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QUEST MEANS BUSINESS
Ben Bernanke Nominated for 2nd Term as Fed Chief; GM Unclear on Opel's Future
Aired August 25, 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, CNN INTERNATIONAL HOST: Ben Bernanke banks a second term at the Fed. Now he has to ensure economic recovery. Is General Motors stalling over Opel? The German government says it needs an answer. It's another glorious day in New York. I'm Richard Quest. I mean business.
Good evening. President Obama has re-nominated Ben Bernanke to be chairman of the U.S. Federal Reserve. It might have been expected, but it still was welcome news nonetheless to the markets. Tonight, we look back over the last few years at how Ben has managed this crisis and what the job he now has to do going forward.
As long as the Senate confirms the appointment, then Bernanke will be back in the chair. His appointment -- the initial appointment ends in January of next year. For the next four years, he will remain in charge of the most powerful central bank in the world.
And he has a particular task to do, not only to ensure the U.S. doesn't go back into recession, but also to make sure that the U.S. economy manages to get back to something resembling stable growth.
The president and Mr. Bernanke both know the task at hand.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The man next to me, Ben Bernanke, has led the Fed through one of the worst financial crises that this nation in the world has ever faced. As an expert on the causes of the Great Depression, I'm sure Ben never imagined that he would be part of a team responsible for preventing another.
But because of his background, his temperament, his courage, and his creativity, that's exactly what he has helped to achieve. And that is why I'm reappointing him to another term as chairman of the Federal Reserve.
BEN BERNANKE, CHAIRMAN, FEDERAL RESERVE: The Federal Reserve, like other economic policy-makers, has been challenged by the unprecedented events of the past few years. We have been bold or deliberate as circumstances demanded.
But our objective remains constant, to restore a more stable financial and economic environment in which opportunity can again flourish and in which Americans' hard work and creativity can receive their proper rewards.
(END VIDEO CLIP)
QUEST: With Mr. Bernanke's background and expertise in the Great Depression, he might have been thought of being a man perfectly tailored for the job. Now, though, he has other tasks on his agenda.
He and the president are staying on the luxury resort island of Martha's Vineyard. But they, of course, have many things on their mind that will prevent them from relaxing too much, as Jim Boulden now explains.
BERNANKE: It has been a particular privilege for me to serve with the extraordinary colleagues throughout the Federal Reserve system.
JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: Tuesday's announcement may have come in the midst of a summer vacation, but Ben Bernanke's time as Federal Reserve chief has been no picnic.
BERNANKE: I, Ben S. Bernanke.
BOULDEN: Firstly, he had to follow in the footsteps of a legend in 2006, at a time when Alan Greenspan was credited with an unprecedented boom in the U.S. economy. Then Bernanke was tasked with having to clean up the mess of an economic crisis.
In 2007, critics pounced when Bernanke made this statement after the American mortgage market started to falter.
BERNANKE: We do not expect significant spillover from the subprime to the rest of the economy, or to the financial system.
BOULDEN: In fact, the spillover was the worst since the Great Depression. Bear Stearns, Lehman Brothers, AIG, General Motors, the American economic landscape changed forever.
So how does financial analyst Todd Benjamin rate Bernanke's first term?
(on camera): Think of an old American report card where A is very good and E is failure, where would you give Bernanke for the first three years?
TODD BENJAMIN, FINANCIAL ANALYST: Well, look, I think if you're dealing in -- early on in his term, you would probably give him, let's say, a D, all right?
BENJAMIN: But early on, all right? Because he didn't realize the severity of the subprime crisis. But you know, the job he is doing now, you've got to give him probably a B-plus, and probably at least an A-minus, maybe even an A because he took the economy from the brink, it's getting back on track.
The big challenge for Ben Bernanke going forward, I'm not saying the next six months, maybe not even in the next year, but in the next, you know, four years, is going to be his exit strategy. How does he rein in all of this liquidity that they've got out there? Because there is oceans of it.
BOULDEN (voice-over): Critics often say the Fed was too interventionist, that the political aims of the White House influenced the Fed. But to anyone who might have wanted Bernanke replaced, supporters say what would have been the alternative?
Jim Boulden, CNN, London.
QUEST: Lakshman Achuthan joins me now, managing director of Economic Cycle Research Institute. We're going to talk more about exactly what this appointment -- it's hard to know, is it an A? Is it a B-plus? We were just hearing Jim Boulden's report.
Some people think he might even have been a C and a D for the early part of his tenure.
LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE: Yes, well, certainly improving grade. And what we've had here is an emergency room situation, and as an emergency room doctor, the Ben Bernanke Fed has done quite well. They've taken us back from.
ACHUTHAN: They've taken us back from the abyss.
QUEST: I'm going to push you hard on this.
QUEST: You're all saying that he has done quite well.
QUEST: Surely he has done more than quite well, he has done bloody well.
ACHUTHAN: Bloody well. Well, you know, not falling into the abyss is a start. And doing that, once you've done that, business cycle dynamics begin to take over and that's a part of why we're seeing a recovery happening here.
The recovery has a lot of different mothers, OK? There is a lot of different reasons why this economy is recovering. The key part that the Fed played was helping the financial system from failing last fall, so we did not fall into the abyss, which would have been much worse than the greatest recession that we've had since World War II.
QUEST: You would agree he was the right man for the right job with his expertise and experience of the Great Depression research.
ACHUTHAN: I would agree with that. And I will leave it at that. I will say that he is good emergency room doctor. And he has done a great job there. It would be nice to not go into the emergency room, is the follow-up point.
QUEST: All right. So what you're doing is the classic New Yorker.
QUEST: It's a classic -- no, it is!
ACHUTHAN: All right.
QUEST: It's a classic New Yorker line.
ACHUTHAN: I'm never satisfied.
QUEST: . of, so what have you done for me lately?
ACHUTHAN: Exactly. And the next question, right, is, we know there is an exit strategy, we're starting to talk about, how do we get out of this? How do we pull -- you know, take our foot off the gas?
And there, you're walking a tightrope, literally. And New Yorkers like that, right? It's very exciting. But on one side, if you pull off and you exit the liquidity that they're applying to the economy, too soon, you risk another recession in short order, and that takes us down a deflationary scenario.
On the other hand, if you wait too late and you leave the gas on for too long, then you worry about inflation surging. So on each side you have a big risk.
QUEST: We're going to get one, if not the other. We are going -- I mean, the chances.
ACHUTHAN: Well, you could -- you could walk the tightrope perfectly. It has been done. I think the best example of this is the middle of the '90s. It's the singular example where the Fed has timed their policy right.
QUEST: It was a world -- there was a world of difference from that.
ACHUTHAN: World of difference, I agree.
QUEST: World of difference.
ACHUTHAN: I agree, I agree.
QUEST: You didn't have toxic assets still on bank balance sheets. You didn't have leverage up the wazoo.
ACHUTHAN: Richard, I agree that the chance of them getting the timing right is very low.
QUEST: Which would you rather, flirt with inflation or risk a second recession and bout of deflation?
ACHUTHAN: I think they're both horrible, but you'd have to take the flirting with inflation over the two.
QUEST: Because we now have to get rid of that.
ACHUTHAN: Because you know how to get rid of it and you don't want to get stuck in deflationary spiral. These are big problems, especially if you owe a lot of money. And all households owe a lot of money, and the government owes a lot of money.
QUEST: Let's bring this -- let's wrap this up by really talking about Bernanke will get his -- he has been nominated.
QUEST: . he will get confirmed.
QUEST: But he is going to have to take some uncomfortable -- Mr. Bernanke, you didn't do it very well, in his hearings.
ACHUTHAN: He is going to get major heat on, why did we get in the emergency room in the first place. He is going to get major heat on who has the $2 trillion that you loaned out over -- during this course of the last year or so.
QUEST: And a quick -- let's finish on this. In all of this, is Alan Greenspan just simply a dirty word?
ACHUTHAN: I don't think Alan Greenspan is a dirty word. I think in the 1990s, vintages '90s Greenspan was quite, quite good. When you got into the 2000s, I think he went adrift and, as did Chairman Bernanke, with the very, very low interest rates in 2002 and 2003.
QUEST: All right. We shall leave it there for now.
ACHUTHAN: All right.
QUEST: Many thanks, indeed, for joining us.
ACHUTHAN: OK. Thank you.
QUEST: And I -- we are lucky, I mean, nice lightweight suits. Nice light jackets. And I'm the idiot standing here in a heavy wool suit.
ACHUTHAN: You look good. You look good though. There you go.
QUEST: Thank you.
ACHUTHAN: All right.
QUEST: He had to say that. We got him out of the office for an afternoon. It's this wonderful sunshine. And we're actually in Brooklyn, on the other side, of course, of the East River.
And Fionnuala Sweeney is in the -- is in the newsroom where I'm sure it's cooler than it is out here.
FIONNUALA SWEENEY, CNN INTERNATIONAL ANCHOR: It certainly is, Richard. We begin in Afghanistan where a car bomb went off outside a government building in the southern city of Kandahar. At least 33 people were killed and dozens more wounded.
The violence came just hours after the election commission announced partial results from last week's polls. Incumbent President Hamid Karzai has eked out a slim lead against his main rival, Abdullah Abdullah. Final results are not expected for weeks.
British Prime Minister Gordon Brown is finally weighing in on the controversy over the release of the Lockerbie Bomber. Mr. Brown spoke after talks with the visiting Israeli prime minister, Benjamin Netanyahu. Mr. Brown says he was repulsed by the hero's welcome Libya Abdel Basset Ali Al Megrahi on his return to Tripoli.
The Scottish justice secretary released the ailing Al Megrahi on compassionate grounds.
A diplomatic tit for tat. Syria and Iraq have recalled their ambassadors to each other's country. The move follows last week's deadly bombings in Baghdad. Iraq wants to Syria to hand over two Iraqi suspects living there. The Iraqi government says they played direct roles in the terror attacks which killed at least 100 people.
And court papers reveal Michael Jackson died from an overdose of the powerful sedative propofol. That's the preliminary finding by the Los Angeles Coroner. He found Jackson's doctor had given the singer a cocktail of medications in the hours before Jackson died.
A single law enforcement source told the Associated Press that the coroner has ruled the death a homicide.
And those are the headlines. Back to you, Richard, in the Big Apple.
QUEST: We thank you, Fionnuala Sweeney in London. And we'll be back with you in about 15 or 20 minutes from now.
When we return, QUEST MEANS BUSINESS, we're in New York, but we will be in Berlin, as our correspondent Fred Pleitgen will be telling us about General Motors's Opel, and a deal that's yet to be done.
QUEST: You've got to admit, that is some view indeed, right the way through to the New York Harbor, Statue of Liberty over there. We'll be showing you more shots of that as the hour goes on. Lower Manhattan, of course, the heart of the world financial system.
Let's talk about the markets and how they've traded. Stocks in Europe just keep rising, all of the main markets, all of the bourses were higher at the end of the session. And that, of course, means that they're at the high points for the year. In some cases they're at the high points going back to September and October of last year.
The FTSE, first of all, back above 4,900 since its brutal month of last October. Financials were on top. The Man Group, RBS, biggest percentage gains, mining stocks. Telecoms were good in France and in Germany. France Telecom and Vivendi among the best performers in Paris. Deutsche Telekom, Siemens in Frankfurt.
Those beaten-down Volkswagen shares are still heading lower. They're down -- lost another 2.7 percent this session.
Now General Motors and Opel. You will recall, of course, that the German government had been asked to put money in to help subsidize the sale of General Motors. Well, General Motors has been in bankruptcy and come out. And still Opel hasn't been sold. Fred Pleitgen is with us in Berlin.
Fred, what exactly is the problem with the sale?
FREDERIK PLEITGEN, CNN INTERNATIONAL CORRESPONDENT: Oh, there are so many problems around all of this, Richard. I mean, how many times have we been talking about this major saga that has been going on between GM -- between GM Europe and between the German government, and, of course, the potential investors, Magna of Canada, and RHJ, that financial investor.
Basically the problem right now is that GM simply hasn't made a decision yet on who it wants to sell its Opel -Vauxhall group to. And then there was that rumor flying around the press, especially the American press, that apparently GM was contemplating not selling its European unit at all.
That, of course, got the German government very, very angry. They called top-level GM managers in here to Berlin to talk today. And they didn't put out any official word after meeting the German government today, but what we're hearing from government sources is that GM is now saying, yes, it does still want to sell its European wing.
However, it still is very much up for grabs of whether Magna will get it or whether the financial investor RHJ is going to get the deal in all of this. However, the German government has made very clear that it wants Magna to be the one to get this -- to get the deal done and says it will only put up German government and taxpayer money if, in fact, the Canadian investor gets the deal in all of this -- Richard.
QUEST: As we move towards the September election for Angela Merkel, is this going to be a sideshow? Or is it likely that Opel might become part of the main event?
PLEITGEN: Well, that's a very good question. And it is very likely, or very possible that it will come to be a main event if, in fact, a deal is not resolved in the near future. The German government says it wants all of this to be resolved within this week.
Now it's very unlikely that that is, in fact, going to happen, because one of the things that is being played out here is that there are very different interests at stake here, Richard.
The German government has a very different interest than in fact a General Motors does. The German government wants as many jobs here in Germany to be preserved and will only put up taxpayer money. If that happens, it believes Magna will cut the fewest jobs.
General Motors wants to retain control of its European wing and believes RHJ is the best company to do that with because they think that if they offer their company, GM Europe, to Magna, that their technology will wander straight into Magna and that they will have no more control over it -- Richard.
QUEST: And, Fred, in all of this, I do wonder, is anybody -- because, of course, Germany had its own car scrappage scheme, the U.S. has just finished "Cash for Clunkers." Is the uncertainty over the future of Opel causing people to decide to shun their cars, or is it so entrenched in German society, (INAUDIBLE) Opel, that it doesn't really matter?
PLEITGEN: Well, you know, that's a very good question. I mean, looking at the German "Cash for Clunkers" program, Opel has done fairly well in that. But part of that has to do with the fact that they do offer the kind of cars that people have been buying as part of this scheme, small cars, mid-sized cars, not very expensive cars.
However, there is a certain amount of people who do decide not to buy an Opel, because, of course, the few...
PLEITGEN: . one of the things we've been hearing in the press over the past couple of days is that for General Motors, apparently, bankruptcy for GM Europe and even liquidation of its German and European assets is something that is still very much on the table.
So certainly that is something that consumers are not afraid of, but are certainly concerned about and certainly something that the Opel management will be concerned about when they look at the consumer going into the showroom, is that going to be something he is going to be thinking about and perhaps buying a car from a different brand.
So certainly that is a major concern and I've heard that from dealers as well. They want this to be over. They want to have clarity about what is going on. They believe they have the product that people want, but they believe people might not be buying it because they're not sure.
You know, you buy a new car today, whether that company is still going to be around four or five years from now -- Richard.
QUEST: Fred Pleitgen, joining us from Berlin. You may think -- Fred, many thanks indeed.
We've been talking about Opel-General Motors. Let me leave you, as we go to the break, we'll be back in just a moment, how about that for the afternoon traffic in New York in Brooklyn. QUEST MEANS BUSINESS, we are live in New York and we're back in just a moment.
QUEST: One of the big issues in the financial world on both sides of the Atlantic, bankers' bonuses, once again, back on the agenda. France will push for stronger commitments to limit bankers' bonuses at the G-20 meeting to be held in September in Pittsburgh.
Nicolas Sarkozy, in the last few hours, has urged French bankers to show restraint in curbing bonuses. Of course, the implication being if they don't show self-restraint, government will restrain it for them. Jim Bittermann, our correspondent, is in Paris, he joins us now.
Why does President Sarkozy believe that he will have any more success at getting self-restraint than anybody else has?
JIM BITTERMANN, CNN INTERNATIONAL CORRESPONDENT: Well, Richard, he has done a few things here today -- or announced a few things that could change things dramatically. One of things is he has gotten an agreement from the bankers themselves to install a kind of system of bonus and penalty which is to say that the traders and other members of the bank who may be eligible for bonuses will only see the bank -- their full bonuses after three years.
That the first third will be paid right away, but the other two-thirds will depend on how well they do thereafter. So they actually could be penalized if they don't continue to perform well.
The other thing is that a third of those bonuses are going to have to be taken in bank stock. So that should incite the traders and other people are eligible for bonuses to keep up the good work, as it were.
And also, Sarkozy has announced a couple of things that are going to make the bankers very nervous indeed. He said there is going to be much more control over the banking system that is going to watch more carefully what the various bankers do.
He has installed Michel Camdessus, a name you may be familiar with, former director of the IMF, who is going to be what Sarkozy called the "czar of French banks," and he said also that French banks that don't cooperate and don't adhere to his code of good conduct, are going to find themselves excluded from government contracts, which is what -- that's a sector that is quite lucrative indeed for some of these banks -- Richard.
QUEST: The issue, of course, remains that the bankers just don't seem to get the message. And it seems to be, Jim, to some extent whether you're in London, Paris, or New York, they don't get that idea that there is anger and fury about this.
BITTERMANN: Exactly. And Sarkozy himself said he was scandalized, scandalized was the word he used at the fact that the bankers had not learned the lesson of the crisis last fall and had not taken appropriate action.
This was the seventh meeting today that he has had this year with the bankers trying to jawbone them into doing something. And clearly he believes that if he -- the jawboning isn't successful, he is going to take other kinds of more drastic action, and he's going to go to the G-20 meeting loaded for bear.
He basically feels and probably rightly so that if the other countries of the G-20 don't adhere to some of these measures, they're not going to really make much sense given the fact that banks are international and that the various players could go elsewhere if they don't get their bonuses and if they don't adhere to some of these rules of good conduct -- Richard.
Jim Bittermann, live for us tonight in Paris.
You have to admit, this is one program that takes you truly to all of the major centers. So far we have been live in Berlin, we've been in Paris, now back here in New York.
Just up the East River, about a couple of miles from where I am is the district of Williamsburg. If you asked New Yorkers which is one of the trendiest areas of the city, they may very well say that.
It certainly saw great growth in the good days. What has happened to property prices in that trendy part of the Big Apple? Maggie Lake went to find out.
MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT (voice-over): Williamsburg, Brooklyn, is only a five-minute subway ride from Manhattan. But the young people who come here call it worlds apart.
UNIDENTIFIED FEMALE: It's colorful.
UNIDENTIFIED FEMALE: It's awesome.
UNIDENTIFIED MALE: This is flipping (ph).
LAKE: Even longtime residents are fans.
UNIDENTIFIED FEMALE: I love this neighborhood. If I won the Mega tonight, I wouldn't move.
UNIDENTIFIED MALE: It's certainly the (INAUDIBLE), there are new bars coming in every day, new restaurants. There are new businesses. There is so much life.
LAKE: In this golden age comes real concerns about the neighborhood's future. Zoning changes a couple of years ago triggered a massive development boom, particularly near the waterfront.
Estimates say between now and the end of next year, more than 5,000 new apartments are scheduled to hit the market in one of the most challenging economic environments ever.
Real estate broker David Maundrell, who grew up in Williamsburg and has seen its rapid transformation from a gritty manufacturing hub, calls it a pivotal time.
DAVID MAUNDRELL, APTSANDLOFTS.COM: The issues that we have here in Williamsburg are really not much different than the issues that, you know, Manhattan is having right now, and the rest of the country.
LAKE: Still, Maundrell says the area's unique draw will help it weather tough times.
MAUNDRELL: You have this mix of old industrial Brooklyn, mixed in with these edgy, creative type of buildings.
LAKE (on camera): Yes, we can kind of see it here. This is an auto repair shop, and then right next door to it, a really new, nice building. And then down further a food -- like a wholesaler.
MAUNDRELL: Yes, that's right.
LAKE: So it's still like that now, isn't it?
MAUNDRELL: And the core market here, they don't mind that.
LAKE (voice-over): And the hope is the neighborhood will absorb the new product.
(on camera): So you don't think it was just all a sort hyper-inflated boom and that, you know, once the plug was pulled that there is no real substance to it?
MAUNDRELL: No. I mean, and what tells me that is because the renters are coming in droves, they're coming in very strong.
LAKE (voice-over): And it's not just renters, on the waterfront, luxury developer Toll Brothers has built two large apartment towers. Senior project manager Scott Avram says after a tough fall, there has been a pickup in sales, thanks in part to price cuts and incentives.
(on camera): Are you guys willing to call -- and in this building, willing to call the bottom in prices?
SCOTT AVRAM, TOLL BROTHERS CITY LIVING: I mean, I would say so. I mean, I think that's reflective in our recent sales. I mean, traffic has been strong, sales have been strong, and I mean, also that's a sign that there has been improvement.
LAKE (voice-over): And that's exactly what is worrying many Williamsburg watchers.
BEN MUESSIG, THE BROOKLYN PAPER: Are there enough people with enough money to move into these units, and if so, how will that change the fabric of the neighborhood? You know, it could continue to be an artistic neighborhood, but already we're seeing people from that first generation of artists and young folks who are being priced out.
LAKE: Unique corner of New York on the edge of an uncertain future.
QUEST: And Maggie Lake is with me. I won't draw attention to the fact that you are sensibly dressed.
LAKE: For a change. Richard, we're going to have to have you come more often. You brought the great weather with you.
QUEST: But did I bring any change in property prices? Your report just then, there are a lot of people who have got -- who are underwater on their property.
LAKE: Yes, it's true, it's true. And in fact, there is just some data coming out that renters, not just buyers, renters, rent is down 10 percent in New York in the month of August. But you know what a one- bedroom still goes for, $3,274. So it's all relative. The rent is moving down, the property values are moving down. But they are still quite hot.
QUEST: But is there a feeling within -- I mean, on this side of the river, that the fall has been arrested?
LAKE: You know, when you -- it depends on who you talk to. Now clearly they have some skin in the game, but the property developer Toll Brothers that we spoke to said that they absolutely have seen a big boost in traffic. They've been moving apartments, which I find is very interesting and completely contrary to what we're seeing everywhere else in the country.
QUEST: You see, I can only imagine in this city -- and we've got a producer who is in exactly this situation, not on the ladder, waiting to get on the ladder, and if you don't get on the ladder now, when are you going to get on the ladder?
LAKE: The other thing that is really helping is people who are able to control their own financing, like Toll Brothers, they have a whole finance arm themselves. They are working with their customers to ensure that they can get credit. They're not in the problem that other people are in where they get buyers who are interested, who have been waiting in lay, like you say, but they can't get a mortgage.
QUEST: All right. And now you may call me -- at this point you may just call me a property snob.
LAKE: Property snob, yes.
QUEST: Property snob. Is it still not the case that this space of water, the B&T, the "Bridge and the Tunnel," space of water makes all the difference?
LAKE: People in Brooklyn say no. The restaurants -- the new restaurants are -- the new bars, the trendy music, all happen in Brooklyn even more. It's about the young, Richard. You should know that. Maybe you're not a property snob, maybe you're an agent.
All of the old folks are over there on Manhattan. And Brooklyn is where it's happening. That's what they tell me. I'm all for Manhattan too, but that's what they tell me.
QUEST: Would you swap your Manhattan -- if you had a Manhattan property.
LAKE: I just did -- no, for a Brooklyn one? No, no.
QUEST: All right. We'll leave it there. Maggie, many thanks, indeed. See you tomorrow. Maggie Lake, who is joining me as a property snob.
When we come back, we'll turn our attention to those people out of work, potentially out of luck, because when unemployment benefits stops, what do you do then? Poppy Harlow will be with us.
QUEST MEANS BUSINESS, and we're live in New York.
QUEST: And welcome back, live from New York this week, part of our "NY-Lon-Kong" coverage, this is QUEST MEANS BUSINESS. I'm Richard Quest, coming to you from the Big Apple.
We know the markets have rallied. They have been rallying sharply in the past few weeks. Is it sustainable? Stephanie Elam is at the New York Stock Exchange.
Stephanie, the key question, in the dog days of summer, when volumes are non-existent, what happens next?
STEPHANIE ELAM, CNN CORRESPONDENT: That's the thing, with volumes not being existent, Richard, a lot could happen because one little trade could change the whole direction of everything because there's just not a lot of people out there making trades.
But we do have stocks that are on a five day winning streak. And right now, we are in the green. A lot of it has to do with, today, consumer confidence. And that came in much higher than analysts were expecting. The market spiked in response, but then pulled back from those highs. But we're still seeing solid gains today.
Now, the survey from the Conference Board is closely watched by investors because consumer spending accounts for two thirds of economic activity in the U.S. and the group says the job market outlook and business expectations improved in March. So that's a good sign that the consumer is coming back to the economy.
But overall, when you take a look at the all that has been going on, the gains that we've seen over the last few days have not been the huge. They've been very small, but gains nonetheless. That -- that would imply that it wouldn't take much for some economic data to come out that wasn't rosy and the markets could change directions -- Richard.
QUEST: Ben Bernanke getting his appointment, as you were talking about. And the market would have been seriously upset if they had not gone the way it was expected.
ELAM: Yes, that is true. And Wall Street has generally liked Ben Bernanke. Now, he's been there through the thick of the turmoil here and he's played a central role in propping up the economy. And we've seen that account for higher stock prices.
President Obama says Bernanke helped the U.S. avoid another depression. That's noteworthy, since he is an expert on the Great Depression, Bernanke, that is, of the 19830s.
Also, Obama wants some certainty because it's still a fragile time for the economy and making too many changes would have sent a different kind of signal to the marketplace overall. They didn't want to do that. They wanted to keep the peace, keep things where they are.
And then many of the Fed's programs began under Bernanke, so he would like to see them through. Remember, Bernanke still has to be confirmed by the Senate and the hearing could get tense. You've got some people who aren't happy with what Bernanke's done. Some senators have doubts about the actions Bernanke & Company have taken. And some economists fear that Bernanke's actions could cause inflation to spike, which would limit recovery.
But at the end of the day, it's about results and that's what President Obama is focused on. Overall, this was not a big surprise. Wall Street is happy to see it -- Richard.
QUEST: Stephanie Elam at the New York Stock Exchange.
We thank you for your assessment and, in fact, this afternoon.
Now, by the end of the -- here's a sobering statistic for you. By the end of the year, two million Americans will have exhausted their unemployment benefit. There will not be any jobs in sight and they'll be wondering what on Earth to do next. That is the situation that they find themselves in, as U.S. unemployment heads toward 10 percent.
CNNMoney.com's Poppy Harlow has been meeting two people who face exactly that situation.
POPPY HARLOW, ANCHOR, CNNMONEY.COM (voice-over): Rachel Gold and Anthony Barberio don't have much in common. Rachel is 28 and worked in recruiting after graduating from college. Anthony is 46. He worked on Wall Street for 20 years, but he never went to college.
The thing they do have in common -- a $430 weekly check from the government. Like six million other Americans, it's life on unemployment after losing your job.
RACHEL GOLD, RECEIVING UNEMPLOYMENT BENEFITS: I definitely didn't think that I would be sitting here, you know, nine months later, you know, without employment.
HARLOW: Rachel lost her job in November. For Anthony, it's been more than a year.
ANTHONY BARBERIO, RECEIVING UNEMPLOYMENT BENEFITS: When I first was let go, I figured maybe a month, two months, you know. And I didn't think it would last this long.
HARLOW: But it has and each day brings more work to find work.
GOLD: This afternoon at 2:30, I have a recruiting meeting with somebody that I was networking with.
HARLOW: But the responds are few and far between.
(on camera): So you've applied for more than 650 jobs?
HARLOW: How many interviews have you had out of that?
GOLD: Maybe 10.
HARLOW: (voice-over): Anthony has applied for hundreds of jobs, too. If it were up to him, he'd extend unemployment benefits.
BARBERIO: I think they should just keep continuing it until the job picture gets better.
HARLOW: Unemployment benefits have already been extended, but the Labor Department forecasts 4.4 million Americans may lose their benefits before finding jobs. For Anthony, that will happen by the end of this year. And Rachel expects to lose her benefits in January.
GOLD: I would go out and get a waitressing job. I would have to.
BARBERIO: I want to put in like a deadline as to when I'm, you know, going to have to really seriously, you know, with -- you know, look for something, you know, whether it be a department store or something like that.
(END VIDEO TAPE)
QUEST: And Poppy Harlow joins me now to talk more about this.
In this environment, where there is uncertainty about -- or non- existence of full-time jobs, what about temporary work -- getting that bit of labor to bring in that bit of extra money?
HARLOW: It's a great question, Richard. Here's what's going on. They get -- Anthony and Rachel -- about $1,700 a month through their unemployment checks. That is more than they would likely make at an entry level job or as a waiter or a bartender in the city. So they don't have any incentive, Richard, to go out and to get those positions, because they're making more through their unemployment.
So there are a lot of people, Richard, that argue there's a glitch in the system, that there's no incentive for folks to go out and get part-time work and bring in at least some money every month, because they can get this unemployment. But then when it runs out, they don't have any experience or any work to put on the resume to help them find a job.
And that's a huge issue that both of them are facing and that they talked a lot about when we interviewed them.
QUEST: This is a classic catch-22 that people find themselves in, not only in the U.S. but I know also in the U.K. Those people on disability, those people, also, on unemployment and housing benefits. You can't give up the benefits because you can't, of course, get the money necessary to make up the difference -- Poppy.
HARLOW: That's exactly right, Richard.
And before I let you go, I have to compliment you on that exquisite tie that you're wearing.
QUEST: Oh, well, I'm glad you mention it because yesterday at the Stock Exchange, they were selling these ties. They were selling them for the princely sum of $6 each or $4 for -- no (INAUDIBLE). They were $4 -- you got four for $20. So I got a bit of a bargain and I promised to wear a different tie each week.
Is it working well for you today, Poppy?
HARLOW: Sorry, Richard?
QUEST: I was wondering whether it was working well on television today...
QUEST: ...popping (ph) very nicely.
HARLOW: I think you wear it very nicely, Richard, especially with that nice Manhattan skyline behind you.
QUEST: And you'd never know it was cheap and nasty.
HARLOW: No, you wouldn't.
QUEST: All right, Poppy Harlow joining us from New York.
We need to get a news update now.
Let's go to Fionnuala Sweeney for things at the CNN News Desk.
FIONNUALA SWEENEY, CNN CORRESPONDENT: Richard, there's the fires in Greece and wide outrage is growing over the government's response. Firefighters are patrolling smoldering areas near Athens, watching for flare-ups, trying to assess the damage. The wildfires burned for days near the capital, scorching thousands of hectares of land. They were the most destructive wildfires in Greece since an outbreak two years ago.
Greek newspapers charged the government with repeating past mistakes.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Hi, everybody.
UNIDENTIFIED FEMALE: All right. Can't you tell about...
(END VIDEO CLIP)
SWEENEY: A heroine's welcome in South Africa. The runner at the center of a gender controversy arrived home to cheering fans in South Africa. Caster Semenya swept to a stunning victory in the 800 meters at the Athletics World Championship last week in Berlin. Now, the sports ruling body is checking whether she is, in fact, a woman. President Jacob Zuma calls that the public humiliation of a "honest, professional and competent athlete."
After Korea's launch of a rocket Tuesday, (INAUDIBLE) that the craft failed to put a satellite into orbit at the correct height. A government official says the liftoff was normal, but the rocket blew past the 302 kilometer altitude without the payload separating. So for the mission, a partial success. A series of delays have kept the rocket from launching for four years.
And NASA suspended the launch of the Space Shuttle Discovery Tuesday because of thunderstorms. The astronauts will have to wait about 12 hours now until their next launch window. The shuttle is bringing tons of supplies to the International Space Station, including an exercise machine and mice for a bone loss study.
Now, Richard, take a close look at these cash machines in London.
Do you notice anything strange?
Blimey, they might say. That's right, your choice of English or cockney. The machines use the East London rhyming lingo on screen and instead of a PIN number, just punch in your Huckleberry Finn then collect your sophage (ph) and nash (ph), that's to say, your cash, and off you go.
And no one is having a giraffe (ph) or laugh at your expense, because it's part of one bank's attempts to keep local dialects in England alive. If it works out, scouse (ph) -- that means Liverpool -- and Scots expressions (ph) could soon be coming to a corner of Britain near you.
Those are the headlines, Richard -- back to you, not in London, in New York.
QUEST: Cold blimey knees under the ground and every other bit of old cockney slang I can think of at this time of the day.
QUEST: Fionnuala Sweeney, many thanks.
When we come back in just a moment, he is wearing a white coat. He has got a toothbrush in his pocket. We will meet with Dr. Ted, one of Brooklyn's better known dentists, who will tell us what it's like looking into people's mouths in this economy.
In just a moment, QUEST MEANS BUSINESS in New York.
QUEST: If there is one person you really don't want to annoy, it is somebody who is going to look into your mouth and may be doing something or wielding a very sharp implement within it. I'm already in trouble with Dr. Ted Rothstein, who is not a dentist.
TED ROTHSTEIN, ORTHODONTIST: I'm an orthist -- an orthodontist here in Brooklyn Heights...
QUEST: All right.
ROTHSTEIN: ...for the last 33 years.
QUEST: And that is a big difference. And boy, do I now know about it. You're actually -- your surgery and your clinic is just a few feet from where we are at the moment.
QUEST: You've been practicing here for many years.
How is your economy doing at the moment, Dr. Ted?
ROTHSTEIN: I have to tell you, Richard, definitely business is on the decline. And it doesn't look likely to come back very soon. I -- I get this by talking to my -- my colleagues. My colleagues in general dentistry and my colleagues in orthodontics and people who -- who sell dental equipment and supplies.
ROTHSTEIN: That's what they tell me.
QUEST: But is this because it is a -- I mean it's not a luxury, but it is a -- it's a -- it's something that people are putting off, they are not wanting to spend the money?
ROTHSTEIN: You're absolutely right. This is a -- orthodontics is somewhat of a luxury. It can be -- it can be delayed. I -- I notice that, though -- I notice that people who -- who come to my -- come to my practice from -- from the higher end, so to speak, from the people who are interested in the -- in the braces that go on the inside, the Invisalign, all those -- the -- the upgrade, the first class...
ROTHSTEIN: ...those people are still -- are still coming. There are a group of people who can afford it.
QUEST: Right. But are they asking you for a bit of a discount?
Are they asking you to do it on the cheap?
Are they asking you to delay their payments?
ROTHSTEIN: You're absolutely right on all counts.
ROTHSTEIN: Yes. They want discounts and I'm happy to give it to them. I'm happy to do that. And they -- they are now -- they negotiate and...
ROTHSTEIN: Yes. And I like that. I negotiate, too. If I was going to the dentist or -- I negotiate with the -- with the supermarket, whoever -- whoever I can.
QUEST: You've lived -- you've been in this area for...
ROTHSTEIN: Thirty-three years now.
QUEST: You've seen property prices go up and you're now seeing property prices come down.
Do you get the feeling that we've bottomed out around here, from what you're hearing from your friends?
ROTHSTEIN: Yes. I think there's a limit now to -- to rental increases, properties, yes. Properties that might have gone for $3 million and $4 million are quite willing to take a -- a 20, 25 percent dis -- discount to get their -- to get their properties sold. There's not much moving. There's not a whole lot of movement.
But I have to tell you, in this area, there are at least -- at least eight real estate agents within -- within 100...
QUEST: They're just waiting?
ROTHSTEIN: Oh, there's just out there.
QUEST: They're just waiting out there.
All right, we thank you very much, indeed, for joining us.
Can I have one of those toothbrushes or do I have to...
ROTHSTEIN: Go ahead.
QUEST: Do i8 have to negotiate?
ROTHSTEIN: Not only can you have one, but for the rest of the camera crew, too. Please, be my guest. They're genuine Dr. Ted -- drted.com toothbrushes.
QUEST: All right. Many thanks to you.
Dr. Ted joining me here.
An interesting discussion. It merely goes to prove, as I always believed -- as I've always believed -- that the best economics is that which is right in front of your eyes. And in this case, in front of -- in your very mouth.
The weather forecast -- the weather forecast now demands our attention.
Before we do go to Guillermo at the Weather Center, let me remind you about Facebook. On Facebook, you can find out how we actually make this program. I can't believe I'm selling a (INAUDIBLE) demand.
On Facebook, you can learn about what the team does when we're not on air. You can learn who we are and how we make this program. That's our QUEST MEANS BUSINESS Facebook page, where you are part of the team.
Now the weather forecast -- Guillermo, if you manage to continue this weather for me, you and I will be friends for a long time.
GUILLERMO ARDUINO, CNN METEOROLOGIST: I think we are. We are, then. I think it's going to remain. It's going to be nice. I have the radar behind me. It's beautiful pictures. It's great for you to be out there and you see there is nothing in the way of precipitation right now over the Northeastern parts of the States. Nothing. Something in the open ocean, that's about it.
So the overall wider look -- in the meantime, I'm going to walk to my computer and check exactly the latest and I will tell you how many more days we're going to have that sunshine there.
Whoops. On Saturday, there's a 40 percent chance of rain showers. Only 40 percent. When it gets to 60, Richard, is when we are concerned. But Saturday -- so when you have like 10 days of beautiful weather conditions over there, we'll see if we are friends forever.
No delays then at all in the United States. It seems to be OK. Denver with some thunder in the evening hours on Wednesday. That's about it. And now that Bill left, it's dragging all the nastiness with it. And everything nice remains. And you see that it's moving, actually, into the British Isles. And, of course, we're talking about remnants of the system. We're going to see winds. Watch out Belfast, watch out Shannon, and, also, Corick (ph) and Dublin.
London is going to feel some winds over there, actually. And we will see some delays associated with this, especially over here, as you see, into the British Isles and some more severe weather in the central parts of Europe.
But you see London with breezy conditions; Dublin even more. I'm sure that there are going to be some bumpy rides over there into the airport.
The heat continues in Central Europe. Look at Paris at 28 for Wednesday. So it's coming back, in a way. But Berlin, 23 degrees in the south. As you see, it continues to be pretty warm, indeed; 21 in London, 21 in Stockholm, as well.
This area, bad weather is where -- oops, I have my CNN badge. Sorry about that.
In the central part is where we are going to see some thunder popping up, in Germany, in the Alpine region; in central parts of France.
And look at the delays in Europe, looking OK. Copenhagen maybe some rain showers. That's about it. Milano, the Alpine region, as I said.
Iraq; also, Iran; Jordan; Syria looking OK. High pressure all over, so conditions are going to remain OK.
In South America, skiing time for Argentina and Chile, no doubt about it. But at the same time, that comes for those who are not having fun that they are in Patagonia with some nasty weather, cold conditions. Northern Argentina, Uruguay and Southern Brazil looking fine. Some clouds in Rio de Janeiro.
And you see here in the coastal parts of Madagascar, we are going to see some rain showers. So that's about it.
In Asia, in the meantime, Hong Kong northward, all the way up into Shanghai, high pressure building in. A little bit of a break for Taiwan; also southern parts of Japan with better weather conditions. And the usual thundershowers in the south, especially Malaysia, Indonesia and into the southern parts of Vietnam.
All right. Stay with us. QUEST MEANS BUSINESS is coming back from New York after the break.
QUEST: The Staten Island Ferry -- they say it is the best free ride in view anywhere in the world, as it goes between Manhattan and Staten Island.
I'm over here if you want to join me for the moment.
Shelly (ph) is enjoying the sun here on the Brooklyn Promenade.
Thank you for letting me interrupt your -- your afternoon.
SHELLY: That's fine. But my coworkers are going to see me playing hooky now. But that's OK, Richard.
QUEST: What excuse did you use?
SHELLY: I had a bad stomach.
QUEST: You do now.
SHELLY: I absolutely do now.
QUEST: Shelly, let me just quickly ask you, the economy -- we're hearing a lot. We need to get some perspective.
How bad is it and are you seeing things getting any better, is the key?
SHELLY: You know, as far as I'm concerned, for individuals like myself, who are still working and luckily have a job, we don't feel it in the same way. But what it's done for me is it's made me be more realistic and more clear about how I do spend money.
But, yes, I've known many friends who are out of jobs and they're very, very, very scared.
QUEST: Are you seeing green shoots?
SHELLY: What are green shoots?
What are they?
You know, I'm seeing -- I'm seeing people be less -- less crazed, less worried. I mean, they have to. They have to feel more optimistic.
QUEST: And we shall let you enjoy the rest of your -- hope your stomach feels better.
That's a good one.
Shelly joining me -- or maybe, rather, me joining Shelly on the Brooklyn Promenade.
You know, green shoots are not just here in the U.S. they're not just in Europe. When you've got to look for green shoots, you try and find them anywhere you can.
Andrew Stevens in Hong Kong on the search of the green shoot.
ANDREW STEVENS, CNN CORRESPONDENT: The recession is officially over in Hong Kong. Growth began in the second quarter of the year.
We're down here in one of the inner suburbs of the city to find out what's happening on the streets. I'm here at the Golden City Dried Seafood Store. It's been catering to Hong Kong's elite for the past 53 years. It's a veritable Aladdin's cave of luxury dried seafood items if you've got the cash to spend. And in Hong Kong, they have got the cash to spend.
Let's take a look.
We've picked out a couple of items for you.
This is one of the most expensive in the shop. It comes with its own presentation case. It is a fish more (ph). That is a fish stomach. This is about 20 years old. To buy that would cost you slightly less than $5,500.
Japanese abalones -- each one of these costs about $350 U.S. the size here is very important here -- the smaller the better.
And these cute little guys, these are sea horses. They come from Africa. This box of about 15 or so would cost about $600 -- U.S. dollars, that is.
So, certainly not a cheap exercise to come shopping here, but more and more Hong Kongers are doing just that.
Let's find out how business is now. I want to introduce you to Mr. Lam.
SING LAM, SHOP OWNER, GOLDEN CITY SEAFOOD MARKET (through translator): Hi.
STEVENS: How do you do?
Mr. Lam, you've been here for 53 years.
How's business now?
LAM (through translator): Business these days is doing fine. There's still demand for high priced goods, but we're making less of a profit.
STEVENS: So how tough has this recession been on your business?
LAM (through translator): Business is on the up compared to the beginning of the year and lately it's been getting even better.
STEVENS: Are your old, long-established customers coming back now?
LAM (through translator): Wealthy customers are still buying, but lower priced goods are proving more difficult to sell because people on a smaller salary are spending less.
STEVENS: How do you think business is going to be over the next 12 months?
Do you think things are going to get a lot better?
LAM (through translator): I think the forecast is good. The economy is actually getting better and I don't think we're far from recovery.
STEVENS: So, as Mr. Lam says, Hong Kong may be out of recession, but it's going to be a little while yet before Hong Kongers restore their full appetite for spending.
In the meantime, bon appetit. Or as they say here in Hong Kong, ol sikh (ph).
Andrew Stevens, CNN, Hong Kong.
(END VIDEO TAPE)
QUEST: And tonight's Profitable Moment from Brooklyn.
We have learned that Fed governors cannot walk on water. When Alan Greenspan retired, he was thought of as the supreme commander of military policy. Delphic was used to describe his utterances. History has not been kind to Greenspan. Even though he has described the collapse as a once in a century event, he was, of course, at the helm when that -- those events actually took place.
He had too much faith in markets, that they would correct themselves, and we're all living with the results of that at this time.
Dr. Bernanke has been described as a man for our times. He is a scholar of the Great Depression. He has the knowledge of history to ensure that we do not repeat the same mistakes; although, as we'll discover, he's probably made a few of his own on the way.
Dr. Bernanke can expect a tough ride before Congress, as they try to make clear all the things he's done wrong.
However, whatever battering he will take, Ben Bernanke gives interviews. He performs on television. He speaks in plain English. No, Ben Bernanke does not walk on water. He's merely prevented us from drowning in it.
And that's QUEST MEANS BUSINESS for tonight from Brooklyn.
Hala Gorani is at the International Desk.
Whatever you're up to in the hours ahead, I hope it's profitable.
I'll see you tomorrow.