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CNN IN THE MONEY

Terrorist take Battle to Turkey; Is Push for Same-Sex Marriage Partially Money Driven?

Aired November 22, 2003 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ANNOUNCER: From New York City, America's financial capital, this is IN THE MONEY.
JACK CAFFERTY, HOST: Welcome to the program. I'm Jack Cafferty.

Coming up on today's edition of IN THE MONEY: battle of the crossroads. Terrorists are taking their fight to Turkey, where Islamic faith and Western culture meet. Find out what the attacks can tell us about the danger beyond Turkey's borders.

Plus, the new look of your old job. Positions that disappeared years ago are coming back, but they don't work or pay like they used to. We'll tell you why.

And straight talk about gay marriage, as Massachusetts takes a big step towards making it legal. We'll see how money fits into the push for change.

Joining me today, as always, a couple of our IN THE MONEY regulars, CNN correspondent Susan Lisovicz and "Fortune" magazine editor-at-large, Andy Serwer.

A very interesting study that you were talking about on "AMERICAN MORNING" last week on the way the stock market tends to behave in Democratic versus Republican administrations.

ANDY SERWER, EDITOR-AT-LARGE, "FORTUNE" MAGAZINE: It's counterintuitive, Jack, because of course the Republican Party, known as the party of business, but the study by two UCLA professors shows the stock market does a lot better in Democratic administrations. I think it's 11 percent per year on average versus 2 percent for the Republicans. I don't know what the explanation is.

SUSAN LICOVICZ, CNN FINANCIAL CORRESPONDENT: It's a huge difference. And it's true. I mean, Republicans are always seen as a party that will, for instance, favor deregulation. Let things happen. Let business do what business wants to do. Is there any reason?

SERWER: Well, Jack might have an answer.

CAFFERTY: I don't know if I have the answer, but I bet I know how the Republicans would explain it.

SERWER: How would they? CAFFERTY: We've had an eight-month run-up in the stock market this year, far ahead of the real evidence that the economy was recovering. The idea being that things like the stock market tend to be indicators of what's coming in the future. So if the Republicans put in place policies that are friendly to the stock market, the effect may not show up until the Democrats are in office. Conversely, if the Democrats put...

LISOVICZ: The lagging indicator?

SERWER: He's got some elephants on his tie. Now isn't that the Republican Party?

CAFFERTY: No. This tie is from -- this tie -- these are a Republican symbol, but this tie came from South Africa.

SERWER: OK.

CAFFERTY: And they're called ellys (ph) in South Africa.

LISOVICZ: But the trunk is down. And that is not usually something...

CAFFERTY: There. Does this make you happy?

SERWER: That means the market is going up next year. Is that right?

CAFFERTY: It means the elephant is happy.

Turkey is Western in mind, Islamic at heart. And this week it's come under attack apparently by Muslim extremists.

Bombers hit Jewish and British targets in Istanbul, including a branch of the HSBC Bank. Joining us now live from Istanbul is CNN's Mike Boettcher.

Hi Mike. What can you tell us?

MIKE BOETTCHER, CNN CORRESPONDENT: Well, there are many different thoughts about that. Many terrorism analysts and Turks themselves believe they are targeted because they represent what the United States and other Western nations would like to see in this part of the world, which are Islamic democracies. And that they have a close alliance with the U.S., that there are bases here.

They have been very active in the coalition's efforts against the war on terror. Their intelligence service has been key. So those are some of the many reasons they believe they have been targeted -- Jack.

CAFFERTY: What is likely to be the reaction of the Turkish government, the sudden incidence of terrorist attacks by Islamic fundamentalists in their country? I don't imagine this was the kind of thing they were expecting.

BOETTCHER: No, they were not. They had the attacks a week ago, on that Saturday, the simultaneous attacks against the synagogues. And frankly, people thought that, OK, it's going to move on somewhere else. Well, it moved on just down the road to the bank and to the British Consulate.

Now, on Friday, the National Security Council of Turkey met, and they considered more than 1,000 names of Turks and others, nationalities in this country who they believe trained in al Qaeda camps in Afghanistan, in Chechnya, for example. They're trying to figure out what kind of threat these people pose, how they deal with it, and where to find them. Because many of them have simply melted away into the population. So there are concerns, Jack, that there will be future attacks in this country.

CAFFERTY: Is it the kind of thing, Mike, that is likely to drive the nation of Turkey right into the arms of the coalition, and ironically work exactly at cross-purposes to what the terrorists perhaps are trying to do there?

BOETTCHER: Well, I think certainly in talking to Turks -- and this is -- for example, Jack, you know Istanbul is a very cosmopolitan city. As you mentioned earlier, it's got one foot in Asia and the other foot in Europe. But it's a very cosmopolitan city where you have a mixture of all of this. And they like their life here.

They are a nation that, if you put their back against the wall, they tend to strike out. They're tough people. And they say they will not bow to these threats. And I think it's very likely, Jack, it could have that exact effect.

CAFFERTY: All right. Thanks, Mike. Mike Boettcher joining us live from Istanbul.

On the map and in daily life, Turkey sits right on the border between Islamic world an the West, as we were just discussing. It's both a Muslim country and a secular democracy, with NATO membership, as well as a European Union candidate.

To help us understand what these attacks mean for Turkey and for the rest of the world, we're joined now by Matthew Levitt. He's a senior fellow at the Washington Institute for Near East Policy.

Mr. Levitt, nice to you have with us. Thanks for joining us.

MATTHEW LEVITT, WASHINGTON INSTITUTE FOR NEAR EAST POLICY: Pleasure to be here, as always.

CAFFERTY: What about this idea that terrorist attacks in Istanbul are likely to push the government of that nation right into the arms of the coalition? Is that something that's perhaps going to be the outcome of this?

LEVITT: I think this government's already part of the coalition. Keep in mind that Turkey has played perhaps the most critical role in Afghanistan on the ground, leading coalition forces there. The fact that as a democracy its government decided not to participate in the war with Iraq may have been a tactical setback for the United States and coalition forces in Iraq, but actually it was a really positive measure of the strength of Turkish democracy.

Indeed, as your previous guest stated, Turkey is everything that al Qaeda hates. And so in that sense, every attack is a shock. But this is not a surprise. I'm surprised that it took al Qaeda this long to attack in Turkey.

SERWER: Matthew, let me ask you this, though. A lot of people are suggesting that, yes, this might push Muslims towards the West. The same with attacks in Iraq. Make them angry at terrorists or angry at al Qaeda.

But what if it, in fact, has the opposite effect, alienating Muslims, saying, well, if Muslims hang out with or do business with Westerners, they're going to get blown up? In other words, a lot of Muslims were killed at British targets. So the problem is, the British need to be moved out of Turkey. Do you think there's a possibility of that sentiment taking hold?

LEVITT: I really don't. First of all, Turkey is a very tolerant society. I think what's going to happen, actually, is this is going to drive the Islamist parties who are in power and the Turkish military, who have been somewhat at odds, much closer together. And we're going to see a very powerful crackdown. Keep in mind that when we've seen also previous attacks by al Qaeda and its affiliates, where the majority of the victims have been Muslims, whether it was in Casablanca or in Riyadh, for example, there, too, the reaction across the Muslim world has really been one of disgust.

LISOVICZ: You know, Matthew, I want to pick up on something that you mentioned a couple minutes ago. You're surprised that these kind of attacks haven't occurred sooner, given the fact Turkey is a supporter of the U.S.-led war on terrorism, the fact that it is a supporter of Israel. How prepared is Turkey now in the wake of these terrible bombings, within a week of each other, to battle this awful violence?

LEVITT: Well, the fact is, Turkey has unfortunately a long history, a very successful history of combating terrorism with Kurdish insurgents and has its share of domestic Islamist groups. It appears some of which have now been co-opted or franchised out to by al Qaeda.

But Turkey actually -- this is not the first time al Qaeda's attempted to conduct attacks here. The Turks have arrested several times Islamists trying to cross the border from Iran, for example. The Turkish services are very, very good.

Unfortunately, this is a business. I can tell you, as someone who used to do this for the U.S. government, that 99 percent success rate is total failure. Eventually, a terrorist attack is going to get through. And that's clearly what happened here. Especially when you're dealing with soft targets, it's very, very hard to stop.

CAFFERTY: A few weeks ago, Mr. Levitt, President Bush likened the struggle to bring democracy to all of the Middle East to the struggle to bring down the iron curtain and eventually the fall of communism in Eastern Europe and the Soviet Union. Can you tie the kinds of things we saw in the last couple of weeks in Istanbul into this idea of eventually making the Middle East a democratic part of this world, whether it's a doable idea, whether it's doable in our lifetime? What kinds of effects, the kinds of things we saw in Istanbul might have on whether or not that idea has any appeal at all in that part the world?

LEVITT: Sure. I think there are two main things to draw from the president's comments. The first is that this is going to be a long battle. The Cold War is a very, very different type of battle, but it, too, is a long battle, changing the way people look at the world as we had to do in Europe, Eastern Europe in particular, as we now have to do in the Middle East. It is not something that's going to be done overnight.

I don't believe that there are certain type of people who are somehow incapable of democracy or democratic values or tolerance. I do believe that this is a region that has not had the opportunity to open up and to go through the democratization process, which is a process that takes a lot of time.

We've had regimes in power that will pretty much do whatever they need to do to stay in power, and, frankly, we in the West have been happy to work with those regimes and keep propping them up as long as their policies, foreign policies in particular, were amenable to us. I think we all have a long ways to go and I think the president's comments are very welcome.

LISOVICZ: As always, Matthew, we welcome your insight. Thank you so much for joining us. Matthew Levitt, senior fellow of the Washington Institute for Near East Policy.

LEVITT: My pleasure.

LISOVICZ: Up ahead on IN THE MONEY, the new shape of the job market. America is poised for an employment bonanza, but the jobs to come won't look like the ones we lost. We'll tell you what's changing.

Plus, blood sweat and spandex. World Wrestling Entertainment took its latest numbers to Wall Street this week. See how the musclemen turned into moneymakers.

And from wrestle rings to wedding rings. As Massachusetts moves a giant step towards legalizing gay marriage, we'll look at how much cash is at stake.

(COMMERCIAL BREAK)

LISOVICZ: By now, you've heard all of the doom and gloom about the labor market. But finally, there may be some light at the end of the tunnel. A new report suggests that nearly all of the jobs lost over the last three years will be added back. But there, of course, is a catch.

You knew there would be. There are questions about where all of those jobs will be and how much they will pay. Joining us to talk about the ever-changing labor market is "Newsweek" correspondent Jennifer Barrett.

Welcome.

JENNIFER BARRETT, "NEWSWEEK": Thank you.

LISOVICZ: So you mean to tell me that all these jobs lost in manufacturing, technology, on Wall Street are coming back?

BARRETT: Not all of them. It's a mixed bag. What happened is, a lot of the industries, like manufacturing, that lost jobs are not hiring back nearly as many jobs as they cut. And that's in part because of automation. It has a lot to do with outsourcing, globalization and, to some degree, obsolescence.

SERWER: Jennifer, back in the 1980s, there was also huge job losses, jobs going overseas. People wringing their hands and moaning. Yet the 1990s was a very robust period of growth.

Isn't this just part of the natural economic cycle, that low-wage jobs, low-skill jobs tend to be shed overseas and you do need an education to get a great job in this country? Something that's sort of timeless?

BARRETT: Well, actually, that's not the case this time around, because a lot of the jobs that we've seen moving overseas have been in high-skill areas like technology. Primarily technology, information technology, and, to a lesser degree, manufacturing. But we're seeing both blue collar and white collar effected by outsourcing and by globalization.

SERWER: All right. So you're saying this is really different this time?

BARRETT: Yes, it is, for a number of reasons.

SERWER: And that's interesting.

CAFFERTY: How much of a factor is productivity in this equation, the ability of American business to do more with less?

BARRETT: Yes. That's a big factor as well. We've seen tremendous productivity gains over the last years. And because of that, a lot of companies are able to do a lot more with less. And so they don't need to hire back as many people as they fired or laid off in the last few years, and that's different from past economic cycles.

LISOVICZ: Jennifer, we alluded to it, that there was a catch with this job recovery, and the fact is that there are going to be an abundance of need of openings for office managers. And they don't pay that well.

BARRETT: No, no they don't. In fact, this report that you referred to earlier, it was commissioned by the U.S. Conference of Mayors, and it looked at the jobs losses over the last few years and the expected job gains over the next two years. And what it found was the top two sectors in terms of hiring are administrative and support services and -- excuse me -- health care and social services. And both of those pay a lot less than some of the sectors that laid off the most jobs over the last two years.

LISOVICZ: What type of salaries are we talking about here?

BARRETT: We're talking about, on average, an $8,000 annual discrepancy, at least.

SERWER: Well, Jennifer -- oh, excuse me. Sorry to interrupt you.

BARRETT: That's all right.

SERWER: Jennifer, let me ask you about regions of the country. I mean, for decades, also, the sun belt has really kind of led the way here, also Silicon Valley. What about geography? How does that come into play?

BARRETT: Good question. The Northeast is coming back strong in that -- it depends on how you look at it, either short term or long term. In the short term, the Northeast is coming back very strong.

We've got hiring in the financial sectors, insurance, again in the administrative and support services sectors, but some areas have been hit very hard. Detroit, for example, that has -- the big three are located there. They've laid off a lot of workers over the last few years, and they are not getting those jobs back.

CAFFERTY: Your research, your story, indicates that 2.4 million jobs will be created over the next year. That's a big number.

BARRETT: Yes.

CAFFERTY: How confident are you in that number, and what would it take to derail those projections?

BARRETT: Well, it's not my report, but I'm quite confident in that number from the research that I did. The 2.4 million jobs that are expected over the next 13 to 14 months are expected to make up for the net job losses over the last three years. And I'm confident that we're going to see more hiring over the next 12 to 14 months, and even through 2005.

We have a few indications that just came out recently that gives us hope. One, you know we had 126,000 new jobs added in October. We had the moving average jobless claims at 375,000. That's the lowest rate in 2.5 years. So there are some indications that the job market is improving, and companies are hiring again.

CAFFERTY: All right. Jennifer, we're going to have to leave it there. Appreciate you joining us on IN THE MONEY.

BARRETT: OK. Thank you.

CAFFERTY: Thank you. Jennifer Barrett, "Newsweek" correspondent. The big question, of course, is whether or not all of that job creation, if it happens, will be enough, along with whatever development are going on in Iraq for one party or the other to win the election. We shall see.

Up next on IN THE MONEY as we continue, titans in tights. Here's a segment you must be looking forward to with a tease like that. We're talking wrestling here, boys and girls. World Wrestling Entertainment out with earnings. Find out if a bunch of guys with mullets beating each other with chairs turned into a major business or just another CNN production meeting.

SERWER: Watch out.

CAFFERTY: Also ahead, standing on ceremony. After this week's gay marriage shakeup in Massachusetts, we'll check the financial side of the fight.

And success story or big box bully? We'll show you a side of Wal-Mart you might not know about as IN THE MONEY moves forward here.

(COMMERCIAL BREAK)

LISOVICZ: Time to get you caught up on some of the week's top business stories.

Senate investigators say one of the world's largest accounting firms helped clients cheat on tax returns. They say KPMG promoted dubious charitable deductions and complicated transactions to generate phony paper losses for their clients. The yearlong investigation examined four tax plans KPMG sold to more than 350 high-income people.

The firm says it no longer offers those tax strategies. Their words. Not ours.

The bloodletting in the U.S. tech sector may be coming to an end. A new industry report says tech companies are on pace to lay off less than half the number of workers this year than they did last year.

But don't tell that to the folks working at AT&T wireless. That company plans to lay off more than 10 percent of its 30,000 workers in the next year and may outsource their jobs. Where? To India and elsewhere.

SERWER: Smack down. This week, World Wrestling Entertainment reported a profit for its second quarter, reversing a loss from last year. The company says it's all thanks to bigger money from pay per view events and cost-cutting measures.

WWE shares are near their year high, but they're trading at about half the value they were when the company went public in 2000. You probably remember WWE was once known as WWF. But thanks to a lawsuit filed by, of course, those little bunny rabbit people, the World Wildlife Fund, WWF had to change its name. Regardless of that conundrum, it is our stock of the week.

LISOVICZ: I think it's the World Wildlife Federation, by the way.

SERWER: Well, federation or fund, anyway. It is fund, as a matter of fact.

Anyway, Vince McMahon and company had a nice run here for a while. They took the company public and then splat.

CAFFERTY: Isn't this whole wrestling thing getting a little long in the tooth? I mean, aren't some of these guys like in the home now?

LISOVICZ: No. You're looking at a whole new generation of stars, like Goldberg and Stone Cold.

CAFFERTY: Goldberg is a wrestling star?

SERWER: He is. He's huge. He's even bigger than Jack Cafferty.

I'll tell you something, though. This business is very, very cyclical. It's like hemlines. I mean, they come and they go.

I remember they were big when I was a lad. George "The Animal" Steele, Andre the Giant, Rowdy Roddy Piper, The Sheik (ph), Bruno Sanmartino, Gorilla Monsoon.

CAFFERTY: I'm older than you are. I remember Gorgeous George.

SERWER: Professor Tanaka. Oh, yes.

CAFFERTY: Right? The question is, do you want to invest your money in a company whose business is guys in mullets beating each other with chairs? I mean, is this a place I want to put my 401k fund?

SERWER: You know, I would say absolutely not. I mean, again, it's -- and even though the stock is half of what it was trading for before, it comes and it goes. Kids get into it. I don't think there are a whole lot of big stars right now.

LISOVICZ: That's true of any entertainment business. Or even fashion, for that matter. It really depends on...

SERWER: Well, I wouldn't put a lot money in there either. But, I mean, some things have a little more staying power, like Disney movies.

CAFFERTY: Plus, it's cyclical, because once one generation figures out that it's a phony deal, then you've got to...

SERWER: Is it really?

CAFFERTY: ... wait for another generation to come along and be fooled.

LISOVICZ: Wait a minute.

SERWER: Hang on. That stuff's fake? CAFFERTY: Oh, come on. Now you guys know better than that.

We have to take a break here.

SERWER: I didn't know that.

CAFFERTY: When we come back...

SERWER: You ruined it for me.

CAFFERTY: ... the push for legalizing -- yes, and I'll tell you about the tooth fairy in a minute, too -- the push for legalizing gay marriage is as much about money as it is about equal rights. We'll examine some of the gay community's financial goals.

And you know Wal-Mart has changed the face of the discount business, but the chain's power and influence extends far beyond that. We're going to shine a light on all of that when IN THE MONEY continues in a moment.

(COMMERCIAL BREAK)

CAFFERTY: Considering the divorce rate in this country, one might cogitate on why so many people still want to get hitched. But they do, even the ones that are so far forbidden by law.

This week, the Massachusetts Supreme Court touched off a fight by declaring the state's ban on gay marriage to be unconstitutional and giving the state legislature a deadline within which to fix what the court said is unconstitutional. Like any march to the altar, same-sex marriages are as much about finance and law as they are about love. And for more on that, we're joined now by Matt Coles, who is the director of the Lesbian and Gay Rights Project of the American Civil Liberties Union.

Matt, nice to have you with us.

MATT COLES, LESBIAN AND GAY RIGHTS PROJECT, ACLU: Good to be here. Thanks.

CAFFERTY: To what degree is this whole argument a question of semantics? And what I mean by that is, if you take the word "marriage" out, wouldn't it simplify this debate tremendously?

COLES: Well, you mean if you were to create a system like the state of Vermont tried to do that treats same-sex couples as legally married, but simply doesn't call it a marriage?

CAFFERTY: Well, aren't there so many religious connotations attached to the word "marriage," that it simply tends to muddy the waters? If the idea of same-sex partnerships is to achieve equal civil rights, equal protection, and insurance and mortgages and things like that, would it be simpler if it was called something besides "marriage" is all I'm kind of getting at, I guess?

COLES: The difficulty I think is certainty. And obviously, when we're talking about the financial side of marriage, certainty is everything.

The difficulty is, if you -- and this is what's happened in Vermont and in Hawaii, which has a similar system. When you go to an employer in a different state and go to put your partner on the health plan, if you've been married in another state, everybody knows what that means and they automatically put the partner on the health plan or on the pension.

CAFFERTY: Right.

COLES: If you say you're in a civil union, people don't know what that means, they don't have the language in their policies. The HR departments that run them aren't used to it. And perhaps even more critically, I mean, the real importance of marriage to most people is that they're protected in times of crises.

If somebody gets sick, somebody goes into a nursing home, is their property going to be preserved? Are they going to be able to stay in the home?

When you're married, we have really clear answers to that. When you take from one state, like Vermont, a civil union into another state, it's not at all clear that they'll be actually treat liked a married couple. So the word, as it turns out, has enormous importance in terms of certainty and letting people know where they really stand.

LISOVICZ: Matt, so let's assume that the legislature does pass what the courts mandated it to do, and Massachusetts becomes the first state in the union to legalize same-sex marriages. If a couple from Massachusetts goes to any other state in the union, they are, then, protected? That is honored? They get all the benefits that come with marriage?

COLES: I think that will ultimately be true. At the start, I think the only thing that you can say for sure is that all of the businesses and institutions that now recognize same-sex couples will certainly honor these marriages. And I expect that some additional ones will as well.

But I also expect that some businesses that disapprove of same- sex couples and that some states are going to balk and refuse to recognize them. And I think it's going to be quite a number of years before we have that sorted out.

SERWER: Matt, has anyone ever done any study to discern whether same-sex unions, relationships are more or less stable than traditional heterosexual marriages? Jack talked about people getting divorced so much. Has anyone done any work like that?

COLES: Well, the problem is, it's really been impossible up until now, since no state has allowed same-sex marriages. And the Vermont civil union system is only barely three years old.

SERWER: But I mean, just in terms of relationships, I guess, then, or stable relationships. COLES: You mean trying to compare just relationships, and maybe like trying to do a longitudinal comparison between same-sex relationships and maybe unmarried heterosexual relationships?

SERWER: Or married. Yes, either way.

COLES: Yes. I mean, I really don't -- I think that the problem is, is that, if you try to compare unmarried to married couples, that really winds up being apples and oranges in a lot of ways. It's really impossible.

CAFFERTY: What do you do about the fact that the public in this country is opposed to this whole idea? By a margin of about two to one, American citizens don't like the idea of gay marriage, period. Every poll that's done on the subject, the same answer. How do you overcome that kind of resistance?

COLES: Well I think you look a little more deeply. When you look at those polls and you say, well, but what about the protections, what about the insurance? What about the protection for what a couple makes and earns? Americans are generally in favor of extending the protections.

And then I think you do what you always do in a good republic. You engage in a dialogue with people.

My experience actually is -- and I think the pollsters will tell you that when they go deeper, this is a general experience -- that when people think about it and agree that they do think that same-sex couples ought to be protected, most people in the end come to a conclusion that says, well, probably the smartest way is to do marriage. I don't personally approve, but I am willing to live with it.

CAFFERTY: It kind of brings us back to where we started, doesn't it? That whole -- that word "marriage." People seem to be opposed to gay marriage, but they're not opposed to equal rights.

COLES: I think that that's right. And the conundrum there is, how do you actually create equal rights if you don't use the word "marriage?" Right now, it's pretty tough.

It's important to recognize, I think, that nobody's saying, not the Massachusetts court or anybody else, that religious organizations that don't want to marry same-sex couples have to. There's no imposition on religion here. So the real issue is, can you give the equality, can you give the certainty?

I think when most Americans look at it, they will say, well, probably you really can't. So it probably makes sense to do what Massachusetts did. But this is the start of a dialogue that's going to go on for a number of years.

CAFFERTY: All right. We shall see. We'll probably talk about this again here on IN THE MONEY and we'll invite you to join us at that time. Thank you, Matt. COLES: Love to be back. Thanks.

CAFFERTY: Appreciate it. Matt Coles, director of the ACLU Lesbian and Gay Rights Project.

Coming up on IN THE MONEY, as we continue, the retail giant that moves the goods and calls the shots. Find out how companies have to conform if they want to do business with Wal-Mart.

And protecting the brand. We'll tell you about Martha Stewart and her bid to lower the legal stakes ahead of her upcoming trial. We'll be back.

(COMMERCIAL BREAK)

LISOVICZ: If you're a consumer, you probably love Wal-Mart's low prices on everything from hammers to pickles. But those rock-bottom prices don't always have a great effect on the rest of the American economy, and they could even cost you your job.

Joining us now to explain this is Charles Fishman, senior writer at "Fast Company" magazine and the author of an article which I found absolutely fascinating: "Why Low Prices Have a High Cost."

Welcome.

CHARLES FISHMAN, "FAST COMPANY" MAGAZINE: Thank you. Good afternoon.

LISOVICZ: This is a very complicated situation, but boil it down to this: here is the nation's largest private employer, and this article basically says it has affected everything from the inflation rate to the amount of imports into the United States.

FISHMAN: Absolutely, there's no question. Wal-Mart drives its own customer, the people who supply it, to supply products as inexpensively as possible. For a long time for companies, that's had a good effect on their efficiency, warehousing logistics.

Eventually, there's no other way to wring out costs but to look for cheaper labor, and inevitably, that cheaper labor is overseas. And so many of the products you buy at Wal-Mart, perhaps most of the products you buy at Wal-Mart, are no longer made in the United States.

SERWER: Charles, let me ask you a question. I mean, no question that Wal-Mart is the most powerful company in America since Standard Oil. I mean, it is truly amazing. We've all heard some of the negative stuff, we know about the positive stuff. Low prices.

I want to put you on the spot. Net-net, Wal-Mart a positive or negative for the U.S. economy?

FISHMAN: I think it's impossible to say net-net. I think the problem with Wal-Mart is that it's an enormous institution which is not very well examined, which is not held accountable. The story we've done here, for instance, a story about its relationships with its suppliers, has never been done in Wal-Mart's 35 years in business.

Wal-Mart's extremely secretive. We're not saying anything in particular about what you should think about Wal-Mart's practices, but Wal-Mart's practices need to be understood and discussed so people realize what the implications are. In this article, the point of the article is that Wal-Mart claims to always be working for the consumer, but, in fact, the lowest price all the time isn't necessarily the best thing for the consumer.

LISOVICZ: Well, and actually, it's really a contradiction from a well-known advertising campaign that Wal-Mart had a few years ago, right? About buying American?

Most of the things in Wal-Mart stores are not from the United States, it would seem. And in fact, it was really a great example you had in the article about talking to these former suppliers of Wal- Mart who said they don't know whether it's like worse not to do business with Wal-Mart or to do business with Wal-Mart, because they squeeze you to point where you're not making a profit.

You sell a lot things, but do not make a profit on what you sell. And you use pickles as an example.

FISHMAN: Right. It's a difficult situation. Vlasic was selling 30 percent of their pickle production to Wal-Mart, and then Wal-Mart wanted this very inexpensive product. Basically, a year supply of pickles for $3.

And that really cut Vlasic's profit margin dramatically. It really damaged their business. It also distorted the entire pickle business in America. And that's the...

LISOVICZ: People couldn't eat enough pickles. I mean, they went bad. They had to throw out these huge containers of pickles, right?

FISHMAN: Pickles went bad, customers throwing away pickles and just going back and buying more cheaply.

One of the problems is that this kind of price pressure doesn't leave enough profit margin for companies to be able to innovate. Companies don't just take profits and put them in their pocket and walk away from the table. They use profits to make the next round of -- perhaps pickles isn't a good example, but next round of interesting kitchen appliances, the next of interesting toothpaste, consumer goods, detergents.

And if there's no money on the table, you've got great, cheap commodities, cheap diapers, but without a little bit of margin left over. What's the next -- where's the next layer of good consumer products come from?

SERWER: All right, Charles. Fascinating and controversial stuff. Charles Fishman, senior writer, "Fast Company" magazine. Thanks very much.

FISHMAN: Thank you very much. SERWER: Still ahead on IN THE MONEY, it takes more than a lick of paint and a fancy stencil to brighten up a court case. Find out how Martha Stewart tried to do it with her trial just months away.

And if you have Martha on your mind or you want to sound off about any of our stories today, don't be a stranger. Our e-mail address is inthemoney@cnn.com.

(COMMERCIAL BREAK)

CAFFERTY: Welcome back. Martha Stewart's first line of defense collapsed this week when a judge rejected her request to throw out some of the charges against her. Martha's world has been rocked in many ways since the allegations against her first came to light last year.

Joining us now for more on that is the managing editor of money.com, and our Webmaster and my friend, Allen Wastler. How are you doing?

ALLEN WASTLER, MANAGING EDITOR, MONEY.COM: How are you doing, Jack? Well, she tried to get two tossed out. She has five against her, and she said, I'm going to go for these two.

It was securities fraud and obstruction of justice. OK? And the judge Miriam Sidderbaum (ph), said, nah, I think we're going to keep them there.

You know what? I thought she a real shot at this.

CAFFERTY: Really?

WASTLER: I really did, because the whole basis for the securities fraud thing is like, hey, we said you broke the law. You said, no, I didn't. That's fraud.

No, it isn't. It's me just saying I didn't do it. And, you know, Andy, you've been following this, too.

SERWER: I've been following it. You know who she needs on her legal team? Goldberg. She needs Goldberg on her legal team.

But yes, it's true. I think that obviously it's not a good sign for Martha, because they were placing a lot of hope on this not happening. And you know I remember months ago, January trial, that's so far away. Hey folks, January's not that far away. We really might see her in the...

LISOVICZ: I was going to say Mark Geragos should be representing her. He doesn't have enough work to do.

SERWER: He's too busy.

CAFFERTY: But the judge will say something about, we'll look at this. I want to hear the evidence in court. I mean, there wasn't a categorical you have no shot at this. WASTLER: Yes. I think the judge just wants to see the full...

CAFFERTY: The door is open a crack.

LISOVICZ: Right. That there is enough grounds that it deserves to be...

(CROSSTALK)

SERWER: That's what you have a trial for. You know? I mean, that's right. We're going to get this thing going.

WASTLER: But as we get closer to January 12, which is going to be the big media circus day, you watch her company's fortunes. They just get more and more -- second quarter, that was down. They saw a revenue go down 16 percent.

Similar thing with the third quarter. It keeps going down and down and down.

SERWER: Can you imagine them trying to hire people? You know, looking for people to work? I mea, you can't. Credibility is a problem.

LISOVICZ: Do you think the timing is not so much that January isn't so far off, but it is, in fact, after the holidays? For instance, Kmart is out with its advertising, and Martha is front and center again.

WASTLER: Yes. And it's going -- it's going hot and heavy. But Kmart's coming back. And some of the operating divisions in the company are actually showing some signs of life. The magazine, of course, has gotten totally pounded, but the TV revenue is beginning to come back.

SERWER: Right. And furniture. She has this furniture line that's doing really well, right?

WASTLER: Right.

LISOVICZ: And her catalog.

WASTLER: And her catalog is beginning to come back. Merchandising still a little bit down for the company.

SERWER: Scented candles.

WASTLER: But there are signs of hope.

Now, all of this gets very complicated, OK? When you're trying to follow everything that's going on, not only with the Martha Stewart trials, but with all the other bozos that we have on trial right now. Go to money.com, or scandal page. Go to our scandal page. We got the scandal page.

CAFFERTY: Other bozos? WASTLER: Well, I'm sorry.

LISOVICZ: It's just one page...

(CROSSTALK)

CAFFERTY: Is the implication of that phraseology that Martha is one of the bozos?

SERWER: Clown-like. Clownish.

WASTLER: I was the first one to come to Martha's defense and said the lady deserves a good trial.

SERWER: And she'll get one.

WASTLER: But she's also -- all these bozos provides yards of fun.

CAFFERTY: Absolutely.

WASTLER: One of my favorite Web sites is a parody Web site of Martha showing her in poses you wouldn't typically see the fashion maven in. So we got that for the people. That will be fun site. You'll find it on the show page.

LISOVICZ: You can't show it? We can't show it?

WASTLER: Money.com/inthemoney. Go there.

(CROSSTALK)

CAFFERTY: Very good. All right..

Stick around. We're going to read your e-mails coming up next. Remember, you can get on this program by e-mailing us at inthemoney@cnn.com. If we don't read your letter on the air, a representative from the show will come to your home and discuss the issue with you in person.

Back in a moment.

(COMMERCIAL BREAK)

CAFFERTY: Last week, we asked you to consider the American criminal justice system and tell us, if you were a defendant, would you rather rich and guilty or poor and innocent? Provocative stuff this.

Our e-mail question seems all the more timely now that the extremely rich and famous Michael Jackson is facing a new round of child molestation charges, sordid business to be sure in any event. Here's some of what you people had to say.

Ken wrote in and said, "I'd rather be rich and guilty, because in American you're innocent until proven broke. If you're accused of a crime and you're innocent, you still have to compete with the resources of the state to prove your innocence."

Greg in Toronto offered this: "It doesn't really matter, because in America you can be guilty and rich. But after the trial and all the legal bills, you'll be innocent and poor."

And a 13-year-old viewer, Carolyn from Texas, wrote this: "I'd rather be innocent and poor. A royal conscience is more important than a royal lifestyle."

LISOVICZ: All right. Let's hear it for Carolyn.

SERWER: The younger set.

CAFFERTY: Is she old enough to watch this program?

SERWER: No, no.

CAFFERTY: All right. Now it's time for the e-mail question of this week. If a member of your family were gay, would you attend his or her same-sex wedding? You can send your answers to IN THE MONEY at CNN.com.

And you can visit our show page on the CNN Web site. The address is easier now. It's money.com/inthemoney.

LISOVICZ: We missed the long one, though, Jack.

CAFFERTY: I know.

SERWER: Yes. After you read the whole thing off with the slashes and the dots.

CAFFERTY: I'll only do that once.

Thank you for joining us for this edition of IN THE MONEY. Thanks to the regular gang: CNN financial correspondent, Susan Lisovicz; "Fortune" magazine editor-at-large, Andy Serwer; and my pal, money.com managing editor, Allen Wastler.

Joining us tomorrow. We'll look at the road to democracy in Iraq. Is it a possibility, is ti realistic? We'll try to answer the question of whether or not it will ever work in that country?

See you tomorrow at 3:00. Enjoy the rest of your weekend.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com



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