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Crisis in Iraq; Conflict Pushing Oil Prices Up; World Bank Cuts Growth Forecast; Refugee Crisis; Second Day of Losses on Wall Street; Europe Mostly Lower; World Cup Kicks Off; Protest Mars World Cup Opening; World Cup-Onmoics; Investing in Women

Aired June 12, 2014 - 16:00   ET



RICHARD QUEST, HOST: The market closes with it being the Dow Jones down more than 100 points, give or take. When the man hits the gavel,

assuming he remembers -- which he hasn't. Go on. Never mind, the market is closed. It is Thursday, June the 12th.

As Iraq launches air strikes to stop a spreading insurgency, the World Bank president tells me the situation is of great concern and it turns to


The opening match of the World Cup is underway. It's just started. Protest turns violent in Brazil as the first game of the tournament kicks


And too big to stow. A new Twitter campaign to shame oversized carry- on.

I'm Richard Quest in London. I mean business.

Good evening to you. We start tonight with the militants who have taken control of Iraq's second-largest city, and who are now threatening to

move on Baghdad. President Obama says Iraq will need more help from the US and the international community, but US officials say there will be no

boots on the ground.

The Iraqi military has launched air strikes on Mosul, hoping to dislodge the ISIS insurgents. The militant group has taken control of the

cities that are shown in red on this map. Just look at them, and you start to see, they are now starting to close in on Baghdad, the capital. The

government's claimed victory, they've retaken the control of Tikrit.

The conflict threatens to disrupt the flow of Iraqi oil. US crude is up 2 percent on the market. Brent is close to 3 percent higher. The

militants have seized part of the town Baiji, which houses the country's largest refinery.

Arwa Damon is on the ground in the northern city of Arbil. She joins me now on the line. Arwa, to anybody who doesn't follow this as closely as

you do, this all seems to be extraordinarily out of the blue.

ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT (via telephone): Well, Richard, actually, if one were to be following developments in Iraq

closely, it's not entirely surprising.

Although the speed with which ISIS was able to enter the various different northern cities, such as Mosul and some of the others and just

see the dissolution, the rapid dissolution of the Iraqi security forces, that was, perhaps, surprising.

But this is really a byproduct of an Iraqi army and police force that was never strong enough at the point that the US withdrew and said that

they believe that the Iraqi security forces could, in fact, hold on to the various gains that had been made.

But what is really fueling all of this is the underlying sectarian tensions that exist here. A predominantly Shia government led by a Shia

prime minister who the Sunni population feel has entirely discredited and alienated them, and has then allowed an organization, a terrorist

organization, like the Islamic State in Iraq and Syria to thrive and grow.

And what's interesting, is when you speak to residents from Mosul, when we were on the border today between Mosul, the main road leading from

Mosul, into the predominantly relatively safe area of Iraqi Kurdistan, people were telling us they were leaving, but they weren't necessarily

fleeing because of ISIS, but rather they were flying out of fear of Iraqi airstrikes.

A handful of people going back saying, look, yes, ISIS is in the streets, they -- we don't know who they are, but they're telling us that

they're not going to bother us, and so we will choose to go there and live under that than have to live under Prime Minister Nouri al-Maliki's thumb.

So, at the end of the day, it's really going to have to be some sort of negotiated political solution to bring about an end to all of this.

QUEST: Arwa, we have a poor connection to you, so we will leave it there for the moment, but we'll come back when there is -- when we have a

better connection. Arwa Damon reporting.

Now, the conflict threatens to derail Iraq's recovery. Oil production in the country has more than doubled since 2003. Iraq is now OPEC's

second-largest oil producer behind Saudi Arabia. Look at the way -- obviously, you have this very sharp fall in 2001, 2003, during the war.

And then it comes way back up again, sharply by the time it gets to 2005. 2009 and onwards, the 3 million -- 3 million -- barrels a day. The

country ranks fourth in the world in terms of proven reserves.

The conflict has pushed oil prices to a six-month high. Brent Crude is topping $112 a barrel. And you'll see -- look at the way it's starting

to rise. Although it's come off quite a lot, it's now going back up again. And the view is the immediate impact of the conflict is likely to be

limited. Over the longterm, though, deteriorating conditions could hold back foreign investment.

The effects of the crisis could be felt far beyond Iraq's borders. Earlier this week, the World Bank cut its growth forecast for the year to

2.8 percent, blaming the crisis in Ukraine and the harsh winter in the US. And now, there's a refugee crisis in Iraq. I asked the World Bank

president Jim Yong Kim whether an escalating conflict will now be of greater concern.


JIM YONG KIM, PRESIDENT, WORLD BANK: Well, you know, Richard, we've had a long relationship. Iraq was actually at the very first meeting in

Bretton Woods, and the organization of the World Bank and the IMF. And so, we've been working with them for a long time. We have over a billion

dollars-worth of projects right now. We are, indeed, very concerned.

I just returned from a trip to Saudi Arabia, Jordan, and Lebanon, and was able to see the situation of refugees directly. This is an enormous

crisis. And to date, the response to the refugee crisis in those countries is still inadequate. And so, to see another situation flare up is of great


QUEST: We've got not only the crisis in Iraq, but of course, this is largely the spillover of the crisis in Syria, which of course has created

its own refugee demands. So, I'm wondering what more can you at the World Bank do?

KIM: Well, in just being there, I visited the Zaatari camp, I spoke with leaders in Lebanon and Jordan and in Saudi Arabia. One of the things

we're doing is we're preparing right now for what we will do when the peace comes.

We don't know when that will be. It doesn't look like it's going to be in the next year, but we think that it will happen eventually. People

are beginning to realize that the spillover effects of that crisis are such that we've got to move towards some sort of negotiated solution.

When we do, we are already looking at the schools and the hospitals, the infrastructure that we'll need to build back quickly. It will be in

that process of building back the infrastructure in Syria that the refugee problem in Lebanon problem in Lebanon and Jordan will be reduced.

Visiting schools where they went from an all Lebanese population in Beirut to one which is now two-thirds Syrian, in fact, many of them are

Kurdish speakers. And so, the crisis there is felt through he skin of the people in Lebanon and felt directly for the Jordanian people as well.

QUEST: Right.

KIM: We're trying to do everything we can to provide direct support, and we're also encouraging others to piggy-back on the work that we're

doing to provide support to the refugees and to the population as a whole.

QUEST: Is there more that you're now thinking about doing for the Iraq situation, or is it still too early, too febrile, and basically too


KIM: It's too early. We've had to stop our operations there for now because we're not really sure where we're going, and so we've stopped all

missions. But we have a lot of great intelligence coming out of Iraq, and we continue to follow.

Again, we will do everything we can to respond because that -- the region itself is so important for the stability of the global economy.

We're continuing to do as much as we can in Jordan and Lebanon, and we will continue to work in Iraq. But right now, we're waiting and seeing.

QUEST: You mention the issue of the global economy, and the one thing that comes out of the World Bank's report -- yes, there's a small

downgrade, if you like, of growth. It's not a huge amount. But it's troubling because this is the moment when growth should be picking up, not

slowing down.

KIM: Well, we downgraded global growth estimates from 3.2 percent, which was in January, to 2.8 percent. And the bulk of that was related to

the conflict in Ukraine, the crisis in Ukraine, and also to the very severe winter in the United States. We project that those rates will grow up to

3.4 and 3.5 in the next two years.

There was the impact, and we saw it in lower growth numbers in the Europe and Central Asia region, and also in the Latin America region

because of reduced exports to the United States market, but we think that it'll pick up again.

High income growth rate we project at 1.9 percent, and we think that will go. We think the high income growth generally speaking is on target.

And while there are still some downside risks, we also expect that developing country growth will pick up again in the next two years.

QUEST: You see, the problem with all of this is, it's all about the risks that are -- I know it might sound a bit obvious, but it's all about

the risks, the very real risks that are out there that could derail or at least affect that growth.

You mention Ukraine. We've now got Iraq. Syria continues to be a worry. You've got questions over relations between the EU and Russia.

These are very real, aren't they?

KIM: Absolutely, Richard, they're very real. But as you know, our articles of agreement of the World Bank and -- since the beginning has been

that we're not a political organization. But it turns out, Richard, that there are so many things that an organization focused on economic growth

can do in the context of political strife.

One of the things I learned from my trip to the Middle East was that there are things we can do right now. Improving the energy supply,

building roads, transport quarters, so that trade can continue. There are so many things that we can do right now.

Now, the complications in -- on the political realm are real, and we know that much discussion remains to be had in order to resolve those

issues. But there are things we can do right now. And for us, the key is to keep moving, to keep making the investments, to keep trying to improve

the business environment.

Because there are 100 million young people, for example, in the Middle East, Arabic speakers, and they are looking for opportunities, they're

trying to find jobs. We feel that we cannot stop investing in growth in those countries, because young people will continue to demand it.

They were responsible for the Arab Spring, they're continuing to ask for more. We think that there are real possibilities for investment right

now, and we're going to make them.


QUEST: That's the president of the World Bank on the issues, not only of inequality, but also, of course, about the current situation in Iraq.

US markets second day lower. Retail sales and unemployment claims missed the expectations of analysts. And as you can see, the market, it

fell sharply. Well, actually, it was down pretty much all -- well, all the day it was down. But the selling accelerated towards the afternoon


Twitter shares were up -- well, if you were the chief operating officer, you might be a little bit disappointed. The shares go up when you

decide to resign. To Europe and the bourses.


QUEST: Mostly lower, three down and one up. The largest losses were in Zurich. Illiad and Bouygues were up. More consolidation is expected in

the French telecom sector. Mining shares mostly down on growth concerns. Lonmin shares were up after the company reached informal agreements with

labor unions in South Africa.

When we come back, it sounds like listening in the background, I can here -- ooh! Somebody has just done something in the World Cup. We'll

tell you what and why what happens in the World Cup can affect your wealth, in a moment.


QUEST: The 2014 World Cup has officially begun in Brazil.


QUEST: The opening ceremony featured artists Jennifer Lopez and Pitbull and was filled with all sorts of fanfare celebrating the flavor of

Brazil. The current score, incidentally, allow me to tell you -- Croatia is one-nil up, they've only been playing for about 15 minutes and Croatia's

already taken the lead.

Otherwise, less savory topics. At least five people have been injured during protests ahead of the opening match, according to the military

police in Sao Paulo. Shasta Darlington, our correspondent, was in the middle of those protests. She joins me now from Sao Paulo near the World

Cup stadium. Shasta, before we get into the sort of current situation, are you all right?

SHASTA DARLINGTON, CNN BRAZIL BUREAU CHIEF: Richard, I am. I just had a small cut from a stun grenade. Unfortunately, our producer, Barbara

Arvanitidis had a deeper cut, but she's at home and she's OK, too. Everybody's fine.

But it was a pretty difficult moment. You can see right here behind me, these are some of the police who've been out all day. And the reason

they're right here is because we're basically standing on the red line.

This is where they don't want protesters to come. This is the main avenue leading to the stadium. And so as soon as protesters get close,

they get pretty aggressive. You can see what happened to us earlier today, they started shooting stun grenades. There was also teargas.

And the protests weren't that big, and as soon as they even got a little bit close to this line, there was this big action by the police. It

gives you a taste for what we can expect over the next month.

This won't just be in Sao Paulo, this will be in every one of the 12 cities where we have games, that where no doubt there will also be

protests. No matter how big or small they are, they are going to make sure that fans can get to the stadiums where they paid for their seats. Today,

61,000 people had to get by, and they were very determined to make sure that they could get there.

And these are people, many of whom feel that there was just too much money spent on this huge sporting event, $11 billion, at a time when the

economy isn't doing so well, and they're going to come out, and they're going to make their voices heard, Richard.

QUEST: Right, but to put this into perspective, because I think you just said that the demonstrations, although noisy and somewhat violent,

they're not very big. So, give us a feel for whether or not this is -- I mean, I'm trying to gauge the extent of this disquiet. Or frankly, are

most people now in Brazil at home on a holiday watching this opening match?

DARLINGTON: Richard, this is a divided nation. We're going to see World Cups, if you will. We do not expect that many people to come out on

the street because they love football. But that doesn't mean they're happy about the World Cup, it means that they love football.

The latest poll showed that 61 percent of Brazilians thought the World Cup should never have happened because it was taking money away from public

services. Whether or not that's true, that's the perception.

So, they may not come out here and march on the streets. They'll probably be at home watching it on TV or even buying tickets to see the

game because they love their team, they want their team to win. But that doesn't mean they think that the president and the previous government

should have signed up for something that they now feel that they simply couldn't afford, Richard.

QUEST: Shasta, thank you very much. Glad -- very, very glad that you're OK and all is well. Shasta Darlington, who is in Sao Paulo. The

game continues, one-nil, I'm told.

Now, look, Brazil's stock market has been experiencing something of a World Cup bounce of late. Come and look at the super screen and you'll see

exactly what I mean.

It is the Bovespa, which has gained, if you look at the numbers -- there it goes. If you look at the numbers, the Bovespa has gained around

20 percent over the last three months. As Brazil's hopes to lift the FIFA trophy for a sixth time, investors are looking to take advantage of tourism

and industry, a feel-good factor.

Analysts estimate the World Cup could boost the Brazilian economy by as much as 4 percent over the next two years. Now, so far, so good. But

if there happens to be an upset, those gains may not last.

If you come back, I'll discuss with my next guest, who has some very strong views, he says that he's proven that when a country is eliminated,

its stock market drops. The Bovespa fell almost one percent on the day after Brazil was knocked out of the last World Cup.

Alex Edmans is a professor of finance at the London School of Business. He joins me now. Good to see you, sir.


QUEST: Thanks for coming in. Now, your fundamental theory is, when a market -- when a country is kicked out, the market falls.

EDMANS: Yes, that's correct. And that's because of the large effect a laugh has on investor moods. So, we know that sports results affect your

emotions. But the magnitude of these effects can be pretty large.

So, when England got knocked out of the 1998 World Cup, on penalties, of course, heart attacks shot up over the next few days. And this is not

just an English thing. So, suicides go up in Canada when the Montreal Canadiens are knocked out of the Stanley Cup of ice hockey.

QUEST: Oh, come on! How? Why?

EDMANS: Because of the -- just the large effect it has on people's mood. And notice that this doesn't just affect your mood about your

feelings about your team, but this spills over into general life. So, it can lead to general economic patterns.

QUEST: Now, I agree, if you decide to commit suicide as a result of this, that's pretty irrevocable.


QUEST: And similarly, other actions may be, too. But what is the -- does the market recover?

EDMANS: The market recovers a little bit. So, what we looked at was the day afterwards, it will bounce back by half the initial decline. So,

the initial decline is half a percent, so you might think that's not a large amount. But applied to the UK stock market, that's 10 billion


QUEST: Let's talk about the UK stock market. This is the FTSE 100 in the week after England got -- were knocked out of the last World Cup in

2010. They were beaten by four goals to one in -- by Germany on the Sunday. Shares fell almost 5 percent in the following week.

Now, we don't know -- we haven't gone, indeed, to see what other factors. But you would say that 5 percent fall, quite a part of it would

be related to the Cup?

EDMANS: That's correct. So, what we do is we control for everything else that might drive stock returns and what's happening in the general

world and so forth, and what can we attribute to the football loss is about half a percent.

QUEST: And what comes back, and how quickly?

EDMANS: So, about half of that will come back on the next day.

QUEST: That's a quarter percent.

EDMANS: That's a quarter percent. And then, from day three on, we would find that it's pretty flat. So, actually, some of the decline is

permanent. So, while there's a modest bounce back, still about a quarter percent goes down which is permanent.

QUEST: Extraordinary. And it's all because of the feeling?

EDMANS: Yes, so this is why we studied 1,100 games. We looked at 39 countries. And so, with a lot of data, we found that was pretty, pretty

robust. And it's strong enough --

QUEST: So, we'll never -- so, as soon as a country gets knocked out of this World Cup, we're going to put your test -- your theory to the test.

EDMANS: Well, it's not going to happen every single occasion.


EDMANS: This is an average. And also, this is controlling for everything else --


EDMANS: -- that might drive stock returns. But on average, if there's a loss, just hold onto your purses, because the market's going to

go down.

QUEST: Thank you very much, indeed, for being with us.

EDMANS: Right. Thanks very much, Richard.

QUEST: We appreciate it. Now, still to come on QUEST MEANS BUSINESS -- that's a fascinating story. One of Wall Street's former top female

execs says investing in women isn't just the honorable thing to do, it's profitable, too. We'll hear from Sallie Krawcheck after the break. QUEST

MEANS BUSINESS. Good evening.


QUEST: Now, one of the most successful women on Wall Street has launched an investment fund to promote gender diversity. Sallie

Krawcheck's new Pax Ellevate Global Women's Index Fund. The Pax Ellevate - - with double E, ell - evate -- Global Women's Index fund is made up of companies with women in the top ranks. And Sallie joins me now.

The whole Ellevate idea is a sort of a networking, a much closer alliance, if you like for women to assist each other, isn't it? Why did

you decide, then, to add this component of investing on top of it?

SALLIE KRAWCHECK, ELLEVATE NETWORK: Well, good afternoon, good evening, Richard. It's great to be here.


KRAWCHECK: Well, the underlying thesis is that good things happen when women are in senior levels in business. And the research shows it.

In fact, I just saw you had Alex Edmans on with you, and I wish he was still here, because in addition to the interesting research he's doing on

sports, he's also done some research on what happens to companies when you have greater gender diversity, really, diversity of all kinds.

And the answer is, good things are associated with gender diversity. Higher returns on equity, greater client focus --


KRAWCHECK: Lower volatility --

QUEST: Why, Sallie?


QUEST: Why does -- yes, why?

KRAWCHECK: Why? Well, I -- so, I've got a little bit of experience working in senior leadership teams, and I think the answer is, with

diversity of perspective comes better decisions. Not faster decisions, but better decisions.

Put another way, you have six math PhDs who went to the same college all around a table, you add a seventh, you get nothing. You add someone

with marketing experience or HR experience or a different background, a different way of thinking, you get something.

So, diversity is so powerful, that diverse teams have been shown to out-perform more intelligent, more capable teams.

QUEST: Right. But gender diversity --


QUEST: The ability to invest in those companies which have a -- women, basically, in more senior positions, dare I say, is sexism in


KRAWCHECK: Oh, my goodness! Well, we should go ahead and admit that I think research has shown that women are different from men in some number

of ways. And in fact, the research shows that women are associated, as I said, with greater client focus, greater longterm perspective.

So, if one's going to be a research analyst -- and again, I'm not -- I've talked about this, yes, investing behind women is a nice thing to do,

and diversity is a nice thing, it's the right thing to do. But it's also a profitable thing to do.

QUEST: That's -- fascinating.


QUEST: We'll get a pocket to --

KRAWCHECK: I think I stymied you.


QUEST: Well, look. I've got three sisters, all of whom are high- quality, high professionals.


QUEST: I'm on thin ice, here. The moment you get a man, a male, talking about females in the workplace, you are on thin ice, and you'd

better watch your step.

KRAWCHECK: Well, I think it depends on what you say. And if you stick to the facts and note that good things happen -- which is why I

bought into a year ago the Ellevate Network.

QUEST: Sure.

KRAWCHECK: When women come together and network and work with each other, they move ahead in business. And why we've launched this index

fund, which invests behind the top-rated companies of the world for gender diversity.

QUEST: Sallie, please come back and talk more about this. When I'm back in New York, we'll have you back and we can go head-to-head once

again. Lovely to have you on the program.


KRAWCHECK: I'd love -- love the show, thanks, Richard.

QUEST: Thank you very much. Thank you. Now, from gender inequality to wage inequality. The OECD says the United States has so much more to



ANGEL GUIRRA, GENERAL SECRETARY, OECD: This is mostly about skills. Do these young people have the skills that the market is demanding? How do

we provide them with the skills?



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


US contractors are being evacuated from a military air base in Balad north of Baghdad following a rise in insurgency in Iraq. President Obama

says he's looking to all options in response to the takeover of Iraq's second-biggest city, Mosul, by Sunni militants. He has, however, ruled out

sending in troops on the ground.

A group calling itself the Islamic State of Iraq and Syria, ISIS, seen here parading through Mosul, is threatening to take over more cities,

including Baghdad.

The president of the World Bank says he is greatly concerned by the number of Iraqis fleeing the country. Speaking to me on QUEST MEANS

BUSINESS, Jim Yong Kim says the situation could inflame what's already an enormous refugee crisis in the Middle East.


KIM: We are, indeed, very concerned. I just returned from a trip to Saudi Arabia, Jordan, and Lebanon, and was able to see the situation of

refugees directly. This is an enormous crisis. And to date, the response to the refugee crisis in those countries is still inadequate. And so, to

see another situation flare up is of great concern.


QUEST: Ignore what you see on the screen, it's not Croatia one, Brazil nil. They have just equalized, Brazil. The score is now one-all.

The first game of the World Cup tournament is 30 minutes into the first half. Croatia and Brazil are now one-all in the first half.

The World Cup officially got underway with a colorful opening ceremony, which featured J-Lo. The ceremony cost $9 million and celebrated

Brazil's culture and traditions, with dancing and all sorts of -- the usual sort of things.

It's a sharp contrast to the scene earlier in the day when Brazilian police had to use teargas to break up a protest in Sao Paulo hours before

the ceremony. Demonstrators are angry over the tournament's estimated $11 billion price tag.

Now, the former US president, George W. Bush, has celebrated his 90th birthday. There he goes. It's George H.W. Bush, of course. Bush 41, as

he's nicknamed. The first time he jumped for his airplane was during World War II, when his plane was shot down over the Pacific. A few years after

that, he did a tandem jump. He has marked his 75th, 80th, and 85th birthdays the same way.

George Osborne, the British chancellor, is expected to say he wants to strengthen the integrity of London's financial markets in the wake of

allegations of manipulation in the foreign currency markets. George Osborne is likely to mention new criminal sanctions when he gives a major

speech known as the "mansion house" speech to the financial community. Market riggings have complicated issue which Jim Boulden now explains.


JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: High-frequency computerized training, 24-hour markets, trading floors mothballed years

ago. Well, not so much when it comes to one of the biggest, most important markets - trading currencies. Foreign exchange or FOREX permeates every

part of the economy. But even in this computerized world, the value of one currency compared to another is often influenced by people, many times

striking deals using e-mails, chat rooms or still the telephone.

BRENDA KELLY, IG INDEX: Certainly some of the larger FX traders is - and institutions will do - some of the bigger deals by phone because it

would not be possible perhaps to do them in any -- on the online scenarios.

BOULDEN: That's because traders working on behalf of big companies moving large amounts of cash tend to call or e-mail around for the best

rate at that very moment. But what if they collude to manipulate the FOREX price? What is someone tries to move the needle even just a fraction?

Some traders are accused of doing just that - tweaking the rate to increase the profits for their own accounts or on behalf of the bank. FOREX traders

from at least ten banks have either been suspended or fired by those banks as authorities investigate whether they colluded to set rates. UBS, RBS,

Barclays, Deutsche Bank, HSBC, big banks that make the currency market and are now at the heart of this global investigation. Now, RBS tells CNN it's

conducting its own internal investigation and is cooperating with authorities. The other banks declined to comment for this report, but in

regulatory filings they also say they're cooperating.

Even the venerable Bank of England, Britain Central Bank, has suspended an employee as it investigates whether anyone there knew

something was rotten in FOREX years ago but didn't say anything.

MARK CARNEY, GOVERNOR, BANK OF ENGLAND: This is as serious as LIBOR, if not more so. (Inaudible) time to -- because this goes to the heart of

integrity of markets.

BOULDEN: LIBOR was a scandal surrounding the daily fix of the interest rate banks lend to each other. LIBOR is set in London and so is

the FOREX price. Some 41 percent of currency trades washed through London's trading floors. Everyone in the currency market looks at the

benchmark price, the so-called London fix. And that struck at 4 p.m. each working day.

KELLY: The reason a lot of companies use the London fix benchmark price is so that if they're a large company with different offices in

different countries, it gives them a more basic accounting practice.

BOULDEN: And according to the Bank of International Settlement, daily FOREX trading is now more than $5 trillion a day, the biggest trading

market of them all. Now, more easily-trackable electronic trading and more regulation and possibly fewer phone calls, just some of the likely fallout

from this latest trading scandal. Jim Boulden, CNN London.


QUEST: Income inequality is now emerging as one of the biggest global problems of 2014. It's so serious it's prompted the OECD to urge the

world's largest economy, the United States, to do more. In the U.S. - look at the numbers. The average income, the average of the richest top ten

percent is 16 times larger than the bottom ten percent. Now, in terms of inequality, the U.S. has the fourth largest gap, and it's behind countries

like Turkey, Mexico and Chile and then the United States. A separate report out today has raised grim statistics about executive pay, especially

if you're on the production line. (RINGS BELL). CEOs - ready for this? CEOs earn nearly 300 times more than their workers. Put it all together,

it's not surprising that we have this exceptionally toxic environment when middle class people are now saying they want a greater share of the pie,

and the working class saying they've been completely left out.

I asked the OECD secretary general what the United States as the largest economy, but seemingly one of the worst problems, can do to tackle

the problem.


ANGEL GURRIA, SECRETARY-GENERAL, OECD: We have to look at productivity, we have to look at competitiveness, we have to look at the

way in which we're going to be improving wages by the wage - by way of -

QUEST: But that's -

GURRIA: -- people producing more.

QUEST: -- that's longer term, that's systemic longer-term shifts in economic power in society. In the short term, to redress the sort of

inequality rise that you're seeing, do you think there needs to be a taxation element - a good old-fashioned redistribution of wealth?

GURRIA: The question has to be dealt with, with public employment services where they will help people get the jobs. It has to be dealt with

skills. This is mostly about skills. Do these young people have the skills that the market is demanding? How do we provide them with the

skills? And this education, this is vocational training, but these skills are provided also in the workplace for the ones who already have a job, and

in special institutions for the ones who have lost a job or do not have it.

This is the great problem. Taxation is only part of the story. You can help companies for example with tax incentives in order to hire people

who have been unemployed for a long time, but they're only part of the story.

QUEST: Right.

GURRIA: This is not about redistribution or tax the rich, this is a simplistic way of dealing with it, and it did not happen in the crisis.

It's been, you know, forming over many, many years.

QUEST: So, both political parties will use this report, the Republicans will say it's an example of poor social policies, the Democrats

will use it as an example of saying the Republicans have created a tax policy that favors the rich. You've given both sides a cudgel with which

to beat the other.

GURRIA: Which means, Richard, that there can be a bipartisan solution.


GURRIA: That they can get together. That they can legislate together, that they can make regulations together. This is one where

there's a win-win situation. But for whatever the motivation, they can work together in order to make it happen and this is what we're betting on.

This is why we're documenting the problem, this is why we're proposing the ways out. It's not just about denouncing the problem, not just about

looking at the numbers and the statistics and where this came from, we're actually going down to solutions and actions.


QUEST: That's the secretary general - a robust discussion with Angel Gurria as always. Delighted to have him on "Quest Means Business."

Now, as World Cup teams begin to battle for fame and everlasting glory on the pitch, companies are battling for your attention on social media

during the commercial breaks. How are they doing it? And why is this different? In a moment.


QUEST: Now, the latest World Cup ad from McDonald's is one of the first to go viral even as the first game is still in its first half. With

over a million hits on YouTube so far, here it is (RINGS BELL).




QUEST: Well, pentacle video. Just one example of how advertisers are expanding the tools they use to advertise for this World Cup. Samuel Burke

joins me from New York. It's a nice enough ad, Samuel, but why's it - what's the attraction of it?

SAMUEL BURKE, BUSINESS CORRESPONDENT: Well, I think you have to have something different than just the traditional advertisement that you had on

TV before. You need a trifecta, Richard - three things. You need a successful TV advert, you need a successful app and you need a viral video

that people share on social media. And the interesting part - that video that you just showed, Richard, was actually an advertisement for an app for

McDonald's. Now the viral video is just that - very viral, it's done very well. But the actual app hasn't done well at all. So the video promoting

the app does very well and the app still isn't there. You're seeing it right now on your screen. So I think they're still looking for that

trifecta to hit millennials, but it's still very, very difficult.

QUEST: Right -

BURKE: Visa is funding about 30 percent, we'll say, on digital right now and still looking to hit all those trifectas.

QUEST: You know, you always have the problem of course of - I mean the old problem of - ambushing, don't you? Because if you're not a sponsor

and therefore you can't attach yourself directly - you can't use the logo, the title and all those other things - so you end up having to be much more

inventive. And digitally, perhaps - I don't know, you tell me - does it offer you more opportunities to do that?

BURKE: I think it offers you more screens, more places to do it. And I think you used the right word - inventive. The one that's really been

successful is the Nike advertisement, but you would never even know it's an advertisement. It's a video on YouTube that's more like a five-minute

movie, and it's called "The Last Game." Now you're seeing it on your screen right here. So it's five minutes, it takes you in, it feels like a

movie. You never could've done this on television before, Richard, and you see the Nike logo tucked in everywhere, and, hey, now we're talking about

it on television. And that one has 28 million hits, so forget Brazil and Croatia. The clear winner digitally at least right now is that short movie

from Nike.

QUEST: Samuel Burke, thank you. Now for the weather forecast. So, we've got the game in Brazil, we've got the weather in Croatia, we know the

stock market is going to fall for whichever country gets knocked out. Jenny Harrison's at the World Weather Center.

JENNY HARRISON, WEATHER ANCHOR FOR CNN INTERNATIONAL: Yes, Richard, 1-all by the way right now. That match - Croatia and Brazil.


HARRISON: One-all, 1-all, it's all exciting stuff, particularly (inaudible). The newsroom is just grit watching this, and of course I need

to talk about weather conditions. So, right now in Sao Paulo for this match we have got - let's have a look here - temperature-wise not to bad.

It's fairly warm, really, let's be honest - 24 Celsius, particularly for this time of the day. But of course the sun beginning to go down and

there's no chance of any rain. So, a really good weather day for the first match.

Now, when it comes to all the other matches taking place - and by the way, just in case you're wondering - here's Manaus on our table. There is

Manaus. And in front of all these teams and all these cities all the way along the coast, eventually toward the bottom there, you get Porto Alegre.

But these are the current conditions and the current temperature in every single one of those locations. Not a huge amount of different. You can

see anything ranging from sort of the low 20s to maybe the low 30s. But of course critical for the matches, depending on the time of the day and what

the weather will be doing.

Now, this is the forecast for the next 48 hours. And not surprisingly, exactly as expected for this time of year. We will be seeing

quite a lot of these showers, maybe even a thunderstorm - all tropical and all typical for this time of year. So, the first match that takes place on

Friday is in Natal - 1p.m local time it should be about 26 degrees Celsius and there is the chance that we could have some of those showers. Not

expecting in a prolonged, heavy rain, but we could have one or two sharp showers come through. It's a very tropical in nature. Salvador, similar

sort of situation, really, 4 p.m. local time this one kicks off at 26 degrees Celsius. And, again, similar sort of weather conditions in Spain

against the Netherlands -- cloudy, we could have one or two of those showers. And then the final match taking place on this Friday is in

Cuiaba, 6 p.m. local time, and it should actually be a clear evening. Even though - look at this - even though it's the evening hours, it's actually

warmer because of the location. So, 28 degrees Celsius is the temperature for that.

Now, as well as that today of course, first day of the World Cup, also the first day of the U.S. Open. This is the radar of the last few hours.

There's the location - Pinehurst up in North Carolina. Right now 31 degrees Celsius, even warmer under cloudy skies. Been lucky so far today.

The showers have literally passed almost either side. But, again, as we continue with the tournament through into Sunday, we will see some

scattered thundery showers in those afternoon hours. And there's actually quite a bit of rain in the afternoon hours and also quite a bit of rain

really across much of the U.S. over the next couple of days. Scattered showers and thunderstorms working their way eastwards and they will reach

the northeast as you can see.

Temperature-wise on Friday, it's another warm day - 29 Atlanta, the same in Washington and 27 Celsius in New York. Now, talking about Croatia,

talking about weather conditions there - still very hot of course in the southeast, some more strong thunderstorms. Four centimeter-sized hail has

been reported in Switzerland this day, 53 millimeters of rain in Belgrade. Not just that. We've actually had a temperature of 32 Celsius, the average

is 24. So, a lot warmer than the average. This is what's happening over the next couple of days - cooling back to average but hot and sunny still

in the south. And, Richard, I've not heard whether I should continue talking or not, I feel as though I've been talking for a long time. So

I'll carry on unless you pop up. Temperatures right now -

QUEST: No, no. Whoa, whoa, whoa, whoa - whoa.

HARRISON: You see, I thought I'd been talking a long time, no one's interrupted. I'll just carry ongoing. There's always -


HARRISON: -- to talk about.

QUEST: Ms. Harrison. Give Ms. Harrison an inch and she'll take the rest of the world.


QUEST: Jenny, thank you very much at the moment. Now, when we come back after the break, look - are you an overhead hog? What do you put in

the overhead compartment? A little bit of this? Or maybe a big steamer trunk? Whenever you take up too much space, it's time to name and shame --

after the break.


QUEST: Now you see it all the time when you fly - passengers who bring along lots and lots of bags as carryon luggage. Inevitably, too many

bags clog up the overhead bins which were only designed for a certain amount. Now a blogger has declared war on the guilty parties, encouraging

passengers to turn on each other and tweet photos with the hashtag #carryonshame. Hashtag #carryonshame. The blogger who came up with the

idea is Spud Hilton as he's known. He joins me now. Spud, OK, I'm - you're - I saw - that you have already tweeted am I a hogger or am I a

liberalist? I only brought one small bag in the overhead, and if it's any bigger I tend to check it. Why do you think so many people hog the


SPUD HILTON, BLOGGER: Well, I think what happened was they started charging baggage fees and everybody started to use that as excuse to have

really bad behavior. They thought, `OK, I don't want to pay 25 bucks, I don't think it's right to pay 25 bucks' -

QUEST: Right.

HILTON: So they all started bringing a steamer trunk and a duffle bag and, you know, a MINI Cooper -

QUEST: Right.

HILTON: -- and everything else trying to shove all of them.

QUEST: Right, but the airlines should stop them from putting over, in the overhead. I mean, your theory and you plan is to sort of end up with

passengers having altercations and argy-bargy.

HILTON: Oh, no, I think you're all wrong about that. The plan here - because it really is a three-way thing. What you're looking at is the

passengers, the sort of folks who think they can get around the rules and are able to justify it with the baggage fees. But there's also the United,

you know, American Air, Lufthansa, everybody - we want those airlines to start enforcing the rules they already have. They have these rules, they

just don't enforce them. United's actually starting to do it but we want everybody to enforce these rules because if you do one thing, you're going

to fix the other. The third thing is actually - the bag makers are starting to make bags that are not really the size they claim they are.


HILTON: So you got three problems, not just one.

QUEST: Right. Now this is a bag that I have here. You perhaps can't see it, but this a bag that is actually the legitimate size for an overhead

compartment. The problem of course is I take this, I then take a bit of duty-free, I then take some other shopping, I have a duffel bag, I have a

suitcase - and of course - I have my briefcase too. That's the problem. It's bad manners.

HILTON: It's bad manners. People think they travel in a vacuum, and quite frankly, they act like they travel in a vacuum. The reality of it is

when you decide to take your steamer trunk onboard, or in your case, your one piece - but if you're taking a steamer trunk onboard, you are affecting

everyone else on that plane. You are causing a much longer time that it takes for everybody to get seated, you might delay that plane. Half the

people aren't going to have a space for their stuff because you brought your steamer trunk onboard -

QUEST: Right.

HILTON: And unfortunately, they have to gate check. And I'll tell you something about gate checking. Everyone thinks that they're being real

wise - they're cut out the $25 bucks, I'll just check it at the gate. Don't do that because you're much more likely to have theft from a gate-

checked bag then from a regular checked bag.

QUEST: Fascinating issue. Thank you for that. The hashtag is #carryonshame. Good to see you, Spud, thank you very much. We'll talk

more about that in the way in which of course it's being - we tweeted about it a little bit earlier. And as we did so, half of you seemed to think

it's legitimate, the other half of you seem to think as it need be.

Now, the second half is about to begin in Brazil's opening game against Croatia in the World Cup. The score right now is 1-all (name

through) Brazil level after an on-goal put Croatia in the lead in the first half. This is "Quest Means Business" from London. We'll have our

"Profitable Moment" after the break.


QUEST: Tonight's "Profitable Moment" or maybe un-"Profitable Moment," depending on how your country does in the World Cup. It is halftime on the

first match and the score is Croatia-Brazil 1-all. But event is now underway. We've had the opening ceremony, we've had all the hoopla and the

noise and the fury. And we told you tonight this fascinating story that the countries when they get kicked out of the World Cup, their stock

markets tend to fall in the following days by a half a percent. And only about half of that ever comes back. This is fascinating, because this

tells us the psychology of a nation when kicked out of the World Cup lowers the confidence and that transmits itself into what investors decisions are

made. It's also incidentally, there's also the statistic that says more people commit suicide. But we'll put that to one side for a moment. Let's

stick to the economic front. Just think - throughout the course of the World Cup, we are going to follow when countries get kicked out, what

happens to their stock markets. It won't be particularly scientific, but you never know, it could help you make a little bit of money before it's

all over and done.

And that is "Quest Means Business" for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, (RINGS BELL) I hope it's