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Quest Means Business
Opening Arguments Underway In Elizabeth Holmes Trial; Trial Begins For Suspects In 2015 Paris Attacks; U.S. Moving Ahead With Booster Shots This Month; Ousted Afghan President Explains Decision To Flee; Global Markets Fall Ahead Of Key Central Bank Meetings; Bitcoin Continues To Slide As El Salvador Adopts Crypto; BlackRock Sets Up First Fund In China; U.K. Tories Introduce Plan For Multibillion Dollar Tax Hike. Aired 3-4p ET
Aired September 08, 2021 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS: We are an hour away from the closing bell on Wall Street, and U.S. stocks are down across
the board. If you look at the big board, the market is sharply lower. It has been in a bad mood all day and doesn't look like it's going to get much
better anytime soon.
Those are the markets and the main events of the day as follows.
Elizabeth Holmes goes on trial in California as prosecutors say the founder of Theranos lied, cheated to get money.
Anthony Fauci says booster shots are the likely way forward whatever vaccine. I'll have the Chairman of Moderna on this program shortly.
And Afghanistan's ousted President denies that he fled the country with millions of dollars in loot.
Live in London tonight, on Wednesday, it is September the 8th. I'm Richard Quest. And in London, I most certainly mean business.
When it boils down to it, it is three things -- lying, cheating, and getting money. That's the opening argument of the prosecution in the trial
of Elizabeth Holmes. You'll remember, she is the former Silicon Valley executive now charged with fraud.
The founder of Theranos is in a California courtroom. She has been accused of misleading investors. Now just remind yourself, it was her blood testing
company, which she claimed with just a few drops of blood, you will be able to detect all sorts of cancers and terrible diseases. The reality is it was
nothing of the sort, and the prosecution says that the company was valued at $9 billion, it is nothing but a fraud sham,
U.S. government believes the technology never existed. If convicted, she faces 20 years in prison. She has pled not guilty.
A few moments ago, the defense team says she may have been naive, failure is not a crime.
We don't know, although, it's thought and they are suggesting that Holmes herself may testify during the trial. But we won't know that until we get
much later on.
Now, other possible witnesses, I guess not, include Rupert Murdoch, Henry Kissinger, and the former Defense Secretary Jim Mattis. Murdoch was once a
major investor in Theranos. The others, all sat on the Board.
The journalist, John Carreyrou, you whose reporting first exposed the controversy said the trial would have huge implications for Silicon Valley.
(BEGIN VIDEO CLIP)
JOHN CARREYROU, JOURNALIST, HOST, "BAD BLOOD: THE FINAL CHAPTER": I think if she is convicted, then it's going to be a wake-up call for Silicon
Valley and if she is not, if she is acquitted, then I think you'll have Silicon Valley -- you'll have young entrepreneurs running around Silicon
Valley saying, yes, you know, I exaggerate, I hype. I push the envelope. But look at Elizabeth Holmes.
(END VIDEO CLIP)
QUEST: Now, the case really is the very DNA of a startup culture. Theranos' defense is, Holmes believed in her product, however fantastic
that might be, but if there is no malice and there's no guilty mind, well, she can't be convicted.
The Department of Justice's argument is Holmes knowingly deceived investors. The executive culture will be the spotlight as they shift the
blame to Theranos' President Sunny Balwani is facing a separate trial, romantically, I beg your pardon involved with Holmes. Now, there could be a
claim that he was abusive and manipulative.
Joining me from New Jersey, our senior legal analyst is Elie Honig, and from New York, our business correspondent, Clare Sebastian. Elie, I'll come
to you in just one second. To Clare first, how has the day gone so far?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Richard, so far opening statements as you laid out from both sides, and the critical point here is
that the prosecution has to prove not just that the fraud took place, but intent. That is at the core of Federal wire fraud.
So, they have been laying out in detail some of the elements of the alleged deception, things like rigging third party machines and using them for
tests instead of the Theranos machines and lying about that partners like Walgreens and Safeway, things like lying about their financial projections
Apparently, they told investors that Pfizer had praised their technology. They even had a fake document to prove that and that is, you know, part of
the evidence that the prosecution is bringing up here.
As you said, the lead prosecutor said, this is the case about fraud, about lying, and cheating to get money, but we've heard as well, some of what the
defense team is going to bring up here. They have said that this was not about money. She was motivated by the mission rather than the money itself.
They said that she never sold a share even after she left the company.
She put all of her effort, all of her money into this. She lost it all and urging jurors, Richard, to consider whether Theranos failed because it was
a fraud or because she was a young CEO that naively underestimated the obstacles in front of her.
They only have to introduce reasonable doubt for the jury to not convict her.
QUEST: Elie, that reasonable doubt they will do their best, but from a prosecutor's point of view, you were a prosecutor. From a prosecutor's
point of view, how much of an uphill burden do you think they have here since naivete and are not crimes.
ELIE HONIG, CNN SENIOR LEGAL ANALYST: Proof beyond a reasonable doubt, what you're required to show as a prosecutor, and by the way, unanimously,
you need all 12 jurors to find proof beyond a reasonable doubt -- that is the highest burden in our American legal system. That said, prosecutors
deal with it in every case and every trial, and the key point here, the line is going to be where is the line between fraud? An intentional
misstatement designed to get money from someone -- really, there are two types of fraud here from the doctors and from the investors on the one
And then on the other hand, your sort of normal enthusiasm, hype, even mistake, which would not be a fraud. So, if I'm a prosecutor doing my
opening argument, I am focusing the jury on the kind of evidence Clare just laid out, the false documents, the smoking guns that show fraud.
QUEST: Would you expect some of these celebrity, well-known witnesses to actually be called? Or is this just a bit of titillation to get us all
HONIG: I've seen situations like this, Richard. It could be the latter. I've seen people who list very big name witnesses who never end up getting
called. That said, the question here is, were some of these witnesses, the victims of fraud? Were some of these investors -- Rupert Murdoch and others
-- were they lied to? If so, did those lies cause them to invest, to part with their money?
So, there could be actually a relevant need here for some of those boldface names.
QUEST: Clare, why is this of interest to Silicon Valley? A crime is a crime is a crime.
SEBASTIAN: Richard, I think this has sort of become emblematic of part of the culture that we've seen over the years in Silicon Valley, the old
phrase, "Fake it until you make it." This is something that we've seen in a number of different cases.
There was a story a few years ago that Steve Jobs was actually faking the first demonstration of the Apple iPhone, of course, he ended up making it,
so all was fine in the end. But we've seen other examples of this in recent years. Nicola, this year, of course, the founder of Trevor Milton, accused
of multiple counts of fraud for various things, including a promotional video where his electric truck was rolled down a hill because it couldn't
So, these are things that we see on a fairly regular basis coming from Silicon Valley, and there are those that think that if she is acquitted,
that will lead to more of this. But if she is convicted, then that will draw a line and put startups and entrepreneurs on notices. I think that is
why this has been really closely watched.
And of course, also, for female entrepreneurs. A lot of people wanted to believe Elizabeth Holmes' story because she was exactly the kind of thing
that people were looking for, a female entrepreneur in the image of Steve Jobs, who was setting out to potentially change the world, to revolutionize
health care. And that, of course, didn't work out in the end.
QUEST: So, Elie, criminal trials are notoriously difficult because the jury can go rogue. The jury can just decide, well, whatever she did, we
don't think it was. Do you think there's a danger here, listening to what Clare was saying that we will extrapolate too much from this trial?
HONIG: It could be, Richard. I mean, everyone watches trials like these because they are important. And prosecutors watch what happens in trials
like these because if they succeed and get a conviction, they will be more likely to bring cases like this in the future. And if there's a not guilty
verdict, I think prosecutors I know the sort of psychology of prosecutors will be more reluctant to bring these kinds of cases and you make a really
good point here.
Juries, we try to put labels on beyond a reasonable doubt, and you have to follow the law. But inherently, juries are just collections of 12 human
beings, every bit as unpredictable as one human being is times 12. I've seen juries shock people both ways. Cases you expected to see a conviction,
juries came back not guilty, and vice versa.
An interesting dynamic here will be how do they relate to Elizabeth Holmes? Do they see her as a villain? Or do they end up sympathizing with her?
QUEST: Elie, we will need you throughout the trial at various points to help us understand the legal side. Clare will be watching it from the
Silicon Valley and putting it into the way the markets and big data is looking at it. Thank you both.
To a trial that is actually underway at the moment, and a very serious one of that is the 20 men accused in the 2015 Paris attacks -- that trial has
begun. In court today, the main suspect shouted at the judge and described himself as an Islamic State soldier.
Salah Abdeslam is the only known surviving member of the group that targeted restaurants, bars, the Stade de France, the Bataclan concert hall
almost six years ago. It is hard to believe it is six years ago. A hundred and thirty people were killed and the trial could be up to nine months.
Cyril Vanier is in Paris.
Judging by the goings on, on day one, this is not going to go well. You're going to have the country of France prosecuting in a traditional way, and
arguably a defendant, wanting nothing to do with it, and not even really recognizing the court.
CYRIL VANIER, CNN CORRESPONDENT: Yes, it was very interesting to watch today, Richard. It was always going to be a big question going into this
trial, what was the attitude of Salah Abdeslam going to be, the most high profile defendant, the one whose name has become synonymous with these
attacks, and with the 130 people killed in the streets of Paris.
And really, the first chance he got, he showed what his attitude was going to be during this trial. He was not only unrepentant, but he was defiant.
He was asked a simple question to identify himself about his profession before the attacks. And he said, quote, "I gave up my profession to become
a fighter for the Islamic State," end quote.
A little later, he said, he shouted, "We're all dogs here. I've been treated like a dog for six years. I never complained." End quote. So it
appears that Salah Abdeslam is trying to tell the court, he is going to engage with them on his own terms.
QUEST: Right. Just remind us, in France, do we -- will we have a jury here? Is it judged by -- is it trial by judge for those who are not too
familiar, like myself, frankly, with the French judicial system?
VANIER: Right, absolutely. No. No jury in this trial. So, it's judges and the person that Salah Abdeslam was speaking to was the presiding judge. The
questions that were being asked, were being asked by the judge, so he doesn't have to convince as might be the case, in some American trials
convince a jury, there's no jury selection, there's none of that.
The way the French system works is the investigating judges, and this is different from the American system. The judges are the ones who conduct the
investigation. They've done so for almost five years, and they've put together an investigation that runs to hundreds of thousands of pages. We
don't know the exact number of pages, but we're told by the French "Daily Le Monde" that if those pages were stacked up, it would be 53 meters high,
and that investigation really forms the backbone of this trial -- Richard.
QUEST: And finally, if convicted, there is no death penalty, obviously, because the death penalty has been outlawed in the European Union, but one
imagines if convicted, a life in prison.
VANIER: Yes, absolutely. Salah Abdeslam is one of multiple defendants who risks a life sentence in prison. Others risk a slightly lighter sentence,
It's interesting that you mentioned the death penalty. Just when I got up here to start the coverage this morning, the first thing I heard near the
courtroom was somebody saying they should get the death penalty. And I would say, I would surmise, it's quite likely he is not the only person who
feels that way.
But as you said, there is no death penalty here in France anymore -- Richard.
QUEST: Cyril Vanier who will watch that for us and we're grateful you're there. Thank you, sir.
U.S. officials now say the country is on track to begin offering COVID booster shots this month. I talked to the Chairman and cofounder of
Moderna, about when people might get a third dose of that vaccine. It is QUEST MEANS BUSINESS. We're in London tonight.
QUEST: The Biden administration in the United States is pressing ahead with booster shots starting this month. Dr. Anthony Fauci, the President's
chief medical adviser said Pfizer shots will come first, then Moderna. He discussed the timeline on CNN "New Day."
DR. ANTHONY FAUCI, DIRECTOR, NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES: We're still aiming for the week of September the 20th. It would
have been optimal to get at least with the mRNAs to get both Pfizer and Moderna to roll out the booster program at the same time simultaneously.
It looks now, it is possible, and I think likely that you will see Pfizer get rolled out first, because the data that they submitted to the F.D.A.
Moderna may be a bit behind, but not much. So, I think that you're going to get both of them out. They may not be absolutely simultaneously, but it's
going to be close.
JIM SCIUTTO, CNN ANCHOR: By the end of this month?
FAUCI: I would hope so. I think that probably, no more than a couple of weeks behind if that much.
(END VIDEO CLIP)
QUEST: Noubar Afeyan is the cofounder and chair of Moderna where short shares are down three percent today. Sir, how far behind are you? And when
do you expect your boosters?
NOUBAR AFEYAN, COFOUNDER AND CHAIRMAN, MODERNA: Well, good to be on with you again, Richard.
We submitted our materials last week, and at this point, it's up to the F.D.A. when they can complete the review of the additional EUA needed for
the boosters, and we're looking forward to that determination I expect it to be shortly.
QUEST: Right, and I imagine you have production facilities running up full tilt, not only for creating vaccine for initial vaccinations and double
vaccinations, but now for boosters. Can you keep up?
AFEYAN: Absolutely. In fact, we have been ramping up all year. We went into this year expecting we would be producing upwards of 600 to 700
million doses. We've upped that to about a billion for 2021, and we're looking forward to the potential of making up to three billion doses in
So, it's a steady increase even as we gear up to also incorporate the boosters into the program.
QUEST: We are a business program, sir, you'll forgive me. I know you will if I -- if we do turn to that aspect of it. The reality is, I mean, are we
now in a situation where in your view, booster shots will be required on a regular basis for the foreseeable future, arguably like the flu, but
perhaps more frequently.
AFEYAN: I think that it is easy to guess as to what might happen. It's hard to know. And I think that we have to be prepared, and then let the
data guide our decision making.
As recently as two months ago, as you know, there was a lot of speculation that we may never need a booster. Sure enough, the data coming out on the
delta variant has compelled the regulators and the health authorities to really take a close look at that, and at this point, it looks like we will
And yet, you know, come six to 12 months from now, what we won't have a good sense of today is what will be the threat? What variants might exist?
And how well are the vaccines performing against those?
So, I think at this point, people speculating whether it will be needed every six months or every year, as you may know, Moderna has announced that
we are working on a program where we think we'll be combining a seasonal flu and COVID vaccine, potentially one more respiratory vaccine into a
single shot, which will have an annual target to it.
These are some of the things we're creating the possibilities to do, and then we have to work with the governments everywhere really to figure out
what's the right solution for their population.
QUEST: And how far do you have to think in terms of the profits made from this? And by that I mean, in the first part of the pandemic when you were
creating the vaccine, there's an element of public good, get this done. We've got to get economies, we've got to save lives. We've got to get
economies. We've got to get people --
But we're now talking about an endemic rather than pandemic, then companies like Moderna, Pfizer, all of you, I'm not singling you out, you just happen
to be on the program tonight -- but all of you have an almost guaranteed high revenue stream for the foreseeable future.
AFEYAN: You know, Richard, this is -- I mean, in the heat of the pandemic, what we haven't really realized is that there's a 10-year history of
developing this platform that we, at Moderna, were fortunate to have done. We had nine vaccines in clinical development even before this virus showed
up, and the basis for our ability to move so quickly, and for that matter, the ability of others to move quickly as well is really based on that
The good news is that this same platform will be applicable to many additional vaccines going forward. So, we've ramped up the number of
different vaccines that we're going to be making. So when we think of vaccines, we think we know all the vaccines that are going to exist in the
world. In fact, we have a tiny fraction of the vaccine that could be made. We know there's no vaccine for HIV that's shown effectiveness.
So, I look forward to the next period where you're going to see the benefits and windfall from a technology advanced such as this, really
impacting health in a much more profound way, and that's what that money is going to go into fueling.
So, I think more to come is definitely, we think a fairly long wave of improvements to human health.
QUEST: You mentioned HIV. Do you think mRNA can offer something that's just bedeviled? I mean, I understand the difficulties of the virus and the
way it's integrated into the body, et cetera, but do you believe that this could offer a potential for a vaccine against it?
AFEYAN: I believe it could offer the potential. And moreover, I would say that one of the vexing challenges about an HIV virus is the degree to which
it mutates, and our vaccine technology is simply not in a position to be able to anticipate or even precede those mutations.
As we learn more and more about the life cycle of the possible mutations that could occur, I do think that a code-based vaccine, which mRNA is,
information based vaccine is an ideal antidote, if you will, no guarantees. But if we were going to start all over again, I think we would pick an
information molecule to fight against a virus, which is itself an information life form.
QUEST: I ask this last question, sir, more tongue in cheek than anything else? Where do you stand on the idea of intermixing a vaccine? So, if
you've had a Pfizer, you can have a Moderna booster. If you've had a Johnson-Moderna? Or do you think it should be a little like, you know, only
the razor blade fits in the manufacturer's razor holder?
AFEYAN: You know, it's an interesting question, because I think that there's a lot of live experiments going on, and there are millions of
people who actually have taken more than one type of vaccine. And of course, we don't have data that tracks them. But the studies that have been
run seem to be maturing, and I think what they may show is that, that that is a possibility.
Certainly the advice we give is that the vaccine that's available should be taken and if there is a reason why one can't take more of the vaccine they
took, then they should definitely avail themselves to the protection of another one.
So, I think we will get more scientific data, but I think the concern about some special untoward thing that could happen, seems to be not supported
with data so far.
QUEST: Noubar, thank you. I appreciate you taking time. Very good to talk to you. We'll talk again to update each other as the year moves on.
AFEYAN: Thanks for having me.
QUEST: Thank you. Delivery workers are now getting mandatory weekly COVID tests in some countries, as more customers attempt to shop.
In Dubai, one warehouse wants to meet that demand, and has a fleet of robots to do so.
Eleni Giokos is in Dubai.
ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT (voice over): The humans here are outnumbered nearly three to one on the floor of this Dubai-based
warehouse. It's the Middle East first robotics fulfillment center and founder, Fadi Amoudi believes that this will become the new norm for e-
FADI AMOUDI, FOUNDER, IQ FULFILLMENT: Technology must play a vital role in shaping that new future of logistics because you're going to have to give
that level of satisfaction and service.
GIOKOS (voice over): With a simple click of a mouse, the hard work begins at centers like IQ Fulfillment, picking, wrapping and shipping up to 36,000
products a day from purchase to packaging.
AMOUDI: Now the shipping label is printed. Good.
GIOKOS (voice over): Amoudi says that items can be processed in five minutes, a crucial pace amid the pandemic as shoppers have grown more
AMOUDI: The consumer needs change because they are home. They want a better service basically.
And for you to have your customer loyalty, you need to give them the best service out there.
GIOKOS (voice over): E-commerce giant, Amazon, paved the way for automation in 2012. Today, 50 of its more than 185 fulfillment centers use
robotics. But most operations at logistics warehouses around the world are still mainly manual, including countries like the UAE.
DEBASHISH MUKHERJEE, MIDDLE EAST AND AFRICA LEAD CONSUMER AND RETAIL, A.T. KEARNY: In this region, it is not an automatic choice to go full robots or
full automation because labor is still affordable and available.
GIOKOS (voice over): IQ Fulfillment uses about 40 robots mainly to move products, which Amoudi says is three times more efficient than traditional
processes. The tech here is similar to what you'd find in the likes of Alibaba or Amazon. But the difference between IQ and these behemoths is the
business model because Amazon requires vendors to sell on its sites.
AMOUDI: IQ is open for everyone. You can sell with your Shopify account, Instagram account, or with your Amazon account. Our aim is to build an
ecosystem in order to enable e-commerce for all.
GIOKOS (voice over): IQ pioneered robotic fulfillment here back in 2019. Now, Amoudi says 12 countries have expressed interest in licensing his
model, meaning that robots might just become the mainstream.
Eleni Giokos, CNN, Dubai.
QUEST: As we continue tonight on QUEST MEANS BUSINESS, Afghanistan's ousted President has broken his silence and said he never meant to abandon
the Afghan people as the Taliban closed in and he says "I did not take the money with me."
QUEST: Hello. I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment.
Afghanistan's deposed president addresses allegations he took millions of dollars with him when he fled the country. And a turbulent few days for
bitcoin. They are just El Salvador's rocky rollout. Now one of the world's largest crypto exchanges reveals it is under SEC regulatory investigation.
We'll get to all of that only after I've given you the news headlines because this is CNN and, on this network, the news always comes first.
QUEST (voice-over): Authorities in Indonesia say a fire tore through an overcrowded prison in Jakarta before dawn today, killing 41 inmates. Many
of the prisoners were asleep at the time and locked in cells. The police are investigating the cause and say an electrical fault may be to blame.
Police in Hong Kong arrest four pro-democracy activists after they refused to hand over meeting records and political information. They belonged to a
group that organizes an annual Tiananmen Square vigil. They're accused of acting as foreign agents, which they deny, and of violating Hong Kong's new
national security law.
The Biden administration says solar energy could power 40 percent of U.S. electrical needs by the year 2035 and could do so without raising
electricity costs for consumers. That goal is contingent on Congress passing legislation that incentivizes renewable energy. A big part of
President Biden's plan to decarbonize the U.S. economy.
The U.S. secretary of state Antony Blinken says he is concerned about the Taliban's new interim government and its lack of inclusivity. Speaking at a
press conference with the German foreign minister, the secretary of state said the militant group will be judged by its actions, not words.
The Taliban are laying out strict new rules that require approval for future process. They announced it as the demonstration that you're
witnessing now, this demonstration by a small group of women in Kabul, turned violent with Taliban fighters using whips and sticks against the
women and some journalists.
QUEST: Afghanistan's ousted president says leaving Kabul as the Taliban entered the city was the most difficult decision of his life. Ashraf Ghani
released a statement and he apologized to the Afghan people for his sudden departure.
And he says a security team urged him to flee Kabul back in mid-August. He also believed it was the only way, in his words, "to keep the guns silent."
He is categorically rejecting allegations that he left with millions of dollars in suitcases. CNN's senior international correspondent Sam Kiley is
You know the old line, well, he would say that, wouldn't he?
As they always used to say in the criminal courts. But the reality is he has a valid point. If he had stayed, arguably, he would have been murdered.
SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, and there's a precedent for that, of course. One of his predecessors was hung and dragged
through streets. So At the end of the Soviet invasion there. So, yes, he definitely would have been in some physical danger.
But tellingly, his immediate predecessors, Abdullah Abdullah and Hamid Karzai, former chief executive and president of the country, stayed on and
continued to negotiate with the Taliban, were left out of this new government that they have just announced in Kabul yesterday.
So clearly, they didn't feel that they needed to run. He really is yesterday's man in terms of Afghan's politics. One of the interesting
things I think about this, is that he didn't say, have a call to arms, didn't try to rally support around Ahmad Massoud in the Panjshir Valley and
other resistance forces, certainly did a self justifying statement, saying there will be more to hear from him in the future.
But whether or not people in Afghanistan are really interested in what he has got up to, other than maybe getting some of the money back he's alleged
to have taken with him, remains to be seen.
QUEST: All right. Let's go there.
What is the feeling on the street?
KILEY: Well, I think in Afghanistan, it wouldn't have been any great surprise that a senior politician would have walked out of the country with
suitcases full of money. They've been caught red-handed in the past doing just that.
Afghan politicians are notoriously or historically very, very corrupt indeed, some of them. And he claims that he was battling against just that
kind of corruption. And indeed his presidential campaign promised to clean up Afghanistan.
And it is that kind of corruption that was partly contributed to the complete and rapid collapse of the Afghan government and the armed forces,
KILEY: He had large numbers of ghost soldiers on the books, soldiers that didn't exist, for whom, the senior officers were drawing salaries, for
QUEST: Sam, the temporary cabinet that has been appointed, how far is this just show and tell?
When in reality, if you like, competent technocrats, people who know how to run governments, are either working in the background or are about to be
appointed as the real cabinet. But these are the front men.
KILEY: I think it is very unlikely. If you look at the personalities in the cabinet, some of them, the prime minister, for example, was a founding
member of the Taliban. Sarajuddin Haqqani, a very senior general and head of the Taliban forces, also a very senior in the Haqqani Network, his
uncle, Khalil, also in the Haqqani Network.
Two other members of the Haqqani Network in the cabinet, the head of intelligence, a former Guantanamo Bay prisoner. These people are well
known, very serious hardliners within the Taliban.
What there isn't any sign of is a technocratic bent, much less an inclusive approach to government. They are calling themselves, however, a caretaker
government so perhaps leaving themselves some latitude to tweak here and there, with some other personalities, maybe joining the government down the
But at the moment, if you combine that with the fact that they essentially banned protests that are unauthorized in Afghanistan, you can see a much
more tightening, a much less moderate view of the modern Taliban, 2.0 as it is sometimes called, than for example, the Qataris have been privately
pressing them to embrace.
QUEST: Sam Kiley in Doha, grateful, thank you.
The crypto world has seen better days. El Salvador's bitcoin day did not go particularly well. And now U.S. regulators are taking aim at one of the
biggest crypto platforms out there.
QUEST: The markets are open. It was a long weekend but they are back in business and there's a lot of uncertainty. We're off the day, 100 odd
points or so; 35,000 is looking a little dicey on the Dow. But there is great uncertainty wherever you look. If you look at the triple stack as
well, now all three of the major indices are lower.
QUEST: The Dow has just popped down under 35,000, according to those numbers. And it is because of the level of uncertainty across a variety of
issues, both political and economic, that the United States is currently facing. Whether the country has lost its way is one of the phrases being
David Rubenstein is with me, the co-founder of the Carlyle Group. He joins me now. Also, the author of a book called "The American Experiment."
David, I read this morning's "Times." There's an economist writing about the U.S. He says, we're a country that could not keep a demagogue from the
White House, could not stop an insurrectionist mob from the Capitol, could not win a losing war against mortally (INAUDIBLE) enemy, could not conquer
a disease for which there are vaccines, et cetera, et cetera.
Do you see the current state -- never mind your book and the people you've been speaking to -- do you see the United States currently as if the
country is lost?
DAVID RUBENSTEIN, CARLYLE GROUP: No. I think the United States has had challenges as we always have in our history. But I would rather be in our
place than other countries. I don't know any other country I'd rather be in right now.
Clearly we don't have the economic power that we once had after World War II and we have some political challenges. But on the whole, I think we are
in reasonable shape. We did get a vaccine in less than a year. It hasn't been fully distributed.
But right now, we are in better shape than we've been in quite some time to conquer the world's challenges, like global climate change, which is a big
issue in the United States, very much interested in doing that.
Of course I would like the government to work more efficiently. I would like the government to not have as many internal fights. But we've had
bigger challenges before.
QUEST: But your allies are basically saying to the United States, and they're saying it privately, we can't trust the U.S. I mean, Donald Trump
could be back at the next election. So Joe Biden's "America's back" is basically three to four years long. And even after the midterms, you could
be in total gridlock.
RUBENSTEIN: Well, that's your perspective and I guess it is designed to get somebody like me to bite at it. But I think the U.S. is regarded by our
allies as being a fairly reliable partner. We can't do everything they want all the time.
But if you're the U.K., who would they rather rely on, us or China?
Who would they rather rely on, someone other than the United States?
The United States has the military and economic might to do most things it wants to do. It can't do everything. So I don't think the United States is
falling apart or a paper tiger. But we aren't as strong as we were economically or politically as we were after World War II. There's no doubt
that China and other countries have come on the scene and have challenged us a bit.
QUEST: One challenge that is hitting all the regulators, bankers, central bankers, is the cryptocurrency. You said you've not invested directly but
you have in a wider sense.
El Salvador's decision to make it legal tender, are we in danger of giving crypto too much credence?
RUBENSTEIN: Well, it is still relatively modest compared to the currency used around the world. It is not going away. The genie is out of bottle. I
don't think any government, including the Chinese government, can eliminate it.
I think you have to be very careful and I wouldn't put 50 percent of my net worth into crypto. I would say put 2 percent or 3 percent in if you enjoy
speculating and the risk of investing. But don't put too much money into it.
But it does serve a goal and it is not unlike gold. Gold has served the same purpose for thousands of years and this is a different version of
gold, more or less.
QUEST: I agree with you in the sense of gold. I've never fully understood the gold bug and how people fall in love with this thing that you can put
in a safe and look at and polish every now and again.
But can you understand El Salvador's decision to make it legal tender, bitcoin?
RUBENSTEIN: Well, we'll see how that works. It is not quite the same as if the United States or China or the U.K. made it a legal currency. We'll see
what the experiment produces.
There's no doubt crypto is moving very quickly and I think there's a lot of political support for it and I think people in Congress recognize that
there's a lot of political support among people in the United States who buy cryptocurrencies or trade in it. And I don't think any type of serious
regulation eliminating it is realistic anymore.
QUEST: David, you're one of those people who beautifully bridge the political to the economic. And I'm just wondering.
QUEST: As Jay Powell looks, as the Biden administration is deciding what to do with the Fed at the top of the Fed. And the Fed is also deciding, it
is tapering policy and how fast to withdraw support. This is an interesting time for central bankers and government.
RUBENSTEIN: Yes. I think Jay Powell is likely to be reappointed. I think he's done a good job in a difficult situation. And I don't think there's a
better alternative out there. I am biased because did he work in my firm for a number of years. But I think he has done a good job.
As for the temper tantrum or the taper tantrum, I don't think we're going to see one because I think when we had that under Ben Bernanke, people were
surprised at what he said.
I don't think there's going to be any surprise now. The market is watching very closely. s I don't expect any kind of taper tantrum. I think the Fed
will reduce its purchases but probably not in the immediate future, given the most recent job numbers.
QUEST: David, I had a good try at riling you. I probably didn't succeed. But your book, "The American Experiment: Dialogues on a Dream" is out and
we look forward to talking to you further, sir. Thank you.
RUBENSTEIN: Thank you very much, Richard. I hope to interview you someday.
QUEST: I'm waiting for the invitation. When it arrives, you'll get a yes.
RUBENSTEIN: You'll get it soon.
QUEST: David Rubenstein joining me.
Now BlackRock has responded to criticism from George Soros. The investment bank says its work in China helps connect the world's two largest
economies. However, this book, "China vs America" by Oliver Letwin has a warning for us. And we need to put that into context -- after the break.
QUEST: BlackRock has hit back at George Soros and his criticism of their growing business in China. Shares of BlackRock are up 28 percent this year.
Last month it recommended clients increase their exposure to China by up to three times, to which Soros has called that strategy, "a tragic mistake,"
writing in "The Wall Street Journal."
BlackRock now says, "Through our investment activity, U.S.-based asset managers and others have contributed to the economic interconnectedness of
the world's two largest economies."
That's the point. Oliver Letwin, the former British Chancellor of the Duchy of Lancaster and minister, his book is "China vs America: A Warning."
QUEST: And if you listened, of course, listened a moment ago, China has threatened the U.S. position as being the principal economic power.
So what is your warning?
OLIVER LETWIN, FORMER BRITISH CHANCELLOR OF THE DUCHY OF LANCASTER AND MINISTER: My warning is that, on the current trajectory, the Chinese
determination to be the other great power in the world and the U.S. determination to remain the sole leader of the world is heading us toward a
cold war and that there are so many flashpoints around the world, which I describe in the book, that we could easily see, over the next two or three
decades, a cold war turning into a hot war, which I think is a disaster I think we ought to avoid.
QUEST: Now Donald Trump brought sanctions or tariffs on. Joe Biden hasn't lifted those tariffs. So to some extent, the trade relationship remains
frozen, which leaves the E.U. as another major trading bloc of uncertainty and the U.K. pretty much out on its own.
LETWIN: Yes. The real worry here is not the trade war. It is not something that could be cured. It is a deeper problem, because there's this struggle
for hegemony over the world. And because of these flashpoints, the relationship is getting more and more tense, going way beyond just trade
and investment into the whole question of how we deal with one another and how we manage the world.
And I believe the only way out of that, actually, the current vortex, is for the U.S. and China to begin to cooperate effectively in areas of common
interest, which aren't the controversial items, not the South China Sea or the East China Sea or the Himalayas or something like that, where there's a
flashpoint but rather, things like climate change and global financial stability and global health protection, where we could actually be doing
business with the Chinese, however much we disapprove of some of their actions and values.
And by doing that business, we could build up trust.
QUEST: That is desirable but unrealistic, I suggest, bearing in mind the current state of play. And I'm thinking of Hong Kong and the new law in
Hong Kong and thinking about the flashpoint of Taiwan, which inevitably will become far more fractious in the years ahead.
How do you build that bridge?
LETWIN: Well, I don't think it is unrealistic to build it if you focus on areas where there is actually common interest. So in the very near future,
in the next few weeks, there will be COP26 and an effort to deal with climate change.
Now we all know that it is impossible in today's world to have any serious impact on climate change unless the U.S. and China are working together. I
believe they could actually do that, notwithstanding all the problems you're alluding to.
Similarly, we've just had a massive pandemic. We all know the WHO system is broken. It is possible for the U.S. and China to cooperate in a narrow band
to put together some much more effective system of global health protection, even if they're disagreeing about Taiwan, the South China Sea
and many other things besides. So it's the question of picking the issues where we could build trust.
QUEST: Forgive me if I take you down a British political story. We're not interested necessarily in the minutiae of the social care policies of the
government in the U.K. But I am interested, as a full politician yourself, on your view on the idea of breaking the manifesto pledge.
In the case of Boris Johnson, there were two of them. One about pensions and two about raising taxes. Listen to how the prime minister of the U.K.
justified breaking his promise.
(BEGIN VIDEO CLIP)
BORIS JOHNSON, U.K. PRIME MINISTER: No Conservative government, Mr. Speaker, ever wants to raise taxes and I will be honest with, as I accept,
yes, I accepted this breaks the manifesto commitment, which is not something -- which is not something I do lightly. But a global pandemic was
in no one's manifesto, Mr. Speaker.
(END VIDEO CLIP)
QUEST: What do you make of that?
I mean, it sounds reasonable but does it add fuel to the fire that politicians don't keep their word?
LETWIN: Well, it obviously does. But on the other hand, actually, I don't think that's the real problem about the policy announcements that have been
made. I think the real problem is it doesn't address the real issue, which is looking after the elderly. It addresses instead the question of
protecting the inheritance of the children of people who are well off and have property to protect.
But if you leave aside that question, just ask the question, as a matter of fact, if the public believes that the policy is worth pursuing, will it
forgive the government for breaking the manifesto promise under circumstances, where hundreds of billions of pounds of money have had to be
printed and where the fiscal situation is very tight?
LETWIN: And I think it is very probably the public will forgive that.
QUEST: Oliver Letwin, thank you, sir. Your book is a fascinating read. I'm grateful that you came onto the program tonight.
And we will have a "Profitable Moment" after the break. QUEST MEANS BUSINESS.
QUEST: Tonight's "Profitable Moment:" I'm so glad we were able to get beyond today. The dollar was up. The Dow was down. We brought you two big
voices, David Rubinstein and Oliver Letwin on China.
When I read that article that I quoted earlier, it makes the argument very clearly, America, over and done with. Then you listen to what Rubenstein
says about Pax American and, no, maybe this was not what it was but it is still the most powerful.
And then you hear Letwin say, well, it may be the most powerful. But China is up and coming and how the two co-exist, that means live together, with
neither trying hegemony over the other, which is almost impossible in my view. They will keep trying one way or the other.
You start to see how the rest of us all get caught up in the middle. All it takes is an accelerant like Donald Trump, with tariffs on trade, or the new
Hong Kong law and people have to decide how to go about it.
And then you've got the Chinese policy of belt and road and who has drawn most countries into their orbit.
And finally, you end up with this really interesting question of, how far does the U.S.' allies believe they can trust the United States?
I don't mean to keep their word but to be there in good times and bad. Rubenstein says allies do believe that. I would venture to suggest perhaps
they're far more questioning on the issue than they ever have before.
Who says we're just dollar and Dow on QUEST MEANS BUSINESS? I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it is
It is a down day on the street. The Dow is down. The bell is ringing. The losses are small. We'll do it all again tomorrow.