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QUEST MEANS BUSINESS

Bernanke Says Recession Over; Airlines Down, Hotels Up in Recession

Aired September 15, 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 ANCHOR: The recession is probably over, so says the chairman of the U.S. Fed.

How to lose $27 billion in two years, try running an airline. But you can still get a cheap room in a hotel. The president of hotels.com tonight on why it's a good time to travel.

I'm Richard Quest, we have 60 minutes together where we mean business.

Good evening. We know of course what happened. We know the financial world has changed now, a year to the day that Lehman Brothers actually filed for bankruptcy. The question we ask tonight, what comes next? And wherever we've been looking today, policy-makers have been speaking left, right, and center.

They've been giving us good indications and good ideas of how they see the future of the great recession, recovery, and exit strategies.

Join me over here so we can hear from some of those who have been speaking. First of all, Ben Bernanke, probably the most important speech of the day, at least globally. Mr. Bernanke says recovery will take some time, but crucially he did say the recession was probably now over.

And on the question of President Obama's reforms and new rules for the financial industry that you and heard about last night, Ben Bernanke was quite clear they will be passed.

(BEGIN VIDEO CLIP)

BEN BERNANKE, CHAIRMAN, FEDERAL RESERVE BOARD: I remain pretty optimistic that a comprehensive reform will be forthcoming and we're very interested in trying to support reform that will be effective and it will go a long way to preventing this kind of crisis from occurring in the future.

The recession is very likely over at this point. It's still going to feel like a very weak economy for some time.

(END VIDEO CLIP)

QUEST: Ben Bernanke, of course, his comments moved the markets. We'll hear later in the program exactly what the full the totality of the effects.

If Bernanke was saying it's all over, this man says much of the blame still rests with the Fed under Ben Bernanke. Eliot Spitzer is the former governor of the state of New York. Mr. Spitzer was one of those who was very harsh going after irregularities in the financial industry. And he says that Bernanke, et al, were to blame.

(BEGIN VIDEO CLIP)

ELIOT SPITZER, FORMER NEW YORK GOVERNOR: The Fed is what got us into this problem. The New York Fed is owned by the banks, literally. The New York Fed is what got us to where we are because they permitted this leverage.

Tim Geithner, when he was up for secretary of the Treasury said, I have never been a regulator. He didn't understand what his job as president of the New York Fed. This is where we are right now.

(END VIDEO CLIP)

QUEST: Now if he told us what happened in the past, he told us where we are now, today it was this man that gave us a good indication of what we can expect, Gordon Brown, the British prime minister, who, in a speech to trade union officials, for the first time he admitted that spending cuts would have to be introduced.

He put it slightly more elegantly than that, but spending cuts to pay for deficits.

(BEGIN VIDEO CLIP)

GORDON BROWN, U.K. PRIME MINISTER: We will be cutting costs where we can, ensuring efficiency where it's needed, agreeing realistic public sector pay settlements throughout, selling off unproductive assets we don't need to pay for the services we do need.

Labour will cut costs, cut inefficiencies, cut unnecessary programs, and cut lower priority budgets. And when our plans are published in the coming months, people will see that Labour will not support cuts in the vital frontline services upon which people depend.

(END VIDEO CLIP)

QUEST: Past, present, and future. And the future, of course, is the spending cuts, the so-called "exit strategy," the way of reducing budget deficits. This is where the entire scenario now rests, which is why I was glad to speak to John Lipsky, the first deputy managing director, basically the number two at the IMF.

We looked to the future, governments that cooperated on their stimulus packages will have to cooperate on their exit strategies.

(BEGIN VIDEOTAPE)

JOHN LIPSKY, FIRST DEPUTY MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: The upcoming Pittsburgh summit is going to address the issue of creating some kind of a durable framework for cooperation and collaboration, not just in terms of exit strategy, but in ensuring sustained growth in the future, and hopefully better balanced growth.

QUEST: Are you -- we'll come on to balanced growth in the second. What we are seeing at the moment is tentative signs the recession is over. But are you seeing, John, any signs of self-sustaining growth, or is it simply growth predicated on stimulus?

LIPSKY: Well, it's certainly the case that there has been important healing in the financial sector, in the business sectors, around the world, especially in the advanced economies, emerging economies, many of them have exhibited renewed strength.

But there is no question that it is in our view, and I think in the view of the most of our member economies, no time to withdraw the stimulus in a precipitous way. This is no time for complacency.

And our positive outlook on the 2010 global economy is predicated on the follow-through of the major economies, on implementing the stimulus measures that they have already announced and agreed with each other.

(AUDIO GAP)

QUEST: . some of it because it's cheap money. At some point that money has to be allowed to get.

(AUDIO GAP)

LIPSKY: . been a substantial improvement in equity markets. There has been an improvement of flows in the corporate credit market, in the bond market, but the banking systems around the world in general still -- in the advanced economies still need..

(AUDIO GAP)

QUEST: What is the one thing at the moment that is worrying and worrying the fund?

LIPSKY: Well, our message has been a rather straightforward one. Avoid complacency, carry through with the measures that have been promised, and start to think in a cooperative way about exit strategies down the road.

And finally, there needs to be international cooperation and substantial political effort behind the regulatory and supervisory reforms that need to take place to ensure that financial markets will be more effective, efficient, and stable in the future.

QUEST: That sounds a bit like.

(AUDIO GAP)

QUEST: . switch the gas off if you go on holiday.

LIPSKY: Well, this is not business as usual, Richard, as you well know. And the kinds of changes that are recognized as necessary are absolutely fundamental and are not going to be easy to either agree on globally or implement.

And if I could add, we shouldn't forget, and one of the messages of the fund.

(AUDIO GAP)

(END VIDEOTAPE)

QUEST: . Bernanke says the recession is probably over. Do you agree? I posted earlier at quest@cnn.com or @RichardQuest.

"FrenchCH (ph)," I suspect that might be Switzerland, says.

(AUDIO GAP)

QUEST: . "not the end, it's not even the beginning of the end, but the end of the beginning." And even after reading that I'm not sure I'm any the wiser.

And as for "ShirpsyCove (ph)": "It's not so bad." Quest@cnn.com.

The news headlines now, and Fionnuala Sweeney. Good evening, at the CNN news desk.

FIONNUALA SWEENEY, CNN INTERNATIONAL ANCHOR: Hello, Richard.

We begin in Baghdad's Green Zone.

(AUDIO GAP)

SWEENEY: . says both Israel and Palestinians committed war crimes during the Gaza conflict. Israel refused to cooperate with the investigation, who it claims was one-sided and biased towards the Palestinians.

Somalia's government confirms that al Qaeda operative Saleh Ali Saleh Nabhan died in a U.S. air strike in southern Somalia. U.S. Special Operations Forces used a helicopter to fire on a vehicle in which Nabhan was riding.

(AUDIO GAP)

(BEGIN VIDEO CLIP)

DIDIER LOMBARD, CEO, FRANCE TELECOM (through translator): . fully put an end to this movement.

(END VIDEO CLIP)

SWEENEY: France Telecom has shed some 22,000 jobs in the past two years. Unions say the pressure on workers is immense.

And those are the headlines, Richard. Back to you.

QUEST: And in 25 years, Fionnuala, of financial journalism, I can honestly say I've never heard anything quite like that before.

SWEENEY: I know. Strange.

(AUDIO GAP)

QUEST: . in about 20 minutes from now.

We've heard repeated warnings, even as economies recover, it may still feel like we're in a slump, if you've anything to do with the airline industry.

(AUDIO GAP)

(COMMERCIAL BREAK)

QUEST: Welcome back, QUEST MEANS BUSINESS. We're looking at what is next. And as a reminder of how bad things are, especially in the airline industry, it came from IATA, the international body that represents most of the major world airlines.

They give detailed forecasts, and the latest numbers show that their forecast was $2 billion of greater losses than they had first thought, losses now expected to be $11 billion in 2009. If you add it on to the losses that were seen during last year, the totality is some $27 (ph) billion.

Now we've often said, and you've heard me say it before, that is more money lost than the airline industry has made since the Wright brothers first flew at Kitty Hawk. So this is serious stuff.

And crucially, as you can see from here, the heavy burden and the reason why makes it a little bit more serious because $11 billion worth of losses this year, if you factor in a lot of oil prices were based on the idea of $55 to $60, well, as oil has now gone beyond $70 a barrel, high fuel prices coupled with low yields, and this is the key bit, the low yields is the part that basically says they're selling seats but not making much money.

At the back of the bus you fill the bus, you fill the plane, but no one is paying very much, the front, those business class seats, they're going empty. So that's the burden at the moment. That's the problem that's leading to these very sharp losses.

Let me show you one airline in focus to why this is significant. The Japanese airline JAL. JAL has said it shall perhaps lose up to 20 percent of its international routes, and 14 percent of its workforce. This is Japan's main flag carrier. You would never have really thought that JAL would be in such a bad state.

But again and again it's in the middle of a two-year restructuring program that is costing 6,500 more jobs and dozens, dozens more routes, which is why two other airlines, American and Delta, are both looking at putting an equity infusion into JAL.

Delta to try and steal JAL for SkyTeam, American Airlines to make sure that JAL stays within oneworld. What is happening with JAL and these two airlines is indicative of the entire airline industry at the moment.

To lose $27 billion in just two years is pretty exceptional. As IATA's chief, Giovanni Bisignani, explained to me earlier.

(BEGIN VIDEOTAPE)

GIOVANNI BISIGNANI, DIRECTOR GENERAL & CEO, INTERNATIONAL AIR TRANSPORT ASSOCIATION: Unfortunately their economy is recovering, but we do not see this reflected in our balance sheet. The reasons: the increased price of fuel, and especially the drop in yields.

This is an industry of $500 billion revenues and we will have a drop of $80 billion in revenues this year alone.

QUEST: But if you look, for instance, at numbers on capacity, if you look at revenue passenger kilometers, all of the matrices that you look at within the industry, especially load factor, load factor is in the 80s. If you can't make money when a load factor is in the 80s, you're never going to make money.

BISIGNANI: The problem is on the yields. The economy is not picking up, and that's the reason why we have to make more -- lower our fares, and the yields are destroying our profitability.

We've increased capacity overall roughly 2 percent in the last time, and so probably we'll have to handle more effectively capacity.

QUEST: Why is Europe amongst the worst-affected? As I look at the numbers, obviously (INAUDIBLE), Asia, Africa, but it's Europe to some extent that is bearing the brunt of this with the U.S. What is unique in the European area?

BISIGNANI: I would say that the U.S. this time, as it was affected by the credit crunch before the others, started to cut capacity earlier. Europe was delayed in this kind of process. And so it's Europe and Asia, the areas that are having the biggest problems.

QUEST: Now let me take you into deep waters, we hear -- for example, and I don't necessarily expect you to talk about one of your members, we hear that JAL is looking at equity infusions from either Delta or American. We know that Iberia and British Airways are still talking.

Are you basically expecting your members to consolidate in the next few years?

BISIGNANI: You know, the crisis is also an opportunity to push the consolidation that we need. In fact, you know, in Europe we have seen some consolidation around the Lufthansa recently. And unfortunately international.

(AUDIO GAP)

BISIGNANI: .are much more difficult for the rules of the game.

So but we welcome. This is an industry that has over 1,000 big players that is far too much.

QUEST: Finally, the totality of losses seriously doesn't seem to be affecting ordinary people. Planes are still flying. We still have flag carriers. We still have airports. Do you think people have just become inured to the idea of, well, airlines lose money?

BISIGNANI: Airlines are losing money, but we are in a very difficult situation. The level of total debt of the industry is $190 billion. The number of airlines that we have had to suspend for our system is over 40. Of those, 30 are out of business.

And no, we are trying to be able to find the cash necessary to be able to fulfill the needs of the falling back, because cash will be a problem.

QUEST: As we now -- we're leaving the European or Northern Hemispheric summer, and we're going into the winter. Do you fear if oil stays at $70 -- $68 to $75, there will be more bankruptcies, there will worse yields, and ultimately greater losses?

BISIGNANI: Absolutely, yes. We have those two problems, and we have the risk of the influenza that could really affect this industry in a more deeper way.

(END VIDEOTAPE)

QUEST: Giovanni Bisignani.

(AUDIO GAP)

QUEST: . able to get a good bargain on the air fare, finding a bargain on the hotel room would be easy. The president of the Web site hotels.com, David Roche, was telling me why room rates around the world have fallen to their lowest levels in five years.

(BEGIN VIDEO CLIP)

DAVID ROCHE, PRESIDENT, HOTELS.COM: I think that what is interesting today is that hotel prices will probably flat-line from this point going forward, potentially until the second half of 2010.

Why do I say that? Now I can't guess, and I'm not an economist, so I cannot tell you what macroeconomic conditions there are going to be next year. Hence.

(AUDIO GAP)

(END VIDEO CLIP)

QUEST: . of travel. You can take.

(AUDIO GAP)

(COMMERCIAL BREAK)

QUEST: Welcome back to CNN's QUEST MEANS BUSINESS. The markets are open and doing business. We will factor in why you're seeing the number that you are, what are the forces underlying?

We have a force of our own, Susan Lisovicz, who will be joining us in just a moment or two. Before that, let's talk about European markets and European economic data. And there were two pieces of important data to bring to your attention.

In Germany, let's begin here with the Zew investor confidence index. Now you don't really need to know whether it went from 56.1 up to 57.7. You only need to know it's now at the highest level for three years.

And with that number, that is a barometer of what investors believe will happen six months from now. It is your classic forward-looking indicator. And that, the Zew index, is risen quite sharply.

On the U.K. front, inflation fell from 1.8 percent annualized to 1.6 percent. Slightly -- the market liked the number. It was slightly worried that it was just a fraction higher than it had thought at 1.6.

But certainly inflation is not a worry, which, of course, as the governor of the Bank of England today, Mervyn King, said before Parliament, clearly shows that eased monetary policy, low interest rates, will remain the story for some considerable time.

Factor it into the markets and there you have it. It's obvious why the Xetra DAX.

(AUDIO GAP)

QUEST: . and the London FTSE. In Paris, we can pretty much say all the same factors were moving the markets. It was improved economic conditions and.

(AUDIO GAP)

QUEST: . what is coming next.

So the market that is open and doing business at the moment is in New York. Bring in Susan Lisovicz.

Good afternoon to you, Susan. Bring us up-to-date. It was Citibank and retail sales.

SUSAN LISOVICZ, CNN FINANCIAL CORRESPONDENT: That's right.

And let's start with retail sales because if we're going to have anything more than a tepid recovery, it's going to depend heavily on the will of the American consumer. And so we got a very nice surprise today that -- of retail sales in August, jumped nearly 3 percent.

If you strip out "Cash for Clunkers," you still had broad-based gains in things like appliances, electronics, department stores. In other words, on non-essentials, discretionary items that consumers don't necessarily need, but want. And so that was encouraging indeed.

In terms of Citigroup, a whole 'nother story. I mean, Citigroup wants to join the other big guys, the big boys, in repaying the government. The problem is, Citigroup received a whole more than the other banks did, $45 billion.

QUEST: Now the government has about 3 and something billion -- I can't remember the exact number, it's over 34 percent. It's many billions of shares. But this report that they're thinking of beginning to sell those shares and they're looking to strategies for it.

And the U.S. government -- wait for this, the U.S. government might actually make $10 billion on the sale.

LISOVICZ: Yes. I interviewed Dick Parsons a few months ago. He said the company was eager to pay it back. Of course, I think the consensus on Wall Street is that the company cannot earn its way out given the billions it owes. But the fact is, yes, I mean, if it's paying dividends, and in fact, if the government did sell some of those shares, you see a 40 percent rise in the stock price since the government -- you know, from the acquisition price.

We're still talking about $4.25 right now. But the government got those shares at just over $3. So I mean, it has a ways to go to go back to its 52-week high of $26. But yes, I mean, the stock has rallied and there would be gains, $10 billion-worth.

QUEST: I think many years ago, I've still got them in my portfolio in the interest of honesty and common interest, I think I'd have paid considerably more in the '50s for my Citi shares, a long time ago.

All right. Susan, you can -- don't weep with me, we'll hopefully (ph) talk tomorrow. Many thanks. Susan Lisovicz joining us from New York with the way the markets are trading. You are getting a good idea of exactly where the strains and weaknesses are in the financial world tonight.

Now the market slump forced a lot of Wall Street insiders to rethink careers, searching for outside finance and different ways of making money. Maggie Lake spoke to a former trader who found a unique way to profit from years of experience.

(BEGIN VIDEOTAPE)

MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT (voice-over): Plunging stocks, panicked traders, the banking system in peril. One year after the worst of the financial crisis, who would choose to relive those awful times again?

ANDREW LUAN, TOUR FOUNDER: Welcome to Wall Street. The heart of American capitalism.

LAKE: More people than one might imagine. This is the Wall Street Experience Financial Crisis Tour, the brainchild of former Deutsche Bank trader Andrew Luan, who lost his job in the financial crisis.

LUAN: I think there's a need for understanding Wall Street, demystifying Wall Street.

LAKE (on camera): There are hundreds of walking tours around New York City. Even down here in Wall Street, what Andrew and his team try to do is use this historical setting as a way to try to walk people step-by-step what happened during the financial crisis.

TOM COMERFORD, TOUR GUIDE: Have you ever heard of the term toxic assets? That's what these CDOs were. And they were responsible for bringing down these large financial institutions. Now, I'm going to show you a toxic asset. And you can even touch it if you want, but be careful.

LAKE (voice-over): The Wall Street Experience passes by AIG, the New York Fed, and it takes in a little history at Federal Hall, where tourists learn that this financial crisis was far from the first.

COMERFORD: That is the House of Morgan. J.P. Morgan was the most powerful financier in modern times. He was said to be more powerful than the U.S. government because twice, in 1893 and again in 1907, he bailed out the U.S. government when we were having a similar crisis to today.

LAKE: Despite the storied past, today's financial crisis is foremost on the minds of people taking the tour.

UNIDENTIFIED MALE: A lot of people must have missed a lot, actually, and the question is why, actually.

LAKE (on camera): And they were getting paid a lot of money at the time.

UNIDENTIFIED MALE: Yes, right, much more than I will ever do.

LAKE (voice-over): Andrew Luan welcomes the tough questions, but his tour avoids placing overall blame on Wall Street.

LUAN: It was more a systematic failure, where each -- instead of individual, each group was maximizing their return.

I think very few people forecast the extent of the fallout. The overall banking, the Street, financial services industry was rocked.

LAKE: Rocked hard, Luan says, but on the rebound.

LUAN: People will find a way to reinvent themselves. I'm actually surprised at how fast it's coming back.

LAKE: One thing he's not surprised at, people's ongoing fascination with the inner workings of Wall Street in good times and bad.

Maggie Lake, CNN, New York.

(END VIDEOTAPE)

QUEST: As sales plunge, General Motors is breaking itself up through bankruptcy, Chrysler is now controlled by Fiat of Italy. To say the auto industry is having a difficult time doesn't tell the half of it.

The show must go on. And car-makers put brave faces on when they go to the Frankfurt International Motor Show. When we come back, you will hear from the chief executives of Saab, which has just been sold, and Audi -- well, you know the story there. We'll have that after the break.

(COMMERCIAL BREAK)

QUEST: Good evening.

I'm Richard Quest, QUEST MEANS BUSINESS.

This is CNN.

The Frankfurt International Motor Show is getting underway in Germany just about now. The industry is still punch drunk from its worst downturn in decades. It's difficult to overstate how bad it has been.

Even so, carmakers are still wheeling out new babies. VolksWorld, Renault, BMW showing new cars where lower CO2 emissions are meant to be the big selling point. At the less green end of the market, Rolls Royce, Porsche and Lamborghini also have their latest models at the show. I know which side I'd like to be looking at.

I mentioned Chrysler is now under new ownership. The same applies to quite a few well known names. Saab has been offloaded -- or is being offloaded by G.M. Its future owner will be a tiny sport scar company from Sweden. And also, of course, there's an inward investment to that company (INAUDIBLE) from China.

Saab is focused on its new model. It's called the Saab 9-5. January Ake Johnson, the managing director of Saab, told me what it feels like to launch a new car in these circumstances.

(BEGIN VIDEOTAPE)

JAN AKE JOHNSON, MANAGING DIRECTOR, SAAB: To be able to continue the development of the 9-5 and now, today, actually officially show it to the media and later on this week to the public, is -- it's a milestone for us. The 9-5 is extremely important for Saab and will play an important role going forward.

So we're very happy to have reached this point as it relates to the development of the 9-5.

QUEST: Let's talk about those measures that still have to take place. They do relate to financing and the overarching ownership structure.

What is your preference for how you would like Saab to be owned in the future?

JOHNSON: Well, first of all, the Koenigsegg Group is the 100 percent owner of Saab. And that is a good position to be in. That means that we have one ownership structure and that means that the company will get the proper directions in a relatively straightforward way.

I think the addition of a Chinese owner -- minority owner into the Koenigs Group -- Koenigsegg Group -- will give us great opportunities to, in particular, penetrate the Chinese market, which, as you know, is the biggest in the world and the fastest growing market. And, of course, Beijing Automotive, with their experience, will be a great asset for us.

QUEST: And -- and finally, if you go back a couple of years -- I suppose one never imagined a man in your position would end up having to deal with the issues that you've had to deal with, from saying good-bye to General Motors to finding a new car, a new suitor and throwing in the Chinese, as well.

JOHNSON: Well, I can tell you, you're absolutely right. That was not on my map when I took this job. So I've learned a lot over the last 12 months in particular. And it's been a -- it's been a very complicated journey, but I can now see that we're on our way out of this and look forward to operate as a more normal -- normal company than maybe what we have done in the last 12 months.

(END VIDEO TAPE)

QUEST: Volkswagen's Audi division has also been showing off its newest offering. It's the 4-8 Spider. The open top sports car will be available to order in the U.K. from November. It will set you back -- well, recession, not recession -- $164,000.

Rupert Stadler, the chief executive of Audi, tells CNN when he thinks the industry will turn the corner.

(BEGIN VIDEO CLIP)

RUPERT STADLER, CEO, AUDI: 2008 closed with a big financial crisis and we all knew that 2009 will be a very difficult year. We think at Audi that we got the bottom line of the crisis and with a lot of new products, we are really able to come out of that crisis. And we are quite confident with our product portfolio to support that.

(END VIDEO CLIP)

QUEST: Two Formula One racing teams are back on the track. The Swiss-based investment firm is buying the BMW-Saab team. German auto giant BMW said earlier this year it was pulling out of the sport. The new owner will be Qadbak Investments, a foundation representing several families from Europe and the Middle East. Lotus has been handed a spot on the grid after winning the backing of Malaysian investors. The team based in the U.K. hasn't taken part in Formula One since 1994.

And, you know, you can tell the season has changed. The news -- the summer is clearly over in the Northern Hemisphere. The news agenda and the business world all back in full throttle.

And Fionnuala Sweeney is with us to bring us up to date.

FIONNUALA SWEENEY, CNN CORRESPONDENT: Indeed, Richard.

We're going to start with a meeting in Jerusalem. The Israeli prime minister, Benjamin Netanyahu, had talks earlier in the day with the U.S. envoy to the Middle East. And the spokesman for Netanyahu says the two discussed various subjects during their two hour meeting, including Jewish settlements in the West Bank. No details of the meeting were released.

A burning bus rolls out of control on a highway in Southern China. No one was aboard the runaway vehicle on Saturday. The driver earlier discovered the coach was burning and got everyone off quickly, but then the bus rolled off on its own. Police are investigating. One policeman was hurt when he tried to use his patrol car to stop the bus.

After the storm comes the cleanup. Typhoon Koppu ripped through Hong Kong early Tuesday. Several dozen people suffered minor injuries. The storm temporarily shut down schools, businesses and the Stock Exchange. It's now headed toward the west coast of China.

He brought audiences to their feet in "Dirty Dancing" and brought tears to their eyes in "Ghost." Hollywood hot draw Patrick Swayze has died at the age of 57. Swayze fought a fierce, nearly two year battle against pancreatic cancer. As soon as the actor's death was made public, mourners visited his star on the Hollywood Walk of Fame to pay their respects.

And that's the new -- Richard, back to you in the studio.

QUEST: Thank you for that, Fionnuala Sweeney.

And I want to just continue with that, what Fionnuala was talking about, Patrick Swayze. Here on QUEST MEANS BUSINESS, I hope you'll forgive us if once in a while we widen the business agenda and talk about something completely different.

A couple of years ago, I was fortune enough to spend some time with Patrick Swayze on his ranch in California. It was part of the Quest for Dance program that we did right here on CNN.

As we mark the passing of an industry legend, I wanted to share a minute or so of that special moment with you.

(BEGIN VIDEOTAPE)

PATRICK SWAYZE, ACTOR: My father was really the cowboy that fell in love with the intensely talented big city girl, you know. And so I had ranch life as, you know, and horses in my world from the time I was little, as -- as well as having the arts.

But it's just like doing so many of my own stunts for so many years, it's like I -- I wouldn't have had that -- I wouldn't have had the ability to -- to pull off the things I pulled off in -- in my acting career if I didn't have that level of -- of -- of technique and training as a dancer.

QUEST: Do you see any form of contradiction between sort of the suave elegance of ballet and dancing and ranch life?

SWAYZE: I love my animals. They're -- they're a wonderful emotional barometer. If -- if I'm not right with myself and I'm not 100 percent present and accounted for, he will not work for me and I might as well get away from him.

So my animals really tell me whether I'm buying the hype or not or -- or whether I'm really 100 percent myself. I don't think I would have survived this career if I -- if I hadn't made animals such an important part of my life. They teach you (INAUDIBLE) freedom of movement. They teach you so much as a dancer. The pure essence of spirit and energy. And it's -- there's something magical about that union with a horse. You come offstage and everybody goes, you know, go wow, that was a beautiful performance, but you know it wasn't there. You know there was -- you were making it up or -- or you were trying too hard.

And that's the hardest thing to do, is to get out of your own way. But when it happens -- when it happens, something beau -- something beautiful takes -- takes hold.

QUEST: All right, the hard one. I'm going to give you a choice -- dancing or acting.

Which is it to be?

SWAYZE: Oh, well, I was a dancer first. My mother didn't believe you could ever -- ever be -- be a true artist or learn how to spell the word unless you were well versed in every level of the arts -- as a dancer, as an actor, as a singer.

Although I graduated out of the musical comedy, the school of presentational acting, you know. And it took a while to, you know, figure out how to -- how to make that organic and -- and breathe life into the character. But some -- I'm avoiding your question.

All right.

(END VIDEO TAPE)

QUEST: One of the most fascinating interviews I've ever done.

The late Patrick Swayze speaking to me a few years ago on his ranch in California.

This is QUEST MEANS BUSINESS.

We'll be back in just a moment.

(COMMERCIAL BREAK)

QUEST: Welcome back.

Excuse me. We were hearing about the dark fate of the airline business earlier in the program. Now, new figures prove that in a downturn, tourism always has an up side. That, of course, is if you're one of the people traveling and you can take advantage.

According to a report by Hotels.com, prices around the world are down 17 percent compared to a year ago. Now, current prices are at their lowest levels in some five years, according to this (INAUDIBLE). This is quite extraordinary -- five year lows. We're paying what we did now back in 2003.

Rates are still going up in some hot spots. For instance, Rio de Janeiro has the sharpest rise in price, up 35 percent. That might be dollar related, remember. These numbers have been adjusted for sterling, so this might be because it's a dollar adjustment.

Abu Dhabi emerges as the world's most expensive major destination. Sit closely and tightly. A room there costs, on average -- on average -- $285 a night, the most expensive.

So we shouldn't be surprised by these latest figures. After all, if we're getting some good bargains, that must be to the good. At least that was the view I put to David Roche, the president of hotel room bookings on the Web site, Hotels.com.

(BEGIN VIDEOTAPE)

DAVID ROCHE, PRESIDENT, HOTELS.COM: I think that what's interesting today is that hotel prices will probably flat line from this point going forward, potentially until the second half of 2010.

Why do I say that?

Now, I can't guess and I'm not an economist, so I cannot tell you what macroeconomic conditions are going to be next year. But what I can tell you is that the prices are down from Hotels.com at this level simply because the demand overall has fallen, but there's too much supply. And we see the existence of too much supply for the next 18 months or so. And that's likely to keep prices depressed.

QUEST: You don't need to be an economist to know that that is a classic -- too much supply, not enough demand, prices fall.

But -- but how much of this is recession-related, do you think?

Because if it's recession related, as we start to grow again, property -- prices per night will rise.

ROCHE: Well, it all depends on how much supply has been brought on- stream.

QUEST: So you really -- and this is a supply issue and not a -- not a...

ROCHE: I think it's both. I think the demand issue...

QUEST: Yes?

ROCHE: ...it definitely relates to the recession. But the extra supply is related to the go-go years and the availability of cheap finance, you know, between 2006 and 2008.

QUEST: So who exactly is traveling and who is renting rooms and who is not renting rooms these days?

ROCHE: OK, well, if you look at the pecking order of who's staying and who's not...

QUEST: Excellent.

ROCHE: ...who's not staying...

QUEST: (INAUDIBLE)

ROCHE: OK. So start off -- the -- the market tier that has been most impacted are the -- the conference business, the incentive travel. The next last year up...

QUEST: Yes.

ROCHE: ...that's also been affected are the corporate travel businesses. This is genuine corporate travel, OK?

QUEST: OK.

ROCHE: Getting a little bit more positive, you've got the unmanaged business traveler.

QUEST: Yes.

ROCHE: OK, the small SMBs and so forth. But finally, and interestingly, the leisure travel is the least affected of all. And, in fact, hoteliers today are relying most heavily on the leisure traveler.

QUEST: So you've got from -- from the very bottom of the pyramid, which is the -- the mice (ph)...

ROCHE: Absolutely.

QUEST: ...the conferences...

ROCHE: The conference (INAUDIBLE).

QUEST: Right the way up to leisure travelers.

Now is it that leisure travelers are still traveling or that they're still prepared to pay the money?

ROCHE: Well, it's both. But remember that they're traveling in almost the same numbers -- maybe not quite the same numbers -- that they were traveling in before. But they're heavily incentivized by the falls in price. Remember that the fall in price, what's bad news for the hotelier is the consumer's windfall.

QUEST: So tell me, why is it that I never seem to get a bargain -- or occasionally I'll get a...

ROCHE: You're obviously shopping Hotels.com, Richard.

QUEST: I asked for that. I asked for that. All right. But you know what I mean. There seems to be a discrepancy, doesn't there, because the - - when I go and stay in Berlin last week, it still seemed to be horrendously expensive.

ROCHE: Well, look, you know, pricing falls on average is not the same thing as prices falls everywhere all the time.

QUEST: (INAUDIBLE).

What do you expect for the rest of the year?

What's the averages that you are expecting to see?

ROCHE: I'm expecting...

QUEST: And which markets do you expect...

ROCHE: I'm expecting to see that, let's say, across Europe.

QUEST: Yes.

ROCHE: I'm expecting to see that the price is broadly going to go sideways. Leaving aside seasonality issues, about sideways.

QUEST: Right. So if you wanted a good room at Christmas, it will cost (INAUDIBLE) more than that.

OK, here's the traffic light and you've got a red, amber or green in terms of the hotel industry and the prices people are paying at the moment.

Which is it?

What would it be for you?

We started, of course, in the depths of recession with a red.

Where would you put it now?

ROCHE: I'd say if you're a hotelier, you're amber. And I'd say if you were a consumer, you are most definitely green.

(END VIDEO TAPE)

QUEST: Hotels.com. Now we've put in perspective all aspects of the - - of the industry -- the aviation, the hotels.

Ben Bernanke says the recession is probably over.

Do you agree?

One e-mail at quest@cnn.com from J.D. Butson (ph) or J. Butson: "It's all in the mind. The recovery is on."

That's Julian (ph) who sends that.

And from Delum (ph), the exact opposite -- quest@cnn.com: "The recession is not over yet."

And we have one Tweet from @richardquest: "The recession might seem to be ending," says Sofinrocks (ph). "This might be not a V-trend. I hope we don't see a W of the Great Depression."

Well, that's a cheerful thought. The numbers, of course, what people are worried about.

The weather forecast -- if you are traveling over the next day -- even if you're just in the garden or at home -- Guillermo, today was -- look, I -- I know the viewer gets deeply -- well, the dear viewer gets deeply worried when I just talk about the weather in me own back garden. But today we have rain, we had lashings of it in London and it really felt like the season has changed.

GUILLERMO ARDUINO, CNN METEOROLOGIST: But it's not raining right now.

QUEST: Yes.

ARDUINO: I see, especially around three or four hours ago was where we had more action, Richard in London. I will give you more details and I'll tell you if it's going to change or not.

Now, Hong Kong -- and you've been to Hong Kong probably 240 times. Well, if you go to Hong Kong tomorrow, I think it's going to be gorgeous, because we had a typhoon very close to Hong Kong that actually made landfall in the vicinity of Macau and we have now the system over parts of China and affecting northern parts of Vietnam, as well.

And once a typhoon goes into the area of Hong Kong, densely populated, heavily polluted, it clears the atmosphere -- all that rain, all that wind.

So Koppu is now over the China coast. It will continue to move inland. Nanin (ph) is not going to see an intense affect of it, indirect in this case, with winds and rain.

But Guam and Saipan, a little bit farther north and closer to this other system, sees the advancement and the deepening of this strong typhoon at 241 kilometers per hour. But it's going to improve from now. It's going to move northward. And we'll see what happens if it makes it into Tokyo or Honshu, for that matter.

We have time -- we're lucky enough to have time to track it down.

Now, look at Austria. Perth, the great Australian bite (ph), Adelaide into Holbert (ph), we will see winds, also. In the south island of New Zealand, it's going to remain very windy, indeed. Coastal parts of New South Wales, from Sydney all the way up into Queensland, we will see some winds, as well.

Now, the problems are going to be in Italy, with the winds and also with a chance of floods. That doesn't change.

In England, we have alerts posted. We are going to see rain, but mostly if we say well maybe 40 percent of the day it's going to be rainy in London. We had advisories posted for London and southeast.

Elsewhere, it's going to remain windy.

Why?

Because of that flirt going on between a high pressure center and a low pressure center to the south, a high to the north. So we see it's not only London, Richard. It's Paris. It's Amsterdam. It's Dublin. It's Brussels that are getting bad weather.

But the rain it's going to be mostly in the south, in Italy, parts of France, Corsica, Sardinia. And the winds also affecting coastal parts of Italy. Rome likely to see delays. Milano likely to see delays, as well, with the rain, with the wind. So that's where the core of the problem is.

And in Frankfurt, some rain showers, as well.

Stay with us.

We have more QUEST MEANS BUSINESS on CNN.

(COMMERCIAL BREAK)

QUEST: It is one of the most keenly awaited books ever. The author of "The Da Vinci Code" has unleashed his new thriller on the world this Tuesday. "The Lost Symbol" looks set to be another big money maker for the author. That much is, perhaps, not so much at risk.

His last novel, "The Da Vinci Code," saw -- sold more than 80 million copies. The film version starring Tom Hanks grossed $758 million.

CNN's Phil Black was on hand for the unveiling of the new novel here in London. And let's see how the bookworms are taking to it.

(BEGIN VIDEOTAPE)

PHIL BLACK, CNN CORRESPONDENT: It's here, easily the most hyped book publishing event of the year -- the release of Dan Brown's first offering since "The Da Vinci Code" was published six years ago was enough to get hard core fans lining up outside this London book shop before dawn.

They weren't as theatrical or as big in number as you get with a Harry Potter book launch, but they were still very excited.

UNIDENTIFIED FEMALE: What's interesting is I work for the publishers here and I'm still not (INAUDIBLE). It's early. So, you know, I'm not clean.

UNIDENTIFIED MALE: And we want to get it down the road. So I just thought why not come out, it will be a nice surprise for (INAUDIBLE) strikes up at 8:00 this morning and got a signed book there.

UNIDENTIFIED MALE: This has got to be like a big publishing event of the year, you know. I mean -- I mean nobody expected "Da Vinci Code" would be the great success it would be. So we'll have to see whether this is just as good.

BLACK: With a print run of 6.5 million copies around the world, one million in Britain alone, big things are expected of "The Lost Symbol".

But a blockbuster novels like this a good thing for book publishers and retailers?

Well, big retailing chains like Waterstones, that can afford to discount heavily, certainly think so.

UNIDENTIFIED MALE: I think books like this are good news for the retailer. They're also good news for publishers. And, most importantly, they're good news for readers, because they get people excited about books, which sometimes we need to be reminded that books are exciting, as products like films are, like albums are, like rock bands are. And this is one of the biggest. This will get people into bookstores. This will get people into libraries. This will get people who don't ready very much -- it will get them reading.

BLACK: But independent book sellers will find it more of a struggle to make money from "The Lost Symbol." The early reviews say this book has everything Dan Brown's fans have come to love in his work -- mystery, science, symbols -- and it's all wrapped up in a thrilling story.

Phil Black, CNN, London.

(END VIDEO TAPE)

QUEST: Am I the only person that hasn't read "The Da Vinci Code?"

Tonight's Profitable Moment. As you heard me talk about with Guillermo and in our economics, the season has changed, economically as it has in the natural world. Here in the Northern Hemisphere, leaves are turning brown, just as those famous economic green shoots are starting to poke through.

Everywhere we look, there is an authority who are saying the recession is over -- the Fed, the IMF, the Bank of England. We're hearing the same message -- things are getting better, the work is not finished.

We are now entering a new phase, one where the data improves, but you and I really don't feel any better.

Worse still, vast government deficits still have to be slashed. And as you heard tonight from Gordon Brown, the British prime minister, that means cuts in spending.

Even the prime minister has admitted it before anyone engages in a bit of schadenfreude at the British expense, other countries in Europe can expect the same. It's going to be a question of bringing budgets back into balance. It will involve pain.

Now, I don't want to leave you on a miserable note tonight. I'm off for the rest of the week. So let's reflect on this. The seasons are changing. Yes, and that's just the way it's supposed to be.

And that's QUEST MEANS BUSINESS for tonight.

I'm Richard Quest.

Adrian Finighan will be with you for the rest of the week.

Hala Gorani is next at the International Desk.

And whatever you're up to in the days ahead, I hope it's profitable.

END

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