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German Economy Slowing to Near Standstill; Merkel, Sarkozy Find Common Ground on Corporate Tax

Aired August 16, 2011 - 14:00:00   ET


RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS: From dynamic to droopy, the German power house, powers out. Merkel and Sarkozy find common ground on a common corporate tax.

And there is another reason to hate those rude, overbearing colleagues of yours-ha! They're getting paid more than you.

I'm Richard Quest. I mean business.

Good evening.

Tonight the powerhouse of Europe is slowing almost to a standstill. The German economy hardly grew at all in the second quarter. Between April and June it expanded just 0.1 of 1percentage point, on the previous quarter. Less than Spain and the worst performance since 2008; well be low what was expected of Europe's biggest economy. And the crucial part, of course, disappointed investors dumped shares. Eurozone markets were hit hard. London's FTSE edged into the back late in the session, but otherwise it was a miserable session for other markets.

It all took place, these GDP numbers were released while Germany's Chancellor Angela Merkel was meeting the French President Nicolas Sarkozy in Paris. They floated the idea of introducing a tax on financial transaction, amongst other things. Nina Dos Santos joins me from Paris.

There was a lot that came out of that meeting. A financial tax, which may or may not go anywhere, common corporate tax by next year, and this idea of a economic government for the Eurozone.

NINA DOS SANTOS, CNN INTERNATIONAL CORRESPONDENT: Yes, Richard, a lot of people here in Paris, and elsewhere, perhaps saying we don't need anymore talkers, what we need at this point, after 18 months of the Eurozone debt crisis, is action. Actions speak louder than words.

What we got was a lot of talk, and promises. They said that in September what they are going to be doing is trying to approach some of these other countries that share the Eurozone. Remember 17 nations share the Eurozone, not just France and Germany, though they are the bigger economies, to set economic government which will be meeting twice a year. And it will also have a president to try and come up with some united viewpoint.

That, of course, has been what a lot of economists have said over the last 18 months, is that you have various finance ministers and heads of countries all expressing different views as to how this Eurozone crisis should be settled. So they are going to be electing Herman Von Rompuy, the current president of the European Council, for the next two and half years to present that united front.

But also, as you were saying, Richard, 17 members of the Eurozone will now, according to these proposals, if they go through, have to adopt into constitutional law, vows to balance their books. That could be unpopular, especially at a time when, as you just said yourself, even Germany and France, where I am at the moment, is showing signs of near zero percent growth and high deficits. Nevertheless, Sarkozy is saying that he is committed to defending the Eurozone and all the responsibilities that that entails.


NICOLAS SARKOZY, PRIME MINISTER OF FRANCE: We wish that the 17 member of the Eurozone adopt before the summer, or during the summer of 2012, the 17 members, the golden rule, which consists of registering within the 17 members the rule showing that annual financial laws must submit an objective for return to an economic budget. It is a good-sense measure which must lead to a reduction of the deficit and the debt.


QUEST: Now, Nina, the question, of course of the Eurozone bond, a common bond guaranteed by all countries, wasn't on the agenda. Sarkozy said it was desirable but at the end of the process, doesn't that put an end to that discussion, do you think?

DOS SANTOS: Well, the debate got rather heated during the press conference, Richard. It was rather interesting because Angela Merkel has said specifically, before, via her aides that she didn't want to be approached about this particular topic during those closed door negotiations with Nicolas Sarkozy. Of course, it came up in the press conference. This is what the two leaders said. I'm going to paraphrase. Basically, Angela Merkel said that she didn't believe in one universal cure to cure all of the problems that the Eurozone has been facing of late. And she said even if there was a universal cure she wasn't sure whether it was the topic of euro bonds.

Nicolas Sarkozy, himself, was a little bit more obvious in his point of view. He said, what the Eurozone needs is two strong members like France and Germany, and if they were to go ahead and guarantee the debt of all the other countries, well that would put the Eurozone itself, and the euro, in danger further.

QUEST: Nina Dos Santos, in Paris, on a beautiful summer evening, this evening. Many thanks for that.

Now, that idea of that Eurozone bond, it might have been off limits for Sarkozy and Merkel. In Germany they believe they are not off the hook yet. Germans may still have to pick up a very sizable tab for the debts of other seemingly less financially responsible nations. Our correspondent in Berlin, Diana Magnay, found traders there are loosing faith in the political leaders.


DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT (voice over): It is hard for these guys to trust the folks in here, if they feel that Germany's ruling coalition can't even agree on how to handle the debt crisis.

Multiply that across the Eurozone's fiscal flashpoints and you'll see why the markets feel Europe's politicians aren't quite on top of things.

JOERG ROCHOLL, EUROPEAN SCHOOL OF MANAGEMENT: Political action has been rather uncoordinated across the Eurozone. And it is really not a good example of European leadership, what we have experienced over the last couple of weeks. Particularly given the fact that some things have actually been ruled out before and now they are implemented.

MAGNAY: Will that be the case then with issuing joint Eurozone bonds? A proposal from some quarters in Europe aimed at stabilizing borrowing costs. Angela Merkel's says it is not on the cards. But the German papers fear she might not stick to that. Never say, never again, says the left leaning text (ph), under the headline, "The Name is Bond, Euro Bond".

Many Germans say they don't want to carry the can for countries who can't keep their fiscal house in order. They don't want to pay higher interest on a riskier common bond. And they don't want to sacrifice fiscal sovereignty to Brussels.

UNIDENTIFIED MALE: I think that each state should be liable for its own debt.

MAGNAY (on camera): What about when most of the states aren't able to sustain their debt?

UNIDENTIFIED MALE: Well, then, yeah, in some cases. One state has to help the other, if it is in its own, and in the common interest that one shouldn't sort of succumb, but that can't mean sort of a general one treasury for all of Europe.

MAGNAY (voice over): In a recent poll for German network ZDF, 42 percent of those surveyed said they thought their government was doing a good job handling the euro crisis; 48 percent said they didn't. As for the European Union's leadership, 61 percent said they thought it wasn't up to much.

But Germans we spoke to said they expected their leaders to muddle through somehow.

UNIDENTIFIED FEMALE: We are a community. And a community stays together, every body had to get together and find a solution for it. And I think they can manage.

UNIDENTIFIED MALE: I trust our politicians in Germany much more than the leaders of the financial institutions, and the banks, especially. So, they at least try to do a good job.

MAGNAY (on camera): But the Germans taxpayer has limited patience. And Angela Merkel knows that every step down the road towards greater European fiscal unity could come at a huge financial and political cost back home. Diana Magnay, CNN, Berlin.


QUEST: Bronwyn Curtis is with me; the head of global research at HSBC.

Bronwyn, whoa. What?


Merkel and Sarkozy, let's start with that. Common corporate tax? A financial tax that may go nowhere. And economic government for the Eurozone, this is integration.

BRONWYN CURTIS, HEAD OF GLOBAL RESEARCH, HSBC: Well, this is a proposed extra step toward integration. But we've heard about the financial tax before. Tobin (ph) tax, the French have talked about it before. It is very difficult to put it on one area of the world, because all the transactions just go somewhere else. Having a Eurozone, a head of the Eurozone, is it just-does it really matter? I mean, I think there is a problem going forward, because the closer they get together, the more that the center, mostly Germany, are paying for the rest.

QUEST: Now, let's talk about it, because that really is the Eurozone bond issue, isn't it, and the transference of wealth? But it is not only Germany's low rate, the bunde that would be put at risk, the French also, which has a low rate, the Fins have a low rate, that would also be at risk, if a Eurozone-which is exactly why they haven't done it.

CURTIS: Well, it is one of the reasons they haven't done. I mean, they are still, Angela Merkel still has to get through, she's got about five weeks now to get through the package that she put forward, they agreed, on July 21. So we've still got to get through that. So, more I think what they are just trying to do is just head off the financial markets and keep them subdued.

QUEST: But they want integration. These two want great integration. Is that coming our way, or coming the Eurozone's way?

CURTIS: Well, they all want greater integration in that they want everyone to obey the same rules. And I think that is not happening. What they have proposed today is that they actually have debt limits and it goes through national government. But we already had the Maastricht Treaty, so there are limits there. They are just not obeying those.

QUEST: I'm reading between the lines here, and tell me if I'm wrong here. But you and I have known each other quite awhile, you're not impressed by what's happened today?

CURTIS: It doesn't seem to have taken us much further. There are big problems. The rescue fund needs to be much bigger.

QUEST: 406, or 400, or whatever it is?

CURTIS: 440 billion euros, it probably needs to be-

QUEST: A trillion, I've heard numbers of a trillion.

CURTIS: It needs to be about that size.

QUEST: Right. Let's talk then about the possibility. We had this 0.1 percent growth in Germany. France is stagnant. The U.K., who knows what the U.K. is doing. The U.S. is a point, and a bit. This is dangerous territory now. As admitted by Robert Zoellick, and Christine Lagarde.

CURTIS: Well, one of the biggest problems-the biggest problem for the Western world is that governments have too much debt and there is no growth. We saw those numbers today. If you don't have growth, who is going to pay the taxes?

QUEST: But how would you get the growth other than by fiscal stimulus, at the same time as deficit. Lagarde talks about this in her article in this morning's "FT" and she entreats the leaders to sort of dance with the devil.

CURTIS: Well, what you are saying is, don't do too much austerity too quickly, or you will kill growth altogether. Now, how you manage that? You can do that in some countries in somewhere like Greece, if you did a lot of reform, you could probably do it.

QUEST: So, how dangerous is the situation at the moment, economically? And how great the risk of a real double dip?

CURTIS: Well, I think it is a very dangerous situation, because if you don't have any growth in the Western world. If you have the situation in the U.S. where they can't agree to bring these deficits down we will see a lot more money going to the so-called emerging market. (AUDIO GAP) more and more money going there, which will make it even more difficult for the Western world. So, I think it is very dangerous. I think the prospect of a double dip, we can't rule it out now.

QUEST: Bronwyn, many thanks. Many thanks.

QUEST: Now, the markets that traded in the United States, which are open.


And doing business. Look at that, down 64-don't get-yesterday it was a lot lower, earlier in the session. That is not bad, 11,419. My theory on this, which you can take to the bank and no one will cash it. It is going to be a quiet week. I have got no justification for saying this, other than I think everyone is exhausted. And just trying to the last bit of August out of the way.

Still to come, back in the hot seat: James Murdoch will face a second grilling by British politicians. The phone hacking scandal getting hotter again.


QUEST: Whichever way you look at it, Britain's phone hacking scandal deepened today as a committee of British lawmakers released new evidence that alleges senior figures at News Corp "News Of The World" tabloid knew about the hacking of phone messages. That James Murdoch, the son of News Corp chairman Rupert Murdoch, is likely to be called in for questioning a second time. Our own Dan Rivers has been following the story. Joins me now.

It is very technical. And there's lots of e-mails, and I would urge you to-


QUEST: Be brief.

RIVERS: I'll try and keep this brief.

QUEST: What is the thrust of it all?

RIVERS: Well, there are more damaging revelations that have come out today, published by this committee of MPs, which are potentially very bad news for News International.

Now, I'm not going to get bogged down in the details, but there is one letter here from the disgraced royal correspondent, of "News Of The World". He was sent to prison for phone hacking.

QUEST: Right.

RIVERS: In it, this is the relevant paragraph here. He says, the fact is that phone hacking was widely discussed in the daily editorial conference until explicit reference to it was banned by the editor. Now who was the editor then? Andy Coulson. That is terrible news for Andy Coulson, if this is true. Because Andy Coulson was hired by No. 10 Downing Street as communications director; he always said he knew nothing about phone hacking. Here, this letter is saying he didn't just know about it. They were talking about it every morning, in their morning meeting.

QUEST: This is a letter from a convicted criminal, who admitted to phone hacking?

RIVERS: Exactly. And I think it is important to bear that in mind, that caveat. But nevertheless that backs up a picture that is coming out from a number of other documents.

QUEST: All right.

RIVERS: The other key document that has come out today, the letter from Tom Chrome (ph), now he is the in-house lawyer for News International, who is now completely contradicting what James Murdoch said to this committee earlier this year. James Murdoch said he was not aware of this key e-mail which included 35 hacked conversations, the so-called "For Neville" e-mail.

Tom Chrome (ph) today has said, I have no doubt that James Murdoch, that I referred to Mr. Murdoch to the existence of this e-mail, what it was and where it came from.

QUEST: No doubt? He says, no doubt.

RIVERS: This is a lawyer here. It is not someone like Clyde Goodman (ph), perhaps, who is got a checkered past. This is their own lawyer contradicting what James Murdoch has said.

QUEST: So what happens now to Mr. Murdoch?

RIVERS: Well, according to Tom Watson, the politician who memorably grilled both him and Rupert Murdoch, he will have to come back. Here is what Tom Watson told me earlier on.


TOM WATSON, MEMBER OF BRITISH PARLIAMENT: It is highly likely James Murdoch will be invited back to give evidence. Before that we want to take a very detailed account of what the former editor, Colin Mylan (ph) knew, and the former lawyer Tom Chrome (ph) knew. We have moved form the exposure of the hacking scandal, to the second phase, which is the very details of the cover up. And we want to get our facts lined up before we consider bringing James Murdoch back. But every member of the committee is determined to get to the facts. It is highly likely he'll be with us probably in October.


QUEST: Let's talk about this. What is the downside now, for James Murdoch? Because so far, as I understand it, no one is suggesting the he ever knew that the hacking was taking place at the time it was taking place. He was far too high up the tree.

RIVERS: Right, no one is saying he-he joined too late, anyway. According to what we know at the moment. What is damaging for him is he tried to cover this up after the event. That is the allegation. That this set of documents seem to back up. Now, of course, he's denying that. But if that is proven to be the case, perhaps it might not be a criminal offense. Although it could be open to charges of perverting the course of justice. But in terms of his legacy as a chief executive and his ability to stay on in that role, does News International want someone like that still in place?

QUEST: Does it call into question-let's sketch a scenario, a worst- case scenario, does it end up in a position where people question whether Murdoch, James Murdoch, or anybody else is a right and fit, and proper person to be a director or chairman of a public company?

RIVERS: I think it is going in that direction. And that has big questions for the dynasty of the Murdochs, if you like. Rupert Murdoch holds-clearly wants James Murdoch to, you know, to-he's the heir apparent, basically. Now that is hanging in the balance.

QUEST: Allegations at the moment. Strenuously denied.

RIVERS: Strenuously denied by-

QUEST: Strenuously denied, let's not forget that.


QUEST: When we come back in just a moment, we are going stay with idea of the boss, behind the scenes. We are in New York and we are in Macao. The business leaders were following off, thinking big, expansion dream. But what happens when you are the boss, because you are the one who has to make expansion- (DESK BELL CHIMES)-a reality.


QUEST: Now in business the ambition is to grow your market. It is the key to what "The Boss" considers to be important. On "The Boss" our featured company chiefs know that only too well. In Macao it is Francis Lui's casino project. The casino is now up and running, but he, Francis still wants to expand.

Now, in New York, our brewer, Steve Hindy, is pushing through upgrades. That will allow him to ramp up production on both sides of the Pacific, they are looking at growing bigger, because they are "The Boss".


UNIDENTIFIED MALE: Previously on "The Boss": Leading from the front, Steve Hindy hits the streets of Brooklyn to find out what is sapping sales.



Honestly I don't think there is a problem. I just think we have to work harder and be more persistent.

UNIDENTIFIED MALE: And in Macao, pride and joy, as Francis Lui officially opens his casino resort.

FRANCIS LUI, VICE CHAIRMAN, GALAXY ENTERTAINMENT GROUP: If you ask me the question, is Galaxy Macao important to me. Definitely it is my first, one child. I love it.

Hi, Trevor. Good morning. Good morning, everyone.

UNIDENTIFIED MALE: Francis Lui is breathing a sigh of relief. The casino that he has worked on so hard, and for so long, has opened without a hitch.

LUI: It has actually exceed everybody's expectation. We had the right product at the right time.

UNIDENTIFIED MALE: Francis takes a moment to let his executive team know that they have done well.

LUI: I think in general, I think we aced it.

UNIDENTIFIED MALE: But as the vice chairman he doesn't dwell on their achievements for too long. He knows the real work is only just starting.

LUI: This is just the beginning, not the end of the journey. And that is important, because as you know, when we have finished such a big project. Everybody is breath relieved and say, huh, now we can sit back and just enjoy the customer coming in. That is not the case. In fact, we see thousands of things that we should be able to improve upon. Such things that will make ourselves better.

UNIDENTIFIED MALE: And today they are looking for ways to do just that. Seeking out where there is room for improvement.

LUI: I sense some issues on the hotel side that we need to sort out, right? That we don't have enough rooms and that the rooms are-can be better?

UNIDENTIFIED MALE: No issue is too small for his direct attention. Outside, Francis is concerned with the pathway on the resort deck, which he feels isn't easy to follow.

LUI: You got a little bit lost and confused, when you go over there, either it is too bright, or too dark, and you know, you don't have this complete route thing.

UNIDENTIFIED MALE: You don't realize it.

LUI: Yes.

UNIDENTIFIED MALE: You go all the way.

LUI: We are concentrating on all the details right now. Which is almost like seven pages of things, a list of things, that we need to be doing to make sure that we will get to where we want to be. So, we are still, to us, even though we are achieving great results right now, I still think that we can be better, much better.

UNIDENTIFIED MALE: For this boss, this is what it comes down to. Ensuring every detail of the customer experience is the best it can be.

LUI: I believe that the Galaxy Macao will be recognized as on of the very best resorts in the world. We are trying to achieve that standard and we think we will get there in five months' time.

UNIDENTIFIED MALE: This is the moment Steve Hindy has been waiting for, for years. The culmination of months of preparation and planning.

HINDY: These are 100 barrel-per-minuters. Came from Germany. And they'll have beer within a week. They'll be filled with beer.

UNIDENTIFIED MALE: Today, workers are installing 17 new, state of the art tanks. For its president, Steve Hindy, this is a moment of pride, tinged with trepidation.

HINDY: It is really a nerve-wracking experience, watching them move these beautiful stainless steel tanks, because obviously if they bump into anything, or God forbid, drop one of them, it is really going to put a big dent in these beautiful tanks.

So, I actually can't stand watching. I just peek in every now and then. But it is nerve-wracking.

UNIDENTIFIED MALE: The expansion, which will increase the company's beer production substantially, has been a painstaking process. Back in March, when Richard Quest first visited the brewery, this massive space stood empty.

QUEST (on camera): This is no longer a micro-brewery. You have now moved into brewing on an industrial scale?

HINDY: Yes. That is true.

UNIDENTIFIED MALE: Two months later, construction was in high gear, with workers busy laying concrete.

HINDY: This is a total thrill. This is a total turn on to be expanding your brewery and to be catching up with demand that is out there. So in other words, you are not just putting these tanks in, paying for them, to look at them, you are going to be filling them with beer on day one, which is a beautiful thing.

UNIDENTIFIED MALE: Throughout the process Steve and his team of engineers spent weeks pouring over every detail of the blue prints. But no amount of planning could prepare Steve for the challenges of doing business in New York City.

HINDY: We came and there were signs up on the wall, here, saying no traffic, no vehicular traffic, because they are going to be paving the street.

UNIDENTIFIED MALE: And no roads meant Steve wouldn't get his precious tanks.

HINDY: Our brew master freaked out. Came into my office with the sign and said, they're going to pave the street. We have got all these tanks coming. And you know, I had to make a call to the commissioner of transportation. It took a little while, ruffled some feathers, but it all worked out.

UNIDENTIFIED MALE: With those problems now out of the way, and with the tanks finally, there this boss can now concentrate on getting his business moving again.

Next week, on "The Boss": Recognition and reward, Steve Hindy treats his employees to a trip to Europe, but even that comes with work. That is next week on "The Boss".


QUEST: The challenges of running a big company. Well, the boss of Starbucks knows about that and brewed up some of his own complaints, this time for lawmakers. Howard Schultz is hoping a few strong words will jolt them into action. We'll explain (DESK BELL CHIMES) after the break.


QUEST: Hello, I'm Richard Quest. QUEST MEANS BUSINESS, this is CNN. and on this network the news always comes first.


QUEST: Hello, I'm Richard Quest. QUEST MEANS BUSINESS.

This is CNN. And on this network, the news always comes first.

President Sarkozy and Chancellor Angela Merkel say they are committed to defending the euro and all the responsibilities that come with that. The French and German leaders emerged from talks today proposing three new things -- a new economic government to coordinate the Eurozone's message and actions, a commitment from all 17 members to balance finances and a tax on financial transactions.

Video from Libya claims to show anti-Gadhafi rebels celebrating in Zawiya near Tripoli. The opposition says it's too early to claim victory there. Fighting is ongoing. The rebels are claiming they have cut off a major road that supplies the capital. That's something the Libyan government disputes.

The suspect in the Australian collar bomb case will stay in U.S. custody until at least October the 14th. Australian Paul Douglas Peters is accused of strapping a fake bomb around the neck of an 18 -year-old girl in a suburb of Sydney. Peters was arrested on Monday in the U.S. state of Kentucky.

Barack Obama says it's time to put the next generation ahead of the next election. The president ripped into Republican lawmakers in the second day of a road trip through the Midwest and asked a group of farmers and small business owners in Iowa to help send that message to Congress.

The CEO of Starbucks wants Mr. Obama off the road and back to Washington. Howard Schultz says that Congress should also reconvene and until it does, he wants the corporate world to cut off payments of checks.

The Starbucks CEO wrote an e-mail to business leaders, encouraging them to stop their campaign contributions. He says he wants to see a fiscally disciplined long-term debt and deficit plan.


HOWARD SCHULTZ, CEO, STARBUCKS: When I began to kind of ask the question, what could we do, I uncovered the fact that almost $4 billion was spent in 2008 in the presidential election cycle among the president and Congress -- $4 billion. And I just thought given the ideology and the partisanship that all, it seems, that people are interested in is reelection. And that reelection is, the lifeblood of it is fundraising. And I just thought given the situation and the profound disappointment that we all feel, issued a powerful message to Washington that we do no -- no longer want to embrace the status quo and we want to see change.


QUEST: Starbucks' chief executive, Howard Schultz, will have much more to say about this and other issues. He sits down with our very own Piers Morgan on Thursday night, 18:00 London, 19:00 in Berlin, 11:00 in Abu Dhabi. "PIERS MORGAN TONIGHT" with Howard Schultz on Thursday.

Schulz is following the outspoken example of Warren Buffet. The billionaire investor says he wants a tax rise for the super rich. That was in the op-ed in "The New York Times." Buffet said tax rates for his staff are higher than his own. He takes his super rich friends ought to be able to contribute a bit more.


WARREN BUFFET, INVESTOR AND PHILANTHROPIST: Oh, I decided to look around and see if any of my friends were being affected by shared sacrifice. And they, like me, are enjoying these extremely low tax rates. And then in the very high percentage of the cases, the very rich are paying less in the way of taxes than the people that clean their offices.


QUEST: Joining me from CNN New York, Peter Goodman, the executive business editor of the Huffington Post, author of "Past Due: The End of Easy Money and the Renewal of American Economy."

Peter, does it -- does it lie in the mouths of these very rich men to be, you know, making these social policy statements. I mean let's take Mr. Buffet. It's all very well. But I can hear people saying, well, pay more tax. You can write a check. Just because you don't have to.

What do you say?

PETER GOODMAN, EXCLUSIVE BUSINESS EDITOR, HUFFINGTON POST: Well, I mean, if we could run the government through philanthropy, you know, that would be a wonderful world. I mean, of course we can't.

I -- I think that the average person certainly thinks, you know, it's easy for Mr. Buffet to say pay more tax. I mean here's a guy who could give up half of his fortune and still have, you know, be further on his way to his second billion than the rest of us.

That said, it is heartening to see a member of the super rich say something that the political process has had a very difficult time concluding for its own, which is that, you know, you don't need a powerful computer program to figure out that it's going to take...


GOODMAN: -- more revenue to pay back a $14 trillion deficit.

QUEST: So...

GOODMAN: That's something that basic arithmetic manages to do.

QUEST: So you've got, then, Howard Schultz coming along saying no more campaign contributions until -- until you're back at work. And even then, he questions the validity of it all.

Does that ring true either, do you think?

GOODMAN: You know, I think that plays to a certain segment of the public, maybe a large segment of the public, that's fed up and happy to see a member of the super elite, a member of the business world say we've got a problem here, the status quo is no good.

That said, I think, you know, most of us understand clearly that big businesses and wealthy people don't make campaign contributions because they're applauding good government, they do it in pursuit of their interests. And, you know, unless somehow or other, the entire business world decides collectively that they've got to stop funding campaigns...

QUEST: Right.

GOODMAN: -- we are going to see the status quo.

QUEST: So are these people...

GOODMAN: Moreover, you know, it's not...

QUEST: Well...

GOODMAN: -- oh, I'm sorry.

Go ahead, Richard.

QUEST: No, well, I want to -- to pull the strands together.

Is it -- it's always been the case in the United States in the very febrile environment of -- of capitalism that everybody gets involved and the great and the good and the big names take part.

But is it likely that we're going to see more chiefs, at these difficult times, putting their head above the parapet?

GOODMAN: I mean people may chime in for their own political reasons and they may chime in out of a gnu sense of belief. But you know, I think that the reality is that people will continue to contribute to campaigns. Moreover, it's not as if we're in this situation because there's some sort of impasse. I mean it's not as if there's some sort of real philosophical disagreement that explains the inability of our leaders in Washington to come up with a deal. I mean essentially what you've got is Democrats being willing to make some kind of deal and having an internal argument over...

QUEST: All right.

GOODMAN: -- you know, how far to go in terms of the balance between taxing people and cutting spending. And then you have an ideological cadre, an extremist group of the Republican Party, which has essentially decided that it's better off for the economy to suffer and for no deal to happen. They're for the status quo...


GOODMAN: -- and they're betting that come November of 2012, the guy in the White House will get the blame for that.

QUEST: Peter, finally, on Huffington Post -- and I look at it most mornings. It's my -- a part of my morning briefing.

But if you pull the strands together from the business section, how worried -- I mean I -- I read a lot of people on her post who -- who take very strong, dogmatic views one side or the other.

But if you pull those strands together, how fundamentally worried are they about the strength of the U.S. economy?

GOODMAN: I think there's real concern. But the concern goes deeper than, you know, the S&P downgrade to Treasuries. And we've seen money flood into Treasuries.

The real concern is, you know, how are we going to grow this economy?

We've got an economy where 9.1 percent of the people who are working or looking for work are out of work. If you throw in people who are in part-time jobs because they want full-time jobs, we're talking about 20, 25 million people who are underemployed. And ultimately, people who run businesses understand that if your customer doesn't have any money and we don't have some sort of fantasy like the real estate bubble or the tech bubble...

QUEST: Right.

GOODMAN: -- to get around that, you've got a problem selling things.

QUEST: Peter, good to have you.

Thank you for coming in and talking to us.

GOODMAN: Thanks very much.


We appreciate it very much.

To the markets.

Alison Kosik is in New York for us this evening.

Good evening.

Good afternoon.

You know, we're at...


QUEST: A few moments ago, we were 60 odd points below. Here we're 113 down. We're still off the session lows.

And should we be worried about this?

KOSIK: Today, I don't think so. You know, volume is very light. What we saw happened last week, that kind of volatility, we're obviously not seeing that kind of volatility today, in part, because volume is very light. Traders are taking their vacations this week. The Dow down 119 points.

You know, stocks had already been under pressure with the opening bell after those GDP numbers out of Europe showed stagnant growth in Europe. And then, of course, we saw the Dow feel even lower after the disappointment over what came out of those meetings in Europe about how to solve the European debt crisis.

So this is sort of more of the same. The markets really reacting to every headline.

QUEST: Right.

KOSIK: We also got some weak U.S. housing reports showing there is really no end in sight for the housing slump.

So it's this constant drumbeat of bad news that is weighing down the stocks today -- Richard.

QUEST: I have a theory. I have a theory, which I've already shared with...

KOSIK: What's your theory?

QUEST: The theory is that after the exhaustion of last week, we may bounce a bit this week, but it's going to be a quiet week.

KOSIK: Yes, we'll have to wait and see that...

QUEST: Oh...

KOSIK: -- because we're going to be analyzing...

QUEST: -- oh, you...

KOSIK: -- (INAUDIBLE) throughout the week, Richard. And you're going to see the markets react to that.

QUEST: Oh, I...

KOSIK: We could see things kind of bounce a little lower.

QUEST: I think she's politely telling me what she thinks of my theory. But she...

KOSIK: Sorry to burst your bible.

QUEST: You're -- you're -- she -- you're far too polite. You're far too nice to actually tell me what you really think...

KOSIK: I'm on...

QUEST: -- about it.

KOSIK: I'm on TV.

QUEST: Oh, that's right.

KOSIK: I'm on TV. I'm not going to do anything mean to you.


QUEST: Exactly.

Thank you.

Alison Kosik, who is in New York.

Alison may not do anything mean to me, but I promise you later in the program, those people who do mean things, well, guess what, apparently they get more money than the rest of us. The meanies do better than the nicies. We'll have that later in the program.


Good evening to you.


QUEST: Now, gold is once again pushing close to $1,800 an ounce, investors flocking to the commodity after last week's market volatility.

Today, it was up $15, $1,781 an ounce. What a long way since the U.S. abandoned the gold standard 14 years ago this week.

Now, let me tell you, when it abandoned the gold price at $35 an ounce, even adjusted for inflation, according to the Inflation Calculator, $35 in 1971 is $186 today. So gold, just on a straightforward basis of investment, has rocketed versus the gold standard.

Now, if you're desperate to get your hands on yellow metal, CNN's Lakone -- Leone Lakhani has some suggestions for how you might succeed.


LEONE LAKHANI, CNN CORRESPONDENT: (voice-over): A standard gold bar weighing 400 ounces would cost you about $700,000 at today's rates. Most of us can't afford one of those, so if you're looking to buy gold, how about investing in parts of a bar?

Paul Tustain heads an online site that allows you to do just that.

PAUL TUSTAIN, CEO, BUILLIONVAULT.COM: It's easier to buy gold now than it is to buy stocks and shares. You don't need to go through a broker. You just go online.

LAKHANI: With gold prices above $1,700 an ounce, some believe it's simply just not worth the investment.

TUSTAIN: If you think the dollar or the pound can lose a great deal more value, and a lot of people think that can happen, then you certainly do want to buy gold at these prices. They invest in gold wen they fear that the value of their currency is going to fall for a prolonged period.

LAKHANI: Bars bought through these online sites are held by accredited vaults around the world. Premiums on the gold are about 1 percent and for the serious gold investors, it's the most efficient option.

(on-camera): As a retail investor, can you invest in any denominations of gold or does it has to be at least one ounce?

TUSTAIN: No, you can invest in any denomination. So, as you know, an ounce is now about $1,750. We have people routinely going down to a couple of hundred dollars. Usually that's only to test the system out, but you can go down all the way to $50 if you really want, which is one gram.

LAKHANI (voice-over): One gram of gold, that's more within my reach.

(on-camera): If you're longing a more modest option, (INAUDIBLE) gold bars and coins may be the way to go. Now, this is a gold vending machine that spits out 24 carat bars. I'm going to give it a go.

(voice-over): The price you pay here is quoted as international gold rates. There is a substantial service charge imposed by the operator, however.

(on-camera): I've got my gold. But one gram just cost me $90. Now, you can expect an 8 to 10 percent premium with most small gold bars and coins. The good thing about them, though, is they're easy to sell.

(voice-over): More than half the world's gold is bought as jewelry. The problem is, most jewelry is sold with a huge markup for workmanship, so its resale value isn't as high. Still, it's easy to see the consistent appeal of gold. After all, its rarity has been prized since civilization began.

(on-camera): Whether you think this is worth $90 or not, its value is likely to hold longer than this.

Leone Lakhani, CNN, London.


QUEST: And as, indeed, the numbers show that quite considerably. Just bear in mind, $35 an ounce in 1971, $1,700 an ounce today. Something has changed.



QUEST: -- is at the World Weather -- good lord, it's nearly the end of August and you're still -- you're still at work.

What's gone wrong?

ARDUINO: Oh, god. I'm going to Cancun in two weeks.



QUEST: Oh, there we are.

ARDUINO: And, you know...

QUEST: You know, I thought there were -- I thought the world was -- was turning on the wrong axis or something.


QUEST: Sorry about that.

ARDUINO: Yes. And I still have 10 more -- I'm going to Prague in November for two weeks. And I still have two more weeks to take. Come to America, baby. You'll get all those holidays here at the mother ship.

1971, I was in first grade in elementary school in Argentina. God, time has changed and it has passed like crazy. Whooo.

QUEST: The weather.

Can we have some weather in all of this, please?

ARDUINO: Yes. The weather is changing in England, you see?

Scotland still with some rain, but now it's changing. So things are changing a little bit for the better. And there are some clouds and that's about it.

France, though, if we see, if we look at the satellite picture and we say, hey, high pressure, really nice, yes, for those in the south of France. But try to convince farmers in the west because, you know, the -- the cattle are suffering because of the drought that we have in the area.

So France is under a severe drought, extreme, actually, in the center -- the central parts of the country. And then look at the Low Countries. Look at England, too. We have extreme drought.

So they're shipping hay or straw from parts where we have a better condition into the west to feed those animals. So keep an eye on those prices.

Copenhagen with some rain showers. Elsewhere, it's going to be OK. Dublin, Brussels -- Dublin, clouds on the increase. You saw that system there. But it's better for the time being. No problems at all now in Barcelona. Madrid still dry and very hot.

Quite cool in Australia. A stormy weather system into the southeast of Australia. And New Zealand still with more snow. So we have at least one more day of heavy snow. And then the -- the trend will continue with this Antarctic air mass that is affecting especially South Island. Remember, Auckland now, it's not going to see any more snow. But parts of North Island will continue to see some more snow.

And heavy rain in the vicinity of Shanghai. The system dips down into the Korean Peninsula and Japan, so we will see some more rain in there. But high pressure for Hong Kong and into Taiwan, too, and Macau. So those areas are looking OK.

Here, we see some action taking place over Hainan and Vietnam. It's been raining a lot in there, especially in Vietnam. So that area, ummm, you know. But it remains warm all over. In fact, in China, Richard, it's very, very hot. The coastal parts are seeing the influence of high pressure -- back to you.

QUEST: All right, let me -- before we finish, are you a nicey or a meanie?


ARDUINO: I am a...

QUEST: -- the kind of

ARDUINO: -- truly nicey.

QUEST: Right. In which case, you are badly paid and you're not getting the promotion that you deserve.

ARDUINO: Probably, yes. You're right.

QUEST: We thank you, Guillermo.


QUEST: Because after -- after the break, stay watching. If you want to earn more than your colleagues, you might want to be a little bit more abrasive. A study that says in business, it doesn't pay to be nice.


QUEST: It's official -- being nice can help make you popular.

But it doesn't make you profitable and it probably doesn't pay.

So what do you want to be, personality popular or profitable?

It's a new study. It's called "Do Nice Guys and Girls Really Finish Last: The Joint Effects of Sex and Agreeableness on Income."

Join me in the library and I will tell you exactly what this study showed.

It was published in "The Journal of Personality and Social Psychology." It found that more agreeable guys earn an average of 18 percent less than their ruder colleagues.

It pays to be mean, aggressive.

The study says ruder men may be more assertive in salary negotiations. They're likely to be -- get more than the nicer job applicants.

And the effect, though, is much less pronounced on women. Less agreeable women like my producer, Gail (ph), here, apparently, she earns around 5 percent more. Well, not she does, but you get the principle I do.

Wendy Walsh is a clinical psychologist and expert in human behavior.

Wendy, good to see you.

Wendy joins me from Los Angeles.


QUEST: OK. We're told to be nice.

Why do the meanies get the most?

What's behind it?

WALSH: Well, we have to make a distinction, first of all, between being disagreeable and being rude and abrasive, because this study just looks at people who are able to stand up for themselves and say no. And think about negotiations for salary. You know the old rule, whoever says the first number loses. So that means that if your boss offers you X and you say no, I'm going to wait until I can get X, Y, Z, then you'll more likely be able to negotiate a higher salary.

QUEST: All right.

WALSH: So it's not -- you can be politely disagreeable, remember, but you have to be able to stand up for yourself.

QUEST: But this study does suggest -- and you're right, it's not saying bombast is best. But it does say that -- I mean the way I've described is as the squeaky oil -- the squeaky wheel gets the oil. You know, he who makes most noise -- or she -- does get further.

This is not -- this is not exactly a good, healthy environment for working -- or is it?

WALSH: No, not at all, because we all know that at the end of the day, social intelligence and emotional intelligence trump and it is related to money. And being socially intelligent is also knowing when you can be disagreeable, when it's safe to.

Richard, I think the cruelest thing about this was the gender difference. It's fascinating to look at, because men, of course, organize themselves always on a hierarchy. So you tend to have follower man and then you have the alpha man. So I can see how more compliant men just won't get more money. Whereas if women stand up for themselves in the workplace, they tend to not be rewarded too much for that.

QUEST: OK, so...

WALSH: So they have to work their social skills in a peace-making way.

QUEST: Well, why do you think that is?

I mean we're all familiar with the awful syndrome where -- look, let's -- come on, we're just talking amongst ourselves now. We're all familiar with that look...

WALSH: Quite.

QUEST: -- that happens, and, oh, she's a pushy woman. A pushy woman. Oh, no, don't want her anywhere. You know the -- you know -- you've heard people say that.


QUEST: But, of course, when he's a pushy man, aggressive, go-getting, domineering.

WALSH: We have a really hard time, in our Western culture, dealing with female power. And for women to -- women themselves have trouble sometimes carrying power and being powerful. So I think, yes, it's -- it's very sexist, but it's true that when women are more disagreeable, assertive and aggressive, they're called the "B" word and men are called ambitious and tough when they have the same behaviors.

QUEST: OK. To any viewer watching now who has to decide, are they going to be a -- let's -- let's stick with the male species, if we may, in the naked self-interest here.

To anybody watching, what would you advise, because this balancing act, you don't want to be a people pleaser. Not -- everybody hates a people pleaser. You don't want to be a bombastic buffoon.

How do you get it right?

WALSH: Now, let's remember, this study only looked at ability to disagree and income over a 20-year span. So ability to disagree doesn't necessarily mean be rude, angry, abusive. But it does mean being able to say to your boss, no, I deserve more. And you can say it in a very polite way.

But those who believe in themselves, you know the old adage, if you believe in yourself, other people will line up and believe in you, too. And I think that's the big message here.

QUEST: Wendy, thank you very much for joining us.

Great to see you on the program.

WALSH: Good to see you.

QUEST: And come back again.

Lovely to have you with us.

I'm just girding myself for what comes next -- the US markets, down 113 points. We're off nearly 1 percent, at 11369. I am sticking to my theory that after the dreadful week we had last week, we're all pretty much exhausted. Many people are actually finally getting on holiday. The economic numbers, yes, they'll be important as the week goes on. Prove me wrong, but I think we're not going to have a terribly tumultuous week.

When we come back after the break, a Profitable Moment. And needless to say, it's about Mr. Mean and Mr. Nice.


QUEST: Tonight's Profitable Moment.

Let's start with some Tweets on the subject that were talking about, nice people get paid less.

As Nadja (ph) said, the key is who gets the job done. We cannot always get the job done by being agreeable. We need to agree to disagree."

Adjilitaka (ph) says: "Where do I fail here -- or fall in, good or mean?"

Mayek (ph) says: "Actually, it's all about the people you work with. God loves diversity."

But I like this one. Ankuja (ph): "We are hypocritical. We interview for model employees then we reward the nasty ones."

Tonight's Profitable Moment.

First, we've seen that in salary terms, the nice finish last. But we didn't need 68 page to tell us.

How many times have you seen the unscrupulous characters leaping the career ladder, happy to use you as a leg up in the process?

They ascended against the guy who would rather leave you a smiley Post-It note than scream at you across the room. Well, who knows, at the end of the day, work isn't a popularity contest. It's about making a living. If you choose to be more aggressive to make a slightly better one, then that's your decision, because let me remind you that that's QUEST MEANS BUSINESS for tonight.

I'm Richard Quest.

Because whatever you do in the hours ahead, I hope it's profitable.

And coming up next, the news headlines.