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At Look At "Made In America" Products; America Exporting Democracy To Middle East; The Body Scandal

Aired March 14, 2004 - 15:00   ET


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

America's invisible export: The Bush administration out to bring democracy to the Middle East. We'll see why a former national security adviser under President Carter says the Bush plan needs a re- think.

Plus, the body corporate: A scandal in Los Angeles, showing America what can happen when you donate your body to science. Lots of kind of gruesome things, when you think about it. Find out how one of your most precious gifts could turn into a company's fast buck and end up in more than one location at the same time.

Plus, process pig and road hogs: Spam and Harley-Davidson, two of America's greatest brands, "Cheers" star David Ratzenberger will join us to show us some of the people behind some classic U.S. products. Yes, Virginia, there still are some things that are made in America.

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

And, while the world waits with baited breath to find out whether or not Martha Stewart's going to prison and for how long, we don't know until June, there are lots of questions about the future of company, Marta Stewart Living Omni Media. The stock has come down dramatically since her conviction, there's a bit of a P.R. campaign underway, she's got people out doing interviews, to talk about what a great gal she is on all the news shows. We had somebody on "American Morning" they other day, I think it was her stylist, talking about what a wonderful person Martha is, apparently trying to influence...

ANDY SERWER, "FORTUNE" MAGAZINE: Yeah. Where's your stylist, Jack? Get your stylist out here.


CAFFERTY: Well, if I had one, she shouldn't be on television talking about what a wonderful person I am, I can assure you of that.

SERWER: Right.

CAFFERTY: What about the future of company is the question?

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, you know, it's interesting because Viacom was very quick to pull the show, right? They had already relegated it to the midnight hours, "Marth Stewart Living," but also, Conde Nast, one of the big giants in publishing just this week said -- hey, we're going to do a new home magazine lifestyle thing, definitely taking aim at a weakened brand, right now, very vulnerable.

SERWER: Now you're talking about the magazines, real simple, published by Time, "Inc's" done well, "Oprah's" done well, but you know what?

LISOVICZ: And they bar -- and they borrowed heavily from her.

SERWER: They have. But, I'm one of these people who thinks that woman's career is not dead at all. I think a lot of people here in Manhattan are all hyped up about her troubles. I think a lot of people out in Middle America don't care; they like her products and they like her, the like that way that she's been able to sell herself. But, she's got to be contrite. Jack, you and I have talked about that and she ain't been able to that, yet. She's got to say her sorry through a Diane Sawyer interview, adopt kids, find a charity, and just get over it, but she can't do that.

CAFFERTY: Get a dog from the shelter, do something, right?

SERWER: Yeah. Right.

CAFFERTY: Because you're right, America's full of comeback stories,

SERWER: It is. It is.

CAFFERTY: Assuming she doesn't get a 20-year sentence, which...

SERWER: Right. She's not.

CAFFERTY: You know, most people say it will be a year, a year and a half, chances are she can come back in some capacity.

LISOVICZ: Wonder how many employees will stay with the company? That's another concern for her.

SERWER: Yeah. A lot of trouble still.

CAFFERTY: All right, we'll find out, I suppose, as time goes on.

Meantime, the United States trying to give Iraq a crash course in democracy and it's hoping that the student's a fast learner. The lessons may be sinking in, but things are still a little crazy in the classroom, that is Iraq. Finals are due at the end June, that's when Iraq is due to begin self-rule.

Walt Rodgers joins us now from Baghdad. Walt, troops in Iraq continue to be rotated out and new ones coming in. Biggest troop rotation, I think, since World War II, maybe. Give us a sense of U.S. troop morale at the time that this undertaking is going on, and I'm sure the ones coming home are delighted, and the ones arriving there probably aren't so happy, but go beyond that and address the mission a little bit, if you would.

WALT RODGERS, CNN CORRESPONDENT: Well, if you're a U.S. soldier being rotated out of here, you're counting the days, hours, and minutes. And, I'm told even when soldiers are at the airport in Baghdad, with their duffle bags and rifles about to be airlifted out, they still are tense until they know that plane is wheels up and they're out of range of anti-aircraft missiles. Remember, these soldiers had a very, very difficult time in here. They were told they coming in as liberators and the honestly believed, last spring, they would be welcomed by the Iraqi people. What they found themselves instead was quite different, a guerrilla war. Having said that, every time you get new soldiers coming in, a testament to the training of the U.S. soldiers, they seem quite psyched up -- Jack.

CAFFERTY: Walt, talk a little bit about security. It seems recently that the number of attacks against American troops has gone down, but the numbers of attacks against Iraqi civilians has gone up. The most devastating one, of course, that awful bombing and explosion, series of explosions at the religious observance. Give us a sense of -- you know, how secure the average person over there today feels today, versus say six months or a year ago?

RODGERS: Security and safety are very relative, here in Iraq now, and to be quite candid, nobody's safe. As much as President Bush talks about democracy, germinating here, it's my sense and the sense of most people with whom I've spoken so far, that we're closer to a civil war in Iraq than we are to genuine Western-style democracy. Now, no one expects that to happen before the Americans hand over power and authority on June 30, but remember, the leading clerics in this country and many of the political leaders have their own private militias. The country is awash in guns and there is no real security here, it is much, much more dangerous for Iraqis, they are getting killed in much larger numbers, and that's the tactics of the guerrillas, they're trying to kill the Iraqis, undermining the credibility and hope of the U.S. mission, here -- Jack.

CAFFERTY: Meantime, Walt, thank you for joining us. That interim constitution was signed this past week in Iraq and many consider that a big step forward. CNN's Walt Rodgers joining live from Iraq.

The Bush administration's goal for democracy, in the Middle East, only start in Iraq. In fact, the White House has a plan already drawn up that includes democracy for the whole Middle East. Too bad nobody has asked the Middle East about that, however, and that's one of the criticisms. Former national security adviser under President Carter, Zbigniew Brzezinski, says it's not too late for the Bush administration to do a course correction on their plans to bring democracy to the Middle Eastern countries. And, Mr. Brzezinski's a counselor at the Center for Strategic and International Studies, also the author of a new book called "The Choice: Global Domination or Global Leadership."

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


CAFFERTY: What's wrong with the administration's approach to bringing democracy to Iraq and ultimately to the rest of the Middle East?

BRZEZINSKI: Well, basically, two things. First, the way it was unveiled. It was unveiled in a very patronizing fashion, in effect, we're saying to the people in the Middle East, "we're going to come and teach you democracy, whether you like it or not," and that's not a good way to get people to go along with you.

And secondly, there have been hints from some people in the administration, but highly place people, like the vice president, that we're going to shelf the peace process between the Israelis and Palestinians until they all become democrats, and that's, of course, ridiculous because you can't have democracy without political dignity and political dignity's denied if you're under occupation.

CAFFERTY: Let me...

BRZEZINSKI: So, both...

CAFFERTY: Let me just as you about...

BRZEZINSKI: ...of these things have weakened it.

CAFFERTY: Let me ask you about Iraq, before we get to the Middle East peace process. Was there any other option for the United States realistically? You couldn't go into Iraq and begin to discuss the benefits of democracy in an open society with the citizens of Iraq, you couldn't get inside the country. It was a brutal dictatorship; the population was under the heel of Saddam Hussein. If you wanted to introduce democracy there, wasn't this really the only way to go about it? Just go in and take that regime out and set up shop and say "now, we're going to try and do something that hasn't been done here before?" I mean, what other option was there?

BRZEZINSKI: Well, the option was not to go in without the rest of the world, and that's the first point. There was no imminent danger, we know that now. We know that all of this hullabaloo about weapons of mass destruction was either hype or just ignorance, and that's a very charitable interpretation. So, we could have simply waited. What was the urgency?

LISOVICZ: Mr. Brzezinski, and so that compounds the problem between the Israelis and Palestinians, in your view? Making them more suspicious, more skeptical of American initiatives there?

BRZEZINSKI: To some extent yes, because to many of the Arabs living there, it appears that we're occupying Iraq. The Israelis are occupying Palestine and we're saying, "and this is not going to change until you all become democrats, and we'll tell you how be democrats." Now, mind you, I think that the democracy initiative is a good idea, but it ought to be done differently. We ought to engage the Arab League, articulate intellectuals, the younger people, we ought to engage the Europeans in a joint program and most important of all, we ought to give peace a boost. We ought to be moving more rapidly to push the Israelis and Palestinians towards peace. We ought to transform the occupation in Iraq under some form of U.N. umbrella.

SERWER: Mr. Brzezinski, I want to skip around a little bit here and talk about history a little bit. Two instance, I think, where is we used our influence to successfully further democracy, perhaps. But, I want to get your interpretation. The Philippines and South Africa: Are those instances where the United Stated eyed used their influence to good end?

BRZEZINSKI: Well, we didn't occupy South Africa, first of all.


BRZEZINSKI: But we exercised a great deal of pressure, that the white upper side regime yields to the majority, and that was very constructive. The Philippines is a much more mixed picture because we were, in effect the occupiers, although he hate to admit that, and the Philippines still isn't really a very viable democracy. I think the best examples are Germany and Japan, but in Germany you had the democratic tradition before Hitler, so once we ended the occupation and installed democracy, it could go on on its own. And the Japanese were very obedient, very pliant and an emperor helped legitimate our efforts including the constitution that we gave the Japanese.

CAFFERTY: All right, Mr. Brzezinski, we're going to have to leave it on that note. I appreciate you joining us on IN THE MONEY. Interesting observations about the situation in Iraq. Thank you.

BRZEZINSKI: Good to be with you.

CAFFERTY: Zbigniew Brzezinski, former national security adviser in the Carter administration.

Time to take a break, when we come back on IN THE MONEY:

The dead and the missing: Donate your body for science, it could wind up with a corporation, instead. We'll look at the trade in human remains.

Plus, workers in America can stand up and solute, they make everything from flags to Spam to Harley-Davidson to Zippo lighters and a whole bunch of other stuff. John Ratzenberger of "Cheers" is going to tell us about it, and he hosts a new show that's devoted to that very subject.

Satellites of love: EchoStar and Viacom have called off their spat. Find out what Wall Street thinks of the reconciliation. IN THE MONEY's back in a minute.

(COMMERCIAL BREAK) LISOVICZ: Donate your body to science and your death could save lives, of course that's assuming science isn't trying to make a spare buck on the side. Police, this week, busted workers at UCLA's Medical School, who allegedly sold donated body parts for cash. The school's boss has apologized for the scandal. For more on the black market in body parts, let's hear from Annie Cheney, a contributing writer at "Harper's" magazine. Her article called "The Resurrection Men: Scenes from the Cadaver trade" appears in the March issue of "Harper's."



LISOVICZ: Hi, Annie. I know you won't be offended if I say your article was really creepy. It was. And it was very enlightening, too, at the same time.

CHENEY: Yeah. It was gruesome to write, also.

LISOVICZ: Yes, I got that. That literally you were getting sick, understandably. One of the things about this business, which you've noted, is that it's unregulated and, therefore, ripe for abuse? That would be a fair synopsis?

CHENEY: Precisely. Yes, I would agree with that.

LISOVICZ: And, why is that?

CHENEY: Well, that's a great question. Ask someone at the federal government. I don't know the answer. The Food and Drug Administration, in recent years has worked pretty hard to try and regulate tissue that's used for transplant, but I don't know that they've ever really looked at this sector of the body business, and that would be the sector for research. Bodies that are cut up and sold to surgical equipment companies and doctors to use them for training.

SERWER: All right, Annie, but let's take a step back. I mean, how does this whole business, if you will, work? You want to give up your body to science, and then what happens? Or, run us through this.

CHENEY: Well, most people, when they think about donating their bodies they think about donating them to the local medical school. I would say at most schools the body will be used in a first-year anatomy class, and that would be the end of it. Some schools, however, have surpluses, like UCLA, and wherever there's a surplus, there's a temptation to -- you know, sell or get rid of those bodies and give them to somebody else, and since the possibility for profit is there, that often happens. So, you never know, I think, when you donate your body to a medical school what might happen, it's important to ask questions. Another way a body might enter the trade is through a tissue bank. You donate your body and they say it's going to be used for research and it's possible that it'll be parceled out and sold to researchers or companies all over the country.

CAFFERTY: How do they circumvent the laws? Trafficking in human body parts is illegal everywhere, and yet this goes on all over the country. How do they manage to get around the law?

CHENEY: Great question. There's a huge loophole in the law. The law says you can't buy and sell, but you can recoup your costs. So, what do these businesses do? They say, well, you know, it costs us money to freeze the part. It costs us money to cut it off, and it costs us money to ship the part, and that's what we're charging for. But, in essence, what they're doing is buying and selling.

CAFFERTY: So, but they -- it's a technicality. It's one of those ads on the infomercials, the book of matches is free but send us $28 for shipping and handing, type thing?

CHENEY: That's right. In fact, when I first worked on this story, I called people and the first thing they would tell me is, "Well, we don't buy and sell," but they have a price list.

CAFFERTY: Yeah. Wow.

LISOVICZ: And Annie, one of the things that you've detailed, gruesomely, is that the body parts are more valuable than the body, the cadaver, as a whole, and that's where you've really seen this black market proliferate?

CHENEY: Right. A cadaver, a whole corpse, ranged -- the price ranges from about $1,000 up to $5,000, possibly more, but I'd say that's pretty much the range. If you cut it up, you can charge a lot more. Most corpse consumers only need one part of the body. If a doctor is going to do knee surgery and practice it, he only needs the knee. So, he's not going to buy the whole body. So, the brokers charge a lot of money for all of the parts, and they end up making more than if they'd sold the whole body.

SERWER: Quick last question, Annie. So, there's a shortage for cadavers in this country?


SERWER: OK. All right. Fascinating, but gruesome stuff. Annie Cheney, thank you very much. Contributing writer at "Harper's" magazine.

We have to step out a minute, but when we come back:

Air wars: Satellite to giant EchoStar went toe-to-toe with broadcast heavyweight Viacom. We'll tell you who blinked.

Plus, Spam that you eat -- not delete. Former "Cheers" star John Ratzenberger will be here to talk about Spam and other great American brands.

And finding the beauty in concrete and steel: We'll take a humorous look at the place Martha Stewart could soon call home.

Back in a flash.

(COMMERCIAL BREAK) LISOVICZ: Time to check some of the top business stories of the week in our "Money Minute." Fed chairman Alan Greenspan wants us all to chill out. Greenspan says he expects the U.S. job market improve soon and he's also warning against protectionism. The chairman says anxiety about outsourcing would not justify closing American markets to international trade.

The highly respected annual new car study by "Consumer Reports" is ranking American cars ahead of European models for the first time in 25 years. The magazine says cars made by Ford, GM, and Chrysler are more reliable than the average BMW, Mercedes, and Jaguar. But, Asian-made cars outranked both the U.S. and Europe in overall reliability and owner satisfaction.

And ImClone is suing its jailed founder and former CEO Sam Waksal for $26 million. The company said Waksal never paid income taxes on stock options he exercised, leaving ImClone to foot the bill. Waksal, of course, is serving seven years in prison in the insider trading scandal that also led to his friend Martha Stewart's conviction.

SERWER: All right. Thank you, Susan. Satellite TV distributor EchoStar and CBS parent, Viacom, settled a nasty dispute earlier this week. The fight over fees left millions of dish network viewers without CBS, MTV, and Nickelodeon programs for three days. They got it back for March Madness, though.

But, EchoStar also revealed this week that it's the subject of a probe by the securities and exchange commission and may have to restate its 2001 results. Echostar is our stock of the week.

And you know something guys? This is one of these companies, not on a lot of people's radar screens, but it's a very, very powerful company, very aggressive, which has been good for it, but also gets it in trouble from time to time.

LISOVICZ: Aggressive and you know, I remember when Time Warner, or parent company, pulled the plug on Disney and Time Warner was the one that actually had the black eye. It offended a lot of viewers who want their MTV and their Nickelodeon and "Survivor" and there were subscribers who left and went back to cable.

CAFFERTY: Well, and when they were asked whether or not they lost any subscribers during that three days that they didn't provide any program, they wouldn't answer the question. But, it's a little tough to play chicken with Viacom when, if you don't deliver the programs that the people are paying you for, they simply begin to call up their local cable company and suddenly the dish has gone from the roof and you're minus somebody who's paying a monthly fee.

LISOVICZ: Viacom, you can't mess with. I mean, you have to have their programming.

SERWER: And, consumers, of course, paid the price. The little guy's in the middle, there, and they take it out on the little guy and of course they do have the choice to go back to cable. But you know, EchoStar -- getting back to Charlie Ergen, who is the genius behind EchoStar, of course the ticker is Dish, you've got to love that. You know, he's a guy from Tennessee, kind of has this whole folksy thing going on, grew up there and he's not exactly quite as folksy as he would let you believe. The guy's got very sharp elbows, constantly litigating other companies, as well. But, you know, he does some funny things. He hosted his own TV show and it has been really successful. I mean that stock in single digits in '97, it went up to $100 it's now back in the $30s.


CAFFERTY: Plus you've got the SEC into them and I wonder -- Do you buy the stock, here? What's the stock at now? In the $30s?

SERWER: About $35 -- you know, it's a real question whether -- you know, how this is all going to play out, I think, between satellites and the wire line, and you have to think that satellites are here to stay. There's probably going to be two systems going on, and -- you know, it's probably a good business going ahead.

LISOVICZ: Right, but you do have the SEC. That's an overhang.

SERWER: Oh -- oh, that!

LISOVICZ: Yeah. Oh, that. And then -- and then

SERWER: I don't like to invest in companies with that going on.

LISOVICZ: And it was interesting, EchoStar said it pulls the programming, because it was -- it was care -- it cares about the consumers. In other words, it doesn't want to pay Viacom's hefty increases. So, it was an interesting thing, but offended consumers.


CAFFERTY: Is this the place, forgive me for saying these words, that the government should get involved?

SERWER: The government's already a little involved, right? I think it's enough. The government's involved enough.

CAFFERTY: There you go. Thank you.

Got pay some bill of our own, and we promise not to interrupt the bringing of this program into your home.

A salute to the American dream: A guy who played "Cliff" on the hit sitcom "Cheers" is going to join us to talk about some of the best products still made in the USA.

Plus, oil and gas prices nearing all-time highs and they're going to go higher. We'll tell you if there's an end in sight, and when it might happen. Stick around. IN THE MONEY returns.


CAFFERTY: We all know him best perhaps as Cliff Clavin, the postman on the hit TV series "Cheers." One of the great sitcoms of all time if I do say so myself.

Today though, John Ratzenberger, highlights the people and products that help make this country great on a new television series on the Travel Channel called "Made In America." And we are delighted to have him with us on IN THE MONEY. He joins us now from Los Angeles.

John, nice to see you. Thanks for joining us.


CAFFERTY: How did you come to get involved in this deal anyway.

RATZENBERGER: I grew up in Bridgeport, Connecticut, an industrial factory town in the northeast. And growing up there, to me, the whole world were people who made things. People who built things. And that's what I thought that's what America was. Now with companies going overseas, as we know, there is less and less of that. I think generations growing up not understanding that there is a process, the Judeo-Christian ethic. That you get up in the morning, put your hand to something useful and be responsible for yourself and family. So I wanted to applaud and pay homage to the people who do that. Who make the products that make a civilization.

LISOVICZ: And, John, the list is a long and very well-known -- some well-known names, Zippo, Corvette, Harley, Ivory Soap, Crayola and of course Spam.

What did you find when you visited these companies?

Were they highly profitable?

How is it that they can stay in the U.S., keep workers here in the U.S. as opposed to so many others who have gone overseas?

RATZENBERGER: Workmanship. The CEOs we talked to wouldn't go anywhere else primarily because of the workmanship and pride that goes into the products. Air stream trailers, for instance, perfect example. Sturm Ruger Riles in New Hampshire, if they left the town would crumble. Don't forget if a victory leaves or when a factory does leave, a lot of people are out of work. Well, the pizza place goes under, the muffler shop, the hardware store. All the mom and pop places leave these are the people who support your little league teams, keep your playgrounds leave. Without them, you will never see the name of a Chinese T-shirt factory on your little league uniform. So, that's the pride that connects them all, but also that same pride is handed to the next generation, and that leaves as well. So that's really the connection that I saw.

SERWER: Hey, John, I have to ask you a two-part question here. First of all, is this a political message you are trying to send out?

Because, of course, this is a hot-button topic now. And the second of course, I have to ask you what Norm would think about outsourcing.

RATZENBERGER: I wish I had Norm on the trip, he would pick out all the good restaurants.


RATZENBERGER: No, I -- you know, it probably is political but I think the Democrats and Republicans, they spend time arguing with each other while the foundation they are both trying to strive is being chipped away at. They might not realize it. That the people and products and the ethic that built the civilization is now slipping away from us while they argue about it.

CAFFERTY: What do they say to you in these factories and plants when you walk in and spend a day or two, you know, touring the assembly lines or the loading docks or whatever?

What kind of comments do you hear from what are the middle class people that built this country?

RATZENBERGER: Yes. One sticks out in particular. Barry Granite (ph) quarry up in north Vermont, a big granite pit, where all the granite for your counter tops, tombstones and et cetera. And a fellow came up to me, I don't know if he had ever granite quarry, but he was granite himself. He had a handshake that would crush a Volkswagen. But he came up and he was a little bit teary. He said, thank god someone is finally doing a show that honors the rest of us. That points out what we are doing. That tells America who we really are. So, just that was worth the trip for me.

LISOVICZ: John, you know, as you mentioned earlier the workmanship on so many products is really well done. You were so impressed with air stream that you bought one yourself.


LISOVICZ: Tell us about some of the -- this is an entertaining show. You learn some interesting things. Like, for instance, about Campbell's Soup.

RATZENBERGER: Yes. It's cooked in the can. Who knew.

LISOVICZ: Who knew.

SERWER: No one knew. I didn't know that.

LISOVICZ: See that?

RATZENBERGER: We talked to people there who met at Campbell's Soup and who got married, their parents had worked at Campbell's Soup. And their kids are about to work at Campbell's Soup. So, you think if Campbell's Soup decided to go off to Mexico, that whole community is going under. Because that's who we are. We are a nation of doers, inventors, we build things. That robot race going from Barstow to Nevada. Well, we have a problem, it's terrorism or a war now, but we are problem solvers. It didn't take long for somebody to come up to the idea how about we send robots out in the desert. That's who we are. That makes us so great. We can't forget there's a process, it starts with an idea, and we have the freedom to chase that idea and build a company around the idea. But that's what we do the best.

SERWER: John, we are running out of time here. One last quick question.

The whole thing is about wages, can Americans really compete are you optimistic?

RATZENBERGER: Well, I -- again, the workmanship. I heard of some companies coming back to America because the workmanship, the quality has slipped so much. They are getting more complaints about products that never had complaints before. So, there's the cost of that. But don't forget, when you buy that $3 cheaper T-shirt because it came from China, well, you put a lot of Americans out of work and your taxes are only going to go up to pay for those people now on welfare. The end of the day, plus your little league teams, all that suffers, it's much more expensive to buy a cheaper product.

SERWER: Right.

RATZENBERGER: Stick with the stuff made here.

SERWER: We appreciate your insight, John. Thanks for coming on the program. Maybe you can get Norm to go on the road with you. I think that would be great.

RATZENBERGER: It would be a lot fun.

SERWER: It would. John Ratzenberger, actor of course and host of "Made in America" on the Travel Channel. Thanks so much.

Time for a quick break. More to come, up next on IN THE MONEY fear of filling. With gas prices high and rising, we will look at how much worse it could get.

Later, a soft sell for hard time. We will show you Web sites with tips for the convicted homemaker.

Wonder who that is?


RUDOLPH GIULIANI, FORMER MAYOR OF NEW YORK: My father used to say to me if you are in an emergency, anybody around you getting nervous, you should be the calmest person in the room because you'll can figure a way out of it.

ANNOUNCER: Faced with the worst terrorist attack of this country, Former New York City Mayor Rudy Giuliani's calm was tested on September 11, 2001. Whether he's running a city or his private equity investment and security consulting firm Giuliani Partners, he governs the way he manages.

GIULIANI: One of the core ingredients of whatever success I have is to have a morning meeting because I believe much in team work. You have to be on top of things, you have to understand them, then we can delegate. (COMMERCIAL BREAK)

SERWER: If you have been filling up your car with one hand on the pump and the other over your eyes, we don't blame you. Gas prices are so high seeing the total for a full tank can be scary. This week a report from the Energy Department warns there is worse to come. It says rising crude oil prices and lower inventory will push prices to record levels over the spring and sumer.

For another take on how high prices could go, we are joined by Phil Flynn, an energy analyst at Alaron Trading. Welcome.


SERWER: Talk to you about what is going on here. I mean, there's plenty of oil in the world.

Why are prices so high?

FLYNN: I wish there was plenty of oil in the United States. Our oil inventories are about the lowest they have been since the 1970s. The truth is that there is not a lot of oil. There's a lot of oil in the ground but it's not in the ships and not in our inventory right now. So, that's one of the reasons. Our inventories are tight. And all this oil in the world is not only going to the U.S. anymore. It's going to places like China. It's going to places like India. And to be honest with you, the way demand is going, prices are going to go a lot higher.

LISOVICZ: Phil, it seems like first of all it's like the swallows returning, every year around spring or Memorial day weekend the prices are going up. You can count on it every year. But my question is, you know, there's been so much focused on the recovering economy, we all know that we hate, as consumers to pay for higher prices what does it do to industry when you have much higher prices for energy?

FLYNN: I think it freezes them. They don't know what their costs are. They don't want to hire new people. It really does. But you mentioned it goes up every summer, and that's true. But you know, it's not summer yet. Usually they go up around Memorial Day. Heck, they are going up near St. Patrick's Day. There's quite a difference here. There is something else going on here. It is -- part of the reason we are going up is demand has been explosive for gasoline. In fact, I think this week for this time of the year, we have used more gasoline in this country than we ever had before, and that's even with prices at a record high. So it's incredible what is going on now when it comes to gas prices. The Senate, it caught the Senate's attention. They're going to try to manipulate the price of gas. They passed an agreement this week about the strategic petroleum reserve. They're not going to fund temporarily to fill that reserve. I wonder if it's going to have the desired effect.

CAFFERTY: What does that mean, they won't fund to fill the strategic petroleum reserve? My understanding is it's there not to influence gas prices by 20 cents a gallon so we can all go to grandma smith's for our summer vacation with a station wagon full of kids and a dog, it's there to protect the United States.

FLYNN: Absolutely, I agree with you 100 percent. There was an amendment passed, it was a bipartisan one passed by Senator Carl Levin from Michigan and Representative Susan Collins. Obviously, they are concerned because their constituents are angry right now. They think it should cause gas prices to come down by a dime to 25 cents. But, I doubt that it will. I don't think that, in fact, it does keep prices down it will only keep demand strong, and prices will probably go up any way. So, I don't think this is the right thing to do. We will have to see if it has the desired effect. But let's face it, with the terrorist bombing, the way the world is today, I think we need to be filling the strategic petroleum reserve as fast as we can.

CAFFERTY: There's a good idea. I agree with you.

SERWER: Phil, another thing here that is the way of the world, that is jumbo SUVS. Big, big, big, big Suburbans.

FLYNN: Hummers.

SERWER: Hummers coming at you.

How much has to do with that?

I mean, that's a huge use in the U.S., right?

FLYNN: Absolutely, I mean, there's no doubt about it. And I think, if you want gas prices to come down, we are going to start having to selling those Hummers. But you can't tell people, hey, sell your Hummers, you know, they love their Hummers.

SERWER: You mean get rid of them.

FLYNN: Yes, get rid of them. But we're going to find out this summer, I think when we start testing record high prices for gasoline, or we start paying $3 a gallon in some of our major cities this summer we will see how much we really love those Hummers. We will see if they stay and sell. I think, that's going to be a key thing we will watch.

LISOVICZ: Phil, without getting too woonky on this one of the reasons for higher prices is because of some environmental changes in several states.

What's that all about?

FLYNN: Absolutely. I like to get woonky, but that's another thing.

SERWER: Oh, no. No.

(CROSSTALK) FLYNN: Absolutely. It is funny. We go back to the Senate amendment they are trying to do the right thing. They are trying to bring gas prices down. I think, they're doing it the wrong way. Filling the strategic petroleum reserve is a deterrent. It's a deterrent to OPEC. It's a deterrent to terrorists, because they know if we have the oil they will look for another target. I think when we talk about high gas prices, a lot our high gas prices are federally mandated or mandated by the states. I think, you know, we are trying to pass an energy bill in this country. It has been held up in Congress for a lot of different reasons. The key thing is when it comes to gas, we need common sense regulations. We can't have 50 or 60 different blends of gasoline in this country. That's one of the main reasons some of these cities are paying such a higher price. It discourages competition, it discourages supply. And it discourages refiners.

CAFFERTY: Phil, we have to leave it there. Interesting. Can't seem to get an energy bill passed and signed but they can mess around with legislation that relates to the strategic petroleum reserve. I find Washington a fascinating place, don't you?

Phil Flynn, energy analyst at Alaron Trading, thanks for joining us. Appreciate it.

Just ahead, Martha Stewart's wardrobe is about to get a makeover. That's assuming she goes to prison. That's not exactly a done deal yet, although the odds are pretty good. We will check out the new look with our "Fun Site of the Week."

And you can e-mail us your thoughts about the program. Our address is But if you're not going to say anything nice, we won't pay a lot of attention to your letter. That's a hint. Now it's time for a commercial break. We'll stop and come back in a moment.


SERWER: If you are in the market for a new car, don't let the dealer take you for a ride. Consumer reports just came out with a few tips that might help you save money on your next car. First you should know the facts. If you are interested in a specific model, make sure you get the details about the car's reliability, safety and performance. Second give yourself some bargaining power by finding out the invoice price. This tells you how much the dealer paid for the vehicle, and it's available online at Web sites like or Keep in mind some dealers receive sales incentives which can lower the price. Some auto pricing Web sites will provide you with details but it might cost you a fee. Third, say no to extras you may not need. Dealers also push you to purchase things like rust proofing, fabric and paint protection. I you don't need it, don't get it.

And if you need to trade in your old car, check out the value beforehand. You can do this by logging onto Web sites like or I'm Andy Serwer for "Money and Family."



CAFFERTY: The age of electronic voting is already here as some states have started using the technology in this month's primary elections. Joining us now with an E-voting report card and the "Fun Site of the Week" is webmaster Allen Wastler.

How are you doing?


Generally a good report.


WASTLER: They are expecting by the time November rolls around, maybe up to 50 million people will use an electronic machine to input their vote. And so, they are watching the primaries carefully. For the most part things are good. Some glitches here and there. Maryland and Georgia, a few precincts had to resort to paper ballots because things weren't work.


CAFFERTY: I thought you were going to say Florida.


WASTLER: Florida was the big -- yes, they lost a county there for a little while and come back. They point out, you know, no votes were lost because of it. But still the glitch, and because it was Florida, everybody goes, "huh huh it's" Florida.

CAFFERTY: And there's a reason.

WASTLER: Yes, they have a history there. However, the companies that do this stuff and the election officials point out in most cases it wasn't so much a software glitch as it was a human error glitch. Like you pushed the wrong button.

SERWER: Allen, you're going to blame the people and not the computers?

WASTLER: I'm a computer-type guy. I always blame the human being, OK.

Now some people have looked at the technology they are going to use in voting machine, most of it coming from Diebold's. And some of them have been critical saying if you put your mind to it, you can jig this bad boy up.

LISOVICZ: Isn't he a known partisan?

WASTLER: Walden O'Dell who heads up Diebold, he is very pro- Bush. And some people cast sort of cast dispersions on his technology on that. I don't...

SERWER: It's a Bush computer voting machine.

WASTLER: But they do point out you could rig the thing. So the verdict is still out.

CAFFERTY: I don't care about that. Let's go to jail with Martha Stewart.

WASTLER: There was Martha. And the Internet...


SERWER: You do, Jack? I'd like to see that. I'd like to see...


WASTLER: Let's check out Martha Stewart's new type look on the net. Basically you will see, that's lovely.

CAFFERTY: That's nice.

WASTLER: Think of the wonderful touches you can -- it's the flowers that do it for me. Here the curtains. You have got to have the curtains. A few throw pillows.

SERWER: Yellow is in this year, by the way.

That's big this spring.

WASTLER: There we go. Martha Stewart living, they're going to have to add behind bars on it. Tips for what you can do, ways organize your time. So there for our viewers, just give them a little taste. They an find it of course on our show. Busy schedule in the jail, right?

Do the laundry here, go down to the mess hall here. So, it's -- it's a little excursion.

CAFFERTY: All right. Martha Stewart, living in prison. Thanks, Allen.

Coming up, we will read your e-mails. Stay tuned for that. If you would like to have your thoughts considered by our crack team of producers and assistance, E-mail us at


CAFFERTY: Time to check your answer to our question about whether the growing federal budget deficit worries you.

Richard from Texas wrote this, "You bet I'm concerned. There is no free lunch. What's happened? Now the Democrats balance budgets, and Republicans want to spend, spend, spend. Eisenhower is turning over in his grave. If we don't cut back, we'll end up like Argentina." Nancy in Pennsylvania weighed in with this, "Of course I'm not worried. I've got to many other things to worry about like how half our tech jobs are now in India. The deficit is the result of our ridiculous entanglement in Iraq."

And Norm in Maryland wrote, "The growing deficit is a real problem, but I don't know who I am more disappointed with, the politicians in Washington who steal everything they can get their hands on, or the experts who are telling young Americans they've lost their benefits fair and square."

Our e-mail question for this week is as follows, How are rising oil and gas prices effecting you?

Send your answer to us at And you should also check out our show page on the Web. The address is That's where you will find the "Fun Site of the week" information and pictures of Allen Wastler naked.

Thank you for joining us with this week's addition of IN THE MONEY.

Thanks to the gang here, CNN's Financial correspondent, Susan Lisovicz. "Fortune" magazine editor at large, Andy Serwer.

Can you tell we tape these on Friday?

And managing editor, Allen Wastler.

Join us next week at Saturday at 1:00 or Sunday at 3:00. Or you can watch Andy and me all week long, if you choose, on "AMERICAN MORNING." It starts at 7:00 Eastern time. Check it out. It's not a bad little 3 hour program.

Thanks for watching. Enjoy the rest of your weekend. See you soon.


Democracy To Middle East; The Body Scandal>

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