better movement or that one skill shot better or the way they interact with their team and the synergy they have with communication.
RIDDELL: there's no doubt about their skills and the highly competitive and commercial world of Esports, but varsity programs now recognize it,
too. At Robert Morris University in Chicago can you study on a scholarship program in Esports.
KURT MELCHER, ASSOCIATE ATHLETIC DIRECTOR, RMU ILLINOIS: I think everyone has this misconception of what a gamer is. That they're eating Cheetos and
guzzling Mountain Dew and Red Bull and they are sloppy. That's not the case. The gamers that we have here for our varsity program are serious.
It's a real skill and real ability. So the same way I give a scholarship for a woman's soccer player, why shouldn't we do that for video game player
and be competitive and successful?
RIDDELL: Putting on a track suit doesn't necessarily make you an athlete or video game as a sport. But the skill and reflexes and the sheer mental
will of these top players might qualify them as super human. And the bottom line is it really doesn't matter. Some of these guys are already
commanding seven-figure salaries and are revered by their fans all over the world.
CARLOS RODRIGUEZ, TEAM OWNER, G2 ESPORT: I think it's completely irrelevant, right? At the end of the day I don't care if we're called a
sport or not. We're within an entertainment company, right? Why these people want to watch gladiators in the past or why people want to watch
football today, it's entertaining, right. Who cares if it's a sport or not, right?
RIDDELL: its popularity is growing at a geometric rate. A young global audience is hooked and engaged with the product in ways that other sports
can only dream of. Whatever this is called, so-called real sports are sitting and paying very close attention. Don Riddell, CNN.
(END VIDEOTAPE)
LAKE: It has been dubbed Switzerland's construction of the century. Deep beneath the Swiss Alps this mammoth engineering project is open.
[16:55:00] (COMMERCIAL BREAK)
LAKE: The journey between northern and southern Europe became a bit shorter today. The world's longest and deepest tunnel opened on Wednesday,
far under the Swiss Alps. The leaders of France, Germany, Switzerland and Italy were on hand for the opening ceremony, which featured dancing,
fireworks and, of course, yodeling. The Gotthard Base Tunnel will cut up to an hour off travel times between Zurich and Milan. Trains will cross
the 57-kilometer tunnel in as little as 20 minutes, and they will speed at up to 250 kilometers per hour. Construction took 17 years and cost $12
billion. It will begin full operations in December.
We take a look at markets. European stocks finished lower Wednesday. Investors were reacting to the latest Brexit opinion poll, which shows the
leave campaign with a lead. Stocks were also hit by wheat manufacturing data from China. Many investors are waiting for Thursday when OPEC plans
to meet.
The DOW meanwhile finished the day with a small gain. U.S. stocks were reacting to a slow increase in manufacturing activity and disappointing car
sales. Investors are also awaiting that OPEC meeting as well the latest interest rate decision from the European Central Bank.
Some news just into CNN. Uber has raised $3.5 billion from Saudi Arabia's investment fund. It comes as Uber is fighting to maintain its dominance in
the ride-sharing market and Saudi Arabia is diversifying its economy away from oil. As part of the deal, a managing director at the fund will take a
seat on Uber's board. Uber is valued at $62.5 billion.
That's it for QUEST MEANS BUSINESS. I'm Maggie Lake in New York. Thanks so much for watching. Richard will be back live tomorrow from Dublin.
END
