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QUEST MEANS BUSINESS
Dow Down 350-Plus Points, Worst Day of the Year; Europe Hit By Market Sell-Off; Greek PM Resigns, Calls Election; Fed, China, Oil Hit US Stocks; Mismatch Between Oil Supply and Demand; Thai Police Seek Bangkok Attackers; Authorities Say Attack Targeted Tourism. Aired 4-5p ET
Aired August 20, 2015 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:59:55] (NEW YORK STOCK EXCHANGE CLOSING BELL)
RICHARD QUEST, HOST: The last few minutes have been absolute turmoil on the stock exchange. The Dow Jones has fallen sharply. She's hit the
hammer, it's a feeble hammer, but never mind what she's doing.
Look at this number over here. We're still waiting to see, the Dow has fallen dramatically in the last few moments of play, down 355 points,
it's going to be the worst of the year if that continues. It's under 17,000, and trading has just come to an end on Thursday, August the 20th.
Consider it a case of fear on the floor of the stock exchange. The market sell-off got steeper, stronger, and deeper.
There was uncertainty in Athens. The Greek government quit, and there'll be new elections next month.
And black gold falls further into the red. Oil sharply down.
I'm Richard Quest. Hold on to your hats, I still mean business.
OK, you don't need to be a rocket scientist or a Wall Street analyst to work out that today was truly horrible on the stock markets. It's the
worst day of the year. The Dow Jones fell sharply at the open. It remained very deeply down.
And we -- down about 300 points at one point during the course of the session. And then right at the close, in this last 20 minutes of trading,
the markets literally fell out of bed and is now down 356 points, a loss of 2 percent on the Dow, and it's under 17,000.
There was also heavy selling in the US -- in the European markets, and the reasons are many and varied, a cocktail of fears over the global
recovery. Oil prices are continuing to slide, briefly hitting a six-year low.
And in the last few hours, a new wild card: Greece. The prime minister Alexis Tsipras has announced and called -- has resigned and called
for elections. Ben Willis is with us. Sir, please explain what happened in the last 15 minutes.
BEN WILLIS, NYSE TRADER, PRINCETON SECURITIES: Basically what you're witnessing is ETF rebalancing or squaring into the end of the day. So,
when ETFs are traded throughout the day, they are left on hedge or open to trading, so you see them balance to square by the end of the day. That's
exactly what you saw, with the market selling off late in the day.
It started very ugly, quite frankly, right on the opening. There was very light trading volume. There was an absence of buyers, what we call a
buyer strike. So, that led to the fear, as you mentioned, coming in. There is definitely fear in this market.
QUEST: Right.
WILLIS: This is a real gut check. If you believe in buying the dips, you had to buy them on the close today. This is a new low from that range-
bound section. If we don't open on the upside tomorrow, it's not going to be pretty.
QUEST: All right. Now, you talked about ETFs, exchange-traded funds, and how they're --
WILLIS: Correct.
QUEST: -- that might have been the technical reasons for the closing last 20-minute fall, but what to you, Ben, explains the bulk of the trading
session, which was down so sharply? Of all those reasons, which is it?
WILLIS: This is a repricing of global growth, and the United States stock market has been a bank to draw money from for the rest of the
investors throughout the world that are unable to make profitable sales in China, in Europe, and the rest of the world.
It is being continued to rock on currency wars, not intentional wars. Today we heard the story of the tenge. I -- quite frankly, I had to look -
- figure out how to pronounce it when I first read about it. But also the South African rand.
We continue to see pressure in the commodity-producing nations that are putting pressure on currencies, and when that happens, people look for
an out, and the safest haven and the most profitable out right now is still the United States to raise funds.
QUEST: All right. Now, obviously, equities in the US are not the safest at the moment, but if we look at the bond market and the way bonds
traded today, because they have issues of their own, with the prospect of higher interest rates coming along at the same time of low inflation. What
happened with bonds?
WILLIS: The bond market is a very interesting dynamic in that the traders in the United States know that interest rates are going higher, so
you don't want to own bonds. But we also have, because of the currency wars throughout the world and the uncertainty, whether it's through Russia
or what's going on in China, we become a safe haven.
[16:05:06] Gold picked up a little bit of the safe haven, if you will, today, but I think gold technically is a hedge against wealth more
than a hedge against inflation. So, the bond market has benefited. The United States Treasury market has benefited from the fact that it's a safe
haven that's kept its price levels and the yield curve fairly flat.
QUEST: Ben, how much of today is the fact that it's the back end of August, it's the dog days of summer, and lots of people are away, so you do
get these very seemingly irrational large moves?
WILLIS: We are -- that's exactly right. The volatility is added to by the fact that there are fewer participants in the market. Take a look
at who's driving next to you on the highway or who's sitting next to you on the train on the way in, if you're one of the guys like me that's still
coming in.
It's very light trading volume. I can tell you, most every single equity trading desk in the world right now has people not on it. They're
on vacation. All of Europe is basically closed. That adds to the volatility.
But the volume we're seeing on the downside move tells you this is authentic institutional selling. When I said EFT-related selling, it seems
to be in basket of stocks when it goes to be sold rather than an individual stock. That again tells me as a trader that means it's based on a basket-
like exchange-traded funds rather than an individual issue.
QUEST: OK. Ben, busy day, thank you, sir. I know you've had a busy day.
WILLIS: Thank you, Richard.
QUEST: But we're very grateful that you took the time to be with us at the top of the program. Throughout the program, we'll be reminding you
exactly of the implications and talking more about this, the Dow down at under 17,000, the sharpest fall so far this year.
In London, the FTSE fell to a seven-month low, now down more than 10 percent from its peak that it reached four months ago. That's your
definition of an official correction. The Paris market and in Frankfurt, they were down more than 2 percent. But remember, they had traded during
the worst parts of all this, the early parts of the New York day. The Athens General fell 3.5 percent.
And Athens had its own issues to concern itself with. The Greek prime minister, Alexis Tsipras, has resigned. He's hoping it won't be for long.
The PM's looking for a fresh mandate, elections expected to be held next month.
Now Alexis Tsipras has been facing growing resistance inside his own Syriza party over the deal he made with Europe and the eurozone in exchange
for bailout number three. Tsipras said it's up to the Greek people now to decide who they want to make the difficult decisions.
(BEGIN VIDEO CLIP)
ALEXIS TSIPRAS, OUTGOING PRIME MINISTER OF GREECE (through translator): With your vote, you will decide who and how to lead Greece
into this difficult but hopeful way in front of us. Who and how to negotiate the reduction of the debt. Who is going to continue with the
procedure of the progressive ideas.
(END VIDEO CLIP)
QUEST: It's the third time this year that the people in Greece have been asked to vote on where the country's going. The elections and the
various different votes that they've had, you will be remember.
On the 25th of January, that was the general election, when Syriza formed a coalition government. It was after that, despite the fact that
they came in saying no austerity, no Troika, no full-scale negotiations, throw away everything that happened before, the bailout negotiations did
begin shortly thereafter.
If you move on from there, you will see that the next date is February the -- I beg your pardon, July the 5th, I do beg your pardon. That was the
bailout referendum. Now, on that referendum, the public voted overwhelmingly "no," rejecting the European bailout terms. However, the no
became a yes and the bailout went ahead anyway.
And now, we are looking at September the 20th. That's when new elections are to be held, and the PM is trying to shore up the support.
Because until now, he has been -- the PM has been relying on the opposition to get his party's manifesto and his mandate through.
Tom Ellis is the senior editor of the Greek newspaper "Ekathimerini," and joins me now from Athens. Tom, good to see you. He had no choice,
didn't he? He was under 120 MPs at the last vote. He was only getting by with the opposition. He either had to go for confidence or an election.
TOM ELLIS, SENIOR EDITOR, "EKATHIMERINI": Yes, it's -- well, we love going to elections, don't we? I mean, we are the cradle of democracy.
Anyway, it was a political move on his party. He couldn't govern, so he moves to elections. He gets rid of the far left, the radical part of
Syriza.
[16:10:06] And then, for the first time after five years of uncertainty, although another election is not the best thing, I guess, for
the markets or the European partners or the IMF. If you look at it --
QUEST: Right.
ELLIS: -- more deeply, you'll see that for the first time in five years, we have the main parties, four biggest parties, supporting the deal.
They just voted for that. So, whoever wins, he or she is bound to implement it.
QUEST: Right.
ELLIS: Now, we don't know if Syriza wins. Most likely, Tsipras is the favorite, but you never know. The New Democracy, the center-right, is
coming back strongly. So it will be a close call, possibly. But still, the main point from this election, or the campaign that is bound to happen
in the next few weeks, is that all of them, the biggest parties, agree and voted for the --
QUEST: All right.
ELLIS: -- the program that has to be implemented. So, in that sense, partners, markets, should be in a strange way -- surreal way, maybe -- more
easy again.
QUEST: But in this election, there will be --
(COUGHS)
QUEST: -- excuse me -- a very strong personal vote for Tsipras, and I wonder, is his popularity still strong, or is there a resentment building
that he went to the country in January and did a U-turn, he went for a referendum and gave them exactly the opposite? Which is it?
ELLIS: It's both, if I may say so, in the sense that he is the young, untested leader until now, he is not part of the old system, so in that
sense, he is the quote-unquote "good guy" that tried his best.
But on the other hand and the other side of the coin, is that he in a sense said things that couldn't be done. He was proven wrong, so the
people will decide.
He himself just said, speaking to the people like an hour ago, that "I made mistakes, I tried my best. It's up to the people to decide." And I
guess at the end of the day, they will decide some kind of another coalition, most likely without the Nationalist part --
QUEST: Right.
ELLIS: -- because we have to remember that Syriza, a leftist party, which becomes more of a center-left now, more of a mainstream European
center-left party, less radical, more mainstream --
QUEST: All right, sir.
ELLIS: -- will most likely not have to work with the far right, and maybe find a partner in the center.
QUEST: Good to talk to you, sir. Thank you for putting that side into perspective.
Let's talk about the politics of it all. The outgoing Greek employment minister, George Katrougalos, joins me now on the line from
Marathon in Greece. Minister, so, elections take place. The electoral mathematics are extremely difficult, but what for you, sir, will be the
most important part here?
GEORGE KATROUGALOS, GREEK EMPLOYMENT MINISTER (via telephone): Well, listen. We want to reconfirm the public support to our policies. And I
think we have broad support among the Greek society, which is not reflected, at the moment, at the parliament.
Because there, our majority has been threatened, because we have about 40 dissidents among the MPs of our party. So, I think the good solution,
the democratic solution, is to go to the people and ask them --
QUEST: Right. Yes, but --
KATROUGALOS: -- what they want.
QUEST: But Minister, at the end of the day, the prime minister is going to the public and basically having to say I went back on everything I
promised you in January, and I went back on everything I said I would agree with the Troika and with the deals. And yes, I've got you a deal, it's the
best the deal we could get. That's essentially what he's going to be saying.
KATROUGALOS: No, no, quite the opposite. The interpretation and the implementation of the deal is going to be a battlefield. A battlefield
similar to the negotiations.
To give you an example, in my field, labor law, what we have agreed is that we're going to legislate according to the best Europe effort. What we
are talking about best European practices, we have in mind the traditional European social model.
Some of our partners have (inaudible) the regulation recent practices. So, who's going to decide? We are trying to make the final arbitrator the
European partners.
QUEST: All right. But you --
KATROUGALOS: Because we want to look up at respondent negotiation, not just on reform, but on the real, actual implementation of the reforms.
QUEST: You still do not have the restructuring of debt, however you want to define it as maturities, interest rates, there won't be a haircut.
And that to some extent, surely, has also to be an issue in this election. Who is going to be able to get the best deal on debt?
KATROUGALOS: Yes, that's true. We have two kinds of problems. The one is exactly the restructuring. And we know that is a mess. All
rational economists agree that we cannot continue like that without some kind of reduction of our debt.
[16:15:07] But on the other hand, we have -- and I think this is more important for the Greek people -- the kind of the policy mix that we are
going to implement. And as I said before, there is very bad language in the agreement. We still are against the more liberal extremes of what some
of our partners have in mind. And that's our basic debt.
QUEST: All right, sir.
KATROUGALOS: If we're going to implement a policy of the left in very, very difficult, more complicated circumstances.
QUEST: We'll talk more about it as the election comes forward. Thank you for joining us, Minister. We appreciate it.
Now, the Dow has suffered its worst day of the year, and oil prices have hit a six-and-a-half-year low. We'll talk about those sort of numbers
when we come back. QUEST MEANS BUSINESS.
(RINGS BELL)
(COMMERCIAL BREAK)
QUEST: Seventeen minutes ago, there was a very nasty event that took place, it was a very sharp sell-off in US stocks. The Dow Jones
Industrials closed at the -- well, the largest single-day fall so far this year, off 358 points. You don't need me to rehears the fact it's now under
17,000.
There were three factors: there was a slowdown in China, Brazil, and Russia. You got the mixed messages from the Fed over when interest rates
are going to rise, and low oil prices. Cristina Alesci of CNN Money is with us. That was quite a -- I mean, the Dow had been down all day, but it
was quite a nasty moment.
CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Ugly.
QUEST: Ugly, that's the word.
ALESCI: And that's basically for what you -- the reason that you stated, which is uncertainty over growth in emerging markets. That's
causing a commodities sell-off, and that is causing investors to entirely reevaluate what the Fed is going to do with interest rates.
We got some mixed messages yesterday out of those Fed meetings. Some committee members think it's time to raise rates, other ones --
QUEST: What did you think when you read the minutes? Where do you think it came down? I noted --
(CROSSTALK)
ALESCI: Well, I think it's coming, and I think it's coming soon. That's personally what I read into it.
QUEST: Yes.
ALESCI: But I think a lot of investors are reading the same thing, given the reaction today. Those are the macro factors. Now, on the micro
front, you have investors kind of questioning some of these lofty valuations, or what they perceive to be lofty valuations, especially when
it comes to media and tech companies. Today we saw Disney get crushed.
QUEST: Yes, why did --
ALESCI: Typically a darling of the media investors. That got crushed. Netflix, another media darling --
QUEST: Six percent down.
ALESCI: Yes. And that stems back -- I mean, this -- Disney has been getting hit for about two weeks now, if you'll remember, on August 4th,
5th, it announced some subscriber losses at ESPN. That had a lot of people asking questions.
And so, investors right now really feeling a lot of skepticism, and that is causing them to take those macro concerns, kind of boil them down,
and find reasons to sell off some of these loftier valuation industry sectors. The financial industry get hit today, too.
QUEST: The issue, of course, is whether this is just noise in the middle of the summer, or is there something deeper underneath?
ALESCI: I think there's something to that. A lot of people are away, even in the US, at the end of August. It's not just Europe --
QUEST: Yes.
ALESCI: -- that takes a break. So, I think we'll have to see what happens when everybody comes back. But to your point, we haven't had a
correction here since 2011. Historically, we've had a correction every year and a half up to that point.
So, a lot of people saying we're overdue, but clearly we need more trading volume, we need people to get back, really do their homework, and
see what happens in September, October.
[16:20:06] QUEST: Excellent. Thank you for the update. Thank you.
ALESCI: Of course.
QUEST: Appreciate that. Now, US crude hit a six-and-a-half-year low as one of the factors. Join me at the super screens and you'll see exactly
how it all traded.
Light Sweet Crude -- well, there's where the day started, with 40 and middles. And then it goes up to -- it rises, and it goes quite high, and
it still continues to rise with a bounce-back of about 1 percent. Still trading, though, lower, 5 below Brent.
The reason, of course, is very simple. It's pure economics. It's the mismatch between supply and demand. And I want you to look at this. This
is the oil supply and demand, and these numbers come from the International Energy Agency.
So, the mismatch between -- the blue is the demand, and the red is the supply. There's a mismatch of about 1.8 million barrels a day. Now,
that's better than in the second quarter, and the IEA believes that this gap will close by the end of the year.
But we are here at the moment. And that is what we're talking about. That is why prices at the moment continue to be so low, because as long as
there's more red and less blue, supply overreaches demand.
So, where is all this supply coming from? Join me, and I'll show you exactly where. The OPEC production is at a near three-year high. You'll
remember the Saudis made it clear they are not cutting production in a price support operation.
But then you have Iran. The lifting of sanctions, the return of Iran in a major way to the oil exporting industry. All of those are really
pumping, and you can see the stockpiles continue to rise. Look at that. There's the US stockpiles going up as well as prices are depressed So,
there's more oil going well and truly from all sides, compounded by the strong dollar.
On the other side of the demand equation, China's demand -- you see? It's gone less. It's gotten even lower as the slowing of the economy in
China. Put all of this together, and you end up with more oil going into the system, but very little coming out the other side. It's classic supply
and demand.
Chris Faulkner is the CEO of Breitling Energy. He joins me now. This 1.8 million barrels -- we can see the reasons: OPEC, Iran, China, the US.
It doesn't go away anytime soon, therefore you must thing prices will fall.
CHRIS FAULKNER, CEO, BREITLING ENERGY: I think in the near term, Richard, we're going to see more headwind then we're going to see tailwind
for the prices of oil. You've mentioned a lot of these items.
We're talking about Iran, bad timing with the sanctions potentially coming out. Iran has said, look, within a matter of weeks, we can go up
500,000 barrels a day. Within a matter of months, a million barrels a day. We don't need that supply right now.
The United States and essentially Canada -- North America, if you will -- is the swing producer. We've got to cut supply in this country. Now,
everyone I've talked to, all my friends -- and we talk all the time about this in the industry -- producers are halting cap ex, our new projects are
getting canceled or delayed.
So, I'm hoping by the end of the year, we're going to see some of this capacity versus demand begin to --
(CROSSTALK)
QUEST: Right, but Chris --
FAULKNER: -- come back into swing. Go ahead.
QUEST: The demand, as long as OPEC, Saudis, and others --
FAULKNER: Correct.
QUEST: -- are going to pump, pump, baby, pump, as long as they're --
FAULKNER: They're going flat-out. Yes, they are.
QUEST: Right. Then you are going to have to cut it in any event. At $40, $45, those fracking wells are uneconomic.
FAULKNER: When we test a three-handle, which is coming really soon, it's going to put a lot of people in disarray, and it's going to cause a
lot of continued bankruptcy, or companies continue to pull back very, very rapidly.
Now, when you look at this on a macro level, rig counts going up for the last four weeks, we're shifting rigs around, we're drilling what we
have to drill just to hold acreage, but production we think is still going to come offline by the end of the year.
But let's keep in mind, we're in the new era of oil prices. We're not going back to $80 or $90 anytime soon. We're going to be dealing with a
$45 to $60 commodity --
QUEST: All right.
FAULKNER: -- in the mid-to-long-term. We're going to have to adjust on our side efficiencies, do more with less, and drive the cost --
QUEST: Is --
FAULKNER: -- of drilling down if we're going to continue.
QUEST: Is there a risk of a total collapse down to $35 and $30?
FAULKNER: You know, I think that -- there's always a risk of everything. What I'm looking at right now is we're going to test $40,
probably break through it and end up somewhere in the $35 range, and that is going to continue immediately to get projects shut offline.
QUEST: Right.
FAULKNER: But these wells have been coming offline, Richard, for the last six months, and they declined very rapidly. We talked about it on the
show before. I think some of the snowball effect's going to start --
[16:25:02] QUEST: All right, sir.
FAULKNER: -- happening, but it's not happening quick enough, as we know.
QUEST: Chris, good to talk to you. Thank you for talking to us.
FAULKNER: Thanks, Richard.
QUEST: Ahead on QUEST MEANS BUSINESS, Thai authorities say Monday's bombings was an attack on tourism and the economy. The minister in charge
of tourism on this program next, QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Police in Bangkok tell CNN they're looking for a new person in connection with Monday's deadly bombing. The police want to talk to a
person described as a woman wearing a black shirt. Authorities think a minimum of ten people were involved in the attack.
Thailand's tourism minister, Kobkarn Wattanavrangkul, joins me now on the line from Bangkok. Minister, a very short, simple question: how are
you going to rebuild confidence in your tourism industry after this?
KOBKARN WATTANAVRANGKUL, THAI TOURISM MINISTER (via telephone): Thank you, Mr. Quest, for the question. We believe that at the moment, it is
crucial to offer the impact (inaudible). Thailand has gone through many ups and downs in the past, and we are quite resilient, but (inaudible),
normally they will return between maybe one to three months. So therefore, we are aiming to achieve 2800 --
QUEST: Right.
WATTANAVRANGKUL: -- international tourists arrival by the end of the year. We believe that we can do that. Because number one, this one
happened in Bangkok, and --
(CROSSTALK)
QUEST: But Minister --
WATTANAVRANGKUL: -- normally we have the popular places around Thailand, like (inaudible) or Chiang Mai. Those places are really
(inaudible).
QUEST: Right, but Minister, let me jump in -- let me --
(CROSSTALK)
WATTANAVRANGKUL: And we believe that --
QUEST: We have a bad line here, Minister, so I apologize. But let me ask you, are you going to put in place more security? Are you going to put
more police? Are you going to take measures to protect more?
WATTANAVRANGKUL: Oh, yes, definitely. We have already put down more security in every crowded place, especially among the tourist destinations.
Not only in Bangkok, but throughout the country, the police are -- cooperation between the police, the military, as well as the volunteer
tourist police.
QUEST: And finally, Minister, I assume, of course, you're now -- you're calling on everybody still to come to Thailand.
WATTANAVRANGKUL: Yes. (inaudible) We would like people to come to Thailand, because (inaudible) are critical to the (inaudible) of Thailand.
We receive so many encouraging emails and messages from our visitors around the world, that they understand the situation and they're confirmed to
return to our country, not only to Bangkok, but to the popular places.
QUEST: Minister, I promise you, I'll see you in Bangkok. Minister, thank you very much, indeed. I know it's the middle of the night for you
there, and we're very grateful that you got up to speak to us this evening. Apologies that the line was not as clear as it might have been.
[16:29:55] QUEST MEANS BUSINESS, it's one of those extremely busy days. Europe's migrant crisis is straining police forces and finances, and
now there are warnings that Europe's open borders are at risk. We'll talk about that after the news headlines.
(COMMERCIAL BREAK)
[16:30:00] RICHARD QUEST, CNN INTERNATIONAL ANCHOR AND REPORTER HOST OF "QUEST MEANS BUSINESS" SHOW: -- and now there are warnings that Europe's
open borders are at risk. We'll talk about that after the news headlines.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment when Ken Rogoff tells us how Europe can tackle its migrant
crisis.
And no upgrades, no reservations, no refunds and now passengers are wondering what do they get on the basic economy plane ticket?
Before all of that, this is CNN and on this network the news always comes first.
The Greek Prime Minister Alexis Tsipras has resigned and will run again in elections expected to be held next month.
He had been facing resistance inside his own party over the concessions he made in exchange for the third Greek bailout. Mr. Tsipras
said the Greek people must decide who they want to make the difficult decisions.
(BEGIN VIDEOCLIP)
ALEXIS TSIPRAS, OUTGOING GREEK PRIME MINISTER VIA INTERPRETER: With your vote you will decide who and how to lift Greece into this difficult
but hopeful way in front of us.
Who and how to negotiate the reduction of the debt? Who is going to continue with the procedure of the progressive ideas?
(END VIDEOCLIP)
QUEST: The U.S. stock markets absolutely pounded today with the Dow Industrials the worst of the year, dropping 358 points below 17,000. The
NASDAQ was down 141 points, nearly 3 percent off.
Falling oil prices, China's economic slowdown and uncertainty about how soon the Fed will raise rates -- all added to the nerves.
Tensions on the Korean peninsula are escalating. North Korea fired two shells across the heavily-fortified border and South Korea retaliated
with dozens more. Jong-un is warning Seoul to stop what it's called 'psychologically broadcasting from speakers' or face military action.
Thai police say they think as many as ten people were involved in Monday's bombing at the shrine in Bangkok and they say they're looking for
an unidentified foreigner who they consider to be the main suspect.
Twenty people were killed in the attack.
The former U.S. President Jimmy Carter held a news conference today to discuss his cancer diagnosis. The 92-year-old said cancer was first found
in his liver and has now spread to his brain.
He underwent his first radiation treatment today. Mr. Carter said he is accepting of his illness.
(BEGIN VIDEOCLIP)
JIMMY CARTER, FORMER U.S. PRESIDENT: I happen to have deep religious faith which I'm very grateful for, and I was pleasantly surprised that I
didn't go into an attitude of despair or anger or anything like that. I was just completely at ease.
[16:35:13] As Rosalynn would testify, I think she didn't have any doubts about my veracity, but I've just been very grateful for that part.
So I'm ready for anything and looking forward to a new adventure.
(END VIDEOCLIP)
QUEST: Returning to one of our top stories tonight, hours before Alexis Tsipras handed in his resignation, Greece made the $3 1/2 billion
payment to the ECB as part of its repayment of loans.
The money came from the bailout cash it received in the nick of time - badly-needed funds which came with strings attached.
CNN's Isa Soares reports.
(BEGIN VIDEOCLIP)
ISA SOARES, CNN ANCHOR AND CORRESPONDENT: Greece and the Eurozone, two sides vying for the political and economic spotlight.
Taking center stage was a bitter row of tax hikes, pensions and black holes in bank balance sheets. But now Greece and its creditors are putting
on a show of unity. Money's being exchanged, reforms are being accepted.
But as the curtain falls on the negotiations behind the scenes, it's where the real drama is playing out. Greece is facing unprecedented
control from its creditors and it seems Mr. Tsipras here - well he's no longer dancing to his own tune.
The country must now adhere to very strict rules. That some Greeks may find some of these controls aimed at opening up markets half-baked.
Like the one on bakeries.
Before, bread could only be sold in bakeries and had to be made to one of two standard weights. Now Greek bakers are being told to rise to a new
challenge, dropping the standardizations and allowing bread to be sold in more outlets such as supermarkets.
If that was hard to swallow, so is this - in Greece milk could only sit on the shelf for five days. That's going against E.U. legislation of
ten days. All this makes importing milk difficult, so dairy products are about 34 percent more expensive.
Now Greece will have to adhere to E.U. rules which will give Greek citizens access to a wider variety of cheaper dairy products.
Pharmacies too will have to adapt. Until now they could only owned by licenses pharmacists, curtailing the number of places to get prescription
medications.
The theory is by getting rid of the ownership restrictions, it will open up the sector to a wider range of providers. Then there's the matter
of shopping. With a few exceptions, all shops in Greece are closed on a Sunday which Europe wants to change.
Critics say these regulations are tougher than the ones in places like in Germany or Italy where most shops are allowed to be closed on a Sunday.
Greece may find some of these individual reforms small and some may even say petty, but if they want the Troika to lend them money, they'll
have to accept the creditors are now in control. Isa Soares, CNN London.
(END VIDEOCLIP)
QUEST: The Greek bailout debate isn't the only crisis that's preoccupied Europe in the past few months. Across the region, an influx of
migrants is straining police forces and finances. The United Kingdom and France have set up a new command center in Calais, and the object is to
improve security near the Channel Tunnel entrance.
Macedonia has declared a state of emergency, and that will allow the Macedonian army to get involved.
Germany's interior ministry -- minister - has called for more help from E.U. members and says the Schengen borders might need to be closed.
Ken Rogoff is the former chief economist at the IMF and told Maggie Lake that Europe's political structure makes it difficult to deal with the
crisis.
(BEGIN VIDEOCLIP)
KEN ROGOFF, PROFESSOR OF ECONOMICS, HARVARD UNIVERSITY: Certainly there needs to be burden sharing because the European Union has a common,
you know, border they try to have free movement within the European Union.
There - you know - some countries have the Schengen Visa where you don't even need to be tracked at all.
And on the other hand, they don't really have a common immigration policy, they don't really have a common interest. So in some ways, it's a
little bit like the debt problem where, you know, they have the euro but they have - the don't have - the other pieces and just the fact that these
tensions between France and the United Kingdom over this long-standing border. It's kind of remarkable to see that going on.
That's inside the European Union, it's not ta the border of the European Union.
MAGGIE LAKE, BUSINESS ANCHOR AND CORRESPONDENT FOR CNN INTERNATIONAL: Can we have -- in the situation with Greece we had finance markets forcing
the politicians to come up with a solution.
[16:40:04] In this case we have looming elections that may force the issue from a political standpoint. As you said, you've got the rise of far
right of anti-immigration. It's stoking racial tensions. How is this going to play out and could that actually help it come to some sort of more
cohesive answer and cut through some of the bureaucracy?
ROGOFF: Goodness, you know, I'd like to say that it will. It's a very difficult problem, there's no simple answers even though people try to
put them forward. They clearly need to share the burden of the costs of dealing with the immigration. The frontline states, you know, are taking a
lot of the immigrants coming in and having to pay a lot of the costs.
Some countries like Germany are absorbing actually a lot more of the immigrants than other countries like France, finding out some way to
allocate, to share the costs, to share the burden.
So I imagine that's the kind of thing that they can talk about - they ought to be able to talk about. The larger, moral question of how do we,
you know, a rift (ph) society living on the edge of this collapsing continent in Africa with all its problems. How many people do we let in?
LAKE: Right.
ROGOFF: Ultimately the solution's not in Europe, it's to make Africa peaceful, stable. To have happen in Africa what happened in Asia, -- but
unfortunately that's very far off.
LAKE: Yes.
(END VIDEOCLIP)
QUEST: Ken Rogoff of Harvard. The Greek island of Kos has become one of the focal points for the migrant crisis. More than 7,000 migrants
landed in July alone and there's no sign that the influx is slowing down. CNN's Atika Shubert has our report from Kos.
(BEGIN VIDEOCLIP)
ATIKA SHUBERT, CNN CORRESPONDENT: Out for a sunrise swim in Kos, retirees spot the latest arrival coming in - rowing in and struggling
against the tide.
We view them from above and as they land.
This is the extraordinary scene every morning - boat after boat of migrants and refugees coming ashore, these ones having rowed all the way
from Turkey.
As you can see, for many of them they're just happy to have survived the night. These are from Pakistan. They paid almost $1,000 each for an
inflatable dingy whose engine broke, forcing them to row across. None of them can swim.
Was it dangerous?
Male: Very dangerous. The water is very, very dangerous today.
SHUBERT: Within minutes a municipal cleanup crew arrives and sweeps their life jackets away. Local men on motor bikes appear and swiftly pack
up the boat, motor and all, and ride off.
What is now clearly a morning routine on Kos with hundreds arriving every day. Now that is Greece, that is the goal. But how to get there?
Well, take a look at it from the air.
For many migrants and refugees, they see this distance as just 2 1/2 miles - about 4 kilometers - between Turkey and Greece. You could almost
swim it if you could swim, and many who make the journey cannot. But for them, this is still the safest route across the Mediterranean. Safer but
still dangerous.
For so many, only the beginning of a long and difficult journey across Europe in search of a new home. Atika Shubert, CNN Kos, Greece.
(END VIDEOCLIP)
QUEST: And we'll be back in a moment.
(COMMERCIAL BREAK)
[16:45:38] QUEST: Russia is stepping up its war against Western foods and now destroying tons of much-needed food simply apparently because of
its origins.
The latest target is a suspected cheese mafia. CNN's Matthew Chance is in Moscow.
(BEGIN VIDEOCLIP)
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: The contraband is lined up on the shop counter as serious-looking customs
officials record their latest seizure.
Three frozen geese from Hungary, the local government food inspector declares illegal under Russian law and without proper documents she says.
Witnesses to the crime are also featured in just one of the many absurd episodes in Russia's bizarre war on Western food. In fact, the
internet is ablaze with videos of Russia's food destruction, shot by authorities apparently trying to impress the Kremlin.
This mass squashing of illegal peaches in the Leningrad region continued in darkness despite a raging thunderstorm. The umbrella-wielding
official proudly reporting crushing more than 19 tons of fruit for having the wrong paperwork.
Many Russians amid an economic crisis are strongly opposed to all the waste. The ban on Western food imposed in response to sanctions from the
West has led to higher food prices here in their supermarkets.
And a recent petition against food destruction was signed by hundreds of thousands of people. The authorities seem undeterred if anything
stepping up their efforts.
The Russian interior ministry released footage of its own progress. The bust of a major cheese-smuggling ring which officials say illegal
earned millions of dollars and posed a risk to Russia's cheese-eating public.
Four hundred and seventy tons of forbidden cheese was found says an interior ministry official, adding that six people had been arrested. The
breakup of a cheese mafia may seem laughable, but Russia is clearly taking its food crackdown extremely seriously indeed.
Matthew Chance, CNN Moscow.
(END VIDEOCLIP)
QUEST: A cheaper way to fly or perhaps not. Delta is introducing a new class of fares. The critics say it shames passengers into spending
even more money and some believe that new tighter seats are actually dangerous. In a moment. (RINGS BELL).
(COMMERCIAL BREAK)
(BEGIN VIDEOCLIP)
(AIRPLANES FLYING)
QUEST: And up we go. Delta Airlines is experiencing a backlash from its no-frills airfares. Delta's offering what it calls 'basic economy'
tickets. They are cheaper than main cabin and they have an entire range of restrictions.
[16:50:13] First of all, the one that you won't be able to have - you have to forego longtime airline basics. Nope, you cannot pick your seat
ahead of time. You will also be the last passengers to board the plane - the overhead compartments will be well and truly full by the time you get
onboard.
There are no upgrades available to you at any time and absolutely none - forget about it, don't even think about - refunds. But it's a cheaper
price -- $20 to $40 less on the ticket. The critics say the plan shames passengers into spending more money.
Joining me now from Washington is Paul Hudson, the president of FlyersRights.org. Paul, the airlines say - you know the - so you're
enormously respected and experienced - you know the arguments. The airlines say passengers want the option of these cheaper fares.
PAUL HUDSON, PRESIDENT, FLYERSRIGHTS.ORG: Well I haven't seen any studies that indicate that. What is clear though is that airlines are very
profitable now and they want even more profits. And because there is no definition of what service you get when you buy a ticket, the airlines are
able to define it down now to really to getting to a steerage class.
QUEST: And yet you look at the success of Spirit, Allegiant and these very bare-bones carriers, and Delta would simply say all we were doing is
offering a few seats on our aircraft that will appeal to those passengers. But you don't buy that, sir, do you.
HUDSON: No, it's kind of like OPEC saying what the public really wants is his - poorer service and higher gas pump prices. The airlines,
because they have consolidated now, most consumers don't have much of a choice. So what are you supposed to do?
You really don't have much choice. Had there been 10 or 12 airlines as it was when airlines were deregulated, then competition would probably
take care of this.
QUEST: And then you've got the question of smaller seats. Because I know you've been very concerned by the - I was going to say the increase of
smaller seats, but you know what I mean by that. The seats are getting smaller, the pitch is getting narrower, the seat's getting less wide.
HUDSON: Yes. We're petitioning the FAA to put a moratorium on any further shrinkage. Airlines have reduced the seat size now to about 16 1/2
inches in width and it's down to under 17 inches - as little as 17 inches - in pitch or distance between seats.
This means that the average person can no longer fit comfortably in a coach seat and someone that is out of the norm - say a person over 6 foot 2
or someone over perhaps 220 pounds - they are going to be in actual danger on long flights of a number of conditions.
QUEST: And yet at the other extreme, we see at the front of the aircraft as you'll be aware - you know, flat beds, showers on some
international carriers. So there is - there's a bifurcation, isn't there? The rich get more and the rest have less.
HUDSON: Well, it's gone even further now. Someone like Delta has, you know, multiple classes and the idea, though apparently once again
profit-driven, is to squeeze the most out of every type of passenger.
QUEST: So - let me just jump in that (inaudible) squeeze the most out of every passenger - but isn't that what companies are supposed to do?
HUDSON: Yes, but there have to be limits. If there are not, how would you feel if the water company called you up and said, 'Well, we're
going to charge you extra to have non-cloudy water.' Or let's suppose you buy a car and after you're ready to sign the contract they say, 'Oh by the
way, tires are not included.'
QUEST: Right. Thank you for joining us, sir. The viewers will certainly have views on that. What do you think on a basic economy ticket?
Good to see you, sir. Thank you for joining us.
A final check on our top story tonight. Look at the Dow Jones Industrials. This is how the trading day went. It was down at the open
and it stayed down and it fell off very sharply.
I need to put it into perspective for you. Over the course of six months, it's starting to look like a map of the Himalayas the way in which
it's going.
Over a one-year, you're starting to see - here's the new year, we start up over here. We're now on - well we are - under the position of
where it began at the course of the year.
[16:55:09] The NASDAQ fell the best part of 3 percent - almost an identical graph of that late fall in the course of the section. And over
the six months, -- again - these are troubling graphs at this point in the profitable era, if you like, when corporations are having that much more
difficulty.
That's the way the U.S. markets traded during the course of today. I'll have a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment" or, frankly, not very profitable when you look at the market. The market fell 2 percent. It's down 358
points, and for the year-to-date, the Dow is now down some 4.6 percent.
There are a myriad of reasons why the market suddenly has become so bilious. You've got the falling price of oil, you've got a slowdown in
China, you've got worries about economic growth in the rest of the world. You've got a strong dollar and what that's going to mean for U.S.
exporters.
Take any one of these reasons, and you've got some serious problems. The issue of course is how long if at all it continues. And for that, you
really have to put into perspective we're in the middle of the summer and at this time of the year volatility is high but volumes are low.
It is very risky to start suggesting that what we've seen in the last day or say is anything more than a bit of summer indigestion. And that's
"Quest Means Business" for tonight. I'm Richard Quest in New York.
Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's profitable. We'll meet together tomorrow.
END
