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US Financial Woes; Global Growth Forecast; CEOs Frustrated With US Budget Deadlock; Dow Down Over Debt Ceiling Fears; European Markets Down; Market Mentality; New $100 Bill; Founding Father Debt Wisdom; Boehner to Address Media

Aired October 8, 2013 - 16:00:00   ET



RICHARD QUEST, HOST: The bell is ringing, the market is closing, the Dow is down as worries over the debt ceiling are now testing investors' nerves. It is Tuesday, October the 8th.

Tonight, consider yourself warned: the IMF tells the United States recovery could quickly turn into a recession. Get your act together.

Also, getting the malaria vaccine to market. GSK makes a major breakthrough.

And he led South Africa to victory in the rugby World Cup. Now, Francois Pienaar shares his leadership tips with us.

I'm Richard Quest. I mean business.

Good evening. The economic world tonight has two pieces of news: the IMF have cut its forecast for global growth and has also warned of serious damage to the world economy in the event of a debt ceiling catastrophe. That is the other big piece that we are watching tonight.

The deadline to avoid a debt catastrophe is just days away. Come and join me over at the super screen and you'll see exactly the situation.

These are the two areas of worry at the moment in Washington: it is day 8 of the US government shutdown. That is underway, and there's no sign that the political gridlock is easing. And it is 9 days to go before the debt ceiling is reached and the Treasury -- the US Treasury, that is -- hits and can no longer pay the bills.

These two -- this one, of course, goes up, that number. This number goes down. The president in the last two hours has been speaking about the consequences of a debt ceiling default.


BARACK OBAMA, PRESIDENT OF THE UNITED STATES: A decision to actually go through with it, to actually permit default, according to many CEOs and economists, would be -- and I'm quoting here -- "insane," "catastrophic," "chaos." These are some of the more polite words. Warren Buffett likened default to a nuclear bomb, a weapon too horrible to use.

It would disrupt markets, it would undermine the world's confidence in America as the bedrock of the global economy, and it might permanently increase our borrowing costs.


QUEST: That was the president a short while ago. The IMF is very concerned about the political showdown in the United States and it has revised its forecast for growth down in both 2013 and 14.

So, if you look at the map, you'll see exactly -- this is the latest, it's known as the WEO, the World Economic Outlook, and there'll be much more talk about that over the next few days as the annual meetings of the Fund and the Bank take place in Washington.

But for the moment, under the World Economic Outlook, serious damage -- the United States is worried about the political gridlock, says the IMF, and it could have serious damage to the world economy if the debt ceiling is not raised.

Other areas of concern: in Europe, the Fund talks of a risk of stagnation if the economy doesn't move forward faster, and that, of course, is a reference not only to the banking crisis but also the continuing reforms necessary within the European Union and the eurozone.

And the emerging markets, they are causing some real concern. Brazil, Russia, India, China -- IMF says new structural reforms are necessary to reignite growth. And the Fund's verdict overall? Growth in the advanced economies won't be enough to make up for the sluggish growth in the developing world.

Olivier Blanchard is the chief economist at the IMF. He joins me now from Washington. Olivier, good to see you.


QUEST: I think rarely have you and I spoken in such a very topsy-turvy environment when what's happening in Washington could have such dramatic implications. How worried are you?

BLANCHARD: If it happens, I think everything I heard the president say about three minutes ago is basically right. If it happens, it's a major event. We can discuss it further, but clearly just the very fact that we will have to decrease spending would have straightforward mechanical effects which would probably turn the recovery in the US to a recession.

And then in addition, if there's any default on the debt, then we're talking about financial implications, which could well make this worse. So, it would really be a very major event.

QUEST: Right.

BLANCHARD: At the same time, I think we all agree that given that it is so dramatic, it's unlikely to happen. So, we're taking this as a tail risk. It's not part of our projections. We're hopeful it will be avoided. But if it happens, it's going to be ugly.

QUEST: Now, if it -- even the threat of it happening -- and bearing in mind, we went through this in 2011, and whatever sort of deal may or may not be done, it won't be a long-lasting or long-standing deal -- is there a spillover effect of confidence? People just don't want to make decisions, and that in itself worries economies?

BLANCHARD: No, it could. You can think of a scenario in which we go to the very last day and everything is unsure and the markets are tense and you see the T-bill rate increase and you see some dysfunction in financial markets. And then --

QUEST: Right.

BLANCHARD: -- things resolve in the end, but there would be some damage. But the damage would really come if we just cross the threshold. If we cross the threshold, big issue.

QUEST: Now, I want to just -- I've got on map here -- because the other major point that comes from this year's WEO, World Economic Outlook, the emerging markets -- and we're looking at over here -- this complete strap of emerging markets, which is going to be -- which you're now warning, quite sharply, about the slowdown in emerging markets, and that's not going to be sufficient. Why are they slowing down? What's behind it, and how critical is it?

BLANCHARD: I think there are two reasons. The first one is potential growth in the 2000s was very high. High commodity prices, low interest rates. So, it all combined to allow them to go really fast. The environment is changing, so potential growth is decreasing, in some countries, quite a bit.

Then on top of this, you have some countries where you have what we call a cyclical adjustment. So, something even stronger than that. It varies from country to country, but in general, lower potential growth in many countries, a cyclical downturn.

Now again, I want to be clear, this is not catastrophic. It happens. But they have to deal with it. They can deal with it, and they'll have to deal with it.

QUEST: The -- we saw just a few months ago in the summer the effect of the worries about tapering from the Fed. It had a dramatic effect on currencies in places like India, Indonesia, Thailand, and the like. So, these emerging markets, which had been showing good growth, if this plays out as it's expected, what does the global economy need to do to maintain its equilibrium?

BLANCHARD: Look, I think there is no question that if the US economy strengthens, the Fed has to do what it has to do, so this means interest rates will probably go up over time. At what rate, we don't know. It's going to be a bit bumpy, but it's going to happen.

This means some of the capital is going to flow out of these countries no matter what, and these countries have to adjust. Can they adjust? Yes, they can, because the situation is very different from 10, 15 years ago. They can basically let the exchange rate depreciate.

QUEST: Right.

BLANCHARD: Which is good for them. And they don't have to worry about what they used to have to worry about, which is foreign currency exposure. So, my sense is that they can adjust to it.

QUEST: Right.

BLANCHARD: And they have to be ready to do that.

QUEST: I'm going to finish, Olivier, as I often do when I'm speaking to you, your gut feeling? You and I have talked many times over the 2008, 2009, 10. Your gut feeling for how serious economic situation is at the moment?

BLANCHARD: Despite the numbers you gave, rather optimistic. I think the recovery is gaining strength in advanced economies. I think the emerging markets are going for an adjustment. I think they will adjust. Recovery continues too slow. That's why we're pushing structural reforms. But it's happening, so on that, optimistic, I would say.

QUEST: Olivier Blanchard, chief economist at the IMF, joining me from Washington. I'll see you, of course, in Washington during the course of the next few days as the meetings begin.

And to make that point, tomorrow on a special edition of QUEST MEANS BUSINESS, we'll be live in Washington, where world leaders and finance ministers will be gathering for the IMF and World Bank. It's the annual meeting.

We'll have an interview tomorrow night with the World Bank president, President Jim Yong Kim. All issues are on the table, including the global economy, the government shutdown, the US debt ceiling and, of course, the very real questions of poverty, Wednesday on QUEST MEANS BUSINESS.

Chief executives are now planning their own course of action to address the problem. The Starbucks CEO, Howard Schultz, has published an open letter calling on his fellow chief execs to act. In the letter, he says, "It is our responsibility to address the crisis of confidence that is needlessly being set in motion."

And Schultz continues, "I'd like to encourage you to consider what your companies and organizations can do to help shift the norms of our country."

So, CEOs are now getting involved. We reached out to the chief execs of every company on the Dow, 30 stocks in the Dow. Most of them had no comment to make. Some of them, of course, because they're in the quiet period before the next quarterly reporting season.

But however, these are the 30 stocks -- and we're going to stick on this. We have heard opinions from these companies who have said that they are concerned. Goldman Sachs has said so, General Electric said so, and AT&T.

The chairman of AT&T said "It is unthinkable that the United States" -- this is what he told us tonight -- "It is unthinkable that the United States could default on its financial commitments, and it would be the height of irresponsibility for any public official to consider such a course."

Now, we also know Goldman Sachs and General Electric, their chief execs are already on record with their frustrations at the situation in Washington.


JACK WELCH, FORMER CHAIRMAN AND CEO, GENERAL ELECTRIC: These are the guys that are acting like robots who don't taunt, who don't schmooze, who don't ever be together, who don't hang out. It's wrong.

LLOYD BLANKFEIN, CEO, GOLDMAN SACHS: There is a precedent for a government shutdown. There's no precedent for a default. We're the most important economy in the world, we're the reserve currency of the world. Payments have to go out to people. If money doesn't flow in, then money doesn't flow out.


QUEST: So, those are the chief executives. And as I say, we will continue to ask every chief exec that comes on this program what they think about it, every minister, ever chief executive.

Anxiety over the looming crisis continues to unsettle the markets. The Dow Jones Industrials, now the numbers have ticked over, down 159 points. Alison Kosik is at the New York Stock Exchange. Alison, I've given the bare bones of the number, down 159. Is this debt despair real?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It is debt despair and it is real. This is why you're seeing the selling, triple digits down for the Dow, second day in a row. It's the debt ceiling that's in focus.

Also, you're seeing a lot of this, twiddling of their thumbs. I'm talking about investors really just sitting on the sidelines. A lot of investors just not in the game trading, and many really just waiting on the sidelines until Washington plays nice.

So, what you're seeing also happen in this is that lower volume, Richard? That's creating more volatility in trading. Although one trader I talked to said look, most of the smart investors are buying as well.


KOSIK: But really, the wait is on to see Washington's next move. The focus is on Washington, Richard.

QUEST: The focus is on Washington. We will, of course, be in Washington, as I was just saying, Alison Kosik. We'll be there tomorrow night. Now, European markets also ended the session in the red with the shares in London reaching the lower part.

Meanwhile, France's Alcatel-Lucent says it will slash 10,000 jobs worldwide. The telecoms equipment maker announced the moved as part of a bid to cut a billion dollars in costs. Of the big markets, you see, it was London that bore the brunt of the losses.

The United States has 9 days before it could face an unprecedented default. Market are in debt ceiling thumb twiddling. The question is, why are we not seeing a bigger fall in the Dow? 159, some would say that's small beer. We'll talk about that after the break. It's QUEST MEANS BUSINESS. It is Tuesday, good evening.



QUEST: Now, we're waiting for the speaker of the House of Representatives, John Boehner, who is going to respond, of course, to what we heard earlier from President Obama on the question of the debt ceiling and the budget.

This afternoon, the president quoted chief execs and economists who warned that permitting a default would be "insane," "catastrophic," and "chaos." But look at the Dow. Down 159 points, and it was a continuing fall throughout the course of the day.

And if you look at the way in which the Dow has continued -- we're down 1 percent on the Tuesday session. If we look over the past week, you do continually see the market falling off over the last month. And it does fall even further, sort of picking up.

But my next guest things that even these movements are relatively tame and that investors will have to see more disaster and mayhem before the market falls out of bed. Paul La Monica joins me now, the assistant managing editor for CNN Money. Paul --


QUEST: I read your article and you're basically saying the market has to fall out of bed before anything will get done.

LA MONICA: That's what I think a lot of people are fearing. When you look back at September 2008 when Congress first rejected the original bank bailout bill, no one thought that Congress would be that silly to vote against it. They did, and the Dow fell nearly 800 points as a result of that. We've yet to have one of those truly cataclysmic sell-offs in the past month.

QUEST: OK, but why do you think -- and I'm looking again at these graphs over here, the Dow off 159, the one-week fall, as you can see. Why do you think the market is not falling further and faster? That is the conundrum that people are asking at the moment.

LA MONICA: Yes, I think Alison raised a great point before the commercial about how there has been relatively low volume, people maybe just twiddling thumbs, and maybe it's the absence of buying as opposed to a huge increase in selling, and I think that might be one of the reasons for it.

Most people that I talk to still think that, ultimately, there's going to be a last-minute deal. We're getting closer to the proverbial witching hour, and something has to get done and people are getting more nervous. But people still think that Congress won't be so dumb to let us go over and has this cataclysmic event of a debt default.

QUEST: OK. It's denial.

LA MONICA: I think that's part of it. People are hopeful that we won't ever have to face this worst-case scenario.

QUEST: But we're going to see -- let's take this out of the United States now and let's talk about Europe and Asia. Because I -- every morning when I wake up here, I see the e-mail from your department basically saying investors in Asia are worried. We're starting to see the triple effect. Is it possible we will see global worries bubble up faster and more furiously than we would here?

LA MONICA: It's possible, but even when you look at earlier in the year, there were much more violent sell-offs in Japan, the Nikkei plunging 5, 6 percent a day when there were events related uniquely to Japan. Same thing in China.

I'm not so sure that we're going to have an international market kind of lead the way. It is possible that Asia or Europe will be the first one to really react in such drastic fashion, but it seems like everyone is just waiting.

QUEST: Time for a bell.


QUEST: When do you think -- this is a really nasty question --


QUEST: When do you think this fall of 159, these triple-digit gains accelerate? If we haven't got a deal by Friday, Monday, Tuesday?

LA MONICA: I think if we don't have a deal by Friday and there's nothing over the weekend that hints at progress, Monday could be pretty nasty.

QUEST: Thank you very much for joining us.

LA MONICA: Thank you.

QUEST: Many thanks. It's worth pointing out at this particular point, when we say that, we're not forecasting in any shape, form, or description, and we're certainly not giving any investment advice about what you should do with your hard-earned cash. We're just pointing out what the market may happen as this crisis continues.

When we come back, they're rolling off the printers and hitting the streets today. Not the newspapers, absolutely not. These are $100 bills. QUEST MEANS BUSINESS.



QUEST: You many wonder what I'm doing. Let me tell you, as the US government faces the prospect of not being able to pay its own bills, the redesigned $100 bill is rolling out today, and Mr. Franklin looks reliably similar, but the bells and whistles surrounding him are very different, and they are designed to thwart the counterfeiters.

Now look here. If you just look here, I'm just going to show you again. This is one of the things that they are designed for. Can you see the way the colors change on the bell at the bottom? And there's this blue stripe down the middle.

3D security, all these different features have been introduced, 3D security ribbon, color-shifting ink, copper to the green bell when we tilt it, the bell seems to disappear. On large $100 bills, you get the idea. It's absolutely everywhere, these security features.

Now, if you were to take all the $100 bills, $16.7 trillion of debt ceiling, it would take 167 bills of these $100 bills to simply pay it off.

So, if you had 167 billion of these, the notes stacked would cover over 18,880 kilometers. 18,000 kilometers. That's more than the distance from LA to London and back again. That's how many $100 bills you would need stacked end-to-end to cover the debt, and it'd all have to be the new ones.

Right before the launch of the new bank note, I spoke to Sonja Danburg. She is the program manager for the US currency education at the Federal Reserve Board. I asked her about the new technology features in the $100 bill.


SONJA DANBURG, US CURRENCY EDUCATOR, FEDERAL RESERVE BOARD: Well, we've incorporated some brand-new technology for US bank notes into the redesigned $100 note, most notably this blue 3D security ribbon that appears to the right of Franklin's portrait.

And we wanted to make sure that we absolutely got the design and production right before we put them into circulation. I'm pleased to report the Federal Reserve currently has approximately 3.5 billion of these $100 notes in our inventories, which we certainly think is sufficient to meet domestic and international demand for it.

QUEST: So, you've got this blue stripe, and then there's the color tint that when you twist the thing one way and another, that will -- changes color within it. And it's all to do with keeping one step ahead of the counterfeiters, isn't it?

DANBURG: That's exactly right. So, we redesign our currency for security reasons to stay ahead of counterfeiting threat. So, it's a proactive rather than a reactive news.

We have relatively low rates of counterfeiting for US currency, so on this base of over a trillion dollars-worth of Federal Reserve notes in circulation, less than one one-hundredth of one percent of that is reported as counterfeit every year. But we take one of those instances really seriously because of course it represents an economic loss.

QUEST: Yes, and of course, the $100 is a crucial one for this counterfeiting -- anti-counterfeiting because let's face it, you're not going to spend a lot of time, money, and effort trying to counterfeit a $1 bill, are you? If you're going to counterfeit, you're going to do the one that gives you the biggest buck -- bang for the buck, pardon the pun. And that is sort of those higher denominations.

DANBURG: That's right. So every denomination of US currency faces unique counterfeiting threats. For the $100, it is our most international bank note, it circulates broadly all over the world, so there are some unique threats that we could see emerging against it, which is why we're putting out this new, more secure design.

QUEST: Since we're talking to the rest of the world now, it's really important that we get this message across, isn't it? Because three quarters of all $100 bills circulate outside of the United States. And this is a new dollar bill, which potentially -- never mind the counterfeiters -- it can become a fraudsters charter, as people try and say they'll swap your old for your new and all that sort of thing.

DANBURG: That's certainly an important message for international markets to know that the Federal Reserve is not recalling any of our older design $100 notes when we issue this new one.

So, there's currently about $900 billion worth of $100 notes in circulation, and as you said, the majority of those are held outside of the United States. We want to make sure that everyone who's holding on to the older design knows that there's no need to rush right out and trade it in for the newer one, and that they can still rely in the security features in the older designs, such as the portrait watermark.


QUEST: Now, then, just one thought to give to you. If you take the $1 bill which, of course, has the face of George Washington, on the question of debt, George Washington said to contract new debt is not the way to pay old ones.

And as for Benjamin Franklin, who's on the $100 bill, Benjamin Franklin -- remember, the $100 bill is nicknamed the Benjamins -- he famously said he'd rather go to bed supperless than rise in debt. Maybe, of course, members of Congress and investors around the world will contemplate that.

Got to hand these back. There's actually somebody come from the Fed to make sure we hand them back, $100 bills. We'll talk about the showdown after the break. QUEST MEANS BUSINESS.


QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN. On this network, the news always comes first.

President Barack Obama says Abu Anas al-Libi was involved in plots that killed hundreds of people and that he will be brought to justice. Libyan authorities are demanding the immediate return of the suspected al Qaeda leader, who was captured by US special forced in Tripoli over the weekend. Al-Libi is currently being questioned onboard a US warship.

President Obama has urged the US Congress to get back to work and pass a budget that would end a partial US government shutdown, saying things will get dramatically worse if lawmakers fail to raise the debt ceiling by next week. We are waiting John Boehner to speak. The speaker of the House is to give his reaction shortly.

The International Monetary Fund has trimmed down its forecast for global economic growth to 2.9 percent. The IMF cited weakness in emerging economies for the adjustment. It also warned of serious damage if the debt ceiling issue isn't dealt with.

Supporters of the Argentinian president Cristina Kirchner have gathered outside a hospital in Buenos Aires where they celebrated news that she had successfully undergone brain surgery. Doctors removed blood from the surface of her brain, and President Kirchner has been told to rest for a month.

Turkey's prime minister says a dark era has come to an end. Today, his government lifted a decades-old ban on women wearing head scarves in state institutions. Critics are accusing the prime minister, Recep Tayyip Erdogan, of pushing an Islamic agenda on the long-secular nation.

It is day 8 of the government shutdown, and there's no reason to believe the end is near, not if you listen to the US president who spoke earlier. And the man we're about to hear from, who is the speaker of the House, John Boehner, that's the podium at which he will be talking anytime now. And, indeed, here is the speaker, John Boehner.

JOHN BOEHNER, SPEAKER OF THE UNITED STATES HOUSE OF REPRESENTATIVES: As you all know, I had a phone call with the President of the United States this morning. We'll say it was a pleasant conversation although I have to say I was disappointed that the President refuses to negotiate. When it comes to the issue of funding our government, the House has passed four bills. Four bills to fund our government and provide fairness to the American people under Obamacare.

Each of those four bills was rejected by the United States Senate. Under the Constitution and our system of government, we asked that they sit down and have a conversation with us about funding the government, keeping it open, and providing fairness to the American people under Obamacare. They refused to do it. Now, over the last 30 years, dozens of times, there've been negotiations over funding our government. All of those negotiations over the last 30 years have resulted in significant policy changes. And I would remind you that the President of the United States and I sat down in the spring of 2011 to negotiate a funding bill for the government from March all the way through September during that negotiation, there were all kinds of policy considerations. And if you recall, the Opportunity Scholarships for kids here in D.C. was in fact restored into law. So the President's position that - `listen, we're not going to sit down and talk to you until you surrender' is just not sustainable. It's not our system of government.

When it comes to the debt limit, I agree with the President. We should pay our bills. I didn't come here to shut down the government, I certainly didn't come here to default on our debt. But when it comes to the debt limit, again, over the last 40 years - 27 times - the debt limit has been used to carry significant policy changes that would in fact reduce spending and put us on a saner fiscal path. When President Reagan sat down with Tip O'Neil in the 1980s, President Bush in 1990 went out to Andrews Air Force Base and got into a long debate and negotiation with Democrats here in Congress. Bill Clinton went through this three times in the 1990s. President Obama and I sat down in 2011 and had a serious negotiation. And while the President today suggested that I walked away from the deal, I would have to remind him that I was in the Oval Office along with the Majority Leader Eric Cantor when we in fact had an agreement that two days later the President walked away from.

There was in fact another negotiation in 2011 that resulted in really the largest deficit reduction bill that we've seen here in the last 30 years. But in 2010 when Democrats controlled the Congress and President Obama was in the White House, what happened was, a group of moderate Democrats in the House wouldn't agree to raise the debt limit without a negotiation. So there was a negotiation then amongst Democrats over raising the debt ceiling.

The long and short of it, there's going to be e negotiation here. We can't raise the debt ceiling without doing something about what's driving us to borrow more money and to live beyond our means. The idea that we should continue to spend money that we don't have and give the bill to our kids and our grandkids would be wrong. This isn't about me and frankly it's not about Republicans. This is about saving the future for our kids and our grandkids. And the only way this is going to happen is that in fact have a conversation. So, it's time to have that conversation. Not next week, not next month, but the conversation ought to start today. And I'm hopeful that whether it's the President or Democrat leaders here in the Congress, we can begin that conversation.

Female: Can you tell us please what would you say to military families who've just been denied death benefits due to the shutdown?

BOEHNER: Last week, the Congress passed the Pay Our Military Benefits Act. We gave broad authority to the Department of Defense to pay all kinds of bills including this. And frankly, I think it's disgraceful that they're withholding these benefits. But again tomorrow, the House is going to act specifically on this, and I hope the President will sign it.

Female: Mr. Speaker, the President made extremely clear that he is not going to negotiate. You are making the statement that (inaudible), Cantor dictated at 11:59 on October 17th and we're not there.

BOEHNER: You know in times like this the American people expect their leaders to sit down and have a conversation. I want that conversation to occur now.

Male: Speaker, the President said today that he would negotiate a temporary deal (inaudible).

BOEHNER: What the President said today was if there's unconditional surrender by Republicans, he'll sit down and talk to us. That's not the way our government works. Thanks everybody.

QUEST: Well, that was short and to the point. And certainly not shorter than when President Obama spoke two hours ago. John Boehner was responding to the President who had made it clear - and he said democracy cannot function like this. Here's what the President had to say that he was responding to.

BARACK OBAMA, PRESIDENT OF THE UNITED STATES, FROM VIDEOCLIP: We can't make extortion routine as part of our democracy. Democracy doesn't function this way. And this is not just for me, it's also for my successors in office, whatever party they're from. They shouldn't have to pay ransom either for Congress doing its basic job. We've got to put a stop to it.

QUEST: Oi, oiya, Athena Jones joins me from Washington. I mean, it couldn't get much clearer. Boehner says he wants to negotiate, Obama says he doesn't negotiate. We all know something'll have to happen.

ATHENA JONES, CNN GENERAL ASSIGNMENT CORRESPONDENT: Well, Richard, something will have to happen, and right now as you can see, this has been a day of dueling press conferences, not unlike many of the days we've seen over the last eight days or so. We heard from Speaker Boehner say many of the same things he just said, we heard him say at ten a.m. Then the President came out around two our time, and now Boehnner's coming out saying negotiate. Now, the President said he'll negotiate. He just wants to do it after the Republicans pass these two bills.

QUEST: I'd just like to jump in here. Because you obviously study this a lot more closely than I do. Do you spot any form of shift of movement in anybody's position - be it ever so glacial?

JONES: I don't see much movement here. Now, the President has said that he'd be open to a short-term deal. Something that would reopen the government and raise the debt ceiling. But even if there is a short-term deal to allow room for these negotiations, these discussions the Republicans say they want, the President still says he doesn't want any strings attached to any sort of deal. The most string - let's put it this way, Richard, the most strings attached the President would agree to is some sort of deal - raising the debt ceiling and reopening the government - that would require discussions. But that's really about it. That's not giving a lot. Richard.

QUEST: Athena Jones in Washington. I think we'll all needs some headache tablets before we're finished with this one. Thank you for that. Many thanks indeed. And before we go any further, I do want to remind you if you just joined us this evening of how the Dow Jones Industrials ended the session and what happened in the markets. The Dow was up 159 points, it's the latest - the second day - of triple-digit losses. We're now well under 14 - 15,000 and it is of course a momentum of losses that's growing as investor concerns continue to rise. World leaders wrapped up the APEC - Asia-Pacific Economic Cooperation Summit in Bali. It was the meeting that the U.S. President couldn't attend because of the government shutdown and the deb t crisis. And his absence was certainly felt. Our correspondent Anna Coren is in Bali.

ANNA COREN, CNN CORRESPONDENT, FROM VIDEOCLIP: Dressed in endek shirts made from traditional Balinese cloth, the leaders and representatives of APEC's 21 countries gathered for the annual family photo. Standing in the back row and hardly visible, U.S. Secretary of State John Kerry. America's number one diplomat had to step in after President Barack Obama canceled his trip to Bali to deal with the government shutdown back home. Secretary Kerry was more prominent on the final day of the Summit. President Obama's absence was a major disappointment to many delegations and it gave China's president Xi Jinping the chance to display his country's growing influence across the region.

The final communique expressed concern about weak global growth, concluding "Risks remain tilted to the downside, global trade is weakening and the economic outlook suggests growth is likely to be slower and less balanced than desired."

Male FROM VIDEOCLIP: We have (inaudible) our commitment --

COREN FROM VIDEOCLIP: Indonesian president and Summit host Susilo Bambang Yudhoyon heralded the Summit a success, saying APEC countries are committed to achieving a free and open trade block in the Asia-Pacific by 2020 and addressing environmental challenges.

SUSILO BAMBANG YUDHOYON, PRESIDENT OF INDONESIA, FROM VIDEOCLIP: In view of the scarcity of our finite resources, we agreed to cooperate in enhancing regional food, energy, and water security. This effort is also aimed at responding to the challenge of population growth and the adverse impact of climate change.

COREN FROM VIDEOCLIP: But it was the Transpacific Partnership promoted by the U.S and Barack Obama that generated the most discussion. This trade and investment zone would include 12 countries stretching from Vietnam to Japan, to Chile, covering a third of the world trade and 40 percent of the global economy. Those countries say progress was made toward the deal by the year's end. But several also made it clear that there is much more work to be done.

As the fast growing region in the world, the over-(reaching) message to come out of this year's APEC Summit was a resilient Asia-Pacific the engine of global growth. The reality is, it's China that will be driving this engine as it prepares to host APEC next near. Anna Coren, CNN, Bali, Indonesia.

QUEST: Now here's a thought for you - which would you rather be covering - the debt crisis and the debt ceiling in Washington or the APEC Conference in Bali on the beach. Something to think about. When we come back, high hopes for a new malaria vaccine. A British drug maker is seeking approval from regulators after positive re results with children. I'll tell you about it in a moment.


QUEST: GlaxoSmithKline says it will take the world's first malaria vaccine to market. The British drug maker is seeking European regulatory approval for the treatment after a promising trial result. 660,000 people die each year from malaria according to the World Health Organization. One member of the GS key team responsible for the vaccine (design) said exactly who it was developed for.

DR. ALLAN PAMBA OF GLAXOSMITHKLINE FROM VIDEOCLIP: This vaccine when we developed it, we had - who we had in mind was - the persons suffers the most from malaria. That's the African child. So, out of the 660,000 people who die every year, 90 percent of those are going to be children below the age of five in Africa. So the vaccine was developed specifically for that population.

QUEST: It is a long and testing process getting a new vaccine or medicine to market. The WHO, the World Health Organization, says if European authorities give the green light to the vaccine, it could start recommending its use from as early as 2015. Our correspondent Jim Bolden has more .

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT, FROM VIDEOCLIP: Malaria nets. One of the few preventative steps people can take to ward off mosquitoes that infect around 220 million people every year. With 660,000 malaria deaths in Africa each year, many of them small children who cannot fend off the sickness, a vaccine would help cut the infection rates. Drug makers GlaxoSmithKline says it will now formally seek approval from the European Medicines Agency to market the world's first malaria vaccine. But maybe unusual for a drug company, GSK is candid about the vaccine's limitations revealed in ongoing trials throughout Africa. The vaccine works for about 18 months and then degrades. Compare that to, say, longer lasting polio and tetanus vaccines.

But supporters of the malaria vaccine say any additional tool to cut infection rates in about 100 countries will help considering the sheer number of children dying from malaria. GSK says the vaccine trials showed 46 percent fewer children, aged five months to 17 months, contracted malaria compared to a control group of children who did not receive the vaccine. The Gates Foundation has committed almost $2 billion to a campaign that has successfully cut malaria rates in the past decade. And now, nothing less than what GSK says is the world's first vaccine against a parasite.

GSK says it will use five percent of the vaccine sales toward research to fight tropical diseases and pledges to not sell the malaria drug for profit. It could be in clinics around the world starting in 2015. Jim Boulden, CNN London.

QUEST: Now we know there have been some extremely bad weather conditions pretty much everywhere, whether it's northeast U.S., Europe had some storms and typhoons we're seeing Asia. Jenny Harrison is at the World Weather Center. Not doing your job, Ms. Harrison, just sort of preparing the ground.

JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Well, you're right, there's a lot going on out there, Richard. I have to say out of all those regions you're talking about, Europe actually faring pretty well. But also some severe weather warnings in place, I'll come on to those. But let's just start with temperatures because we're going to begin to see a bit of a difference across the northwest in particular, so much cool air filtering in. Right now it's fairly mild, particularly given the hour of the day. Seventeen in Paris, 16 in London where it's just nine Celsius in Kiev. We've got some relatively clear skies across that portion of Europe as you can see,

And some fairly stormy conditions across the central Mediterranean. That will stay in the forecast, but a storm is working the way across towards the southeast, and as I say, turning cooler across the northwest more showers across Scandinavian, the low countries northern areas and mainland Europe as well.

But as it continues through the rest of Tuesday and Wednesday, more of those warnings and (inaudible) very heavy amounts of rains and severe winds as well - in particular these areas in red. And then as we go Wednesday into Thursday, all of those warnings actually shifting a little bit further towards the southeast.

So in terms of what is happening next, let's have a look at -- everything's frozen up on me - no, it's not going to move. Well, I was going to show you - there we go, here we go - Acqua Alta. This of course is happening right now in Venice. It's the first of the season. We've got some very heavy months of rains, hence of course those warnings in place too across much of Italy - that's where the thunderstorms are. You can see people are fairly well prepared, but the water's not particularly deep there. This gentleman not doing quite as well although he is at least managing to keep his luggage out of the water.

But I'm afraid there's more rain in place really for much of Italy. The delays at the airports are fairly short as you can see, apart from some fairly windy conditions in Glasgow as they go into Wednesday - those are in the afternoon hours. There's rain fairly widespread again across much of the southeast. Rain also working it so across the - working its way across from the north, sweeping across into mainland Europe and that cooler air is being ushered in behind that. So when it comes to your highs on Wednesday, we've got 16 in London, the same as it is right now actually, 16 in Vienna and 22 in Rome underneath all of that rain and that cloud. Richard.

QUEST: Jenny Harrison with the World Weather Center. That chap was holding his suitcase - fascinating. Now, when we come back, and self- confessed reluctant leader The former captain of South Africa's World Cup rugby winning team shares his lessons on leadership. It's Francois Pienaar and you will hear from him in his own words after the break.


QUEST: The South Africa rugby legend, Francois Pienaar, has told CNN he didn't want to be captain of the Springbok, a team he led to victory in the 1995 World Cup. While reluctant at first, the sporting hero says the role taught him valuable lessons about leadership that he used later as a chief executive of a major rugby club. (Inaudible) Coren sat down with Pienaar as he wrapped up mentoring young leaders at the One Young World Summit in Johannesburg.

FRANCOIS PIENAAR, RETIRED SOUTH AFRICAN RUGBY UNION PLAYER FROM VIDEOCLIP: I was hoping when I - you know I got picked for the first time in my life to play for the Springboks - that I would just be able to ease my way in and play, but Mr. McIntosh - Ian McIntosh, fantastic coach - called me to the side and he said, `By the way, Francois, you're captain. That was daunting you know although it's a hell of a privilege, the responsibility at that stage - I was still fairly young and we'd just come out of isolation you know, apartheid had just been abolished, we've been allowed to play international rugby for the first time, and we soon realized how the ban on international rugby hurt us. So, it was a very difficult time. We had to learn very quickly, but would I have changed it? No, I learned so much.

COREN: And when we talk about the 1995 World Cup, Mandela had been president for just over a year, the whole nation was still a bit wobbly essentially, and you took the team to the final. And Mandela walked onto that pitch wearing your jersey. And many people say that was the moment the New South Africa really was born. Did you know that you were playing such a key role in that?

PIENAAR: No. Playing international rugby is what every sportsman wants to do - sportsman or woman. You want to put your skills against the best the world. So in the rugby world, (inaudible) South Africa, our focus was on the World Cup and that W - chasing that W to win it. And to win it for the first time in South Africa would have been magical. So we trained very, very hard. But through the course of the Rugby World Cup, a lot of things happened. And the spark was lit by Mr. Mandela.

Everybody knows our sad history. So now for the first time, this country that had been poles apart and still are poles apart with a lot of deep wounds, had the opportunity to welcome the world to our house. And you know rugby being followed by the white people in South Africa predominantly - the Afrikaners - real passion for it, and the black people thought as a symbol of apartheid. I would think that the team earned their respect. But it started with Mr. Mandela asking them to support the team.

COREN: What did Mandela say to you as the trophy was lifted?

PIENAAR: Very special - because when I walked up onto stage to get the trophy from Madiba, his first words were, "Thank you very much, Francois, for what you have done for this country." And I became quite emotional because I couldn't believe that he's just said that to me. And my reply was, "No, Mr. Mandela, thank you for what you've done for this country." And I felt like hugging him. I felt like - but you know there was protocol and everything - it was just a - it was just a special moment.

COREN: I'm sure we could have done with a hug.

PIENAAR: Yes, I'm - that's - if I have to rewind the clock, would I have done that? Absolutely.

COREN: To me, it's tougher being the captain of a national rugby team than it is being the CEO of a big company.

PIENAAR: I guess I had (inaudible), but you know I just loved it. I was very privileged and blessed to be given the captain's mantle. With that comes responsibility. You get the right CEO - I think he'll act the same. You know, it's a responsibility to have an effect on the people that you work with plus the board (inaudible).

QUEST: That's some interesting thoughts on the question of leadership. When we come back, perhaps pulling the strands together. We'll talk more about that in our "Profitable Moment." And as for the Dow Jones industrials - while we keep reminding you what happened today - off 160 points (inaudible).


QUEST: Tonight's "Profitable Moment." In the old days they used to send a canary down the mine to warn of danger when things were going to get nasty. Well, we've had two canaries so to speak in the last few hours. Firstly, the Dow Jones Industrials which fell so very sharply today down 159 points. A first sign of warning of what might be if they don't solve the debt crisis. And then also we had the world economic outlook and the IMF giving us a warning saying about the U.S., Europe, emerging markets, things are starting to look rather precarious again. And just when hope had started to rise that things might be getting better.

Well, we'll be in Washington for the next couple of days at the IMF and World Bank meetings. And tomorrow I'll be talking to President Kim of the World Bank. @richardquest is the Twitter where you can put your questions through me to the president of the World Bank. And that's "Quest Means Business" for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead - I hope it's profitable. I'll see you in Washington tomorrow.