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QUEST MEANS BUSINESS
Bankers' Warning to US; US Government Shutdown Day Two; US Stock Markets Falter; Berlusconi's About-Face; Golden Dawn Leader in Court; Vertu Unveils New Handset; Startup Blueprint; U.S. Shutdown Risk; Part-Time Luxury; Marc Jacobs Leaves Louis Vuitton
Aired October 2, 2013 - 16:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(NEW YORK STOCK EXCHANGE CLOSING BELL)
MAGGIE LAKE, HOST: Wall Street is worried. You're watching the closing bell signaling an end to the trading day, but there is no end in sight to the US shutdown, now in its second day. It's Wednesday, October the 2nd.
Banking chief executives warn Obama that a failure to raise the debt ceiling will be catastrophic.
A humiliation for Berlusconi as he abandons his attempt to bring down the coalition government.
And Vertu's cheaper phone is introduced: a mere $7,000.
I'm Maggie Lake, this is QUEST MEANS BUSINESS.
Good evening. The CEOs of America's biggest banks are joining the public and demanding an end to the budget deadlock in Washington. More than a dozen of the biggest names on Wall Street, like JPMorgan's Jamie Dimon and Goldman Sachs' Lloyd Blankfein, met with President Obama.
They came to send a warning about the impact on the financial system if the shutdown and debt limit are not resolved. Blankfein and Brian Moynihan of Bank of America said this was an issue that transcended politics.
(BEGIN VIDEO CLIP)
LLOYD BLANKFEIN, CHAIRMAN AND CEO, GOLDMAN SACHS: You can look at the membership of our group and you'll find people on all points of the political spectrum. It's just making sure that we understand the consequences -- the longterm consequences of a shutdown -- we are already in the short-term consequences of a shutdown -- but certainly the consequences of the debt ceiling, and we all agree that those are extremely adverse. Although we haven't witnessed the extent of it yet.
BRIAN MOYNIHAN, CEO, BANK OF AMERICA: We represent one or two American households in our company. Lloyd represents lots of companies. It's just making clear that people understand the seriousness of the situation and what we need to do to get through this.
(END VIDEO CLIP)
LAKE: President Obama is scheduled to meet with congressional leaders in about an hour's time. Senior White House correspondent Jim Acosta is live in Washington. Jim, people have been looking for leadership coming from the president. Could this be the break that we need, the chance to sort of put away or reduce some of that poison atmosphere and get these two sides together?
JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: I tell you, Maggie, we're going to have to wait and see on that one. We're not really sure at this point. All we know is that at least there is a breakthrough that they're talking to one another, the president inviting congressional leaders over to the White House in about 90 minutes from now.
And you just heard from some of the financial services, titans of Wall Street, there, just a few moments ago. They were at the White House earlier today, including the Goldman Sachs CEO, Lloyd Blankfein. He was basically saying after his meeting with the president that there is a precedent for a government shutdown, but there is no precedent for a debt default
And so, really, we're starting to see these two tracks merging here, now, concerns about the government shutdown continuing. And then this looming deadline of October 17th, when the nation hits the debt ceiling. That is going to be the subject of conversation between the president and congressional leaders.
The White House says that the treasury secretary, Jack Lew, will also be at that meeting to warn congressional leaders of the potential for some catastrophic consequences to the global economy if the United States does default on its debts.
As to what they might accomplish at this meeting, I posed that question to White House press secretary Jay Carney, and here's what he had to say.
(BEGIN VIDEO CLIP)
ACOSTA: But if the president is going to stick to his position, and the speaker of the House is going to come over here and stick to his position, what's the point of having a meeting?
JAY CARNEY, WHITE HOUSE PRESS SECRETARY: Well, there -- the Republicans keep saying they want to negotiate, they want to meet, why isn't the president meeting with them? He is meeting with them. He has called them. He has, again, met with and spoken with Speaker Boehner quite a bit during the time that John Boehner has been speaker of the House. Often -- in earlier days, quietly, and --
ACOSTA: That weren't read out to the press?
CARNEY: Precisely. And -- for a variety of reasons, and I'll -- you can surmise what they might be. Or who put them forward. But the fact of the matter is, it's not about taking a -- the president's only position is that the government ought to be open. The president's only position is that the full faith and credit of the United States must be maintained. He's not asking the Republicans for anything in return for them doing their jobs.
(END VIDEO CLIP)
ACOSTA: Now, we pressed Jay Carney on whether or not a package deal might emerge that combines a raise to the debt ceiling along with the continuing resolution to keep the government running. Jay Carney did not respond to that.
But this shutdown is starting to have a major impact, Maggie, on the president's schedule. He was expected and scheduled to leave Washington, leave the country this weekend to head to a couple of economic summits in Bali and Brunei, and those trips for now are still on the books.
But he was expected to go after that to Malaysia and then onto the Philippines. Those two portions of the trip have now been scrapped because of the shutdown, and now the entire trip is in question because the government is still closed here in Washington and around the United States.
And so, as each day goes by, Maggie, there's pressure not only on Congress, but now on the president to really get something done and to get this government back open again, Maggie.
LAKE: And let's hope that behind closed doors, the tone is different, because in front of the public microphones today, those two sides sound as far apart as they have ever been --
ACOSTA: They do.
LAKE: -- and investors so worried about those two issues now being bundled, the debt ceiling along with the funding issue. Jim Acosta, great to see you, thank you so much for bringing us up to date.
ACOSTA: You bet.
LAKE: A short time ago, I spoke to Representative Bill Pascrell. He's a Democratic congressman for New Jersey who serves on the influential House - - Ways and Means committee. I asked him if there's any common ground that can help the two parties find a way out of this mess.
REP. BILL PASCRELL (D), NEW JERSEY: Well, there's no doubt in my mind that if we ever put the legislation -- a clean, a clean continuing resolution on a budget for six weeks or a month or two months, if we put that on the floor -- and don't forget, the new budget started October the 1st -- we put that on the floor, there is no doubt we'll have enough Republicans to come and vote with us and pass that. And that's what Boehner's -- Speaker Boehner's afraid of, that it might pass with bipartisan support.
LAKE: Right. I think this is the problem, that we've --
PASCRELL: Everybody's looking for an edge here.
LAKE: Right. We've heard that. And the same conversation keeps happening over and over again, which is why so many ordinary people are getting so frustrated. I keep hearing that it won't be until we get a message from the markets, a thousand-point slide on the Dow, that politicians will wake up to the reality and be forced to do something. Are you all really willing to take that risk?
PASCRELL: Well, no, I'm not, certainly. But you know how I feel about it. We should have passed a continuing resolution, we should pass a budget. We compromise by taking the lower number. They refuse to compromise. They simply wanted to undermine health care reform in the United States of America.
And with so many people, with all -- despite all the glitches yesterday, with so many people inquiring and signing up for what will be a real manifestation of change in the health care industry in this country yesterday, I'm very confident that that is going to work. The Republicans are not going to undermine it.
This is not socialized medicine. This is real American marketplace health care, and we are very proud of that legislation. We're sticking by our guns. The Supreme Court says we're right, the voters said we're right, Obama won reelection. What the hell more do they want?
LAKE: Representative, looking from the outside, not only for Americans, but for everyone around the world, the atmosphere in Washington seems poisonous, it seems dysfunctional, Congress seems broken. Are you worried that this is -- the fact that we keep finding ourselves in these crises is going to hurt America's credibility.
PASCRELL: No, I don't think so, because we're a strong nation. We have a strong economy. And there is no two ways about it: we have difficulty in combat and debate in America, and we do not take out any weapons to kill our opponents. Many countries have that problem.
So, it's interesting, if they want to criticize us. We're going through the democratic process. That's what we're all about.
And I am so happy, talking about countries that are in crisis right now, that Italy has decided to back off the precipice and even Mr. Berlusconi has said, look, the country's more important than my own interests, and I think he's risen above it. Italy is still whole today, and I think that's a good --
So regardless of all their problems, you come together in crisis. And that's what we should be doing in the United States right now. And it isn't a question of one side being absolutely right or the other side being absolutely right, but if you're not talking before the crisis, it's difficult to get people together at the crisis.
LAKE: We want to bring this to you. The US president has just been speaking about the standoff in Washington on US TV. He has renewed his vow not to negotiate the debt ceiling. Here's some of what he had to say.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I have bent over backwards to work with the Republican Party and have purposely kept my rhetoric down. I think I'm pretty well-known for being a calm guy. Sometimes people think I'm too calm. And -- am I exasperated? Absolutely I'm exasperated. Because this is entirely unnecessary.
(END VIDEO CLIP)
LAKE: Investors seem more nervous on day two of the government shutdown than they did on day one. Zain Asher is at the New York Stock Exchange with a look at the action. Zain, what changed from yesterday to today?
ZAIN ASHER, CNN BUSINESS CORRESPONDENT: Hi, Maggie. It's almost as if people were sort of starting to realize that this shutdown could actually drag on. This is obviously costing the US economy roughly around $1 billion a week.
But moving on, I do want to mention quickly some key pieces of economic data we did actually get this week. We got a weaker than expected ADP jobs report coming in at a 166,000, slightly lower than what was expected.
And at this point, that actually might be, believe it or not, all the data that investors might have to trade on this week, because guess what? If this shutdown continues, we may not get the official government jobs report come Friday. That actually happened in 1996 at the end of the last shutdown, so this was somewhat expected.
Many traders on the floor, though, will tell you that this isn't really necessarily that much about the shutdown. It really is about the debt ceiling. Obviously, a lack of negotiations over the spending bill really does sort of raise the question, will the government be able to strike a deal come October 17th?
And if they do end up defaulting on their debt for the first time ever in US history, that can obviously have catastrophic impact on the global economy.
Now, most people do believe that lawmakers will reach an agreement and the country won't default, but obviously, they would rather it be done sooner rather than later and not at the 11th hour, like what we've gotten used to. Maggie?
LAKE: And clearly today, those two issues now seem bundled together, which I'm sure investors not happy about at all. All right, Zain Asher, thank you so much --
ASHER: Of course.
LAKE: -- from the New York Stock Exchange. Well, Silvio Berlusconi drops his bid to the topple the Italian government. The story behind his bombshell about-face when we come back.
LAKE: A shaken Silvio Berlusconi has abandoned his attempt to bring down the Italian government on Wednesday. The former prime minister stood before Italy's senate and announced that his center-right party would support the fragile ruling coalition.
It paved the way for Prime Minister Enrico Letta to win a vote of confidence. Ben Wedeman has more on the showdown and what it all could mean for Italy's larger-than-life political player.
BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): The body language in the Italian Senate spoke for itself. A confident, upbeat prime minister Enrico Letta and a far-less allegro Silvio Berlusconi, who had tried to bring down the five-month old grand coalition between his right- of-center People of Liberty Party and Letta's left-of-center Democratic Party.
"Last night, I didn't sleep like many of you," Letta told the senate before the vote of confidence.
WEDEMAN: He was occasionally interrupted by Berlusconi's allies, but the outbursts were short-lived. With Italy struggling through its worst recession since the second World War, Letta stressed the need for stability and reform. "The Italian people are weary of drama," he said, "and need a proper government."
When it came his turn to speak, it was an uncharacteristically subdued Berlusconi who called off the attack. "We've decided, not without internal pain," he said, "to express a vote of confidence for this government."
WEDEMAN: It was members of his own party who stole Berlusconi's thunder, worried that a man who's been convicted of tax fraud, who has courted scandal and controversy, was fast becoming a political liability. It may be the beginning of the end, says Professor James Walston.
JAMES WALSTON, POLITICAL ANALYST: This is a devastating defeat for Berlusconi. He had to go -- he was forced into a U-turn, which makes him look very silly.
WEDEMAN: Some praised his U-turn as a noble gesture. "Despite all his human errors, Berlusconi has shown himself to be a true gentleman again," this woman says.
While others said they just hoped the politicians would get back to work. "For those of us who are just miserable cogs in big machine," Bernadetta says, "let's see if this government of Letta will do something for us now."
WEDEMAN (on camera): On October 15th, Silvio Berlusconi will begin to either serve a year under house arrest or do a year of community service for tax fraud. It has yet to be determined which. He's also facing a one- to-three-year ban on holding public office for the same conviction.
After 20 years, Silvio Berlusconi, "Il Cavaliere," as his supporters call him, may have had has last stand in Italian politics.
Ben Wedeman, CNN, Rome.
LAKE: In Greece, the leader of the country's far-right Golden Dawn Party is still in court being deposed on charges of being part of a criminal gang. Three senior lawmakers will released pending the trial. Elinda Labropoulou is in Athens for us tonight. Elinda, this is a case that's being very closely followed. Tell us what happened today.
ELINDA LABROPOULOU, CNN INTERNATIONAL CORRESPONDENT: Well, what we're having here is, as you say, a case of very serious criminal charges against a political leader and his leading MPs.
So, what we expect to see from this deposition is we expect Mr. Michaloliakos, the party leader, to say that this is all a political trial. But the truth of the matter is that they are being tried on a political -- on criminal charges, and very serious charges at that.
He's been accused of forming a criminal gang and taking part in it. And then there were a lot of individual charges involved that go as far as murder. This is a very particular situation in Greece, because we're looking at the legally-elected leader of a party and his senior politicians.
LAKE: Elinda, what's been the public reaction? I understand three of the men were actually released today, or they left the courtroom. This is a party -- a political party that's really come out of nowhere with sudden force. How is this being received in the court of public opinion, if you will?
LABROPOULOU: Yes, you're absolutely right. It is a party that, in many ways, has come out of nowhere. It's a party that, in the last elections before the crisis hit -- so, in 2009 -- it only received 0.3 percent of the vote.
And since then, its popularity grew and grew, and it grew because it followed a very nationalist agenda and a very populist agenda, a very Greek-for-the-Greeks agenda, food handouts for Greeks only, as popular moves are. So, it brought a lot of people closer to the party at a time of hardship.
So, in 2012, it got almost 7 percent of the vote, and in just one years since, its popularity has grown immensely, some of the polls brought it up to 40 percent. So, it almost doubled in just that one year.
But of course, what has happened since we've had these charges against it, what we've seen in the first polls, is that its popularity has dropped significantly.
LAKE: The social consequences of some of the economic problems we're dealing with. Elinda Labropoulou for us, live tonight in Athens, Greece.
Well, we have the mayor of the internet. That's right, after the break, Reddit co-founder Alexis Ohanian will guide us through the ruthless start- up world. And luxury phone marker Vertu is looking to ditch the bling. There's still plenty of sparkle, though, from its new constellation.
LAKE: Luxury phone maker Vertu is trying to get away from its reputation for bling. Its handsets may be made from precious metal, then encrusted with gems, but Vertu is trying to put the emphasis on the craftsmanship and quality without the shiny bits. Jim Boulden joins me now, live from London.
Jim, I feel like you're outpacing me here in terms of the SmartPhone. What are they trying to do? What's this all about?
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Well look, I've got one here right now. This is the new Vertu Constellation, comes out today. It's got 102 carats of sapphire, and of course, titanium. It's going to cost you around $6,600 retail, Maggie, so it's not the cheapest phone --
BOULDEN: -- on the market. But it is the cheapest phone that Vertu has put out. No gems on this one, no bling, because they're trying to show customers that it's not the bling that should be most important to them, but it should be the craftsmanship. We got a behind-the-scenes look at the factory here in the UK in August. Take a listen.
BOULDEN (voice-over): Vertu is polishing up its new product, preparing to unveil its more affordable and up-to-date SmartPhone, known as Constellation.
HUTCH HUTCHISON, HEAD OF DESIGN, VERTU: The thinking behind Constellation was to address a younger demographic and more unisex appeal and a more contemporary design.
BOULDEN: Vertu may be known for its bling phones, each costing $5,000 and more. But it says it would rather be known for its fine craftsmanship and high-quality parts, all being highlighted in this new handset.
HUTCHISON: When it comes down to it, what are we? We're true straight lines and a V, and the best materials in the world: titanium, sapphire, calf skin.
BOULDEN: That's a five-inch screen of sapphire crystal, weighing more than 100 carats. Vertu's new CEO, Max Pogliani, says the Constellation should help position Vertu as more than a super-luxury handset.
MAX POGLIANI, CEO, VERTU: So here we are more unisex, and by introducing this range of color, we will clearly also target the feminine market.
BOULDEN: Vertu's handsets are known as being assembled by hand one at a time. It takes about two hours.
HUTCHISON: So, there's no production lines here at Vertu. A kit of parts is delivered to each craftsman. They sit here, and from the very beginning to the very end, one person, one phone. And that way we ensure the commitment to the quality and the ownership of that build
BOULDEN: And to ensure a link with the customer, each craftsman or woman has their name etched on the inside. In this case, Joanne Cameron. It's not unusual for owners of the phones to come to the factory and meet Joanne.
JOANNE CAMERON, VERTU CRAFTSWOMAN: Yes, yes. We've all had people come in and ask for each different builder.
BOULDEN: Vertu was founded by Nokia as its luxury arm, but Vertu has now split off, allowing it to drop Nokia's operating system for Google's more popular Android OS.
POGLIANI: At a certain point in time, our objective was a little bit divergent, so they are much more focused on the mass market. And also in terms of technology, we were kind of suffering the fact that we were linked to their technology.
BOULDEN: If you're wondering why these pricey phones are assembled in semi-rural England and not in Asia, well, so are Rolls-Royce cars and many Formula 1 cars, and parts for Airbus.
BOULDEN (on camera): So, you'd rather have engineers and designers who've worked on aerospace than worked in watches, for instance?
BOULDEN (voice-over): After all, once in a while, they are commissioned to make an extremely expensive one-off handset. And it's not just about adding more gemstones.
HUTCHISON: The most exclusive phone we ever made, funny enough, had no stones whatsoever in it. It was a pure one-off with -- a one-off set of sapphire cut at crazy angles and faceted body to the phone.
BOULDEN: Packed by hand, many special orders, a screen that can really only be scratched by a diamond, Vertu is telling its well-heeled customers their handsets are robust and worth the price, bling or no bling.
BOULDEN: So Maggie, of course, no bling on this phone. And I will make it very clear, of course, I have to give this back to security --
BOULDEN: -- the moment we're done here, and it goes back to Vertu. It is, of course, something more than $6,000, so obviously, it does not stay here.
LAKE: Oh, but Jim, it suits you so well! Listen, if something's going to be $6,000 and it has anything to do with sapphires, I'd better be wearing it. But seriously, is this really more of -- does this have to do with functionality, or is this really more about a fashion statement, a status statement?
BOULDEN: Well, the earlier phones in Vertu, I think, you could tell quite quickly they were a Vertu phone. Frankly, they're from Nokia, and it looked a bit like a Nokia phone, but the bling around it made you feel, well, I've got something special. People would notice that.
What they want now is for people to notice it because of the colors, because of the look. Obviously, it looks very similar to some of the other high-end handsets on the market, but it's got the large screen, which Vertu didn't have before. Didn't have a very good camera before. So, they're trying to bring it up to market standard, if you know what I mean, but still be --
LAKE: No, I don't --
BOULDEN: -- a phone that people would like to own.
LAKE: -- I don't know what you mean. For $7,000, I don't know what market standard -- I mean, no offense to them, but it looks like every other phone out there, but it's a heck of a lot more. Listen, there's a market for everything they say, especially when you're talking --
BOULDEN: You can't break it, Maggie.
LAKE: -- about luxury, so we'll see.
BOULDEN: They say you can't break it.
LAKE: You report back to us if you see somebody out in London with one of those phones, Jim. I want to know about it.
BOULDEN: I will.
LAKE: All right, great stuff, Jim Boulden for us there.
LAKE: Well, the internet -- "It's not just consumers that are fickle, the internet is fickle, and ruthless in some cases." The words of Reddit co- founder Alexis Ohanian. He co-founded the website straight out of college in 2005.
Now, he's written a guide to help others navigate through the brutal start- up world. And it can be brutal. Alexis Ohanian joins me now, live on the set. Alexis, fantastic to see you.
ALEXIS OHANIAN, CO-FOUNDER, REDDIT: Thank you.
LAKE: We're going to talk about how people can get ahead in this sort of economy and start-ups in a second. I did want to ask you, though: I know in the past you've had to deal with Washington, you've said Washington could use a lot more nerds in it.
LAKE: People who know about technology. What do you make of the situation that you're watching right now unfold?
OHANIAN: Whew. Congress has a lower approval rating than colonoscopies --
OHANIAN: -- which are important and save lives, let's be clear.
LAKE: And journalists, who don't save lives, but usually have a very poor rating as well.
LAKE: They're at the bottom of everybody right now.
OHANIAN: It is very clear that we as citizens are frustrated, and one of the things -- one of the reasons why I was so compelled to write the book is that I feel internet, this technology, can be a way for us to actually get a government that is more responsive and responsible to us.
The way I think about it is, right now, at a moment's glance, I can look down and see what Kim Kardashian is having for dinner.
OHANIAN: Right? I can see that photo that she's tweeted, and that's pretty inane, that's pretty silly. If I can have that kind of access into the lives of some random celebrity, why can't I know what my government is doing? Why can't I know what my politicians are doing.
There is -- and we saw this in the fight against SOPA and PIPA, we've seen the power of a bunch of mobilized citizens able to use this technology to actually like holding our elected officials accountable, and I hope -- hope, hope, hope -- we can continue to use the internet to do just that.
Because we deserve it. They work for us. And I think technology is going to help us turn the tide a bit and remind them of that.
LAKE: Of course, we have to put the pressure on them, but we have seen the power it can unleash around the world. It's been striking over the last couple of years.
The book that you wrote struck me, when I looked at it, no title. What's the message, what are you trying to do here?
OHANIAN: I'm a rather unconventional fellow, and an amazing designer at Business Plus actually came up with that. I love mascots for all my companies. This -- I have to giver her all the credit.
The idea is that in a pre-internet world, there were these gatekeepers, there were a lot of barriers. It required permission, so to speak, whether it was a loan from the bank or a bunch of work and cost and whatnot to get something started.
That, thanks to the internet, has slowly started to fade. And what originally was prohibitive is now a sort of -- a very powerful situation for someone with an internet connection and the skills to make the most out of it.
And that comes down to knowledge and sense. If the fact that Steve and I started Reddit -- Mark Zuckerberg started Facebook, the Twitter founders started -- we can go down the list -- for less money than it probably cost for their people.
LAKE: I think you're being humble, though. I would venture to say there's something exceptional about all of you. I will take that, there is all of this opportunity. I think a lot of the young people -- and the unemployment rates with the youth are staggering. It's so frightening to me. They don't know how to tap into that. And when I talk to entrepreneurs --
LAKE: -- it seems to be practical advice. Can you give us some practical advice to people who are sitting out there, wanting to make their way, but are sort of lost about where to start?
OHANIAN: Absolutely. And it is -- that is part of the reason I wrote the book, it's why I'm going to 75 universities this fall, I'm going on an internet entrepreneurship tour because you can get started right now. And so, the most valuable skill, I'd argue, of this century is learning how to code.
You can -- with a Google search, you can literally get started. There are websites like code academy that let you get started learning this skill in a browser. There are free resources, the same resources that my co-founder Steve Huffman, Mark Zuckerberg, any of these successful tech entrepreneurs used to teach themselves are freely available to anyone.
So, learning how to code is a very easy answer, just simply because we can't hire enough people with these skills right now. And another point is that a lot of these platforms that we are building are actually enabling other people to be entrepreneurial.
So, let's say -- I met some jewelers in St. Louis, Missouri, they run an Epsy store called Scarlet Garnet. They met each other online. These are two amazing jewelers, these two independent women, met each other, loved each other's stuff, have had so much success online on Espy, they are now building -- they have built a storefront, brick and mortar, in downtown St. Louis and are part of a revival there.
And they would have been just as talented as jewelers five years ago, but never would have had the access to the market that they do now --
LAKE: And that's it, the marketplace is wide open.
OHANIAN: -- because of Epsy. So, whatever you want to do, and we're -- I've got a laundry list on the site. If you're passionate about film, here are examples, here are sites, here are places to go. If you want to be a web comic artist --
OHANIAN: -- like, go. You could be the next Gary Larsen in "Far Side." These are all examples.
LAKE: Alexis, I could sit and talk to you for a whole hour.
OHANIAN: Let's do it.
LAKE: I can't, but -- but not this time, not right now.
OHANIAN: All right.
LAKE: But we will have you back. Here's the book. There is no name to search, but you can go by his last name and find it.
OHANIAN: Thank you.
LAKE: None of this comes up, by the way, it's captured in the economic data, which I think is something lost. But we'll talk about that next time.
OHANIAN: OK, another segment.
LAKE: The opportunity. OK, we'll be right back after this break.
LAKE: Welcome back.
These are the main headlines this hour.
Armed men have attacked the Russian Embassy in Libya's capital, Tripoli. They caused damage to the building, but no reported injuries to any people. The country's state news agency says it's likely the attack is linked to the killing of a Libyan Air Force technician by a Russian woman earlier this week.
Italy's prime minister has won a confidence vote in the senate with an overwhelming majority. It happened after former prime minister, Silvio Berlusconi, unexpectedly dropped his bid to topple Enrico Letta's government.
Members of Berlusconi's party were already in rebellion and planning to back the confidence motion.
Criminal charges were filed today against top members of Greece's extreme right, Golden Dawn Party. Anti-terror police escorted them to and from the courthouse. They were arrested in a sweep that followed the death of a popular anti-fascist hip-hop artist.
The Al-Shabab the rebel group is threatening new attacks after Kenya's president vowed to keep troops in Al-Shabab's home country of Somalia. Al- Shabab claims responsibility for the siege of the Westgate Mall in Nairobi that killed at least 67 people.
U.S. President Barack Obama is set to meet with Congressional leaders to discuss ending the government shutdown. He told a U.S. television channel a short time ago that he is prepared to negotiate on anything, but only after Congress passes a clean piece of legislation that reopens the government.
The head of the ECB says the U.S. government shutdown could present a risk to the global economy.
Mario Draghi was speaking at the central bank kept its benchmark interest rate on hold, citing a weak, fragile, uneven recovery. He said if the stand-off in Washington drags on, it could hurt, stifle the world's return to growth.
(BEGIN VIDEO CLIP)
MARIO DRAGHI, ECB PRESIDENT: The U.S. budget shutdown is it -- is a risk if protracted. At the present time, the impression one has is that it will not be so. But certainly, if it were to be protracted, there's certainly a risk for the U.S. and the world recovery. (END VIDEO CLIP)
LAKE: Mr. Draghi also said the ECB was poised to us its vast array of instruments to keep interest rates low.
Global economist says those instruments are increasingly ineffective.
I spoke to her earlier today.
(BEGIN VIDEO CLIP)
BROWNWYN CURTIS, GLOBAL ECONOMIST: I think they're taking a breather. They're just waiting to see what happens in Washington. They do have some tools, but of course, as you know, as time goes on, the effect of those tools is less and less. And unless we see some movement on the reforms, on a banking union and those sorts of things, and that keeping on going, then I think the -- the bank will really have trouble, you know, keeping rates low.
LAKE: So many people are watching the situation unfold with a lot of and a lot of puzzlement over what we're seeing happen in Washington.
How much of a risk is this really for Eurozone growth, this uncertainty surrounding not only the shutdown, but more importantly, probably, this debt ceiling issue?
CURTIS: Oh, look, I think it's a huge issue. And I think most people in Europe think it is, as well.
The debt ceiling issue is just so important, because, of course, the U.S. dominates the financial markets. I mean the U.S. Treasury market is the benchmark for all of our markets in the rest of the world.
You just have to look back, remember when Ben Bernanke, head of the Fed, started talking about tapering and U.S. yields started to go up?
They went up everywhere else, as well.
So it's really important what happens in the US. And I think if we don't have this done reasonably carefully, we could end up with another Lehman's moment.
LAKE: And no one wants to see the happen. And we're certainly hoping it doesn't get to that.
A lot of people, I think, are betting on the fact -- we see a fair amount of complacency in the market. We're seeing a little bit of a reaction, but nothing on the scale of what one would expect, which led me to believe people think they're going to work it out.
But what about the sort of bloated confidence, the uncertainty?
I mean we are in a situation where Congress is governing by crisis.
Does that hamper business' ability to make decisions, especially investment decisions, which are long-term and they're expensive?
CURTIS: Yes, of course it does, because it hits sentiment. They think, well, what's going to happen?
And any uncertainty, you know, long-term decisions are expensive, investment decisions. So, you know, it's not just companies, but it's also consumers. You know they've just started to get back spending a bit. Things Aare looking brighter everywhere in Europe and in the US.
But that -- the growth is fragile. And the last thing you need is this sort of uncertainty.
I think what the markets are saying is, we don't think it's going to go on very -- for very much longer and it will be solved.
And I think as we hit -- start getting up to some of those deadlines, that if things don't look as though they're going to be solved in Washington, then the markets will get more volatile and you will see -- remember, back in 2011, when we had problems like this, the equity market dropped about 20 percent.
So you've just got to be terribly careful here.
LAKE: European markets closed mostly lower on Wednesday, as investors did, indeed, worry about the effects of that government shutdown we've been talking about.
The head of the European Central Bank warned a protracted stand-off could pose a risk to the global economy.
The ECB left its key rate of -- lending rate, of course, at that record low it's been sitting at.
In London, Tesco shares ended slightly lower on a fall in first half profits.
Italy's benchmark index hit a two year high in trade as Prime Minister Enrico Letta won that confidence vote that we mentioned earlier.
A luxury yacht to entertain and the private jet to get you there, all without the hassle of ownership. We'll show you how to get a piece of luxury at the fraction of the cost.
LAKE: The battle for landing slots between two of Japan's biggest airlines is over. Al Nippon Airways has won. Japan's government has allotted ANA 11 slots at Tokyo's Haneda Airport. Japan Airlines will get five. This has been an ugly and very public fight. ANA claimed JLA was getting preferential treatment after Japan's government bailed it out in 2010.
ANA had called on the government to restore the balance by giving it more slots. JAL had asked that they be divided evenly.
And if you want to avoid long lines at the airport, you can always hop into a private jet. These days, that's a budget option, believe it or not. Some seats are now on offer at just a fraction of what it would cost to own or rent a plane, so long as you are prepared to share.
Yacht owners have warmed to the idea, too.
Rose Tomkins reports.
ROSE TOMKINS, CNN CORRESPONDENT (voice-over): They're perhaps the ultimate in status symbols -- from old school glamour to modern-day glitz.
UNIDENTIFIED MALE: And it says something about what you've accomplished.
TOMKINS: A luxury yacht to entertain on and a private jet to get you there.
LOREN SIMKOWITZ, PRESIDENT & CEO, MONOCLE YACHTS: Forty-five percent of those jets that are flying are flying empty.
TOMKINS: While some don't want to see their assets sitting idle, others want access to the lifestyle without the hassle of ownership.
SIMKOWITZ: Owning a yacht is a lot of responsibility. It's like running a business.
TOMKINS: And not one that comes cheap, which is why people at every end of the market are realizing increasingly it pays to share.
CLIVE JACKSON, FOUNDER AND CEO, VICTOR: Today, people are much more frugal with their money and they're careful about where they spend it and they want to make sure they get maximum value.
TOMKINS: One way to maximize is to share through fractional ownership.
JACKSON: A group of people get together and they buy a percentage of an aircraft. So when they're not using it someone else uses it. If you're flying to a particular destination, you have the right to sell that aircraft either as a whole aircraft when it returned empty, or you could break it down into a per seat model. And that's helping the whole industry become much more efficient.
TOMKINS (on camera): I've just run a search for flights from London to New York and it's actually come up saying there are none available for the whole month. So while there is a lot of activity on the site, there is a degree of luck involved that you'll find what you're looking for.
(voice-over): When it does work, though, it brings down costs and improves efficiency, the same goals at the heart of Monaco, bringing fractional ownership to the high seas.
SIMKOWITZ: The high cost of yachting, that drives people out of yachting. People use the boats three or four weeks a year. And the other time, it sits around, it's an idle asset just depreciating.
TOMKINS (on camera): This is where you spend most of our time, in here.
TOMKINS (voice-over): After eight years of shouldering the burden of full ownership, Dino Ballestra has decided to sell off 75 percent of his yacht, handing the management to Monaco.
DINO BALLESTRA, YACHT OWNER: The costs of running a boat are really high. So I'm looking to share the boat to make it more affordable for me and for other people.
SIMKOWITZ: People don't want to be tied down to an asset they only use infrequently. You know, they're -- they're much more practical. They're smarter now then they were, uh, in 2000, so to speak.
TOMKINS (voice-over): The compromise is clear -- sharing means not always having it when you want it. It's not the same as having your own, but it helps more people have something.
Rose Tomkins, CNN.
(END VIDEO TAPE)
LAKE: Well, it is time for weather forecast right now.
LAKE: He was the highest profile American designer at the helm of a major European fashion house until today. Now, Marc Jacobs is leaving Louis Vuitton, to take his company public. How his move shakes up the fashion world, next.
LAKE: Marc Jacobs is leaving Louis Vuitton to go it alone and take his brand public. The American designer had been at the helm of the French fashion house flagship brand for nearly two decades.
With Jacobs as creative designer, Louis Vuitton became a global fashion power player.
Now, if you look at recent successes of fashion IPOs, and it's easy to see why Marc Jacobs was tempted to try his luck at going public. Prada raised $2.14 billion, Michael Kors, another former LVMH designer, raised $944 million. Italian fashion company Ferragamo, raised $487 million.
But not all public fashion companies are destined to do well. Kenneth Cole brought his label back from shareholders after the brand's shares fell during the recession.
Is the editor of "Women's Wear Daily" and he joins me now.
James, it's great to see you today.
You know, it's an interesting time for this to happen. It's a tough economy. We're facing yet another crisis in Washington.
LAKE: Talk to me, first, about what this could it -- what the departure means for LVMH.
FALLON: Well, for Vuitton itself, it's going to be a transition phase. I mean Vuitton is the engine of the LVMH group, along with alcohol and Shandong (ph), particularly.
So they are going to have to find a new designer. The leading one that my colleague, Richard Foley, identified today is probably Nicolas Ghesquiere, who used to be at Balenciaga.
So there will be some transition there. But it is an engine. Marc Jacobs has established a brand that will probably continue. Even though in some key markets, like China, the growth is slowing, it is still growing and is the envy of a lot of other luxury brands out there.
LAKE: And now what about his prospects as a public?
I mean he's quite well known. You know, he's a fashion superstar. His brand has a lot of traction already.
But we've -- we've seen, often, it doesn't matter if you're talking about technology or fashion, when you are the creative person, you don't always make a good business head.
What do you think his chances are?
FALLON: No. I mean I think they're all looking, as you identified, at Michael Kors, which is really valued at $15 billion every one...
LAKE: It's been extraordinary.
FALLON: It's been extraordinary.
FALLON: And so they're all looking at that and saying, well, if he's that, I can be even more. And so...
LAKE: Is that true, though?
Is that an assumption...
FALLON: I think...
LAKE: -- they should be making?
FALLON: -- I...
LAKE: -- or is that a particular case?
FALLON: -- I mean any -- no assumption is safe in either fashion or business. So, but I think that, you know, Marc Jacobs is an established brand. His fragrances sell really well. His apparel -- his brand is already about a billion dollars as you've written today.
He has a lot of growth internationally available. But you're right, I mean he -- he's never been the business side. His colleague is Robert Duffy.
FALLON: They're going to have to build the business side of that brand as...
LAKE: That's the thing, you need a good business...
LAKE: -- person.
LAKE: -- though, Michael Kors only a sort of ready to wear, designed for all women, that was sort of his (INAUDIBLE) being. And Marc Jacobs seems to be a little bit different, you know, Michael Kos, a very big accessory business. It contributes a lot to the bottom line.
LAKE: Are -- does Marc Jacobs, is it going to translate and does it run the risk of diluting or -- or, you know, upsetting his core customers that were the first that were loyal to him?
FALLON: I don't think so. I mean I think that really, what they're going to predicate the growth on is the secondary line, which is Marc by Marc Jacobs. Michael Kors, as you said, was identified as already to a designer. But we wrote earlier this year, I think in the first quarter, 87 percent of his revenues were accessories.
So they're all looking at that model as, OK, you know, and that is really where the growth of the business is these days anyway, is in accessories. It isn't in ready-to-wear.
So marc will probably -- you'll see a lot more accessories coming out of him, probably the fragrance will grow, as well.
LAKE: You mentioned China.
Is it -- is it important to have quick international success?
Is that going to be the key?
Because a lot of people are looking at that, although it's been shifting a little bit...
LAKE: -- but looking at that as (INAUDIBLE) growth in that...
FALLON: -- Asia, the Far East and -- and even Brazil and those markets are -- are -- they have to be there, because those are the growing economies, and that's where they have to grow fast, basically.
LAKE: Well, it's going to be fascinating to watch. An experiment, for sure.
FALLON: Thank you.
LAKE: Thank you so much, James, for coming in...
FALLON: Thanks for having me.
LAKE: -- and sharing your thoughts with us.
FALLON: Take care.
LAKE: We'll have more on QUEST MEANS BUSINESS in just a moment.
Stay with CNN.
LAKE: Welcome back.
This news just coming in.
There is a verdict in the Michael Jackson trial. Michael Jackson's family suing his promoter, AEG, in his death. Again, a verdict in. The jury has been deliberating for two full days. No word yet on what the verdict is. We'll bring you that news at the very soonest it comes in to CNN.
Before we go, we want to bring you up to date on U.S. markets.
This is where the session closed, definitely some jitters coming into the market now on day two of the government shutdown.
The Dow had been suffering triple digit losses earlier in the day. They managed to pare back by the close, down about 58 points, a little less than .5 percent. This is just the beginning. President Obama meeting with Congressional leaders. Investors are going to be watching this all night to see if there are developments.
A lot of concerns that the issue of the shutdown in funding now seems to be tied to the debt ceiling. The markets much more concerned about the issue of the debt ceiling, so it could be a rocky day.
The European markets also taking a hit, closing mostly lower on Wednesday, as investors again worry about the effects of the U.S. government shutdown.
The head of the European Central Bank warned a protracted stand-off could pose a risk to the global economy. The ECB, remember, left its key lending rate at a record low in London.
TESCO shares also moving slightly lower on a fall in first half profits in Italy. We need to mention that, of course. The benchmark index hitting a two year high in trade as Prime Minister Enrico Letta won that confidence vote that we've been talking about after Berlusconi threw in the towel. So a little bit of a mixed session there.
And that is QUEST MEANS BUSINESS.
I'm Maggie Lake in New York.
Again, the verdict in the Michael Jackson trial is expected to be read in 90 minutes.
"AMANPOUR" is next.