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Quest Means Business
President Biden Tests Positive For COVID-19; ECB Raises Interest Rates For First Time In 11 Years; Italy's Political Turmoil; Nord Stream 1 Resumes Flow From Russia To Europe; Call To Earth: Joel Sartore; Summer Airport Chaos; Cause Of Inflation "Mix Of Explanations". Aired 3-4p ET
Aired July 21, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:33]
PAULA NEWTON, CNN INTERNATIONAL HOST: So an uninspired day on Wall Street. Let's take a look at the Big Board there, not doing much of anything. It
has been in and out of highs and lows. That is not to say -- there you go - - sometimes negative, sometimes positive, as I said, an uninspired day.
That is not the same for the NASDAQ though because it has been up better than one percent and that is thanks to Tesla earnings.
Those are the markets and these are the main events: US President says his symptoms are mild after he tested positive for COVID.
A turning point for Europe. The ECB raises interest rates for the first time in 11 years.
(BEGIN VIDEO CLIP)
ANNA STEWART, CNN REPORTER: I'm honestly worried that I am going to miss my flight, despite the fact that I arrived three hours early.
(END VIDEO CLIP)
NEWTON: Our own on Anna Stewart bravely goes where legions have gone before, right into Europe's summer of airport chaos.
Live from New York. It's Thursday, July 21st. I'm Paula Newton in for Richard Quest, and this is QUEST MEANS BUSINESS.
Good evening.
And we begin with the news from Washington. US President Joe Biden has tested positive for COVID. The White House gave this update just a short
time ago. Listen.
(BEGIN VIDEO CLIP)
KARINE JEAN-PIERRE, WHITE HOUSE PRESS SECRETARY: Good afternoon, everybody.
As you all know, I received a letter from the President's personal physician this morning. We released it to you shortly thereafter, in the
interest of transparency.
I have the letter here and I just want to read it through, so we can get started -- before we get started.
This morning as part of our routine screening program for the President, the SARS-CoV-2 virus was detected by antigen testing. This result was
subsequently confirmed by a PCR test.
Unquestioning, President Biden is currently experiencing mild symptoms, mostly a runny nose and fatigue with an occasional dry cough, which started
yesterday evening.
Given that he meets USA Food and Drug Administration FDA emergency use authority criteria for Paxlovid, I have recommended initiating such
treatment.
(END VIDEO CLIP)
NEWTON: The US President says he's doing well. He tweeted this video from the White House where he is isolated.
(BEGIN VIDEO CLIP)
JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: Hey, folks, guess you heard it this morning. I tested positive for COVID. I've been double vaccinated
and double boosted. Symptoms are mild, and I really appreciate your concerns and I'm doing well, getting a lot of work done. Going to continue
to get it done.
And in the meantime, thanks for your concern and keep the faith. It's going to be okay.
(END VIDEO CLIP)
NEWTON: Okay, so he looks good, sounds good.
Kevin Liptak joins me now.
I mean, I know there was a sense of inevitability about this, right? Like the rest of us, he'd been kind of getting on with his life. And yet, there
must be some caution at the White House, given his age.
KEVIN LIPTAK, CNN WHITE HOUSE REPORTER: Yes, there certainly was and the White House has really gone to lengths to protect the President from COVID,
both when he was a candidate, and since he became President, that's in part because of his advanced age. And that, of course, puts him at greater risk
for severe disease.
But the White House, they've been briefing for about 45 minutes now, really trying to emphasize that the President's symptoms are mild, that he is
double vaccinated and double boosted and thus, protected from the most severe effects of this disease.
And just to walk you through, Paula, a little bit of the timeline here. The President last tested negative for COVID-19 on Tuesday. Yesterday, he did
travel to Massachusetts for that event on climate change. Now, we're told last night was when he began experiencing some of the symptoms, things like
fatigue, runny nose, a dry cough, and then it was this morning on an antigen test that he first tested positive for COVID-19 and that was
followed up by a PCR test, which confirmed that result.
So right now the President is in the residence of the White House that's on the second floor. He is working from the White House Treaty Room. He
tweeted out a photo of him on the phone. He called some of the lawmakers who he was supposed to meet today in Pennsylvania, of course, that trip was
canceled.
He also is talking to staff. He talked to his physician. He talked to the White House Chief of Staff, Ron Klain. But as you said this had been
something of an inevitability in the White House.
[15:05:10]
At some point, basically, they said everyone was going to get COVID, particularly the President of the United States, because while he had been
taking these extra measures, things like wearing a mask, things like isolating, things like not meeting in big groups, those had been easing
over the last several months.
And of course, you saw him last week in the Middle East. He did do some fist bumps with a lot of leaders, but he also shook hands with a lot of
other leaders. He didn't wear a mask for a lot of that trip.
And so the President was really kind of trying to go about his job as normal. And then of course, he got COVID, and the White House said that
they had to put a plan in place, they had had this plan all along. And of course, what you're seeing now is very different from when the last
President contracted COVID-19, President Trump, he, in fact, got very, very sick and had to be helicoptered to Walter Reed Medical Center. You're not
seeing any of that now, in part because the President is vaccinated.
The White House also says that it wants to be fully transparent about his condition, which is why these officials have been briefing for the last
hour or so. They also say that they'll provide updates as the week goes on.
So for now, the President says he is doing fine. He, of course, looks like he's doing fine. But this disease still in its first day, here in
Washington -- Paula.
NEWTON: Yes, we know that he is doing well. Some tense days ahead, but we certainly continue to wish him well and we'll watch carefully and closely
in terms of his recovery.
Kevin Liptak for us in Washington, thanks so much.
And Biden's personal doctor says the President's symptoms are mild. He is fatigued. And as you were hearing, has a dry cough. The doctor says his
symptoms began Wednesday. Biden is being treated with the antiviral you just heard about it, Paxlovid.
The President has been double vaccinated and two booster shots, yes, four in all.
Joining me now is CNN medical analyst, Dr. Jonathan Reiner. Good to have you on board as we have had so many times before, throughout this pandemic.
Here we are 79 years old. What are your concerns when you take his medical history and, you know, closely monitoring his treatment now as well?
DR. JONATHAN REINER, CNN MEDICAL ANALYST: Well, I think the President should do fine. The key issues -- and the key difference now compared to 18
months ago is that the President of the United States has received two doses of an mRNA vaccine, and then two subsequent boosters, and this
dramatically reduces the chance that his currently mild disease will worsen to severe disease or require hospitalization.
He should do fine plus, White House physicians are administering the antiviral agent, Paxlovid, which further decreases the risk to the
President by about 90 percent, so he should do fine and his symptoms are a classic for a vaccinated person with BA.5.
That sounds like he has a bit of upper respiratory kind of syndrome, and the change that we've seen now in sort of the vaccinated world, is that it
has changed COVID from a potentially lethal lower respiratory disease, which really created havoc in the lungs to more of an upper respiratory,
much less severe viral illness.
So now, the President will have these symptoms for the next few days. Paxlovid will help clear the infection and resolve the symptoms and very
likely the President will do well.
NEWTON: Yes, I'm very interested that you said, I mean, on all likelihood it is the variant that you described there. They said they won't know for a
few days, but I'm really interested to hear you say that. So you think that this -- that the President is really showing symptoms that many of us may
be feeling and again, so many more people testing positive, even if they have been vaccinated and boosted.
LIPTAK: Right, so BA.5 is the variant that is circulating widely and wildly around United States and around the world. It is remarkably
transmissible, almost has about the same transmission characteristics as measles. But it does not appear to cause more severe disease than some of
the earlier variants, which is great news and our vaccines, in terms of preventing severe disease, hospitalization and death have really held up.
What they're not so good at right now is preventing acquisition of this virus. So even if you're well-vaccinated, it's still quite easy now to get
this virus since there's so much virus in the community. And the President was in this very sort of busy environment over the last couple of weeks.
First he was at the NATO Summit in Madrid, and then he was in Israel and Saudi Arabia and it is really hard to protect him by testing everyone who
he meets in that setting.
[15:10:05]
REINER: They've done that very well in the United States, but once he's out in sort of the international arena, it is very difficult to check
everyone who he might come into contact with.
NEWTON: And is that perhaps the lesson of what we're seeing here? This is one of the people that arguably is the most well protected in the world in
terms of being tested and making sure that people around him are tested, and yet it is breaking news that he essentially has the symptoms of a cold.
Do you think this will be, you know, that transformative point in this pandemic, where we say, "Look, we have it under control, and yes, we will
continue to get it just like the President did, but as long as we follow doctor's orders, we stay home, we do not infect other people, we're going
to begin to get through this."
REINER: Well, I think that's very true for people who are "fully vaccinated" and then fully boosted which now for somebody over the age of
50, includes two booster shots.
But if you take the same person over the age of 50, an unvaccinated person has a 29-fold increased risk of dying from this virus, as does a 50 year
old who has been doubly vaccinated and doubly boosted.
So yes, most people, the vast majority of people who acquire this virus who are well-vaccinated will be just fine, but if you are unvaccinated, and
even if you were vaccinated, but unboosted, this virus can still kill you.
So I would say that because the President's symptoms are so mild, this should be a reminder to people to go ahead and get boosted and we've not
done a great job, particularly in the United States of getting boosters out to people over the age of 50 and we need to do better.
NEWTON: And that is the issue, all of us have wanted to get on with our lives. And again, it's a reminder as you said, of the work, the hard work
that the vaccines do.
Dr. Jonathan Reiner, thanks so much. Appreciate it.
Coming up for us, the European Central Bank is raising interest rates. Its fight against inflation will be even more difficult than for most other
Central Banks. We will tell you why when we come back.
(COMMERCIAL BREAK)
NEWTON: The European Central Bank raised interest rates by half a percentage point this morning. It's the bank's first rate hike in 11 years
and it's a bigger move than it had signaled previously.
The ECB is trying to address record Eurozone inflation. Its main interest rate is now back to zero.
[15:15:10]
It had been negative, yes, since 2014.
ECB President, Christine Lagarde explained the bank's decision to now move more aggressively.
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, PRESIDENT, EUROPEAN CENTRAL BANK: Realization of upside risks to inflation, plus the presence and the operationality of the
flexible reinvestment under PEP, and more importantly, the unanimous support of the Governing Council for the transmission protection instrument
led us to decide a larger than what had been signaled rate hikes on the occasion of this meeting.
(END VIDEO CLIP)
NEWTON: Now for months, the US Federal Reserve and other Central Banks have been raising their rates. The ECB has a unique set of challenges that
is making its fight against inflation much trickier.
Now here, stay with me. It says if Christine Lagarde is taking the stairs, right, while the Fed Chair Jerome Powell glides up in that escalator,
Europe is facing possible fuel shortages as a result of Russia's war in Ukraine, rising energy costs have been one of the main drivers of European
inflation, higher interest rates could lead to diverging bond yields right across the Eurozone and that's a problem for countries burdened with larger
debts. And political instability in places like Italy make fiscal solutions less likely.
Clare Sebastian is with me now to break it all down. So 50 basis points, bigger than expected. Why this move? And why now? Because they know that
they're doing this, Clare, they're really risking growth in Europe with this.
CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, Paula. I think it's pretty significant. The first rate hike in 11 years coming into an environment
where risks to growth are very much increasing, but I think -- look, there are a number of reasons why. It boils down in particular to the inflation
environment. This is what we're seeing around the world. The inflation rates are so high that it is forcing Central Bank's hands.
I think a bigger question, much more short term, but still significant is why 50 basis points, when just about five weeks ago, they were very clearly
saying not even signaling, saying outright that the rate hike was going to be 25 basis points, a quarter percentage point.
I think what Christine Lagarde said was that really the inflation environment is just sort of getting worse by the day. We've got the energy
situation in Europe. You've got the euro, I think we can show you a chart, which is dramatically weakening against the dollar, that only exacerbates
inflation.
But it's not just that. The other reason, of course, as she outlined is that they have now got this new tool, the transmission protection
instrument, which if anything, even on a day when they raise rates for the first time in 11 years, is getting more attention than that rate hike.
NEWTON: Yes, and as well, it is it should, can you explain that to us. Now, it is supposed to protect, you know, those weaker economies in Europe
from more expensive borrowing costs.
You know, why is it so important? And as you're speaking, Clare, we're showing the Euro-US dollar value. I mean, the Euro firmed up, I should say,
it certainly didn't take off, based on this 50 basis points.
SEBASTIAN: No, it did not take off. It's still very low by historical standards, but look, case in point when it comes to the transmission
protection instrument that brand new ECB acronym is that Italian bond yields, for example, went up today partly because of this rate hike, in
large part, of course, because of the political instability in that country, whereas German 10-year bond yields came down.
Now, we're not seeing serious fragmentation yet, not like we saw in the 2011-2012 debt crisis. But the ECB wants to nip this in the bud. And the
transmission protection instrument is essentially a bond buying program, which allows them when they get serious market stress, what they call
unwarranted disorderly market dynamics, they can activate the system and they can start buying bonds in countries where it is most needed to sort of
bring down those borrowing costs and prevent the kind of divergence that can cause financial instability.
It's more urgent at the moment because of things like the Italian financial -- the Italian political crisis, but also more controversial because of
that, because there's, you know, no one wants this to look like the ECB is stepping in to try and calm political instability.
But we do have a situation and take a look at debt to GDP ratios. We've got the Italian debt to GDP at 150 or so percent. We've got -- Greece is up at
189, and yet Germany and the Netherlands, much, much lower.
So that the risk is that as rates go up, countries with higher debt are at greater risk, and this is what the ECB is trying to guard against.
NEWTON: Absolutely, and we'll continue to monitor exactly what they do. I was interested to hear Madame Lagarde saying there that this is a wait and
see. They are in no way, shape, or form telegraphing what they will do in future meetings.
Clare Sebastian, thanks so much. Learned a lot from that, and now we go to those European markets, which actually had a mixed day Thursday. Stocks in
the UK and France closed higher. Italy, as you might expect, on the other hand, sharply lower.
Now the -- let's see, MIB closed down about seven-tenths of a percent and the Italian -- and that's because the Italian Prime Minister Mario Draghi
has resigned after a tumultuous week.
[15:20:12]
Italy's President has accepted the decision and dissolved Parliament. A snap election is now set for September 25th.
Now, Italy's political instability could cause trouble as the ECB raises rates. Draghi was ECB President during the European debt crisis. You'll
remember his nickname, right, it was Super Mario because of his work to actually save the euro.
As Barbie Nadeau explains, Draghi no longer had enough support to steady his country.
(BEGIN VIDEOTAPE)
BARBIE NADEAU, CNN CORRESPONDENT: Italian politics are often messy, but the latest crisis here in Rome is nothing short of a bloodbath. The now
former Prime Minister Mario Draghi resigned to Italy's President for the second time in a week, but on Thursday, Sergio Mattarella accepted the
resignation, paving the way for a period of uncertainty in this country.
Italians had expected to go to the polls in May 2023. That certainly won't happen now.
Draghi a Euro-krat who once led the European Central Bank has been in power since February 2021, as a safe pair of hands for this country when they
needed it most. But the three ruling parties that abstained from the Wednesday evening confidence vote sent a clear signal to Draghi that he did
not have their support.
Now, the country is headed to snap elections with the center right bloc led by Matteo Salvini, Silvio Berlusconi, and Giorgia Meloni polling strong
enough to take over at the moment. If they retain that momentum in this country, Italy could be in for more uncertainty.
Barbie Latza Nadeau, CNN, Rome.
(END VIDEOTAPE)
NEWTON: Now, Italy is as we were saying earlier, facing higher borrowing costs as the ECB raises rates and it's not the only country that should be
concerned.
Greece, Italy, Portugal, Spain, all highly indebted, with debt to GDP ratios above 100 percent, sparking concerns that higher interest rates
could lead to a repeat of the sovereign debt crisis in 2011.
William De Vijlder is the Chief Economist at BNP Paribas, and he joins me now from Paris.
And I will put the question straight to you: How concerned are you at this point in time about the -- about Europe's ability to really stave off that
debt crisis, especially in those weaker countries.
WILLIAM DE VIJLDER, CHIEF ECONOMIST, BNP PARIBAS: The debt crisis really becomes an issue if long term bond yields would continue to move higher, in
combination with a significant further slowdown in economic growth. That is, by the way, why people also scared about the shut off of Russian gas
supply because that would imply a big hit to the economy, it will trigger a recession. And then of course, you have a problem.
That is why you and colleagues had explained earlier in the program, we need this TPI, this new instrument. I think for the moment, there is
nothing that is, let's say, very scary in the near term. What we have been seeing in recent past is that with bond yields, German bond yields moving
higher, quite normally, spreads have lightened somewhat.
I think the more important thing is that you now have a tool that gives the ECB flexibility to react. One example could be that you would have spread
widening in Italy because of political circumstances, but then creating some contagion toward Spain, Portugal, Greece, that the ECB would be in a
position to help Spain, Portugal, Greece, whereas not doing anything with Italy, because that is purely driven by country specific problems.
NEWTON: And you use the word there, "contagion." And when we talk about trying to keep the Eurozone together economically, it is a difficult task
for so many reasons that we've discussed here.
What do you see ahead, though, in terms of the ECB's strength and being able to mitigate the crisis? What tools do they have? I know, we just
talked about the latest one there, but do you think they can see through this, especially since we're going into winter into likely an energy
crisis?
DE VIJLDER: If you would end up in an energy crisis, it clearly would be a problematic situation for the ECB. I think that may have played a role in
the decision to frontload the monetary tightening, point one and point two, and also to insist on the fact that further rate hikes will be data
dependent; that way they have more flexibility.
It would be a dilemma because you know that if gas prices would move higher, significantly profound repercussions in terms of activity, in terms
of demand, yet also more inflation, what you then do? So that's one issue that we that we are facing. Another issue that the ECB is facing, of
course, is at some point, it will have to stop reinvesting the bonds that mature in the EPP portfolio and that is also -- we will also be still years
off, but it could also be a factor of concern in markets in which instruments that is created, they will be better equipped to address that
as well.
[15:25:18]
NEWTON: How much does the inflation picture worry you and when we talk about here in the United States, we talk about, of course, the robust
consumer, we talk about full employment, that is not the case in Europe.
So how much does that also constrain the picture here where you could have incredibly, you could get a much higher inflation picture in the next year,
depending on what happens in energy, and at the same time have a very -- a real problem on your hands to get to full employment.
DE VIJLDER: So the real upside risks to inflation indeed, as you see is energy and also food. If, however, you look at early warning indicators, I
would say leading indicators of inflation dynamics, there are also awful signs, you see, for instance, that business surveys report that companies
are slightly less inclined than before to raise prices. They still wanted to raise selling prices with a bit less than previously. Goods prices are
also rising at a slightly slower pace. So that's good.
On the other hand, wage growth is accelerating and will continue to accelerate; no comparison, however, with what we see in the US, yet what we
also have in Europe is that we have major labor market bottlenecks. Companies are struggling to find people similar to the US is a source of
inflation risk.
But I would say on the whole, if you look at the underlying developments of inflation, what you will see is, as we get into the fall of this year that
it will start to decline, but the real question is not whether it goes well, the real question is, how fast will it go down? And that is
explaining why the ECB took a decision today. They can no longer afford to wait and see what happens, and to proceed with slow rate hikes, because
they're really kind of taking risk with their credibility and that is why they stepped up the pace and actually created a surprise, because as was
being said earlier on the program that "promised 25 basis points" and at 50, big change.
NEWTON: Yes, and it has been a no-no among Central Bankers to surprise the markets in this way. So if they did it, it was clearly as you said, because
they see inflation as being sticky and much more difficult to drive down in this energy environment.
I can't thank you enough for really parsing that for us. I will take that word from you though, it's not scary yet. We will continue to stand by and
wait for more data points out of Europe. Appreciate it.
DE VIJLDER: Pleasure.
NEWTON: Up next for us, Russia restarts gas deliveries to Europe -- for now. This, as the bloc clashes over how to tackle energy, next.
(COMMERCIAL BREAK)
[15:30:00]
(MUSIC PLAYING)
NEWTON (voice-over): Hello, I'm Paula Newton. There is more QUEST MEANS BUSINESS, when Spain and Portugal are rejecting calls from Brussels to
reduce their gas consumption.
And a firsthand look at Europe's summer of travel chaos, Anna Stewart takes us on a fraught journey through long lines and crowded airports.
Before, that these are the headlines.
(MUSIC PLAYING)
NEWTON (voice-over): The U.S. tightens sanctions against Russia over the war in Ukraine. The latest measures are dubbed the (INAUDIBLE) package.
They expand previous measures and now include Russians gold, its most significant export after energy.
Turkiye says Russia and Ukraine have reached an agreement for the safe transport of grain.
And in the U.S., the January 6 committee convenes in just a few hours in Washington. Lawmakers are expected to focus on the 187 minutes that elapsed
during the riot at the nation's capital and then what then president Donald Trump did or did not do. Our special coverage of that begins at 7 pm
Eastern in Washington, 7 am Friday in Hong Kong.
(MUSIC PLAYING)
NEWTON: Gas is once again flowing from Russia to Europe, via the Nord Stream 1 pipeline. Maintenance workers took the pipeline offline for days.
Many feared Russia would not turn it back on.
Germany warns this may still might happen. Gazprom is no longer a reliable supplier. The pipeline is currently operating at just 40 percent of
capacity. This is key. It is not enough to refill Europe's gas tanks for winter.
The European Union has an emergency plan to tackle the expected shortage. It wants each member nation to cut its gas use by 15 percent. Spain,
Portugal and Hungary are already pushing back. They are rejecting a one size fits all target.
Fred Pleitgen joins me from Berlin.
You are actively listening in on this debate, flying across Europe. Please let us know what is the opinion in Germany right now, because they are at
the pointy end of this. While it has been turned, on especially German industry could be very much hurt in the months to come.
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: They definitely could be very much hurt. The Germans are certainly very concerned. When you
look at the past couple of days, while the maintenance was going on in the Nord Stream 1 pipeline, it was unclear whether or not that gas will
continue and restart flowing again.
There was a lot of concern here, not just among politicians but among the general population as well. Not only does Germany rely on Russian gas for
instance, for heating a lot of homes in this country but also the German industry which is gigantic, the backbone of this country's economy, relies
so much on gas as well.
The Germans are saying, yes, that gas is flowing once again. But it is only 40 percent of the capacity of the Nord Stream 1 pipeline. That's about the
same as before the maintenance started.
The Germans are saying that they believe the Russians saying that more gas can flow through there because of technical reasons, they don't think that
that is true. And the German economy minister said, they believe Russia is using energy as a weapon.
And that the gas from Gazprom is no longer reliable supplier. So the Germans put forward a flurry of measures they want to put in place. They
say they need to fill the storage facilities to 95 percent, until the 1st of November, which is very difficult, when only 40 percent of the capacity
is running through the Nord Stream 1 pipeline.
[15:35:00]
So the Germans say, they want to use as little as possible of that gas to turn into electricity. They're urging people to conserve energy, not just
regular people but companies as well, in public buildings.
And the Germans also very much tapping into their coal reserves, even putting coal fired power plants back online, which is certainly not
something they want to do, as Germany was trying to move more and more toward renewable energy, which they're still trying to do.
But they say that will be extremely difficult in the next seasons and the next couple of years, with gas being so uncertain -- Paula.
NEWTON: Very interesting to watch how all that gas flows. It's hard to believe now as your sweltering in Berlin. But as the cold temperatures
arrive in October and beyond.
Across the Atlantic, Cuba is facing a different kind of fuel crisis. A diesel shortage has led to persistent blackouts and long lines at the pump.
As CNN's Patrick Oppmann reports, some drivers have been waiting more than a week to fill up.
(BEGIN VIDEOTAPE)
PATRICK OPPMANN, CNN CORRESPONDENT (voice-over): The line for diesel in Havana seems to go on forever and barely moves. It takes days now for these
drivers to fill up their tanks. Yes, you heard that right. People wait here for days to get fuel. don't even think about leaving the line not even for
a second.
We can't go he says if you leave someone else takes your spot. And you have to go back to the beginning and start all over again. So drivers catch some
in their cars. Brush their teeth by the side of the road, kill the hours playing dominoes. Hoping the next increasingly scarce shipping fuel comes
soon.
OPPMANN: But people were at the front of this very long line say they've been waiting for eight days to fill up their trucks and their cars with
diesel. They'll sleep in their trucks have their family bring them food.
What they didn't want to do is talk to us on camera they say that they complain to publicly they might lose their place in line. Battered by the
pandemic, U.S. sanctions and a global supply chain disrupted by the war in Ukraine, Cuba is confronting a worsening energy crisis.
OPPMANN (voice-over): Large parts of the communist run Island are being hit by longer and longer power outages. Keeping the lights on requires more
fuel than the Cuban government has on hand.
The power plants have consumed more of the small amount of fuel that we have, he says fundamentally diesel, which costs us a lot of work to get. It
means that our generation of energy is affected as our important economic activities. Analysts say the whole grid is in danger of collapsing.
JORGE PINON, LATIN AMERICA AND CARIBBEAN ENERGY PROGRAM: You have a number of cumulative effects that are taking place that cannot be solved with
Band-aids. We're talking about major structural investments in the billions of dollars. That's going to take a number of years to solve this problem.
OPPMANN (voice-over): Blackouts in July 2021 sparked the largest anti- government protests in decades. Already this summer outages have caused
people to take to the streets, banging pots and pans to demand the power be restored.
But with the government warning that the Blackouts and fuel shortages will continue. Cubans can expect a long, hot, intense summer ahead of them.
(END VIDEOTAPE)
NEWTON: Coming up for us the natural world is undergoing an extinction crisis. Up next, the photographer documenting the world's disappearing
species.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
[15:40:00]
(MUSIC PLAYING)
NEWTON: Biodiversity is declining worldwide, with more than 40,000 species at risk of extinction. It's a problem photographer Joel Sartore has turned
his lens on now for the past 16 years.
Today on "Call to Earth," The Photo Ark founder on taking more than 12,000 photos of animals in captivity in an effort to raise awareness for the
dwindling populations.
(BEGIN VIDEOTAPE)
(MUSIC PLAYING)
JOEL SARTORE, PHOTOGRAPHER, THE PHOTO ARK (voice-over): The world has 1.5 million species described. We tend to give all the publicity to the tigers
and the gorillas and the giant pandas.
But who cares about the minnow or the sparrow or the toad?
I do. My name is Joel Sartore. I am a photographer and fellow of National Geographic Society and founder of The Photo Ark. The Photo Ark is my 30-
year effort to document every species in captivity around the world.
I try to do portraits, each animal on a black and white background, to eliminate distractions and allow you to look them in the eye and see that
there is great beauty there and intelligence and they are worth saving.
They have a basic right to exist, in my opinion, like we do; 30 or 40 percent of the amphibians could go away in the next 50 years. A lot of the
insects are already going away. We need those animals to survive.
One in three bites of food we eat comes from an insect, comes from a pollinator. So, it is critically important that people pay attention. And
as a photographer I didn't know what else to do.
We have done studio portraits of about 12,500 species; that's mammals and birds, it's reptiles and amphibians, it's fish and invertebrates. So
everything from ants to elephants. The goal is to get the world's 20,000 to 25,000 in captivity while there's still time.
Many of these animals don't even exist in the wild anymore. They're extinct in the wild. So the only breeding populations, the seed stock, are in zoos.
Beyond that, zoos are a great way for people to stay connected to nature.
At the Lincoln Children's Zoo, we've got some interesting animals. We did prehensile tail porcupine and ball python and tin wreck and three-banded
armadillo. But to see these animals actually alive and thriving and looking at the camera and thinking, this is a big deal. This is not done very often
with smaller creatures.
The majority of the animals we photograph have never been photographed well before. Many of them have not ever been photographed alive. My job is to
become a voice for all these animals, the small things that really keep the planet running. It's really at our own peril if we ignore it.
Who all do we have coming in here today for animals?
My answering the call of conservation came the only way it could, through photography. So The Photo Ark is my desperate attempt, last-ditch attempt
to try to get the public just to pay attention. If we take the pressure off some spots, animals will come roaring back.
We are going to have this window close on us. We don't have an infinite amount of time. Most of the species I photographed can be saved. But we
actually have to do something about it.
[15:45:00]
(voice-over): I get asked a lot, what's your favorite animal to photograph?
And it's the next one. It's the next one.
(END VIDEOTAPE)
NEWTON: Gorgeous photos.
Let us know what you are doing to answer the call, with #CallToEarth.
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(COMMERCIAL BREAK)
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NEWTON: U.S. markets are in fact up amid signs of a cooling job market. Major indices have recovered after being down some earlier in the day.
That's because the U.S. Labor Department says more than a quarter million Americans filed new jobless claims last week.
That's the most since mid November. Investors are also reacting to second quarter earnings from American Airlines and United, both reported their
first operating profit since the start of the pandemic.
The two airlines also say they will scale back growth plans this year. United CEO Scott Kirby says travel chaos, fuel cost and a potential
recession all pose risks. American is down almost 8 percent and United Airlines down over 10 percent this hour.
Airlines in the U.K. are being warned amid this chaos that they have to try and put passengers first. A joint letter from the Competition and Markets
Authority and the Civil Aviation Authority say that airlines need to stick to the rules.
What are they?
Not selling more seats than they can supply. That seems normal. Getting customers plenty of notice for cancellations and meeting legal obligations
when it comes to rerouting. To see just how difficult air travel can be for passengers right now, CNN's Anna Stewart traveled from London to Ibiza.
(BEGIN VIDEOTAPE)
ANNA STEWART, CNN CORRESPONDENT (voice-over): Long lines, delays and cancellations. Travel in Europe has never felt so chaotic.
STEWART: One of the best ways to really show you the issue is to (INAUDIBLE). We are going to go through one of the worst (INAUDIBLE)
airports in the world and to one of the busiest holiday destinations (INAUDIBLE).
STEWART (voice-over): And we were quickly confronted with challenge number one. We are too early. And we are not the only ones.
UNIDENTIFIED FEMALE: What's the problem?
UNIDENTIFIED FEMALE: We can't check in.
STEWART (voice-over): Once bag check-in opens, this is the queue.
Now my advice would be (INAUDIBLE) don't check in a bag this summer, unless you really have to. But out of curiosity, we're going to check one in
anyway. I'm actually going to put a GPS tracker in, it so we can see where it gets taken.
(voice-over): Tracking the bag is a good idea, particularly through Heathrow.
[15:50:00]
A shortage of baggage handlers has resulted in scenes like this: mountains of lost luggage. Bye-bye suitcase, hope to see you in Ibiza. If the queue
for check-in looked bad, look at this.
I have never seen a queue like this in security. I'm honestly worried that I'm going to miss my flight, despite being three hours early. I wasn't
allowed to check in a bag until two hours before flight.
But this queue has gone all the way from security, snaking all the way around and it's going all the way back down the airport's entrance way to
the far corner.
(voice-over): I am fast tracked through and it's getting too close to departure. So no time for a shop, I rush to the gate only to find it's
delayed. But a couple of gates down, there is a flight delayed by a lot more, 14 hours. These girls and many others slept here at the airport.
UNIDENTIFIED FEMALE: My children are sleeping on the floor. It is real cold. My children, yes, it's really bad. We -- yes, I'm tired as well.
STEWART (voice-over): This couple's flight woes started even earlier.
UNIDENTIFIED MALE: My flight started in Dublin two days ago. And my first flight got canceled. And then I started my flight yesterday to London, the
second one. And now this one got canceled also. And now I am here and I hope today I will leave the country.
STEWART: Are you ever traveling again?
UNIDENTIFIED MALE: Not to the U.K.
STEWART (voice-over): I made it onto the plane, it was now delayed. But that seems small fry compared to others.
And amazingly, even my bag made it. Of course, it could all go wrong when I go back home. Maybe I should just stay here -- Anna Stewart, CNN, Ibiza,
Spain.
(END VIDEOTAPE)
NEWTON: Airline tickets are one of the products affected by inflation, as costs rise. A debate is cropping up over the cause. In an analysis in the
U.S. over the last, year members of The Roosevelt Institute argue that there are three factors.
The first, strong demand. We all know it's there. We saw prices increase regardless of the size or type of company.
And next, supply shortages. We've been there. Markups increased more for those businesses experiencing supply chain disruptions.
And finally, rising profit margins. The analysis found that some companies use market conditions to boost their profits.
Mike Konczal is director of macroeconomic analysis at The Roosevelt Institute, he joins me from Washington, D.C.
I've been wanting to talk to you about this to help answer this question. We just had three of the causes.
But why is inflation still so high?
And is price gouging by companies contributing to its significance?
MIKE KONCZAL, THE ROOSEVELT INSTITUTE: Yes, absolutely. We knew that corporate profits were quite high from aggregate data and for things like
earning calls. But it was not until just recently when we finally had the data on last year's corporate accounting sheets.
We were able to look at them, not only last year but over decades past. We found that their profit margins were incredibly high. The highest they've
been since the 1950s. To look at it by sector by sector, industry by industry, we found that corporations were able to raise their profit
margins across the board.
That implies that demand story that we just talked about. Also some industries saw really large markups and really large increases in the
profit rates that implied that there is something going on with supply chains or other forms of sector specific interruptions.
And finally, those firms that had the biggest profit margins, right before the pandemic, increased their margins a little bit more. Those prices are
passed on. So it's a good question of how much those trends are continuing. We don't have the data in real-time. But we do know how these resolve. They
have huge implications for families in our economy.
NEWTON: When you say how they resolve, I think there is that anger. Everybody has experienced this, depending on the product. You see it,
whether it is your plane ticket, it skyrockets. They blame a million different things.
But when things smoothed out, supply chains or less demand, it is persistent, the cost does not go down in lockstep the way it went up.
What do you see happening now in the next few months with that?
KONCZAL: Those profit margins, two or three things could happen. One is they could just persist. They could be huge paydays for shareholders,
bonuses for CEOs.
Prices could come down, they could moderate. They could slow in their rate of increase. Or they could be eating into things like energy costs or
labor.
The third would not bring down prices, it means that prices would not increase based on those kinds of pressures. That would be beneficial. It
means that there is some room for those to come down.
[15:55:00]
And bring down the rate of inflation that we would've seen otherwise.
NEWTON: You know and I know you have seen it, there has been this big debate about corporate greed is explaining a little bit of our inflation. I
don't call it corporate greed, I actually call it market weakness, ineffectiveness. But it definitely plays a role in inflation.
The president's been adamant that companies are being too quick to take advantage of price gouging when they can, when they have the market
strength.
Is he right?
Jeff Bezos the, founder of Amazon, shot back so quickly on social media, saying that the White House does not understand economics.
Which is it?
KONCZAL: I think with inflation as high as it is and as broad as it is, it's not going to be one story. Corporate price gouging, corporate greed,
market weakness, competition weakness, that is not the sole story and it's not the majority of the story.
But it is an important part of the story. The U.S. government thinks of it as a whole of government approach, trying to bolster supply chains, invest
in infrastructure, weakening demand through raising interest rates through the Federal Reserve.
We also need competition policy to be part of the answer. Inflation is such an important thing for everyday families and the stresses that they are
feeling. This needs a big approach and this needs to be part of that.
NEWTON: Given the lobbyists and Congress, I'm not so sure anticompetitive policies are going to save us all that soon. I did want to ask you.
Where do you see inflation going?
I know what a deep dive you do on the data and it is a debate.
Have we peaked inflation or do you see it rising a lot?
KONCZAL: Unfortunately, a lot of people use year over year measurements. Last summer was particularly an odd summer for inflation. It was the first
of the reopenings, it's where auto prices skyrocketed.
I think that's a really poor baseline to look at year over year. If you look since October or January, you see that core inflation is about 5
percent. In addition, because of Ukraine, food and energy prices have gone incredibly volatile and gotten really high.
Within inflation, we see it at about 5 percent. It's becoming a little bit more broader, a little bit more in services and housing. But we know that
the Fed has already started normalizing this. They have put a lot of constraints onto the economy already.
We see house prices coming down, we see housing stop, we see some indications of weakness in the labor market. There has already been a
pretty big tightening and inflation has not been increasing since the beginning of the year.
So there is a lot of room for it to come down with the actions already taken. I'm actually far more worried that the Fed overreacts and causes
unnecessary recessions. Then whether or not inflation increases more, there is a really good, valid and important question about how fast it will come
down.
I do believe that the peak is behind us in terms of core inflation. And we are going to see some moderation in the near future.
NEWTON: That will be good news to many people. And many people have to go grocery stopping and buy a plane ticket soon. Thank you so much, that we
really appreciate that, that's very important.
We are just a few minutes away now from the final numbers and the closing bell, right after this.
END
