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Sarkozy Blasts Unrestrained Capitalism; Apple Presents iPad

Aired January 27, 2010 - 14:00:00   ET


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: The danger signals for capitalism, a call for change. Nicolas Sarkozy blasts unrestrained capitalism.

No spare change, Barack Obama is set to announce a freeze in spending.

And changing expectations, Steve Jobs on Apple's newest gadget.

I'm Richard Quest, live in Davos, where tonight, I mean business.

Good evening, from Davos, in Switzerland. Tonight on the program, out with the old, in with the new. At least, that is what Nicolas Sarkozy, of France, wants. Speaking here at the opening session of the World Economic Forum. The French president told business leaders they must rethink capitalism and engineer it to, in his words, "restore its moral dimension".

Tonight on QUEST MEANS BUSINESS, the moral dimension, can Davos bring change? These men will be looking to achieve just that: Pascal Lamy, is the head of the World Trade Organization. He'll be with us. The president of the U.S. Chamber of Commerce, Tom Donohue, will be with us. And Simon Crean, Minister Simon Crean, Australia's trade minister, will tell us tonight why the Aussie economy is in the kind of shape that others envy.

We begin, capitalism must change. That much, perhaps, we've known. The recovery you're seeing will be nothing more than a respite from the crisis. The words of the French President Nicolas Sarkozy speaking earlier. He fired a furious broadside against fast-buck capitalism, at the opening of the 40th WEC.

He said we have experienced a crisis of globalization in which the entrepreneur morphed into the speculator. The only way to save capitalism is to re-found (ph) it and make it more moral.


NICOLAS SARKOZY, PRESIDENT OF FRANCE (through translator): Without state intervention everything would have imploded, total collapse. This is not a matter of liberalism, or state intervention, or socialism, of being from the Left or from the Right. It is a fact. And not to draw the lessons what we experienced a year ago, namely that we need deep, profound, change, in that we were not to change, we would quite simply be showing tremendous irresponsibility.


RICHARD QUEST, CNN INT'L. ANCHOR, QUEST MEANS BUSINESS: Sir Martin Sorrell is the chief executive of WPP, the group that owns some of the world's biggest advertising agency and he is with me now.

Were you surprised, Martin, at what Nicolas Sarkozy said? And the tone, the rhetoric?

MARTIN SORRELL, CEO, WPP: Well, the tone was very strong. I think it follows on from what we heard on Thursday night from President Obama. I think we were somewhat surprised by what appeared to be a change in direction or a shift in direction on Thursday night. And also the fact that it was uncoordinated. It seems that neither the British, the French, the Germans, or the Italians, or the Spanish knew what was coming. So this seems to me, to be a continuation of that.

And I think one of the areas that we've been debating here, in Davos, in the first, on the first day, is this issue. The man in the street doesn't quite understand what happened. Either you bail the banks out, their money, my money, your money, as taxpayers, goes in to bailing the banks out. And so it is almost as though we've gone back to where we are, so life hasn't changed. And that is the big issue.

QUEST: But when you get Sarkozy talking about deep, profound change, can't be business as usual.


QUEST: Is he talking to men like you, who are leading chief execs of major public companies? Is he talking to bankers? Who is he talking to?

SORRELL: I think primarily it is directed against bankers. I mean, I have to say that in fairness he should also direct some things against regulators. I mean, we can bash the banks, every group, we have to have somebody that we bash. But we must bash the regulators as well, because they presided over this.

But I think he's primarily-he's really embracing a populist view. And we saw it in Massachusetts. We are seeing it in the American elections. We'll see it, I think, in the British elections. We'll see it in any elections taking place in any of the democracies. There is a populist view that what has gone on is wrong. And it is not business as usual. We have to redefine-redesign, as they are saying.

QUEST: Oh, I have a good mind to fine you.


SORRELL: Using that stuff.

QUEST: I have a good mind to find you. I'm going to fine every guest that uses-

SORRELL: Wash my mouth out with soap?

QUEST: Redesign, re-engineer.


QUEST: Yes, OK. So we have got to move from the generalities to the specifics.


QUEST: At some point this means new rules and regulations.

SORRELL: Well, it means-it is regulation at one level, but the banks have it in their own hands. They just use the numbers that-


SORRELL: What they haven't done, apologies are fine. Making minor changes are fine, but it is no good, I think, continuing to believe in the face of this, what we heard on Thursday night, what we hear today, and we'll hear more of it, more of it will come down.

QUEST: You think?

SORRELL: It is unrealistic to believe that you can't do it without changing the basic approach. So it is not-gestures are not good enough. There has to be something more fundamental in terms of personal commitments, corporate commitments. You know, just to put it into perspective, just for a moment.


SORRELL: Just put it into perspective for a minute. You have the tragedy of Haiti, right? And our session, Bill Clinton came in, he's explaining. So, you've got that going on at the same time as this; a speech against fast-buck capitalism. These things had to be brought into balance. Moral capitalism, responsible capitalism, not the first time we have heard this. And it is something that has been-there is a groundswell for that in the environmental area, the social area, and we have seen it in the last year or so, since the crisis.

QUEST: And I need to ask you, though, finally.


QUEST: As a chief executive?


QUEST: Running a large company, how do you get that message that fast-buck actions will no longer be tolerated?

SORRELL: Well I'm always reminded of what people say about corporate social responsibility. If you are in the business of building long-term brands, and products and services over the long-term, if you are not there to get the quick buck. I mean, if you are in the oil industry get the oil out of the ground in the quickest period of time, at the lowest possible cost. But if you are in the business of building an energy company over the future, you won't do things that endanger the environment or anti- social. You will build a company that is morally responsible in the way that Nicolas Sarkozy was suggesting.

Maybe not quite so extremely, but suggested.

QUEST: Many thanks to you, Martin. Good luck.

SORRELL: Thank you very much.

QUEST: Now, as the recovery gets underway, we need to ensure we have early warning of anything that might blow it off course. Nouriel Roubini was the man they called Doctor Doom for one very good reason. He was one of the first to warn of the latest financial crisis, long before most of knew it was happening, let alone what to do about it. On the banking question, Nouriel told Poppy Harlow, things are getting back to normal, but we shouldn't forget the lessons of the past.

NOURIEL ROUBINI, CHAIRMAN, ROUBINI GLOBAL ECONOMICS: I think they were back to business as usual in the financial system, on banks. You know, they are taking risks, they are increasing leverage, lots of profit taking, obscene bonuses, compensation has not been changed. You have zero interest rates, you have quantitative easing. You have regulatory forbearance. And now there is the beginning of asset bubbles in the U.S. and around the world. So, we need to try to curb the excess in the financial system.

POPPY HARLOW, CNN INT'L. CORRESPONDENT: So, because of under regulation we have the beginnings of new asset bubbles? So, the future risk of a double dip, in your opinion?

ROUBINI: Well, eventually, who have these dollar funds, that carry trades that are leading to assets bubbles, easy money credit in Asia, in China, around the world, that could, over time, not this year, to lead to excesses. They are going to lead them to a financial crash and then to a double dip. I don't think the risk is this year, but we're not really dealing with excesses in the financial system. That is why the kind of proposal that Obama has made are going, at least, in the right direction.


QUEST: Nouriel Roubini on banking reform. The U.S. markets are still struggling for direction. Word from the Federal Reserve on its economic assessment is due any time now. When it arrives, we'll bring it to you. Scrutinizing the Fed for hints of what will then-when they might start a tightening of policy.

But look, down 47.2 on the Dow, 10,000, must be starting-I've said this before. It must be starting to look a little bit dodgy at the moment. But anyway, that is the way the U.S. market trades. President Obama gives his State of the Union tonight, when we'll hear more.

European stocks, on to those. They fell for the fifth time in six sessions. Markets are not happy. All gains seem to have been forgotten. Bank stocks in the red. Investors were worried about the coming of meetings. Just look at that. The London FTSE and the CAC Current; FTSE down the largest of them all. The markets, you are up to date, with now you need to know about the news headlines and for that, Max Foster, at the CNN News Desk.


QUEST: We thank you, Max Foster. When we return in a moment, the waiting for gadget lovers is over. Is it a tablet? Is it a slate? No, it is an Apple! Well, actually, it is an iPad. I think, I see the iPad, ha, in a moment.


QUEST: Over an hour ago Steve Jobs put fans of Apple out of their misery. The company's new computer was one of the worst-kept secrets of the year so far. This is the moment, though, that the iPad was shown to the world.


STEVE JOBS, CEO, APPLE COMPUTERS: Let me show it to you know. This is what it looks like. I happen to have one, right here.


QUEST: It is known as the iPad. It is a tablet style touch screen computer. Now, obviously, you don't need me to tell you that it is bigger than the iPod, but smaller than a laptop. It is designed to surf the web, read, game. Earlier this week Apple said profits leapt 50 percent in the latest quarter. And now we know that it is betting on the iPad to drive the next wave of growth. This is what Mr. Jobs said.


STEVE JOBS, CEO, APPLE COMPUTER: The question has arisen, lately, is there room for a third category of device in the middle? Something that is between a laptop and a smart phone? And of course we pondered this question for years as well. The bar is pretty high. In order to really create a new category of devices, those devices are going to have to be far better at doing some key tasks. They are going to have to be far better at doing some really important things. Better than the laptop, better than the smart phone.


QUEST: That, in a sentence sums up the issue for the iPad. Better than a laptop, better than a smart phone. Errol Barnett has been following the online chatter that has been going on in the lead up to this launch. Errol joins me now.

Let's just ponder that thought for a moment, Errol. It has got-Steve Jobs and Apple have been brilliant at finding new ways to read other people's distributed materials. Does this follow that trend?

ERROL BARNETT, CNN INT'L. CORRESPONDENT: Absolutely, Richard. Another feature that they have announced is that they are rolling out something called iBooks. This is a functionality that will make this iPad essentially an e-reader, putting it in direct competition with the popular e-readers out there, like Amazon's Kindle, Sony's Nook (ph), I think is the name of theirs. So what they want to do is, now, continue that as a revenue stream and allow content developers, for their content to be posted on this iPad. And they have worked with major publishers of books and newspapers to work with them on this device.

Let's look at some of the hardware and software specs. I can tell you that the display measures about 246 millimeters. That is a diagonal measurement. That will allow you to work in both landscape and portrait views, read papers online. It is very thin, less than 13 millimeters thick. That is about half an inch thick. It only weighs 680 grams. So it is light, at about a pound and a half.

Let's look at the device's battery life. The company says that it lasts for about 10 hours, but as you know, with any device, it depends what you are doing with the device to really allow it to last that amount of time. Has 64 gigabytes of flash storage. That is not breaking news. There are other devices and that Apple has, like the iPhone, that has just as much as much memory. It is also wi-fi, Bluetooth enabled and has that multi-touch functionality.

Something else that they announced, Richard, was that they say this product is quite green. It is free of arsenic and mercury. Apple has come under some criticism for their devices and what do you do with them when you are finished with them. And they are quite toxic. They say this device is highly recyclable.

You might wonder, you know, they did tout their quarter earnings earlier, ahead of this announcement. We can tell you right now that Apple shares are down 4 percent on this announcement. We have full coverage at, Richard. What we haven't heard is price and availability just yet.

QUEST: Errol hang on a second. I have just been doing a little bit of mathematics of my own. By my reckoning it is about this big, give or take.


QUEST: I just wonder, Errol, you are much more in tune with this sort of stuff than myself, and I am just wondering, who do you think it appeals to most? Those over 40 like me, or under 40, who may have a little more interest in this sort thing?

BARNETT: Well, that is the key, Richard, as Apple does, they want to make this appealing to both audiences. Number one, they want to hang onto their growing customer base, people who use iTunes, and now will be able to use iBooks. People that use the iPhone and all of those applications. Plus, a new market of people who are flooding to eReaders. sold more e-books than physical books, this past Christmas. It is really a growing market. So they want to hold on to what they have and grab on to a bit more.

QUEST: Right. I'm stopping you right there, Errol, we do need to pause for a moment. Errol Barnett, in CNN Center. Many thanks, indeed.

The Associate Press is now reporting that the U.S. Fed has left interest rates where they were. No change in U.S. interest rates for the moment.

Errol gave us a glimpse of the future from Steve Jobs. It is just one aspect of the changes that are now taking place in the wide world of technology. Does anybody know, really, where it is headed to? ? I asked Accenture's Chief Executive Bill Green what he thinks of Apple's latest gadget and whether there is a market for it.


BILL GREEN, CEO, ACCENTURE: Well, I'm impressed by all the new forms of delivery ideas. There are a lot of them, but here's why. Because whether you are talking about health care, you are talking about education, you are talking about social services, our current way of doing things isn't getting it done. And we have to reinvent our delivery system. We have to leverage technology to do it and the device at the end of the line is going to matter. And that is why the tablet and other devices like it are important.

QUEST: But you put your finger on the problem. It is squaring that circle, if you like, to find the right device. And some years ago, Bill Gates, famous, he said no one device will do all that needs to be done.

GREEN: Well, I think that is true. I think-and we have to have inter-operability, as they call it between the devices. But more important than that, it isn't the device, right? It is how we reinvent the process of getting knowledge and know-how from where it is to fairly remote places, or to masses of people. That is where technology is going to provide the significant advantage.

QUEST: So we start with the computer, we then go to the phone, we then go to the smart phone, and then we end up with some hybrid in between?

GREEN: Well, I think in the end they will be hybrids, and they will be fit for purpose. If you are trying to teach young children in India, where we have 350 million people under the age of 17, how are you going to reinvent the education system there? You are going to have to use a different form factor than teachers, classes and books. You are going to have to leverage technology.

QUEST: Leveraging technology and social media, whether it be Twitter, Facebook, MySpace, or any point in between?

GREEN: Uh-huh?

QUEST: Are they yet where you see they are going to go?

GREEN: Well, no, I think that we need to industrialize them.

QUEST: But what does that mean?

GREEN: Well, we are still in the invention phase, right? We are still-we still have a new idea every couple of weeks. And every time there is a new idea we all get excited about it. But at the end of the day what we need to do is have industrial, repeatable processes. We have to build leverage into our social service systems. So we can get repeat of use, and we can get leverage about networks, about devices, and most importantly about knowledge over the network.


QUEST: And the fascinating part about Davos this year is seeing the big thoughts on the issues of the day. Like that, like the tablet, and like the other issues of banking that we are seeing and hearing about at the moment. The CEO of Accenture joining me earlier.

In a moment, freezing Davos, a look at another kind of freeze. The U.S. president believes the years of ever-rising spending has to stop. It is his State of the Union, tonight. (INAUDBILE)


QUEST: President Obama will do his best to quash the charge he's too liberal with taxpayers' money. He delivers the State of the Union Address later on Wednesday; middle of the night, of course, in Europe.

Barack Obama is expected to say that he'll freeze all discretionary federal spending on areas unrelated to security for three years. He's aiming to save $250 billion. He faces a tough sell with his first year in office marred by rising unemployment and the spiraling government budget deficit.

Tom Donohue is the president and chief exec of the U.S. Chamber of Commerce. For his own take on Mr. Obama's speech, he joins me to tell me what he thought the president needed to do next.


TOM DONOHUE, CHAMBER OF COMMERCE: Well, I really have-I think the president needs to divide his concerns and his comments into two parts. And let's talk about the second part first, and that is the global, the national security, the geopolitical issues that he and this country face in the next 18 to 24 months. And they are many, and they are serious, and they are challenging. And everybody in the United States wants to support on dealing with those efforts.

The second part of his speech, he's got to address the fundamentals of how he's going to use the government to contribute to the process of creating more jobs and re-establishing this economy on a more positive, going-forward basis over the next months and year.

QUEST: There has clearly been a failure in the ability to portray that message so far, would you agree?

DONOHUE: Well, I think there is a reality and an historic reality. When you come out of a recession, first thing that happens, the markets get better, and then people start to replace inventories and do some capital expenditures, and then it takes a long time for job creation.

QUEST: So, but the failure to get that message across; that it is going to take time. I mean, anyone who looks at this knows that jobs is the last lagging indicator to come back up and to recover.

DONOHUE: Yes, but if you are unemployed, if you think you are going to be unemployed, or you are concerned about being unemployed, then you don't want to wait for any time. So, you know, the government is going to do a lot of things. And one of the things that he's talking about is building high-speed rail, and-but there aren't going to be any jobs out of that for a long time.

QUEST: When the president speaks tonight, it is a vitally important speech for his presidency, that seems to be agreed. I think we're agreed on that? (ph)

DONOHUE: I think it is an important speech, but there is time in his presidency. Win, loose, or draw, he's got another three years. What people are saying, is it is important for the momentum in his presidency. It is important for him to look at what all the things he was trying to do domestically in a short period of time, and decide which ones he's going to do, how is he going to do it, and how is he going to build the political capital to do it? And to do it in the middle of a recession, and keep the support of his fellow citizens?

QUEST: And as you go around the halls here, in Davos, how are you able to convince people that America, Inc. is not weakened by all of this?

DONOHUE: Well, even if America, Inc. is somewhat weakened, it is still the most dynamic economy on the globe. I hear everybody telling me about China. I go to China all the time. Our economy is about seven times the size of China. And everybody here is concerned about our economy because we are major purchasers of goods from all around the world. We are major investors and we are major involved in maintaining the peace. Everybody is concerned about us.

We appreciate that. We are concerned about us. And I hope there are a lot of things we can do together to improve it all.


QUEST: Mr. Donohue of the U.S. Chamber Of Commerce.

As the economy does begin to recover apparently it was starting to trust corporations just a little bit more, according to the Edelman Trust Barometer. Ah, a fine barometer of what's happening. The public relations firm surveyed nearly 5,000 people in 22 countries. Presumably, they didn't ask Nicolas Sarkozy.

Fifty-four percent of the adults around the world now say they trust business, slightly up from 50 percent last year. Their goodwill does not extend to bankers. Their reputation has plunged. Nearly 29 percent of people say, in the U.S., they trust banks, compared to 68 percent who did in 2006. The only sectors seen as less trustworthy thank banking are insurance and the media.

Richard Edelman is chief executive of Edelman. He joins me now.

Richard, all right, so -- and we're not as trustworthy as bankers. But this trust survey, do we have to take it with a pinch of salt, bearing in mind the low levels we're coming from?

RICHARD EDELMAN, CEO, EDELMAN: Richard, I think that this year shows some stability. We have not come back to a situation where business is just green lighted. We are at a sort of point of yellow light. And, in fact, what we see is real fragility. Seventy-five percent of people say that they expect to business to go back to business as usual after the recession is over.

QUEST: That is truly worrying, when you bear in mind what we heard from Nicolas Sarkozy, who says that he won't-if France has to go it alone, he won't allow business to go back to normal.

EDELMAN: But here's the thing, people don't want state capitalism, they want enlightened capitalism. And what that means is a new set of rules, meaning, trust and transparency plus quality products. It's not just about making the numbers of having a charismatic CEO anymore. You've got to figure out what business' role is in society.

QUEST: OK, Ben Verwaayen on this morning's program, of Alcatel- Lucent.


QUEST: He-you talk of enlightened capitalism, he talks of cohesive capitalism. The problem is that the public are skeptical that the chief executives actually mean it. They think it's spin.

EDELMAN: Look, the fact is we have to have metrics beyond the numbers of EPS. We have to say OK, here are our eco goals. You know, here's our employment in the community, whatever. We have to have different numbers that we're putting forward, not just the bonuses. That's the thing that's sticking in people's heads.

QUEST: Do you think that the chief executives truly believe it? Because there is a huge trust gap between what's said and the lip service.

EDELMAN: I see clients like Howard Schultz's Starbucks. He completely believes it. He's absolutely on top of what's going on in ahead of him.

QUEST: You've chosen the one chief executive that -- that's unique in that, in his drive in that respect.

EDELMAN: No, he's not unique. He's terrific, but he's not unique.


EDELMAN: You know, Indra Nooyi at PepsiCo, Klaus Kleinfeld of Alcoa. I could keep going. These are people who recognize that business has to be somewhat different from eight or 10 years ago.

QUEST: Are you surprised that President Sarkozy did bash away tonight, as he did, calling for deep, profound change, said we have to discuss what the future of capitalism should look like?

EDELMAN: It suits him. Let's face it, he wants to be a world leader. This is his way of getting forward. But it's not what the data show. Business is more trusted than government in 18 of the 22 markets we survey. It's not corroborated by the facts.

QUEST: So what needs to happen, then, is actually action in terms of greater enlightenment, is what you're saying?

EDELMAN: This is correct. And we can't have the face of business be exclusively that of the bankers. The bankers are at the lowest possible ebb. They need to talk about the green IPOs they're doing. They need to talk about what they're doing to help certain countries in extremis.

QUEST: Richard, many thanks, indeed.

EDELMAN: Take care.

QUEST: Lovely to see you.

EDELMAN: Always good to see you.

QUEST: It's always good to have you with us.

EDELMAN: Thank you.

QUEST: Many thanks, indeed.

Now, it's still summer Down Under. So this must feel like a long, long way from home for the Australian trade minister. There's nothing chilly, though, about the Aussie economy, as he wasn't short to let me tell me.


SIMON CREAN, AUSTRALIAN TRADE MINISTER: So it wasn't just China. It was Asia as a whole. It was Korea, Japan. It was the ASEAN countries -- all of them demanding the sort of resources that we had.


QUEST: A look at the economy eager for the upturn in just a moment.


QUEST: Good evening.

I'm Richard Quest at the World Economic Forum, QUEST MEANS BUSINESS in Davos.

This is CNN.

And a recap on the main business news today. A couple of hours ago, the French president, Nicolas Sarkozy, blasted the forum, speaking of a crisis in globalization. He said only state intervention had prevented the total collapse of the financial system. The only way to fix it is to regulate banking and finance more carefully. President Sarkozy said we cannot go back to business as usual and concluded, talking of the model imperative to remake capitalism.


NICOLAS SARKOZY, FRENCH PRESIDENT (through translator): We will not save the future of our planet if we do not pay the true price of scarcity. That is not only an issue for the (INAUDIBLE), but it concerns us all. We will not reconcile our citizens to globalization and to capitalism if we are not capable of offsetting market forces with counter balances and corrective measures.


QUEST: Nicolas Sarkozy speaking earlier.

For more on the opening day's events, I'm joined by the director general of the World Trade Organization, Pascal Lamy.

Sir, good to have you with us, as always.

And thank you for braving the cold tonight.

What do you make of what President Sarkozy says, basically saying market capitalism is OK, but there does have to be massive change?

PASCAL LAMY, DIRECTOR GENERAL, WTO: Well, I mean I -- I would tend to agree that in many areas, this crisis has shown that we need more global regulations, which is, by the way, what we have in trade, which is probably why this crisis hasn't resulted in a big protectionism drive, as some would have expected.

Now, whether this is doable on the financial side, whether there is enough political will and technical capacity to do this globally remains to be seen. But I think I would very much agree with what he said when he said that protection is one thing, protectionism is another thing.

QUEST: Well, let's -- since this is your bailiwick, let's talk about that, because the World Bank joined the recession and came out numerous times saying that they were seeing evidence of protectionist activities, usually dressed up in some nice fancy language, but protectionism, nonetheless.

Do you think we've moved away from that now?

LAMY: Well, yes. I think overall, although there have been some slippages here and there, the world economy is as open today as it was last year. Some have gone a little bit in the protectionist way. Others have gone the other way around. I mean Mexico and Malaysia, for instance, have opened their economies.

So, overall, what we can say is that the international system depends on world trade as work.

Now, this being said, we're not out of the woods, because unemployment is still on the rise and, you know, protectionist functions are still there.

QUEST: Do you have any hope of a Doha round or any round or any form of round in our lifetime?

LAMY: Well, we are -- we are not far from concluding this negotiation. I'm not -- technically speaking, it's perfectly (INAUDIBLE)...

QUEST: Are you prepared to have another bash, to really put a lot of credibility behind having a final go to get around going (ph)?

LAMY: Well, what G20 leaders have said last year is they want to conclude this negotiation this year. Now, whether this resolve is there, we will see. And we have a sort of a stock taking exercise the end of March in order to check whether this result of last year is still there.

QUEST: In the past, when you and I have talked on Doha and we -- we've sort of gotten between optimism and let ourselves over the top of the fence.

Where would you say you are now?

Are you optimistic that you can -- and I mean realistic, actually. Let's get rid of optimism -- there's too much of that. Let's have realism.

Are you realistic that you can get around them by the end of the year?

LAMY: If there is enough political resolve, which is -- which remains to be seen (INAUDIBLE)...

QUEST: Do you see that resolve there?

Do you see the resolve?

LAMY: I mean it might be there. But I would be -- I would be prudent. What's for sure is that for developing countries, who now are the sort of part of the world economy that's working, that's growing, this is fundamental for them. And this is why they are pushing, including countries like India, Brazil...

QUEST: Right.

LAMY: ...they are pushing for a rapid conclusion.

QUEST: Many thanks, indeed.

LAMY: My pleasure.

QUEST: Thank you very much, indeed.

LAMY: My pleasure.

QUEST: Now, one country which appeared ahead of the curve in its recovery, Australia. The first member of the G20 to raise interest rates back in October. And according to the IMF, is set for growth of 2.5 percent in 2010.

The consensus of economists is there will be another rise in interest rates in February.

I asked the trade minister, Simon Crean, for his views on regulating the banks.


SIMON CREAN, AUSTRALIAN TRADE MINISTER: I think it's not just the question of the regulatory reform that we've got to look to here. I think the big message that we also bring is the need to continue to undertake structural reform, to make the economy more competitive and more productive. And that requires decisions within and in the global context that ads to that competitiveness.

QUEST: Your stimulus package was more successful than most. But the critics would say that was because China and Asian nations was the second leg, if you like, of your stimulus package.

CREAN: Well, the stimulus package was effective for that reason. But it was also effective because our consumption dimension, which was only a third of our stimulus package, the consumption dimension worked because we had the safety nets in place. We had had a retirement income policy which we -- a compulsory retirement income policy we put in place where the health policy -- people were prepared to spend because the security -- including security in employment -- was there.

But the China dimension is important, but it's not the only part of the equation. The stimulus packages that other countries were undertaking were essentially an infrastructure.

What does infrastructure need?

It needs resources -- iron, or it needs the sort of stuff that Australia supplied. So it wasn't just China, it was Asia as a whole, it was Korea, it was Japan, it was the ASEAN countries, all of them demanding the sort of resources that we had.

QUEST: Oh, well, many thanks (INAUDIBLE).


QUEST: And some of you may think this is just a beautiful venue, certainly with Simon Crean talking to me in the wonders of a basking, beautiful sunny day.

Is it just an excuse to squeeze some skiing into our schedules? You might be right.

In a moment, we'll meet the man who makes sure even if your stocks crash, you won't slip up on the slopes.


QUEST: Now, the breezy, chilly weather, even when it's sunny, is pretty cold here in Davos. Imagine how bad it is if you've actually traveled several thousand miles from an environment that is considerably warmer, from Sand to Snow.

John (INAUDIBLE) -- John...


QUEST: Come here.

I'll tell you, John Defterios, who has literally gone -- well, you tell us, John, and why it's significant.

JOHN DEFTERIOS, HOST, "MARKETPLACE MIDDLE EAST": Well, we arrived from Riyadh last night, which is quite interesting. But this is one of those stories that was germinated here in Davos. Having covered the Middle East, I had a bunch of businesspeople say, I just came from Riyadh, I just came from Riyadh.

And I said, why have you been coming from Riyadh?

And they said, because I've come from the sand to the snow.

There was a major conference taking place just ahead of Davos, piggybacking off of Davos. So I did the trip this year.

Let's take a look.


DEFTERIOS (voice-over): The physical contrasts are stark -- the rugged peaks above Davos juxtaposed against the desert capital of Saudi Arabia. Davos, home to the World Economic Forum for 40 years; Riyadh, the venue for the Global Competitiveness Forum for just four.

While vastly different, they do share one vital link -- many of the same A-list players, like Jim Turley of Ernst & Young, go to both.

JAMES TURLEY, CEO, ERNST & YOUNG: This is very much around competitiveness and sustainable competitiveness, especially in the region and connecting the region to the world.

DEFTERIOS: The effort is part of a gutsy global positioning move by the kingdom, not known for its openness to the outside world.

(on camera): With a few years under their belts, some participants have joined a club referred to as Sand and Snow -- those who pack in both Riyadh and Davos in the same week.

(voice-over): One can recognize the similarities, including the signage and stagings and the obvious differences. Here is GCF host, Governor Amr Al-Dabbagh in Riyadh, and how he appears on the global scene. Chief executives like Michael Dell have made it a must attend date, in part because Saudi Arabia is the largest market in the Gulf, with vast oil wealth behind it.

Former British prime minister, Tony Blair, was here and held a bilateral meeting with Saudi's King Abdullah.

TONY BLAIR, FORMER BRITISH PRIME MINISTER: The truth is, power is shifting East. But this East-West relationship is absolutely at the heart of -- of the future of the global economy.

DEFTERIOS: Bringing in global players to air their ideas also plants the seeds of change for the next generation of Saudis, as religious conservatives continue to resist reforms. Saeb Eigner has a foot in both worlds. He is a European with close ties to the region.

SAEB EIGNER, CHAIRMAN, LONWORLD GROUP: They're showing the best of their parentage (ph) in other parts of the world. And they're looking at how this could be applied locally.

DEFTERIOS: Like the movie, "Trains, Planes and Automobiles," all modes of transport come onto the table in the transfer from Sand to Snow. It took a lot of planning for one and it's tricky packing in going from, say, 24 or 26 degrees centigrade to zero or two degrees in Davos right now.

(voice-over): We shared a ride with Jim Turley as he made his move to Davos for the tenth time.

TURLEY: (INAUDIBLE) the group that really helps organize this for the (INAUDIBLE) realizes that in doing this back to back, it's probably fruitful because maybe we'll pick them both.

DEFTERIOS: During his five-and-a-half hour journey, Turley combs through his very thick briefing book before landing in Zurich. He's ready to jump into the big event, which now has a smaller companion.

(on camera): It is certainly colder than Riyadh.

UNIDENTIFIED MALE: So you'll pick it up as you go in your direction.


QUEST: Now, then, John, I -- I can only imagine what your body must have been going through from that temperature to this.

DEFTERIOS: Well, I'll tell you a little sidebar story. I -- my throat went out during -- halfway through that panel I was chairing there, so I had to go get this steroid shot to get my voice back.

But I feel better over here now in the fresh air.

QUEST: Absolutely. Now, listen, how much of all these conferences in places like Saudi Arabia is there -- it's still the old line, why do people rob banks?

That's because they have -- they have the money in them.

Why do people go to conferences there?

That's where the money is.

Is there really policy issues discussed in the way that there are here?

DEFTERIOS: Well, this is a very clever strategy we touched upon here, but let's go a little bit deeper. This is the kingdom and King Abdullah of Saudi Arabia trying to open things up. So the best way to open things up is bring in the dialogue. So you have the debate. And the business leaders have already been there because there's a $500 billion spending plan over the next five years. So they want to have a presence.

But while you're going to have a presence, let's also have a debate on how to reform society and the economy at the same time.

QUEST: All right.

Many thanks, John.

You're putting me to shame with that delightful scarf.

DEFTERIOS: You like that, right?

QUEST: I do. I really -- I've been coveting it all day, compared to...

DEFTERIOS: And I told you it's the influence of my Italian wife. She takes care of these things for me.

QUEST: Well, that's a bit of a dressing for me.

Many thanks to you.

John Defterios, look after the -- right.

Now, a balancing act may be a good way to describe the economic mission of this year's conference. Many here are just as interested in improving their balance on skis -- that is, if they ever do manage to get up the mountain.

I went for a lesson with a local instructor and tried to get his dirt on high profile clients, because this chap, he teaches the powerful, the rich, the famous to ski in his World At Work.


MARCO GRASS, SKI INSTRUCTOR: Really go over. Stay in the plow. Go in the plow. Now stay in the plow all the way around, Richard.

QUEST: Well, I started with the Hoff.

GRASS: It will be three years, three-and-a-half. Skiing was always a big passion in my life, especially when you're on the top of the mountain with the nature kind of scenery, just the mountain itself.

Flying up, up, toward me. That's it.

QUEST: Tell me about some of the famous celebrities that you've taught to ski.

GRASS: I think confidentiality is quite important because you witness phone calls or you witness other kind of family conflicts, which I guess it's...

QUEST: I don't want to know...

GRASS: I know...

QUEST: I don't want to know...

GRASS: No, I know...

QUEST: I don't want to know who's sleeping with who. I just want to know who did -- who have you taught?


QUEST: All right.

GRASS: Keith Stumm.

QUEST: Stumm?


QUEST: Oh, yes.


QUEST: OK. So...

GRASS: Let's go skiing.

QUEST: Of course, now it's a yes or a no.



QUEST: Celebrities?


QUEST: Hollywood?


QUEST: Business leaders?


QUEST: You're not a very good skid (INAUDIBLE).


GRASS: Stretch, long way, now feel the pressure on the lower ski. That's it.

Sometimes we have communications on the T-Bar or on the chair lift, which they want to know my opinion about certain things. In the moment we say good-bye, it just stays with me. You know, it doesn't go outside. And I think that is also something which makes an instructor successful, to be loyal, you know, and not spreading out, oh, I've been skiing with these people and, oh, it's a fun time.

Transfer to the lower ski the weight. And feel it.

QUEST: Chief execs...

GRASS: I can see they have different rules when it comes to, you know, manage something. They really give themselves a target for like in three days, I want to manage this. And they'll really work hard.

Sometimes I even advise them, you are so off on the phone, why don't you leave it down at the bottom and just try to ski all day long without a phone?

QUEST: Tell me what happens to Marco when you wake up in the morning and you look out and you see there's been a big clump of snow overnight and you realize you might be the first person?

What happens in there?

GRASS: Oh, my heart is smiling and the inside of me obviously blossoms up. And I want to be out in the deep snow and just, you know, be in -- in the wildlife outside, in nature and just enjoy the quietness, enjoy the gleaming snow.

QUEST: And there's a big (INAUDIBLE).


QUEST: Every year it is the same. I get up onto the mountain just once, to do a little bit of filming and then back into the Congress Center.

We'll be back with more QUEST MEANS BUSINESS.

We're live in Davos.

So are you, in just a moment.


QUEST: Welcome back to Davos.

And just in to CNN, the U.S. Geological Survey has recorded a 6.1 magnitude quake in the Philippines region. Now, this, of course, is serious stuff. We'll been wanting to know not only the effects there, but the potential for tsunami or other activities.

Guillermo Arduino at the CNN World Weather Center.

We need to know more, please.

GUILLERMO ARDUINO, CNN METEOROLOGIST: No tsunami warning, very important to point out. It's 6.1, the magnitude of the earthquake. We're going to ask Taylor Ward, our producer behind the scenes, to roll. We're going to tell you where it is. It's that red dot behind these two yellow dots. That means that yesterday, we had some action, as well.

One hour -- it happened one hour ago. It's two -- it was at 2:49 in the morning here in the Philippines. The distance, roughly, 150 kilometers southeast of Pandan in Cantanduanes (ph). And from Manila, it's 500 kilometers.

Again, 6.1, no tsunami warning. No more reports right now -- I'm sure they felt it in here -- relatively shallow because it's 21 kilometers in depth -- 25 kilometers in depth. And it happened roughly one hour ago.

No tsunami warning, again. We're going to continue on the story just in case we get some more information from the Geological Service.

Let me now transition to my maps. And I'm going to tell you, Richard, that I was checking out if you got some snow. You did get some snow, but yesterday, mostly. Not from last night until now, according to the observations, though I remember last night, two minutes before 9:00 p.m. Your time, you got some snow. We saw it on the screen.

Well, you're going to get much more, because remember this low is dumping here some snow. Probably, we are expecting 25 centimeters or so for you. And we're going to see it, actually, tomorrow. Look, again, this is it, into this area, where you are, 25 or a little bit more. This is the estimate that we have. Nine -- well, it's in inches -- in centimeters, so we are talking about -- there you go, 25. Yes. Around 25 centimeters of snow.

Let's see the official forecast. And I'm going to go in a second. That graphic pops up. Thursday, some snow; and Saturday, some more snow for you. It's bitterly cold, though. I know it's like minus 11.

Do I go back to Richard or are we going to break -- Richard, we go back to you.

Very cold, indeed, outside for you.

QUEST: There's no snow -- Guillermo.

ARDUINO: You'll get it tomorrow.

QUEST: There's no -- not yet, there isn't.

Oh, yes, yes, yes.

All right, Guillermo at the World Weather Center.

ARDUINO: Thank you.

QUEST: QUEST MEANS BUSINESS teaming up with Connect the World to bring Davos to your desktop. Becky and I will be hosting a live Web chat on the World Economic Forum. She's in London, I'm here. We want to know has the recession ended for you?

Your business, your country, Friday at 15:00 in London, 16:00 CDT.

Our Profitable Moment in a moment.


QUEST: Finally tonight's Profitable Moment.

President Sarkozy has long been a critic of the Anglo-Saxon model of capitalism. Laissez-faire trading, profit at all costs and, as he says, leverage, leverage and the rule of the fast buck.

In coming here to Davos and attacking capitalism as we have known it, he set out his opposition to minor tinkering with the system. President Sarkozy was blunt -- only deep, profound change will do, he said.

No one can really disagree with much of what he said. It makes common sense that the broken system can't be simply restructured.

The issue will be how much opposition there will be in making these changes. Of course, this goes much deeper than simply changing capital adequacy requirements or liquidity buffers. President Sarkozy was talking of cultural, conceptual change. And the CEOs here, like Verwaayen, need to take back to their companies as they bring forward their own version of enlightened or cohesive capitalism.

And that is QUEST MEANS BUSINESS for tonight from Davos.

I'm Richard Quest.

Whatever you're up to in the hours ahead, I hope it's profitable.

"AMANPOUR" is after the headlines.