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American Morning

2003: Last Word on Business

Aired December 29, 2003 - 07:52   ET

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

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


SOLEDAD O'BRIEN, CNN ANCHOR: For our look back at the big stories of 2003, we are offering the last word in business to James Surowiecki. He is from "The New Yorker." James Stewart of the magazine, "SmartMoney." And our own Andy Serwer is joining us this morning.
ANDY SERWER, "FORTUNE" MAGAZINE: Hi.

O'BRIEN: James, let's begin with you. Sum up in a word for me the year. Is it "scandal," "recovery?"

JAMES STEWART, EDITOR-AT-LARGE, "SMARTMONEY": First, it is recovery. The stock market has had a great year. It's been historically one of the most stimulated periods we've ever gone through.

And secondly, what a year in scandal. I mean, everything from the Tyco case to the mutual fund scandal -- these scandals that began with Enron in 2001 had just kept rolling along.

O'BRIEN: The holiday season upon us now. Is it critical what happens now? Or is it sort of water under the bridge?

STEWART: No, it's very important. The consumer has propped up the American economy for about the last three years, spending away, taking those rebate checks, going to the malls, buying electronics, and they've got to keep doing it.

O'BRIEN: A bit of a scandal was Dick Grasso and how angry people became at his compensation.

JAMES SUROWIECKI, EDITOR, "BEST BUSINESS CRIME STORIES OF THE YEAR": Right, Dick Grasso, who was the head of the New York Stock Exchange. And it was revealed that he was getting essentially a kind of retirement package, even though he wasn't retiring.

But he was going to take the money. It was $140 million. We later find out that there was another 50 million. And, yes, people essentially just rose up in revolt against how much he was getting paid. There was no evidence at the time that he had really done anything wrong in the sense of corruption or anything like that. And he really was, I think, the first CEO in American history to be fired for getting paid too much. And that, I think, is a really fascinating story.

O'BRIEN: Give me a closer look at scandal over the past year. Where do you think that leads us as we head into the New Year? ANDY SERWER, "FORTUNE" MAGAZINE: Well, you know, what's interesting to me is that it's sort of a rolling wave of scandals. And we've gone from analysts to CEOs and now the mutual fund industry, so all walks of the financial services life, if you will. And it's really undermined investors' confidence in the markets, I think. I mean, who can forget the Kozlowski trial and the $6,000 shower curtain and all of that?

O'BRIEN: You can be rich and have no taste whatsoever, I think, was the take-away from that one.

SERWER: That really was. But this is all cyclical. The stuff comes in bull markets, when the economy is robust, when people think they can get away with it, and also when the rest of us don't care. If someone's stealing $600,000, if you're making 40 grand yourself, you don't care as much.

STEWART: Once they see a few people in handcuffs going to jail, they start to regain confidence. And, in fact, it does clean out the market, and I think it's a really healthy thing.

O'BRIEN: If we were doing a magazine that was AMERICAN MORNING'S business person of the year, for good or for bad, famous or infamous, who's on the cover?

STEWART: Well, I know he's on there every year, but it would have to be Alan Greenspan. I mean, he never quite said the word "deflation this year," but when he said unacceptably low inflation, I mean, the markets went crazy. And that has been a huge stimulus factor this year.


Aired December 29, 2003 - 07:52   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: For our look back at the big stories of 2003, we are offering the last word in business to James Surowiecki. He is from "The New Yorker." James Stewart of the magazine, "SmartMoney." And our own Andy Serwer is joining us this morning.
ANDY SERWER, "FORTUNE" MAGAZINE: Hi.

O'BRIEN: James, let's begin with you. Sum up in a word for me the year. Is it "scandal," "recovery?"

JAMES STEWART, EDITOR-AT-LARGE, "SMARTMONEY": First, it is recovery. The stock market has had a great year. It's been historically one of the most stimulated periods we've ever gone through.

And secondly, what a year in scandal. I mean, everything from the Tyco case to the mutual fund scandal -- these scandals that began with Enron in 2001 had just kept rolling along.

O'BRIEN: The holiday season upon us now. Is it critical what happens now? Or is it sort of water under the bridge?

STEWART: No, it's very important. The consumer has propped up the American economy for about the last three years, spending away, taking those rebate checks, going to the malls, buying electronics, and they've got to keep doing it.

O'BRIEN: A bit of a scandal was Dick Grasso and how angry people became at his compensation.

JAMES SUROWIECKI, EDITOR, "BEST BUSINESS CRIME STORIES OF THE YEAR": Right, Dick Grasso, who was the head of the New York Stock Exchange. And it was revealed that he was getting essentially a kind of retirement package, even though he wasn't retiring.

But he was going to take the money. It was $140 million. We later find out that there was another 50 million. And, yes, people essentially just rose up in revolt against how much he was getting paid. There was no evidence at the time that he had really done anything wrong in the sense of corruption or anything like that. And he really was, I think, the first CEO in American history to be fired for getting paid too much. And that, I think, is a really fascinating story.

O'BRIEN: Give me a closer look at scandal over the past year. Where do you think that leads us as we head into the New Year? ANDY SERWER, "FORTUNE" MAGAZINE: Well, you know, what's interesting to me is that it's sort of a rolling wave of scandals. And we've gone from analysts to CEOs and now the mutual fund industry, so all walks of the financial services life, if you will. And it's really undermined investors' confidence in the markets, I think. I mean, who can forget the Kozlowski trial and the $6,000 shower curtain and all of that?

O'BRIEN: You can be rich and have no taste whatsoever, I think, was the take-away from that one.

SERWER: That really was. But this is all cyclical. The stuff comes in bull markets, when the economy is robust, when people think they can get away with it, and also when the rest of us don't care. If someone's stealing $600,000, if you're making 40 grand yourself, you don't care as much.

STEWART: Once they see a few people in handcuffs going to jail, they start to regain confidence. And, in fact, it does clean out the market, and I think it's a really healthy thing.

O'BRIEN: If we were doing a magazine that was AMERICAN MORNING'S business person of the year, for good or for bad, famous or infamous, who's on the cover?

STEWART: Well, I know he's on there every year, but it would have to be Alan Greenspan. I mean, he never quite said the word "deflation this year," but when he said unacceptably low inflation, I mean, the markets went crazy. And that has been a huge stimulus factor this year.