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QUEST MEANS BUSINESS
GM Recall Report; US Markets Break More Records; ECB Reduces Interest Rates; European Markets Rally; ECB's Move; Unconventional Instruments; Make, Create, Innovate: DNA Sequencing
Aired June 5, 2014 - 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)
MAGGIE LAKE, HOST: US stocks raise to brand new records. It's Thursday, the 5th of June.
Tonight, brutally tough, deeply troubling. General Motors admits to deadly incompetence.
From zero to hero. Markets cheer the ECB's radical rate move.
And entering a new field. Alibaba invests in China's football champions.
I'm Maggie Lake, this is QUEST MEANS BUSINESS.
Good evening. After the death of at least 13 people and a recall that came a decade too late, GM has admitted to a pattern of incompetence and
neglect throughout the company. CEO Mary Barra said an internal investigation revealed a history of systemic failures at GM, but no
evidence of a corporate cover-up.
Fifteen employees have been dismissed for misconduct, and five others disciplined. Barra says she was personally disappointed by the findings.
(BEGIN VIDEO CLIP)
MARY BARRA, CEO, GENERAL MOTORS: I can tell you, this report is extremely thorough, brutally tough, and deeply troubling. For those of us
who have dedicated our lives to this company, it is enormously painful to see our shortcomings laid out so vividly. As I read the report, I was
deeply saddened and disturbed.
(END VIDEO CLIP)
LAKE: Poppy Harlow is in Detroit for us. Poppy, General Motors was saying there was no evidence of a cover-up within the company.
POPPY HARLOW, CNN CORRESPONDENT: Right. That's exactly right, that's what everyone wanted to know. Was this just a grave error, years of errors
of non-reporting and not getting up to the highest levels, or was this a conscious cover-up? Their internal investigation over three months, led by
a former US attorney, says no, there was no cover-up.
But Mary Barra, the CEO, choosing very tough words for herself and the rest of the company, saying there was a pattern of incompetence and
neglect. But when you look at this here, what happened? That's what people keep asking. How could this have happened?
And she said over 11 years, people saw that this defect, it was deadly. At least 13 people died, and she said it just didn't get to the
levels that it needed to. But Maggie, they have fired 15 people as a result of this, over half of them, we're told, are high-ranking executives.
They would not give out the names, but they have 15 people go as a result of this.
She talked about this as being, quote, "riddled with failures that were tragic." So, the company, they're again saying no cover-up, but still
saying grave, grave errors were made.
LAKE: And Poppy, you're braving some tough conditions out there yourself, nothing like what Mary Barra is going to face from not only you
guys in the press --
LAKE: -- but from Congress in coming days. But with all seriousness, GM, is it sticking to its version that these events killed only 13 people?
There's been a lot of controversy surrounding that number, hasn't there?
HARLOW: Yes, there has been, and they are sticking to that number of 13 deaths. They're using a very narrow definition. They're only counting
deaths in frontal-end crashes where the airbags did not deploy. So, even in some crashes where a passenger sitting in the front has died who is
counted on that list, a passenger who may have died sitting in the back is not counted on that list.
Also, they're not counting side-impact crashes. So, there's a lot of contention. A lot of family members that I've spoken with want their loved
one to be counted. General Motors has hired, as you know, Maggie, Ken Feinberg, right? The attorney famous for doling out compensation after
tragedies to victims' families after 9/11, the BP oil spill.
He is going to determine who General Motors will compensate, not only those who died, but those who were injured. Once he does that, GM tells me
for the first time today, they may alter that 13 number, and it may go up, and that's what we're going to have to watch to see.
Another key thing to watch here is this is the end of GM's internal investigation. Congress is still investigating, the Department of Justice
is still in the midst of a criminal probe. And we are waiting the findings of that.
That is a big overhanging question: what does Congress find as it pores through a million documents.? We're told a million documents from
GM. And what does the Department of Justice find?
But for these families, we're getting some of the reaction. Some of them were happy to hear GM accept responsibility but still want more from
the company and want a lot of answers. Still more answers that they want from this.
LAKE: Absolutely. By no means the end of the story. Poppy Harlow, thank you so much. Poppy mentioned the fact that Congress is still
investigating. A US senator from Nevada is calling for additional hearings before Congress as they continue to investigate GM's claims.
Rana Foroohar is CNN's global economic analyst -- not easy for me to spit out tonight, Rana, but there's a lot to pay attention to. Thank you
for joining us.
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Thank you.
LAKE: You and I watched Mary Barra together this morning. They're going to be investigating -- criminal investigation is not over. Mary
Barra very much trying to put a period at the end of the sentence today saying this was exhaustive, this is what we found out, there was no cover
Did we hear enough, or do we have enough to believe that this did not reach the upper C Suite of General Motors, including herself. I mean this
is the question.
LAKE: She's an insider at this company.
FOROOHAR: She is. To be honest, I think we're going to find that she didn't know anything. I don't think GM would have her front and center,
frankly, right now if she was -- if we were going to find out later on that she did know something.
And she took a lot of personal responsibility. In that conference this morning, she said from now on, if anybody sees anything that's
happening in the security arena, you take it to your supervisor, and if your supervisor's not acting on it, you bring it to me personally. That
was a big statement.
But when you look at the 325 pages of this report, there are so many really, really troubling details. And there's clearly just a culture of
One of the things that really struck me was a reference to the "GM nod," this nod that people would give in meetings where issues would come
up and you'd sort of see people nod and then they would leave the room and not do anything about it. That's a tough culture. She's going to have her
hands full changing that.
LAKE: It's a tough culture when you have safety at hand. We're not talking about trying to gain market share --
LAKE: -- or not getting a raise. We're talking about the fact that you put people in these vehicles -- which by the way, she did address that
when she was talking about this not being a business problem, this is a fundamental problem --
FOROOHAR: Yes, that's right.
LAKE: -- where they failed their customers. So, she really did take a lot of ownership on that front. How would you grade and how do you grade
Mary Barra's handling of this situation? We've talked about it before.
We have to point out, she's the first woman CEO to hold the top job at a US auto company. Any CEO coming newly into that position to then be hit
with a crisis like this is going to be severely tested.
FOROOHAR: Absolutely. I've got to say, I give her an A grade for crisis management. I don't think she stepped away from any of the tough
accusations, I think she's taken personal responsibility.
I think it's really good news for her that so far, she's had nothing to do with this, because that gives her an opportunity now to get in and do
what we always knew she had to do at GM, which was change this culture, de- silo this company, get divisions talking to one another.
But it's going to take a long time. These are sea changes that came on for decades at this company, and I think it's going to take years to fix
LAKE: A lot of people were talking about the fact that there's going to be history made either way once she had this role. Does she have a
unique opportunity here? We are going to talk about the compensations.
There are many questions to be answered about how this went on for so long, how they deal with the compensation issue. So, we're going to be
talking about that for weeks. But in terms of Mary Barra, what she needs to do now, is this going to present an opportunity for her?
FOROOHAR: I think so, and I think it's one that's actually going to reverberate not just in the auto industry, but in business in general.
You'll find many, many companies like GM that are complex, that are global, that have these different divisions that don't speak to one another.
And as business problems -- and frankly, all world problems -- get more complex, I think that that's going to be more and more the case. I
think this issue of breaking down silos, of making sure that there is someone taking responsibility at the end of the day and that things are
making their way up the food chain to the CEO is going to be a big deal.
The fact that safety is now in the C Suite at GM is making a big statement. And I think if she can de-silo this company, which is clearly
one of the toughest around to do, then that will be potentially a Harvard Business School case study going forward.
LAKE: Absolutely. Absolutely. And this is a situation that may also set a precedent in terms of how CEOs apologize.
FOROOHAR: That's right.
LAKE: We saw headlines on that today. And also the fact that you can say, "I didn't know about this." That has been the legal defense since the
dawn of time --
LAKE: -- for the people at the very top saying, "I didn't know what was happening, I delegated that to somebody else." Mary Barra sort of
blowing that up today and saying, "E-mail me directly."
FOROOHAR: E-mail it.
LAKE: I'm taking personally responsibility.
FOROOHAR: That's a big deal, because in the end, then, she will be legally responsible if there are issues.
LAKE: Absolutely. Rana, thank so much for coming in once again with us.
FOROOHAR: Thank you.
LAKE: Well, US stocks shattered all-time records Thursday. Alison Kosik is at the New York Stock Exchange. Alison, a very busy day on the
business front, and a record one for US stocks.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Oh, yes, this is a market, Maggie, at this point that's really riding on momentum. You look at the
Dow, closing at its seventh record high of the year. The S&P 500 closing at its 17th record high of the year.
I want you to also look at the Dow, getting very, very close to Dow 17,000. If there is a very positive or number that beats expectations for
the jobs report, the May jobs report that comes out tomorrow, it could be that you could see the Dow hit that 17,000 mark. It wouldn't be the first
time you see a 200 point rally on a good jobs number. We shall see.
As far as what drove the trade today, the ECB's move to counter inflation, analysts say it's good to see this form of stimulus happening
overseas as the Fed winds things down here in the US. So, all of this sort of good news culminating into lots of record highs today, Maggie.
LAKE: Absolutely. All right, Alison, thank you so much. Still to come on QUEST MEANS BUSINESS, accentuate the negative. The drastic
measures the ECB is taking to shore up the European economy.
LAKE: The European Central Bank is taking unprecedented steps to jump start the European economy and ward off deflation. In a first for a major
central bank, ECB president Mario Draghi reduced the deposit rate to below zero. That means banks will now need to pay the ECB to park their money
The ECB also reduced its key lending rate to 0.15 percent, a record low. Draghi announced measures to spur lending to businesses that
economists say could be worth more than $800 billion. Although the ECB held off on quantitative easing, Draghi left the door open for action in
(BEGIN VIDEO CLIP)
MARIO DRAGHI, PRESIDENT, EUROPEAN CENTRAL BANK: We've done this. We think it's a significant package. Are we finished? The answer is no. We
aren't finished here. If need be, within our mandate, we aren't finished here.
(END VIDEO CLIP)
LAKE: The ECB announcement pushed European markets to near six-year highs. Germany's DAX briefly topped the 10,000 mark and closed within
touching distance. Banks led the rally in European markets, as you might imagine.
Italy's Mediobanca and Spain's Banco Sabadell both rose more than 3 percent, helping to produce healthy gains in Milan and Madrid. Germany's
Commerzbank finished the day nearly 2.8 percent higher.
Now, the euro fell to a four-month low after the announcement. It later bounced back, ending the day with a gain, trading at 1.36 against the
Stephanie Flanders is JPMorgan's chief market strategist for the UK and Europe, and she joins me now here in New York. Stephanie, thank you so
much for coming in. Expectations could not have been higher in terms of the pressure on Draghi to do something. It seems like he delivered. Is it
going to have a lasting effect, I think is the question?
STEPHANIE FLANDERS, CHIEF UK AND EUROPE MARKET STRATEGIST, JPMORGAN ASSET MANAGEMENT: I think they pulled off a neat trick because as you say,
everyone was expecting moves, and they knew there were a limited range of things that the ECB would be comfortable doing.
And yet they still seem -- although each individual measure isn't necessarily a game-changer from a standpoint of investors or the economy, I
think taken together, it was a bit more comprehensive, a bit more assertive than people were expecting.
I think another crucial point was that it was unanimous in the governing council. You'll remember in the past, particularly the German
Bundesbank president has sometimes voted against these programs. The fact that it was unanimous is significant.
But you're right, there are some very problems that the ECB's dealing with, and I think a lot of people in the markets think this is not going to
be the end of the road. Mario Draghi signaled that they might be willing to do more, and I think they are going to have to do more eventually.
LAKE: Yes, promises, promises. Though there is the feeling, especially when it comes to that quantitative easing, that they're very
reluctant to do that. Some of this -- we always say central banks have only so many tools in their toolbox that they can work with, and a lot of
it is posture and the willingness to step forward.
The lending -- there was an issue here when we embarked on these unprecedented measures in the US -- is this going to help spur lending?
The negative interest rate is also -- it's a bit risky. It carries its own --
LAKE: Do you think it's going to push that money into the economy, where it needs to be?
FLANDERS: Look, it's a controversial step, the negative rate. I suspect it won't have the same kind of impact as you might -- it's not
going to be as radical as it sounds, either on the positives or on the negatives. It won't make such a difference.
I think the problem is, you are to some extent pushing on a piece of string, here. They've already brought rates to very, very low levels, just
cutting them a bit more, even though it takes it into a symbolic negative territory, isn't going to necessarily make a big difference. And we do
worry a bit about the impact on money markets of having the negative rate, that distortion.
But I think the more important thing is they can now say they really have delved into the toolbox and used pretty much all of what you might
call the normal unconventional measures. And so those who would support quantitative easing going forward, they'll have a sort of -- something to
say now. They'll be able to say, look, we've tried everything else, we really have tried everything else.
So, I think this could be a step, an important step on the way to quantitative easing. Although you're right, they're not really keen to go
LAKE: Right. So, what's going to be the thing that tips their hand? What are they going to be looking for? We know the issue of inflation,
lack thereof, deflation is an issue in Europe. People are watching the currency very closely as well. What do you think is going to be the thing?
What should we focus on as investors to determine whether that next step is necessary in Europe?
FLANDERS: The problem they have is the currency is really key, not just to the recovery hopes longterm, because they want exporters to do
well, but also to the short-term impact on inflation. It's import prices, falling import prices, the strength of the euro that's pulling down
inflation and causing such problems from them.
Some people have been telling me that they're basically praying over the next six months inside the European Central Bank. They know there's
some forward momentum in the economy. They're also hoping that this study of the bank, the asset quality review of the bank balance sheets will lift
the cloud off European banks and support lending in that direction.
If you get enough momentum from that over these -- from these measures and from that sort of forward momentum in the economy in the next six
months, they're hoping that will be just about enough.
But there is a real problem with the currency, and I think they're conscious that it's quite hard to fix. In a big global financial market,
can you really easily pull levers to change the currency when every other country in the world wants a cheap currency --
LAKE: That -- well --
FLANDERS: -- every other country wants to export their way out of recession as well.
LAKE: Not everyone can win the race to the bottom, right?
LAKE: And that is right now what we're facing, which makes things difficult. And I guess it is fitting that the currency should be the issue
for the currency bloc that is the eurozone. So, we're going to have to watch it very closely. But certainly, Mario Draghi, as we said, is the man
of the moment for the markets for sure.
FLANDERS: He's the man of the moment. Super Mario strikes again.
LAKE: That's right. Stephanie, thank you so much for coming in this evening.
FLANDERS: Thank you.
LAKE: Appreciate it. Well, Mario Draghi says the whole ECB is united and ready to use those unconventional instruments if the economy doesn't
improve. As Richard explains, he could learn a thing or two from the experts, the cast of the musical hit, Stomp.
DRAGHI: The governing council is unanimous in its commitment to using, also, unconventional instruments.
RICHARD QUEST, CNN INTERNATIONAL (voice-over): The more unconventional the instrument, the more skill you need to use it. And no
one knows this better than the cast of Stomp.
JASON MILLS, STOMP CAST MEMBER: You have a completely different skill set that you have to develop for each instrument. So, as you're developing
it, you're discovering what you can do with the instrument.
QUEST: Like these performers, the ECB must be precise, sure-footed, calculated.
MILLS: We're balancing the stuff where we have to hit very specific marks, and then -- but also being willing to just throw caution to the wind
and just try something out in a given moment where that's not too gigantic of a risk.
(DRUMMING WITH TOOLS AND POLES)
QUEST: The European Central Bank already knows about handling high stakes. Take the LTRO. Two rounds of longterm loans to banks in late 2011
and early 2012. It helped trample down bond yields.
Then came the OMT, outright monetary transactions. Draghi swept in again in August 2012. While the stock markets jumped, Draghi faced mixed
DRAGHI: Are we satisfied for that? I think to say the least, the jury is still out.
(DRUMMING WITH POLES AND TOOLS)
QUEST: The drum beat of possible deflation, or "lowflation" as inflation lies well below target. The shaking rhythm of growth, just 0.2
percent in the last quarter. And the alarming sound of nearly 12 percent unemployment.
MILLS: You can feel that exact moment when the audience realizes what we've done, when they realize that that -- that's how this is going to end.
QUEST: Even as they bring in each new instrument, the central bank must also plot its exit. And the trick is finding the right time.
MILLS: Timing is probably the single most important thing in our show.
CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: It will be about timing, it will be about execution, it will be about
QUEST: For now, the ECB show must go on, at least until the real economy start to perform.
LAKE: A very big thank you to the cast of Stomp here in New York for that.
Well, the amount of our DNA that separates you and I and other humans is just 0.1 percent. Now exploring that difference is getting cheaper and
faster. Next, we'll see what companies are buying into personalize medicine.
LAKE: No matter what you think about DNA profiling, business are lining up to buy in. Whether the new technology can help police solve
criminal cases or influence your insurance premium, we're beginning to see it more and more. In this edition of Make, Create, Innovate, we find out
how DNA sequencing is getting faster, how companies are paying big for it, and how it's beginning to save lives.
NICK GLASS, CNN INTERNATIONAL CORRESPONDENT (voice-over): Up to 3 billion base pairs in human DNA. We as individuals only differ genetically
by 0.1 percent. This is no ordinary microchip. It's designed to detect those minute differences between us quickly, cheaply, and efficiently. The
promise, no less, is a revolution in medicine.
CHRIS TOUMAZOU, PROFESSOR, DNA ELECTRONICS, LONDON: My invention is really the ability to switch on and off a microchip with DNA. Boing from
something that's laboratory-driven that would take weeks to sequence your DNA to a small microchip that could do it within 30 minutes to me was a
GLASS: Invented in 2001, Genalysis is a platform where a microchip can cross-reference a patient's DNA with a template for a particular
mutation or genetic code.
TOUMAZOU: So, you might be predisposed to Type I diabetes, for example. So on this microchip, I've got the template of Type I diabetes.
So now, this microchip is comparing your DNA with the target of Type I diabetes, and within less than 30 minutes, I can determine whether or not
you have that genetic predisposition.
GLASS: Dubbed "quick read DNA," Genalysis is all about speed.
TOUMAZOU: It does critical applications in triage situations, situations where you do need a realtime result. Wouldn't it be wonderful
if they could give you the right drug, the right dosage, at the right time?
GLASS: Personalizing medicine, as it were. And Chris Toumazou's interest in genetics first developed for a very personal reason.
TOUMAZOU: My son got renal failure when he was nine years old. He lost his kidneys. This was a genetic predisposition.
GLASS (on camera): Had your invention existed earlier, would it have made any difference?
TOUMAZOU: It would have been managed very, very differently. Because if we detected it early enough, it wouldn't have been preventative
medicine, but we could have managed his lifestyle.
GLASS (voice-over): Toumazou and his team are convinced their technology will change the face of future health care. But for now, their
trials are more skin deep.
GLASS (on camera): Genalysis arrives on the High Street in London this summer. One unique retail outlet, New Bond Street, where else? But
the purpose isn't medicinal, it's cosmetic.
UNIDENTIFIED MALE: This is your personalized DNA testing kit. We're going to be analyzing two of the major causes of skin aging: collagen
levels and your anti-oxidant levels. In half an hour, we'll have your DNA aging profile.
TOUMAZOU: We've licensed it to a company called Geneu, who actually used the technology to look at skin DNA and they can then recommend a
UNIDENTIFIED MALE: Well, we actually have the creams ready for you.
GLASS: So, these are made specifically for me.
UNIDENTIFIED MALE: Bespoke for you.
GLASS (voice-over): Geneu doesn't come cheap: $500 a month or so for the Bespoke creams. But the real ambition for this technology lies not
with the beauty industry, but in health care. It's an invention potentially worth billions to the big pharmaceutical companies. Genalysis
has been licensed to Life Technologies, the company recently acquired by Thermo Fisher in the United States for $14 billion.
TOUMAZOU: Because I believe that the future doctor will be somebody that will be looking at your medical future and not your medical history.
LAKE: The Chinese e-commerce sight Alibaba goes on a shopping spree. We'll tell you about the big ticket item you won't find on their site next.
LAKE: Welcome back, I'm Maggie Lake. The news headlines this hour. US president Barack Obama says Russian president Vladimir Putin has, quote,
"the chance to get back into a lane of international law," clearly a reference to Ukraine made during a news conference with the British prime
minister David Cameron in Brussels. It followed a meeting of G7 leaders. Notably, Mr. Putin was not invited.
Nigerian officials claim hundreds of people have been killed in raids by Boko Haram in the country's northeast this week. Some sources put the
death toll as high as 400 to 500. They're talking about villages in Borno state on the border with Cameroon. Officials say the area is still
controlled by the Islamic militants, and villagers can't even go back to bury their dead.
A US official has told CNN that army sergeant Bowe Bergdahl may have tried to escape his Taliban captors on at least two occasions. Sergeant
Bergdahl was freed after five years in captivity in exchange for five Taliban prisoners.
GM announced today that it dismissed 15 employees, many of them top executives. It says an internal investigation found incompetence and
neglect, but no cover-up of the defect that cost at least 13 lives.
The European Central Bank has introduced a negative deposit rate for banks. It is a first for a major central bank. Institutions will now need
to pay the ECB to park their money there.
Just one week before the World Cup kicks off in Sao Paulo, subway workers there have walked off the job, and they say they don't know when
they will come back. Three subway lines were shut down and commuters vandalized at least one station. Workers rejected a plan to boost wages by
8.7 percent. The city of Manas is getting into the spirit of the games - residents have created a 200-meter long canopy showing the Brazilian flag
and the crest of the National Football Federation. Volunteers reportedly used $1 million pieces of tape to make the canopy.
Well, Chinese e-commerce company Alibaba is also feeling football fever. Alibaba paid $192 million for a 50 percent stake in China's most
successful football team, the Guangzhou Evergrande Football Club. Jim Boulden joins us now live from CNN London. Jim, is this an unusual
purchase for them? It seems that Alibaba is literally everywhere we look these days.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Yes, I think, you know, it has even had its IPO yet. Of course it's filed for one in the U.S., but
when you read about this, it sounds like it's about diversification for Jack Ma and Alibaba, the idea being that maybe it's a good idea to spend
some of that money in other areas of course because of the Chinese real estate market isn't doing so well. And it seems that all these tech giants
nowadays want to have a football club. And although Jack Ma isn't that old, --
BOULDEN: -- he hasn't done it live Steve Ballmer who did it after retiring completely from Microsoft. So, I think it's interesting that Jack
Ma and Alibaba decided to do this. It's only 100 - I mean -- $200 million. We are talking about a company that is possibly going to have the biggest
IPO ever. So, it's small change but it is - it's interesting because Guangzhou is the team that was relegated a few years ago and has done very
well in the Chinese football and in Asian football as well. So he might have bought it at a very low price if this team can continue to go the way
it's been going, Maggie.
LAKE: Well that's the thing. I mean, everybody is probably watching this and the fans especially thinking this guy is considered a visionary,
he knows how to pick a winner, that's for sure. You know it's interesting that you mentioned the tech giant. Certainly here we've seen a lot of them
at play bidding for the Clippers which were an NBA basketball team here. Is Jack Ma famously a big sports fan? Ballmer is - we know that. In fact
a lot of people think he looked like a coach when he was out there on the platform even during his corporate days. Is Jack Ma known as a, you know,
BOULDEN: What I've read is that he's not really and that he said something about not really knowing a lot about football. So he reminds me
a bit more of a Jeff Bezzos type who spends all of his time - or Michael Dell who spends on the time on the company and that sport isn't their
thing. But you know, here a lot of the English football clubs have been bought by very rich, sometimes from Middle Easterners, but also American
tech and businessmen. And they become very, very enthusiastic about their teams and they become big fans very quickly. So it surprises some people
that for instance Americans in - not necessarily soccer being number one - they then become very big in that sport and they love that sport. So it'd
be interesting to see if this - if this trend continues because there are lot of very, very rich men in China now and they could be definitely buying
and selling these clubs. We'll see whether it is an inflation or a bit of a bubble in the price now.
LAKE: Yes, it is interesting because we haven't really thought of them as coming in and scooping up. Interesting that he could have done
that. He could have gone international and bought a team, especially if he doesn't really know that much about the sport. He could've just looked at
the global landscape. Instead he chose to invest in China, presumably there may be a market that we haven't talked about. We're used to talking
about the property market, we used to talk about everyone chasing those Chinese consumers - but sports is a potentially explosive growth market
there as well.
BOULDEN: Yes, used to be that a lot of these sports clubs in China from what I've read - and I had to read a lot about this today because we
don't follow Chinese football -- were owned by real estate companies and real estate giants and pharmaceuticals. (Sort of the - sort of/So that the
- so that) the difference is extraordinary compared to say England, for instance, where it's not those kind of people. And so they may be just
saying, hey, look, maybe real estate isn't the place to be anymore, maybe we're going to diversify a little bit. Obviously e-commerce doing very
well. But if you can just own a little bit of the separate clubs - you remember some of the TV companies in America did this in the 80s and 90s,
Maggie. The all decided they had to diversity into sports teams. They've all sold all of them now. So, it could just be a trend, it may not last
very long, but, you know, Jack Ma starting another trend - that's not a hard to say, is it?
LAKE: No, it's certainly not. And it's much more fun to talk about somebody scooping up a football team, isn't Jim, than a reat (ph) or
something like that, so we'll take it. Jim Boulden, thanks so much. Well a year after Edward Snowden revealed mass cyber spying, some websites are
telling users to take back their privacy. We'll explain after the break.
LAKE: One year ago today, Edward Snowden changed the way we think about the internet forever. Now Snowden has joined some of the world's
biggest companies to declare a day of action to reset the net. He's the movement's plan. First take stock of your personal information that's out
there on the web, then know there are sites and companies that can help protect your privacy. Finally, learn how you can keep private information
hidden from prying eyes or take it off the internet all together. One of the websites advocating the "Reset the Net" campaign is a the social media
site Reddit. Joining me now is Erik Martin, Reddit's general manager. Erik, thank you so much for being in today.
ERIK MARTIN, GENERAL MANAGER, REDDIT: Yes, thanks for having me.
LAKE: So talk to me about why you guys feel so strongly about "Reset the Net."
MARTIN: So, yes, we felt it was really important to promote "Reset the Net" because it's critical that we all take more control and have more
awareness of all of our data and all of our personal info that's flying around the web.
LAKE: And the presumption there is that we don't really have any idea how much information is out there on us. Is that correct?
MARTIN: Right, and I think, you know, a very small percentage of people out there realize just how much information is available - you know
- for governments to snoop on and even for other people to just suck up.
LAKE: I mean, the issue with this, isn't it - I think we all think the idea of somebody prying into our personal lives is completely
offensive. But the government has made the argument that this is absolutely necessary in order to keep us safe. These are national security
issues at stake, we don't want another terrorist attack for example. Listen to what one former head of the NSA had to say - have a listen.
KEITH ALEXANDER, FORMER NSA DIRECTOR GENERAL: It's going to get more dangerous. I would rather be sitting here in the hot seat defending what
we're doing than being sitting - than sitting here - in the hot seat after a terrorist attack and you ask me how did we fail the country. It's a bad
place out there, they're trying to kill us, these are some of the tools. If you take away some of those tools, it is my assessment after 40 years in
the business and today is my 40th anniversary from joining the army, it is my assessment that it's going to get tougher. And these leaks have hurt
CHRISTIANE AMANPOUR, CHIEF INTERNATIONAL CORRESPONDENT FOR CNN AND HOST OF CNN INTERNATIONAL'S "AMANPOUR" SHOW: Yes.
ALEXANDER: It will -
LAKE: And that is him talking to our Christiane Amanpour. I hear that and that makes me torn. What do you say to that argument?
MARTIN: Well I don't think anyone really has a problem with targeted surveillance the same way it works on the offline world, in the physical
world. What we have a problem with is this mass surveillance where just because they can, the intelligence agencies are sucking up every single
thing out there that's floating around on the internet and storing it forever.
LAKE: And of course it raises the question, I mean, who's watching the watcher? That's always my issue. It's interesting that these big
companies have joined and they're also participating - Google, Facebook, the like - on "Reset the Net." There are a lot of people who think they're
storing and collecting an awful lot of information about us that maybe they don't have any business monitoring or then turning around and selling. Is
that a bit tough that - is that an uncomfortable situation? Or do you think that they're two completely separate issues?
MARTIN: Well, I mean, I think, you know, they're definitely related and that we should be more aware of what's happening with our personal
information that's out there on the net - whether it's, you know, being more aware of private companies are doing or what our government is doing.
So that's why I mean "Reset the Net" is a lot of - there's a lot of - ump (ph) and source - free, easy-to-use tools that are just proven that kind of
basic steps you can take to make your information more secure.
LAKE: Yes. And being informed that we have a responsibility ourselves to know - as you said to be informed and know what to do. We
mentioned in the intro too that in some cases at least know what's out there, know how to protect yourself, and in some cases take it off the web
if you want to. I was operating under the impression that we've been preaching that once you put it out there, it is out there forever, even if
you think there are applications to delete things, right. Is that not true? Are you able to take control of erasing your footprint on the net?
MARTIN: I mean, --
LAKE: Or did we overstate it? You can tell us if we did.
MARTIN: -- well, I mean, I think it's all about - it's all about - layers and it's all about sort of reasonable steps. You know, it's
probably not possible to completely erase, you know, something from the internet, but you can make it much harder to find. And you can make it
much harder for someone that wants to, you know, collect as much of that information as possible. You can sort of make it more expensive for them
to gather that, which in the case of governments, it forces them to be more targeted the way - the same way they are in the offline physical world.
LAKE: Erik, this is such an important issue. Thank you so much for coming on and talking to us about it. We appreciate it.
MARTIN: Thank you very (inaudible).
LAKE: President Obama dined with French President Francois Hollande Thursday. There may have been some tension in the air. President Obama
has voiced concerns about the sale of French warships to Russia. Michelle Kosinski is in Paris. And, Michelle, both sides have some reason to be
tense as well. I know France not happy with some issues with the French banks at the moment and U.S. regulators going after them. How do we think
relations are between the U.S. and France at this moment, especially given this situation with Russia?
MICHELLE KOSINSKI: WHITE HOUSE CORRESPONDENT: Very definitely. I mean, they're really trying to work together on this though the news was
pretty stunning when it really came up publically that France is going ahead with this deal to sell these warships, helicopter carriers to Russia.
This is a more than $1 billion deal, and apparently it's been three years in the making. So what's being said publically though is not about
tensions although President Obama eluded to that today.
What he said about that warship deal was that he understands why France is going through with it. That is also a country that needs a lot
of jobs and it has been a long time in the making. But he said it would've been preferable if they had had held off on it and that he would be
bringing that up. In fact, Obama said that he has expressed concerns over it to France and we know that French leaders on their part wanted to bring
up their beef with the United States at this dinner over this BNP Paribas fine. It's a potential fine of some $10 billion because this bank had been
doing business against U.S. sanctions on countries like Iran, Syria, and that had been going on for some time.
So, the French government apparently wants to get involved in this deal and try to lessen that fine. Because apparently in the beginning it
was going to be much, much lesser. President Obama said when he was asked about this specifically today, he said, look, I don't get involved in that,
that' what I would tell the French president if he brought it up at this dinner. That this is a matter for the courts and financial regulators -
not for the President. Maggie.
LAKE: Well it's sort of a tough time but you could see the enormous effort everyone is putting forward to present a united front. It is so
important for them to come out of this G7 at least looking like they're on the same page, isn't it?
KOSINSKI: Yes, and that's obviously been the goal here. I know today when it was discussed, what really was the takeaway from this? The Obama
administration said that united front. And in his remarks today when President Obama took a few questions with the U.K.'s Prime Minister David
Cameron, Obama said that relations between France and the U.S. have never been better, never been stronger he said. In fact, he said that there was
intense cooperation on a number of issues including Russia. And even though France is going ahead with this deal, you know, he said that that's
something that could be sort of put aside, that there's a lot of cooperation in other areas as well. Here's some of what was said today.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I think it would have been preferable to press the pause button. President Hollande so far has
made a different decision, and that does not negate the broader cooperation that we've had with France with respect to its willingness to work with us
on sanctions to discourage President Putin from engaging in further destabilizing actions and hopefully to encourage him to move in a more
KOSINSKI: And you could really this from two sides. I mean, all of these nations that have met have expressed willingness to go forward with
tough sanctions, but then you see deals like this still going through. It's really like talking out of two sides of your mouth. But it's
something that it seems like world leaders are willing to work through and President Obama reiterated that saying that France has expressed that
willingness to go forward, that there is the cooperation there. And that if those sectorial sanctions were enacted that every country really has to
do its share, that every economy might feel its own pain but the collective products would be that Russia would really be hurting from these sanctions.
And that might be the only way to try to shape Russian behavior at this point, Maggie.
LAKE: Michelle Kosinski for us in Paris. Thank you, Michelle. In France the world is preparing to mark a solemn anniversary - 70 years since
the D-Day landings in Normandy. As leaders and veterans gather for the ceremonies, Jenny Harrison is at the CNN International Weather Center.
And, Jenny, what does the forecast look like for them?
JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: I know. I wish I was on the Normandy beaches actually. Let's be honest, Maggie, what an
amazing day that is going to be. It's pretty good actually. There is a chance of some rain. Well probably not until later in the day because this
is a satellite of the last few hours. So what you'll see straightaway is this system here of course working its way towards Northern France, so how
much that will impact the day? Well, as I say, hopefully quite a little. This is sort of a cutoff area here with high pressure. I'll talk about
this in a moment because, my goodness, the temperatures are set to rise dramatically across Central Europe. Still warm in the East as well, but we
have got that rain heading in from the West.
But look at this - hour by hour -- we've picked Bayeux in France because it's not far at all. It's just slightly inland from the two main
beaches that we're talking about. And you can see the temperature picking up very, very nicely. So in the morning hours when all of the ceremonies
begin and the speeches, temperatures very nice - about 18 degrees Celsius, and the winds a little bit brisk. They're coming from the Southeast, but
even so, not bad. The winds consistent all day long and it will warm up. Probably the highest temperature in the day about 24 degrees Celsius.
There's just a chance of some showers. That's sort of early evening, but as I say, hopefully by that time most of the day's events will have
actually taken place.
Now, when it comes to high temperatures, let's be glad we'll not have these temperatures across in the West, certainly in Northern France
because, my goodness, 32 Celsius in Moscow. That's the highest temperature there recorded this year. Thirty-one in Saint Petersburg. Now we know it
has been a bit warmer a week or two ago. But that is still 13 degrees above the average. And guess what? The heat is really set to continue.
So, look at these temperatures - Kiev around 30/31 for the next few days, 32 in Moscow by Saturday and as you can see in Saint Petersburg, actually
beginning to cool off a little bit as we head into Sunday. Still above the average and still very nice, just not as hot as it was.
And then look at this - this is showing you the temperature trend of the next 24 hours, and you'll notice there's warmer colors edging in and
sure enough that does mean higher temperatures. We've got, as you can see over the next few days here, temperatures getting to 29 in Prague by
Sunday, the average is 20 Celsius. We reached 30 in Budapest, an average of 24 normally this time of year. And then in Berlin, 31 which will be a
nice around ten above the average. So very warm indeed.
Good news too for the tennis. Even though we've got that rain pushing in across the Northwest, rain not expected to arrive until Sunday so Friday
and Saturday partly cloudy skies. Although, again, you'll notice it's getting a lot warming, so much warmer end to these championships than the
beginning. And as I say, there is some rain - maybe some thunderstorms even on Sunday.
Now meanwhile elsewhere in Europe, as I say, we've got the rain across the West. We have got, you know, a scattering of showers across Central
regions and more really in the way of rain across Eastern areas too. But a lot of what you're looking at is those showers and those thunderstorms that
really pop up in the afternoon hours when it gets so warm. And as for temperatures elsewhere, a few places not talked about - 26 in Rome, 30
Celsius in Madrid and not bad even up there in Dublin and Copenhagen with a high of 16.
Now, in the U.S., again, Wednesday another day with severe thunderstorms. There were 13 tornados reported, some strong winds, some
hail. So, again, watching these storms as we continue through the late afternoon and even hours, everything working its way eastwards. So, now
doubt, I'll be talking about that this time tomorrow. Maggie.
LAKE: All right, we look forward to it. Thank you so much, Jenny. Well, every day the skies over Northern Europe are filled with about 5,000
planes. We'll meet the air traffic controllers who say they can fit even more into that airspace.
LAKE: Well if you take a look at this, this map shows real time air traffic over London where it is nearly 10 p.m. These are some of the most
crowded skies in Europe, and they can only get busier as we enter the next century of passenger flight. Air traffic controllers are working on
innovative ways to get even more - pack even more - planes into that airspace if you can believe it, and get everyone down safely. Lisa Soares
ISA SOARES, REPORTER AT CNN INTERNATIONAL: Europe skies on a typical July day, about 30,000 carefully choreographed planes flying along
invisible highways. The race is on to redesign this airspace to cope with the growing rush hour above our heads. The NATS Control Center on the
south coast of England is responsible for 200,000 square miles of airspace. It handles 5 and 1/2 thousand flights every day across one of the most
complex pieces of airspace in the world.
PAUL HASKINS, GENERAL MANAGER, LONDON TERMINAL CONTROL: So our brief (ph) challenge is capacity. One of the things that we're looking at doing
is through single European skies, breaking down international boundaries and making the transfer between one air traffic provider to another
seamless, without worrying about lines on a map.
SOARES: For Heathrow, the third busiest airport in the world, getting planes on the ground as quickly and safely as possible is often hampered by
HASKINS: It's been 80 days a year, strong winds affect our landing range. In normal light winds, we land about 40/42 aircraft an hour, in
strong winds that reduces to around 30 aircraft an hour. So we're introducing time-based spacing. It's a concept where currently we separate
aircraft by distance, and we're going to be introducing separation where we separate by time. We're going to do a lot of work to prove that that's
safe, and we've been using lasers to detect turbulence in the air, measure how smooth the air is so we can get aircraft closer together.
SOARES: Time is money in aviation, time wasted by planes circling in holding patterns waiting to land has to be reduced. That means moving away
from the current 3D system where controllers track the position of an aircraft on a radar screen.
HASKINS: 3D is around exactly where the aircraft is in space. 4D is effectively the time - what time is it actually, physically at that place.
And at the moment we don't necessarily manage that in the right way. The whole point of going to a 4D management is that we've got that time
predictability that you can use right from start to end of flight, which helps the aircraft operator in terms of fuel burn and ultimately helps both
airports manage what's going to happen when the aircraft arrives there.
SOARES: Predictability is the key when it comes to managing our increasingly busy skies. So are we edging closer to the day when we board
a plane without a pilot?
HASKINS: One of the benefits of unmanned flights is that the ability for the air traffic controller to make inputs - direct, potentially in the
long term, direct entries into the aircraft database which will allow the aircraft to be able then to manage itself in the same way. And that
predictability brings a big plus to the whole system. It takes away some of the risk we have now as a human in the system. The human makes
SOARES: The technology might already be here for pilotless planes, but having an infrastructure that could cope with the demands of hypersonic
flight is a lot further away.
Female: You could fly from London to Sydney and back in a day.
HASKINS: The difficulty we'll have from an air traffic perspective are one of the things and NATS is trying to understand is how you manage
those hypersonic flights into the already congested airspace. We don't imagine we'd be building extra runways to accommodate hypersonic flight.
They'd have to be accommodated into the normed subsonic aircraft that we've got today.
SOARES: Planes without pilots transporting us around the globe at hypersonic speed on the distant horizon. For now the focus is about
turning the existing invisible infrastructure above our heads into more efficient, safer highways in the sky.
LAKE: The perfect host knows there are some guests you just have to keep apart. Francois Hollande has been playing the diplomatic over two
LAKE: Welcome to the diplomatic dinner table. The French presidential palace face a major diplomacy headache in Paris on Thursday.
How to host both the Russian and U.S. Presidents while keeping the two apart. After weeks of planning, the French came up with the only solution
they could. President Hollande would have to be at two dinners.
First up for the French president was his day with the U.S. President Barack Obama. They've already dined together of course when Hollande
visited Washington earlier this year. But after kicking Vladimir Putin off the G7 table, they couldn't exactly invite him to the dining room. The
solution? Hollande planned to travel from the _lys,e Palace across town to the Champs-_lys,es. Now, if you've ever been in a Paris taxi, you'll know
that that is not a ride for the faint-hearted.
His second dinner of the night with Vladimir Putin was due to happen about two hours later. Not to be outdone, the German and Ukrainian leaders
have been planning their own soir,e. Angela Merkel was due to have dinner with the new Ukrainian President Petro Poroshenko. And he would hope - you
would hope - the man known as Ukraine's chocolate king has something sweet to bring for dessert. And that is "Quest Means Business." I'm Maggie
Lake. I'll see you tomorrow.