Return to Transcripts main page


World Bank: Food Prices Reach Dangerous Levels; Madoff Says Banks Were Complicit in Fraud

Aired February 16, 2011 - 14:00:00   ET


RICHARD QUEST, HOST: The World Bank warns food prices are at dangerous levels.

From prison, Bernard Madoff says, of course the banks knew what he was up to.

And, we speak to the man who claims to have discovered Coca Cola's secret recipe. Or is it all fizz and no pop?

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

Good evening.

We start tonight with a story that is close to our heart, the human cost of rising prices. It's now approaching dangerous levels, as inflationary pressures continue to mount across the globe.

Well, the World Bank is now warning that millions of lives in the developing world are at risk. And it's not just in the developing world that price rises is on the agenda. Inflation very much back on the list of problems facing the developed world as well, whether it's developing, emerging, or developed.

Join me in the library and you'll see what I mean. We need to begin, of course, with the U.K. Yesterday, I told you about the U.K.'s inflation numbers - which were four percent. Rising prices, commodity, VAT, and sterling.

Now, the Governor of the Bank of England, Mervyn King, says that talk of an instant or an immediate rate rise is premature.


MERVYN KING, GOVERNOR, BANK OF ENGLAND: We never pre-announce the decision of interest rates. We haven't taken one. We take those decisions month-by-month. And surely, if we've learned anything from the past three to four years, it's that so many unexpected things can happen, even in three months.

So, what our decision will be next month, let alone in May, we haven't decided. We'll come back and look at the facts. That's the way we set policies, right? Some people are running ahead of themselves.


QUEST: They may be running ahead of themselves, but the market is pricing in now, rising interest rates in the U.K., and it's believed to be that perhaps as early May. The pound fell around a third of a cent on the prospect of that. Bearing in mind it had risen on the thought that rates were going up.

In the United States, the producer price index - core producer prices - is up half of one percent. Now, that was the highest rate rise since 2008. It gives cause for concern. If core PPI is rising, then of course, that could feed through to CPI, RPI, and will lead to a greater demand in the economy. But that's the emerging - and that's the developed world.

What about the developing world, where price rises have a disproportionate impact on the people. Robert Zoellick, the President of the World Bank. He now says, price rises are at dangerous levels. Rising food prices have pushed 44 million people in the developing world into poverty. Whichever side of this equation you are on, rising food prices is very much part of your life.

The managing director of the World Bank is Ngozi Iweala, and she joins me now from Washington. Ngozi, always lovely to - to see you. But, the serious issue clearly is, food prices in the developing world, and this crisis for the poor.

NGOZI IWEALA, DIRECTOR, WORLD BANK: Yes. Good to talk to you, Richard. This is a very big issue for the poor. As you mentioned, tens of millions more people have been thrown into poverty, as a result of this rise.

You know in the last quarter alone, fats and oils rose 22 percent, according to the price index here at the World Bank, and grains, about 20 percent. But this is impacting on particular countries. We have Kurdistan, for instance, wheat prices have gone up by 54 percent. Tajikistan about 37 percent. Bangladesh 45 percent.

So, this is something we need to really pay attention to, because it impacts the most vulnerable; children, women, pregnant women -


IWEALA: And it really hits the poor.

QUEST: But, the question of course becomes, what to be done about it? Because even if there is a fundamental rise in prices, that's not just borne out by speculators, what do you do, and what does the bank do?

IWEALA: I think the first thing we have to note is that, you know, we need more transparency of information, in terms of where food stocks are around the world. Because we often find that, it may be that some countries have more than they need, in terms of stocks. And others don't have enough. And if we have that information, and we're able to move food from one part where there's surplus to another, that really helps. So we need to get that information on food stocks.

And from only what we know, we think that this situation now, in terms of stocks, is better than in 2008.

Second, we need to focus on - on - on making sure nothing impedes trade. No export bans. No holdbacks by countries, you know, that can afford to trade their rice or grains to other countries, because that helps.

Third, we need to make sure we support small farmers in developing countries and bigger farmers as well.


IWEALA: To produce.

QUEST: But, all those things will do some good. But effectively, what you're saying - and let's not mince around about the words here - you're saying there has to be intervention by the authorities into the market.

IWEALA: Well, yes. Because there's imperfect movement of information. There's imperfect knowledge, you know. So you have to, where there's no - not enough knowledge, you have to intervene to be able to make that knowledge available, so that markets can work better.

QUEST: If - if nothing does happen, what is your fundamental fair here? Because we do know, that part of the price rises was one of the reasons in Tunisia, one of the reasons in Egypt. It was, if you like, the final tinderbox, its inflammation to it. But what do you feel will happen in other countries?

IWEALA: I think that we have to be careful, as an international community, not to let the food prices become - not a national security threat in countries, but a global security threat. Because it could well be that. I mean, you see people moving, you know, because they don't have access to food that they can afford.

QUEST: Right.

IWEALA: And you the second thing is that, look, it will hit the most vulnerable the most. And, you know, this is not a -

QUEST: Right.

IWEALA: Situation which we want to obtain anywhere in the world.

QUEST: Ngozi, many thanks indeed. Joining us from the World Bank in Washington. Always lovely to see you. Ngozi Iweala joining me, managing director there from the World Bank.

Now, wheat is one of the food stuffs that we were just talking about there, that Ngozi said that countries were most concerned about. After all, prices have doubled in the past six months. Part of the pressure on prices, comes from Russia's ban on wheat exports last year. Things may be about to turn around, as our correspondent in Moscow, Matthew Chance, explains.


MATTHEW CHANCE, CNN INTERNATIONAL SENIOR CORRESPONDENT: This could be the answer to global food shortages. New, tough strains of wheat and other grains being developed in these hot houses outside Russia's freezing capital.


CHANCE: So these are plants that you've tried to breed - these are plants you've tried to breed to - to be resistant to the drought. Scientists say poor crops last year, which caused the Kremlin to ban Russian grain exports, makes this work all the more urgent.

SANDUKHADZE (THROUGH TRANSLATOR): Last year's drought affected different breeds strongly. I came to the conclusion that strains were developed in the past 10 years, dealt with the drought much better than the old ones. New breeds yielded 25 percent more harvest than the old.

CHANCE: Those hardy new breeds, now covered in winter snow, have been sowed across the country. The hope is, yields will increase, and in the spring (video audio sound error) exports to the global wheat market.

Well, they've already taken some samples. But, it won't be possible to accurately estimate how these crops will do, until the shoots push through in wheat fields all over Russia. But what we already know is, that nearly 10 percent of Russia's wheat fields couldn't be planted at all least year. The soil had been so badly damaged by the drought.

It means, of course, that the size of this next crop will already inevitably be affected, making it all the more difficult for the Russian government to lift its export ban. The drought last summer was the worst in Russia for over a century. It ravaged the country's crops, cutting the wheat harvest by close to 40 percent.

The subsequent export ban sent shockwaves through international markets. Even now, Russian agriculture officials say it's unclear when exports, currently suspended until June, will resume.

SANDUKHADZE (THROUGH TRANSLATOR): We will sow very large areas of soil, but the weather can influence the results. Besides, the condition of the spring crops might be rather poor. In that case, an extension of the export ban until autumn is possible.

CHANCE: For years, Russian has been one of the world's most important grain exporters. But keeping their own people fed, is now the priority.

Matthew Chance, CNN Moscow.


QUEST: In his first published interview since his arrest more than two years ago, Bernie Madoff says, a variety of banks and hedge funds had to know, in his words, about the Ponzi scheme. We'll be in New York. We'll be right back in a moment.


QUEST: The New York market is open and doing business. Alison Kosik is in New York for us this evening. Alison, fresh from being on the floor of the exchange, talking to the CEO. And, before we get to the market, and how it's traded today - do you think that people are still a little bit wide-eyed about the fact that the New York Stock Exchange, now owned by the Germans - or will be?

ALISON KOSIK, CNN CORRESPONDENT: I think that they've had time to let it sink in. I was asking traders on the floor earlier today if they're still feeling confident about it. They say they are. They think that this is a great opportunity. And when it comes down to it, Richard, it's - you know, it's all about business. It's all about making money.

And this is a money-making opportunity for the New York Stock Exchange which, as you know, had been falling down in its market cap. So, you know, by Deutsche Borse essentially buying the NYSE, you know, they're thinking that it - it could just be an upward trend, hopefully, for the stock exchange, that is, until it goes through the regulatory process.

QUEST: And, of course, people conveniently forget that actually, the New York Stock Exchange does own the Paris Bourse at the moment, anyway. So, it's all - all fair in love and war. Quick roundup on the markets - what's happening and what should we be looking at?

KOSIK: We've got merger mania today. You know how Wall Street loves mergers. It means companies are willing to spend money, take some risks. We've got a pharma merger, which is a big factor behind the gains today. French drug maker Sanofi-Aventis buying U.S.-based Genzyme for $20 billion. We've also got upbeat earnings reports from Dell and Deere. That's also keeping the numbers higher today.

We also got a mixed housing report, that wasn't all too bad. We found out new home construction surged almost 15 percent January, after falling the month before. It is the highest level since September. So, really Wall Street focusing on the good stuff today, Richard.

QUEST: Alison Kosik. There'll be plenty of time for the bad stuff in the weeks ahead. Many thanks, indeed.

Now, Bernard Madoff says the banks and the hedge funds he dealt with, had to know about his multi-billion dollar Ponzi scheme. He made his comments in interviews and e-mails sent from prison. There is a reporter from the New York Times, who is writing a book about it.

Allen Chernoff. CNN's Allen Chernoff joins us now. Allen, it is extraordinary that now Madoff is coming out and speaking, albeit in this roundabout way.

ALLEN CHERNOFF, CNN SENIOR CORRESPONDENT: Right. Well, yes. Diana Henriques of the New York Times, is working on a book. And she did a great job getting ahold of Madoff. I spoke earlier today with somebody who has been in regular touch with Madoff, and said that he is really distraught over the suicide - the recent suicide - of his son, Mark. But he also seems to be showing a little bit less sympathy for his investors.

He's encouraged that the trustee has been able to do so well. Irvin Picard, thus far gotten $.50 on the dollar for the supposed victims of Bernard Madoff. Have a listen to what he said in that New York Times interview. He said, "I would've loved for them (referring to the investors) to not lose anything. But that was a risk they were well aware of by investing in the market".

Of course, we well know that in fact, when people were putting money with Madoff, it really wasn't going into the stock market. And contract that, with what Bernie Madoff said at his sentencing in the summer of 2009. "I live in a tormented state now, knowing of all the pain and suffering that I have created. I will live with this - with this pain, with this torment for the rest of my life. I apologize to my victims. I will turn and face you. I am sorry".

He did face them, Richard. But it certainly was not very convincing. I was in the courtroom at the time.

QUEST: It's somewhat academic in so far as Madoff is concerned, isn't it? I mean, he's not going anywhere for the next 150-odd years. But, but, Allen, as we look at the various trustee litigation against the banks, this does put a new complexion on it.

CHERNOFF: Right. The trustee has sued JP Morgan Chase, which is the bank where Madoff said he actually deposited the funds from his investors. And he was running money in and out of JP Morgan Chase. JP Morgan has said, look, we didn't know what was going on. Picard the trustee says, well, you really should have. And he's suing them for billions of dollars.

Now, have a look at what he said about the banks - Bernie Madoff did - in that New York Times article. "They had to know", Mr. Madoff said. But the attitude was sort of, if you're doing something wrong, we don't want to know. Now, when Madoff pled, he said, well, I was the only one who knew anything. He said I - he sent out client statements. He sent out false statement s to the SEC. He said he did anything he could to make sure it was secret, and that only he would know.

But when he did plead, he actually did say, "I used yet another method to conceal my fraud. I wired money between the U.S. and the U.K. to make it appear as though they were actual securities transactions executed. So, again, there he was saying, you know, I did it all myself. Now of a sudden he's saying, well, those other guys, they probably knew.

QUEST: Finally, Allen, let me take you into - into deeper waters. You covered this case, start to finish. You saw him in court. Why do you think he's spoken now?

CHERNOFF: Richard, I think there's a lot on his mind. Look, he's - as you say, he's not going anywhere. He's going to die in prison. Having had his son commit suicide, and perhaps feeling, at least some degree of remorse, I think at least, you know, he wants to get some off his chest. And he also - you know, sometimes criminals have this very, very strange mind, where they try to lay the blame on someone else. And here, indeed, he appears to be trying to lay the blame with the banks, with some of the hedge funds that he was involved with. That may be what's going on here, Richard. But, it's certainly very interesting reading.

QUEST: Allen Chernoff. We appreciate your perspective on that tonight, from New York.

There will be a predicted 10 billion mobile devices over the next 10 years. Keeping all this information safe is big money. Hear how Juniper Networks' chief executive hopes to corner the mobile security market. We're back in a moment.


QUEST: There's big money in mobile security. And if you doubt what I say, just ask Juniper Networks, which is exactly what we did. The chief executive, Kevin Johnson, sat down for a chat with Jim Boulden at the Mobile World Trade Show, in Barcelona.


KEVIN JOHNSON, CHIEF EXECUTIVE OFFICER, JUNIPER NETWORKS: First of all, you've got this explosion of mobile devices. You know, whether it's smart phones, tablets, and more and more people using them. I think some people project, over the next 10 years there'll be 10 billion of these mobile devices.

And certainly with more people using these devices, it creates this opportunity for bad actors to start planting viruses and malware. And we think that's - that's one of the significant issues that - to be addressed here over this next several years.

JIM BOULDEN, CNN INTERNATIONAL CORRESPONDENT: It's all about employees wanting to come into the office and be able to tap into everything in the network with their new mobile devices.

JOHNSON: Consumers are bringing their mobile devices into work. They want to be able to access corporate data. And, you're absolutely right, that what they're accessing is information and applications in the cloud.

BOULDEN: Give some examples of when we were talking earlier about anti-virus, but also the theft, I think, is very interesting.

JOHNSON: Yeah. Well, we introduced a product called Junos Pulse, that is software that runs on IPhone, IPad, Android, Windows Phone. And, you know, it started just as providing secure access to corporate data. But more recently, we've introduced anti-virus, anti-malware.

And we find that many people lose their phones. And so if they lose their phone, they can go to a website where the GPS will tell it where the phone is. If somebody steals their phone, they can also go to the website and wipe the data clean.

So, you know, as a business user, if you've got important private data of your customers, or personal data, if somebody steals your phone or you lose it, the ability to wipe it clean is an important feature.

Employees have mobile devices. They access corporate data. You start to get into - whether it's social security numbers, or account balances -


JOHNSON: Or, you know, things that companies have a responsibility to keep private, and somebody loses their phone, the ability to wipe that data clean is critical.

BOULDEN: And the explosion of 4G, that's - that's a bit of a game changer, isn't it?

JOHNSON: Well, certainly Juniper plays a significant role in the infrastructure of the internet. We power about a third of the internet today, and that's growing. And so the transition to 4G, is just going to drive more traffic and more opportunity for distribution of video and different scenarios to users. And we participate in that as well.

BOULDEN: Of course, we are just sort of coming out of a recession, and companies are re-investing in their networks. How much of this new re- investment is - because the economy's gotten better - how much of it is security, how much of it is 4G and mobile devices?

JOHNSON: You know, I think you're right. The economic situation has improved. Just coming off 2010, you know, our business grew 23 percent. In Q4 we grew 26 percent. And, I think that's a combination of economic situations improving, but it's also a combination of there is insatiable demand for these scenarios. More mobile devices. More traffic. And that's driving more demand for infrastructure and secure solutions like Junos Pulse.

BOULDEN: So 2011 for network equipment manufacturers, is this going to be a banner year?

JOHNSON: I won't speak for others -

BOULDEN: (Laughter)

JOHNSON: But look, we're optimistic at Juniper. We - you know, line of sight to growth this year.


JOHNSON: And we've got a great suite of products, and technologies that have significant impact on the experience and economics of networking.


QUEST: The CEO of Juniper Networks, on the phone issue of internet and, of course, mobile data security.

Now, she grew up on stage, the youngest child of a family of entertainers. The superstar, Janet Jackson, talks about her personal struggles in her new self-help book. And on Piers Morgan Tonight, she opens up about her life, loves, and what it's like to be a Jackson, including the relationship with her father.


PIERS MORGAN, HOST, PIERS MORGAN TONIGHT: Do you feel sad you didn't have a relationship with him that is better?

JANET JACKSON, ENTERTAINER: Not anymore. I used to. It would've been nice. I - I would go over a friend's house, when mother would let me go, and I'd see my friends, the relationship with their father. How they'd call him Dad, and sit on their lap, and -

MORGAN: What'd you call him?

JACKSON: Joseph.

MORGAN: (inaudible)

JACKSON: One time I tried to call him Dad.

MORGAN: And what happened?

JACKSON: He said no. He said, I'm Joseph. You call me Joseph. I'm Joseph to you.


QUEST: Janet Jackson. It's a rare, and revealing, sit-down interview. It is on Piers Morgan Tonight, which is literally 30 minutes from now, after Quest Means Business.

And we will be back with more Quest Means Business, in just a moment.


QUEST: Hello. I'm Richard Quest. Quest Means Business. This is CNN. And here, the news always comes first.

The anger spreading through the Arab world, is now appearing in Libya. A source tells CNN, demonstrators and police have been clashing in the coastal city of Benghazi. Several people were arrested. Protestors are demanding the release of a human rights activist. A Libyan official is downplaying their (inaudible), saying it's just young people fighting with each other.

Human rights activists in Bahrain say Wednesday's demonstration has remained peaceful, since police backed off. That's after two protestors were killed in earlier crackdowns. The government says it's investigating the deaths, and holding suspects in custody. The mainly Shiite crowd is demanding reforms, including political equality.

In Tehran, thousands of people turned out to honor a student shot dead in Monday's demonstrations against the Iranian government. Things got heated, and new clashes reportedly broke out. Pro-government demonstrators say, the victim was a member of the Basij militia, and was killed by an outlaw opposition group. But Green Movement supporters say he was protesting against the regime.

A Somali pirate will serve nearly 34 years in a U.S. prison. Abduwali Abdukhadir was sentenced on Wednesday. He apologized in court, saying he was recruited by people more powerful than him.

His was captured by the U.S. Navy in 2009 after the hijacking of a U.S. flagship.

Back to our business agenda. And the world's largest mine company says it's planning to spend $80 billion in the next five years as it looks to develop new projects. It's a sizeable amount of money that BHP Billiton is planning. And it is doing so rather than acquisition and merger, several of which, of course, have had problems.

It's ditched three major deals in the past three years, potash, an iron ore venture with Rio Tinto and a full take over with Rio Tinto itself.

Now today -- today, BHP Billiton reported a near doubling of its first half profits, fueled by booming demand for metals.

So not only is it going to -- to do -- it is also going to return more than $10 billion to shareholders.

China is the big reason, of course. You don't need me to tell you that. Booming demand has seen iron ore, copper and other metals -- it's pushed them to record prices and spurred great boom in shares for BHP, Rio Tinto, Xstrata, collectively spending more than $110 billion of an expansion over the next few years.

One of the countries, of course, is Norsk Hydro. Now, Norsk Hydro has a very strong presence, of course. Demand for aluminum, especially in China. And Norsk expects the aluminum market to grow by 7 percent this year.

Its own results were especially strong, $100 million more ahead of estimates and sales rose by 18 percent.

Earlier in the studio, I was joined by the Norsk Hydro chief executive and I asked him and put it to him that although the results were better than forecast, they could have been better still.


SVEIN RICHARD BRANDTZAEG, CEO, NORSK HYDRO: 2010 was a year of change for -- for the company. We have established a new platform through the contraction (ph) in Brazil and also the fact that we are bringing up the copper smelters to full speed. The seasonal evaluation made the fourth quarter a bit below the third quarter, which is quite normal for the aluminum industry.

QUEST: The aluminum industry, at the moment -- and I've seen your comments. You're talking about China and the demand from the emerging markets.

But how much of the future in -- in aluminum is resting on these emerging markets?

BRANDTZAEG: The future of commodities in general is resting quite a lot on the development in the emerging markets. But we also see that aluminum is introduced in new applications in mature markets. For example, in automotive, transport, in -- even in building systems, which makes this also interesting markets.

QUEST: But are you content, within your own company, that you haven't, you're not relying too much on China and emerging markets?

Because the one thing, of course, most chief execs sit in that chair and say is that the growth area is emerging markets.

BRANDTZAEG: The difference there is that China is taking care of their own supply-demand in primary aluminum, meaning that China, at the short-term and maybe even medium-term, will try to produce as much aluminum as they are consuming.

QUEST: If we look at the developed markets, we've got Europe, at the moment, with only, really, Germany showing some significant, fast growth. Other peripheral countries -- even the U.K. is in some trouble.

You take, for example, the United States, 3 to 3.5 growth, but with budget cuts.

So where does that leave you?

BRANDTZAEG: We see that automotive is using body in white aluminum in high volume costs (ph) now, to the higher extent than what -- what we have seen ever before. Aluminum is priced far below copper and other metals and we are now replacing other materials through the competitive situation of aluminum. And we are continuing our technological development and innovation, which creates a lot of new promise in aluminum.

QUEST: So a viewer who's watching tonight, wherever it might be in the world, explain to that viewer, please, why aluminum?

What's the beauty of aluminum, or aluminum, as my U.S. colleagues would say?

BRANDTZAEG: Thank you for your question.

Aluminum is less than one third of the density of copper. It's a light metal. It has a high tunnel (ph) connectivity, high electrical connectivity, which means that there are a wide number of applications where aluminum can be used and where it has a -- a lot of competitive advantages compared to other materials.

It can be reconciled infinity amount of times and when we only recycle aluminum, we use only 5 percent the original energy content and 75 percent of all aluminum that has ever been produced is still in use.


QUEST: The chief executive of Norsk Hydro.

Now, on the markets in Europe, it was a positive day all around. There were solid gains in Paris and London. The CAC and the FTSE both around 1 percent, less so the gains in Frankfurt. Still, wherever you looked, the stocks, particularly in Frankfurt, 29 months high.

In France, Societe Generale was up by just under 5 percent after Q4 good numbers and they almost quadrupled.

And some strong numbers from Heineken. Their earnings jumped by 41 percent.

Britain and the Netherlands could see a $5 billion windfall. That's what the two governments spent reimbursing citizens who lost Monday when Iceland's Icesave Bank failed in 2008. Now, Iceland's lawmakers have backed the deal to repay the debt. The rpms are due to start in 2016, the so-called Icesave Bill now needs to be signed by President Grimsson. The bill will be expected to be signed.

But back in Davos in January, I spoke to the president about whether he likes this blueprint for what became today's agreement.


OLAFUR GRIMSSON, ICELANDIC PRESIDENT: But it's much better and it's much clearer and it accepts some of the fundamental points that I was trying to put to you and the others about a year ago. And in that sense, it's better.

But still, it's a heavy burden on Iceland, a burden which many people argue we are not legally obliged to -- to take.

So it is a kind of a question whether it is, in general, good policy for us to finish this issue, on one hand and what are the legal obligations on the other.

QUEST: When we look at now how your people are bearing the brunt of this on a daily basis, it's been very difficult for them. And economically, the recession that followed on and even now.

GRIMSSON: Well, of course it has been difficult and many people in Iceland have suffered great losses and our unemployed -- although that unemployment is less than was predicted.

But I think in all fairness, we can say that we have come out of this earlier and more effectively than anybody expected. And there are primary reasons for that.

One is that we allowed these private banks to fail. We allowed them to collapse. We didn't pump a lot of public money into them.

And the second reason is that the devaluation of the Icelandic currency has enabled our export centers to be now much more competitive than they were before the crisis.


QUEST: That was President Grimsson of Iceland.

And that interview, of course, was in Davos earlier this year.

President Grimsson's spokesman has said that the president won't be commenting on whether he will sign the preliminary bill into law. That decision is still to be reached.

Taming social media -- will the demands of the bottom line rein in the online revolution, in a moment.


QUEST: Social media companies are shying away from Kudos, even though they've played a role in the rush for reform across North Africa, Egypt and Tunisia.

Why are they being so modest?

Maggie Lake is in New York with some answers -- Maggie, I mean sure -- this is not -- this is not a time to be hiding one's whatever it is under a bushel, surely. They -- they -- whatever it is -- what is it you hide under a bushel?

Anyway, you know what I'm saying.

MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: I -- I do. And usually businesses are not shy about laying claim to things they're responsible and even things they're not responsible for. A little bit of a different issue here, Richard. And it's sort of a -- an interesting story line that's emerging from this chapter.

You remember, Facebook, it's not that old. And certainly, when it was formed, it was all about openness and how sharing was going to be a vehicle of change and sort of the very foundations of the company.

But things get complicated when there are billions of dollars at stake.


LAKE (voice-over): Organizers call it the social upheaval that might never have happened without social media.

WOLF BLITZER, HOST: First Tunisia, now Egypt.

What's next?


BLITZER: You're giving Facebook a lot of credit for this?

GHONIM: Yes, for sure. I want to meet Mark Zuckerberg one day and thank him.

LAKE: No thanks necessary, says, Facebook. It's playing down social media's role in Egypt and playing up the role of revolutionaries, saying, quote: "Certainly technology was a vital tool in their efforts, but we believe their bravery and determination mattered most.

Experts say it's no secret why social media companies are being coy.

EVGENY MOROZOV, "THE NET DELUSION": These companies also have to grow, right?

They have to expand. In China, they have to expand internationally. And for them, it's not really a good marketing move to be seen as the digital equivalent of, you know, Radio Free Europe.

LAKE: A mere two years ago, Facebook's CEO, Mark Zuckerberg, touted social media as a way to create a more open world and a way to change, quote, "how people relate to government and their leadership."

But a lot has changed in two years. Facebook now has a $50 billion market valuation. Suddenly, Egypt may look like a double-edged sword.

SREE SHREENIVASAN, COLUMBIA UNIVERSITY: I don't think revolutions and business go together hand in hand. And there will be lots of countries that are looking at this idea that Facebook could come in and help their people overthrow their

government and say, well, we don't want that here.

LAKE: For many countries, the Chinese model of blocking some Internet content may look better after Egypt.

MOROZOV: This will result in more local authorities, the Facebook and Twitter and Google emerging in places like Russia or China. I mean, look at China now. They do not allow in Facebook. They don't allow in Twitter. They don't allow in Google that much. They pretty much are all satisfied with the services of the Chinese companies. And any time that they need to be turned off, they will be turned off.

LAKE: But does Facebook need to be everywhere to remain successful?

UNIDENTIFIED MALE: As with any successful product, if you can get China's market as part of your base of customers, obviously, you want them. You want Chinese consumers in your mix. But there's still so much growth in the rest of the world that Facebook can achieve that it can be very successful, as it has already been, without Chinese consumers adapting it.

LAKE: Facebook's cool factor couldn't be higher after Egypt. The company hasn't officially said it wants to enter mainland China, but its ability to expand there and other international markets may have just gotten harder.


LAKE: And listen, Richard, Facebook may have had a tough time in China anyway. We've certainly seen the issues with Google and Yahoo!! . But it will -- shareholders still, they are watching this event really closely. Remember, right now, Facebook is a private company. But we are widely expecting it to go public some time in the next year or so.

Is this going to hurt its valuation or, on the other hand, is this something that's only going to sort of reinforce its power and importance in people's lives?

There's a debate that -- that we're going to have as we wait for that IPO -- Richard.

QUEST: And, Maggie Lake, you and I will continue to talk about it. I might even click and make you a friend on Facebook, if you're -- if you're very nice to me.

All right, Maggie, many thanks, indeed, in New York.

there are some places.

Now, so much rain that school was closed. This time we're talk about Darwin in Australia.

Pedram is at the World Weather Center for us this evening -- good evening.


Yes, the rainfall there, a tremendous amount of rainfall in the past 24 or so hours. And if you take a look at this, we do have a couple of tropical cyclones. That's Diane offshore. But the one that's been canceling school and has been closing down the airport in Darwin, the roadways out there, that's tropical cyclone there, Carlos and video coming out of Australia from Darwin showing you what it's like out there.

And we always say, you know, anything, when you get up to say, 10, 15 centimeters of water, if that's moving just a couple of kilometers per hour, your care is going to be on the move. It's a very dangerous situation. And the roadways, of course, out there are being closed as the water is coming down.

And now, officially, it's been the wettest 24 hour period in Darwin in recorded history. We've picked up nearly 500 millimeters of rainfall.

And take a look at the numbers here, very impressive, again. But the monthly average is about 365 millimeters for the city of Darwin. Look at this, the last 60 hours, over half a meter now, pushing 600 millimeters of rain in this very concentrated region right outside there of the Great Sandy Desert. And this moisture is going to begin to move across the Kimberly Region here in the next couple of days.

And, you know, flooding concerns certainly right now. But just go back the past six months. This is from the Australian Bureau of Meteorology. And going just the past six months, not counting in the current rain, we're talking about that area being above average for rainfall totals and record rainfall in some of that region. So that's why we're seeing the flooding concern, as the soil is really fully saturated in this general area and the storm system has been as slow as it gets. It's kind of parked in place here.

And how about some 25 plus centimeters of rainfall, perhaps pushing in closer to 50 in some areas over the next couple of days. And that rainfall is going to continue, again, as this feature slowly begins to move on south toward the Kimberly Region. And the winds also remaining gusty over the next couple of days as the heavy rainfall also remains in their forecast.

Now, how about areas within Europe?

We're also talking about a couple of storm systems, one of them to the south out there toward portions of the Bay of Biscay, another one toward the Mediterranean.

Together, we'll see some scattered showers just to the north of the storm system. A few snowflakes certainly possible, but it really doesn't look like it's going to impact travel across the northern or central region of Europe there, where we have travel delays minimal over the next couple of days. It's just some breezy conditions.

And as you work your way a little farther to the east, that's where all the cold temperatures are. Look at Western Europe, mild -- warm, to say the least, and you work your way out east, temperatures around portions of Eastern Europe on into Russia. The areas that we had fires, Richard, last summer and also droughts -- drought conditions, temperatures now about 25 or so degrees below zero in areas around Moscow. So very much a cold air mass in place out there -- Richard.

QUEST: Pedram, many thanks, at the World Weather Center.

Now, if you're in need of a little refreshment, well, we might have just the thing that you need.


TIM HOMEWOOD, HEAD BARTENDER, BABYLON: QUEST MEANS BUSINESS -- to me, that leads itself to quite a grown-up drink, quite a sophisticated drink.


QUEST: Coming up in two, we'll be shocking things up at the cocktail bar in just a moment.


QUEST: That is the site of downtown Atlanta in the Southern United States. One of those big buildings on the other side of the city there is the headquarters of Coca-Cola. Of course, CNN's headquarters is also based in Atlanta.

Now, one question that we need to be asking is, are they trembling at Coca-Cola, because one of the most closely guarded secrets in the business might have been revealed for the second time -- the recipe, apparently, for Coca-Cola, has actually been out in the open all the time. This, supposedly, is the recipe for how you make it. I've got a another version of it here.

A radio show host thinks so.

The host of "This American Life" is Ira Glass, who joins me now from CNN New York.

Before we talk about the recipe, I do need to say, Coca-Cola say that this isn't the real recipe, it's not the right thing. They deny that you've shown the real recipe.

IRA GLASS, HOST, "THIS AMERICAN LIFE": Well, it isn't the current recipe. There -- there are known differences between what we found and what they do currently. What they do currently has high fructose corn syrup instead of sugar, it has phosphoric acid instead of -- instead of citric acid.

What we say is that this recipe, which we saw in this newspaper and then also matched a recipe written by hand in the notebook of John Pemberton, the guy who invented Coca-Cola, this notebook found in Coca- Cola's own archives, we're saying that this recipe is either the original recipe or one of the original recipes in the development of Coca-Cola.

And -- and on that point, I think that it's really hard for them -- I'm not sure why -- why they -- why they're saying it's not.

QUEST: Now, the -- the ingredient, of course, the important ingredients, if I'm -- if I understand this right, is a huge amount of folklore about this. But is a 7X flavor, isn't it, the secret 7X bit that's the flavoring?

GLASS: There's the flavoring, yes. I mean the -- the other -- the other key ingredient that people are curious about is that there's cocaine in it. The original recipe had fluid extract of coca...

QUEST: Right.

GLASS: -- which had elem -- which had cocaine in it, as well.

But, yes, the 7X formula is the -- is the ingredient that, if you look on a bottle of Coca-Cola, on the side where it lists the ingredients, it's listed as natural flavorings, I think. And -- and that's made up of -- of a bunch of different oil extracts.

QUEST: Why do you think, Ira, whether it's -- whether it's the real recipe or not or whatever Coke may say, why are we still fascinated by, in this day and age, when we can pull things apart, we know how to manufacture most of the things, why are we fascinated by it?

GLASS: I think we're fascinated because -- because for years and years, Coke has sold this idea of this -- its incredible secret. They have a wave of advertisement that's on TV even now which talks about this amazing secret.

And -- and I think what we were trying to say, like we -- we have no hatred of Coca-Cola. We're trying to say that what this is is very lovely showmanship on their part. But, in fact, any scientist with a gas chromatograph, any flavoring guy would be able to actually break off -- break apart the -- the chemistry of that and tell you what's -- what's in that soda and -- and I think people are interested because it's been drilled -- drilled into our heads that -- that this thing is such a super secret. There were years where -- where -- where it was widely believed that only two people knew the recipe. And the -- and the two men who knew the recipe in the company weren't allowed to fly on a plane together. And, in fact, Coke has an ad that -- that -- that tells that story.

QUEST: Right.

GLASS: And I think -- I think that's the interest.

QUEST: So, in today's Coca-Cola, do you believe, Ira, there are any secrets left? GLASS: In today's Coca-Cola?


GLASS: I -- I -- I don't think there are, no. I -- I -- I think that -- that any scientist who really wanted to crack it could get in there and crack it. I mean what we published was the original. What we put on our radio show was the very original -- what we believe is an original or the original recipe.

But I feel like anybody who -- who willfully wanted to get to the bottom of it and make a duplicate could do it.

QUEST: Right.

GLASS: The thing is like, you know, Coke -- Coke said to me -- and they say to anybody, let them try, you know what I mean?

They have 125 years of -- of marketing and seizing the world and making it -- you know, Coca-Cola, you know, one of the reasons I think people interested -- are interested is because it is the best known product in the world.

QUEST: Right.

GLASS: And -- and so they say like, you know, you want to go and make your own little recipe, like go ahead, you know. And -- and they...

QUEST: All right...

GLASS: -- they don't seem very scared.

QUEST: Next -- next turn your attention to Colonel Sanders and his seven spices or whatever he puts in that thing.

GLASS: Yes. Yes, we have (INAUDIBLE).

QUEST: Absolutely.

Many thanks.

Ira Glass joining me from New York.

Now, if the recipe for Coca-Cola sounds complicated -- and I promise you, it's got caramel, alcohol, orange oil, lemon, even coriander -- then try running a cocktail bar. Those drinks are shaken, stirred and everything else in between. As we continue celebrating the world at work, we went to Kensington Roof Gardens to find out the secret behind the perfect cocktail.


HOMEWOOD: My name is Tim Homewood.

I'm the bar manager here. And I've been working as a bartender for, oh, coming up to seven years this year.

It's a lot of hard work. And to get to the top of your game, it -- it's incredibly difficult. It's a very competitive industry. Just a nice classic after dinner drink now. We're going to do an espresso martini. Here, I make it with vanilla vodka and Kahlua and a bit of sugar and then just fresh espresso. So then we go with those. And then our sugar. And then we're going to put in 35 mils of fresh espresso.

I stand by 90 percent of what you do as a bartender is to do with who you are and how you talk to people. And the other 10 percent is whether you can knock together a good gin and tonic or a great whiskey sour, you know, just to finish it off, three espresso -- espresso beans, one for health, one for wealth and one for happiness.

Sun Craze (ph) did a massive amount for our industry back in the '80s, I guess.

I don't believe there's a bartender on the planet who hasn't seen the film "Cocktail." And there's always going to be a part of all of us that likes the idea of throwing bottles around and stuff. It's great to have those little tricks up your sleeve. That's not what makes a great bartender. What makes a great bartender is keeping your guests happy and making sure they're coming back again and again.

I'm going to make a honey monster now. It's kind of vodka and Cointreau with sugar puff and cheese milk -- a really, really guilty pleasure of mine. A lot of love and care and attention goes into every drink I make. I stand by the mantra and I drill it into the rest of my bar team, if -- if you made a drink that you wouldn't be happy to drink, don't serve it.

Cocktails have been around in some way, shape or form since about 1640. So they've been around for a long time. That's a lot of history. And more people are open to cocktails. I think they've just become more acceptable. Consumer knowledge has grown, which has been a massive contributing factor to that. And what -- what that has meant is that the bartenders need to be more educated and more informed, as well.

It's fantastically rewarding and it's fantastic to see the smile on people's faces at the end of the day when they're having a really great time and, you know, you're involved in that.


QUEST: The quality distinction -- a drink with a difference.

That's the World At Work.

When we come back in a moment, it will be a Profitable Moment to put you to bed, in a moment.


QUEST: The price that we pay -- the Profitable Moment.

It doesn't matter where you look in the world at the moment, it seems to be a case of when, not if. We know that interest rates are going up. We just have to hope that it won't be too painful when that day arrives.

And one of the real problems is many of us, myself included, have enjoyed several years of really low mortgage interest rates. And in my case and others, the deals are about to expire.

Rates in the U.K. mortgage and credit markets are already rising in anticipation of a central bank move later this year. It's the same in other parts of Europe.

Now, wish I could say that I hadn't got used to the cheaper monthly payments. I did try to remember it wouldn't last forever, but unfortunately, when the new deals are fixed and the payments are taken, there will be a hole in my pocket.

And that's QUEST MEANS BUSINESS for tonight.

I'm Richard Quest.

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

"PIERS MORGAN" after the headlines.