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QUEST MEANS BUSINESS
Debt Ceiling Deal; Debt Deal Details; US Markets Surged on Debt Deal News; Cantor Fitzgerald CEO on Debt Deal; Albert Fried Managing Director on Stocks Surge; European Markets Mixed; Warren Buffett Says Ditch Debt Ceiling; Cinnabon President on Debt Deal; World Food Day
Aired October 16, 2013 - 16:00 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)
RICHARD QUEST, HOST: They are clapping, they are cheering, they have been saved by the bell and saved by a last-minute deal to raise the debt limit. The closing numbers on Wall Street. It is Wednesday, October the 16th.
The US steps back from the brink of disaster. A deal on the debt is done, and now it just needs congressional approval.
Tonight, we'll get the reaction of Cantor Fitzgerald chief exec Howard Lutnick.
And also, Michael Kors tells me he's using his business skills to fight world hunger.
I'm Richard Quest. What a day to mean business!
Good evening. You could hear it, you could feel it, and certainly it was welcomed. The collective sigh of relief, not only in Washington, but around the world hours before the US is due to run out of money to pay the bills, and there's a deal in Congress to raise the debt ceiling and reopen the US government.
Live pictures of the Capitol. The agreement still needs approval from both sides of that building, the Senate and the House, and then, of course, it goes up Pennsylvania Avenue to President Obama's desk. The US House speaker encouraged Republicans to pass the plan when he was giving a radio interview.
(BEGIN AUDIO CLIP)
REP. JOHN BOEHNER (R), SPEAKER OF THE HOUSE: We've been locked in a fight over here trying to bring government down to size, trying to do our best to stop Obamacare, and we fought the good fight, we just didn't win.
(END VIDEO CLIP)
QUEST: Now, that is John Boehner who, of course, has to "herd cats," as he put it, in the House. Votes are expected this evening.
You need to know the nuts and bolts of the plan, and if you join me over at the CNN super screen, you'll see exactly what this deal really is all about. It is complicated, but the gist of it is to raise the debt limit until February the 7th to avert a possible default. Now, that's the big one, raising the debt limit.
They would also be reopening the US government until January the 14th -- 15th. So, that's -- there are the two, if you like, crucial parts of it.
What the Republicans got were stricter income verification for some people who are getting subsidies under the so-called Obamacare. In other words, making sure there isn't any people getting something they're not entitled to.
And this, I think, is the bit that we're going to focus on: the long- term spending plan talks. There will be budget negotiations for a long- term spending plan. In the Senate, both leader -- majority leader and minority leader, Reid and McConnell, stressed the importance of passing this deal.
(BEGIN VIDEO CLIP)
SEN. HARRY REID (D), MAJORITY LEADER: The eyes of the world have been on Washington all this week, and that is a gross understatement. And while they witnessed a great deal of political discord, today they will also see Congress reach an historic bipartisan agreement to reopen the government and avert a default on the nation's bills.
SEN. MITCH MCCONNELL (R), MINORITY LEADER: For today, the relief we hope for is to reopen the government, avoid default, and protect the historic cuts we achieved under the Budget Control Act. This is far less than many of us had hoped for, frankly. But it's far better than what some had sought. Now is time for Republicans to unite behind other crucial goals.
(END VIDEO CLIP)
QUEST: The market gave its reaction almost -- I need to turn to Maggie Lake in a second, but I think it's probably the best of the day if not within a point or two, up 205. Maggie Lake is on the floor of the New York Stock Exchange. A very strong rally that picked up steam in the closing moments.
MAGGIE LAKE, CNN INTERNATIONAL BUSINESS CORRESPONDENT: It's a rally, Richard, but I'll tell you right now, let's consider this a golf clap for the lawmakers not throwing themselves off a cliff, but the people down here know they're still on the edge.
It's up some 200 points, you're right, it's probably the best levels of the day, but there's not a lot of volume, not a lot of conviction behind this. This is a lot of program trading going on. These folks down here know that all they did in Washington is kick the can down the road, it's the same cast of characters that are going to be arguing again about the same things in a few months.
So, it wasn't a great deal of progress. There's not a euphoric mood of celebration down here, but it is a nod that at least disaster was averted.
QUEST: Maggie, stay there, do not move too far away. We need to put some perspective into that kicking of the can. Howard Lutnick is chairman and chief exec of Cantor Fitzgerald, joins me. Come on! Come on, Howard! They did a deal!
HOWARD LUTNICK, CHAIRMAN AND CEO, CANTOR FITZGERALD: Well, when we were together in January, we said that the US was going to do crazy things and it was going to act dopey, I mean -- and come on, the last couple of weeks have been, what? Crazy. And the US has been acting dopey.
(QUEST RINGS BELL)
QUEST: But do you welcome -- that was for the dopey.
QUEST: Do you welcome the deal that was done, and what are you worried about because of it?
LUTNICK: Yes, so this deal had to happen because the US doesn't want to default, it doesn't want to get into the whole nonsense of what happens when the richest country in the world -- with a printing press that can just turn around and print them up -- decides to cross their arms and not do it.
But all we've done is kick the can down the road. You put it up there -- February 7th -- January 15th, the government will shut again, and February 7th, they're going to be talking about this again.
QUEST: So, you don't think that there is the possibility for this compromise committee to reach any form of significant budget negotiations?
LUTNICK: No way. Because you elected a very strong left president on the same day you elected a strong right Congress. And the strong left and the strong right, all they're going to do is wrestle. You hear John Boehner go out and say "we lost." You think he thinks he lost? He lost today. He will be back -- his crowd will be back, and they will slug it out again some other day.
QUEST: So, if that's the case, why did the markets hold their nerve? Because in many ways -- and I, look, I am not suggesting for a moment I wish to default. I'm not for a second saying that. But the fact they did the deal at the last minute, at the 59th minute, reinforces the market's view that this will always happen every time there's disagreement.
LUTNICK: I think that's true. I think it will, effectively, happen. But what will happen is there'll be no new spending, there'll be nothing on government. Every time the Obama White House wants to come in with something, the Republican Congress is going to cross their arms and say "No."
QUEST: So, what do you want from a deal?
LUTNICK: Well, I don't think they'll be able to come up with a deal. That's the beauty of having a Republican House. The Republicans want to spend less money and Obama was not elected to spend less money. Those two things are just true.
So, what's going to happen is they're just going to continually slug it out and get what you got today, which is no new spending, the new sequester -- which we haven't talked about that -- $19 billion in cuts come the middle of January. You think there's going to be a deal to not have that happen? No chance, no way.
QUEST: So, if you've got the existing sequester, which is still in force --
QUEST: -- and some would arguably say at least it's got the deficit down. You've got new sequester coming in January, and you say you've got a no agreement in a compromise committee, then I put it to you again: when is the markets going to lose their nerve and actually say we're going home?
LUTNICK: Well actually, what's interesting is if they keep kicking the can down the road, what they've got is a little bit of fiscal reasonableness. They didn't spend more money today, did they? Matter of fact, with the deal was --
QUEST: Oh, but that's hardly an achievement to have fiscal reasonableness by --
QUEST: -- by scythe and sword.
LUTNICK: But that's what we've got. I think that's exactly what we've got is that we need to have toe-to-toe combat in order to not spend more money, and that's what the Republican House actually did get today, it got no new spending, and Obama knows there's no chance there's going to be new spending coming in the next 11 weeks.
In fact, what he's certain of is since he's not going to cut any spending and they're not going to let him spend anymore, you know the exact number: 969, because that's what the sequester says. I'm a genius, that's spending of the US government going forward.
QUEST: All right. The rest of the world -- you're in touch with the rest of the world. You've got offices all over the place.
LUTNICK: It's just -- it's awesome how much they laughed. Think of the Chinese. That's one of my favorites, the Chinese --
LUTNICK: Yes. As opposed to a year ago when they said de- Americanize, only this time, because we acted so silly, people actually listened to them for a moment, but they're saying the same things they said yesterday. Why treasury bills were 70 basis points --
QUEST: They really rose, didn't they? Those four-week bills and 52 - -
QUEST: -- they doubled almost.
LUTNICK: Correct. And then they halved again today.
QUEST: Yes, halved!
LUTNICK: But you know what? These are -- this is like a week's interest, which is no money. I mean, we can -- let's face it, the difference between 70 bases points and 17 basis points, you know what it is? You and I can go get a cup of coffee at Starbucks.
QUEST: You're paying! You're paying!
LUTNICK: Let's do it.
QUEST: Finally, we're going to meet in Davos -- I assume you're going to Davos.
LUTNICK: I will be there.
QUEST: Assuming we've all got the money left to go there after this.
QUEST: Prognosis for what you and I will be talking about in Davos?
LUTNICK: It is the world of mediocre growth. We are in a world of such sad, mediocre growth. We are going to see a Fed that keeps easy money. You're going to see a Europe with easy money, you're going to see easy money, easy money, easy money.
QUEST: My producer will go spare, but I need to ask you quickly -- very quickly -- I assume tapering gets put off for a few months just to get over this mess.
LUTNICK: Well now, tapering is definitely off, and then, what do you think they're going to do? They know this is going to come again, so tapering is going to be put off in January again. So, we're not tapering, we're going to keep super easy money in America --
LUTNICK: -- for a long time to come.
QUEST: Go on, you can --
(LUTNICK RINGS BELL)
QUEST: You're the first and only guest --
QUEST: -- that we've allowed to do that.
QUEST: Howard, good to see you, as always. Live pictures of the US Senate floor and how they are starting the debate, looking forward to the vote. They hope to vote after -- after dinner, I think is how they put it, which all seems rather civilized. Maggie Lake is at the New York Stock Exchange to get further and deeper into what happened today.
LAKE: Right, Richard. We just heard about credits. Let's go back to equity markets and the rally we saw. We're here with Ben Willis from Albert Fried, and Ben, we were just talking before with Richard, the rally of 200 points, the highs of the day, is there any conviction behind this?
BEN WILLIS, MANAGING DIRECTOR, ALBERT FRIED & CO.: No. This was simply a proxy vote to Washington to say we're happy with what you've finally accomplished, keep it that way. There's still a little risk going in, they still have not officially voted yet, so we'll have to be worried about tomorrow morning on top of IBM missing their earnings.
But just look at this as a proxy to Washington saying you accomplished what we thought you should have and raising --
LAKE: Which you should have done from the very beginning, if not at all.
WILLIS: Exactly. And all we've done is postpone it. We're going to have -- hopefully we won't, but I know we will, February 7th, you and I are going to be standing here talking about this again.
LAKE: And that's the thing. Are we going to see any follow-through tomorrow, even if the deal goes through? Because all they did is kick the can down the road, and it's the same people involved.
WILLIS: As a professional trader, I would not be uncomfortable being short going into this close, anticipating being able to buy them back tomorrow for less than I sold them for.
However, as a long-term investor, if you're at home watching this, when you see the markets sell off, you should be in here buying stocks, the same way you'd buy something at Macy's when it goes on sale. The long-term effect is the world markets are getting better and you need to have your money in stocks.
LAKE: We hear that, and is it also because, we just heard a guest on say there's going to be no taper, easy money's here to stay. What about the growth, though? We've had CEOs say, listen, I can't plan for the future when this nonsense goes on on the fiscal front, earnings are coming in weak. Can we still get a stock rally with that kind of macro backdrop?
WILLIS: Yes, we can, because it's the confusion that Washington is giving us -- and we'll get in leading indicators on Friday to give us an idea -- and that will -- that has dampened some of the enthusiasm or the psychology of the market. But the world markets, we continue to see improvements in China, in India, and the like. And that's important to the world markets and the US economy.
IBM, as I just said, missed after the close today, so that's a disappointment. And you have some firms now like Stanley Works, Black & Decker, who reported today, who are blaming the government shutdown --
LAKE: Yes, you point out --
WILLIS: -- so we know the --
LAKE: -- inconveniencing --
WILLIS: Right. We know the government's been screwing us. We didn't know they were doing it with electric devices, so --
WILLIS: There you have it with the earnings. But again, I still think the big picture is the world economy's improving. Don't be afraid. People who make money long-term investing buy when nobody else wants them, like Warren Buffett.
LAKE: All right, there you heard it, Richard. So, the rally today kind of tepid, but people still putting their faith in equities. And let's face it, are there a lot of alternatives? That's a big part of the scenario, too, Richard?
QUEST: Yes, certainly not if interest rates stay as low as they're likely to be for the foreseeable.
LAKE: That's right.
QUEST: Maggie's at the New York Stock Exchange. Thank you, Maggie. European markets, now they -- it's hard to tell, because they gained on expectations that a deal would be reached. If you look at the Frankfurt DAX, it closed at a record high of 8,846, a strong rally there.
Paris was dragged lower by LBMH on slowing sales. And Zurich SMI was fairly flat. But they didn't really see the best of the day because the deal on the Senate wasn't really announced until Europe had closed.
Warren Buffett says it's time for the US to get rid of the debt ceiling so politicians can't use it as a "weapon of mass destruction." We'll hear from him when we return. QUEST MEANS BUSINESS.
QUEST: Welcome back. Warren Buffett says the US shouldn't have a debt ceiling at all. He's one of the business leaders gathering in "Fortune's" Most Powerful Women's summit at Washington. Poppy Harlow, who's one of our most powerful women is there and joins us now from Washington.
QUEST: Oh, come on, it was an obvious one. You had to allow me that one. Poppy, Warren Buffett --
POPPY HARLOW, CNN CORRESPONDENT: Yes.
QUEST: -- has been the one man who has been quoted by Congress, by president, by newspapers over his nuclear weapons analogy with the debt ceiling.
HARLOW: He is, and it's also interesting, Richard, he told me that he received a call from the president over the past few weeks as it's been going on, he didn't tell me what the president said to him, but he also said that political groups have been sending him talking points on this debacle in Washington and that he isn't even reading them, he just deletes them.
But yes, he has called this akin to a nuclear weapon, that it's that dangerous to have a fight like this over the debt ceiling, that we shouldn't even have a debt ceiling.
We talked to him literally minutes before that expected deal came through a little bit earlier today, so he weighed in on this brinkmanship, he called this, clearly, both sides here playing games, and he said to hold the full faith and credit of the United States in jeopardy is nuts. Listen.
(BEGIN VIDEO CLIP)
WARREN BUFFETT, CEO, BERKSHIRE HATHAWAY: It is totally asinine to have a debt ceiling at all, and to use it as a means to try and get your way on anything else, whether it's abortion, gun control, Obamacare, you name it, it's a political weapon of mass destruction that shouldn't be used.
(END VIDEO CLIP)
HARLOW: So, clearly, it's something that he doesn't even want to see. In fact, he went on to tell me that if this expected deal does pass, which he thinks that it will, that politicians on both sides of the aisle, Richard, should agree to take this, quote, "weapon" just off the table completely.
Because he said that if we come back here in two months and have this same argument again, it's just foolish, and it puts this country at great, great risk. So, take it off the table. I don't know if that's going to happen, he doesn't know if that's going to happen, but he think it's faulty to even have this.
QUEST: Now, the chief executives that you've been with and the people you've been talking to, the comments that we hear, "irresponsible," "dangerous," all the sort of -- "they need to get their act together," but there's not much more they can do about it, is there?
HARLOW: I want -- let's bring in one right now, and we'll talk about it, because yes, a chief executive today, a leading woman, told me that this is completely irresponsible that this is happening in Washington. I've heard even harsher terms from some.
But we have one right here, Kat Cole, she's the president of Cinnabon. They employ some 12,000 people around the world, 57 countries you operate in, so let's talk first about this. What does this do, this brinkmanship? Even if we get a deal, let's take a short-term deal, what does it do to the reputation of the US for business and the global economy?
KAT COLE, PRESIDENT, CINNABON: I think as a business person, it makes you ask, what is it that is causing our legislators and our government not to believe enough in tomorrow that they can come to a deal. Usually, people totally rise to an occasion when they believe in the future and tomorrow.
And this stalemate, this inability to come together and using this debt ceiling as a weapon, as Warren Buffett has said, really makes us question, do they not see the possibilities --
QUEST: Right, but --
COLE: -- that small business owners see? We see the possibility, we see the climate being positive for business, we're creating jobs all over the world, why can't they see that?
HARLOW: So, Richard has a question for you.
QUEST: I do. Kat, look, what is it you actually want from Washington? What is it you need from them? Because they would say -- I mean, the Republicans would say they are actually protecting many of your interests, in terms of lower costs for health care and the like.
COLE: You know, there's a law of diminishing returns of protecting any partisan interest. And so at some point, that protection is disabling our ability to do basic things, like focus on creating jobs. Like provide clarity on Obamacare and what it's going to mean for our businesses.
Right now, the whole topic is whether or not the government is in session and this debt ceiling. That should be off the table so we can focus on topics that enable business owners to create jobs and provide clarity so we know what we need to do as business owners to be lawfully compliant with what's going to come into practice with the health care law and to focus on the right stimulus to help create more jobs.
HARLOW: So, even if this deal passes, it's a short-term deal.
HARLOW: So, I just -- I want to know if this is going to impact Cinnabon's ability to hire or willingness to hire because I was just talking to Anne Sweeney from Disney and ABC, and she said it really depends how long it lasts. If it goes until Monday, that's one thing --
HARLOW: -- if it goes beyond a month, it's another thing. Are you going to hold back from hiring as a result?
COLE: You know, for a true main street business, like a little food service business, it will affect our ability to hire if it goes on long enough to affect consumer confidence. And if consumers --
HARLOW: Hasn't it already?
COLE: -- start to get shaky -- it has a little bit. But right now, I think the average consumer still has hope and belief that our government is going to step up and create a deal. They're not totally pulling back their discretionary income yet.
But if it goes on too long, they absolutely will, and no one's going to shop and no one's going to travel, and that will affect our ability to keep people in the jobs that we have, much less hire new ones.
HARLOW: We were here in 2011, we're here now --
HARLOW: -- we may be right back here in February. Kat Cole, appreciate it. Richard?
QUEST: Thank you very much, Kat and Poppy at the conference in Washington. Now, tonight, your views, @RichardQuest, we need to hear your views on this debt ceiling and what you think the agreement does and what it does for you. What are your thoughts?
We'll try and get some in before the end of the program, and maybe tonight's Profitable Moment, instead of me, we'll have some of your thoughts on the debt ceiling, @RichardQuest.
In a moment, this is one way to capture the attention of millions of people: Michael Kors knows how to make a big impression for a good cause. He's in the C Suite with me after the break. QUEST MEANS BUSINESS. Good evening.
QUEST: We change our agenda completely now into something just as important. Today is World Food Day, a United Nations Initiative to raise awareness about poverty and hunger, and the designer, Michael Kors, is a staunch supporter of the campaign.
To help spread the message, he's taken over 12 billboards in Times Square. Frankly, you can't miss them. You can't miss the t-shirts either. He's giving away t-shirts, which I shall show you in just a second. Michael Kors is in the C Suite to join us now. Good evening, sir.
MICHAEL KORS, DESIGNER: Good evening.
QUEST: I promised to show the t-shirt, and the t-shirt I shall show. Now, this is the way in which the t-shirt's -- "Hunger -- Watch Hunger Now."
KORS: "Watch Hunger Stop."
QUEST: Right, "Watch Hunger Stop." We've known about this issue for a long time. What do you think you're now bringing to it that brings it and raises it up the agenda?
KORS: I think realistically, there are so many things that people feel that they can't make a difference, and by making noise today and designing product -- we designed the 100 series watch -- and in six months --
QUEST: It's very big.
KORS: Yes, you definitely notice this glamorous watch.
KORS: Plus you start the conversation about hunger, and this watch we've actually served almost 2 million meals in six months.
QUEST: Do you feel that sometimes people feel that -- when you mention world hunger, the enormous nature of the task --
KORS: Seems -- insurmountable.
QUEST: Yes, and where does one begin?
KORS: Today is the day. Today is the day, because quite frankly, you can -- it's a cappuccino here in New York City is $5. So, skip that cappuccino, that's 30 meals, 30 meals.
QUEST: Why did you decide on this? In the vast variety of and range of philanthropic areas that you can get involved in. I know you did "With God's Love, We Deliver."
QUEST: And now, of course, you're doing this. But why was this so important to you?
KORS: I have to say, as a fashion person, I think the best thing that I do as a designer is transform lives, and this is an unbelievable transformation that everyone can be involved in in changing someone's life. It's that simple.
QUEST: It's not only that, because what you do bring, and what we saw in Times Square, and what we're seeing with this, is an element of glamour.
KORS: Yes. Yes.
QUEST: And all too often in the philanthropic world, it is a story of misery and mayhem or at least a downbeat. But you've got to add that glamour if you're going to get people to join onboard, do you think?
KORS: Absolutely. I think you have to make people feel optimistic about it, that they can make a difference. A little bit of glamour certainly never hurt. And at the same time, people can be involved. You don't have to be a billionaire to be involved.
QUEST: What do you want from people like me?
KORS: I want everyone to start the conversation. The watch is also even something that keeps the conversation going, to realize that, in fact, you can skip tomorrow's cappuccino --
QUEST: And do what with the money?
KORS: Let's -- you can donate to the World Food Program?
QUEST: How much is this going to cost me?
KORS: The t-shirt we're giving away just today, limited supply --
KORS: You can look on WatchHungerStop.com --
KORS: -- and you can go to World Food Program, you can make a donation, go locally, chop vegetables, deliver a meal --
QUEST: Get involved.
KORS: -- we can all make a difference. Get involved.
QUEST: Michael, many thanks, indeed --
QUEST: -- for joining us and talking about this.
QUEST: On a business program like this, where our daily diet is one of IPOs and --
QUEST: -- and this -- it is important and refreshing that we're able to turn our direction to talk about these other issues.
KORS: It's -- to me, it's imperative.
QUEST: Thank you very much.
KORS: Thank you.
QUEST: Now, when we come back, we will return to our daily diet. Washington has a deal, it's a deal to avoid a default. There are already signs of some damage having been done. After the break, it's QUEST MEANS BUSINESS, good evening.
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. This is CNN, and on this network, the news always comes first.
The members of the United States Senate have agreed on a deal to reopen the federal government and avoid a possible default on its deals and debts. Now it will temporarily raise the US debt ceiling until February the 7th. The bill must pass both houses of Congress before it reaches the president's desk.
The chairman and CEO of Canter Fitzgerald says Congress is merely kicking the can down the world. Speaking to me on this program, Howard Lutnick says Washington is setting itself up to revisit the same arguments in a few months.
(BEGIN VIDEO CLIP)
LUTNICK: The US doesn't want to default, it doesn't want to get into that whole nonsense of what happens when the richest country in the world - - with a printing press that can just turn around and print them up -- decides to cross their arms and not do it.
But all we've done is kick the can down the road. You put it up there -- February 7th -- January 15th, the government will shut again, and February 7th, they're going to be talking about this again.
(END VIDEO CLIP)
QUEST: Forty-nine people have died in a plane crash in southern Laos. The Lao Airlines turbo-prob aircraft was preparing to land during strong winds and heavy rains, according to an airline official. The flight was en route from the capital to an airport near the border with Thailand.
The White House says Iran showed a level of seriousness and substance in nuclear talks that it hasn't seen before. News agency reports say Iran laid out a three-step plan in Geneva aimed at breaking the standoff within a year. Talks are set to resume early next month.
And lawmakers in Greece have voted to strip members of the far-right Golden Dawn Party of the parliamentary immunity. Several Golden Dawn members are facing criminal charges after the murder of a left-wing musician last month. Today's move means party deputies may now face other charges.
A deal to avoid default comes hours before the U.S. is due to run out of money. Live pictures of Capitol Hill. The plan must still pass the Senate and the House. The debate in the House is underway. The U.S. Senator John McCain said today he hopes this will end the dysfunction in Washington.
SEN. JOHN MCCAIN, R-ARIZONA: I think it's obvious that we are now seeing the end of this agonizing odyssey that this body has been put through, but far more importantly, the American people have been put through. It should - it's one of the more shameful chapters that I have seen in the years that I've spent here in the Senate.
QUEST: Joe Johns is live in Washington for us this evening. Joe, before we get the bunting and the trombones and balloons out, what Howard Lutnick said to me on this program is basically we're going to be back here in January and February, and the chance of a grand compromise in the meantime is virtually non-existent. So there's not much to celebrate.
JOE JOHNS, CNN CORRESPONDENT: No, and Richard, to be quite frank with you, what we refer to in this situation is Groundhog Day in Washington, and it's been going on for more than a year and a half. And that tells us that the Senate and the House can't get their act together to get any type of grand bargain, and what they end up with is just kicking the can down the road. That's exactly right. The Senate deal is expected to be voted on later this evening. The House Speaker has said he won't try it -- to hold it up. There's cautious optimism this is going to bring an end to this partial government shutdown. And there's optimism --
JOHNS: -- that was bolstered by the fact that Ted Cruz, at least one of the senator who's been holding it up, and has been instrumental in creating the shutdown , isn't going to stand in the way of it.
JOHNS: So the speculation is this deal will get some opposition, but it'll clear the Senate and clear the House, and then we'll be back January 15th and February 7th dealing with the same things again, Richard.
QUEST: And that's the problem, isn't it? Because as long as you have a far right and a far left, and an unwilling - the grand old men and women of compromise - the Reids and McConnells of this world - they don't exist elsewhere to do a deal.
JOHNS: No, and it's happened over years and years and years, and the Congress of the United States where the moderates were voted down in favor of individuals who were either on the right or the left. So we've seen this slowly diminishing middle in American politics which creates real problems in governance, Richard.
QUEST: Joe Johns in Washington. Excuse me. Now, what we're seeing on the markets may indicate that everything's fine now, the Dow up 205 points - well, it isn't. The rules of the game have changed, and the damage has been done. And, excuse me this evening, if you join me over here at the Super Screen, you will see exactly what I mean.
The dollar bill, and the cracks have already begun to appear. In this crisis over the last week, first of all, we saw treasury yields spike. There was a notable increase in the amount of money that the U.S. government was having to pay for short money - one-month money. Just look at that, at the beginning we were down here - just barely .08, then it spikes up to .3 and it comes down again today. That is a real increase in interest rates at the short end - the very shortest end - of the curve. And yields are twice as high, higher than Libor. And today's auction saw a fall but certainly nothing much to write home about. So treasury yields will spike. Then you have people deciding they're not going to invest in U.S. debt. Banks like Citi did and Fidelity - they ditched short-term treasuries. JPMorgan - Fidelity reduced their exposure. Citi was no longer accepting short-term T-bills as collateral. Hong Kong says short-term bills now have less value as collateral - a real effect. U.S. debt not as worthy as it was. And then you have the CDSs -- credit default swaps -- the ability to bet against U.S. government defaults. Unthinkable in the past. Market over the past month - the cost of buying CDSs, 12 times higher. You've got a spike in yields, you've got collateral not being accepted, you've got a CDS splurge, and finally you have places like the CME requiring a greater level of margin before they'll let you trade up some 12 percent for CME imposes this 12 percent premium on interest rate swaps. Real effects taking place, even though the Dow Jones Industrials is up 205 points.
Ken Rogoff is the Professor or Economics at Harvard. Ken joins me now. It's tempting, isn't it - I mean, we'll talk about kicking the can in a second, but it's tempting to believe all is now sweet and light in the garden because a deal is done. But as we've just shown there, the cracks are showing.
KEN ROGOFF, PROFESSOR OF ECONOMICS AT HARVARD UNIVERSITY: Yes, well I mean if you keep doing business like this all the time, it's certainly going to bring forward the day or the decade when people turn to another currency to be the reserve currency. That's a long ways off, Richard, but this isn't - we want it to be the reserve currency for 100 years. This is no way to do business.
QUEST: And on that point, as long as you do get these temporary spikes - the ditching of the debt, CDSs and all these things, people like the Chinese only have to make minor shifts before a trend begins, so they put more reserve into euros, they put more reserves elsewhere.
ROGOFF: Well, where's elsewhere is the problem. You said euro, that's not exactly been a safe haven. But you know, things will calm down, memories are long and you pay a price for doing things like this again and again. We depend on our customers - we can't kick them in the face all the time. So, no, I mean, this was just a really ugly episode. They should never do legislation like this. The debt ceiling should be something that's just automatic.
QUEST: We've got this deal now 'til January the 14th - the middle of January - from the budget, February on the debt ceiling. You know, Howard Lutnick said it on this program, our viewers know that this is more than just kicking the can down the road, isn't it? There's an inability to get this grand bargain.
ROGOFF: Well, I think this was a little better this time. I mean, I think the radicals got very little. They said, 'Let's shut the government down, let's threaten to you know blow up our debt and let's see what leverage we get,' and they didn't get much. They just got declines in the polls at least for the moderates. And so I think - I think the odds that it's as bad when it comes up in January and in February, or actually probably less I think this was sort of a small win for the center among many losses that there are certain crazy places you just don't go. So I'm a little more optimistic on the outcome from this, but again, there's still all this deep divisions across the House and the Senate. It doesn't solve them and so it doesn't mean our governance is suddenly going to turn very productive.
QUEST: What is your gut feeling for what this has done for the short to medium term of U.S. growth?
ROGOFF: Oh, I mean, I think it's important that we didn't get another tightening of fiscal policy out of this, which was threatened. We didn't get a loosening either. I mean, it definitely could have been worse. On the other hand, you know, I don't necessarily see a rational grand bargain coming out of this, say, fixing the tax system, doing sensible infrastructure investment. So - but I don't think it was catastrophic either. I think the U.S. economy is really pretty stable and robust at the moment. So, the government didn't bring it down, it didn't put us into recession. So on the whole, let's face it, it could've been a lot worse.
QUEST: Ken Rogoff joining us from Harvard tonight. Good to see you, Professor, thank you very much indeed. Now, the phrase we hear all too often - 'I'm busy, so busy, I'm crazy busy,' it's a common boast that's cleverly wrapped up in a complaint. In other words, you're so busy that you're too busy to be busy. It's the busy trap. We'll hear from the man who came up with the idea and the problem of how you solve it, when you're caught in the busy trap.
QUEST: As we tick down to the debt deadline, politicians in Washington remain very busy people. People across the U.S. are busy with their deadlines and packed schedules, like some investors who have hedged against Washington's dysfunction with a flurry of personal activity acts against our own fears of emptiness. In fact, have you ever been so busy, you're too busy to be busy? On this week's "Business Traveller" we've got "The 'Busy' Trap" and how to deal with it.
QUEST: Four months ago, the author Tim Kreider wrote an article which caused quite a stir. It suggested that for many us, being busy is a way of life that we can't give up. He calls it "The 'Busy' Trap." If we are going to find a solution, we could start by talking to the man who defined the problem. I read the article and I immediately saw myself in it.
TIM KREIDER, AUTHOR OF "THE 'BUSY TRAP": Hm hm.
QUEST: I complain about being too busy, but I'm the first person who's the victim of his busyness which isn't doing anything about it.
KREIDER: You know, it's sort of the default answer these days when you ask someone how are you doing - they say, 'Oh, busy - crazy busy,' you know and my essay described it as a boast disguised as a complaint. My (inaudible) theory is that people are living in dread of what would if they didn't have all their time filled up. It's a sort of self-reassurance if your calendar and your day book are full, but your life must be important.
QUEST: We wear it, perhaps, as a badge of honor and pride but also as a curse.
KREIDER: Well, it's a defense - yes, as a kind of armor. I mean, I think if you're - if your burrowed down with your eyes straight forward, focused on the near distance all the time, you never have to second-guess the big questions. Like should I even be doing what I'm doing?
QUEST: But when you get to those big questions, it turns into a (inaudible) crisis.
KREIDER: Well, it turns into a nightmare, yes.
QUEST: And there is nowhere I think where this is more prevalent than in the travel. I think it's a great way to say, 'I'm sorry, I can't see you - I'm in Paris next week.'
KREIDER: Yes, it certainly sounds like you must be doing something if you're in Paris. It sounds like your life must be going well.
QUEST: But people don't realize they're doing it anymore, and they can't get out of this trap.
KREIDER: Well, it isn't entirely self-inflicted, I mean, it's like a traffic jam. Nobody wants to be in it - everyone has to do it because everyone else is.
QUEST: So, give me the solution.
KREIDER: Well, you know, I can't say anything that's not stupidly obvious. Do less stuff. I don't know - cancel some things. It feels great to cancel things.
QUEST: Cancel some stuff? Easily said. Back to Columbus Circle, please. Less easily done. When it comes to what to cancel, I need whipping into shape by a professional. Julie Morgenstern is an organizational guru. She's giving me a consultation on time management.
JULIE MORGENSTERN,ORGANIZATIONAL GURU: First of all, I think time management or productivity is a life-long skill. I don't think any of us ever get it perfectly.
QUEST: Is the situation getting worse for many of us?
MORGENSTERN: Oh, definitely. I think it's gotten - time has gotten more elusive. I think time to focus has just kind of - you know - disintegrated in our hands.
QUEST: But traveling can be the wobbly that throws the whole time management over the cliff.
MORGENSTERN: Yes, if you don't use your time traveling very consciously and mindfully for particular things - whether that's rest or thinking time or relationship-building time - if you're not strategic about it, it can feel like time away, and secondly, it crunches the time at work.
QUEST: Time management for me a juggling act between key areas. This weekend I'm leaving for Brussels and then I'm --
Busy? Irregular? Year around travel schedule for "Quest Means Business."
MORGENSTERN: What would you most like to get guidance on, advice on, insight on?
QUEST: Better management and control.
MORGENSTERN: Let's get specific to solve it. And when do you plan your schedule?
QUEST: You make a rash assumption that it's planned.
MORGENSTERN: So your calendar - what is on your diary there? You have two? What your bigger issue is that it's hard to relax and - in the play time (inaudible).
QUEST: (Inaudible) the play time and it's hard to structure the work time.
MORGENSTERN: I'm going to throw off some concepts at you, and I'm going to see if we can kind of get to some things. You're starting and ending your day in a very reactive way. E-mail and communication time should be a little bit more methodical and thought-through, and not just be in every available moment. So then we have to just create some structure for this. You need meetings and you need some thinking time. You need to build it in, when you need to be using your assistant more. But your assistant can only really support you if your assistant has full visibility into the task list. No matter how smart and capable your assistant, they're always operating with only a partial picture, which means you're the only one who can make judgments.
QUEST: Very good advice.
MORGENSTERN: So you first have to have a default. You have to have very clear - this is my optimal flow.
QUEST: So how do you get (inaudible) when it all have to be negotiated?
MORGENSTERN: You - list, you're in a position to structure your day. Once you get that time app right, you share it with your assistant who can actually schedule around it -
QUEST: This is really interesting.
MORGENSTERN: And then you punch when there's a change. But if you have no structure, and you're always punching, it --
QUEST: You - I - I take my - if I was wearing my hat, I'd take it off to you. But I'm not.
QUEST: And I can honestly tell you, I don't think I have made notes in an interview in 10 years.
QUEST: And the fascinating part about that is it's really quite humbling and quite worrying when you realize that - everything - all the advice one's being given - it seems so clear and obvious one hasn't done it for so many years. Jenny Harrison is at the World Weather Center this evening.
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: I am (inaudible). I was listening and watching.
QUEST: No, but it's true, isn't it, Jen, I mean, you know you - sort of this advice that one gets, which suddenly seems so blindingly obvious.
QUEST: And you thought - here's the awful part - I did that interview a couple of weeks ago, and I'm back to my old habits. The weather forecast.
HARRISON: Oh, now that's bad (inaudible). You even said you'd stop - you made notes - you were making notes as she took you through it. You see, got to let your assistant in. You naughty, naughty (inaudible) nasty bad habits. Well, OK, right. Let me talk about what you're going to do this weekend. Here we are, here's something else to put in your planning with. You've got your weekend retreat - get away in a minute. But, look at weather conditions - we had more bursts of thunderstorms across central Europe, pushing towards the southeast. Quite a band of rain heading in towards the west as well. Some pretty ferocious areas of rain pushing across the U.K, really sweeping across western Europe as you can see there. And surprisingly or perhaps not so surprisingly, not a great bit of change really as we head towards the weekend. The next area of low pressure is pushing in across western Europe - going to bring those showers and suddenly some cooler conditions across much of the U.K. into Portugal, Spain also and into France as well. Meanwhile, as we continue into Thursday, more of these warnings in place across to the southeast. So, as for that weekend getaway, well how about this, then? Ibiza, yes, it's an island of fun, we all know that. Well, the weather conditions will really help you Saturday and Sunday. It is going to be glorious - partly cloudy skies, 25 degrees Celsius on both days, very nice and warm in the overnight hours. And then this is a particularly lovely city down there on the coast in the far southwest of France - Biarritz, and again, some very nice conditions. Still warm enough this time of year as well, so you can (about) take in the beaches as well - 24 on Saturday, 22 on Sunday, and still pretty mild in the overnight hours. However, you've got to be able to get there, so let's follow the course going on at the airport. On Thursday not too bad. Quite a bit of low cloud around Thursday. In Berlin we've got some fairly long delays and in fact some windy conditions in Amsterdam to beginning of the morning, they should clear as we go through the day. So that could lead to 45 minutes late. Here's something you don't see often at the airport - now you might've seen this already today, I'm going to show you this - let's have a look, can we? Yes, you don't often expect to see a kangaroo at the airport. This one looking for some help at the pharmacy. This is actually in Melbourne. It did mean that the airport had to be partially shut down. Apparently he was injured, this one. I don't know how he found his way into the pharmacy, but that's what he did. Now, I don't know about you, Richard, but I often pop into a bookstore when I go to the airport, but he wasn't in the bookstore finding a book, he was there looking for a little bit of help. But as I say, it did actually cause the airport to shut down, so -
HARRISON: -- there we go - yes, I know, good Lord, indeed. Moving on from there very quickly look at this - we've still got quite a bit of rain pushing in over the next couple of days. You can see that as I say that was that next system pushing into the west - more showers, keeping things cooler. And as for your temperatures - 17 in Paris, it's getting a lot cooler. These of course are temperatures for Thursday, 23 in Rome and 14 in Vienna. Just watch out for wayward kangaroos. He was retrieved, by the way, and all is good. The airport reopened without any problems.
QUEST: We thank you for that and we're not offering any money-back guarantees, I hasten to add, if Jenny Harrison's weekend retreat forecasts are wrong. No money back -
HARRISON: That would be wrong.
QUEST: No money-back guarantees.
QUEST: Thank you, ma'am. Right, when we come back, you could just about hear the cheers on Wall Street. The stock market came tantalizingly close to reaching new highs, as Washington struck a last-minute deal.
QUEST: Now we've had some results that went out in the last hour. IBM and EBay posted results after the closing bell -- two of the companies that reported today. These are the way the numbers looked. IBM shares are falling 3 percent in our after-hours trading. Third quarter revenue was $23.3 billion. It missed expectations, and a huge miss. Analysts had expected billions of dollars more in that, so that's why that has taken it. Wind it on, and EBay also sliding after hours. The stocks down 4 percent. There was a disappointing outlook. It was on the guidance on Q4 for EBay. Wind it on - Bank of America reported earnings of 20 cents a share. There was a case of better than expected earnings and a show showing by consumer and wealth management. There was weak spots mortgage lending and the like. The company earnings as we go through (inaudible) third quarter. The Dow Jones Industrial - this is the number that you really need to look at tonight, and as we go through - got to put it into a complete perspective. That's what it looks like today. That's what it looks like over the course of the week. Look over the course of the month and you start to see how the fall came back and how it's not inching itself back. Year-to-date over the last year - significant, isn't it? Peaks and drops, and we're on their way back again. That's the way the Dow Jones in New York has trading. When we come back after the break, it will be a "Profitable Moment."
QUEST: Tonight's "Profitable Moment" - they are talking in the Senate, and of course the debate is (ongoing). I want to read you some of the Tweets that you've been talking about as we've been on air. Sayed Hassan says "The USA has already defaulted when cash flows cannot support spending outlays it's evident you have become insolvent." (Lord FiFi Kale), "The United States cannot go down like that. In life hard times comes. All that is needed is thinkers and risk takers." More of this - (Timothy) says, "The U.S. government has become addicted to last-minute, short-term fixes." (Obiju) says, "(Inaudible) the percentage to U.S. being the world's policeman with military bases all over the world." There is a sum of the questions or comments that you have been Tweeting for me. I suppose we should be grateful. A deal was done. We are back from financial Armageddon. Well, so far so good. But there's January's deadline on the budget, there is February's deadline on the deficit -the debt. There is unlikely to be a deal in the meanwhile, all of which leads me to conclude, regretfully, and with sorrow, we'll be back here in three months. And that's "Quest Means Business" for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, hope it's profitable. I'll see you tomorrow.