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Quest Means Business
German Chancellor Gives Update On Coronavirus; World Economies Launch Giant Stimulus Package; E.U. Leaders Give Update On Coronavirus; E.U. To Close European Borders To Outside Travelers; S&P Global: Virus Has Led To Global Recession; IATA Asks Governments For Broad Tax Relief; U.S. Stocks Rally On Coronavirus Stimulus Plans. Aired 3-4p ET
Aired March 17, 2020 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:48]
RICHARD QUEST, CNN INTERNATIONAL ANCHOR: I'm Richard Quest. Breaking news. Angela Merkel is now speaking. Let's listen in.
ANGELA MERKEL, GERMAN CHANCELLOR (through translator): For most, it is about the protection of citizens, medical care for citizens, but also we
will attempt to minimize the consequences for the economy. All have confirmed that they are prepared to do what is necessary and Germany is
part of that.
Before we heard a video conference between Erdogan, Macron, Johnson and myself, we talked about the situation in Syria. I believe it was quite
useful, this conversation. It was about the humanitarian situation in Idlib and also our possibilities to help.
Germany has 25 plus hundred million euros for this aid. It needs to get to the people very quickly. We welcome that there's a temporary ceasefire, the
Turkish President informed us about the joint groups. And informed us about the traffic there in Idlib.
The political process, we agreed will need to be continued that we also talked about NATO, the Turkish President expressed the wish, of course to
be a member of NATO. We welcome this.
There are political differences, and today was a good opportunity to discuss differences.
We also talked about immigration --
QUEST: Chancellor Merkel there. We've already -- she's already put forward her economic suggestions and proposals. CNN's Fred Pleitgen is in Berlin.
What did she say? What was the gist of what the Chancellor said?
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes. Hi, Richard. Well, I think there's two things that really stand out in that are
going to be very important here, not just for Germany, but generally for Europe.
One of them economic, and the other one that has to do more with the health situation. One of them is that the European Union or the European countries
are going to institute essentially, a travel ban an entry ban on people coming from outside the European Union area. Also the U.K., they are still
going to be allowed to go to Europe.
So anybody coming from non-E.U. and not the UK is not going to be able to enter into the European Union anymore. The important thing with that is
Richard, that's something that the E.U. nations still have to officially put into place, but the Germans are going to implement that immediately.
So you can reckon that a lot of flights coming from outside E.U. areas are not going to be able to make that trip to airports, like for instance,
Frankfurt or Munich.
The other thing is Richard, as you know, this is the biggest exporting and one of the biggest industrial nations of Europe. They apparently also
talked about -- Angela Merkel talked about this as well is that the free flow of goods needs to be ensured, she said.
They said that there have been a lot of issues over the past couple of days at inter-European borders that have essentially closed or restricted those
borders, and with a lot of pile ups of trucks happening there, a lot of big traffic jams.
I actually witnessed some of that just yesterday, when I was at the border between Germany and Poland -- very difficult for those trucks to get
through.
The Germans specifically, are very keen to make sure that those processes are streamlined, they say to the German economy, but generally to the
European economy, which of course is so integrated. That is something that needs to change.
And apparently, countries like for instance, Poland and others have said that they want to streamline those processes, not just for the free flow of
cargo and for trucks, but also for people having to get across the borders because of course, as you know, in many European countries, there's people
who live in one country, but work in another country, which of course during times when the borders are open is not a problem, but right now, it
does become more difficult.
[15:05:02]
PLEITGEN: So for the Germans, they're saying they want the economic impact of the corona crisis which they know is going to be huge to be minimized as
much as possible and they said the free flow of goods which of course is a centerpiece of the Schengen area and the European Union that needs to be
insured -- Richard.
QUEST: But Fred, tonight, are we looking at sort of a suspension almost of Schengen? I know that the Chancellor was talking about flights from non-
E.U. ex-U.K. going into to Europe, but as countries within the E.U. start to close their own borders. How Schengen become unworkable for the time
being?
PLEITGEN: That is -- that's a big question. You know what there are politicians here in Germany and other European countries who are
questioning whether Schengen could return or whether or not this might indeed spell the beginning of the end of Schengen and for the free flow of
people and of goods across European borders.
You're absolutely right. Of course, a lot of these European countries have unilaterally closed their borders or at least severely restricted those
borders. You can still get across under certain circumstances, but it has certainly become a lot more difficult.
It seems as though the negotiations that Angela Merkel had today, other European leaders had that today and there's going to be more negotiations
coming tomorrow as well, are also aimed at saving Schengen as well, because of course, one of the things that makes things difficult is if that these
countries cannot get on the same page, as far as the free flow of goods, for instance, is concerned.
If there's big issues of getting that in place, and if in fact, maybe at some point, other countries don't want to go back to opening their borders
completely.
So I think that a lot of European leaders, the Germans specifically because of course, they profit so much from their exports and from free play here
in Europe, they want to make sure that things go back to normal once this crisis is over and that Schengen doesn't fall by the wayside, which I think
a lot of European leaders believe is a very, very real danger -- Richard.
QUEST: Fred Pleitgen, who is in Berlin tonight. Fred, thank you.
Now, let me update you in the world that's already unrecognizable from the one that you and I were in just a week or so ago.
The attempts to save the global economy are well and truly underway. The world's largest economies are launching extraordinary stimulus packages in
some of the biggest aid packages since the Second World War.
In the US, for instance, the White House is working with Congress. It's a package that could inject a trillion dollars into the U.S. economy.
The Treasury Secretary says that President Trump is looking at sending checks to Americans, and that would happen almost immediately.
In Europe, Spain, has put together an aid package worth more than $200 billion. The French President has already promised that not a single
company will face bankruptcy, and within the last couple of hours, the British Chancellor of the Exchequer announced around $400 billion worth of
loans to businesses.
Rishi Sunak who has been in the job for 33 days said Britain would do whatever it takes.
(BEGIN VIDEO CLIP)
RISHI SUNAK, BRITISH CHANCELLOR OF EXCHEQUER: This problem will not be overcome by a single package of measures or isolated interventions.
It will be won through a collective national effort. Every one of us doing all we can to protect family, neighbors, friends, and jobs.
This national effort will be underpinned by government interventions in the economy on a scale unimaginable only a few weeks ago.
(END VIDEO CLIP)
QUEST: To Wall Street and volatility is raining, there are two distinct peaks. Julia Chatterley is with me. Julia, while we look at these, let's
comment, because what's happened is exactly -- I'm not sort of saying I told one so, but it's exactly what I thought was going to happen.
That first peak at 11 o'clock was the Fed coming in to buy commercial paper, it dissipated and evaporated. The second peak came after the
stimulus package, that too, seems to be dwindling. What's happening?
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: We're recognizing and investors are recognizing Richard, that for all the tweaks that we're seeing here and
what we're hearing from governments arguably is more than tweaks. It's not enough.
The scale of what we're seeing is not enough, and you and I have been saying, on a daily basis, throw out the rule books, throw out the models.
We don't have a model for a global economic sudden stop, and that's what we're looking at.
And it's not even just about that. It's about the speed upon which this is happening.
So we're talking about temporary workers, salaried workers, simply in the next two to three to four weeks being told, look, we've got no job for you
to do and it's going to happen on a global basis.
So the idea that you've now got the U.K. government stepping up and saying, look, we're willing to chuck the equivalent of -- what -- 15 percent of GDP
at this problem is good.
Rishi as you heard there, he gets it. This is unprecedented.
So when you're talking about an $850 billion stimulus package from the White House, great, but guys, it's not enough. The equivalent to what the
U.K. in Germany is saying that they're doing here is three, four, five trillion dollars.
[15:10:26]
CHATTERLEY: So, Richard, to circle back to where you began, until we start to see policymakers in the United States talking about these kinds of
numbers, and really, really quickly, I don't think you're going to see a measure of relief.
The Federal Reserve is tinkering around the edges. It's not enough.
QUEST: Okay. So immediately, which way does it move forward? Because I can sketch out any one of a dozen scenarios. But surely, it all depends on the
direction of the virus.
I mean, this idea of containment versus mitigation. Now everybody has gone to containment, which means brick wall stopping of the economy for
understandable reasons.
CHATTERLEY: Absolutely. And the critical question you're asking, Richard has only one answer at this stage. We don't know.
So we don't know whether this is going to be a four-week, a five-week or six-week or a seven-week issue. Looking at the lockdown measures that we
continue to see in in the West, we've seen in Italy and it's incredible what we've seen in the space of two weeks and we're coming there.
QUEST: Let me just interrupt you because I want to get on that point. Sorry, forgive me, but --
CHATTERLEY: No, please.
QUEST: But how close always to a seizing up of the financial network? Today's Fed move was the equivalent of lubricating the wires, the cogs of
the commercial paper, because trust was starting to dissipate, but how close are you hearing that we might actually be to a seizing up of
financial networks and procedures?
CHATTERLEY: So that's a great question, separate health crisis, economic crisis and then the plumbing of the financial system.
Richard, I can tell you that what I was hearing was already big companies were having issues this week rolling their short term, unsecured paper,
which is commercial paper, which is why in this space, and I'm surprised by the speed here and also impressed, the Federal Reserve --
QUEST: Sorry -- I'm sorry, Julia.
CHATTERLEY: Go on.
QUEST: We've got to go to Brussels. E.U. leaders are speaking. Forgive me.
CHATTERLEY: Please.
QUEST: Thank you anyway. Thank you.
CHATTERLEY: No worries.
CHARLES MICHEL, EUROPEAN COUNCIL PRESIDENT: We affirmed the need to work together and to do everything necessary to tackle the crisis and its
consequences.
On the four priorities identified, first, limiting the spread of the virus, we endorsed the guidelines proposed by the Commission on Border Management.
We need to ensure passage medicines, foodstuffs and goods, and our citizens must be able to travel to their home countries, and to create solutions for
cross borders workers will be found.
To limit the spread of the various globally, we agreed to we enforce our external borders by applying a coordinate temporary restriction of non-
essential travel to the E.U. for a period of 30 days based on the approach proposed by the Commission.
The second item, providing medical equipment. We will turn to the decision taken by the Commission to adopt a prior authorization for export of
medical equipment, and we support it. The Commission efforts to engage with the industry to one, join public procurements and to purchase of protective
equipment through the Civil Protection framework.
This second item is very essential. We need to make important progress in the next days and in the next two weeks on this important topic.
The third topic promoting research. We encourage the efforts made to support research such as the advisory group on COVID-19, and we stressed
the need to share information and to develop a vaccine and make it available to all those in need.
We invite also the member states and the commission to support European companies in that respect.
The fourth point tackling socioeconomic consequences. We endorse the Euro group's statement and invited the Euro group to continuously and closely
monitor, economic and financial developments and to adapt without delay a coordinated police response to the rapidly evolving situation.
And we support the various initiatives taken by the Commission in the areas of the single market such as the adaptation of the state aid rules, and the
use of the flexibilities provided for in the Stability and Growth Pact and Recourse to the E.U. budget.
[15:15:06]
MICHEL: The Union and its member states will do what whatever it takes to address the current challenges to restore confidence and to support a rapid
recovery for the sake of our citizens.
The fifth point is also very important and it is highly representative -- was also present and active for this video conference.
We committed to coordinate among our embassies and the E.U. delegations in their countries and the high representatives and the European external
action service with support in this regard, we will jointly arrange repatriation of E.U. citizens when necessary and possible and make use of
the Union Civil Protection mechanism.
Additionally, E.U. funding for such joint operations will be mobilized.
So then we'll see --
MICHEL (through translator): I would like to add that we also agreed that we will be meeting again next week as a video conference.
So in other words, the European Council that was physically due to take place on Thursday and Friday in Brussels will not be happening once again
next week, we will have a video conference of heads of states of government.
I wanted to say after virtually three hours of video conference, the message that we want to give you is that we are rallying together that we
are faced with a serious crisis, an exceptional one in terms of magnitude and nature, and very intense work has been carried out with the member
states, with the European Commission over the last few days.
And we want to move ahead together. We want to meet the same objectives together. We want to push back this threat. We want to slow it down as far
as possible, slow down the spread of this virus, and that is why all the member states have taken very strong measures in order to reduce the
movement, reduce travel, so that we can push back this spread, this contamination and also to take the pressure off the health services.
I think that the first top priority is that we have to mobilize our efforts for the health of our citizens and we will be very determined when it comes
to addressing economic and social consequences, but health is going to be key.
Everything is going to turn around that over the coming days and looking at also the economic and social consequences as I said. Thank you.
URSULA VON DER LEYEN, EUROPEAN COMMISSION PRESIDENT: It was indeed very good to see how the Member States strongly endorsed the package we have
brought forward over the last days. It's the package on borders, the package on the economy, on the joint public procurement we have and of
course, including the research part.
So it was good to see that was full approval on the side of the Member States.
To go into a few of these topics more deeply. Indeed, one of the first topics was the implementation of the temporary entry restrictions on the
external borders.
So we got a lot of support by the Member States. It's up to them now to implement. They said they will immediately do that, this is good. So that
we have a unanimous and united approach what the external borders are concerned. There was a lot of approval with our proposal is concerned.
A big topic today were of course also the internal borders and consequently, the blockages there and here, it is absolutely crucial that
we unblock the situation, because we know that too many people are stranded within the European Union and have a problem to go back home. They have to
be supported to go back home.
And of course, we have a lot of traffic jam of lorries transporting goods. The flow of goods has to be swift. We need these goods for the functioning
of the internal market.
And therefore there was a broad welcome concerning the guidelines we issued yesterday that were discussed yesterday in the Council of the Ministers of
Internal Affairs. So a big approval for the so called Green Lanes, Fast Track Lanes, mainly for the flow of goods.
But we have also to make sure that the commuters can go back and forth where they live or where they work. There was an impressive example from
Luxembourg, who the Prime Minister of Luxembourg said very clearly that's for Luxembourg essential that they have the commuters coming back and forth
because the majority of the health workers in the hospitals are living either in France or in Germany and have to commute swiftly and it cannot
take them hours to go to work or back home.
[15:20:13]
VON DER LEYEN: So it's important that we fix that situation here, same goes for the lorries. My commissioners are in constant contact with the
respective ministers of the different Member States that we solve that.
Now, we have the guidelines. There was approval for the guidelines, and they have to be implemented now.
One point that was very positive, we had been asked to set up a group of experts, virologists or epidemiologists to give us advice and we had the
first meetings and it was good to see that they fully approved in their recommendation what the measures for determined social distancing is
concerned.
So it is absolutely correct on this evidence-based and scientific based approach to have these measures to slow down the spread of the virus, to
make sure that we have no public gatherings, that universities and schools are closed, that entertainment places are closed, because we want people in
this case not to have contact with each other so that we can reduce the speed of the spread of the virus and therefore reduce the pressure on the
health sector and the patients that have to be treated.
We launched today, public procurement for gloves and masks and yesterday for respiratory ventilators. Twenty four Member States are participating.
That is good.
The companies have now six days to tender and then the Member State can immediately sign up the contract the day after the tender is closed within
the next six days.
We are working also with the industry throughout Europe to ramp up the production of these scarce goods. So concerning the personal protective
equipment, but also the ventilators that are desperately needed.
And finally, on Friday, indeed, we launched a strong economic package. This tool was unanimously endorsed by the Member States. Friday feels already
quite a while ago, because since Friday, we see that things have gotten even more serious, the situation has worsened.
The economic situation is extremely serious and therefore, all the measures that have been taken on the health side which are correct to contain the
virus, we see that they have a huge impact on our economy.
This is an external shock and it hits the whole world. We have never had that before. The enemy is a virus. And now we have to do our utmost to
protect our people and to protect our economies.
Since last Friday, we are working on all fronts to deliver on the ground. First, we are right now finalizing the new temporary framework for state
aid that will provide very high flexibility to Member States to support for example, their companies.
Second, it was good to see that yesterday the Euro group welcomed our readiness to activate the general escape clause. We're working on it and
we'll come forward with a proposal to the Council in the next days.
And let me stress once more, we are ready to do everything that is required. We will not hesitate to take additional measures as the situation
evolves. Thank you.
MICHEL: We'll take a couple of questions in the room and we've received a lot of questions, of course, virtually, but first. Yes, POLITICO. We'll
take a question from you.
SARAH WHEATON, WHITE HOUSE REPORTER, POLITICO: Sarah Wheaton with POLITICO. President von der Leyen, today, you posted a video on Twitter talking about
aid to a company working on a vaccine for coronavirus, and you said, "I hope that with the support we can have a vaccine on the market perhaps
before autumn."
Regulators and public health experts in both the U.S. and Europe have consistently said it will take at least a year to a year and a half to have
a widely available vaccine. And that's even speeding up the normal regulatory process.
So what makes you think there is a possibility that we would have a vaccine by autumn? And is there a responsibility for Commission officials like
yourself to maintain realistic expectations in the public?
VON DER LEYEN: Yes, the fact that other countries tried to buy that company show that they are the frontrunner in the research, highly acknowledged and
they are working on a pattern that has already been approved and gone through specific processes that are necessary.
[15:25:14]
VON DER LEYEN: So they are highly specialized in this field and it's their prediction that they might be able towards fall to have the possibility to
have a vaccine that is fighting coronavirus.
It was very important for us. It's a European company. We wanted to keep it in Europe. It wanted to stay in Europe. It was very important to give it
the necessary funding and that has happened yesterday when we had this conversation.
WHEATON: With all due respect, I asked them and they said that they acknowledge the process usually takes years. It would be up to regulators
to speed it up. Have you gotten any guarantees from regulators? Can you give us any specific information about what is leading you to make a
prediction that differs from regulators?
VON DER LEYEN: Yes, I think as we are under severe crisis, we all see that we are able to speed up any of the processes that are slow normally and
take a lot of time and are very bureaucratic.
We all know, it goes for the public procurement for example, right now, too. We have processes that normally are slow, are difficult, but we have
the means to speed them up.
And hereto, I think if we focus on the essential, we're talking about a crisis that will not only affect heavily the European Union, but we know it
will spread throughout the world. And just imagine that it goes into other regions of this world, what it means to have a potential vaccine, so this
is of utmost importance for us.
MICHEL: Yes, next question.
THOMAS GUTSCHKER, FRANKFURTER ALLGEMEINE ZEITUNG: Okay. Thank you. Thomas Gutschker, Frankfurter Allgemeine Zeitung. Question to the President of the
Commission. Have you received any assurances today from the Polish government that is going to change its policy at the border? Specifically
stopping people from the Baltic Republics that want to cross through?
And have you received assurances from any government that with the closing of external borders, they are willing to take back some of the unilateral
controls they have introduced in the Schengen Area these past days. Thanks.
VON DER LEYEN: We had a good discussion with the member states on the problems at the border, also specific borders and Member States. It was
good to hear that I had several phone calls with the Polish Prime Minister, and it was good to hear that he said to the Member States that they are
working at the moment being first of all on the fast track on the green lanes and to make sure that there is a corridor that is important for the
lorries and that they are working hard also, on giving assistance to the people that are stranded on the German side.
For example, people coming from Estonia or Latvia or Lithuania, so that they can go through in a corridor through Poland. So it's absolutely
necessary that something happens, but I'm positive that there will be movement and a positive change over the next days.
QUESTION: I have a question.
VON DER LEYEN: And yes, this --
QUESTION: -- reassurances (INAUDIBLE).
VON DER LEYEN: Yes. I think it is important now to implement the regime on the external border. I told you and you said it too that we have an
intensive discussion about the internal border measures that are hampering not only the single market and our economy, but also difficult for the
labor market for example, with those who are commuters and we have published the guidelines. The guidelines got a lot of backing.
So I think the first step will be that we ease the tension in those regions where internal borders have been below measurements have been put up in
general so that they are more flexible and they are more targeted on leading the way to the flow of goods and those people who have to cross the
border urgently.
But I think it will take quite a while still until we reach the lifting of the internal border. It was an intensive discussion. I think it was clear
at the end of the discussion that we have to be very careful with our single market.
[15:30:10]
And this is the most economic -- economy -- in the economy, it's the most precious instrument we do have. So it's of utmost importance that we keep
it going and keep it up because it is of essential importance, mainly being in such a crisis as we are right now.
UNIDENTIFIED MALE (through translator): I have a couple of questions in French, perhaps for the president of --
QUEST: That is the press conference of the European Commission President and the council -- the council president and the commission president.
Nina dos Santos is in Downing Street. Nina, you are listening to that. The issue seems to be besides the economic measures, the issue seems to be the
border. Now they've agreed to close down the external non-Schengen border. Let's put the U.K. to one side for the second, but they're still bedeviled
by the problem of what to do within the Schengen region.
NINA DOS SANTOS, CNN CORRESPONDENT: Yes, this is a massive crisis for Europe, it's essentially having to try and make sure that it stands up for
what it's supposed to stand up for, which is cooperation at a time when countries are hunkering down and closing off their borders.
Like for instance, Poland, you heard the last question that was asked specifically to the European Commission President Ursula von der Leyen
saying, well, have you been having conversations with Poland to try and get them to change their mind.
Poland for instance is the classic example of why this is so important not just for free travel. We have European Union citizens stranded in some
parts of the E.U. that can't get back to their families on the other side of the border.
But also, let's take for instance, the German economy from where Ursula von der Leyen hales used to be the German Defense Minister. Big carmakers like
Volkswagen, make cars in some of these countries that are on the other side of the German border like Poland, also Slovakia.
Volkswagen today, just as an example, said that it was going to be shutting down its European production in large parts of the E.U., Spain, Portugal,
also Germany and Slovakia.
So the real concern here is on the one hand, it's political. It's about making sure that people can continue to move. It's about shoring up the
single market as well. And it's about shoring up the belief of Europe being one project of cooperation.
It also comes at a time after Brexit. And we know now today that when it comes to those Brexit negotiations with that hard deadline at the end of
this year, well, they're going to have to pause as well, because both sides can't have interaction with each other. It's just too risky at the moment,
Richard.
QUEST: Nina dos Santos in Downing Street. We'll talk more about the British response later in the program. Let's take a break. This is QUEST MEANS
BUSINESS live from New York.
(COMMERCIAL BREAK)
[15:35:29]
QUEST: President Trump says the economy will pop when the crisis comes to an end. For now, the S&P global is warning the whole world is in recession.
The agency says the economic damage is about to get much worse in Europe and the United States. S&P's Chief Economist says the initial data from
China suggests that its economy was hit far harder than projected, though a tentative stabilization has begun. Europe and the United States are
following a similar path. And the recession fear is prompting the Trump administration to act.
The U.S. Treasury Secretary says the administration is working to send checks directly to Americans within the next two weeks. Steven Mnuchin
(INAUDIBLE) says taxpayers could defer some payments for 90 days. And the Treasury Secretary has confirmed he's pushing a stimulus package worth $1
trillion.
Let's talk about the recession impact in the United States, Michelle Meyer is head of U.S. Economics at the Bank of America. She joins me now from New
York via Skype.
I think since we last spoke, it is somewhat academic to talk about whether there will be a recession or not. I've guess the only question now is how
long and how deep?
MICHELLE MEYER, HEAD OF U.S. ECONOMICS, BANK OF AMERICA (via Skype): I think that's right. And it's really amazing how quickly things are changing
every day, every hour, almost every minute, we're getting more information about how the virus is spreading and how the economy is reacting to that.
So yes, it seems very much the case that the measures that are being taken now while they ultimately hope will end up being quite helpful in terms of
stemming the flow of the virus. In the short term, it certainly means it's going to be a very, very weak economy in the near term.
QUEST: Of all that you have heard, economically, which is likely to be the most effective? Because obviously, the headline is the helicoptering of
money to everybody in their paycheck or sending a check to everybody. But the evidence of that from Australia, well, it wasn't as successful as
perhaps they'd hoped it might be.
MEYER: Yes, so I've been in the view, and we've seen that historically as well that the more targeted the fiscal response is, the more impactful it
will be.
So sure, helicopter money spending -- you know, giving everybody a check, it helped. But it really only makes a difference for those individuals that
are budget constraint.
So to me, the best thing that we could do is to try to help those that are going to be hit the hardest from the coronavirus and the economic fallout
from it.
So those people that are hourly workers in the hospitality, for example, or in restaurants that won't be going to work, won't be receiving a paycheck
or if they are, it's going to be a lot smaller than it was before, those individuals that don't have paid sick leave. And some of the policy
responses are specifically (INAUDIBLE) which it can get really encouraging.
QUEST: But to that -- to some extent that alleviates the worst effects for those most affected. But if you're talking about a need to stimulate the
economy overall, to counter the effects of this, then what would you prefer, a payroll tax cut? And we -- I mean the Fed's just out on lowering
interest rates. What is the most effective general stimulus for the economy?
MEYER: So here's the response. It has to be multifaceted and it has to be timed properly. So the first order effect is to make sure the financial
system is up and running, which the Fed is attempting to do.
Now with most recently, the commercial paper facility in trying to keep that flow of credit going. The second order effect has been from fiscal
(INAUDIBLE) which again is to help the people who are being hit today and being hit the most hardest in a budget constraint.
And then that third order effect is to make sure that once you get assets and we're at that other side, that businesses can seamlessly reopen and
that people can return to their normally functioning lives.
QUEST: Michelle, we always appreciate it. Thank you for taking time from there to talk to us. Thank you.
Now there are dire warnings about the effects of coronavirus, the aviation industry is particularly badly hit.
United Airlines says the financial impact of this crisis on our industry is much worse than the stark downturn that we saw in the aftermath of 9/11
attacks. That was sent in a letter from United and its management and workers to Congress asking for help. Treasury Steven Mnuchin has echoed the
sentiment at the White House.
[15:40:05]
QUEST: Now, Jeffrey Goh is the chief executive of Star Alliance, he joins me via Skype from Frankfort. Jeffrey, good to see you, sir. Thank you.
And we can -- we can -- we can short circuit to some extent the discussion here by agreeing that the aviation industry is the worst affected. How bad
do you think it's going to be from your members?
JEFFREY GOH, CEO, STAR ALLIANCE (via Skype): Good evening, Richard. Good to see you again. Thanks for having me.
Well, Richard, I think the hard reality from which we cannot hide it as it is going to be pretty bad, not just for the Star Alliance members, but
certainly for the entire industry. This is the biggest and worst crisis that the industry has witnessed that is unprecedented. The impact is pretty
brutal.
Already for our members, we are looking at 15 percent down in capacity just for March and the outlook is really not very promising. You know, as much
as I would like to have a crystal ball, it is really difficult to predict what the -- you know, six to nine months looks like for the -- for the
members.
QUEST: OK, what is it you want because the three alliance as Star, OneWorld and SkyTeam, you all came together and you actually wrote a letter
collectively, which is in itself is an achievement. And but what is it that you actually would like governments to do? You've got the slot alleviation,
so you've got some slot relief in term there, what's next?
GOH: Well, I think first and foremost, Richard, we need to understand as you will acknowledge that -- you know, this crisis has a great impact on
social and the economic fabric, it has been devastating.
And I think it's quite inevitable that -- you know, government and state support will need to be provided across sectors and across a spectrum of
societies.
You know, measures such as, as you say, usage of slots which some authorities have come forward to provide relief, but there is still a long
way to go. Relief from airport charges, navigation charges, relief from aviation taxes and passing duties.
And equally important, though, direct or indirect financial aid to support the industry in relation to the employees. So that when confidence returns
for travel, the industry will be there to provide for the demand.
QUEST: It's a thorny subject and I realize that the world today is not the world of two weeks ago or when this crisis happened. But was it wise for so
many airlines to go on share buybacks sprees, rather than perhaps making greater provision?
I accept sir that nobody could have made provision for this particular environment, but it does state -- it does speak to a state of mind.
GOH: Well, Richard, I think, you know, we can always be wise after the -- after the event. But this particular crisis, the coronavirus crisis is
really unfolding as such great speed, that what was yesterday isn't quite what will be tomorrow.
But you know, the reality is the airlines have to run their business model, which the aviation industry in itself is a lifeline for global commerce and
social connectivity, right? The industry carried over four billion passengers last year, and that's more than half the global population.
And, you know, the industry has to find itself in a -- in a sustainable way as far as it can, but no one could have predicted the way in which this
particular crisis has unfolded so quickly.
And not just for the aviation industry, but -- and beyond the travel industry, the hospitality industry, the restaurant industry, the retail
industry, so many facets of the economy have been affected in such a fast pace.
QUEST: Of the Star 26 members of Star Alliance, do you fear for the survivability of any of your members or any of your members in what one
might say is existential crisis and could fail?
GOH: Well, I think, Richard, you've seen the figures being predicted. You know, just only a week or two ago, the industry is predicting a --
predicting a revenue loss of over $100 billion. And there's no doubt that the road ahead is going to be very tough and there will -- there will be
recovery ability that will be differentiated between airlines, within Star Alliance and beyond Star Alliance. Some are going to be better position and
some are going to be less better positioned.
And there might well be the likelihood that some will not make it through. Given the criticality of which this is real challenges for many of the
airlines. And it is a serious -- a serious threat.
QUEST: One thing I noticed, I mean -- I mean, let's take the Lufthansa Group, two airlines of that group, Austrian and now today I see Brussels,
both grounding the fleet effectively switching off the lights for the time being.
[15:45:12]
QUEST: Would you expect -- will Star, OneWorld, the whole industry, do you expect that it's going to get to the case where each group and each airline
says, you know, we're better off just grounding the fleet, shutting off the lights and waiting till this is over? Do you expect more airlines to stop
flying temporarily?
GOH: Well, I think that is a great likelihood, Richard. If you look at the last -- just in the last 48 hours, successive announcements from Austrian
Airlines, Brussels Airlines, LOT Polish airlines, SAS and New Zealand, EgyptAir even today announced that they will also be shutting down.
And you know, the magnitude of the severity is quite quite significant, it's undescribable. I do expect that if not a complete cessation of
operations, a significant amount of operations are going to be reduced for many of our members still become.
QUEST: Jeffrey --
GOH: But we're in this together, Richard. I think the industry needs to recognize that we're in this together, coordination, cooperation,
transparency is ultimately the most critical part of these airlines, airport, stakeholders, governments. We're in this together and we should
come out of this stronger together at the end of it.
QUEST: Jeffrey, always glad to talk to you, always grateful, and we'll talk more as this continues. I appreciate it, sir.
And we need to just quickly look at the markets and how they are trading. I always look at what's happening there, there's peaks and troughs. First
peak is when the Fed announces its buying commercial paper. The second peak is the Fed -- is the Treasury and the gov -- the administration announcing
its stimulus package, or at least what it's thinking of.
And this third peak in the afternoon is heading towards the close. And we're starting to see a bit of buying in a bit of weakness, a bit of -- bit
of strength, I should say. But it can't alter the fact, all three of the indices led by the S&P indeed is now in a bear market. The NASDAQ having
the worst of the day and -- or so far. I'm sorry, the best of the day, I should say so far, up six percent. This is CNN.
(COMMERCIAL BREAK)
QUEST: So the European Commission says it will ban travel from outside the E.U. and the European Tourism Association says it expects business to fall
by 50 percent this year and that was before the travel bans were announced.
[15:50:05]
QUEST: Tom Jenkins is CEO of the ETA, European Tourism Association, he joins me via Skype from London. There's another number I want to put to
you, Tom. (INAUDIBLE) the International light -- Nightlife Association says globally, at least around about $271 billion as a result of the shutdown of
bars and clubs. And this is devastating and it's going to get worse.
TOM JENKINS, CEO, EUROPEAN TOURISM ASSOCIATION (via Skype): And it is devastating. Now you're looking at the complete disappearance of the -- of
the fabric that makes up urban life in Europe and I think you will see very shortly in America as well.
And you're based in New York, I'm in London and London is starting to look like a ghost town. Things are still open but the theaters are shut. The
museums are closing and the shops are struggling really hard. We are --
QUEST: So --
JENKINS: Sorry.
QUEST: If we accept that these measures -- and for the purposes of this question, please accept the premise, these measures are necessary on the
health side of the equation, you've got nothing else really to do other than waiting it out. But what do you want government to do of all
persuasions across Europe once things start looking up?
JENKINS: Well, I mean, they've got to try and re-instill confidence. We don't know what that involves, because we've never seen a loss of
confidence like this.
And the weird thing is that when we compare it to previous scares, such as the terrorist scares that people refer to 2001 and '91. These collapses in
confidence were largely triggered by nugatory threats, and you almost had a moral obligation to ignore them. Here you don't, you got a huge scare from
the government that you need to stay at home, you need to avoid going out, you need to avoid effectively spending money. And this is -- this is what
we've been seeing.
QUEST: So what do we do in a case of a restaurant like in New York or in Paris or in where they've all been closed on Rome or whatever? Suddenly
your income stops overnight in a second, but your expenses, your rent, even if you lay off the staff, unfortunately, you've still got your rent and
your rates and you (INAUDIBLE). The only people who can offer relief from that is government.
JENKINS: I think the only thing they can do and the only thing they can do is not offer loans, they have to offer grants. You can't stay in business
if there is no business to stay in, and suddenly lots of people, a huge quantity of businesses are suddenly finding that that's what they're
confronting.
And my members whose job it is to sell Europe, in North America and elsewhere in the world. Well, they haven't got a product and they haven't
got any demand. And so they've got a very, very acute business problem, I think the polite way of phrasing it is.
QUEST: Tom, we'll talk more about this. Please keep your phone close at hand so we can talk to you again in the future.
And now the last few moments of trade on Wall Street. There's a rally, a marginal rally underway. If you look at the graph, you'll see.
Clare Sebastian is with me. Why this last rally of the day, do you think?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Richard, I can only presume that this is something that goes on in the last hour of trading, the moves
that we've seen during the day tend to be exaggerated. Although, I will say that this is very much off the highs that we've seen of the session.
But the pattern that you see today, the up on potential help from the government or central banks coming down is that sort of euphoria fades,
then going up again, that has been replicated on a day by day basis on a weekly basis over the last couple of weeks as the markets have grappled
with this new reality that we're facing. And it is worth remembering that the Dow fell 3,000 points nearly yesterday, this by no means addresses that
decline.
QUEST: Right, there's simply a reason -- you know, you buy on a or the market rallies on a secondary moment of optimism and dissipates just when
they remember, well, really, nothing's changed. And we -- as Tom says in our last interview, the bottom line is we just don't know how long this is
going to last.
SEBASTIAN: We don't, Richard. And you know, we do have Mitch McConnell coming out today saying this might not be the last stimulus package, he
wants to do another one in the Senate.
Government is clearly now sort of being much more aggressive, especially -- you know, not just in this country, but throughout Europe as well.
Governments are really stepping in and that whatever it takes to refrain is something that we're hearing over and over again.
But meanwhile, this isn't something to speculate about anymore. This isn't layoffs in the future, they have started Richard. I've been speaking to
restaurants all day who say that they've already many of them let most of their staff go. They simply can't afford to wait this out.
QUEST: Quick stocks to we look at as we've got a few seconds left. Boeing is once again leading the downward side, down -- it's down another or what
is it, five percent but it's trading at 122. There we have it, down 6-1/2 percent.
[15:55:02]
QUEST: Dow Chemicals, Travelers, Intel at the top of the board where the gain is. I mean, the significant weakness on this down leg of McDonald's,
American Express, Disney, Boeing, all travel related.
SEBASTIAN: Yes, right. So there's a couple of things, there's McDonald's obviously in the restaurant industry that we're seeing closures across
multiple states. Boeing continues to be weak staggering to think this company has lost about -- you know, more than 60 percent of its value since
the middle of February.
And then also we've been watching L Brands, dine and restaurant. L Brands who owns Victoria's Secret and various other retailers. They are down
double digit today, so as Darden Restaurants for obvious reasons. Kohl's as well down sharply today.
And you don't want to be -- they were struggling before this, you don't want to be coming into this on the back foot. Delta of course, for obvious
reasons, down double digits too.
So despite the rally, there is still some significant weakness in this market.
QUEST: Clare, thank you, Clare Sebastian with that. We will take a short moment. Perhaps it feels a bit odd to call it a profitable moment after the
break, but we'll do it anyway. In a moment.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. Today for the first time it really felt like governments had got serious about what they were going to do.
Certainly in the United Kingdom, where 15 percent of GDP is now being made available for businesses and individuals by way of loans and grants on an
simply vast scale and the British Chancellor said there was more to come. It was the same in Germany. France has yet to get the full details.
Here in the United States, the talk is of helicopter money. That's where you'd give everybody something, whether or not it works, or it's a sort of
last desperate gasp. But no one knows really, because it's not been tried that often. Certainly not on a scale of the United States.
Whatever does happen, though, there is a real feeling that finance chiefs and leaders are realizing this is like nothing they've ever seen before.
It's on a greater scale, it's going to be deeper, it's going to be nastier, and it's going to take longer to sort out.
But at least, we are in a reasonably good position to maintain what we've got, and in fullness of time, make a recovery.
However, that's still some way off as we are about to find out. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York.
Well, you know, whatever you're up to in the hours ahead, as always, I hope it's profitable. The bells ringing, today is done. The Dow is up, might be
the best of the day.
[16:00:07]
END
