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QUEST MEANS BUSINESS
Climate Change Summit Could Have Wide-Ranging Impact; Paris Restaurant Puts Historical Wines Up for Auction
Aired December 7, 2009 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Act this day to save all our tomorrows. The U.N. lays down the gauntlet as part of climate change.
And counting the cost, business, prepares to foot the bill. How big will it be?
Also, tonight, the formidable headwinds that could yet blow the economy off course in the United States; the Fed Chairman Ben Bernanke is giving his own climate warning.
I'm Richard Quest. It is the start of a busy week, because, I mean business.
Good evening. After years of contentious negotiations the largest ever U.N. climate change conference is now underway in Copenhagen.
Diplomats from around the world, negotiators, trying to hammer out their agreement on cutting greenhouse gases. Who will make sure that everyone sticks to their promises?
And tonight, on this program, we question who is bearing the cost of those greener pledges?
We are going to look on QUEST MEANS BUSINESS, into how business will have to adapt in a greener world. It is fine and fair to say somebody must do something. But which corporations will pay the bill? That is our agenda tonight.
They came, bearing the promises, the world's biggest polluters. They had ambitious pledges on gas emissions. An attempt to seize what the organizers called, their last best chance to save the planet, to avoid the tipping point.
The U.S. is offering to cut emissions by 17 percent, from 2005 levels, by the year 2020. Now that's a sizable reduction. Of course, the caveat, the U.S. Congress has to agree.
Across the Atlantic and the European Union is pledging to cut emissions, in this case, upping the ante a bit, 20 percent from level seen in 2005. But that, of course, is by 2020. It says it will raise the target to 30 percent, if other developed nations follow suite.
And, China, the world's largest emitter, currently, of greenhouse gases, says it will slow the increase of emissions by 40 to 45 percent. That is interesting. There you have a different approach, in terms of the direction. One is cut, and one is slowing the increase. China says it already has made emissions cuts at many power stations.
The scenarios under which those negotiations took place, we need to find out now how they were received. Our Correspondent Phil Black is in Copenhagen. Phil, joins me now, live.
So, we know that in this early part of the summit it is a put up and shut up type of a scenario. It is just negotiations.
PHIL BLACK, CNN INT'L. CORRESPONDENT: Very much so, Richard. You listed all those pledges there, from the various countries in the parts of the world. And on the surface of it, they sound impressive. But everyone here at this conference knows that they are still not enough. Everyone has to go further. Everyone has to be pushed to be more ambitious in the pledges that they make, the cuts that they agree to, and the money they hand over to developing countries to come to terms with climate change.
So, some very intensive negotiations lie ahead over the next couple of weeks. You are not just dealing with more than 190 countries, here, you have activists, lobbyists, industries, businesses, all jockeying to try and get the best possible result for their individual special interests.
But it is not as if these negotiations have just started now, out of nowhere. They have really been going on among all the key groups for some years now. And there is the feeling here by the organizers, that it is time to deliver. Time to come together and make something happen.
Take a listen now to the United Nations' climate change chief official, Yvo de Boer.
(BEGIN VIDEO CLIP)
YVO DE BOER, EXECUTIVE SECRETARY, UNFCCC: The time for formal statements is over. The time for restating well-known positions is past. The time has come to reach out to each other. I urge you to build on your achievements. Take up the work that has already been done and turn it into real action.
(END VIDEO CLIP)
BLACK: So, the momentum in these negotiations, here at this conference, are going to build slowly over the next week, or so. Don't expect any big announcements until the leaders start rolling into town. That is going to happen in the last few days. And really, all expectation comes down to the arrival of U.S. President Barack Obama. It is up to him, and the Chinese premier, here, to really make this deal work, Richard.
QUEST: OK, and whatever deal they come up to is going to be paid for, in the 10s and 100s of billions of dollars, but it is industry and commerce that will foot much of that bill. So, Phil, is business represented at the summit?
BLACK: Well, at the moment they are keeping a low-key. Certainly the businesses that have a high profile are the businesses that believe they can benefit from a low-carbon world. These alternative fuels, technologies, people that believe they can help countries, businesses, industries, achieve those carbon cuts that are being pushed for and negotiated at this conference.
They have a strong presence here. They are really trying to sell their wares. Certainly, behind the scenes you can expect energy companies and so forth to be driving their cause as well. And likewise, a lot of the very energy dependent, primary industry, dependent nations, they are the ones that fit -you know they really risk losing here. And so they are driving their case, very hard, behind the scenes as well here, Richard.
QUEST: Phil Black, who is going to be in Copenhagen. And Phil, we'll be talking to you many times in the days ahead. Phil Black, in Copenhagen.
Now, who wins, and who loses, when it comes to this whole question?
We know the cost to the environment, but let's face it, between you, me, and everyone else we have to put a dollar amount onto that cost. It is no use being airy fairy about this, because if you look at this number, it is going to cost between $70 and $100 a year. That what, according to the U.N. framework convention, needs to be spent by the world by - $100 billion a year, by 2030 to sort this out. It involves updating infrastructure, power plants, replacing homes, teaching people new ways of going about business and living their lives, and, of course, electric vehicles. That is an enormous amount of money, especially for any global economy that is desperately coming out of recession.
Of course, it is not equal. Not everybody can afford to pay, therefore, at least $10 billion of that massive amount needs to be paid for by the developed world, to the developing world, to help them tackle climate change. It is the developing world in many ways that, of course, are the largest polluters or will be in the future.
This is by no means quite clear cut. If you look at the industries who are attending COP15, you have obviously the big energy providers, Shell, BP, you have JP Morgan, Deutsche. You have retail companies. You have auto companies. Everybody, in fact. And the reason, as you can clearly see, with these large numbers there just isn't a set -there isn't part of the economy that isn't affected by climate change. And that is why it is so significant what's been happening.
Let's go now to get some wide issues. Ken Rogoff, economics professor at Harvard, joins me. Always good to have Ken on the program to make sense of these difficult issues.
Ken, can we -I know you are going to perhaps say we have no choice, but economically can we afford to be doing half the things that the activists say we should be doing?
KEN ROGOFF, ECONOMICS PROFESSOR, HARVARD UNIVERSITY: Well, you said it, Richard, we have no choice. And the question is how fast we are going to move. Frankly the targets that they are promising are not that ambitious. They are really saying we are going to do a lot of the work after 2020. We are going to hope that technological innovations can arise to the day and we will turn out to not to have to do so much.
But, boy, you talk about businesses having to pay, the consumers are going to have to pay. If businesses have to pay ultimately the cost has to be passed on. Businesses are worried about the uncertainty. They don't know what's coming. How do they prepare? That is as big a problem as anything.
QUEST: In that context, are we at risk? I mean, with the sort of promises being made won't take affect for some years to come. But you would agree that the global economy is really in no fit shape to be having anything extravagant at the moment?
ROGOFF: Well, no. It is one more piece of uncertainty. I don't think these carbon taxes are really coming in heavy, quickly. But investment is very slow in a lot of the developed world. We have financial reform coming and now there is carbon reform. And the quicker they can lay out a framework which seems credible and viable, the better. But we know it is going to take a long time. So, I don't see a way around it, but no, it's not going to be easy.
QUEST: Ben Bernanke, today, before -in a speech, says there are "formidable headwinds" for the economy. It is stating the obvious, perhaps, a little bit, but sluggish growth next year and faster growth the year after. From what you saw of Mr. Bernanke's comments today, what tickled your fancy, of what he said?
ROGOFF: Well, he has become much more sober about the prospects for the economy just as the markets become more gleeful. Bernanke really has clearly marked down his assessment of what's happening. He is trying to control expectations, both by telling people, look it is going to be a long time before we can raise interest rates. It is not happening soon. And also, maybe, in his own way, trying to cool off bubbles in the assets markets.
I agree with Ben Bernanke's assessment. Growth next year is going to be sub-par despite the fact that the employment numbers were not quite so bad as we had feared.
QUEST: The big fear, Ken, is that there is something smelly out there; something waiting to break. The markets seems to be discounting this. But whether it was Dubai, or the prospect of a European country going belly up and defaulting, why people still so worried that there is never mind - that there is something waiting to happen?
ROGOFF: Well, I think the governments of the world have pretty much guaranteed everything. So, if you are worried, you have got to worry about the German government, the U.S. government, the Japanese government. You are not going to see a big worldwide bust unless one of them goes bust. And I don't think we are going to see that soon.
But people are looking at the trajectory of debt rolling out five years into the future and are pretty uncomfortable about it. Also, despite the fact that the banks can borrow money, a lot of medium and small-sized businesses can't. They are still worried about their books. They have a lot of commercial real estate and other things they haven't marked to market. And they are worried about regulatory reforms. So, that is holding back credit.
QUEST: Ken, always good to have you. Thank you for making sense in this tonight. And dealing with - as always, we always relied on Ken to get with us on a wide variety of issues. Many thanks, indeed. Ken Rogoff, joining me from Harvard.
Now, amidst all of this, you might have been wondering what the markets were up to. Since it was the start of a new week, a fairly lackluster session. In London, the banking shares, they lead the declines on the 100. The U.K., it is all the talk about bankers and windfall taxes on bonuses. The Paris CAC 40 down slightly. The Frankfurt Xetra DAX - where are me notes here. Xetra DAX, off more than half a percent. Investors were reacting today to reports on factory orders, which unexpectedly fell in October, from the previous month on weaker export demand.
You now know what is happening in Copenhagen. You know what is happening in the markets in the Euro bourses, now Fionnuala Sweeney to bring us up to date from the CNN news desk.
FIONNUALA SWEENEY, CNN INT'L. NEWS ANCHOR: Richard, dozens are dead as terrorists strike again in Pakistan. In the latest attack at least 30 people were killed when a pair of explosions ripped through a crowded market in Lahore. Dozens more people were wounded.
Earlier a suicide bomber killed 10 people outside a district courthouse in Peshawar. Two police officers were among the dead in that attack.
A key anniversary in Iran gets pro-reform protestors out in the streets. Thousands reportedly marched in and around Tehran despite government efforts to block them. Reports say cell phone networks around universities have been cut and Internet connections around Tehran slowed to impair communication. Today is student day, a holiday that honors three young people killed in 1953 by security forces.
Police and rioters faced off for a second day in Athens, Greece, one day after violent clashes broke out in the streets. Police say 784 people were detained between Saturday and early today. Five protestors and 16 police officers were injured on Sunday. The riots began on the one year anniversary of the police shooting of a 15-year-old.
Some of the victims of a deadly nightclub fire were buried in the Russian city of Perm. The overnight death of a woman has raised the death toll from Friday's blaze to 113. Russia declared Monday a day of mourning. Charges have been filed against four people connected to the Lame Horse Club, the scene of the fire. A fifth suspect is still hospitalized.
And those are the headlines. Don't forget to tune in for more on the day's biggest stories, "WORLD ONE" at 8:30 p.m. London time. Richard, back to you in the studio.
QUEST: Fionnuala Sweeney, thank you.
The economy looks like it is getting better. Hidden hazards still remain just below the surface. One of those is, of course, a report that says 40 million people at work today, could find themselves on the scrap heap tomorrow. It is all a question of, who is next? In a moment.
QUEST: More than 14 million people worldwide at risk of losing jobs, if governments are not careful. It is a message from the International Institute for Labor Studies, which has just released its "World of Work" report.
It warns that millions could be shut out of the labor market if government stimulus packages are stopped prematurely. In other words, don't stop spending now. Those people will be in danger of long-term unemployment, of dropping out of the job market entirely, literally on the scrap heap. 20 million jobs have disappeared since October of last year, when the financial crisis began in earnest. And this report says that if the governments don't get it right 10s of millions more will join them.
The author of the report joins me now. He is Raymond Torres, the director of the ILO.
Mr. Torres, looking at your report, it seems to be saying that the ability of us not to affect greater loss is really up to the governments. Don't stop spending now.
RAYMOND TORRES, INT'L. INST. FOR LABOR STUDIES: It is very important that the jobs crisis is taken seriously. It is true that there is a rebound in the economy and we see a little bit more growth. Of course, faster in countries like China, India, than in the U.S., for example, or in Europe. But it doesn't mean that jobs will be created automatically and certainly it doesn't mean that those who are now unemployed will find a new job. That is the risk. The risk that people who are currently unemployed drop out of the labor market, go into long-term unemployment, get demoralized, de-motivated, and fall outside the labor market. That is a serious risk, certainly.
QUEST: And that, of course, is exactly what we are starting to see in the United States. That reduction that we saw in the unemployment number came by, not because new jobs were being created, but because existing people were no longer looking for work, if you look behind the numbers.
TORRES: Exactly. This is what happened in the U.S., there was a little reduction in unemployment, but in fact, a large number of people dropped out of the labor market. I think that is not good for the economy. It is not good for society. Actually it has happened in other countries as well. In the majority of developed countries participation rates, which measure somehow the extent to which people participated in the economy, looked for jobs, has declined already. So in fact, this is happening already. The danger is that --
QUEST: But let's have a dose of realism here. You have countries running 10 and 12 percent budget deficits that are not sustainable if there is not going to be default or higher interest rates; which, indeed, would perpetrate and perpetuate further recessions. And yet you want them to continue spending?
TORRES: It is interesting is that this is the way it happens now. It didn't happen when governments decided to rescue banks. At that point there was little consideration about budget deficits. But it is true, it is very true that in the long run one has to be very careful about the deficit.
Really, what we say in the report is that addressing the jobs crisis and reducing the budget deficit are not contradictory. These are mutually supportive objectives in the medium run. Even if it means that in the short run you need measure to support the unemployed, so that they don't fall out of the labor market, to support the small and medium size enterprises. This is a cost in the short run, but actually you support the economy.
TORRES: And in the longer run you are going to have more ability to tax and so on. So that the deficit will decline in the long run.
QUEST: Hang on. Is there a moral question here? That hundreds of billions of dollars were spent rescuing banks, for valid reasons, but bankers are already back to getting large bonuses. And those who are at the bottom of the heap are really getting the worst deal of all. Isn't that what you are really saying here?
TORRES: It is, of course, part of the story but it is really an economic issue. It is really an economic argument. Supporting people so that they don't get excluded is actually something which is obviously socially desirable, but in addition it will support the economy. Because once people drop out, they will not participate even if there is an economic recovery. They will stay out and the budgets will have to support them somehow.
TORRES: In most developed countries, there is social assistance and so on and this is costly, of course.
QUEST: Mr. Torres, interesting report. Many thanks for joining us. Come back again and talk more about. Always glad to have you on the program. Raymond Torres joining us from the ILO.
Now, when we come back in just a moment: France's fanciest wine seller is throwing open its doors. You are invited, glug, glug, glug, a bottle or two. Whether you prefer a smooth red, a crisp white, or your like something sparkling. We'll have a bit of something to tickle your fancy in a moment.
QUEST: If your favorite tipple is something more akin Chateau de Plunk, then the next story perhaps isn't for you. Because one of the most well-known wine sellers in the world is selling off some of it's legendary collection. The global recession may be far from over but the message in the bottle is that the wine lovers are ready splash out the cash. Six bottles of a 1998 Chateaubriand, white Bordeaux, when for more than $2,000. That was far more than expected. Jim Bittermann looks at where the profits are being consumed.
JIM BITTERMANN, CNN SR. INT'L. CORRESPONDENT (voice over): It is one of the oldest and most celebrated restaurants in Paris. And while some food writers visiting the La Tour D'Argent in recent years have not always been so kind, no one would ever criticize two things. The incredible view from the main dining room, across the Rive Seine to Notre Dame, and the even more breathtaking view, at least for wine connoisseurs, down in the basement.
Nearly a half million bottles of wine and spirits that date back more than two centuries. There is down here a cognac from before the French Revolution.
DAVID RIDGEWAY, CHIEF WINE STEWARD: 1788.
BITTERMANN: And a bottle of champagne from the first shipment to break through the British blockade of the American States, in 1815.
The wine list at the Tour D'Argent runs to 400 pages and details a wine selection which is considered arguably the best in France, and perhaps in Europe. But now at least some bottles will be up for sale.
RIDGEWAY: There is a moment in time when you have to say, enough is enough.
David Ridgeway, the man in charge of the cellar, has picked 18,000 bottles to be put up for auction.
RIDGEWAY Obviously, that is a bit of a shame to see them go. But at the same time, we are not consuming them, so they have got to be drunk. That is the finality of any wine, is to be drunk. It is not just to be looked at.
BITTERMANN (On camera): Looking through this wine cellar is a little bit like looking through the pages of a history book. Throughout wars and revolutions, as kings and emperors and presidents have come and gone, the wine has endured. As a chief wine steward here puts it, "In an era when things aren't really built to last, it is not so bad to live with something that has been."
(voice over): The owner of the restaurant, whose family has run the Tour D'Argent for nearly a century, emphasizes that the sale will not affect the wine selection, since no single vintage will be sold entirely.
ANDRE TERRAIL, DIRECTOR, LA TOUR D'ARGENT: The important thing is to have it as a reference. So, we want to keep, maybe 12, 18 or 24 of this reference. This is more than enough for us. And we can keep on buying.
BITTERMANN: That, say the wine experts, is especially important for the restaurant.
OLIVIER THIENOT, DIRECTOR, ECOLE DU VIN: The Tour D'Argent cellar was really a symbol for the wine lovers, that I think now it is more a symbol for old school wine lovers.
BITTERMANN: Old school or not, because the wines here have been kept under the best conditions over the centuries, the restaurant hopes to make at least a million euros, $1.5 million from the sale. Liquidity it will use to modernize its other liquid assets. Jim Bittermann, CNN, beneath the streets of Paris.
QUEST: And so say all of us.
When I return, just when you thought the economic climate was looking a little rosier, Ben Bernanke, the U.S. Fed chairman, has warned of "formidable headwinds". Here, the chairman's full forecast, in brief, in a moment.
QUEST: Good evening.
I'm Richard Quest, QUEST MEANS BUSINESS.
This is CNN.
The negotiations have begun in Copenhagen at the start of COP 15, the global climate change summit. And while the negotiators are putting their final and best offers ahead of the leaders in the summit meeting in a couple of days, so business is counting the cost of what might be agreed in the talks. Business will bear the ultimate cost of putting it all together.
One company already adapting to a greener future is the Danish health care company, Novo Nordisk.
The chief executive, Lars Rebien Sorensen, joined me. And, of course, I wanted to know, at the end of the day, will it be the business world that will foot the bill.
(BEGIN VIDEO CLIP)
LARS REBIEN SORENSEN, CEO, NOVO NORDISK: Well, we, as major players in the economy, will bear a significant part of future costs and -- and that is also why we have already now started to develop a client strategy. We've taken initiatives which are going to bring us ahead of the curve on this problem, which eventually will lead to added costs for the industry.
QUEST: What do you want from leaders, though, in Copenhagen?
What do you want them not to do and what do you want them to do?
SORENSEN: We want them to create clarity on the long-term objectives. We want to -- for them to create international systems of Cap-and-Trade so that we know what to deal with going forward. And that means that we have clarity on the cost data going forward, on what does it cost to get rid of the CO2 that we emit from our factories so that we can make a proper investment assessment of -- of what to do to deal with this.
QUEST: So Cap-and-Trade has clearly got to be part of any solution for industry at the moment?
SORENSEN: I would think so, yes.
QUEST: And with that in mind, the overarching goal still has to be a sizeable and systemic reduction in emissions?
SORENSEN: Which is why we have, as part of our climate strategy, already achieved the targets that we set for ourselves a couple of years ago. We could realize that our business is going to grow 10 percent per year. So we need to decouple our energy consumption and emission of CO2. Otherwise, we would be facing an increasing financial burden.
We've done that through energy savings, through a collaboration -- a strategic collaboration with the oil and gas and electricity manufacturer in Denmark so that we now buy green energy. We have reduced our CO2 emission already to the levels of 2004.
QUEST: Do you worry that any final agreement might put an unburdenable cost upon yourself or other industry?
SORENSEN: I think it will put a significant cost, which is why everybody ought to pay a lot of attention to what is being discussed in Copenhagen these days. And there will be reluctance on the part of the political leaders, because they know it might cost jobs.
QUEST: Do you have difficulty convincing your board that that is the right thing to do and pay the money up front on the capital process?
SORENSEN: Not at all.
QUEST: They don't say hang on a second, let's wait for other people to do this?
SORENSEN: The pay -- the payback time for our energy savings programs are less than two years. That has enabled us to save money, which we have been able to commit to the establishment of a windmill park -- one of the bigger windmill parks in the world, offshore, which secures that we have supplies of green energy.
QUEST: And what is your biggest fear for what is going to happen in Copenhagen over the next few weeks?
SORENSEN: Well, if we are to believe the consensus that man has a significant influence on the climate, then the biggest fear is that we get no agreement at all, because then the bill will be even larger next time they meet.
QUEST: Is there a contradiction between your views as -- as, perhaps, a father, as a member -- you know, as a human and as a chief executive that has to create profits, that has to keep jobs going?
SORENSEN: No, I'm -- I'm a member of the -- the board of the Danish National Oil & Gas Company. I am the member of that board because I want to secure energy for my children and my grandchildren in the future. And I'm going to determine that that will also be sustainable energy.
(END VIDEO TAPE)
QUEST: The chief executive of Novo Nordisk, Lars Rebien Sorensen, talking to me, giving us the business view on what is happening in the climate change debate.
CNN -- we are in Copenhagen all this week. It's part of our extensive going green coverage.
Still to come over the course of this evening, on "WORLD ONE," 20:30G, Fionnuala Sweeney looks at the big picture -- what the summit hopes to achieve and what it's stand -- will stand in the way.
At 21:00, Becky Anderson hosts a special edition of "CONNECT THE WORLD." It comes from the Danish capital. And she'll be talking about the controversy that has put some scientists on the defensive.
And later, find out what it's like to cover a meeting that involves delegates from nearly 200 countries. That, of course, has to be Michael Holmes, who has got The Back Story.
No wonder, it's comprehensive coverage of climate change and it's only on CNN.
The chairman of the U.S. Federal Reserve is pouring cold water on speculation that rates may rise soon. Ben Bernanke described it as "formidable headwinds" for the U.S. economy. And he thinks unemployment will remain stubbornly high.
Maggie Lake was listening to what the U.S. Fed chairman had to say.
Maggie joins us now.
And I mean, to the extent that he's said it before, should we be concerned that he's saying it again?
MAGGIE LAKE, CNN CORRESPONDENT: No. The reason it matters, though, Richard, is because everyone changed their mind Friday after we had that much better than expected employment report. We're still losing jobs, just not that many. And everybody in the market started to rethink the interest rate environment and the idea that maybe the Fed was going to raise rates a lot sooner than anyone expected.
Bernanke stuck to the script, which means they're not. In fact, he came right out in the question and answer and said they're going to stay low for an extended period.
And he didn't exactly paint a rosy picture of the recovery. He talked about the fact that credit remains tight, the job markets are weak and that inflation is low and may still fall further.
So this does not sound like a hawkish Fed, which sort of put everyone at ease that started to get a little bit concerned that maybe rates were going up and -- and put everybody back in the camp of this is going to be a slow recovery.
The other thing that was very marked about this, Richard, is that it was in front of a much bigger audience. We've really seen Ben Bernanke taking a very public beating. Even Pete -- congressmen suggesting that he shouldn't have the job. In fact, one of the peers in the group today, after lots of questions about the economy, asked him if he was sorry he ever took the job.
(BEGIN VIDEO CLIP)
BEN BERNANKE, FEDERAL RESERVE CHAIRMAN: Economics is not a subject which should be studied in ivory towers. It's one that should be applied in a way to try to help the broader economy, to try to help the public, to try to make things better. And it was my objective to bring my knowledge, my -- my research on the Great Depression, on financial markets, on the economy to do the best I could to bring that to the actual policy-making arena. In that respect, I -- I don't regret coming to Washington.
(END VIDEO CLIP)
LAKE: That -- that -- all that academic research certainly being put to the test -- and, Richard, you'll like this. When asked what's the best thing about being Fed chairman, he said the fact that he gets to go through the security lines at the airport a little quicker than he would have when he was a professor.
QUEST: The fact is -- that -- that was a major advantage to -- to running the world's largest economy.
But the fact is, at the end of the day, we now have got a pretty clear picture. Anyone who thinks that it's going to be a quick recovery, a V- shaped or anything like it, is just whistling in the wind and has probably been drinking too much of that wine Jim Bittermann was telling us about earlier.
LAKE: Yes -- but -- but I have to tell you, Richard, there is a consensus here that maybe things are going to get better faster than people expect...
LAKE: And Bernanke didn't exactly rule that out. He did say that they're going to examine the data and they'll move when they see evidence that things are changing. But he doesn't want to ramp up those expectations, get people overly optimistic. So he is sort of bracing everyone for a slow recovery.
But if you were him, wouldn't you underestimate what's going on and hope you're wrong but err on the side of caution?
That seems to be what he's doing.
But people here are wondering, after that jobs report, whether things aren't coming back a little quicker than a lot of the pessimists had thought.
QUEST: They're missing the point on the jobs report. It wasn't a -- well, come on, Maggie, you know this. The fact of that jobs re -- the -- fact of that jobs report was it was the number of people who are no longer looking for work. They fell out of the statistics.
LAKE: I -- I -- yes, you're right. There are some difficult things. But -- but just hearing people talk, Richard -- I mean I interviewed a real estate broker today. Just here and there, anecdotally, you're getting a sense that...
LAKE: ...some of the shell shock is over and people are coming back out of the woods. It may not be sustainable. People may rethink it. But there is this little stirring of optimism that's going on. You're always telling me I'm throwing cold water on the party. I'm, for one, telling you that things are feeling a little bit better here.
QUEST: Yes. Yes. You've just succumbed to the festive season. You've been at the eggnog early.
All right, Maggie Lake in New York.
Who knows what she'll be like by the time we get to Christmas?
OK, a quick big board, as we look at the markets, down 11 points. It's barely worth spending more than a second or two. Look at that -- 11, 11, 11. You don't see that very often. The market is at 10 -- and you didn't see it for very long.
When we come back in a moment, it's an international financial product of mystery -- at least to those non-investors. Fear not, if you've ever wanted to know about the corporate bond, the name is bond, corporate bond. Biz Clinic next.
QUEST: We spend a lot of time talking about the equity markets, how shares have risen and fallen. And often, perhaps, we ignore, to our cost, the silent giant in the world of investment. The global bond market is valued at an estimated $84 trillion. It virtually never gets the attention that we heap on equities or property and more shame us for that.
So time to adjust the balance in this week's Biz Clinic.
Charles Hodson reverses the trend.
He tells you how to get the most out of your bonds.
CHARLES HODSON, CNN CORRESPONDENT (voice-over): Sixty years ago, when the United States was rebuilding its economy after World War II, bonds had a certain stirring patriotic appeal. That's changed a little bit, but the fact is that bonds are probably the great unsung heroes of the average investor's portfolio. And never more so than in these turbulent times for stock markets.
That said, though, as asset classes go, bonds are the dreary ones.
JOSEPH MCDEVITT, MANAGING DIRECTOR, PIMCO EUROPA: We're not always the most popular people at cocktail parties. Everyone wants to talk to the -- you know, the small cap equity manager instead of the -- the bond manager.
Bonds, I think for many, are an institutional product. It's something they access perhaps through their 401(k)s or through balanced portfolios that they may invest in through their -- their pensions.
HODSON: The safest bonds are those issued by governments of established economies like the United States, Japan or Britain. But that security comes with a price -- limited returns. Those willing to take on more risk can look for higher returns from corporate bonds or emerging market debt.
NICK GARTSIDE, HEAD OF GLOBAL FIXED INCOME, SCHRODERS: Think of a bond like a mortgage. If you're a high quality borrower, you pay less in the way of interest. If you're a lower quality borrower, you pay more. Precisely the same in bond markets. Bond investors lend money to people in exchange for receiving an interest payment every year.
HODSON (on camera): The fact is, if you'd been willing to take a risk about a year ago at a sticky time for the markets and bought corporate bonds, bonds issued by companies, you would have made a handsome return throughout 2009.
(voice-over): The issue now is will you have such generous returns in 2010?
GARTSIDE: 2010 will be a very tough year for the bond market, because there's two dark clouds on the horizon. The first is higher inflation and the second is higher interest rates. Both of those things are the enemy of any asset that gives you a fixed income. Inflation-linked bonds will do very well in 2010.
MCDEVITT: Investors need to manage down their expectations of what kinds of returns are -- are likely and can be achieved without taking undue amounts of risk.
HODSON: Many investors choose to invest in bonds by choosing a bond fund.
So how do you choose one that's right for you?
MCDEVITT: So it's a combination of starting with the investors' own risk/reward appetite and what they're really trying to achieve over the next few years with their investment then look also at the -- the cost structure of the fund -- what are the fees that the fund is going to charge?
GARTSIDE: What investors should be saying to fund managers is, where do you get your ideas?
The second thing is, let's take a look at that portfolio.
Is it diversified?
And then the third thing is what are your risk components?
HODSON: Experts also warn that past performance is never a particularly good indicator of future performance. If a fund did well in 2009, find out why before you choose to invest.
Charles Hodson, CNN, London.
(END VIDEO TAPE)
QUEST: Charles Hodson, of course, with the bond market.
And that is your Biz Clinic for this week.
Guillermo is at the World Weather Center this evening.
And well, I mean, I -- I don't know why -- and you and I were talking about this before -- but why I'm surprised. It's winter in the Northern Hemisphere. It's raining.
GUILLERMO ARDUINO, CNN METEOROLOGIST: It is raining. And now you're going to get a little bit of a break. But don't be fooled -- the rains are going to be coming back.
It's this low that is approaching. So the storms move back tomorrow. And then it is going to stay dry, but colder. And that is for most European capitals. I was checking out Germany, particularly, right now, but let me tell you what's going on in London.
It is fine now, Tuesday, with some rain showers maybe. And then on Thursday, it appears that it's going to improve. The winds are here, as you said. Paris is reporting rain right now. Not at London Heathrow. Amsterdam and Dublin with winds.
So it doesn't look that nice. And the winds come back, especially they are going to be in the northern sections.
But Germany here, we see rain for the time being in Nuren -- Nuremberg, in Munich, Dusseldorf and in Auchsburg (ph). But the south may see some snow.
The Alpine Region, you see, is going to see some snow and we get, again, more rain, especially into the south. I'm talking about Turkey. Despite these cold temperatures, there's a lot of hot air.
Richard will explain, after the break.
QUEST: Now, this week, there's a lot of hot air being talked, whether it's about efforts to tackle global warming or a critic's view of all the talk in Copenhagen. Hot air left, right and center.
And yet, if you go to some parts of Europe, hot air is actually part of the solution.
CNN's Jim Boulden traveled to Sweden, where he discovered a new style of house that quite literally heats itself.
JIM BOULDEN, CNN CORRESPONDENT (voice-over): To find out exactly how a so-called passive house works, I went right to the source.
(on camera): Hello, Hans.
HANS EEK, ARCHITECT: Hello, Jim.
BOULDEN: (voice-over): Meeting Hans Eek, the father of Sweden's passive house push. It's here, next to his family's very drafty 17th century house, where architect Hans built a passive house with his sister.
(on camera): I would have thought with all these windows, that it would be a lot of cold air coming in off the lake.
H. EEK: That's true. But the windows are very, very energy efficient. They are about six times as energy efficient as only -- as normal two pane...
H. EEK: ...two pane windows.
BOULDEN: (voice-over): So what is a passive house?
Hans says it's quite simple.
H. EEK: The principles of a passive house is -- is that you have to minimize the great losses.
BOULDEN: But it's much more than just well insulated windows. Firstly, thick walls -- 40 centimeters or 15 inches of wood and insulation; thick floors -- 30 centimeters, or more than 11 inches; and very, very thick roots.
(on camera): For instance, look at this roof. In here is 50 centimeters of insulation -- about 20 inches. And it's one of the main reasons why this passive house uses only one tenth the amount of energy that a normal Swedish house would use for heating.
(voice-over): Ingeborg Eek says it's quite cozy, even with no radiators and no furnace.
(on camera): Some people won't believe that you actually stay warm in the wintertime.
INGEBORG EEK, "PASSIVE" HOMEOWNER: Because I go up the stairs, up and down. So I stay warm.
BOULDEN: You stay warm.
And you create more heat and energy in the house, don't you?
I. EEK: Yes.
BOULDEN: (voice-over): And that is the key -- a tightly sealed passive house captures the heat generated naturally during the course of the day -- heat from appliances and heat from the people themselves. This concept has been around for years, but previous attempts failed because of stagnant air.
Enter this heat exchange -- fresh outside air is pumped in and warmed up when it passes over the warm air being pumped out. Something explained to environmental experts the world over, who flocked to this passive house center in Western Sweden, where many are surprised to learn that old houses can be converted to passive homes.
(on camera): While much of the rest of the world is just catching onto the theory of passive housing, here in Alensoth (ph), outside of Gothenburg (ph), the city government is renovating 300 40-year-old apartments using the passive house technique. Sixteen are already completed.
(voice-over): Here in Vecra (ph), dubbed Europe's greenest city, the government is building what might be the boldest passive house project -- a series of eight story apartment buildings -- passive apartments a with a twist. All the walls and most of the superstructure is wood -- a better insulator than concrete. These apartments will use, say the designers, as much energy to generate heat and hot water as a hair dryer.
I. EEK: (INAUDIBLE) how -- how to build these passive houses -- energy efficient houses.
BOULDEN: (on camera): And to do it profitably and then to show other people around the world how to do that.
I. EEK: Yes. That's -- and then sell more to make more profit.
BOULDEN: (voice-over): Sweden, along with Germany and Austria, is in the midst of a passive home revolution, a with little help from homeowners...
I. EEK: When it's very, very cold, I can make a cake or cook or make coffee or something like that.
BOULDEN: -- as she jokes, for a passive home to work, the owner has to be active inside.
Jim Boulden, CNN, Iksha (ph), Sweden.
(END VIDEO TAPE)
QUEST: And when we come back, I'll have a Profitable Moment.
(BEGIN VIDEO CLIP)
KEN ROGOFF, ECONOMICS PROFESSOR, HARVARD UNIVERSITY: Boy, you talk about businesses having to pay, the consumers are going to have to pay. If businesses have to pay, ultimately the cost has to be passed on. Businesses are worried about the uncertainty. They don't know what's coming.
How do they prepare?
That's as big a problem as anything.
(END VIDEO CLIP)
QUEST: Harvard's Ken Rogoff from earlier in this program.
And tonight's Profitable Moment.
Climate change -- it's easy to say that doing the right thing makes commercial and common sense at the same time. In Copenhagen, the negotiators battling know that the true cost of the deal will be paid for by companies around the world.
The companies are needing Cap-and-Trade. The companies have to invest heavily to make energy and production, manufacturing cleaner, more efficient and more friendly. And all this at the same time when it has to be commercial and be profitable.
And after all, as consumers, how many of us are willing to pay higher prices when changes push up the cost of production?
Before we berate governments, negotiators, companies, corporations for not doing enough, ask ourselves how much are we prepared to spend to make sure they get it right this time?
And that's QUEST MEANS BUSINESS for this Monday.
I'm Richard Quest in London.
Whatever you're up to in the hours ahead, I hope it's profitable.
Christiane is after the headlines from the I Desk.