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CNN IN THE MONEY

Outsourced White Collar Jobs; What Will It Take To Bring American Troops Home?; A Look At Super Bowl Advertising

Aired January 31, 2004 - 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, IN THE MONEY: Welcome to the program. I'm Jack Cafferty.

On today's edition of IN THE MONEY, the countdown to the bail out. America started the fight in Iraq. The job's not over yet. But we're going to try to find out what it will take to get the military home.

Plus, the long distance manager. Factory and tech jobs not the only ones being outsourced by U.S. companies. We'll look at a trend toward hiring white collar workers abroad, as well.

Plus, the Super Bowl of sales.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Yes. Kind of like that. Air (ph) Mist.

(END VIDEO CLIP)

CAFFERTY: These days, the Super Bowl's biggest attraction may not be the football game, but the commercials.

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

So, it's an interesting directive over at the Old Gray Lady. The "New York Times" has issued a rule that says that their reporters, their correspondents, are not allowed to carry guns.

Apparently, the ruling coming from a reporter in the Iraq theater, who was armed, and the editors, or the management of the "Times" felt as though that removed them from their non-participatory status. It could also get them dead, but ...

ANDY SERWER, EDITOR-AT-LARGE, FORTUNE MAGAZINE: Hey, the "New York Times" did something right. I mean, you know, I haven't memorized every statute of the Geneva Convention. I'm not even sure it applies, which is why I'm bringing it up.

But, I mean, come on. You can't carry a gun if you're a reporter out there. What happens if you get captured? How do you explain yourself to the other side like that?

SUSAN LISOVICZ, CNN CORRESPONDENT: But, you know, sometimes you don't have that chance. And, of course, this comes just days after a terrible tragedy in our CNN family, when we lost two of our people in Iraq in an ambush shooting.

Michael Holmes, our correspondent, who was one of the people who was involved in this got away safely, because we had a security guard there, who was able to respond. Michael Holmes was not carrying any weapons, but he was saved because someone else was.

CAFFERTY: But the question is, you know, you raised the question, well, how do you explain it if you're captured. How do explain the fact that you might get killed if you don't have a gun?

SERWER: Well, the other thing, Jack, is God forbidding one should give me a weapon over there, because that would be a disaster. Maybe the "New York Times" guy was trying to defend himself from Jason Blair or something ...

CAFFERTY: I was going to say, they got all that accuracy cleared up, I guess, ...

SERWER: Right.

CAFFERTY: ... in their reporting, so now they can move on to other issues.

SERWER: Yes, that's true.

CAFFERTY: All right. On we go.

The Iraq war began in March, and just about every day we're reminded that it's not over yet, not by a long shot.

Washington wants to hand over power to an Iraqi government of some sort by the end of June. That doesn't necessarily mean that's when our troops are coming home.

For a look at the situation in Iraq, we're joined now from Baghdad by Jane Arraf. Jane, what's the latest?

JANE ARRAF, CNN CORRESPONDENT: Well, Jack, as you mentioned, there are an awful lot of troops coming home. We saw a lot of them just the other day at the airport. Now, the airport here is absolutely full of troops waiting endlessly, it seems, for flights to Kuwait and homeward.

And you would think that they would look overjoyed, but a lot of them look kind of shell shocked, and they say they won't believe they're actually out till they get out of Iraq.

Now, it's a really tricky thing, this handover. New troops, new challenges, an Iraq that's increasingly, it seems, volatile in places. It's a big challenge changing over that many people - Jack. CAFFERTY: This is actually, though, part of a big troop rotation. This has nothing to do with drawing down the American military presence overall in that part of the world, does it?

ARRAF: Well, there will be fewer troops in some parts of the country, in the north, for instance, as some of these divisions are being replaced by smaller numbers of troops.

But the real impact is that you're replacing essentially troops who have gained really valuable experience over a very broad array of situations and dangers, with troops that are brand new.

Now, there will be a bit of a handover, but essentially, a lot of these people are coming here cold. And it's really going to be interesting to see how that works out.

CAFFERTY: Yes. Scary stuff. Jane, thanks for joining us. I appreciate it. Jane Arraf reporting from Baghdad.

Deciding when the U.S. military leaves Iraq means balancing as soon as possible with as long it takes - not an easy equation, that.

To help us understand what has to happen before our troops can come home, we're joined by David Phillips, a member of the Council of Foreign Relations, who joins us from Washington.

David, I apologize for the nature of the question, in advance. It's a very difficult one, but I have a hunch it's one that we're going to hear over and over again, once the Democrats have their nominee for president.

When is the U.S. military going to be able to begin drawing down its forces in Iraq and bringing them home? Is it possible to even begin visualizing when that might happen?

DAVID PHILLIPS, SENIOR FELLOW, COUNCIL ON FOREIGN RELATIONS: It's not possible. The trends are negative. Conditions of insecurity are worsening.

When the administration made a decision to disband the Iraqi army, we immediately transformed what could have been a partner in security into 300,000 antagonists.

Right now, unless we change the mission and we're able to internationalize forces, there's no foreseeable time in the future when we're going to start drawing down forces in a meaningful way.

CAFFERTY: You mentioned changing the mission. The administration has been reluctant to do that. There is a timetable that, for want of a better word, may be wishful thinking on their part, to try and have some sort of elections, perhaps with the help of the United Nations, by the middle of summer.

What sort of things are going to have to happen in order to satisfy the Shiite cleric who is demanding free elections across the country, as opposed to the American request to have caucuses in various parts of the country and create, perhaps, a more representative democracy - whether the U.N.'s going to be able to help facilitate any of this.

How do you see that whole thing playing out in the next six or eight months?

PHILLIPS: Well, when the U.N. sends their team over, they're going to come back with a report. And the report's going to say that there's just too much violence around the country to have elections by the June 30 deadline.

Either way, the Coalition Provisional Authority is going to shut down its offices by that date. That doesn't mean that U.S. troops go into a hole. In fact, leading up to that time, there's likely to be an increase in violence.

And then after there's a handover to a legitimate Iraqi sovereign, U.S. forces, with coalition partners, are going to have to stay on the ground to maintain security. There'll be some kind of a status of forces agreement with whatever new Iraqi government emerges after June 30.

LISOVICZ: Phillip - rather ...

PHILLIP: David.

LISOVICZ: ... David, sorry, I was looking at your last name.

We were talking to our Baghdad bureau chief, Jane Arraf, who was saying that there is this huge rotation of forces coming in now, that they're coming in cold. So you have this deadline, which the U.S. would very much like to meet, the elections this summer. And you have this huge rotation of troops at a very chaotic and confusing situation.

Does that compound the situation in your view?

PHILLIPS: The rotation creates some difficulties. The troops are there not only providing security, I mean, they've assumed a nation-building function.

They have relationships with local sheiks, local leaders, the city councils. They're administering funds at the municipal level.

Those relationships that have been built up over a year are critical to the kind of partnership that's important, if we're going to strengthen Iraqi governance and get to a point where we can hand over the administration of Iraq to Iraqis.

Bringing in a whole new group is going to disrupt the continuity of those relationships. It's going to take time for the new crew to get up to speed.

SERWER: David, two-part question here. First of all, one thing you said peaked by interest. You suggested that the situation is deteriorating. Did I hear you correctly? Haven't things improved since we captured Saddam Hussein? That's number one.

Number two, is it a partisan issue? Are Republicans for keeping us there longer, and Democrats for pulling us out faster?

PHILLIPS: When you look at the number of attacks that have been occurring on a daily basis, the number has decreased by about 40 percent. When you look at the casualty figures, the number has been essentially flat. So, the overall trend hasn't been positive.

We expected that there would be an increase in violence after arresting Saddam. There was a momentary increase, and then we went back to essentially the same number of casualties as before.

In terms of whether it's a partisan issue, when a president sends young American men and women into harm's way, it's not partisan.

We set out on a mission to change the regime in Iraq, to liberate the Iraqi people, to establish conditions for Democracy there. Whether it's President Bush or whether there's a new president after January '05, the U.S. is going to stay involved in Iraq for a long time to come.

Keep in mind, as well, that the strategy was to use Iraq as a launching point for a forward, freedom strategy, transforming the broader Middle East. That strategy isn't going to disappear. Countries like Iran and Syria remain of concern. Any administration is going to want to create a safe environment for Israel, as well.

CAFFERTY: What's your vision of the solution to establishing a stable government in that country. We talk about establishing democracy there. In this country, that's majority rules. Over there, that's not going to - by definition - not going to be what they wind up with.

What's the government eventually going to look like, do you think?

PHILLIPS: The most important thing here, Jack, is that it has to be legitimate. The reason why Ayatollah Ali Sistani has been calling for elections, is because he wants to make sure that the government is proportionally representative of the Arab Shiite majority.

We spent the past six months debating whether elections could happen. We're at a point now where, given the June 30 deadline, that's not going to be possible. The indirect caucus system is unviable, because Iraqis have rejected it.

I suspect that what'll end up happening is, the U.N. will come back, and their assessment team will submit a report proposing a sort of Baghdad conference, modeled after the Bonn conference for Afghanistan.

Emerging out of that conference will be an interim assembly, a government and a constitutional commission. I think those goals can be achieved by June 30. Either way, the CPA is going to shut down its doors on June 30. Every day that passes, it loses legitimacy. And until we actually hand over power to Iraqis, there's going to be continued resistance to the American presence.

LISOVICZ: David Phillips, we thank you for your insight. David Phillips is a senior fellow at the Council on Foreign Relations. Thanks for joining us.

PHILLIPS: Thank you.

LISOVICZ: Ahead on IN THE MONEY, feeling the heat. The author of a memoir about the first Iraq war talks us through Iraq war two, and why it's so tough on morale for America's fighting forces.

Also, top jobs take a hike. Find out why more companies are taking white collar work overseas.

Plus, pop stars. Pepsi's just one of the companies rolling out new ads for the Super Bowl. Find out why they're playing to win on Madison Avenue.

(COMMERCIAL BREAK)

LISOVICZ: The outsourcing of U.S. jobs overseas is becoming more and more of a campaign issue this year, and with good reason.

One report predicts that over three million white collar jobs will shift from the U.S. to low cost countries by 2015.

Joining us with a look at how high up the corporate ladder this phenomenon will go is Alan Tonelson. He's a research fellow at the Business and Industry Council educational Foundation, which represents small and medium-sized manufacturing companies. Welcome.

ALAN TONELSON, RESEARCH FELLOW, U.S. BUSINESS & INDUSTRY COUNCIL: Hi.

LISOVICZ: Well, we certainly know that after years of NAFTA, after all sorts of other trade agreements, China joining the WTO, we see the outsourcing and what it's done.

We heard an interesting speech the other day from Alan Greenspan, saying, we've seen - the U.S. has seen this exporting of jobs before, and has always created new jobs.

My question to you - and probably to Mr. Greenspan is - where are these jobs going to come from? What new industries are going to be created? What new jobs will be created?

TONELSON: That's a darned good question, especially since the kinds of jobs that are increasingly being outsourced to very low wage countries like India and China, are at the very cutting edge of technological progress. And there's lots of reasons to think that we are sending these jobs overseas in these very high tech sectors faster than the new technologies are being developed. SERWER: But, Alan, haven't we heard this movie before? Just to follow up on what's Susan's saying.

I mean, you've heard this, jobs going overseas in previous decades. It was textiles a couple of decades ago, yet South Carolina didn't fold up shop. Companies came in from overseas, actually - car manufacturers.

You can't tell where the new jobs are going to come from, right?

TONELSON: Well, let me just make one point about the new auto investment in South Carolina. That was the result of the U.S. imposing trade barriers on foreign automobiles. So the foreign auto companies had no choice but to bring the auto making jobs to the U.S.

So that wasn't free markets or free trade. That was a great use of strategic trade policy, and we could use a little more of that, quite frankly.

CAFFERTY: What ...

TONELSON: But getting back to your larger point, again, these are jobs not in smokestack industries. These are not jobs that produce buggy whips and other technologically obsolete products. These are jobs that represent the very best paying and most technologically sophisticated work that our economy is currently able to create.

And they are, one, going overseas faster than they can be created, and two, the jobs that remain here are turning into lower wage jobs, because of the threat that they will go overseas. Workers' bargaining power is being destroyed.

CAFFERTY: What is your interpretation of the thinking behind this policy, that allows companies to cut labor costs by outsourcing jobs to places like India, Mexico, wherever, transfer those savings directly to the bottom line, which enhances profits, causes their stock prices to go up, and makes Wall Street happy, at the expense of the middle class people in this country who can no longer afford to buy a home, put their kids through college, or in some cases, even find decent work, because the jobs are gone?

Who's the architect of this, that this is a good idea for us?

TONELSON: It's one of the clearest signs we have that U.S. trade and economic policy - and also immigration policy - are not very democratically made at all. And, in fact, they are almost completely controlled by big, multinational companies, who, as your remark just suggested, find this a great, short-term way to boost their own bottom line. And I don't blame them for that.

I do blame them for spending hundreds of millions of dollars each year in Washington to try to skew those rules and those U.S. policies in their favor. I blame them for not being honest about what they're doing and why they're actually doing it.

But I would also argue, they're being very short sighted. Because, in effect, they're firing their best customers.

These new tech jobs and these new professional jobs, they're not serving markets in India and China. They're serving markets in the U.S. But as you send the jobs overseas, or as you reduce the wages here, you are reducing the ability of their American customers to pay for their consumption of these goods and services in a responsible way.

LISOVICZ: You know, Alan, I recently did a story on all the free trade agreements that have occurred over the last decade. And I talked to some unions, which have certainly been decimated by the exporting of America, as some people like to call it.

And their approach is kind of interesting, because they're not attacking the workers or the countries that are seeing these exporting of jobs. What they're trying to do is to elevate their working wages and their living standards, because if that happens, you sort of level the playing field in their mind.

Is that realistic? Do you really see that happening, that you could level the playing field so that some of these jobs could come back to the U.S.?

TONELSON: I've been working with folks in the labor movement for more than 10 years, and I respect them tremendously. But I do think that this idea is rather utopian.

As my recent book, "The Race to the Bottom," made clear, and in tremendous detail, the glut of labor in the developing world is so enormous and growing so quickly, that workers there will never be able to have the kind of bargaining power they need to increase their wages and improve their own working conditions in the policy-relevant future. There are just too many of them.

And if you believe in the laws of supply and demand - and I hope everybody does - you can see, it's not going to happen quickly enough to help American workers now.

SERWER: All right. We're going to have to leave it at that. Obviously, a hot button topic. Alan Tonelson, thanks very much - a research fellow for the U.S. Business and Industry Council.

Up ahead on IN THE MONEY, an unhappy ending to one of Hollywood's most profitable partnerships. Pixar, the studio behind "Finding Nemo" and more, has called it quits with Disney. Find out what it means to the company's bottom line.

Plus, feels like the first time - that's a Foreigner song - only more so. We'll speak with a veteran of the first Gulf War about troop morale in Iraq.

And passion meets Pyrex. The new love drug called Cialis - got that right - is just one of the products with a Super Bowl ad. Find out why Madison Avenue is putting the game in the shade (ph).

(COMMERCIAL BREAK) LISOVICZ: Now let's check the week's top stories in our Money Minute.

The Federal Reserve decided to keep interest rates steady at 40- year lows, but the Fed hinted rate hikes could be on the way, by dropping its promise to keep rates the same for a "considerable period" of time. Both the stock and bond markets reacted to the news with sharp sell-offs on Wednesday afternoon.

The Martha Stewart trial hit a snag when defense lawyers and prosecutors withheld a key document from them. The defense tried to get the case dismissed over the issue. The judge refused, opting for a delay instead.

And a federal judge in Alaska has ordered ExxonMobil to pay $7 billion in damages and interest because of the 1989 Exxon Valdez oil tanker spill. The payment would go to fishermen and property owners. The company is expected to appeal.

SERWER: All right, Susan. The company behind some of the biggest animated films of all time is looking for a new partner on Thursday. Pixar CEO Steve Jobs said the company was ending its 12- year partnership with Disney.

Under the old deal, Disney distributed blockbuster Pixar movies like "Finding Nemo" and "Toy Story" - movies that made billions of dollars for both firms.

Now, though, Pixar will likely seek a new partner to distribute feature films. Pixar shares are up about 40 percent over last year, though they are off their highs they hit last fall. That makes Pixar our stock of the week.

I don't think it's too strong to say this company revolutionized the movie making business, because it's a new genre, somewhere between live action and animated films. They call it animated films, but it's computer generated movies.

LISOVICZ: And (ph) how (ph) (UNINTELLIGIBLE) ...

SERWER: And every single movie they made was a smash hit - unbelievable track record. What's Disney doing?

LISOVICZ: Well, and it comes at the worst possible time for Disney, or I should say, specifically for Michael Eisner.

SERWER: That's right.

LISOVICZ: He's been leading the company for 20 years. A very public campaign to oust him. Roy Disney - if that sounds familiar - nephew of Walt Disney, resigning from the board. And now Disney meets two weeks with analysts, and after that annual shareholders' meeting. Disney just lost a very valuable partner.

CAFFERTY: On the other hand, it's Disney. We're not talking about the ABC widget company. This is Disney. They own the sequel rights to films like "Finding Nemo," so they can probably find another animation studio that'd be willing to collaborate on what is sure to be a huge blockbuster.

They have the marketing muscle and expertise and distribution network for motion pictures that Pixar doesn't have access to at this point. And they can probably find somebody to team up with out there, who doesn't want 90 percent of the profits on everything that goes to the box office. I'm not sure it's so terrible for (UNINTELLIGIBLE).

SERWER: Yes, I think - you see, I think you hit - the last point is exactly dead on. Because, you know, you can have a good business, but what's it worth? I mean, what's the deal worth?

No question, Pixar is a great company and does great things. But how much are you willing to give up?

Pixar is going to go around to Sony and Warner and say, OK, how would you like to partner up? The terms of the deal have got to be right. Otherwise, it's simply not worth doing.

Steve Jobs, the guy who heads this, I think he's a real business genius, understands technology and entertainment as well as anyone in the world. But he is a hard, shrewd businessman, and he is going to be asking for a lot.

LISOVICZ: Yes, he will be. But, you know, at the same time, Disney has been making cuts in its own animation business. And some of its films, you know, have not done that well.

SERWER: Oh, that's true.

LISOVICZ: This is - this is the company that came out with "Snow White" and "Fantasia." And, you know, some of its films like "Pocahontas" and "Mulan," they haven't been "Lion King," let me put it that way.

So its relationship with Pixar has been stellar.

CAFFERTY: Wall Street reaction to the announcement that they're getting a divorce - Pixar stock up substantially, Disney stock down a little.

Do you buy the stock of either company at this point?

SERWER: Well, I certainly wouldn't buy the stock of Pixar. I mean, that stock has doubled in the past two years.

LISOVICZ: Close to a doubling, right.

SERWER: There's always people talking about a lot of hot air in that particular thing. People get very, very excited by it.

Disney - I think Disney's an interesting situation. At some point - you know, I hate to say this, Michael Eisner, but there's going to be a successor. You have shown an inability to get along with a whole lot of people.

I mean, you know, Katzenberg, Ovitz, Jobs, I mean, ...

LISOVICZ: Harvey Weinstein, (UNINTELLIGIBLE) ...

SERWER: Well, that's an understandable, perhaps. But I mean, ...

(LAUGHTER)

SERWER: ... at some point, there's going to be a new person here, and this company's going to get revitalized. Jack, as you said, they've got an awful lot of great businesses.

CAFFERTY: And the economy's beginning to play into Disney's hands a little bit. Things like the theme parks and the amusement parks are starting to do a little better.

LISOVICZ: But it's still got ABC, and that's still a laggard in prime time.

SERWER: Oh, everybody's got some issues, right?

CAFFERTY: Except us.

SERWER: Yes, except this company.

CAFFERTY: We're going to step out here for a minute and deal with our own issues. And when we come back, the issues being, trying to make a couple of bucks for the front office.

When we come back, the mood on the front lines. We're going to check the morale of U.S. troops in Iraq, see what challenges they face once they come home. We're going to talk to a man who knows. He was in the Marine Corps during the first Persian Gulf war.

And big game hunting. U.S. advertisers spending millions on the Super Bowl. Find out how they go about getting their money's worth. Stick around. We're back in a couple.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: What's he doing?

UNIDENTIFIED MALE: What's he doing?

UNIDENTIFIED MALE: Whatever he's doing, he sure seems to like it.

UNIDENTIFIED MALE: Delay of game.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

(NEWS BREAK) CAFFERTY: If you think it's hard watching television pictures about what's happening in Iraq, and it is sometimes, imagine living there or fighting there. This week Britain's "Guardian" newspaper reported that one in five U.S. service men and women posted to Iraq will suffer from posttraumatic stress syndrome.

That is according to senior military medical staff. Earlier this month the "Associated Press" quoted the Pentagons top doctor as saying there is a high number of suicides among U.S. horses on duty in Iraq. For a Marines eye view of the Iraq war and why it's so tough on our troop there's, we're joined from Iowa City by Anthony Swofford who served as sniper in the first Gulf War and wrote a memoir about it called "Jarhead." A Marines chronicle of the Gulf War and other battles. Anthony nice to have you with us thanks for joining us.

ANTHONY SWOFFORD, AUTHOR, "JARHEAD": Thank you for having me.

CAFFERTY: Let's talk of the suicide report. Why would the suicide rate be higher in the Iraqi theater than it would have been in the "Desert Storm" theater or the Vietnam Theater or Korea or any one of a number of combat theaters in previous times?

SWOFFORD: Well, you know, this war they're for an extended period of time and going out on patrol every day, and, really, their lives are threatened and on the line each day I think. And the longer that people spend in a combat theater, the higher the stresses are. And you know as well, it's guerrilla warfare, and the stress is intense on them.

This war versus Vietnam -- you know, I'm not aware of the figures, but I imagine that it has to do with the long-term possibilities of being on the ground, and again the real stresses of the guerrilla urban warfare environment.

LISOVICZ: Anthony, does politics enter into this trauma at all? The fact that this is not a popular war overseas, the fact that the chief weapons inspector recently departed. Chief weapons inspector has said no signs of any weapons which was the reasons why the U.S. went in and one of the reasons why the U.S. went in the first place. Does that enter in at all?

SWOFFORD: I think it will be more of a problem in the long term, because it's important when people fight, are injured and see their friends die, to believe they've fought for a reason and that the reason they were inserted into this situation was just. I believe that long term what seems to be the falsification of intelligence, certainly the gross misreading of intelligence.

Is going to be how the affect on the psychologists of the people who are over there serving, because, again, they need to feel that they fought and they've sacrificed for a reason. And that they weren't sent over there as puppets.

SERWER: Anthony I read your book last year. And I got to tell you, it was disturbing and chilling and enlightening also. One thing that really struck me is when you came back from combat; you sort of tossed out in the streets. And you kind of freaked out a little bit you had some adjustments.

What more should be done for soldiers who come back?

SWOFFORD: I think a lot more should be done. My return, really I was in Saudi Arabia, it was a few weeks after the end of the warfare, and 16 hours later I was driving my car home to hang out with my buddies who had just been in college. And to essentially, I was supposed to re-enter civilian life, civil life. And warfare is not a civil endeavor and that's very problematic, as it was in Vietnam.

I understand now they're keeping troops on the base when they return to the states for a bit of time, 30, 60, maybe even 90 days. They may be requiring them to go through counseling, and that's really smart. That's essential to the -- a slow re-entry into civil society is much better than the way that I entered which was abrupt and really just as violent as the way I entered war fare.

CAFFERTY: What was it that kept you from completely derailing once you got home? Because that was a possibility, wasn't it?

SWOFFORD: It sure was, you know ironically, still staying in the Marine Corps I think, for another 18 months helped me. Because you know unit cohesion is important. And I was in the Marine Corps and I continued to serve with the same men who I'd been to combat with.

And that was a safety net being around these same men who had experienced the same thing that I had. It was important that we stay together. I think that people who left our unit and went to other units or got out of the Marine Corps right away, I imagine that they didn't fare as well as those of us who stayed in the Marine Corps and had each other as sounding boards.

SERWER: All right, we're going to have to leave it at that. Obviously some really interesting stuff Anthony. Anthony Swofford, author of "Jarhead." Thanks very much for coming on.

Up next on IN THE MONEY, we will take a closer look at the mega bucks advertisers spend on the Super Bowl. And you can tell us what you think about this year's ads, or anything else on our show. Our e- mail address is INTHEMONEY@cnn.com.

(COMMERCIAL BREAK)

LISOVICZ: This weekend the New England Patriots and the Carolina Panthers square off in Super Bowl XXXVIII. And while millions of people around the world will tune in for the game, millions more will be watching for the commercials. Joining us today is a woman who believes the ads are now more important than the game itself. Bernice Kanner is the author of "The Super Bowl of Advertising: How the Commercials Won the Game." Welcome.

BERNICE KANNER, AUTHOR, THE SUPER BOWL OF ADVERTISING: Thanks so much.

LISOVICZ: I really love watching the commercials, and have for a long time. So I've seen the sneaker wars, I've seen the cold wars, I've seen all the dotcoms come and go. And I guess this year, we are going to see sort of the sex wars with Levitra (ph) and Sealis (ph) squaring off?

KANNER: We call this dysfunction wars.

LISOVICZ: Ooh, you said it!

KANNER: Indeed I think that scares me a little because Americans watch this program to be entertained. And pharmaceutical advertising as a rule is not entertaining.

CAFFERTY: To the degree that the games have often been one-sided and a little less than entertaining, doesn't that sort of force you to focus on the commercials? I mean if it's a great game you'd probably pay less attention to the breaks?

KANNER: Indeed, people pay more advertisers pay more to be in the beginning of the game because if it's a blowout, people tune out. But this didn't become the advertising showcase right away when it started in '67. Advertising ran run of the mill commercials that they ran every day.

There were a few bright spots in those dark ages, when Coke launched "I'd like to teach the world to sing" and mean Joe Green and then 1984 apple came along with the famous commercial why 1984 won't be like 1984. And that set the groundwork for this to be the Super Bowl of advertising.

SERWER: All right Bernice, two-part question first of all does this really work? We know Pepsi's got a big campaign, they're going to spend a lot of money, and they have traditionally for years going against Coke. Do their sales really go up? Talk about that for a little bit, about the soft drink wars. And then I got to ask you, who's going to win the game?

KANNER: Well, it's more than soft drink. It's Bud has tracked every year that its sales rise significantly after its commercials, and Pepsi has been able to ride this rather old-fashioned media event right out of the kitchen, and become a real contender to Coke. So, yes, it does work, but it doesn't work for every company, and it doesn't work for every kind of product.

You can't insult your audience as "Just for Feet" once did. You can't give them real rational benefits. You've got to give them an emotional or rug pull, and then you can't bore them. You bore them; they have these great expectations of what they're going to see on this event. You bore them you've lost them. And you know people come to this event to watch the game.

Every other day advertising is the enemy. They want to tivo you out. Now they don't get up to go to the bathroom or the fridge they want to watch this because they want to be a part of the fraternity or sorority tomorrow. I think sorority. Because 40 percent of the audience is women, more women watch this than watch the academy awards, which are known as the Super Bowl for women. CAFFERTY: Tell me a little about the psychology that causes sales of something like Budweiser or Pepsi to rise? We all know about Budweiser beer and Pepsi-Cola's a soft drink. The product tastes the same the week before the Super Bowl as it does the week after the Super Bowl.

What is the subtle thing in those ads that causes people to go out and walk in to the store shelves and begin to buy the product in increased numbers over what they bought before the ad ran?

KANNER: There's no recipe for a great ad. Certainly, you can run any type, but people are attracted to great advertising, and feel they want to give something back. And they say along Madison Avenue, that the best way to kill a mediocre product is run great ads. Years ago, Burton Harry Peels was so beloved by his New York audience that they went out and bought the beer just to celebrate the advertising, if you will. They bought the beer, tasted the beer, hated the beer and never bought the product again.

CAFFERTY: I remember that.

KANNER: So in a sense, great advertising can kill a mediocre product much faster than mediocre advertising.

LISOVICZ: Hey Bernice, I have a two-part question. One is what the tone of the overall commercials tell us? Because you really see a lot of post-9/11, the recession, the rise and fall of the dotcoms. I'd like to know your opinion about that and of course Andy's too chicken to ask you again, whom you think is going to win.

SERWER: We got to know Bernice. You must have some insight here.

KANNER: Well, definitely know I think AOL will win, because of the halftime show that is really intriguing. I think Staples will win, because I've yet to see boring Staples ad. I think Charmin will win because they got something soft and strong for your end zone.

CAFFERTY: Oh!

SERWER: Funny.

KANNER: (CROSSTALK) may not win. I think Coke, rather Pepsi and Budweiser win every year and I think they'll win again this year. But clearly, there are going to some losers. Every year people walk away with egg on their face.

LISOVICZ: Who are they? Who are the losers?

KANNER: Well, think about the year 2000, when you had the dotcom bowl and they walked away, or Just for Feet which ran a commercial, with four white guys in a Humvee track a black barefoot Kenyan runner, drug him and forced shoes on his feet. The was certainly a loser.

And earlier in 1985, Burger King certainly got egg on its face, when it introduced the world to Herb the nerd, the only person in America who has never tasted a whopper. So I think that monster is not going to come across anywhere near as well as it has in the past. We all love that commercial where the kids talk about growing up to be a brown nose, a "yes" man. This year isn't as good.

CAFFERTY: What is the cultural statement to be made by the fact that the most widely viewed event on television in this country is going to be dominated by commercials for sexual enhancement?

KANNER: Well, I don't think it's going to be dominated. You've got two players in it, and it's a new category, but every couple of years a new category does comes on.

CAFFERTY: Well let's address that category. I mean what does that say about this nation here?

KANNER: Well they say that it's a dual audience because this is a product that is designed for men and women, and women are so critical to making the decision. And it also says that this is the way to reach men. One of the few wide spectrums and it also says that a lot people must be interested in this product, and that the companies have deep pockets.

SERWER: Yes.

CAFFERTY: You are to be commended for the grace with which you handled that little deal. Bernice thanks for coming on and talking to us about it. It's fun stuff and it's interesting. We've learned something.

KANNER: Thank you.

CAFFERTY: Bernice Kanner, author of "The Super Bowl of Advertising."

Coming up on IN THE MONEY, as we move along, bats and birds. Too cold for baseball, but Wastler's found a Website where you can knock some penguins around.

And while your sitting in front of the computer, please, unburden yourself. Write to us about the things that trouble you. E-mail us at INTHEMONEY@cnn.com, and we'll attempt to make your life better.

(COMMERCIAL BREAK)

CAFFERTY: Crazy lawsuits not a rarity in this country, not by a long shot. But some cases deserve special attention, and ridicule, and duration and contempt. Here to help us heat some of that upon them is my pal the Web master Allen Wastler has this year Stella Award.

SERWER: Stella!

LISOVICZ: Stella!

ALLEN WASTLER, MONEY.COM: Actually it is named after Stella Liebeck, who sued McDonald's for the hot coffee.

CAFFERTY: Oh OK. (CROSSTALK)

WASTLER: they come out every year, they come out with their awards. And what they think were the craziest, most outrageous lawsuits. And of course this year the good one, the guy who sued over the Oreos' cookies, having fat. Remember that?

SERWER: Yes.

WASTLER: And another one suing McDonalds's, for being -- you made me fat. My favorite the guy got struck by lightning in the parking lot of an amusement park. Sued the amusement park. But here we go. Second runner up, this is Wanda Hudson. Wanda was -- well she got kicked out of her house and sort of found an aboard in the storage lockers and she accidentally got locked in there for 63 days.

CAFFERTY: Oh come on.

WASTLER: Turned around --

CAFFERTY: Come on!

WASTLER: She barely had enough food to survive for 63 days.

(CROSSTALK)

SERWER: Have some Oreos in there --

WASTLER: She sued; she was awarded $100 grand. The jury was not informed of her past history of mental disturbance. So that might have been a factor.

LISOVICZ: It was on appeal.

SERWER: Lucky, that's winning the lottery.

WASTLER: First runner-up. Doug Barker, he loved his dog. God told him adopt this stray dog and he just lavished --

SERWER: Wait a minute his name is Barker and he's got a dog?

WASTLER: Yes, so he lavished attention on -- never bought it a collar. He left it with a dog sitter one night while he and his girlfriend went out on a date. The dog got at way. He spent $200 grand hiring - not $200, $20,000, taken out full-page ads, he hired psychics; he hired a witch to get the dog back. Finally two months later he went to a place where it was lost, found the dog, turned around sued the dog sitter for a $160,000.

CAFFERTY: I wonder how much he would have spent if the girlfriend would of disappeared?

What is number one?

WASTLER: Number one, city of Madeira, California. Officer Marcy Noraga (ph) she had a rowdy suspect, she had him handcuffed to the back of the car. He started kicking the window. So she reached to taser him, but accidentally grabbed her gun instead and sort of shot the guy.

CAFFERTY: Sort of shot the guy?

SERWER: You sound like the defense attorney.

WASTLER: The city of Madeira, is expecting a wrongful death suit.

LISOVICZ: Did he die?

WASTLER: So they sued Taser. To say you got to take responsibility for this, because it is too easy to confuse a Taser with the gun.

SERWER: There you go its Tasers fault.

WASTLER: That's the number one.

CAFFERTY: So they -- the fact Taser made it look too much like a real gun is the bases, it is a frivolous -- the wrongful death suit makes a lot of sense.

SERWER: Well it would be like the witch looking like the girlfriend in that other one.

CAFFERTY: Now you say you're hungry for some baseball but it's still weeks until spring training? Our man Wastler has a place for you to go.

WASTLER: Oh, yeah. we got it for you. Our fun site of the week, you can just be the abominable snowman and wind up on an old penguin there. Penguin drops, that's the trick if you want to get the good yardage, you got to get the hop, that is the trick to this game. Go for that don't go for the fly. You go for the fly -- and look, bong!

LISOVICZ: Is this a --

(CROSSTALK)

SERWER: Very upset about this.

WASTLER: Any way for your amusement.

SERWER: Calling out penguins. All penguins should really be watching this. This is really bad stuff.

LISOVICZ: No penguins were hurt.

SERWER: All right, Allen Wastler that was great stuff, Web master extraordinaire thanks much.

Just ahead, we read your viewer e-mails. Right. Our e-mail address is INTHEMONEY@cnn.com. But first, Susan's has this week's edition of "Money and Family." LISOVICZ: Holiday debt hangover is a common problem this time of year. So here are a few tips to reduce the pain. First, out of the balance on each credit card, and figure how much to set aside monthly to pay down the cards. It is a good time to contact your credit card operator and ask for a lower interest rate. They'll often accommodate your request, particularly if you have another card offer on hand to mention.

Interest rates are low now, but several economists say they may rise later this year. So focus on paying off any of your high interest debt first and then lock in to a low-fixed interest rate credit card. Check out cardweb.com or bankrate.com for more information. I'm Susan Lisovicz for "Money & Family."

(COMMERCIAL BREAK)

CAFFERTY: Time now to read some of your e-mails, to our question of the week about which Democrat has the best chance to become the next president of the United States and beat George Bush in November. Highly unscientifically I might point out and the results of our question, quite different from the national numbers right now.

For example, General Wesley Clark led the pack of our viewers 43 percent of our emailers chose Clark. John Kerry a distant second with 26 percent and Edwards came in third. Dean, Lieberman, Sharpton, Kucinich and the draft Hillary contingent, far behind.

SERWER: Kucinich, he is on the move!

CAFFERTY: I am heart broken. Sarah in California one typical Clark supporter she wrote this, "Clark is the only one with experience working with other cultures while striving for the betterment of his own people."

And of course Washington is nothing if not another culture.

But John in California letting outside forces make his choice for him he wrote, "If the New England Patriots win the Super Bowl, then the Democrats should nominate New Englander John Kerry. But if the Carolina Panthers win, they should nominate Carolina John Edwards. Hey, it's no dumber than the primaries."

All right, here's the e-mail question for this week -- how much do you learn about the presidential candidates from television? Send your answers to INTHEMONEY@cnn.com. We'll read some of them next week. You can also check our show page at money.com/inthemoney. That is where you can learn more about upcoming shows. Get the fun sight of the week address.

If miss it the first and you want to get this weeks fun site, it is about hitting penguins with a ball bat. Thanks for joining us for this edition of IN THE MONEY. Thanks to our regular gang, CNN's National correspondent Susan Lisovicz. "Fortune" magazine editor at large Andy Serwer and Money.com managing editor Allen Wastler.

Join us next week, Saturday at 1:00 Eastern, Sunday at 3:00 or you can watch Andy and me all week long on "American Morning" meaning at 7:00 Eastern Time, Monday through Friday. Thanks for watching and see you soon.

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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