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Quest Means Business
Markets Flat Amid Rate Hike, Recession Concerns; New World Bank President; Pizza Chains Struggle With Rising Food And Labor Cost; Yara International Kyiv Office Hit By Missile Early In Russian Invasion; Author Of "Megathreats" Says Current Status Worse Than Previous Crises; Call To Earth: Dyer Island; Jojo Moyes Discusses New Work. Aired 3-4p ET
Aired February 23, 2023 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:36]
RICHARD QUEST, CNN INTERNATIONAL HOST: An hour to go of trading and the markets have been betwixt and between throughout the course of the day as
you can see there, along a bit of green at the beginning and then a long period in the red and now, a bit in the green, but the movements are small
or relatively so. So it need to be taken with a pinch of salt. It's a wait and see type of market at the moment.
The main events of the day that we're bringing to your attention. Damned if you do, damned if you don't. Nouriel Roubini is on the gloomy take and
choices facing Central Banks today.
US nominate Ajay Banga, the former Mastercard CEO to run the World Bank.
The author, Jojo Moyes joins me to talk about the value of a good read with her new book.
We are live in New York. It's Thursday. It's February the 23rd. I'm Richard Quest, I mean business
Good evening.
Tonight, you're going to hear that a hard landing will be necessary to truly beat inflation. It is the view of one of the most famous and
controversial economists, Nouriel Roubini. Mr. Roubini often called "Dr. Doom" for his prognostications and forecasts told me he believes inflation
will remain elevated for the next year.
And as a response, he says, Central Banks will need to raise rates higher, or they risk inflation spiraling out of control.
Nouriel Roubini joined me in the C suite in the sky, and told me what Central Bankers are facing.
(BEGIN VIDEOTAPE)
NOURIEL ROUBINI, FOUNDER AND CEO, ROUBINI MACRO ASSOCIATES: They say that they want to fight inflation, but I think inflation is going to be more
persistent. It is easy to cut it from 10 to six percent, pushing it from six to two is going to be much harder, because commodity prices are going
to remain high, wage inflation, government rein in high, and services demand mostly labor.
So I think that inflation is going to surprise on the upside, and then policymaker will have a tough dilemma. Either they really raise interest
rates much more than say five percent for the Fed, or three percent for the ECB, and then they cause a real hard landing, and they cause a financial
crash with effects on equity market, bond markets, and credit markets and a financial economic crash. They are going to feed off each other.
Or if as I expect, they're going to blink and wimp out, then inflation expectation gets de-anchored like the 70s, and then we end up with high
inflation, it is still a recession. So unfortunately, given the shocks, given the amount of that, damned if you do, damned if you don't.
QUEST: Is your preference to push back to two percent or to sort of wimp out somewhere around about three-and-a-half to four percent on inflation?
ROUBINI: I think that we have to push for two percent, because once you wimp out, who knows that whether inflation is going to be stuck at four
percent, or five or six. Once you have a de-anchoring of inflation expectations, like in the 70s, including that with double digit inflation,
but unfortunately, doing the right thing cause a hard landing and a financial crash, so we have to be aware of the cost of going to two
percent.
QUEST: Do you foresee a really nasty, hard landing?
ROUBINI: I do believe that it is going to be hard landing even if now markets believe in a soft or a soft-ish landing, because my view is that
commodity prices are going to remain very high this year.
You have the war between Russia and Ukraine, you have Israel and Iran, you have the building tension within US and China. If China is going to grow
faster this year, demand for commodities is going to be higher, and there has been a massive underinvestment in new capacity of commodity, not just
energy, green metal, industrial metal.
So, commodity prices, according to Goldman Sachs this year could go up 43 percent. If that's true, then headline inflation and core is not going to
go lower, it is going to go higher.
QUEST: I'm going to give you a thousand dollars. What are you going to do with it? Are you going to go and spend it? Are you going to go and invest
it and if you do, are you going -- what would you invest it in? Or are you going to take you and your friends out for a nice dinner?
ROUBINI: Well, it is better to save it and invest it rather than consuming it given that debt ratios are high. When inflation is rising like last
year, you lose money on equities because the discount factor for equities is that the bond yield goes higher, but the higher bond yield implies that
the price of the bond is lower.
[15:05:07]
So last year, you lost more money on 10-year Treasury, 20 percent price fall, as the yield went from one to three-and-a-half than you did on the
S&P 500, where you lost only 15 percent. So you lost money on your bonds, you lost money on your equity.
If I'm right, that the average inflation rate is not going to be two percent, it is going to be six. The loss that you saw last year on bonds
and equity is going to be more severe in the next few years to come.
How do you ahead yourself? Short term bonds, inflation index bonds, commodities and precious metals like gold and sustainable forms of real
estate that do well when inflation is rising. So you have to move away from traditional investments like bonds and equity towards stuff that get to a
hedge against inflation, debasement of fiat currency, sociopolitical and geopolitical risk, and even environmental risks.
QUEST: Will there be enough left over for an ice cream?
ROUBINI: Yes, you can have an ice cream, but better to save for more ice creams tomorrow than having ice cream today.
(END VIDEOTAPE)
QUEST: Roubini's anxiety over rate hikes has been felt on Wall Street today. Markets can't decide which way to go, hence, that uncertainty.
Rahel is with me. Not as much of the -- let's talk about what Roubini was saying. I listened closely to his sort of both the Central Bank dilemma,
and of course, what you now do if you're an investor, it's very difficult.
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: It's very difficult, but I should say that the Fed for its own part has said that it doesn't expect
for inflation to get to two percent until about 2024. So in that way, I think the Fed is actually aligned with Dr. Roubini there.
But look, I think to present the counter argument to everything that Roubini laid out there, you have consumers that are still in healthy shape
here in the US, you have Europeans dealing with and benefiting from a warmer winter, you have corporations that are in good shape, you have banks
that are in good shape. So I don't think it's as black and white, as Roubini pointed out there.
I think there is a lot of room for gray area here, and dare I say even some room for optimism.
QUEST: Oh, dear. Yes, you'll be wanting an ice cream next. It was a dollar Dr. Roubini is not going to buy you yet.
But he is fundamentally right that the situation across many -- I don't just mean today's market -- and about debt, commodities, war -- is such
that the risk must be on the downside.
SOLOMON: And there are so many risks, to your point, I mean, we're coming up on the one year anniversary of Russia's invasion of Ukraine, and then he
laid out sort of some of the other geopolitical factors, China, but even if we're talking about China, you have the reopening which many people
actually expect will be to the benefit of the global economy.
So I think, Richard, for every risk factor you have, you have another factor that is working in our favor, some of which I already laid out in
terms of excess savings.
We haven't even talked about the labor market. Richard, in six of the G7 nations, we are talking about record low unemployment. So by and large,
people in many nations are employed and still sitting on a bit of cash. So, for every risk factor, you have something that could potentially balance it
out.
QUEST: You're an optimist.
SOLOMON: I am an optimist. And I should say, Richard, if you gave me a thousand dollars, and you are welcome to, I would spend it. I know as a
business reporter, I shouldn't say that, but I would spend it.
QUEST: Yes, of course, the entire viewer, the dear viewer, who joins us each night is wondering what you will spend it on, and we're going to leave
them wondering what you will spend it on, at least tonight. What would you -- thank you.
SOLOMON: That is what we call in the business a tease -- Richard.
QUEST: Yes, well, a tease, and if you'd like to tell me what you would spend the thousand on it's -- you know, the email address. Well, you can
tweet me @RichardQuest or it's Richard.Quest@cnn.com.
What would you spend a thousand on? And no, I'm not going to give it to you.
Thank you, Rahel.
The US President Joe Biden has nominated Ajay Banga to lead the World Bank. Banga was the Chief Executive of Mastercard for more than a decade. The
White House highlights his upbringing in India and his efforts on climate change.
Critics have accused the outgoing bank President, David Malpass of climate denialism.
So Eleni Giokos, spoke to Ajay Banga back in 2017 when he told her he is used to changing circumstances.
(BEGIN VIDEO CLIP)
AJAY BANGA, WORLD BANK PRESIDENT NOMINEE: My dad was in the Army, we moved every couple of years. So moving is kind of natural, and that helps you
adjust to different kinds of places.
I'd say the Nestle-Pepsi, Citibank-Mastercard move is just what people are doing these days. You make a career that gives you a chance to see many
different kinds of experiences. These were mine.
I joined a consumer product company, stayed in that space, got into a consumer bank, got to the rest of the bank and ended up in technology and I
love where I am.
(END VIDEO CLIP)
QUEST: Okay, with me is Paul Romer, the former Chief Economist at the World Bank. He joins me now from New York.
Ajay Banga, very competent, extremely well-known, but he did consumer products, he has done consumer banking, he has done tech, but he has not
done macro policy.
[15:10:10]
Is that a -- is a big weakness?
PAUL ROMER, FORMER CHIEF ECONOMIST AT THE WORLD BANK: Not a big thing. That's okay. You can you can hire macro economists, you know, we're a dime
a dozen out here. So he has got some great experience for this job.
He knows what it's like to grow up in India. He knows what it's like to operate in the cutting edge financial markets in the world today. I think
it's a really inspired choice.
QUEST: Okay, so let me be blunt here, Paul. You know, the battle that the US faced, of course, was it wants to keep the right to name the traditional
duopoly. The IMF goes to Europe, the bank goes to the US. It wants to keep it, but it had to come up with a name that would be acceptable to
developing countries and less developed countries.
They've sort of balanced it quite nicely, haven't they? Because the NGs of this world can't object?
ROMER: Yes, well, they not only bounced it nicely, but they've selected somebody who is terrific. They didn't have to compromise to do this.
And what this shows you is that if you just cast a wide net, there is a lot of very talented people out there. The last round at the IMF, we got stuck,
like in the movie "Casablanca," where we were just rounding up the usual suspects, and then got a candidate who, you know, turned out to be
compromised because of problems everybody knew about at the World Bank before.
So we've got to be willing to look broadly and not get stuck with all the usual suspects.
QUEST: But he is exceptional. But I question, you know, once you move into the world of policy, you're dealing with government, you're dealing with
geopolitical. I grant you he has done that at Mastercard, but not to the same extent. You're dealing with shareholders who have national agendas,
and I wonder about his ability to navigate the development world as much as all the others.
ROMER: Yes, you know, he's going to have a probably a heightened -- he could have a heightened public visibility and may have to pay a little more
attention to communications, but you know, negotiating with difficult people, you're going to face that in any company you run these days and
listening to the experts making the right decisions. This is what's involved in running an organization like this. I think he'll do fine.
QUEST: Right. Now let's turn to -- since I've got -- it's a case of while you're here, Doctor. Let's turn to what Nouriel Roubini was saying at the
start of our program. I think you heard what he was saying.
I mean, are you a Roubini fan in the sense that you think there's always a germ of truth there? Or are you one of those who thinks well, he was right
once, but let's count the number of times otherwise.
ROMER: I'm a friend of Roubini. So I wouldn't call myself a fan. I think I tend to be a little bit more like your reporter. I'm a little bit more on
the optimistic side.
I think Nouriel is very consistent on identifying all of the risks. The problem is the world is full of both -- a lot of problems. But honestly,
things have turned out on the economic front, remarkably well.
We've got a war. We've come through a pandemic, there are problems out there. But on the economic side of things, I think everybody has to admit,
they've been pleasantly surprised.
QUEST: So Paul, the core question is not whether there is going to be a recession or not, or although that is of certain academic interest. But it
really is this question of, we've taken the low hanging fruit of inflation down to six percent. We can probably get it down to four with marginal
increases on the policy rate.
ROMER: Oh, Richard, Richard, we're below six now. I mean, when you look at the trailing average over the last year, it's maybe six, but the last few
months, we are well under six. So you know, between four and five.
QUEST: All right --
ROMER: So you know, it's not two percent, but it is --
QUEST: Do you push down to two?
ROMER: Well, this is a debate we should be having. Not everybody agrees with me, but I think that it is far from clear that two percent is the
right inflation rate. And let's remember when we came out of the financial crisis, the usual voices like Larry Summers were saying, we should be
aiming for four percent, five percent.
People like, you know, Olivier Blanchard at the IMF. It's just not clear that two percent is the right target, and everybody is treating this like a
question of like, you know, virility right now, how tough they can be about how much pain we want to have.
It may not be useful. Everybody concluded after the financial crisis, that a two percent target was too low. It left Central Banks with not enough
ammunition to deal with the shock.
QUEST: Paul, it's great to see you. I'm very grateful. So we'll talk more as we get towards two percent and beyond.
Thank you. Paul Romer joining me from New York.
The markets and the Dow has been -- let's look at it -- up now 127 points.
[15:15:08]
We had interesting earnings from the likes of Domino's Pizza and Papa John's, and when you look at the earnings and their conundrums, they make
larger points about the pressures the companies are facing in the environment.
Consultant Simon Freakley of AlixPartners joins us to talk about it, in a moment.
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Papa John's and Domino's Pizza, both getting a pummeling from investors. The pizza chains have raised their prices to deal with the
rising cost of food and labor.
Domino's is down 12 percent and says it is struggling to find delivery workers. It's only one issue, the tight labor market for many of the issues
chief executives are facing at the moment.
To give you an example of the range that people are dealing with, yesterday, you heard from the Starbucks CEO, Howard Schultz, on the
changing work environment.
(BEGIN VIDEO CLIP)
HOWARD SCHULTZ, CEO, STARBUCKS: When you have a whole generation that has lived through 2008 financial crisis, 9/11, COVID, and they've been
imprinted with a government situation of politics that is not working, government that's not representative of them, companies that have let them
down. There is a macro issue here.
(END VIDEO CLIP)
QUEST: Now, Simon Freakley has been examining the disruptive forces facing CEOs as the Chief Executive of the consultancy, AlixPartners. He joins me
from New York. It's fascinating, this disruption index, because it's not about the obvious, is it? It's about these things like Schultz is talking
about that are coming out of nowhere, societal of nature, long lasting and have to be dealt with. So how do you?
SIMON FREAKLEY, CHIEF EXECUTIVE, ALIXPARTNERS: Well, Richard, great to be with you again, and you're absolutely right. It's not just that there's any
one disruptive force, there are multiple forces acting on every business in every industry in every geography, and it is the layering of each of these
on top of each other that are proving to be so challenging for many businesses. And of course, we're seeing that now in their reported
earnings.
QUEST: And so when I look at the work that you do, obviously restructuring, in some cases liquidation and other cases, Chapter 11 type of work, but the
restructuring -- what do you find leaders need more now and don't have?
[15:20:08]
FREAKLEY: Well, as you know, Richard, most of our businesses are workers with businesses that are thriving, some of which in difficult
circumstances. But of course, what good leadership means at a time like this is making sure that a business remains agile, that business leaders
are not a hostage to any strategies that have gone before. They're keeping their costs down as low as possible, and to the extent possible, moving
fixed costs to be variable to stay agile.
And so it's a matter of ensuring that they can make the best decisions at every moment, as they deal with these multiple disruptive forces.
QUEST: This is a how long is a piece of string question. In the current environment, what sort of CEO or which sort of CEO is preferable, the
technocrat or the visionary?
Now, of course, ideally, you have a bit of both in vogue. But you know, the guy or woman who has worked their way up, and who suddenly finds themselves
in technically very good at running the company, but doesn't have a vision, which is better?
FREAKLEY: Well, you certainly have to know where you're going. But what we see from our work on the frontline with clients every day, Richard, is that
the best leaders, the best leadership teams are people that do it nearly right, but do it now. They stay agile. They are not a hostage to anything
that's gone before, they do ensure that they have the balance sheets to give them optionality, by which I mean, to the extent possible, they keep
cash on their balance sheet, so they're not wholly at the mercy of debt markets. They can take advantage of interesting opportunities that come up
when many of their competitors haven't got the cash to do that.
So the best leaders are the ones who are their own chief communication officers. They know where they're going, but they can narrate it and they
move quickly.
QUEST: Simon, we have obviously small, medium-sized business owners watching us around the world, perhaps they might not have the wherewithal
to pay your fees. So give them some free advice, please, courtesy of QUEST MEANS BUSINESS. What should they be looking at doing?
And I realize I'm asking a very broad question. But if you're a CEO, whether it's in the Middle East, South Africa, Latin America, and you look
at the scale at the moment, what should they have in their minds?
FREAKLEY: Sure. So key, of course, is what does the customer want? So making sure that the business strategy is absolutely geared around meeting
the customer's needs, making sure that you have the resources necessary to deliver to that.
Your earlier speaker talked about a tight labor market. Actually, within that labor market, the skills market is even tighter. So if you need
digital skills to make sure you can pivot your operating model and your strategy, make sure you have a strategy to get hold of them.
For every business, making sure your supply chain is secure. You know, in this time of terrible disruptions, awful ground war in Ukraine is now just
not a matter of having just in time production, it is having just in case production as well.
So securing your supply chain and making sure that as chief executive, you are your chief communication officer. You're explaining to your clients,
your staff, your broader stakeholders what you're doing, why you're doing it, and why it's your best strategy, and doing it nearly right, but doing
it now.
QUEST: Nearly right, but now. Thank you, Simon. I shall put that --
FREAKLEY: Thank you, Richard.
QUEST: Nearly right, but now.
Young voters could play the decisive role in Nigeria's presidential election. This Saturday, one of 18 candidates will succeed President Buhari
who is term limited.
People under 34 make up 40 percent of Nigeria's voters. It's an outsized influence, and as a result, a tight race. It has made a third party
candidate a serious contender.
Discontent amongst young Nigerians has led some to make more drastic choices, and that is basically to leave the country altogether.
CNN's Larry Madowo reports from Lagos.
(BEGIN VIDEOTAPE)
LARRY MADOWO, CNN CORRESPONDENT (voice over): It has become a social media trend -- Nigerians fleeing the country and filming as they relocate for
greener pastures abroad.
Adu Ayeni is packing up his house in Lagos, getting ready for his flight to the UK in a few days to start a new job and a new life. It's called,
"Japa," a Yoruba word meaning "flee" that has become the shorthand for the exodus out of Nigeria.
ADU AYENI, NIGERIAN EMIGRANT: I japa-ing and leaving the country, like we say because of the opportunities that are available to me abroad.
I am going there to have a better life, better economy for my family.
MADOWO (voice over): Nearly 70 percent of Nigerians would relocate out of the country if given the chance, a 2022 survey by the Africa Polling
Institute found.
MADOWO (on camera): What frustrates you most about living in Nigeria?
AYENI: Are you sure you want the answer to that question?
MADOWO: I do.
[15:25:10]
AYENI: Because there are a lot of things that frustrate me, starting with the most basic of all, power supply.
MADOWO (voice over): Many Nigerians fed up with erratic power supply, the high cost of living, insecurity, and persistent corruption are emigrating
mostly to Europe and North America.
Japa is part of popular culture in Nigeria, because almost everyone knows someone who is leaving or has left.
PETER OKOYE, P-SQUARE TWINS: And when you japa, they see the good life. They see the good life, they see a good world, good everything.
PAUL OKOYE, P-SQUARE TWINS: I have a family.
MADOWO (on camera): Where are they?
PAUL OKOYE: Where are they? My family has gone to America, because of security.
MADOWO (voice over): The P-Square Twins hope Labour Party presidential candidate, Peter Obi who has promised to tackle the brain drain and turn
things around, but everyone is running on radical change to revive a deeply broken Nigeria, even the incumbent party.
(on camera): At this rally for the ruling party candidate, Bola Tinubu, you can see why the campaign's messaging resonates, offering renewed hope for
Nigeria and promising to fix the economy and secure the country.
(voice over): New beats and an old song perhaps, but it is still popular among his supporters, if not all of a weary population.
TITUS NWAFOR, BUS DRIVER: (INCOMPREHENSIBLE) that's what we want. Get your food, the amenity in this country (INCOMPREHENSIBLE).
MADOWO (voice over): Those who can survive are migrating out of Nigeria. The number of worker visas in the UK issued to Nigerians jumped almost 400
percent In just two years according to official data.
Nigeria was the fifth largest source of immigrants to Canada in 2021, moving up eight places in just five years.
About 50 doctors resettle out of the country every week, the Nigerian Medical Association says. In fact, the health sector is losing nurses,
pharmacists, and other professionals in record numbers.
DR. KEMI ABILOYE, PRESIDENT, LAGOS ASSOCIATION OF RESIDENT DOCTORS: If nothing is done to reduce the rate at which people -- doctors, medical
professionals, healthcare workers -- are leaving the shores of this country, it is just a matter of years. I'm not sure whether any doctor will
be left in this country.
MADOWO (voice over): But most people in Africa's most populous nation can't leave. They can only hope that Nigeria's next leader will make it worth
living in.
Larry Madowo, CNN, Lagos.
(END VIDEOTAPE)
QUEST: And of course we'll have lots of coverage -- full coverage in fact of the elections and the results.
QUEST MEANS BUSINESS tonight continues. Doomsday scenarios from Dr. Doom. Nouriel Roubini lays out his greatest fears for the future of civilization.
(BEGIN VIDEO CLIP)
ROUBINI: I have two scenarios, one in which all these mega tribes interact with each other, and it's not just the end of our economy, it could be also
the end of the planet.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
[15:30:00]
(MUSIC PLAYING)
QUEST: Hello, I'm Richard Quest. A lot more QUEST MEANS BUSINESS as you would expect. I'm going to lift your spirits with the author Jojo Moyes on
the value of a good book.
And we'll bring you back down to Earth with sober reporting from the economist Nouriel Roubini on so-called megathreats facing humanity. We'll
get to all of that only after I've updated. You because this is CNN and on this network, the news always comes first.
(MUSIC PLAYING)
QUEST (voice-over): A senior State Department official says the Biden administration will constrain Chinese companies that evade Russian
sanctions. Victoria Nuland said new sanctions against Russia will also be announced on Friday, the first anniversary of the invasion.
A top U.S. transportation safety official says a toxic train derailment in East Palestine, Ohio, was 100 percent preventable. And she says the NTSB
will hold an investigative hearing there this spring.
Meanwhile the Secretary of Transportation Pete Buttigieg visited the site today and called for more rail regulations.
Federal prosecutors have announced four new fraud related charges against the FTX founder Sam Bankman-Fried. In December he was charged with multiple
counts of conspiracy wire fraud and campaign finance violations. Bankman- Fried's being freed on 250 million dollar bond and has already pled not guilty to the original charges.
The former Hollywood producer Harvey Weinstein's been sentenced in Los Angeles to 16 years in prison for sexual assault charges. He was convicted
of raping a woman in Beverly Hills in a hotel room a decade ago.
The cofounder of Miramax Films is, of course, already serving a 23-year sentence for a separate conviction on sex crimes in New York.
(MUSIC PLAYING)
QUEST: The G7 is raising its economic support to Ukraine to $39 billion this year. In the last few, hours Europe's begun marking the first
anniversary of Russia's invasion. We've seen vigils in London, the Ukrainian flag raised in Brussels and the Eiffel Tower lit up blue and
yellow as you can see.
In Kyiv, they're preparing for Friday's anniversary by beefing up security. President Zelenskyy's calling for talks with China after its top diplomat
spent time this week in Moscow.
For businesses, as we've been covering over the course of the year, incredibly difficult. Yara International's office in Kyiv was hit by a
Russian missile earlier in the war. Thankfully, none of their employees were killed. Svein Tore Holsether is the CEO of the Norwegian chemicals
company. He joins me from Tokyo.
First of, all thank you, sir for either staying up very late or getting up very early. One or the other but I guess you're used to it when you're in
Asia. The situation now for the company, with Russia, it's very difficult because we know parts of the economy are performing. We know parts that
exports are still valid.
So what are you still doing?
SVEIN TORE HOLSETHER, CEO, YARA INTERNATIONAL: First of, all thanks for having, me Richard. It's a very challenging situation indeed for the
Ukrainian farmers. And our colleagues in the country are doing whatever they can to maximize the crop yields and try to move fertilizer in to
support half of world's food production. It's a direct result of fertilizers. It's important to make these supplies all the way to the
farmers. But it's challenging.
And we see reports of mines in the fields of the farmers, farmers having to wear bulletproof vests out in the fields. So it's a really challenging
situation right now.
QUEST: Right. Now when I look at your latest comments and concern.
[15:35:00]
I'm looking down, forgive me, to see the percentage less of crops that you are expecting in '23 is really quite dramatic, isn't it?
Both in terms of planting and in terms of results?
HOLSETHER: Well, this is what happens when one world superpower in food goes to a brutal war against another one. And yes, indeed, it could be a
reduction in crop yields or in the harvests by more than 50 percent compared to pre-war levels.
And when we think about the consequences of this, globally, it's really massive. And this is a war that Putin is not only fighting with weapons --
we see the brutalities in Ukraine -- but it also has global implications. He's using energy, food, fertilizer as weapons in war.
QUEST: And there doesn't seem to be any letup in that, far from it, if we listen to his comments over the past few days.
So with that in, mind what strategies can be employed in the food security?
I'm thinking back to when Ukraine was finally able to export some things through very complex negotiations, highly fragile arrangements. And a
relatively small amount was exported with Russian approval.
HOLSETHER: Well, it's good that it was possible to get some exports out of Ukraine. But it's very fragile, as you say. And we need to grow more food
in our parts of the world -- Africa, Europe, the rest of the world.
And this is part of the weaponizing, Putin, by making a more robust food system where more food is grown in other parts of the world, to make
supplies available.
QUEST: Our earlier guest said, just in time and manufacturing's become just in case in terms of diversifying the supply chain.
So are you seeing moves being made to increase agriculture, fertilizer in places like Africa, which do have the capacity, if not the financial
ability, to pick up the slack?
HOLSETHER: We're seeing a lot of increased investments going into the agriculture sector. But more should be made. And I'm thinking about Africa
in particular. Europe needs to also step up their investments right now.
And the challenging situation right now is that there are curtailments within the fertilizer production in Europe for economic reasons. And
there's other parts like the United States that, with the Inflation Reduction Act, are really stepping up investments going into fertilizer
production at the moment.
QUEST: We'll talk more as the year moves. On and we get a better idea of crops, crop yields and alternatives. Thank you sir, I'm. Grateful.
You can either go for breakfast or go back to bad.
Nouriel Roubini, Dr. Doom, he says the war in Ukraine is going to get worse. And geopolitical conflict is one of the megathreats addressed in his
new and important book. In the C suite in the sky, he said policy makers need to stop hitting the snooze. Button and start dealing with their many
challenges.
(BEGIN VIDEO CLIP)
NOURIEL ROUBINI, FOUNDER AND CEO, ROUBINI MACRO ASSOCIATES: I have two scenarios, one in which all these megathreats interact with each other. And
it's not just the end of our economy, it could be also the end of the planet and our species.
And there is a more utopian, less dystopian scenario. But that requires massive technology and innovation (INAUDIBLE) at the national/international
level. And unfortunately, fear of the dystopian scenario right now is more likely than the desirable, optimal utopian scenario.
But there are policy solutions to each one of the megathreats that I. Address
QUEST: Which mega threats are you most concerned of?
ROUBINI: It depends on the horizon. In the short run I think with this combination of inflation, recession, return to stagflation because mega
devaluing its supply shocks. And that ratios there are so high that we're raising interest rates. We could have a debt crisis.
Of course over the medium term the risk of geopolitical depression. We're already in a hot war between Russia and Ukraine. It's going to get worse.
Unfortunately, this year could become unconventional, could involve NATO.
I was recently in Israel where it's clear that Iran has become a threshold nuclear state. And Israel (INAUDIBLE) tough decision (ph) this year on
whether to strike Iran or not.
And the U.S. and China cold war is getting colder by the day.
QUEST: Right.
ROUBINI: But we have even the risk of war among great powers and powers that have nuclear weapons.
QUEST: Is it worse than it was?
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I mean, when you think back to post Second World War and we think of Korea and Vietnam and you think of all the other things, are we in a worse
situation?
ROUBINI: I think that we're in a worse situation in three dimensions. First of, all in the 1970s, we had stagflation and shock. That ratio is
going to advance (INAUDIBLE) 100 percent of GDP. Today there are 400.
So we had stagflation but we didn't have a debt crisis. After the global financial crisis, we had debt problem, housing debt, mortgage debt, bank
debt. But with a negative demand (ph) shock, a credit crunch (ph) and with deflation. So we could do massive monetary fiscal and credit easing.
And compared to the 1930s, when there was a geopolitical depression, at that, time there was no risk of climate. Change there was no risk of really
having unconventional wars. There was no risk of a severe pandemic. And there was no way either (ph) destroying. Jobs so compared to the '30s, we
are worse off today. So we have the worst of the '70s, the worst of the post GOC (ph) and the worst of the 1930s in terms of geopolitical
depression.
QUEST: With that in mind, what do you want them to do, policymakers?
I mean, if it's as bad as you suggest, what do we do besides hide under the blankets?
ROUBINI: No, we don't have to hide under the blankets. That's what we're doing every time somebody like me sounds the alarm. You push the snooze
button, we go back to live like zombies (ph) and forget and denial. Or we kick the can down the road or we put our heads in the sand as if we're
ostriches.
So for me, it's a wake up call because each one of these threats has some solutions. They're all interconnected with each. Other so you have to have
a holistic approach. If you have the right leadership individually, collectively, nationally and internationally, step by step, we can resolve
this problem. But I fear that the political leadership is not. There
QUEST: Right. So you just said, if we have the right policies, with the right leaders, in the right order and we do it across the globe, it's not
going to happen.
ROUBINI: Unlikely to happen because, traditionally, there's a global edge and one that provides global public goods, like security, free trade,
capital mobility, financial and economic stability, climate, environment, even a pandemic.
But in the world in which you have rivalry, within great powers, U.S. and China without rising ones like Europe, India and other ones, there is a
collective action. Problem because they disagree on all of these issues. They cannot agree on any of. Them and there, the provision of these global
public goods becomes harder.
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QUEST: That's Nouriel Roubini. And on this, program you and I, we frequently talk about the value of a dollar, the value of an investment.
But what about the value of a good read, a good book?
Author Jojo Moyes is with us in a moment.
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QUEST: On the shores of southern Africa, endangered African penguins are struggling to breed. The destruction of their nesting sites is left them
exposed to rising temperatures. Today on Call to Earth, scientists are deploying artificial nests to help the seabirds and their chicks beat the
heat.
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UNIDENTIFIED FEMALE (voice-over): Antarctica is known to have the largest population of penguins in the world. But not all penguins live in snow and
ice. Some can be found waddling along the balmy shores of southern Africa, on barren and windswept islands like this one.
But in the last century, populations of the endangered African penguin have plummeted, due in part to human disturbance, egg poaching and climate
change.
TRUDI MALAN, CONSERVATION MANAGER, DYER ISLAND CONSERVATION TRUST (voice- over): On Dyer Island in the 1970s, there is about 23,000 breeding pairs. At the moment we're counting about 1,100 breeding pairs. That's quite a
severe collapse.
UNIDENTIFIED FEMALE (voice-over): Historically, African penguins make nests in bars of guano, layers of accumulated seabird and bat feces. But in
the 19th century, humans began to exploit guano suppliers and sell it as fertilizer, believing penguins and their eggs exposed to predators and the
scorching sun.
UNIDENTIFIED MALE (voice-over): At one, point in them, the colonies, it ranged from 3 to 10 meters in depth. And even deeper in some areas. Right
now the deepest one remaining in any of the colony's measures in the centimeters.
The only thing left is bare gravel, bare oil, nothing that they can burrow into. And that took away their entire nesting ability.
UNIDENTIFIED FEMALE (voice-over): In 2016, the African penguin nest project dived (ph) to the rescue. A coordinated effort between Dyer Island
Conservation Trust, Dallas Zoo and other organizations, its mission is to design and deploy artificial nests to give penguin parents a safe and cool
place to raise their chicks.
After two, years of development in studying old guano nests, project experts settled on a final design which they started deploying in late
2018. The aim was to emulate Mother Nature as closely as possible.
UNIDENTIFIED MALE (voice-over): We made the entrance hole small, so the penguins can squeeze in. And as soon as they turn around they can protect
that entrance all from any predator. It looks a little bit strange when you look at. It but it's an exact copy of what the penguins built themselves if
they were given the opportunity.
UNIDENTIFIED FEMALE (voice-over): Each nest is fitted with a sensor that measures temperature and humidity, which enables researchers to track the
nests' microclimate.
UNIDENTIFIED MALE (voice-over): Eggs are an extremely delicate structure. They're only set to be incubated at about 38 to 39 degrees. Any higher than
that, and there is a very real risk of the eggs dying.
We're going to constantly be looking at the performance of the nests when it comes to the usage rates.
Are the penguins using them?
Are the eggs hatching?
Are the chicks fledging?
But so far what we're seeing is that the artificial nests are fledging chicks at a much higher rate than any other option that they have.
UNIDENTIFIED FEMALE (voice-over): Funded by donations or by people sponsoring individual nests, Graham (ph) says the project has so far
installed more than 1,500 nests around South Africa's penguin colonies.
Next, year the project hopes to expand to penguin colonies in Namibia. The end goal is that every penguin that needs a nest will get one. But while
nests are vital to populations bouncing back, the birds still face threats from climate change and overfishing.
MALLOY (voice-over): It's not just a single, we give them a nest, the species is saved. This is part of it, it's a big part of it but there has
to be more.
MALAN: I think we have got a responsibility as humans because we've kind of intruded onto a place and messed things up a little bit. But we also can
fix it. I never think of an African penguin as cute and cuddly.
I think of an African penguin as absolutely tenacious. I think they are such survivors and they should be an example to all of us that you can
overcome.
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QUEST: Gosh.
Let us know what you're doing to answer the call. As usual, #CallToEarth.
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QUEST: We end the program tonight with Dr. Doom, Nouriel Roubini, who painted a very bleak picture of the future. Indeed, it's hard not to feel a
bit adrift as the various clouds darken all around.
There is, however, a surefire refuge from the gloom: it's reading. A University of Sussex study shows reading can reduce stress by up to 68
percent. And so the novelist Jojo Moyes is with us. Her new book is "Someone Else's Shoes."
It's earlier this month it came out and she is with me from London.
I'm in the middle of it. I deliberately didn't finish it because I didn't - - I wanted the anticipation of hearing you speak. Now I can go back and finish it. But I didn't want -- it's building up and bubbling very nicely,
which is where I am at the moment.
We've had the -- I'm not going to give too much away for those people who haven't read it.
But how important is it to you, this idea of a good read?
JOJO MOYES, AUTHOR: Oh, it's hugely important. And if I don't have time to read, if I'm too tired, then I listen to an audio book. Because as you,
said with regards that University of Sussex study, I think reading takes your brain on a holiday.
You know, we can all sit there and doom scroll through our phones or stare at our computers but I feel tired at the end of. It I feel weary and
sometimes kind of sullied by all the terrible things that are going. On whereas actually, if you listen to or read a book, you're taken out of
yourself in a different way.
QUEST: The book itself is, so, it's really that core point, isn't it, like the film "Sliding Doors" or whatever it was, if one fact changes,
everything else follows on. The consequences multiply.
MOYES: Yes, I just like that idea of one small thing changing everything. And in this book, you have two women of a certain age, who accidentally
swap gym bags on a crisis day in both their lives. And it's what happens to them as a result. Sometimes the smallest thing can lead to the biggest
changes.
QUEST: Is there any autobiographical part in that or is it just a good story?
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QUEST: Has something happened to you that you thought, this is marginally, not totally, marginally reflective?
MOYES: I think there's a bit of me in everything that I write. Often a few years after I've written something, I'll go back to and realize that,
actually, I was processing something that was happening at the time.
And I thought about this recently with this book, which is that really this book is about what happens when your armor is stripped away from you.
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And if I look, back the thing that happened while I was writing, it was lockdown and then we were all stripped of all of our support networks, all
the things that we felt our lives were built around. So I think probably that was no coincidence.
QUEST: Now when you read, you alluded to the fact that you flirt shamelessly with e-readers and the like. But fundamentally, are you e-
reader, are you online or do you like the crinkle of the page?
MOYES: I like the crinkle of the page. I mean, I have way too many books. But they feel like furniture to me. I don't know what my house would look
like without books. It would be very strange.
And I think books bear the imprint of the time that you read them, you know, we take our beach read away, they come back a bit fade with sunscreen
on them and bits of sand. And I don't know; there's a smell to books as well that I think can't be replicated by A&E-reader.
QUEST: Well, thank you for joining. And I'm looking forward to finishing the book; deliberately didn't want to know anymore about it because I'm
thoroughly enjoying. It and I have a long flight to Korea coming up this weekend. So it will be with me for that. Thank you so much. Please come
back again. And talk to us. More
MOYES: Thank you for having. Me
QUEST: I want to quickly show you the markets, very, very quickly. This is where the Dow is at the moment. The Dow Jones industrials as you can see
and there you are and these two points of the day.
Just look at that, they moved when the market moved. And it all went a bit funny. One piece to bring to your attention, the U.N. General Assembly has
just passed a resolution on the war in Ukraine, demanding Russia's withdrawal immediately and unconditionally.
It was 141 to 7; 32 countries abstained, including China. Russia is overwhelmingly isolated over its actions. The vote, of course, however, is
nonbinding. And there is no veto as there might be, for example, in the Security Council. We'll have a "Profitable Moment" after the break.
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QUEST: Tonight's profitable. Moment am I the only person left in the world that still has a landline telephone?
This morning at our QUEST MEANS BUSINESS meeting, the subject came. Up and I said to the group of 8-10 people, who still has a landline phone?
And I was the only one. I enjoy still picking up a phone with a nice little cord and dialing a number and having a proper call. I used to use a
justification that, if all the electricity went out, the phone would still work because of the old copper pipes and copper wires.
Well, that doesn't apply anymore. Because it's all I.P. protocols and therefore the electricity goes off and will go down. Too but that's not the
point. Yes, I still have a modern device, several of them, to be true.
But when I'm making a phone call and that means calling you to have a conversation that's going to be enjoyable, I want to do it properly with a
phone. An even a speakerphone. I want to hear you. I don't want ---
Don't want that. So I still have a landline. And I think I might be the only one. Or maybe you have one, too.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. I'm whatever you're up to in the hours ahead. I hope it's profitable. Back
with you tomorrow.
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