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QUEST MEANS BUSINESS
Crowded Above, Tokyo Begins Building Underground; Deficit Reduction Super Committee Fail to Reach Deal; Sell-Off on Wall Street; Austerity in the U.S.; Interview with Peter Morici; Would At Work; Egyptian Protests
Aired November 21, 2011 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HALA GORANI, CNN CORRESPONDENT: I'm Hala Gorani at the CNN Center. Here are your headlines this hour.
Officials say the the Egyptian cabinet has offered to resign after three days of violence in Cairo's Tahrir Square and an adjacent street. A cabinet spokesman says the government will continue to perform its duties until a decision on the resignation is made. Protesters have been clashing with security forces in the square evoking scenes from the revolt that toppled former president Hosni Mubarak in February. Officials say at least 22 demonstrators have been killed.
Western powers are putting new pressure on Iran over concerns it's building nuclear weapons. The British Finance Ministry says the UK will cut all ties with Iranian banks. And in about two-and-a-half hours, the U.S. is expected to announce new sanctions against some Iranian companies.
Reports say two buses carrying Turkish pilgrams back from the Hagg were attacked inside Syria Monday. According to Turkish media, the buses apparently got lost and gunfire broke out after some of the people on board tried to ask for directions at a checkpoint. We're told at least two people were hurt.
That's a quick look at your headlines. I'm Hala Gorani at the CNN Center. Quest Means Business starts now.
RICHARD QUEST, HOST: Hurdling towards failure, the super committee deeply divided. Rapture on Rajoy in Spain, the markets think otherwise. And it's all about what's going on a little over the surface in Tokyo. It's our future city underground.
I'm Richard Quest. I mean business.
Good evening. From super committee to a super disappointment, what's happening in Washington is having a major effect on the world financial markets. This time it's the U.S. turn. And nowhere more evident than in New York where the Dow Jones is off 2.7 percent, a fall of 323 points. That's the latest position in the U.S. and in Europe too. Stock markets were sharply lower during the day. Investors on edge about the lack of progress that U.S. politicians have made solving debt problems in the United States.
With just hours left to the deadline it looks as though we'll be getting from the U.S. super committee the news will be bad. Aides have told CNN the band of bipartisan lawmakers, six from either side, they have failed to draw up a plan to slash $1.2 trillion plus from the U.S. deficit.
It takes the U.S. a step nearer to automatic budget cuts that were agreed in the summer, the principle were at least. And most important, it lays bare the malignant stalemate at the heart of the U.S. government.
CNN's Kate Bolduan joins us now live from Washington. Is it fair, Kate, to say that failure is just about on the cards and a done deal?
KATE BOLDUAN, CNN CORRESPONDENT: I would say -- we always try to leave ourselves a little bit wiggle room up here on Capitol Hill, Richard. And the only reason being in 11th hour negotiations are not surprising when it comes to these major negotiations. But I will say baring any unforeseen breakthrough, or honestly maybe a miracle, it does appear that the committee is headed towards failure and that we will likely hear them announce that formally sometime this evening, possibly after the markets close here in the United States. And that that -- that statement of failure will come in just the form of a joint paper statement, which in and of itself is receiving some criticism among many -- Richard.
QUEST: All right. Kate, we'll leave you for a moment and many (inaudible) in Washington.
The politics of this are messy. The economics are serious. The potential outlook is disastrous.
Democratic Senator John Kerry who is on the committee says the main obstacle to an agreement is a Republican pledge against tax rises. He told NBC's Meet the Press the committee's main focus should be cutting the deficit, not taxes.
(BEGIN VIDEO CLIP)
SEN. JOHN KERRY, (D) MASSACHUSETTS: Most significant block to our doing something right now, tomorrow, is their insistence, insistence, insistence on the Grover Norquist pledge and extending the Bush tax cuts.
Now we are not a tax cutting committee. We're a deficit reduction committee.
(END VIDEO CLIP)
QUEST: So, there is John Kerry. That is the taxpayer pledge that he is referring to. It was created by Grover Norquist. The president of the taxpayer advocacy group Americans for Tax Reform. It vows to oppose any and all tax increases. According to the group's web site it has the support of 230 plus representatives and 41 senators.
Grover Norquist is a name that is on everybody's lips in Washington. He joins us now live from Washington.
Mr. Norquist, like it or not -- and you heard Senator Kerry -- you are being blamed as the 13th member of the super committee whose obstructionist.
GROVER NORQUIST, AMERICANS FOR TAX REFORM: Well, actually the taxpayer protection pledge is a commitment by elected officials, 238 in the House, 41 in the Senate, it's a signed commitment to voters not to me, to the American people, that they'll oppose any effort to raise taxes. This was known a year ago. Obama knows it. Reid knows it. Pelosi knows it. They've been trying to get congress instead of reigning in spending, to raise taxes. And of course we just had an election where the American people said stop spending so much. The Democrats want to raise taxes to pay for more spending.
QUEST: But are you exercising what some might describe as undue influence on lawmakers whose primary duty is to cut the deficit and to avoid the U.S. economy going down hill?
NORQUIST: No. The pledge, and my support of those elected officials who oppose tax increases, are what's moving us in the right direction. Some politicians want to keep spending more money and want to raise taxes. The final negotiating position of the Democrats, Senator Kerry and the others on that committee, was to increase taxes by $1 trillion, increase spending by $1 trillion and imagine that not being in Iraq for the next 20 years would count as spending cuts.
QUEST: So, are you prepared to see the process fail tonight, as it looks like it's going to, with all the attendant market disruption. The Dow off 300 points, rather than exceeding or compromising on tax increases ever so small.
NORQUIST: That presumes that the market wanted to see the top marginal tax rates increased, the capital gains tax increased. That's kind of silly. We know what's happened when those kind of tax increases have passed, what's happened to the market. In point of fact, as we move forward, the fact that this commission was not going to come to some grand agreement has been known for months not hours.
So we're going to move forward -- and by the way, there's been no failure. If this committee didn't come up with $1.2 trillion in spending cuts, we've go to automatic spending cuts. The only failure if you want to raise taxes.
QUEST: But in the -- there's a lesson to be learned, surely, from what has happened in Europe over the last six months to a year that failure by politicians to agree and move forward eventually pushes bond yields up and turns economies sour. Is that a risk you're prepared to run?
NORQUIST: The history of Europe over the last 30 years is in creating unsustaining social welfare states is a bad idea. That's what we are fighting against right now. Our job is to not become Europe. That is why the American people are saying to congress, and specifically to the Democrats and Obama, we're not going down the road of France and Greece and Italy which have much larger welfare states than the United States, can't afford them, and they're bankrupting their countries.
We're not going there. Obama wants to turn the United States into Europe. We're stopping him.
QUEST: Grover Norquist, busy day for you. And we appreciate you on this day taking time to talk to us and put your point of view so strongly. Grover Norquist thank you for joining us there from Washington.
The other side, perhaps, on point of view Robert Rice was Labor Secretary under President Bill Clinton, also the author of "Aftershock: The Next Economy and America's Future" which is in paperback now.
Former secretary Robert Reich joins me now from the University of California at Berkley. You heard, I suspect, Grover Norquist. The United States is not heading to be Europe, Greece, Italy and Ireland. But doesn't Mr. Norquist have a point that somebody has to talk to -- hold the line. And that's what they're doing?
ROBERT REICH, FRM. LABOR SECRETARY: Well, they're holding the line on tax increases on the wealthy. They have put on the table some substantial cuts in social spending, including some programs that were very sacrosanct to Democrats: Social Security, and Medicare, the big social safety nets that were emblematic of the Democratic Party going back years.
But you see in order to get an agreement the Republicans had to put on the table some tax increases, specifically tax increases on the wealthy.
The tax rate right now, the top tax rate in the United States on the wealthy is lower than its been in the last 60 years. And at the same time, a larger percentage of total income is going to the wealthy than has gone to the wealthy in 80 years.
So if we're going to try to get the budget deficit down, it stands to reason there's got to be a combination of spending cuts and tax increases.
QUEST: What's your fundamental fear, Mr. Reich, that if they don't -- it actually looks like the failure will take place, although they'll abandon it. I mean, that there will be some who say that failure was built into this process from the summer. It was a bad compromise to begin with to have the super committee.
But what's your fear now?
REICH: Well, my fear now is that with the failure of the super committee to reach any agreement, then we go into automatic, and across the board spending cuts, many of which are going to hurt children, young people, education, job training -- you have Food Stamps -- many people are going to be hurt for absolutely no reason at all.
We have a kind of austerity program going into effect precisely at a time, that is starting in 2013, almost just a little bit more than a year from now, when the American economy is still likely to be very weak. And yet the rich are not sacrificing at all.
QUEST: You talked to the protesters that are in Oakland the other day in a speech in which you made these points about how the inequality in the United States is rising.
So I wonder, surely the failure of the super committee tells a terrible tale of American politics today.
REICH: Well, it's certainly emblematic. The super committee, the failure of the committee, the failure of congress and our democracy to be able to not only reduce the budget deficit over the long-term, but also the failure to raise taxes on the wealthiest members of our society does suggest a fundamental failure of democracy.
We now have so much money going into our democracy with almost no restrictions at all. The Supreme Court now saying that money is the equivalent of speech and the corporations are the equivalent of people has inundated congress with money. And yet at precisely the same time we've got people who are protesting, who are being fire-hosed and clubbed and told that they can't protest this state of affairs. It's really very unbalanced.
QUEST: As a student of economics and a professor of economics and Mr. Reich, when you look at the situation, the Transatlantic situation, Europe paralyzed on its EuroZone debt crisis, the United States now apparently paralyzed on its own debt reduction plan. How serious is it that both sides of the Atlantis can't move forward?
REICH: Well, it is very serious politically. And it could be very serious economically.
Look, almost every economist, at least on this side of the Atlantic will tell you that in the short-term austerity is the wrong medicine. You've got to actually get growth and jobs back. And then once growth and jobs are back you do want to reduce these very, very large budget deficits, partly by spending cuts, and partly by tax increases, particularly on the wealthiest members of society.
What I've just given to you, that is -- that sequence of short-term jobs and growth, longer term reductions in spending and increases in taxes on the wealthy it is a formula that could work, but our political processes are absolutely deadlocked.
QUEST: All right. Joining us from California, many thanks for that. Two sides and two views on the crisis. And we will, of course, tell you how it's reacting, the most important perhaps, from investors' point of view is at the moment the Dow is off, as you can see, very heavily. The Dow is off more than 300 points.
When we come back in just a moment, let's return to our own bailiwick in Europe, a landslide at the polls and a land slip for the stock market: investors vote against Spain's new government even as the voters say yes.
QUEST: Now Spain woke up to a brand new government with the same old problems. A new center-right government swept to power yesterday on promises to tackle the debt crisis. It seems the markets just aren't convinced. Spain and Spanish foreign costs are rising tonight. The yield on the Spanish 10-year bond is 6.55 percent. It's inching closer to the poisonous 7 percent.
Now you take 7 percent as (inaudible) because that triggered bailouts in other EuroZone countries. It's not a given that of course 6.5 or 7 percent automatically does it.
Italy's new government has impressed markets even less. 10-year Italian bonds are now at 6.7, give or take, just .6 percent.
Back in Spain, Madrid's IBEX Index falling all day as Spanish banks are looking especially unhealthy. It close down 3.5 percent. All of which will be a concern with the drip, drip, drip affect of falling stock markets.
This is how Mariano Rajoy, leader of the Popular Party celebrated his party's triumph last night. The euphoria is unlikely to last. Mr. Rajoy said he will make cuts everywhere in order to slash Spain's deficit, promising to lead the battle against the crisis. No miracles, he says.
Now let's go to Spain. I'm joined by our Madrid bureau chief Al Goodman in the Spanish capital. Al, look, he says he went to the polls saying that there would have to be cuts and there would have to be austerity. So the public voted for him. They now know, do you believe, what's coming their way?
AL GOODMAN, CNN INTERNATIONAL CORRESPONDENT: Now they know there are going to be a lot of cuts. And by the way, Richard, he will not be in power until just before Christmas. So we have a month, basically, and that may be contributing to the market nervousness, because you have a caretaker government of the outgoing Socialist who was so heavily hit by this financial crisis the he didn't even run again. And then you have Rajoy who hasn't announced who his economic team is going to be yet, that may also contributing. There are rising calls here in Madrid, even this Monday, go ahead and tell the world your economic team and that will maybe calm down the markets.
But in terms of the budget cuts, he has to do the budget by -- for next year. And what he hasn't told the people, besides pensions, which he says he's not going to touch, he hasn't said where he's going to make the cuts. So the outcry could come later -- Richard.
How are the Spanish people going to react when the nasties finally arrive and when it starts to get tough. Will we see the sort of street riots and the sort of protests? Or are the Spanish people resigned to their fate here?
GOODMAN: OK, that's an excellent question and we don't know the answer. But one could predict that the tensions are going to rise.
Now you already have a whole basis for the protests in Spain. For the past six months these economic protests have had the name of the 15th of May, the 15M movement, mainly young people, but have attracted a lot of other people. The unions are sort of waiting in the wings. They did not go out very big against the Socialist government. A few major actions, but that's another potential group that could get explosive. You're already seeing strikes here just in the past days of doctors, of teachers at various parts of the regions around Spain.
Now if the cuts get deeper this could all gel together and it could get a lot more tense -- Richard.
QUEST: Al Goodman joining us from Madrid this evening.
And if you want to put into perspective this is how the markets across the rest of Europe fared. By no definition could ever be described as a good day. The markets were down several percentage points. The worst losses on the FTSE, the 100 Index, Lloyd's banking (ph) fell to two-and-a- half year's low.
Apparently with the illness of the chief executive the investors didn't like the plan to cover the chief exec's absence on sick leave. They're worry about what happens if he fails to return.
The worst losses of the day came in Paris and in Germany, not surprisingly two key EuroZone countries. And they're off more than 3 percent.
Quest Means Business for you this evening.
Tokyo needs more space. And we'll show you how Japan's capital is taking the green route underground tonight in future cities.
QUEST: How Tokyo is showing the world size doesn't really matter. In a city with a mighty population and a miniscule amount of spare land there's no shortage of pushing the design boundaries in Japan's capital. If you join me over in the library, you'll see what I mean.
It's future cities tonight. And we are in Tokyo. Among the innovations we of course you'll be familiar with the capsule hotels, the small sleeping places for just a small amount of money salary men who didn't go home, they'd take one of these capsules overnight or for a few hours rest. Everything you need is in there -- TV, alarm clock, adjustable lighting. They are almost coffin-like as I'm sure some of you have tried them on your visits to Tokyo.
The country -- or the city itself is densely packed with cars as well as people so it's adding imagination to car parks like roof gardens an the like to create green space. It's a gift in a sea of concrete.
And keep in mind three million Tokyo residents make their way to the city center each day for work. Look at the map of the Tokyo subway: complicated at the best of times. 13 million they join who already live there. You can feel that for yourself by taking a ride on the Tokyo subway during rush hour. They push people onto the train.
Now the demands of compact living as such are sending inhabitants underground in other ways. Residents who used to use their bikes along with the subway are giving a whole new meaning to park and ride. For tonight's future cities report CNN's Andrew Stevens is in Tokyo.
ANDREW STEVENS, CNN INTERNATIONAL CORRESPONDENT: Finding room to walk in a city like this can sometimes be a challenge. Throngs of people living on top of each other in a crowded urban environment. In Tokyo, space obviously comes at a premium, but what makes a place like this work is that the city doesn't just use the space above ground, they're also using more and more space below ground.
Take for instance something that's a mainstay for many residents: their bicycles. These people are heading down below for a reason.
OSAMO OOBA (through translator): This underground bike parking was built in 2006 when the station would be built underground. A big plaza was created in front of the station, but in order to prevent people from leaving their bikes in the plaza we built a bike parking underground. This was done to use the space effectively and also to keep the scenery clean.
STEVENS: Facilities like this shuttle thousands of these urban necessities underground each day. It's about $1.25 a day for safekeeping and away from the elements. And in a city where technology is king, they're even complete with an escalator that helps you shuttle your two wheels back to the city streets.
Another thing vanishing in Tokyo these days, the stalled, tangled mess of above ground telephone lines, a project several years in the making supported by one of Japan's great architects.
TADAO ANDO, ARCHITECT (through translator): In Tokyo, there are many telephone polls. And together I would like to put those polls underground.
STEVENS: Turning this into something more like this.
ANDO (through translator): In three years, all the telephone polls in Central Tokyo will be buried underground. By putting all the polls underground the 500,000 roadside trees increase to 1 million trees.
STEVENS: Tree-lined streets that are easier on the eye as well as the lungs.
But a bigger issue to tackle than bikes or trees, where do you put a new highway, a highway that runs between the bustling and iconic districts of Shibuya and Shinjuku.
UNIDENTIFIED MALE (through translator): What you see behind me is the Ohashi Junction.
STEVENS: That's right, urban planners and engineers have been digging for years to put two sections of the circular ring road underground. One section was completed last year, the other is a work in progress.
TORU TERAYAMA, METROPOLITAN EXPRESSWAY COMPANY (through translator): Once this Shinagawa route is completed, it will not only alleviate traffic at the surface, but also connect Tokyo with Tokyo Bay, its harbors, and Haneda Airport.
STEVENS: Japanese maybe have followed the project steps closely. It's essentially Tokyo's big thing. And today they're getting a look at a 500 meter stretch of the main junction. It's this drill that's tunneling at a pace of about 9 meters, or nearly 30 feet a day, hoping to finish the remaining section by the end of the year.
But don't be mistaken, underground Tokyo is about as crowded as above ground.
UNIDENTIFIED MALE (through translator): Tokyo is already extremely exploited at the surface as well as underground. For example, there's a large network of underground trains, sewage, electricity and gas. We had to build a tunnel in a place where there was already so many preexisting elements. So it was a huge technical challenge.
STEVENS: Just how crowded is it? At one point, one of the tunnels comes within two meters, or about six feet, from a Tokyo subway.
Along with easing congestion there's the junction itself the idea is for the above ground section to be an urban park for the district's residents.
UNIDENTIFIED MALE (through translator): We will build a park on the roof of the junction. And it will be named the Garden of the Sky. It is important to think also about the environment and the people who live in these neighborhoods.
STEVENS: Using every square inch of a crowded city above and below ground.
Andrew Stevens, CNN, Tokyo.
QUEST: Quest Means Business. As we continue, few trumpets will sound for the U.S. economy this Thanksgiving week. Americans gearing up for one of its biggest holidays and we're on Wall Street for more on the tough start to what's an important week.
QUEST: Hello, I'm Richard Quest.
More QUEST MEANS BUSINESS in a moment.
This is CNN. And on this network, the news always comes first.
Egypt's military has accepted the cabinet's offer to resign. It comes after three days of violence in Cairo's Tahrir Square. The violence has left 22 people dead. The clashes are evoking scenes from the revolt that toppled the former president, Hosni Mubarak, back in February.
This amateur video is said to show a bus chartered by Turkish pilgrims that came under attack in Syria on Monday. According to the the Turkish media, the convoy got lost on its way back from the Hajj. Gunfire broke out when some of the passengers tried to ask for directions at a Syrian checkpoint. At least two people were injured.
Democrats from the so-called super committee are gathered on Capitol Hill right now. Republicans left their meeting last hour. The two sides are struggling to reach a deal on a $1.2 trillion savings to reduce the U.S. deficit.
Wednesday is the deadline for a vote but any agreement must be submitted today for procedural reasons.
The deadlock is sparking a sell-off on Wall Street. The Dow sank more than 300 points down. Right now, the Dow is off more than 250 points. The fear is credit agencies could further downgrade the U.S. after already taking away its triple rating during the summer.
So the New York market is off more than 200 points. It was down 300 at its worst point in the day.
Alison Kosik is in New York.
Fundamentally, expectations were low for the super committee -- Alison, so tell me, why is the market falling out of bed?
ALISON KOSIK, CNN CORRESPONDENT: Yes. I mean this doesn't really come as a huge surprise to the markets, that, oh, my god, you know, lawmakers couldn't come to an agreement. You know, there -- it really wasn't a big shocker, because the bar was pretty darned low.
But you know what, Richard, investors were also holding out some hope that -- that maybe, even -- even, you know, officials could pull out a -- a partial deal. But -- but now that doesn't even seem like it's -- it's apparently the case.
That is why you're seeing this -- this sell-off. You know, we've also got other worries here on Wall Street. You know, there -- there are the worries in the Eurozone. There is a Moody's warning that France's credit outlook is weakening. There's even a Chinese official, Richard, who came out and said economies are in for an extended global recession.
So what Wall Street is seeing is just too many negative headlines piling one upon the other. And that is really fueling the sell-off that you're today -- Richard.
QUEST: All right. Alison Kosik in New York with the Dow Jones off more than 250 points at the moment.
As Alison said, today is the start of the week, the Thanksgiving week in the United States.
Pluck the turkey and let the holidays begin. Now, this Thursday, America celebrates Thanksgiving. It all started 390 years ago in Plymouth in Massachusetts after a particularly plentiful harvest. It very much is all about giving thanks for the good times.
A major U.S. holiday, probably the single biggest holiday in the U.S. agenda, maybe July the Fourth, we could argue, which is bigger.
But you're going to have to look beyond the bird to find something to be thankful for this year, at least on the economic front. If you join me in the library, you'll see what I mean.
Economic growth, that's the really big problem. Well, five year down to in the .4 of 1 percent in Q1. And annual rate of growth will be less than 2 percent. That's certainly not good enough to solve the second, fundamental big problem, and that's jobs -- 9 percent in October. More than two years after the recession officially ended, only a quarter of the nine million jobs have been recovered. At 9 percent, even the Fed, in its latest forecast and economic outlook, says it doesn't believe unemployment will come down much in the next 12 months. Simply put, the U.S. isn't generating enough growth to bring down unemployment at anything like a satisfactory level.
So with Thanksgiving very much on the agenda, we have Black Friday coming along, Black Friday when the shops start their Thanksgiving sales, Cyber Monday, when people go online and do other shopping.
The National Federation expects 152 million people to shop this weekend, up 10 percent on last year. All in all, in 1939 President Roosevelt moved Thanksgiving forward a week because he wanted to boost the shopping season.
Maggie Lake is in New York -- Maggie, Thanksgiving, just to be, I suppose, correct and proper, it's about a lot more than the economy. It's about peace. It's about democracy. It's about an American way of life. So from that point of view, there's still probably much to give thanks.
But on the economic front...
MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: Yes, it's troubling, Richard. And I think you're really right, it is a lot -- about a lot more, but so our economic problems. There is a deep frustration among voters that we don't have leaders capable of solving some very big problems.
So you have -- you have real political trouble, as well as economic trouble. And the two combining really making a lot of people worry about what the outlook is for the next year.
And, of course, they're not going to spend if they're uncertain or feel like we're going to fall back into recession.
Let's talk about the debacle of the super committee and what that's likely to do to the -- to the economic forecast.
In 2012, according to a couple of brokerage reports out from JPMorgan, Chase, Morgan Stanley among them. If you're looking at the immediate fallout from a failure to reach a deal, which is what looks likely, you're talking about a potential of 1.5 to 2 percent off of GDP. And remember, we're just about getting up to 2 to 3 percent. But that would put us almost back to the flat line, barring anything else. And that is because you're going to see the end of the payroll tax and those extended unemployment benefits gone.
The real pain, though, comes in 2013, with some of these automatic spending cuts that are going to be triggered. If you take that in addition to the expiration of the Bush tax cuts, you're looking at a hit of GDP to 2 to 3 percent.
On top of that, Richard, and this may be even more worrying, is if you throw in there the mix of a possible rating downgrade, what that does to confidence -- and -- and a lot of this is about confidence -- then that's a real wild card...
QUEST: All right.
LAKE: -- we don't know how much more of that could impact it.
So the outlook, looking -- looking -- darkening as we head to the end of the year and that's not what you want going into the holidays.
QUEST: Quickly, Maggie, Congress made the rules. Congress set the agenda. Congress bound their own hands on these automatic spending cuts. And Congress can break that, as well.
LAKE: Absolutely. And that's the worry -- and, Richard, that's the worry when it comes to the ratings agencies. We haven't heard from S&P. But Moody's says as long as they don't start to fudge those automatic cuts, because they will mean, you know, a pullback or -- or deficit cutting -- as long as they don't fudge those, the rating will probably stay the same.
Should they start to try to do anything to that, watch out. The ratings agencies are going to be on guard and it could mean a downgrade.
So that's where -- really where the worry point is here.
QUEST: Maggie is in New York.
Maggie is watching over that.
We go to Washington and Professor Peter Morici, former economic director of the U.S. International Trade Commission.
When we want to know what's happening and get some perspective, Peter is always the man to -- to put it in -- into sharp focus.
Peter, who's to blame for this failure?
PETER MORICI, UNIVERSITY OF MARYLAND: Well, I think both sides are. I mean the Republicans really don't want to raise taxes very much and I don't know how you do this without more revenue. And the Democrats don't want to admit that they have increased the size of the government by 25 percent over the last four years and that maybe we can't afford a lot of that and we're going to have to cut back some.
This super committee trigger, you know, half to cuts coming from defense, really not very realistic. They're going to have to sort this out in the whole Congress in 2012.
QUEST: OK, so, at what point do we start to see evidence, either in bond yields or in stability, where do we see the evidence of this failure?
Because as I look at U.S. 10-year bonds at the moment, record low rates. There's no indication that the bond market is worried yet.
MORICI: Well, the international currency is the dollar. It is fleeing Europe. And there's grave concerns about China. You know, money is actually leaving China these days, because there's grave concerns...
MORICI: -- about its banking system.
MORICI: And since the United States can print money, it makes it kind of a safe haven.
QUEST: Exactly. That's my point. So the U.S. can afford to have this crisis. The U.S. can afford to have this failure of the super committee. It's not Greece, Ireland and Portugal.
MORICI: Absolutely right. You put your finger right on it. If we get decent holiday shopping over the next couple of days, you watch for the market to go back up again.
And then people will say, well, so what?
The super committee was a bad idea in the first place. Most of us knew that and we were hoping for a miracle. Maybe we'll still get one today.
But in all likelihood, the Congress as a whole will have to make the political decisions to balance the books this year -- in 2012 and after the election.
QUEST: You talk about the election. That is now the single driving force, isn't it, politics and economics have now merged, as only does happen once every four years in the U.S.?
MORICI: Absolutely. And the Republicans are not putting forward an alternative to Barack Obama that is attractive and exciting to people. Cutting taxes and deregulating does not inspire confidence. The only candidate with a complete platform is Mitt Romney. He really does have a complete alternative. But he's not a very exciting candidate. He doesn't really, you know, get people to respond. And it doesn't help him that there are, you know, nine or 10 candidates kept alive by this endless cavalcade of debate.
QUEST: All right, so does -- this is a -- this is a sort of a -- a when did you stop beating your wife question.
QUEST: Economically, does America have anything to give thanks for this year?
MORICI: Absolutely. We're a phenomenally innovative society. Most - - all of the innovations that have redefined the -- the modern age into the -- the 21st century, have come from America. And they continue to flow.
We have the ability to do it all. The problem is stringing the beads together.
This president may not be able to do that. The Republican pool may not be able to do that. But sooner or later, someone will come forward and the generation that follows mine will kick in and get it done.
I believe in American exceptionalism and I believe...
QUEST: All right.
MORICI: -- that we will find a way out.
QUEST: And we wish you a Happy Turkey Day later in the week, as and when you arrived.
Have a good Thanksgiving, Peter.
MORICI: Thank you.
QUEST: Good to have you on the program.
As renewed protests in Tahrir Square continue for a third day, we'll be looking at the state of the Egyptian economy, a serious issue, when we come back.
QUEST MEANS BUSINESS.
QUEST: The markets, the economy, they all lack a little balance at the moment, or, it is a balance, it seems to be a one way down on the falling front rather than heading up.
In Britain, many are still hoping that the Olympic Games in 2012 will give everything that economic bounce.
But one athlete is training hard to make sure she flies at the Summer Games.
She's Amanda Parker. And now she shows us why she loves her life up in the air, as she reveals for us her World At Work.
AMANDA PARKER, OLYMPIC TRAMPOLINIST: I mean Amanda Parker and I'm Great Britain trampolinist. I've been trampolining 21 years. I've been in it since I was four, so it's pretty much what I do best.
I just love trampoline and I just love being able to bounce up and down and throw myself around. I've got really good spatial awareness. I always know where I am, so even if I've got a move wrong, I can always alter where I am on the trampoline.
Because trampoline is such a technical sport, you need to have a lot of mental strength in order to be able to take off for the more difficult skills and make difficult combinations when you put your routines together.
It's a really strange feeling. If you're kind of coming off toward the side or you've leant toward an end, it all kind of goes in slow motion.
There are things -- some competitions and sometimes I've been training and I'll go off the trampoline and go what did I just do then?
And I know it's been because I've been completely in a daze.
Trampolining is very much having mental commitment and, you know, making yourself go for the difficult skills. It's a lot of preparation. I think probably my favorite is my triple somersault with a half twist out and a pipe shape. It's a -- it's a skill that I start one of my routines with.
Well, there I've, you know, got the thing I've got to get round three times. It's -- it's about practice -- you know, practicing over and over. It just becomes easier and easier and I really enjoy doing it.
From a very young age, my goal and my ultimate dream was just being to be part of the Olympics. So we're -- we're all pushing and striving toward being -- being selected for that.
With us being on the world stage, you get to see the best people in the world and -- and you're always then trying to be as good as them or better than them, if possible.
I love the feeling that in the last 21 years, I'm still learning new skills and always trying to better my performance. I love just the feel of being up in the air and twiddling yourself around and stuff. It's -- yes, it's really good fun.
(END VIDEO TAPE)
QUEST: Extraordinary stuff. I was dizzy just watching it.
Jenny Harrison is at the World Weather Center -- Jenny, I'm -- I'm sure that your triple somersaults with a half twist out, and, you know, I'd pay good money to see that.
JENNY HARRISON, CNN METEOROLOGIST: Yes. I'm not sure about the landing, Richard. I could do all of it in the air, but it's a landing, isn't it?
And talking of landings...
HARRISON: -- it's not been a good weekend, of course, for travelers. Et me get straight to it. It's all been about the fog over the weekend. It really began Friday in Northwestern Germany and over the weekend, Sunday, into this Monday, we have had severe problems across the southeast, U.K. and London, of course, in particular, London Heathrow, but also across into London City. And right now Amsterdam also, Schiphol Airport, reporting some long delays, but also some cancellations.
You can see here on the satellite, a lot of low clouds even where we don't have that fog. And right now, we're having foggy conditions being reported across much of Germany. In London, it's actually just a case of drizzle and low clouds. But the visibility is still not good at London Heathrow. And, as I say, there have been more cancellations at London City.
Across the Channel into Amsterdam, we have got fog being reported right now, hence, the fact there are many delays and, as I say, cancellations, too, both of course for departures and also arrivals.
Now, if you want to think about this fog, it is fairly typical to see it at this time of year, throughout much of November. It's very common for the months of autumn. And particularly when you get a land mass such as the U.K., when you have all this water around the land, and what happens is the temperature actually falls to the dew point. That's when the clouds come to the surface.
If you're wondering what the dew point is, that's when the air mass actually reaches the same temperature. And that's when it becomes so saturated that you actually have clouds form, which is really what fog is, of course, but it's formed at the surface.
So that is what has been happening. And this is why, as well, high pressure across Central Europe. So this is where we've seen the fog and cross into Germany throughout the weekend. Very light winds. Of course, nothing to shift the fog, as well, once it's in place. Some very cool air in place across much of Germany.
And then out toward the southwest, some very mild temperatures on land. And, of course, the warm air heading across the cooler waters of the English Channel and that is what then caused that air mass and, as I say, it reaches the same temperature as the dew point.
But we have got a bit of a change in store. As I say, we've got drizzle being reported right now into London Heathrow. But look at all this rain coming into the west. Some very heavy showers pushing into areas of wales and across into Ireland. It's all coming in with this next front.
Now, as it does come through, it will bring some cooler air in place and begin to get rid of some of that mild sort of stagnant air which is sitting across the southeast. You can see a real dividing line so far with the temperatures. Look at this -- minus 12 in Berlin right now. That's how it feels with the wind. Minus one in Warsaw.
Meanwhile, in London, nine Celsius, 10 degrees Celsius in Paris. Oslo, as well, right now reporting freezing fog, but the temperature there is just at freezing. And you can see that cool air coming in as we go through the next couple of days. But I have to say that as it comes in, it's fairly short-lived.
The rain, meanwhile, very heavy across the Western Mediterranean. That's going to stay in place because of that high. And we've seen some pretty high totals of rain there, as well. So this, unfortunately, is an ongoing weather pattern, as well -- Richard.
QUEST: She may not be able to do her triple somersault with a half twist out, but I think for the first time I actually understand what fog is. I never knew it was clouds on the ground. And I didn't know what I thought it was.
QUEST: I thought -- I -- I -- go on.
HARRISON: It doesn't -- no, you're in -- you've been such an authority on airplanes, too. Everything that goes up in the sky and you didn't know. But I'm glad to be of service -- Richard.
QUEST: Well, I -- I'm grateful to have you with us, Miss. Harrison.
Now, when we come back after the break, we need to update you with the events in Egypt.
QUEST MEANS BUSINESS, in a moment.
QUEST: Egypt's cabinet has offered to resign, we have been accepted after three days of protest against the country's military rulers.
Ivan Watson joining me from Cairo -- Ivan, the protesters might be tempted to say the wrong people have gone.
IVAN WATSON, CNN CORRESPONDENT: Well, and we're already starting to hear that, because the crowds of people in Tahrir Square right now, Richard, they're not saying we didn't hear them chanting (AUDIO GAP) "Down with the Civilian Government!" "Down with the Prime Minister!" I heard them chanting, "Down with the Supreme Council of the Armed Forces, which I think many people here believe is truly running the show in Egypt since that incredible downfall of the former president, Hosni Mubarak, some 10 months ago.
So it's not clear whether or not the apparent resignation of the civilian government, which was always seemed to be subservient to the ruling generals, will satisfy the people in the square here right now who seem to be settling in for the long haul, bringing in blankets and tents and medical supplies and are engaged in running battles with the police just blocks from where I am standing right now.
And the ambulances you see over my shoulder are signs of the constant wounded people coming out of those vicious street battles -- Richard.
QUEST: Ivan, does the military leadership just not get it, because from where I'm sitting here, they are courting the same sort of potential fate of disruption, riot and calamity that Mubarak faced?
Do they just not get it?
WATSON: I think a lot of observers, much more informed Egyptians that I've talked to, are suggesting that the military are making some of the same mistakes that Hosni Mubarak and his circle made less than a year ago.
And having come back here throughout the -- the course of the last 10 months, they have seemed to be tone deaf at times to the demands of people. They have resorted to the use of force, allegations of -- of torture and human rights abuses to stifle dissent out here. And it seems like some of those measures simply went too far on Saturday.
Once the loss of life began, that started this spiral of determination to show opposition to the government. And I think that people here feel that they were betrayed when they left Tahrir Square 10 months ago and are determined not to lose the moment now that they've recaptured this very symbolic piece of territory in the heart of the Egyptian capital.
QUEST: Ivan Watson, who is in Cairo for us this evening.
Egypt's stock market fell 4 percent on Monday. And that was down, one of the largest, of course, as anywhere in the world.
And the Dow Jones Industrials they're pretty much holding Saturday, down 257 points, again, a fall of 2.1 percent. But it had been up more than 3 percent or more than 300 points at one particular point. So the market is holding itself at the beginning of what's going to be a difficult week, all things considered.
When we return, at the moment, drawing the parallels between Europe and the United States when it comes to a debt debacle.
It's A Profitable Moment.
QUEST: Tonight's Profitable Moment.
Any idea that the debt issue was a European problem went out the window today. Now, the U.S. has its own debt debacle front and center and even if the effects won't be as immediate or dramatic as the collapse of the Eurozone would be, the depth of anger, distrust and despair, that is frothy.
The atmosphere now on both sides of the Atlantic is febrile, with honest people being unable to agree on fundamental issues and threatening economic stability. It seems it doesn't matter where you look, there are worries that cannot be resolved by people come together and reaching a compromise.
I'll give you an example. Having spent three weeks in the United States, where the Eurozone debt shenanigans have been viewed from a distant far, but always motivated by self-interest.
The Americans wondered what was Europe up to?
Why couldn't they agree?
Well, now it's the other side's turn to watch askance as U.S. politicians have failed -- a terrible indictment. But with so much at stake, so little has actually been done.
And that's QUEST MEANS BUSINESS for tonight.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I hope it's profitable.
The news continues on CNN.