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Quest Means Business
Trump Speaks After North Korea Fires Ballistic Missile; Stiglitz Says the Tax Bill is the Worst Package One Could Imagine; British Banks Pass Brexit Stress Tests; Prince Harry and Meghan Markie Plan May 2018 Wedding. Aired 4-5p ET
Aired November 28, 2017 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] DONALD TRUMP, PRESIDENT OF THE UNITED STATES: A missile was launched a little while ago from North Korea.
I will only tell you that we will take care of it. We have General Mattis in the room with us, and we've had a long discussion on it. It is a
situation that we will handle.
With that being said, Chuck Schumer and Nancy Pelosi did not show up for our meeting today. I'm not really that surprised. We have a lot of
differences. They're weak on crime, they're weak on illegal immigration. They want the illegal folks to come pouring into our border and a lot of
problems are being caused, although we've stopped it to a large extent as much as you can without the wall, which we're going to get.
Before this meeting and before this missile launch, they've been weak on military. In terms of spending, they're very hard to get the military --
they want it for a lot of other things, but the military is always secondary to them. The military, to me, is number one. We won't be here
without our powerful military, and we're building it up stronger, bigger, better than ever before. And General Mattis can testify to that.
And the other thing, they want tax increases, and we want major tax decreases. So, they decided not to show up. They've been all talk and
they've been no action, and now it's even worse. Now it's not even talk. So, they're not showing up for the meeting.
I will say this, in light of the missile launch, probably they'll be here fairly quickly, or at least discussions will start taking place fairly
quickly.
I think that we're in a very good position in terms of the meeting we just had over at the Capit3ol with the Republican Senators. It was outstanding.
I think we have tremendous support. I was just informed by Mitch that we had a unanimous vote -- from the Republican side at least -- we had a
unanimous vote on the tax bill. And it goes now the next step, and I think we're going to get it passed. I think it's going to pass. And it's going
to be very popular.
It's going to have lots of adjustments before it ends, but the end result will be a very, very massive -- the largest in the history of our country -
- tax cut. And lots of good things are going to happen, including the bringing back to our country of -- probably will end up being over $4
trillion -- money offshore that's stagnant that companies -- they're just not able to bring it back. So, I think it's going to be a number over $4
trillion.
Corporate will be able to compete now against the world. If you look at China, if you look at so many other countries, if you look at many of the
countries, China is at 15 percent. They're lower than us. We're getting it down to a level that is either going to be lower or right in the
ballpark, so that we can compete much better with our companies -- our great, great companies. And that means jobs and it means lots of other
things.
I'm very happy to see that the consumer confidence level is just about the highest it's ever been. If fact -- I don't want to make any mistakes in
front of the press because you'll get me on it -- but to the best of my knowledge, it's the highest it's ever been. Consumer confidence has been
setting records. They have confidence in the people leading their country.
And, I will say, that I think it's going to go better and better, and I do believe this vote on taxes, which are really tax cuts and reform, is going
to be very, very important.
So,23 we had a good day today. We had a phenomenal meeting with the Republican Senators. We had -- it was very special that meeting. And, in
many respects, I wish you could have been inside that room. It was very, very special -- the comradery. It was somewhat of a lovefest. They want
to see it happen. They want to see it happen not only for the Republican Party. I think, much more importantly, they want to see it happen for the
country because they know how important it is for us to compete and win.
And, with that, I maybe will start with Paul Ryan to say a few words about where we stand with different things and then I'll ask Mitch McConnell.
REP. PAUL RYAN (R), SPEAKER OF THE HOUSE: OK. I'll just briefly say I think it's regrettable that our Democratic colleagues and leadership chose
not to join us today for a bill to become a law. Congress has to pass a bill, and the President signs a bill. That means Congress and the White
House always negotiate legislation. We have important work to do. We have big deadlines to do. We have a military in need of our support, and that
work needs to happen now.
And I just think it's very regrettable that our Democratic colleagues and leadership chose to not participate because we have to negotiate these
bills to get this work done for the people we represent. And especially to help our military with these difficult situations we have. And I just hope
that our friends in leadership on the other side of the aisle will choose to participate so we can get the people's work done.
SEN. MITCH MCCONNELL (R), SENATE MAJORITY LEADER: Mr. President, I would just add I've been in this position under a couple of previous Presidents.
I can't recall ever turning down an opportunity to go down to the White House.
[16:05:05] As the Speaker mentioned, only one person in America can sign a bill into law, and that's the President of the United States. You cannot
negotiate the year-end -- the omnibus spending bill without the person who signs the bill in the room.
So, I think the Democratic leaders in the House and Senate need to understand the way the government works, and the administration has to be a
part of the ultimate negotiation over what the spending level is going to be for the next year.
TRUMP: Well, we are very far apart because our views on crime and our views on immigration and the military -- so many are different. But a lot
of things have happened, even over the last two hours with respect to the missile launch. We want our military funded and we want it funded now.
It's going to be bigger, better, stronger -- it already is -- than ever before. But we want to get going on that now. So that is a difference, in
all fairness, from this morning when I told them that we're way, way far away.
And with that, I may just have General Mattis say just a couple of words about what he has found out. General, do you want to say just a couple of
little pieces of information to the media?
JAMES MATTIS, U.S. DEFENSE SECRETARY: Mr. President, Senator, Speaker, a little over two and a half hours ago, North Korea launched an
intercontinental ballistic missile. It went higher, frankly, than any previous shot they've taken. It's a research and development effort on
their part to continue building ballistic missiles that could threaten everywhere in the world, basically.
And in response, the South Koreans have fired some pinpoint missiles out into the water to make certain North Korea understands that they could be
taken under fire by our ally.
But the bottom line is, it's a continued effort to build a threat -- a ballistic missile threat that endangers world peace, regional peace, and
certainly, the United States.
TRUMP: Thank you, General. And we will take care of that situation. Thank you all very much. I appreciate it. Thank you.
RICHARD QUEST, CNN HOST: There is a lot to digest on those comments from the President. Just barely seven or eight minutes long.
TRUMP: Nothing changed. Nothing changed. We have a very serious approach, but nothing changed. We take it very seriously.
UNIDENTIFIED MALE: Do you believe there will be a government shutdown, Mr. President? And would you blame Democrats if that happens?
TRUMP: Blame the Democrats. If it happens, it's going to be over illegals pouring into the country, crime pouring into the country, no border wall --
which everybody wants. I got elected partially because of the border wall.
If you look at the military, we want strong funding for the military. They don't. So many things. As an example, they want high taxes. We want to
cut taxes. We're going to cut taxes. We're going to reform. We're going to simplify. They want high taxes. We want low taxes.
So, there's a lot of big differences. So, we'll see what happens as to shut down. We'll see. But right now, things have changed over the last
two hours, because two hours ago, a missile was launched. I think that will have a huge effect on Schumer and Pelosi -- I think. We'll see.
We're going to learn very soon.
They should be calling immediately and say, we want to see you. But probably they won't, because nothing to them is important other than
raising taxes. That's the only thing they like doing is raising taxes.
Thank you all very much. Appreciate it. Thank you.
QUEST: Right. That looks like it is the end of the President's comments. A variety of issues that were talked about. The most important, of course,
is the intercontinental ballistic missile that appears to have been fired by the North Koreans. Donald Trump saying it's a situation we will handle.
General Mattis saying it was higher than any that had been fired before. South Korea did return some pinpoint missile fire.
And then Donald Trump coming back again saying, we will deal with this. We will take care of this. We will take care of this. Paula Newton is in
Seoul in South Korea. Michelle Kosinski is at the State Department in Washington. We'll come to you, Michelle, in just one second. Paula, the
word from Seoul after this missile launch is what?
PAULA NEWTON, CNN CORRESPONDENT: This is a significant escalation. My words, not theirs. But you can tell in their actions they're treating it
as such. We have just heard the Defense Secretary Mattis there talking about what South Korea did in response. Think about it, Richard. While
this missile was launched in the middle of the night -- it was launched at 3:47 local time. While it was still in the air, the South Korean military
went to work.
[16:10:00] And they basically started what they call a precision missile strike drill. And what that is, it begins a certain simulation of a
retaliation. What could happen if North Korea is not careful. But what is really interesting here, as well, is what they were just talking about in
terms of the R&D process. The fact that North Korea is pushing the envelope here, and that they will continue to escalate this entire
situation. I'm not sure what President Trump means in terms of what we will handle it. Everyone is waiting to see that. And I can tell you that
the South Korean government is waiting to see that, as well. We are at a press conference yesterday with the Unification Minister here. Some really
interesting things came out of that, Richard.
Firstly, they said they had, in fact, also detected what they said was noteworthy movements. Ask they thought that might be a missile attack.
One thought I want to leave you with, the South Koreans now have put on the table that they believe that the North Koreans could be nuclear capable --
fully nuclear capable, meaning tipping those ICBMs with a nuclear weapon sometime next year, as early as next year.
QUEST: Stay with me, Paula. To Michelle Kosinski. Do you have any better idea of what Donald Trump might have meant when he said of this situation,
we will handle it, we will take care of it?
MICHELLE KOSINSKI, CNN SENIOR DIPLOMATIC CORRESPONDENT: That is actually phrasing we have heard before in the last few months. We have seen a
number of different types of tests and launches by the North Koreans. Remember, it wasn't that long ago when Trump became president, the question
was, would North Korea attempt an ICBM. And since then, now we have seen several of them. You heard the Defense Secretary, Mattis, there, saying
this one went higher.
So, it's one more incremental movement, in a direction the U.S. doesn't want to see. So, when Trump has said this in the past, that this will be
handled, he often says it in conjunction with some military statement. We heard that today, too. Talking about the strength of the military. Then
we heard from the Defense Secretary. Him not using really any rhetoric that we heard before, inflammatory language. He stuck to the facts there.
I thought it was also interesting in the course of the statement by President Trump. At one point he said he didn't want to make any mistakes,
because the press would catch him on it. That sounded like something new and that tells us that that's something that he is at least now thinking
about, and worrying about.
Another extraordinary thing here is when we have seen these launches, the State Department is silent. They say nothing. You hear from South Korea,
you hear from Japan. The State Department sits, doesn't say anything. Then you hear from the President. Either in a statement from the White
House or today --
QUEST: All right, Michelle.
KOSINSKI: An on-camera statement. And that's the strategy. They don't want to -- you know, they want the State Department to focus on diplomacy.
They want the President and the Defense Secretary to generally focus on the military possibilities here.
QUEST: Back to Paula in South Korea. Having heard that, I mean, the issue becomes the level of the reaction. The proportionality of it. Because I
already see, Paula, the comments coming. All the usual suspects. The EU, Japan, everybody is making their usual comments about how unacceptable it
is. But frankly, unacceptable means nothing. They just keep doing it.
NEWTON: Yes, absolutely. And let's start with the premise of what the old cliche is right? There aren't any good military options here. Having said
that, it seems, from what I heard yesterday, that South Korea -- and let's keep in mind, Richard, South Koreans have an Olympic game coming up in the
beginning of February. Through all of that, they had been hoping there would be no more provocations, in their words, leading up to that time.
Obviously, they were wrong.
But they want to know now, is what is going to get North Korea to the table. And really, that's all South Korea wants. Quite frankly, they're
the ones that probably arguably have the most at stake here right now. It was interesting to speak to their Unification Minister yesterday in terms
of implicating North Korea as perhaps -- perhaps -- he said he would not claim it was a change in government policy. But that perhaps what will
bring them to the table is recognizing that now they are a nuclear power.
QUEST: All right, Paula, thank you. Michelle, thank you. Obviously, that will happen - we'll have more in the hours ahead as we get more details,
and as there's more analysis on exactly what took place. The strength of the missile, and its viability.
As we continue on QUEST MEANS BUSINESS tonight, records, three of them. I'm just looking over at the trading post. The Dow, the S&P and the Nasdaq
all showing record highs. We'll put the numbers on to show you -- we'll increase the record numbers we continue after the break. QUEST MEANS
BUSINESS.
[16:15:03] (COMMERCIAL BREAK)
QUEST: I'm not sure whether it was the uncertainty of what had happened or whether the market had quite digested it. But as you can see, the missile
launch from North Korea didn't weigh down a market that was boosted by hopes of tax reform. So, you've got the Dow up at a record. The S&P up at
a record. And the Nasdaq all closing at a record high, which is why you have a sea of green all around us.
Let me show what this means in the implications for the market. So, the Dow now has had 61. The Nasdaq has 56 records so far, this year. And --
sorry, the S&P. And the Nasdaq itself is now up to 70 records. We'll tidy those up in the days ahead. But it gives you an idea of where we are. The
Dow, the Nasdaq and the S&P 500. And this was largely on the back, of course, of the prospect for tax reform.
And the President says he thinks the Senate will pass tax reform -- at least the full Senate, the first major overhaul. There is an all-out push
now under way to get this through. A short time ago, the bill cleared its first legislative hurdle in the Senate through the budget committee. The
Republican majority leader's warning of getting the votes on the floor. In his words, Mitch McConnell said it's a bit like trying to solve a Rubik's
cube. These 10 Republican senators have expressed concerns from its effect on the deficit, and how it treats different types of companies and its
repeal of part of Obamacare. Professor Joseph Stiglitz says, the tax Republican plan making its way through Congress is the worst package one
could imagine. Now Professor Stiglitz has looked at a few packages before. He actually was working on the Reagan one. He has a new book out,
"Globalization and Its Discontents Revisited. Anti-globalization in the Era of Trump." He joined me a short while ago and said it's inconceivable
to raise taxes on the middle class to give the rich a tax break.
(BEGIN VIDEOTAPE)
JOSEPH STIGLITZ, NOBEL LAUREATE ECONOMIST: It's absolutely the worst package one could imagine coming out of Congress. The -- you know, I never
thought I would see a tax package where you raise taxes on those with incomes under $70,000 and lower taxes on the billionaires. I mean, this is
just almost -- inconceivable from a point of view of political science.
QUEST: But those raised taxes don't happen immediately, do they? That's the catch in this. Because if you take the first two or three years, they
benefit hugely from the catapulting down or the constant teaming of the tax plan, that round.
STIGLITZ: Yes. So, it is a little bit of a swindle in that way. But the Congressional Budget Office has been very clear where this is going.
[16:20:00] And you don't pass a tax bill for what you -- the sugar you put up front. It's where you're going. And what's very clear is that ordinary
Americans are going to have their taxes raised in order to finance a tax cut for a corporation and for the billionaires. I mean, it's just
inconceivable.
QUEST: You can certainly see there is strong merit in reducing the corporate rate of tax. When you are in a race -- has become a race to the
bottom.
STIGLITZ: I don't think so. There's very little evidence about that, actually. What is true is that most economists think it would be a good
idea to have a base broadening and lower the tax rate at the same time. So, you get rid of the loopholes, and the -- you keep the average tax
roughly where it is or maybe a little lower. But this is not an exercise in base broadening. This is an exercise in gimmicking Lou Goldberg trying
to put in everybody -- you know, satisfy everybody in negotiation. So, this is so interesting. I was around for the 1986 tax reform under Reagan,
that old. And it's so different.
QUEST: In what way?
STIGLITZ: Well, in 1986, they had a blueprint for tax reform. They had thought it through. They had hearings. They had a conception of where
they wanted to go. They had a conception of let's get rid of all the special provisions. Lower tax rates. But at the same time, get rid of all
those loopholes. And so, there was -- there was a theory behind the tax reform. Not this kind of air socks reform. Reform is just a word for
describing a jungle of provisions.
QUEST: It's going to pass, isn't it, though?
STIGLITZ: I don't know. I don't think it's clear.
QUEST: Well, it's through the House.
STIGLITZ: It's through the House, and it's through the Senate committee, but --
QUEST: But if it becomes a political issue that this administration will get to the end of the year without a significant legislative achievement,
then the pressure on Republicans in the Senate to hold their line.
STIGLITZ: Which is better, to pass a bill which most Americans think is bad, or not to pass a bill. You know, they're in a dilemma. It would have
been better if they could have come up with a good tax bill that is supported by a majority of Americans. That's what normal congressional
politics is about. This is very weird. Saying I have to pass a tax bill that is opposed by a vast majority of Americans.
QUEST: Are you comfortable with Jerome Powell at the head of the Fed?
STIGLITZ: I think he's -- you know, if you're going to break with tradition, which has been a bipartisan tradition of -- if the head of the
Fed has done a good job and Janet Yellen has done a fantastic job, you keep them on. If you're going to break with that tradition, this is a good
appointment.
QUEST: He said basically today, rates continue. He basically said everything is data dependent. Anybody who is looking for major change out
of Chairman Powell is going to be disappointed.
STIGLITZ: That's right. This is continuity. And, you know, if you're going to have continuity, why did you break with a tradition of keeping the
Fed out of politics bipartisan. But, you know, Trump is breaking every norm across our society. So why not break this one?
(END VIDEOTAPE)
QUEST: Professor Stiglitz. And later, he'll talk about Brexit and the current negotiations.
As we continue tonight, it's a three-ring circus in Washington. As lawmakers are juggling three major projects. Join me at the super screens,
and you will see what I mean. First of all, joining me in the circus. First of all, you have showdown over taxes which we've been talking about
this morning. In this case, it's classic Republicans versus Democrats. Elephants versus donkeys over on that side. The Republicans are still
hoping to get a full Senate vote this week. Notwithstanding what you've just heard Joe Stiglitz talking about.
In the middle ring, you've got the ring master overregulation, over monetary policy, over the Fed. Jerome Powell first day of testifying
before Congress and his confirmation hearings. He says he expects the pace of rates will rise, will continue.
(BEGIN VIDEO CLIP)
JEROME POWELL, NOMINEE FOR U.S. FEDERAL RESERVE CHAIR: I've made it a practice to not to talk really specifically about individual meetings,
because, you know, that's why we have the meeting. We're all supposed to hold back on that final decision and then go in and listen carefully to
each other's views, all the reserve bank presidents, all of the governors. That's what we do out of respect to each other. I will say though Senator,
I think the case for raising interest rates at our next meeting is coming together.
(END VIDEO CLIP)
[16:25:03] QUEST: Which is as good as you're ever going to get in terms of a Fed governor saying most likely to happen. And the third one, perhaps
the one that's going to fire the cannon looming over everything is the government shutdown. December 8 is the deadline. Donald Trump says that
Democrats will be to blame.
This is the scenario that Washington faces at the moment. And yet the stock market, as you have seen today, managing to hit three records. The
Dow, the S&P and the Nasdaq, with the Dow being up 30 percent. Peter Morici is with me, economist and professor emeritus at the University of
Maryland. Good to see you, Peter, to put this into perspective. The situation in Washington -- we've called it sort of the three-ring circus in
the sense of that there are these different areas requiring immediate attention. And they are not easy to solve in this free environment in
Washington at the moment.
PETER MORICI, PROFESSOR EMERITUS, UNIVERSITY OF MARYLAND: Well, the Fed chairmanship, that will be resolved. He will be confirmed. Everyone
pretty much likes Mr. Powell. I kind of wish we had an economist going in the job or that Janet Yellen was able to stay on. But that's done.
Neither the Democrats nor the Republicans want to have a government shutdown. Or at least they don't want to have one they're blamed for. Now
the Democrats got sideswiped today by -- they didn't show up, they had a reason. But then we had the missile thing. And so, you know, for a few
hours they're going to look bad.
But at the end of the day, no one wants to be responsible for shutting the government down. The real circus -- the middle ring really should be the
tax cuts. Now, it's not quite what Mr. Stiglitz said. He was in the Clinton White House, by the way. I met with him there, went to the oval
office with him while I was chief economist for the U.S. ITC, and he gave the Democrats' position. The reality is, the corporate tax cut is paid
for, unfortunately by increasing the deficit.
We have the highest corporate taxes in the world. Not just the highest rate, but the highest average taxes. So, you know, that needs to be done.
The real problem is on the personal income tax side. They're robbing Peter to pay Paul. There's not enough money in there. And so, you know, they
can't make everybody happy. They're not going to make everybody happy and it's not very popular.
QUEST: Do you -- I understand you may come from slightly different political views in terms of with Joe Stiglitz, but do you agree with the
thrust of his point that short-term, yes, the middle class do get a tax cut as the bands become narrower -- or sort of wider -- fewer bans are wider.
But longer-term, they are going to pay higher taxes.
MORICI: Only if the tax cuts are not extended. The Republicans have been very shrewd this time. They have basically made permanent the tax cuts
they want, the corporate tax cut. And put the Democrats in the position if they get the government back and they let the tax cuts expire, it's on
them. I mean, this is basically political theater. Absolutely the way it's written in the early years, the middle class gets a tax cut. It gets
a gosh darn big tax cut. There's a lot of cooked numbers in town. But the reality is, they get a big tax cut in year one. But year four, year five,
if it expires their taxes go up and it will be up to Congress then to extend them. Which means the deficit impact is going to be a lot bigger.
And that's not a good thing.
QUEST: This tax plan, it's through the Senate committee. Now, of course, the last bits of amendments, keeping in mind that there can't be more than
$1.5 trillion in deficit over the period. To account for another law that has to be met. Is it your gut feeling this deal gets done?
MORICI: No.
QUEST: Really?
MORICI: It's not.
QUEST: Really?
MORICI: Yes. I think this is basically the swan song of the modern Republican party, and its theology of tax cuts, deregulation and free
trade. The reality is, I don't think -- you saw those ten personalities. Out of those, they can get out of this box without two of them bolting. In
particular Collins for example. Now I'd be delighted to see it happen. I think it should happen. But I think that they are going to have a lot of
trouble getting it done and --
QUEST: Would you agree that --
MORICI: I'm skeptical.
QUEST: Would you agree, it's devastating for the Trump presidency if it ends this year without having this done and without having a single large
legislative achievement. Or maybe not. Which do you think?
MORICI: It's certainly a big negative for the Trump presidency. But this is really a circular firing squad --
QUEST: Right.
MORICI: -- for the Republicans in Congress. Because they're the ones that go to the polls next. And I've got a couple of basic principles I operated
on in Washington. And one of them is it's hard to win two elections in a row. So, the Democrats may have a whale of a party. It's the biggest
drunk ever. The night after the election in 2018. And then Trump turns around and says, all right, you got it. Give me something I can work with.
They won't be able to work with him. And then he gets re-elected, because he sticks them with the blame. Also, there's going to be a recession out
of this if they fail.
[16:30:00] QUEST: Upon that note, we shall leave it. Teasing beautifully that you'll come back and tell us about that recession in the future. Good
to see you again, Peter, thank you.
MORICI: Nice to see you.
QUEST: Thank you.
Now, North Korea appears to have launched its most advanced ballistic missile yet, according to the U.S. Defense Secretary. It went higher than
anything before. It's a warning from Kim Jong-un to the international community. It is QUEST MEANS BUSINESS, live tonight from New York.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANINGS BUSINESS in just a moment. When Britain's biggest banks passed their stress test in
preparation for the doom's day Brexit scenario. And planning a Royal wedding in six months, Prince Harry and Meghan Markle reveal their plans
for May of next year. As we continue, before all of that, this is CNN, and on this network the facts always come first.
For the first time in two-and-a-half months, North Korea has fired off a ballistic missile. It's believed to have been sent from Pyongsong and then
flew for around 50 minutes before splashing down inside Japan's economic exclusion zone. The Pentagon's initial assessment indicates this was an
intercontinental ballistic missile.
Democratic leaders have pulled out of their meeting with President Trump after he tweeted that it was likely not to result in a deal over funding
the government. The Senate Minority Leader, Chuck Schumer, and the House Democratic Leader, Nancy Pelosi, said they would continue negotiating with
their Republican counterparts in Congress instead of the White House directly.
Thousands in Kenya have celebrated Uhuru Kenyatta's inauguration in his second term as president. Where violent protests that also marked the day
police clashed with the supporters of the opposition leader, Raila Odinga, who had boycotted the election.
Ireland's Deputy Prime Minister has resigned in a political crisis threatening to trigger new elections. It's all to do with a whistleblower
for police controversy when Frances Fitzgerald was the justice minister. The crisis could hurt the Irish government's position in Brexit
negotiations, with respect to Northern Ireland border.
In the last half hour, the U.S. President has promised, when it comes to North Korea, we will take care of the situation. The Pentagon said the
North Korean missile traveled about 1,000 kilometers, and then came down in the Sea of Japan in the economic exclusion zone.
[16:35:00] The Japanese Prime Minister has ordered an emergency meeting. Kaori Enjoji joins me from Tokyo. This is a deteriorating situation. But
one in which it's not clear what Japan is in a position or power to do.
KAORI ENJOJI, JOURNALIST: That's right, Richard. And I think that has been the case throughout the year, as these provocations from North Korea
have intensified. The latest, the 20th missile this year to be launched by North Korea, traveling towards Japan and falling and slashing down in the
so-called exclusive economic zone for the fifth time this year for Japan. The Japanese Prime Minister made a few remarks moments ago, condemning the
latest provocation.
But trying to put on a fairly brave face this time, saying that they were aware from the beginning when the missile was launched at 3:18 local time,
until he came down into the economic zone. Saying it's probably one of the reasons why Japan didn't issue an alert system to its citizens about this,
because they were -- they were not aware of any immediate threat to the country or its citizens.
But this is another provocation, and I should also note that over the last two days in particular, people have been on high alert here, because of
reports of radio signals that have been coming out of North Korea, and also because there has been no missile launch for the last two-and-a-half
months. And during that time, of course, as you know, we had the designation from the U.S. of North Korea as a terrorist state.
We have had comments from both the Japanese Prime Minister, Shinzo Abe, and his defense minister, who are both huddled together at the Prime Minister's
residence right now, that this it is likely to have been an intercontinental ballistic missile, an ICBM. We have had this situation in
the past. There were two ICBMs launched back in July. And I think that's when the alarm signals rang out, because it potentially had -- could
threaten the western coast of the United States -- Richard.
QUEST: Kaori, in Tokyo, thank you.
Almost a decade ago, the credit crunch hit British banks hard. Today the Bank of England is hopeful they have a better place to cope with Brexit.
We'll talk about that after the break.
(COMMERCIAL BREAK)
QUEST: Now, sterling showed a sharp spike against the dollar after the "Daily Telegraph" newspaper reported a potential breakthrough in Brexit
talks. Incidentally, the "Financial Times" also suggests that they have come up with a number, $100 billion, that will be discounted in terms of
the Brexit bill.
[16:40:00] The Bank of England says Britain's banks should be able to survive a worst-case scenario, according to its latest stress tests. The
bank's warning, the pain will be felt if no deal is agreed. Watching over our Brexit business coverage is Anna Stuart who joins me in London tonight.
So, this idea, the banks have been stress tested before in terms of recession and economics. But not specifically for Brexit. So how tough
were these tests?
ANNA STEWART, CNNMONEY PRODUCER: These tests were seriously tough. They were worse than the financial crisis of 2008. And incredibly, they all
passed, even RBS, such as you know was bailed out in 2009. This test involved a huge recession of minus 4.7 percent, high inflation, high
unemployment. Interest rates at 4 percent. So, it was pretty damn tough. In the good news was the banks passed.
But Richard, the investment bankers I spoke to today said they're really less interested in capital buffers, and whether financially that the banks,
the institutions can survive. People here are much more worried about the operations post Brexit. If they lose passporting rights, which they almost
certainly will when the U.K. leaves the single market. What trades will they be able to do within Europe, what trades won't they? It's simple but
very crucial questions. And banks are having to press the button on contingency plans without having any of the answers.
QUEST: So, in that regard, because this is important stuff. They're going to lose passporting. Only a fool believes there will be a way around it.
What's the bank and what's the governor saying on that issue, because I know you've got a chance to hear him on that issue. Because the crux of
the issue -- as we heard on this program last night, is moving out of London is not an option. You have to do it. So, what other potentials are
there?
STEWART: Well, we're hearing such different things from either side of the channel particularly, and within banks themselves. Now some banks are
moving jobs from the U.K. to Europe. Some are setting up new subsidiaries in Europe. But many are actually wondering whether they might be able to
use some sort of mechanisms. You could say loopholes, to circumvent passporting. Ask to do trade within the EU after we've left may be at
least transitionally. And I have to say, Mark Carney today seemed pretty keen on that. And this was surprising, Richard. Because at the ECBM, they
came out saying they don't want back-to-back trading. They don't want loopholes that leave empty shell businesses in Europe, sending trades back
to London without Europe having any oversight. But here's Mark Carney. He had a very different take.
(BEGIN VIDEO CLIP)
MARK CARNEY, GOVERNOR, BANK OF ENGLAND: That might be a sensible expedient, short-term strategy. But it's unlikely to be a sustainable
strategy. Unless we have -- what we would recommend -- unless we have a negotiated agreement that permits wholesale activity -- it continued access
for certain wholesale activities. So, it's a strategy that's very much dependent on the financial deal.
(END VIDEO CLIP)
QUEST: Fascinating. You can almost see the wheels turning there, Anna. As he recognizes this is a way out of the situation. From your
conversations, is anybody in the city panicked yet?
STEWART: No. Interestingly, there isn't any panic. There has to be a solution, Richard. And there is some comfort. And Mark Carney actually
finished the conference on this point. He said, over half of all equity and debt for European governments, European businesses, is raised in the
U.K. So, Europe needs the U.K. financially, just as much, if not more, some could argue, than the other way around.
QUEST: Anna, good to see you. Stay on top of this Brexit business over the next few months, please. We've got plenty of work to keep you busy
with.
The European markets all closed higher. The FTSE up over 1 percent. Following those stress tests the OECD is predicting growth of just 1.1
percent. Interestingly downgrading the U.K.'s growth. On "QUEST EXPRESS" the Secretary-General Angel Gurria I was told it was crucial to have a
smooth transition.
(BEGIN VIDEO CLIP)
ANGEL GURRIA, SECRETARY-GENERAL, OECD: What we need to do is to make it -- you know, as seamless and as smooth as possible. The least disruptive
possible. But again, they are going through a difficult patch. The question of Northern Ireland, as you have seen, and the border question has
even had political impacts in Ireland itself. And the Irish political situation, they've solved it now. But the question of Brexit is creating
uncertainty. And this is why one of the very few countries in which we have now lowered our growth scenarios four 2017, 2018 is precisely the U.K.
QUEST: OK.
GURRIA: Because originally, we had a 1.8 now going to 1.5, then going to 1.2.
(BEGIN VIDEOTAPE)
[16:45:00] QUEST: Those numbers worrying. I put the Gurria's comments to Professor Stiglitz earlier. He told me a cliff-edge scenario for the U.K.
now seems less likely.
JOSEPH STIGLITZ, NOBEL LAUREATE ECONOMIST: I don't think it's going to be the crisis of a sudden, you know, falling off the cliff like some people
thought a year ago. I think it's not going to be good for the U.K., and it's not going to be good for Europe. But it's going to be more of a
gradual problem.
I think much more deep problem is what Trump is doing to the rules-based system that the United States takes the lead in, in creating after World
War II. You know, this kind of protectionism, America first --
QUEST: He says -- he says, as he said on his way back from Asia, this is giving the U.S. new respect. That people are now realizing that you can't
take America for granted or for advantage.
STIGLITZ: Well, I travel all over the world, and I can tell you, the level of respect for America is at an all-time low. Nobody takes America for
Granted. They never did. They knew that we were tough bargainers in our trade agreements. You know, Trump has said our trade negotiators got
snookered. That's laughable. I was talking to one of the finance ministers in the -- you know, the Brexit and they were laughing at that
idea. The U.S. gets almost always what it wanted. And that's one of the points of my new book, is to show -- to explain that the problems with what
we wanted, not what our trade negotiators got snookered.
QUEST: Right. So, on your book and on trade, because this is a bit that always bedevils me. Donald Trump continually points out that different
countries that have trade deficits with the United States. Making the point, almost ergo a deficit by definition is a sign of a bad trade deal.
He has a point.
STIGLITZ: No, he doesn't. Some countries have surpluses. Some countries have deficits.
QUEST: Most have deficits with the United States. Against the U.S.
STIGLITZ: Yes. So, the point is, that is a result of our macroeconomics. When a country saves less than it invests, there is going to be an overall
trade deficit. It's just macroeconomics. And what he is doing in his new tax bill, which is going to reduce U.S. savings by increasing the deficit,
officially $1.5 trillion, but realistically, probably twice that amount, over ten years, that is going to make the trade deficit worse.
You know, the trade deficit overall, which is what matters, is not determined by these bilateral trade agreements. That affects what we buy
from one country or another, the overall trade deficit is determined by our macroeconomics. And through this tax bill, he's making that much, much
worse.
QUEST: Thank you very much.
STIGLITZ: Thank you.
QUEST: Now, get on board a plane and find that the engines are hybrids. That will give you something to think about. Rolls-Royce, Airbus and
Siemens are joining forces to put the hybrid plane in the sky. The companies are calling it the E-fan x and could be flying by 2020 and go
into service ten years later.
The test model is based on a regional jet, the bae 146. You know the 146. It's got the over-wing engines, makes funny noises when the wheels come in.
Only one of its engines will be electric initially, thank goodness. Frank Anton is head at eAircraft at Siemens in told me this technology is similar
to that that is found in cars.
(BEGIN VIDEOTAPE)
FRANK ANTON, HEAD OF E-AIRCRAFT SIEMENS: It is the same concept. All the time and works on fuel. The turbine, which is generating the electric
current of the cruise flight can be much smaller than a normal plane. But during the phase when the plane needs a lot of energy, which is the takeoff
and the climb phase, that takes about 20 minutes, 30 minutes, during that phase, additionally to the energy which is created with the turbine, the
batteries add the energy.
This is the hybrid electric concept. And this is the basis for this.
QUEST: Batteries, batteries, batteries. That is going to be a challenge here isn't? To create an engine that does not require so much weight of
batteries that the thing can't get off the ground.
ANTON: Actually, there are three challenges.
[16:50:00] Number one, we have to create electric machines which are a factor of 10 more powerful, 10 times more powerful with the same weight as
before. Which industry never and we did it for the first time.
Second challenge is the certification of the aircraft. And third challenge is we have to get on programs, on big programs, where really hybrid
electric planes will be built.
(END VIDEOTAPE)
QUEST: Now, they have the venue. Prince Harry and Meghan Markle must plan the rest of their wedding and of course decide who to invite. That is a
politically difficult bit. It is a task full of political pitfalls. We shall go into it in great detail after the break.
(COMMERCIAL BREAK)
QUEST: Ahh. The beauty and the splendor. The venue is set. Prince Harry and Meghan Markle will be wed here at Windsor Castle in May of next year.
It is only six months, and the couple has plenty left to plan. Well, think about.
You got the reception, the clothes, and crucially, who should you invite? Who -- I mean, you've got various lists. The musts, the maybes, the could
dos and the no's we don't want but we have to.
Mark Niemierko has planned weddings for Premier Football League and celebrities, joins me now. So, on this occasion, there are those that you
have just got to invite. And you don't really have much choice about it, do you?
MARK NIEMIERKO, CELEBRITY WEDDING PLANNER: For sure, Richard. I think more so, with any royal wedding, obviously, there's a massive national but
also international interest. So, they can't be, you know -- they've got to fulfill certain protocols. However even though St. George's Chapel can
hold 800, that might seem quite extreme for most of us, it's still quite an intimate number for a royal wedding, looking back at William and Catherine
that was 2000, and I think Charles and Diana is even more so at 5000. So, Yes.
QUEST: The Royal Family is going to be paying the bill for this. You know, what would you expect that bill to look like?
NIEMIERKO: So, an average wedding that I would plan, which is an above average say London U.K. wedding is on average a 250,000 upwards to half a
million. It really depends on the scale that they go to. You know, in some instances, with some of those weddings, the dresses alone, you know,
an average of 25,000 if not 100,000.
So, it really depends on the scale that they'll go to. I think it's more so the evening part and the dinner and the party that we don't necessarily
get to see much of.
[16:55:00] QUEST: Right. You won't necessarily -- but they won't necessarily have to -- they've got the staff. They've got the venue. They
don't have to rent a place. The booze they have to buy. The food they've got to buy. Security will probably be picked up by the U.K. government.
But you're still looking at over half a million, you would say, for this wedding.
NIEMIERKO: Oh, easily. If not millions.
QUEST: Really?
NIEMIERKO: More so, because of -- because of the state occasion. But also, I think, our choice of venue is really interesting in the sense they
have chosen Windsor. Shutting down London costs a lot more money, as we would know. But Windsor will be slightly relatively easier. But there
will still be a huge interest, huge obviously press interest. But more so public descending on Windsor.
QUEST: How to make it classy? How to give it that element, but at the same time recognizing, yes, he's fifth in line to the throne so unlikely to
happen, so it can be less formal, more fun. But you don't want it to be vulgar.
NIEMIERKO: Of course. But I think more so, as I say to all my couples, is to just stay true to yourself. Don't need to follow a formula, don't
follow the latest trend. Be yourself. And I think we're already seeing that with Harry and Meghan. In how they spoke yesterday. The fact that,
you know, it could be -- it's going to be 800 or less people attending the ceremony.
QUEST: Good to see you. Quarter of a million to half a million. I'll send you an e-mail when I'm ready. Thank you very much.
NIEMIERKO: Thank you.
QUEST: Profitable Moment after the break. I seem to have left my wallet at home.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment recorded a three-ring circus going on so what is going on in Washington at the moment. Whether it's the
government shutdown on Capitol Hill or indeed the tax debate taking place with the Senate. But then you also have the other side, which is North
Korea, launching its missiles, and you start to see the very delicate nature of both geopolitical situations and markets.
Take a look, and you see the two sides of this here. You've got obviously Congress, which is grappling tonight with the tax plan in the Senate. But
then you've got the Dow Jones, and around about 2:00, you see that little dip down. That is when the North Korean Missile launch happened. But the
market recovers again.
The moment it becomes clear that the tax plan has passed the Senate budget committee. Pulling this together shows how difficult the next few weeks
are going to be. And the precariousness in many ways of the markets. We have to watch and wait to see whether the resilience is what Trumps the day
over, for example, natural volatility born out of uncertainty.
And that's QUEST MEANS BUSINESS for today. I'm Richard Quest in New York. Hours ahead, I hope it's profitable.
END
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