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Quest Means Business
The United States Imposes New Sanctions On Iran Over The Downing Of The Ukrainian Airliner; Rep. Rick Larsen (D-WA) Reacts To Boeing Apology After Release Of 737 MAX Memos; U.S. Announces New Sanctions Against Iran; Pelosi to Soon Send Impeachment Articles to U.S. Senate; Dow Tops 29,000 After U.S. Jobs Report. Aired 3-4p ET
Aired January 10, 2020 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:14]
RICHARD QUEST, CNN INTERNATIONAL HOST: An hour before the closing bell rings on Wall Street. Interesting day on the market. The main three are
down, but the Dow did hit 29,000 earlier. Those are the markets, and these are some of the reasons why.
Designed by clowns supervised by monkeys. Derogatory comments from Boeing employees. We'll find out why and what they meant.
The United States imposes new sanctions on Iran over the downing of the Ukrainian Airliner.
And history is made. The Dow does go over 29,000. It peaks its head over the top and then folds right back down again.
It is Friday, January the 10th. Live from Beirut in Lebanon. I'm Richard Quest where of course, I mean business.
Good evening tonight from Beirut. We start of course, with the downing of the Ukrainian aircraft in Tehran and astonishing announcement tonight from
the Iranians that they expect to announce the cause of the crash after meeting international investigators tomorrow in Tehran.
Now, also the Iranian say they are inviting Boeing to help with the investigation. The Ukrainians say that their experts have been given access
to the black boxes. They still though deny missiles, Iranian missiles brought the plane down.
Meanwhile, Sweden is suspending flights for Tehran. Seventeen of the victims was Swedish.
Peter Goelz is the former Managing Director of the N.T.S.B., the National Transportation Safety Board. We'll get to the role the N.T.S.B. might play
in Tehran in a moment.
First, though, Peter, your reaction to this idea that tomorrow that they will give the results or the report on what caused the crash?
PETER GOELZ, FORMER MANAGING DIRECTOR OF THE N.T.S.B.: Well, it seems like a little bit of a rush to judgment, doesn't it, Richard? They've bulldozed
the apparently the site. I think the Iranians are ready to move on. It's a little premature.
QUEST: And this bulldozing of the site, or at least, let's give them the benefit of the doubt and just simply say, the removal of the wreckage. How
long in an average investigation with this sort, do you think the wreckage would normally be there? They've removed it after 48 hours.
GOELZ: Well, they would remove it once the investigator in charge, the lead investigator gives word that they have established a grid. They've looked
at where all the pieces are, that there is nothing more to be gained from examining the layout of the crash scene.
And clearly there's no investigator in charge. That hasn't happened. The Ukrainians have not been on site extensively. This is all a rush to get
this thing over with as quickly as possible, I think.
QUEST: What role do you expect the N.T.S.B. to have having been invited? They were notified, obviously, as required by treaty, but now they've been
invited to participate. They say they're looking at the extent of that participation.
GOELZ: Well, I think, you know, it's obviously an evolving situation. The N.T.S.B. is going to be -- nobody is potted plant in an investigation -- if
they are being invited to participate, they're going to participate. They're not going to be a rubber stamp. They're not going to be, you know,
I say a retiring figure in the investigation, they're going to fully participate. And I think they're weighing that very carefully.
And if the Iranians are going to announce a probable cause tomorrow, then I'd say there's probably not much reason for the N.T.S.B. to go over.
They're not going to rubber stamp an explanation in 72 hours.
QUEST: Is it likely though that they would also say publicly, that they're not happy with things? I mean, I know a lot of this is always done in the
background under the ICAO principles of secrecy and the like, but the moment the N.T.S.B. signs on to this. They are surely also obliged to say
publicly when they're not happy.
[15:05:04]
GOELZ: Well, I mean, obviously there's an element of diplomacy in all of these international investigations. Sometimes, the N.T.S.B. hasn't been the
most diplomatic in some investigations. And I think in this case, they certainly are going to speak out.
This is an issue of international importance. The cause of this accident has got to be declared and has got to be made clear. And the N.T.S.B. is
not going to go along with a code of silence to help the Iranians cover something up.
QUEST: Peter, we'll talk more about this next week. I'll be back in New York and we can talk more about what the findings are and how you think
that has moved forward. Thank you, sir.
GOELZ: Thank you. Look forward to it.
QUEST: Boeing employees giving their true unfiltered -- thank you -- giving that true unfiltered views. A whole new slew of messages, e-mails, instant
messages coming out, painting exceptionally unflattering and some say worrying picture of what the Boeing employees were saying to each other
about the MAX plane.
Boeing has apologized. One memo said, "This airplane is designed by clowns who in turn are supervised by monkeys." Clare Sebastian is in New York to
talk to us about this.
Should we take these e-mails and messages at face value? We all sort of say things internally between colleagues that we'd rather hope that never saw
the light of day.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Well, I think perhaps someone at Boeing are wishing they'd be more careful, Richard, with what they put
in writing. But in terms of whether this has a material impact, the F.A.A. - the Federal Aviation Administration, which of course is working with
Boeing on recertifying the MAX says that this doesn't bring up any new safety issues.
They have carefully reviewed the documents. They got them before they were released to the public. And they say there's nothing that they haven't
already seen.
Boeing says that when it comes to questions related to the simulators around the MAX, they have carefully reviewed all of those simulators. They
find that they're all functioning correctly.
So the message from both of those parties is, don't worry, this is not a safety issue. But culture can be safety, Richard, certainly when it relates
to a company like Boeing and some of these messages, a couple more of them to bring up are particularly worrying.
There was a an exchange between two Boeing employees in February of 2018. That's eight months before the Lion Air crash. One says, "Would you put
your family on a MAX simulated trained aircraft? I wouldn't." The second employee says, "No." So that's two employees who were saying the simulators
were not up to par.
There was another -- there is a slew of comments in these e-mails, Richard, which relates to efforts by Boeing to avoid having to mandate or recommend
simulated training for pilots. That of course would dramatically increase the costs and timing of this plane for customers. It would limit its
ability to compete with Airbus there.
That employee says, "I want to stress the importance of holding firm that there will not be any type of simulated training required. Transition will
go face to face," he says "... with any regulator who tries to make that a requirement."
QUEST: Right, but what about Boeing's argument that the very fact that these have come to light shows transparency?
SEBASTIAN: Well, certainly that is the message they are trying to put out, Richard. They are in a middle of a leadership change. David Calhoun, the
new CEO, he steps in on Monday.
When his name was announced, they said this is a new phase, a new era of transparency. They said they're going to repair relationships with the
public with customers and with the regulators. So this shows that they're trying to get ahead. They'd already released these documents to the
regulators and to Congress. So perhaps they felt that they were going to leak out anyway, so they should probably get ahead of it and get it out
there.
Certainly, it does show that, but it does raise questions and certainly questions are being asked on Capitol Hill today about what more might be
out there.
QUEST: Clare Sebastian in New York. Clare, thank you.
The FAA has described the tone and content of those e-mails and messages as disappointing. But as we were saying, it said there has been no impact on
safety.
It says, "Any potential safety deficiencies identified in the documents have been addressed. The F.A.A. remains focused on following a thorough
process for returning the MAX to passenger safety."
Rick Larsen is with me. He is the Chair of the U.S. House Aviation Subcommittee responsible for civil aviation and the F.A.A. So, Rick Larsen,
when you hear these comments, as I was saying, look, they are not very nice. They're little -- they're very distasteful. But it's the sort of
thing that arguably colleagues say amongst themselves when they think they're not being about being followed or listened.
REP. RICK LARSEN (D-WA): I think there's certainly an argument for that, Richard, but you got to put all these comments in context. It seems that if
when you look back at the first e-mail trove that came out in the October timeframe and now you look at these e-mails, there's certainly an
organization within Boeing, the chief test pilot and the people around him as well as the people he is reporting to that really didn't seem to think
that they had any direction except to save money for the -- save money for the company and not ask for tougher requirements for simple things like
making sure the plane is safe and the simulators work.
[15:10:32]
QUEST: Do you not have to be careful at this point in that, Boeing is under huge amounts of pressure. There is leadership change that's taken place,
both in the Chair and the CEO. They've got to get the MAX back up. They've got other projects that they need to take care of.
It's a fine balancing act surely for lawmakers about how to handle Boeing without, frankly, damaging it beyond repair.
LARSEN: Yes, look, safety is the only timeline that the F.A.A. needs to consider when making a return to service decision on the 737 MAX. But, you
know, there's a sense at home and I represent more Boeing employees than anybody in Congress. There is a sense at home that with this new
leadership, there's an attempt to turn a corner with Congress and with the regulators.
I think that's why we saw Boeing release these e-mails. I think we saw -- you know, we saw Boeing recommend to the F.A.A. that there should be
simulator training, not just computer-based training for pilots on the recertified 737 MAX. That's a 180-turn from what Boeing is arguing, you
know, four or five years ago, as we saw in these e-mails.
QUEST: Yes.
LARSEN: So there is a sense that they're trying to turn a corner, but I don't know if it'll be fast enough, but I do think they're trying to get to
that finish line faster, and the only transparency on Boeing's part will get them to that finish line faster.
QUEST: Can we turn, sir, to the events in the Middle East? And obviously you're involved in the aviation subcommittee. You are the Chairman and
therefore you --
ZAIN ASHER, CNN INTERNATIONAL HOST: All right, it looks as though we have lost our Richard Quest. He was live for us there in Beirut. We're going to
take a quick break. We're going to see if we can reestablish Richard Quest's shot there. We'll be right back.
(COMMERCIAL BREAK)
[15:15:07]
ASHER: Welcome back, everybody. The White House is unveiling tighter economic sanctions against Iran that is targeting the country's largest
metal producers. Also targeted on eight senior Iranian officials as well. All of this coming after strikes against U.S. forces by Iran in Iraq.
Treasury Secretary Steve Mnuchin says these sanctions will be denying the regime of billions of dollars. Take listen.
(BEGIN VIDEO CLIP)
STEVE MNUCHIN, U.S. TREASURY SECRETARY: I think we have a hundred percent confidence and we are consistent in our view that the economic sanctions
are working, that if we didn't have these sanctions in place, literally Iran would have tens of billions of dollars. They would be using that for
terrorist activities throughout the region, and to enable them to do more bad things.
And there's no question by cutting off the economics to the regime, we are having an impact.
(END VIDEO CLIP)
ASHER: All right. Nic Robertson is joining us live now from Riyadh, Saudi Arabia. So Nick, just walk us through what's different about these
particular new sanctions compared to previous ones?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Well, I think just picking up on what the Treasury Secretary said there that would be
something that will be echoed here in Riyadh. They see that, particularly when it comes to the Houthis who are supported by Iran in Yemen, a proxy of
the Iranians. They see them getting less money from the Iranian regime now because sanctions are tighter. So that's sort of one part of the bigger
picture, if you will.
These sanctions, you know, people have questioned whether or not the United States can put more sanctions on more companies and trading and entities
and people in Iran and have effect, and it seems here that again, going after the big industries of iron and steel, going after anyone that tries
to do business with Iran, whether it's in the construction area, manufacturing, textiles, mining, and not just primary sanctions, secondary
sanctions as well. Those can have quite a broad impact.
And certainly for a country that has its economy struggling already. And then these more targeted on individuals, those eight individuals, one of
them is the head of the Basij Forces, an internal security force, largely volunteer force that Secretary of State, Mike Pompeo said were responsible
for some of the internal repression going on, he said, responsible for the deaths of about 1,500 Iranians in recent protests.
And another person that was specifically mentioned in those eight people was the leader, the Secretary of the Supreme National Security Council.
Again, somebody with influence at the high levels in the regime. Perhaps those individuals that are sanctioned, it can be put on them, not as
punitive as those on the business and industries. But the implication will be, it would make it hard for them to be effective outside of the country.
But perhaps those sanctions on those individuals, those are perhaps more symbolic of the people that the regime -- or rather the United States would
like to target in the regime in Iran.
ASHER: And it just in terms of strategy, just walk us through the U.S.'s long term goals when it comes to this maximum economic pressure campaign
against Iran.
ROBERTSON: It's a tactic that seems designed to bring Iran to the negotiating table, but it's a tactic that has failed so far, because what
it had produced was an escalation in violence in the region by Iran and its proxies. And that's why because Qasem Soleimani was targeted, albeit
because he was going to ratchet up those attacks and tensions further.
But the real question is, can this tactic -- is it a real strategy? And can it actually pay off? You know, United States allies here hope that it can.
They're not sure what the United States next steps are going to be.
They do hope that there's a de-escalation in the region. They do want to see that. But it's not clear that how Iran is going to tackle having
additional sanctions and additional sanctions.
I think one of the interesting things that Secretary of State Mike Pompeo talked about was, you know, this idea of President Trump raised of NATO
taking a bigger role.
The Secretary said that NATO officials were at the State Department right now working on that. He said that in discussions with the Iraqi government,
they will not going to withdraw U.S. forces right now that indicated over time that may change.
So you can see scope for conversations with the Iranians, but it doesn't feel close and I'm not quite sure I see all the steps to get there right
now.
ASHER: We'll keep an eye on it as I'm sure you will, as well. Nic Robertson live for us there in Riyadh. It looks as though we've reestablished Richard
Quest's signal in Beirut -- Richard
[15:20:06]
QUEST: Thank you, Zain. Indeed back to Congressman Rick Larsen, who chairs the House Aviation Committee. My apologies that we lost the signal there.
But technology is what it is. I'm sure you understand being in a technology related business from aviation.
Now, sir, back to what I was saying, if it is a missile -- if it is a missile -- what should the U.S. do?
LARSEN: Well, I think what needs to happen first and foremost is the -- if the N.T.S.B., since they've been invited, that we ought to give them an
exemption, a waiver to the restrictions on travel to allow N.T.S.B. to travel there.
Ultimately, I think the flight data recorder and the cockpit voice recorder, we need to insist that those get into the hands of the country
with the technical capability and resources to actually evaluate the data on those.
I'm not convinced Iran has the capability or the resources. France does. The U.K. does. Germany does. We do. But I think we're out of the picture in
that regard. Because when you get that information, we will have a much better idea of exactly what happened to this flight.
QUEST: And this idea that tomorrow, the Iranians are going to announce the probable cause of the crash, 72 hours after the incident. Some might say
that's laughable.
LARSEN: I think it's really too soon. You certainly expect first off a preliminary report which the Iranians have already put out, which is really
basic information and extending the invitation to affected countries including the N.T.S.B. to come and help with investigation.
But you know, expect maybe four weeks or five weeks to have a little bit more information and do a preliminary report based on that. But, you know,
these kinds of investigations should take at least nine months, if not a year or a bit longer to actually do it.
It sure seems -- 72 hours after this to have a conclusive answer -- it seems pretty ridiculous, unless that conclusive answer the Iranians are
going to announce are the kinds of things that are being reported in the press here in United States about a likely -- the likeliness or the
likelihood of a missile attack, but I don't think the Iranians are going to fess up to that if that, in fact was the case.
QUEST: And finally, sir, I want to come back finally, if I may to the F.A.A. and your supervision of the F.A.A. Every time I read the F.A.A.'s
statement, saying that the MAX will only fly when it's safe, and we will ensure the safety of the MAX, et cetera et cetera. I just keep thinking
back to where were they before all of this, and it's a case of me, thinking you don't protest too much.
LARSEN: Two things that add to that, Richard, one is because of congressional efforts, the F.A.A. established an independent Technical
Advisory Board to kind of look over the F.A.A.'s shoulder specifically on the recertification of the 737 MAX.
So it's not just in the F.A.A.'s hands. There's an independent board looking over their shoulder asking questions, getting answers, giving
technical advice. So that's the first thing.
The second thing is what your comments indicate is that, I think we are not now in a position of looking at if we're going to change how airplanes and
airplane components are certified in this country. It is really a matter of how we are going to change the law.
Not if we're going to change the law, but how we are going to change the law because the F.A.A. was not connected enough to this process with the
MAX.
QUEST: Thank you, Congressman. Thank you, and apologies again, for the technical delay. But these things happen in the worlds of live broadcasting
and we're grateful that you have been with us throughout. Thank you, sir.
Now, why was I in Lebanon here in Beirut? Because of course, Carlos Ghosn conducted his first press conference and gave his first interviews since he
escaped from Japan, from justice in Japan.
However, Carlos Ghosn's legacy, of course, is that of Renault, Nissan and Mitsubishi. He was working on his legacy before it all crashed down.
(BEGIN VIDEOTAPE)
QUEST (voice over): Carlos Ghosn was at the peak of his power before his arrest in 2018. Leader of the massive Renault-Nissan-Mitsubishi Alliance,
responsible for more than 470,000 employees and 10 million vehicle sales that year.
(BEGIN VIDEO CLIP)
CARLOS GHOSN, FORMER NISSAN EXECUTIVE: I got to be Chairman and CEO of Renault. I'll be Chair of the Board of Nissan and Chair of the Board
Mitsubishi. I have my hands full.
(END VIDEO CLIP)
QUEST (voice over): Ghosn's career began in 1978 at the tire company, Michelin. He joined Renault in 1996, three years before he orchestrated its
tie up with Nissan.
He had a reputation for efficiency. It's earned him the nickname "Le Cost Killer."
[15:25:10]
QUEST: Ghosn repeated his slashing feat at Nissan, eliminating automatic promotions, cutting jobs, closing plants. The painful cuts saved Nissan and
made Ghosn a hero. One of the few foreigners to successfully run a large Japanese company.
(BEGIN VIDEO CLIP)
GHOSN: After 16 years, we can say Nissan has really revived. I feel very good about that.
(END VIDEO CLIP)
QUEST (voice over): Nissan now says that cult of personality Ghosn created allowed his behavior to go unchecked. While Ghosn accuses Nissan executives
of orchestrating a corporate coup, the former CEO insisted in April, he still loves the company.
(BEGIN VIDEO CLIP)
GHOSN: My love for Nissan is untainted today after all the ordeal I've been through. I want you to know that. I want you to be convinced of that.
(END VIDEO CLIP)
QUEST (voice over): Now it's Ghosn's own legacy that is tainted. Once seen as a visionary of the auto industry, today facing an uncertain legal future
of his own.
(END VIDEOTAPE)
QUEST: Carlos Ghosn says that his future is here in Lebanon. The country says he can't leave anyway as long as there's an Interpol red notice for
him. Lebanon itself is in political turmoil bordering on crisis and disaster. So I asked Carlos Ghosn, did he see a future role helping
politics in Lebanon?
(BEGIN VIDEOTAPE)
QUEST: The country is in turmoil.
GHOSN: Yes.
QUEST: It's seeking a government.
GHOSN: Yes.
QUEST: It's looking for leadership. Straightforward, Carlos, do you or would you -- would you accept some role in the Lebanese government?
GHOSN: No.
QUEST: You say that now.
GHOSN: I say it now, I said before and I will say it in the future. I'm not interested in the political carrier. I'm ready to put my competence and my
knowhow helping politicians succeed, but I'm not interested in political a career.
QUEST: So let's put that there. If you are invited to be President, you'd say now. If the President asked you to become -- to make a cross party
government, you'd say no.
GHOSN: Exactly.
QUEST: Will it feel like you're in a very pleasant sort of prison being here? You can't go anywhere except maybe to France or Brazil, and you'd
have difficulty getting to both and you'd be taking an enormous personal risk.
GHOSN: Yes.
QUEST: So would you take that risk? Would you go to France?
GHOSN: Well, it depends for what? It depends for what? It depends what is your perspective. You know, obviously you're telling me my situation today
is not perfect. It is not ideal. I agree with you.
But it has to be compared to my situation before. My situation before was being in a -- practically in prison in a different prison in Japan, without
my friends, without my family, without my community where you don't speak the language, et cetera. So this is the situation.
So now I'm in Lebanon where it is a country that I like, where I have friends, I have family. So yes, I may be constrained to Lebanon for a
while, but I'm intending to eliminate it.
QUEST: You say for a while in that sort of tantalizing way as if there's a plan.
GHOSN: Sure. I know I can challenge the red notice of Interpol. I can challenge it. I have the right to challenge it. And I'm going to challenge
it because I don't think -- I think this case is political.
(END VIDEOTAPE)
QUEST: Now, late in this hour, Renault-Nissan-Mitsubishi, the Alliance he put together, Carlos Ghosn tells me what has now gone wrong.
The Dow turned slightly lower this morning. That's after it hit 29,000. We'll discuss that and show you a lot in just a moment.
This is QUEST MEANS BUSINESS. Good evening to you. We're live in Beirut.
(COMMERCIAL BREAK)
[15:30:00]
QUEST: Hello, I am Richard Quest, a lot more QUEST MEANS BUSINESS in just a moment, including we'll hear more from Carlos Ghosn, this time on the car
company alliance, the giants that he put together, and now seems to be falling apart. And 29,000 on the Dow, it came and then it went. But we need
to understand where it's likely to go next.
All of that still to come. This is CNN, and on this network, the news and the facts always come first. The Trump administration is putting new
sanctions on Iran this week after the attacks on the U.S. and allied troops in Iraq. These attacks came after President Trump of course ordered the
strike on a top Iranian general.
The new sanctions target Iran's construction, manufacturing, textiles and mining, oil has of course already been sanctioned. U.S. House Speaker Nancy
Pelosi says she's getting ready to send the impeachment articles to the U.S. Senate next week, and that would start, of course, the president's
trial. There's been a standoff between the house and the Senate for weeks. Democrats are trying to get the Senate Majority leader Mitch McConnell to
agree to have trial witnesses.
U.S. Navy says a Russian warship aggressively approached an American destroyer on Thursday in the north Arabian Sea. This is the video of it
that we've obtained. Navy officials say the Russian warship ignored warnings, increasing the risk of a collision. A similar incident happened
about seven months ago in the Pacific. Mike Pompeo, the U.S. Secretary of State is maintaining the Iranian General Qasem Soleimani was an imminent
threat to Americans.
He says that President Trump made the right call in ordering the strike against Soleimani. He didn't give specific time frame, but said the threat
included attacks on the U.S. Embassies.
It was brief and you might have missed it if you didn't look, but the Dow did hit 29,000 this week ever so -- did today ever so briefly intraday and
then promptly fell back, but now down 133. So, the selling is extending. Disappointing job numbers came out, they weren't bad, they're just not as
good as they have been lately. Paul La Monica is with me. Paul, if you look at the last three months, this is the lowest. But it does beg the question
why? Is there something underlying that caused this?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think we have to be very careful, Richard, and not make too much out of one month of data because as
you pointed out, we've had several months in a row of pretty strong jobs numbers, but this is a disappointment, it missed forecast, and it comes
after a blockbuster report for November.
[15:35:00]
Even if you factor out all those GM workers that returned to work, you had very strong numbers above 200,000 jobs added in November. So, this is a
pull back from those levels. The good news is the unemployment rate remains near a 50-year low, about 3.5 percent. And this is the mixed bag of good
news-bad news. The wage growth figure dipped below 3 percent, that's good if you are in the markets and feel that the Fed doesn't really need to be
doing anything any time soon, they're likely to keep rates on hold. That's good news.
The bad news obviously is that wages are coming down and you know, the growth is coming down. Consumers have a little bit less in their paychecks.
QUEST: OK, but I was talking earlier to Mark Chesler(ph) of the New York Stock Exchange on "EXPRESS". He says that the market is still expected to
rise. And many people are forecasting say a 5 percent to 10 percent gain in the major indices in 2020, despite the fact economies might be slowing.
LA MONICA: Yes, I think that seems reasonable. Obviously, we had incredibly robust gains for all the major market indexes in 2019. It would be
difficult if not impossible for Wall Street to replicate those gains this year. So, I think what you're likely to have is more measured gains in 2020
-- and if we can get 5 percent to 10 percent, I don't think there's anything wrong with that.
QUEST: It just will be not enough for those who expect more. Good to see you, Guru La Monica --
LA MONICA: Thank you --
QUEST: We'll catch up in detail next week. The U.S. unemployment rate did hold steady at 3.5 percent with weaker growth. Let's talk about this with
the Lakshman Achuthan; the co-founder of the Economic Cycle Research Institute, he joins me from New York. The number is -- Lakshman, the
numbers as you see them -- now, look, this is full employment. It's unrealistic to expect job growth of 200,000, 250,000. This is going to be
the new normal surely.
LAKSHMAN ACHUTHAN, CO-FOUNDER, ECONOMIC CYCLE RESEARCH INSTITUTE: Well, I - - let's -- I'll accept some good news here. There's a lot of good news in what the economy has been doing. In the past 10 years, we've -- the past
decade, right? We've added 22 million jobs. That's great. The unemployment rate is at a 50-year low. That is great. This is all good.
It doesn't take away from the fact that the economy is slowing, as you guys were just talking about. And in 2019, we added 600,000 less jobs than we
did in 2018. The year-over-year pace of jobs growth is at a two and a quarter year low, and as you were just talking about, wage growth has now
come down to a one and a half-year low. So, if the market is super tight, you wouldn't -- job market -- if the job market is so tight, you wouldn't
expect wage growth to be falling. That doesn't really hold together. So, I think we do have a slowing economy, it's natural in a free market to have
that.
QUEST: The slowing economy at a time, though, of tight labor markets, it should allow the Fed to hold tight or of any form of even rumors of any
changes in interest rate, certainly not higher. But I do wonder how long this unduly accommodative stance can last.
ACHUTHAN: You know, it's a great question. So, before the financial crisis, the way that markets in the world worked is that -- I am talking, you know,
the last recession, you would have had a slow-down in earnings pretty much impact the markets, right? Because the markets are buying some future
stream of earnings when they buy -- when you buy a stock.
And what we see more recently in the last several years is that it's all about central banks. And so right now, you have a slowdown -- you have
earnings growth that's fallen, it's actually flat, it's near zero. But stocks are hitting new highs. You know, what has changed is really that
central banks around the world, not just the U.S., all over the world, they're cutting rates at the fastest pace since the last recession.
And when we look at the United States on top --
QUEST: Right --
ACHUTHAN: Of that, you have the balance sheet being expanded very fast. The Fed balance sheet which basically means that they're kind of covering the
fiscal deficit, the deficit out of Washington, it's a trillion --
QUEST: All right --
ACHUTHAN: Dollar deficit.
[15:40:00]
QUEST: Good to see you, sir --
ACHUTHAN: All right --
QUEST: Thank you, I really appreciate it --
ACHUTHAN: All right, thank you --
QUEST: Happy Friday, thank you, have a lovely weekend.
ACHUTHAN: You too.
QUEST: And we continue on QUEST MEANS BUSINESS, we'll be talking once again to Carlos Ghosn, this time, we need to understand how he views the alliance
he put together. QUEST MEANS BUSINESS live from Lebanon.
(COMMERCIAL BREAK)
QUEST: Carlos Ghosn says that the companies and the alliance that he formed of Renault, Nissan and Mitsubishi. All are the worst performing auto stocks
so far. Take a look and he might well be right. Nissan -- Ghosn's former Nissan colleagues -- look at the slump in their shares over the last year
or so. Well, Carlos Ghosn's former Nissan colleagues called his escape a betrayal.
But he blames them for his removal and for letting the alliance deteriorate. And now the relations have soured between them all, taking a
toll on their performance. Carlos Ghosn says it's really very simple. The alliance is not being run effectively.
(BEGIN VIDEOTAPE)
QUEST: Before his fall from grace, Carlos Ghosn created one of the world's biggest car makers, the Renault, Nissan, Mitsubishi alliance. The three
companies share factories, technology and have multiple ownership stakes in each other. Now, "the Wall Street Journal" says the alliance is in danger
of collapse as growing tensions among the companies get worse without Carlos Ghosn to keep the peace.
Sales across all three car-makers fell sharply in 2019. Nissan was hit the hardest. Profits plunged 91 percent through the first three quarters of
last year. The car coach Lauren Fix says the alliance is facing an uphill battle.
LAUREN FIX, AUTOMOTIVE EXPERT: This is a problem, and they're going to have to do a complete restructuring in order to save all three companies, and
the alliance is going to have to get stronger, not weaker.
QUEST: The journal says the alliance also ended Mr. Ghosn's annual tradition of announcing the billions of dollars it saved together. The fear
of looking foolish when profits were plummeting. Now, the entire Renault, Nissan, Mitsubishi alliance that Ghosn built may be at risk of unraveling
without him.
(END VIDEOTAPE)
[15:45:00]
QUEST: Carlos Ghosn doesn't have any schadenfreude over the problems of the alliance, but he does say he knows how he would fix it, and it's not the
way it's being run at the moment.
(BEGIN VIDEO CLIP)
QUEST: The alliance that you put together, it's virtually falling apart.
CARLOS GHOSN, FORMER CEO, RENAULT-NISSAN: It's true.
QUEST: That suggests it could only stay together with the dictator, Carlos Ghosn.
GHOSN: I don't think so. First, I don't think a dictator could have made the alliance. I don't think so. I think a dictator would have not being
able to create a space where people can come together even though they're coming from different countries with different culture. This requires a lot
of skills in terms of negotiation, persuading people to come to the table because it was their own interests.
So, a dictator would not have been able to do that. Now, let me go to the second thing. Yes, the alliance is not going well, it's not because I am
indispensable, I think -- but I think the methods which are being used today in the alliance are absolutely not efficient. And that's what I'm
worried(ph).
QUEST: I realize, you know, the alliance is your life's work professionally. Is there just not even a scintilla of schadenfreude that
the way in which they've got themselves into a mess, Nissan's profits is down so heavily, Renault failed to pick up Fiat-Chrysler, Mitsubishi hasn't
turned around. Don't you just have --isn't there just a moment when you say that? Well, got rid of me and look what you ended up with.
GHOSN: Well, without any doubt, they -- you know, many people said we want to turn the Ghosn page. Well, they turned the Ghosn page, except that what
was the Ghosn page? That Ghosn page was profit, growth, strategic dynamics, technological innovation, and alliance that works. Well, today, when we
look at the situation, yes, they turn the page. There's no more profit, the growth is down, there's no more technical innovation, there's no more
strategic initiative. Well, the only strategic initiative was Fiat-Chrysler which was lost and alliance not working.
(END VIDEO CLIP)
QUEST: So, with me is Lauren Fix, the car coach, leading analysts of the auto industry. Now, you were listening to Carlos Ghosn, so when he says
turn the Ghosn page, I mean, is the alliance in trouble because it doesn't have the glue of Carlos Ghosn?
FIX: There's a lot of pressures coming in from the French government to take over the Japanese car company, of course, Nissan doesn't want that,
and that's part of what caused the pressures of Carlos Ghosn to be put into this position. And the alliance is really in a lot of trouble. For all
three of them to survive, they have to work together, and I just don't see that they want for them to work together for -- comes even something as
simple as electric cars.
They came out with the Nissan Leaf, and it sort of that's it. I mean, where other car companies are pushing toward electrification, we're not seeing
those kind of innovations, and the reason for that is it comes down to dollars and cents. And they have to work together, that's the only way that
we're going to survive, otherwise it's going to fall apart --
QUEST: Yes, right, but Carlos Ghosn says he wasn't a dictator, but by the same token, you can't run this alliance by agreement. If somebody has to
lead, somebody has to have strategic direction. Is that what he gave, that is -- he -- that is not there now?
FIX: All right, Carlos Ghosn is an innovator, he's a fixer, he's the one that put this all together, he is an entrepreneur, and the way he thinks
was correct. You have to have someone who is the leader of the three you can communicate with all three companies so that you get the best from
everyone. And without that, all they're doing is fighting. The in-fighting is hurting them all financially, and you're seeing that in the sales and
the drop in profits.
QUEST: So, what do they do because the plan that Ghosn had was for a holding company, very similar to the airlines actually when they merge. You
have a holding company, and then you have the two individual entities. In this case, we have a holding company and Renault and Nissan and Mitsubishi.
But they didn't want that, and in fact, according to Carlos Ghosn, they so badly didn't want it, they colluded with the prosecutors to get rid of him.
FIX: Right, that's exactly what it is. It's a coup. I've been saying that since the beginning, you and I have been talking since this first came down
in 2018. I believe it was a coup. They didn't want -- Carlos Ghosn got pressure from the French government, at the time it was Macron who was
working on the financial side, he was a financial minister and they wanted the pressure of getting Renault to own more of Nissan, and overnight, he
owned 43.4 percent, the French government owned of Nissan, and that was a problem because there was voting power from Renault on Nissan, but Nissan
had no voting power with Renault, and that's where problems got -- things went upside down.
So it's not a fair alliance where everybody kind of works together, it's uneven, and then without having a leader, someone who can position to
communicate, be a liaison to each company, it's just going to fall apart.
[15:50:00]
And that's not good because each car company needs to align themselves with some car company because the only way you can survive in today's world --
QUEST: Right --
FIX: Is to share technology, share platforms, and I'm not seeing that happening, not with the way things are right now.
QUEST: Lauren, good to see you, Lauren Fix joining me to talk about that, much appreciate it. Well, we came to Lebanon for one reason, specifically
to interview Carlos Ghosn. What a week it has been. In fact, there's been - - so much happened, and after the break, we'll pause for thought and take a breath.
(COMMERCIAL BREAK)
QUEST: Very simple, what a week. It starts off with the United States launching a raid which kills Iran's top general. Iran then retaliates with
an attack on Iraqi bases. You have the downing, possibly, probably by missile of a civil airliner, and Carlos Ghosn decides to speak here in
Lebanon. What a week.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: If Iran does anything that they shouldn't be doing, they're going to be suffering the consequences.
QUEST: President Trump is promising fresh and new economic sanctions on Iran.
TRUMP: Iran appears to be standing down.
QUEST: Ukrainian International Airlines has now released the names of the crew, the pilots and crew on board of 752.
TRUMP: It was flying in a pretty rough neighborhood, and somebody could have made a mistake.
JUSTIN TRUDEAU, PRIME MINISTER, CANADA: The evidence indicates that the plane was shot down by an Iranian surface to air missile.
QUEST: Tonight, Carlos Ghosn very firmly on the offensive, in his first public comments since he fled as the fugitive from Japan.
GHOSN: I did not escape justice. I fled injustice.
QUEST: Do you accept that you broke the Japanese law in leaving?
GHOSN: I accept the fact that I broke the Japanese law by leaving this way, yes. I didn't leave Japan to hide somewhere, I left Japan because I'm
looking for justice, and I want to clear my name. Freedom, no matter the way it happens, is always true.
QUEST: Here and the now, the Dow hit 29,000.
(END VIDEO CLIP)
[15:55:00]
QUEST: Never mind the Dow, in the here and now, the here and the now shows the Dow under 29,000. Well, it went down way above it, but it came back
down again. But it does prove what a week it has been. Very busy and delighted that you have been though with us throughout all of this. The
markets are down, and largely on the back of disappointing employment numbers, 145,000 jobs created, the unemployment rate in the United States
remained at 3.5 percent.
Take a look at the Dow 30 there, you have Pfizer is at the top, if I look round the corner, we'll see who is at the bottom. We will have our
profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment. If you really want to get a taste of the problems of Lebanon and understand just how bad the situation is here,
think about phone roaming, mobile roaming charges. So, you land anywhere else in the world, and you're told that your home rate applies or T-
Mobile's one rate applies or whatever. It's not a big deal.
Land here in tiny Lebanon, and you get a notice from your company that it's not in any global roaming plans, it will cost 50 cents a minute, $3.95 per
minute on the phone, and it will cost at least $5 per megabyte, 15 in some cases for data. Why? Why does everybody else manage it? Because here I'm
told the phone companies were greedy, they wanted too much money from the international giants and they said no.
And that's really one of the problems that's indicative of what's happening in Lebanon. When a small country like this can't even get a decent roaming
agreement, and it can't put together a government, and it has a caretaker government, and the sides of the various factions still can't agree, and
you end up with the newspaper this morning, Hezbollah barely opposed cabinet of specialists.
It makes you realize just how deep the problems are, and how intractable and difficult they will be to solve. And really, you can bring it all the
way down to something as simple as corruption and greed, and things like roaming charges. This is one of the few places on earth that I've never
been able to roam without having to pay a small fortune.
And that's QUEST MEANS BUSINESS for tonight. I am Richard Quest in Beirut. Whatever you're up to in the hours ahead, I hope it is profitable. We are
back in New York on Monday, have a lovely weekend.
(BELL RINGING)
END
