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Federal Reserve Hints At Rising Interest Rates; Interview With Bernard Lewis; Iraqi Democracy Will Depend On Women

Aired May 02, 2004 - 15:00   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.


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. On today's program:

The fight for the future of Islam: Muslim extremists are pulling their guns on moderate Arab states. We're going to see what that could mean for the Middle East and for America.

Plus, the power behind the veil: Find out why democracy in the Islamic world ultimately could depend on women.

And, will the little search engine that could become a profit machine for investors? Google is our stock of the week.

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

So, the stock market investor has to be a little frustrated. We're coming off one of the best quarterly earning seasons in a long, long time and the market's going nowhere. On the one hand we got great corporate profits, on the other hand the fear of rising interest rates, there's the uncertainty about the war in Iraq, there's a hint of inflation in the pipeline, now. Who's going to ultimately win the battle here?

ANDY SERWER, "FORTUNE" MAGAZINE: Well, you know, Alan Greenspan is acutely aware of this, Jack, and what he's trying to do is pull off a balancing act. I think there's no question, interest rates will be going up. But he hopes is that that's offset by economic growth. So in other words, rate goes up, that's bad for the stock market, the economy grows, that's good for the stock market and a rise in tide, we hope.

SUSAN LISOVICZ CNN CORRESPONDENT: And, the Federal Reserve is very good at telegraphing its sentiment well ahead of time. So, you can see that the federal reserve will meet this week, no decision on interest rates expected, but we've certainly seen increasing signs of inflation. That's also these tremendous earnings, not only because the earnings have been good, but you're seeing signs of revenue growth. That's what we haven't seen in previous quarters. Cost cutting amounts, really accounted for a lot of the profits, here you're seeing real revenue gain and some optimism about the future. But yes, fears of what a rising interest rate will do to business spending and consumer spending, definitely holding back investors.

SERWER: But the big thing is -- you know, interest rates have been declining since 1981. The fed funds rate then was 20 percent, it's now one percent and the real point here is it looks like we're at one of these sea change moments where rates will begin a long rise again and that's a big unknown.

LISOVICZ: And we should also mention the Middle East finally.

CAFFERTY: Sure.

LISOVICZ: You heard trouble spots, not only Iraq, but we have Syria, Jordan, Saudi Arabia. Places where you don't typically hear some very disturbing news about terrorism and threats and that also shook up investors.

CAFFERTY: And, we'll get a lot more focus on the overall economic situation on Friday when we get the jobs report for the month of April.

SERWER: That's it. Yeah.

CAFFERTY: So, that should be interesting too.

The fighting this week, changing topics here, in Fallujah, has not changed the administration's target date for handing political control back to the Iraqis, if even only symbolically. June 30 is the date. The question is, how do Iraqis and Americans in Iraq feel about how the occupation is going right now, or liberation, if you choose that word. And do they think that the handover June 30 will be successful?

For a look at the mood in Iraq we're joined, from Baghdad now, by CNN's Ben Wedeman.

Ben, nice to have you on the show, as always. Some interesting polling done in Iraq, among Iraqis, in the last week or ten days about how they feel about all of these topics. Give us some of the highlights, if you would.

BEN WEDEMAN, CNN CORRESPONDENT: Well basically, they have, Jack, a long-term optimistic feeling that things, after five years, will get better. A majority of Iraqis said that. But increasingly we're seeing more disappointment, more frustration with the American presence, for lack of a better word, in Iraq. That there's a feeling that they haven't really been able to really put the country back on its feet again, that by and large, in some cases American soldiers haven't treated Iraqis as well as they would like. But as we look ahead to the June 30 handover of sovereignty, we see that the situation is becoming evermore cloudier with uprisings in Fallujah and in Najaf and elsewhere. And there was a lot of concern when the Marines went into Fallujah earlier this month and they're so-called Iraqi allies, the security forces on the ground, chose not to join in the fight, and basically melted away. So that really raised some alarms about what the Iraqi security forces that exist in Iraq today can actually do when it comes to maintaining and imposing law and order.

But interestingly, what we're seeing going on in Fallujah, at the moment, is the creation rather rapidly under the command of several former generals in Saddam Hussein's army of a new security force that's composed almost exclusively of former Iraqi army soldiers. And you're seeing here the Americans are beginning to have a second thoughts about distancing themselves from former members of the Iraqi army, possibly giving them a greater chance to impose security as we're seeing in Fallujah, and in fact, the situation in Fallujah, as this new force goes in may be the test of whether some sort of new kind of Iraqi security force will be able to do what the old force wasn't able to do, and that's create law and order out of what, at the moment, is really chaos -- Jack

CAFFERTY: Thanks, Ben, very much.

CNN's Ben Wedeman joining us from Baghdad. The ultimate irony, I suppose, we're going to give control of the armed forces back to Saddam Hussein's general...

SERWER: Back to the general who we threw out.

CAFFERTY: Go figure.

This week brought a shoot-out in Syria and word of a failed bomb plot in Jordan, both blamed on terrorists and that's not to mention the unrest in Saudi Arabia recently. Extremist Islamic violence is cropping up a lot lately in moderate Arab states. It could be terrorism, then again it might be a fight for the very heart and soul and future of Islam. To help us understand the situation we're witnessing, we're joined now from Washington by Bernard Lewis, professor emeritus of northeastern studies at Princeton University.

Professor, it's a pleasure to have you on the tonight.

PROF. BERNARD LEWIS, PRINCETON UNIVERSITY: Thank you, I'm delighted to be here.

CAFFERTY: Give us your take on the escalating terrorist or violent activity we're seeing in the so-called moderate Arab world.

LEWIS: I think we have to understand what all this is about and that terrorism is an expression of a growing feeling of frustration and resentment in most of the Islamic world and more particularly in the Middle East. They have become increasingly aware that things are going badly in their society. This is especially aggravated by the development of modern communications. Previously, they couldn't make comparisons, now they can. And they know how badly they're faring as compared with the west with the Far East and even with much of Africa and the resentment is very understandable.

CAFFERTY: So the resentment, in many cases, you're suggesting, is against their own government and perhaps rightfully so. The people's standard of living has not kept pace with the resources provided by the crude oil fields and all of the wealth that's been accumulated by the governments in those countries as a result of selling oil to the West, right?

LEWIS: Quite so. The resentment is directed against their own governments. Now, where their own governments are seen, as we would put it, as American friends and allies, as they would put it, as American puppets, that resentment also affects their attitudes to the United States. Where their governments are hostile to the United States, as in Iran, that resentment translates into very warm and friendly feelings towards the United States.

LISOVICZ: You know, Professor, everyone in the United States is obsessing about how long the U.S. should stay there and what conditions will be in place before the military leaves. Is, perhaps, the bigger question in your mind whether the real battle is between reformers and Islamists?

LEWIS: Yes. I think that's true. I mean, in this awareness that things have gone badly wrong, they are relatively poor and weak, and there are two -- broadly speaking, there are two schools of thought. One school are those who say, well, what was lacking was modernization, we did not keep up with the modern world, and the answer is to modernize, to become more modern, to become part of the modern world. That is, for example, the dominant view in Turkey.

The other view is the exact opposite. They say no, modernization has been our problem rather than our remedy. All that befell us was because we abandoned our own true heritage, the faith of Islam and went aping foreign infidel ways bringing in degenerate foreign customs. And the remedy is to go back to authentic Islam.

That is the message of the 1979 revolution in Iran, of al-Qaeda on various other radical Islamic groups. And obviously there are many sub-variants in each of these, but these are the two main responses those who want to modernize, which also means democratize and become part of the modern free world and those who reject that and see what we call the modern free world as a world of degenerate infidels and feel that the remedy to their problems is a return to authentic Islam which means, very often a return to a rather imaginary past.

SERWER: Right.

LEWIS: And in every Muslim country now, the struggle is going on between these two views.

SERWER: Professor, let me ask you a question. Does this call for a reassessment of how U.S. foreign policy is conducted? In other words, instead of taking a country by country approach, maybe marrying that with a more holistic approach towards this Islamic situation worldwide?

LEWIS: Yes, I think that would be wise. The tendency the Middle East, as in Latin America and other places, is to make the main aim stability. Don't interfere with things -- otherwise you'll get upheavals and these civil wars and general disorder. The underlying assumption is these people are not like us, whatever we do they will be ruled by corrupt tyrants, and the aim of foreign policy should be to ensure that they are friendly tyrants and not hostile tyrants. We know the results of this approach in Central America, in Southeast Asia. On the whole, the Middle East fared rather well by comparison to those two.

CAFFERTY: Interesting stuff. Professor Bernard Lewis, thank you very much for your time, I appreciate it.

Professor at emeritus of northeastern studies at Princeton University Still ahead on IN THE MONEY as we continue:

How half the Muslim world could change the whole Muslim world. We'll look at how equal rights for women could be crucial in bringing democracy to Islamic countries.

Plus, the relevant Bangalore of booking (ph): U.S. Jobs shipping out to places like India. Find out why one outsourcer thinks there might be a bright side in outsourcing for American workers.

You're watching IN THE MONEY.

(COMMERCIAL BREAK)

LISOVICZ: The U.S. hopes to build democracy in Iraq, but can democracy exist in a Muslim nation without equal rights for all citizens including women? That's a question worth asking as the U.S. prepares to hand over authority in Iraq this summer. Our next guest is here to help us sort out the complicated place where women, democracy, and Islam meet. Zainab Salbi is the president and founder of Women for Women International a nonprofit women's rights group.

Welcome.

ZAINAB SALBI, FOUNDER WOMEN FOR WOMEN INTERNATIONAL: Thank you.

LISOVICZ: You know, one of the things that we heard prior to the invasion of Iraq, that in terms of equal rights or rights for women, Iraq wasn't such a bad place considering the geography -- the geographic area, where it was. What's the situation for women now in Iraq?

SALBI: In many ways it has gone down actually. In terms of security, for example, right after the war mothers starting pulling their daughters out of school because of the security, because of kidnapping incidents. They were actually raping and kidnapping women for trafficking purposes, and impacted their economic opportunities.

A lot of especially poor women who were doing small income (UNINTELLIGIBLE) projects within their homes or small factories, or all of these things, had actually stopped working because of the security tension and because of the lack of facilities, such as electricity and transportation and things like that.

So, in many ways there has been a step back. There are other ways in which actually there is an opportunity for Iraqi women now to define their role in the new Iraq. To define their role in the politics of the new Iraq, in the new constitution, in the future of how the country is assigned in a civil society. So there's a give and take and we need to understand the history of Iraqi women to understand what is going on right now and what is the potential for them in the future.

SERWER: Zainab, I want you to try to broaden out, and I know you make this point that it's very hard to generalize about the conditions of women in the Islamic world, because conditions obviously are so diverse country from country. But have things worsened in terms of women in Islamic countries or not over the past decade or so, because of the rise of fundamentalists, for instance?

SALBI: Well, definitely. I mean, fundamentalists of course, do reach out to women. As a matter of fact, there are lots of women who are supporting Islamic fundamentalists. We need to understand why. And in my opinion, in understanding why we really need to look a economic realty.

Muslim fundamentalists a lot of times are reaching out to the grassroots, are reaching out to women in poor neighborhoods, to widows, to single heads of household, to unemployed women, to mothers who have eight, seven children and cannot have the food or the means to feed them, and they are reaching out to that sector and addressing their immediate economic realities, help with their needs, all of these things.

If you look at Hamas, for example, in the West Bank and Gaza, Hamas addresses that sector of the population and is providing them services. Same thing in Egypt, same thing in different countries, in different Muslim countries. So in order for us to understand why Arab women are actually even supporting fundamentalism to some extent, we have to understand their political, economic, and social reality. And, we need to understand that the way to get out of that is to give them other alternatives.

If you think of Afghanistan, for example, a lot of times during the Taliban time, a Talib would go to a woman who is a widow and has seven to eight children, for example, and would tell her, "here is a food package, give me your son, I'll send him to the medreta (ph) and teach him how to read and write and I'll feed your children." She's making a cost/benefit analysis. She's saying, "OK, well, I don't have any choice." What we need to do is provide her with alternatives with more choices, and our choice is actually much more attractive than the choices that they are providing.

CAFFERTY: Let me address the domestic issue in a relationship between the sexes. Equality for women in the Middle East or anywhere else can't come unless there is freedom from fear. The Koran is very explicit in its instructions of the issue of equality between the sexes, and yet violence against women at the hands of men in the Middle East and Arab countries is notorious. And it's condoned, and in the case of the Taliban, it was even advocated in some sense.

There was a very popular Saudi Arabian newscaster who was severely beaten here just a short time ago by her husband, wasn't the first time, and she allowed her story to become public. She was damn near killed, for want of a better way to phrase it, by a husband, and traditionally nothing happens to the men who perpetrate this kind of violence on women. Can you address that issue?

SALBI: We need to distinguish between -- and the "we" is not only "we" in the West, but even Muslims need to distinguish between culture and between religion. The religion itself, Islamic religion itself, does protect women and does provide women equal legal, economic opportunities. In many ways, there's a lot of opportunities for women within Islam.

The culture on the other hand, has actually brought out different elements of the previous pre-Islamic cultures from different notions and it has become actually more oppressive, to combine the religion with the culture and became more oppressive habits towards women. So, we need to distinguish between the two.

In a lot of Arab countries, for example, the whole concept of iab (ph), it is a shame, shame for women to talk about the oppression that she's facing, shame for a woman to talk about a rape if she's been raped, a shame for a woman to talk about domestic violence if he's been beaten.

And so, with the Saudi woman, for example, has done is gone beyond the shame, a very strong concept in Arab society, and Muslim society, in general and she went to her Islamic rights, which is no man has a right to violate her the way the husband has the right to violate her. No man has the right to force sexual intercourse with a woman, no man has the right to beat a woman, all of these things.

So part of the solution is for Muslims to actually distinguish religion from the culture and for women to more -- to go beyond the concept of shame and say, we want our rights, the rights that are protected for us by Islam and by our new society, by the new world. We need to catch up in many ways with the new concepts of women's rights.

CAFFERTY: Right. A lot of work to be done obviously.

Zainab Salbi is the president and founder Women for Women International. Thank you for being on the program.

SALBI: Thank you.

CAFFERTY: Coming up on IN THE MONEY, as we continue, a lot of investors hate it when they try to describe how the market is doing. Web master Allen Wastler has some ideas on how we can go about fixing that by perhaps standardizing some of the terminology.

And, you can let us know your ideas by e-mail us at inthemoney@cnn.com. We are deeply concerned about issues that concern you.

(COMMERCIAL BREAK)

LISOVICZ: Let's look at the week's top stories in our "Money Minute." Comcast withdrew its $48 billion offer to buy Disney saying it was obvious the house of mouse just wasn't interested in the deal. Disney said all along it thought the offer was too low. People attending IBM's annual meeting in Providence, Rhode Island were greeted by demonstrators protesting "Big Blue's" outsourcing policies. But, IBM chairman and CEO, Sam Palmisano was able to grab some of the attention away from the protesters by announcing that the company was boosting the annual dividend by 12-1/2 percent.

And Thursday marked the end of the line for America's oldest car company. The last Oldsmobile rolled off the assembly line in Lansing, Michigan. Oldsmobile was founded by Ransom Eli Olds in 1897 and it became part of GM 11 years later. GM says it discontinued the line because it was no longer profitable. So sad.

SERWER: All right, our stock of the week hasn't even hit the trading floor yet, but how often does a company with a product that millions rely on go public everyday? Not often.

We're talking about Google, of course, the king of all internet search engines announced plans to launch a $2.7 billion initial public offering and the news has internet stock watchers partying like it's 1999. That's Prince.

But the question is can Google be a good investment in 2004 and beyond?

You know, the question here is, this is a company that does things differently. I call it the "my way" IPO -- Frank Sinatra, right?

CAFFERTY: I know.

SERWER: I mean, these guys are going to do this dutch auction deal instead of a regular IPO, which presumably will allow ordinary investors to get in rather than just super-connected people. It's a big experiment; we'll have to see how this one goes.

LISOVICZ: You got to love this story, because a lot of times when you have an IPO, it's a company that you haven't heard from, there's a little buz, this is a giant company that, with its public offering, it's going to be -- have the market value -- market cap of say a FedEx or a Sears. And it's big enough and strong enough and hot enough to say, we're going to do it our way. We're going to minimize -- minimalize Wall Street.

CAFFERTY: You know what else occurs to me, there is no country in the world except this one where stories like this happen over and over and over. These were a couple of students at Stanford University sitting in some dorm smoking socks or whatever saying, :hey, what about this technology..." and they came up with an idea. And when this thing rolls out, they will both become at the age -- what is it 30 or 31?

SERWER: Thirty and 31.

CAFFERTY: Billionaires.

LISOVICZ: A few times over. SERWER: Right.

CAFFERTY: I don't really know if they were smoking socks, but you know what college kids do.

SERWER: The only bad thing about this...

LISOVICZ: They surf the net. The surf the net.

SERWER: The only bad deal is they've got in two classes of stock situation where these guys retain control, so, I mean, it's great that they want to do it their way. But, you know, this means that the whole thing is that the ordinary investors actually won't be in control of the company, these two 30 or 31-year-old guys will be.

LISOVICZ: They want it both ways. And they also won't give quarterly guidance.

SERWER: Yeah right.

LISOVICZ: Which is another interesting aspect.

SERWER: Well, it's going to be a lot of fun to watch this one.

Just ahead, on IN THE MONEY, we'll talk to a man who sends U.S. jobs overseas. He says if American workers want to save their jobs, they need to act now.

And let us know what you think, our e-mail address is inthemoney@cnn.com.

(COMMERCIAL BREAK)

SERWER: All right, that crunching noise you're about to hear is the sound of TV sets across the land getting busted. Our next guest is an outsourcer, one of those guys who sends U.S. jobs overseas, and that's enough to make some people want to put a foot through their TV screen. But hold your fire, because he thinks American workers can bounce back if they wise up. Atul Vashistha is the founder of a California company called neoIT and he joins us from Atlanta.

Welcome.

ATUL VASHISTHA, FOUNDER, NEOIT: Thank you.

SERWER: Can you explain to us why what you do is not destroying the American economy?

VASHISTHA: No, what we are doing is actually helping the American economy, because if you look at outsourcing, it reduces cost which in turn reduces prices. And that's enabling American companies to stay competitive. The competition for these companies is no longer local, it's global. And so they have to compete in the most efficient manner possible, but also, because of these lower costs, it's benefiting the consumers because their buying power is a lot higher than what it can be. LISOVICZ: And we've seen it certainly with Wal-Mart, which certainly gets a lot of its products from overseas. But Atul, consumers don't spend if they are worried about their jobs or in fact they don't have jobs, and jobs are going overseas. So can you address that?

VASHISTHA: Yes, you know, I don't want to downplay the pain that displaced workers are going through right now. But I think it's important to recognize that in the last two, three years we've lost millions of jobs in the U.S., but less than 150,000 are because of offshoring. And in fact, there was a study done by the ITAA, the Information Technology Association of America, and they saw that 90,000 jobs last year were actually created by this global sourcing. I think we are blaming the wrong thing. And instead of focusing on what we need to do as a country to create these jobs, we are trying to blame something that's actually benefiting our economy.

CAFFERTY: I don't understand the logic of how it's benefiting our economy. Even if we look at numbers you just gave us, there are still 60,000 families that don't have a bread winner as a result of this thing that that's going on, that the critics suggests simply is a way to increase corporate profits. If I can send a $10-an-hour job in the United States to Bombay where I can get it done for $1 an hour, I net $9 bucks an hour and that makes my stock worth more money and even though the family who doesn't have the $10 an hour job anymore is out looking for work.

VASHISTHA: So if you look at that, what you're seeing is companies are doing this. I can give you examples of companies without naming them that have had to do layoffs because they didn't address the competition by trying to figure out lower ways of doing business. So you have to also have to look at the other side. What would happen to some of these companies if they didn't take advantage of this?

Now, of course we should answer the question is what happens to these displaced workers and what should we be doing, but I think we ought to focus on creating jobs for innovation. So these workers have to be re-skilled. We've had people in technology that have been working for four years and five years that haven't gone back to school, haven't learned new technologies, and technology is changing. Re-skilling is our way of making sure we continue to stay ahead of the game. And I think that's an area that we ought to focus on, is how do you create these jobs rather than how do you try to protect these jobs?

SERWER: Hey Atul, let me ask you, what if there is legislation banning outsourcing, what would that do to the economy?

VASHISTHA: You know, if it applied right now, they're trying to do that, but mainly applies to federal and state governments, if they did that to corporations, I have to tell you, what will happen is many companies will no longer be able to compete in markets, which in turn will lead to layoffs, which will in turn lead to lower spending. I think that's a downward spiral. LISOVICZ: Atul, you said something about workers constantly getting reeducated about technology, but you actually say there are several areas that are insulated from exporting overseas. Can you quickly just name them?

VASHISTHA: Yes, absolutely. I think there is three key areas that I would say are insulated or at least they are long away from being offshored, things that are special, specialized, or localized. And what I mean by that is there's so many jobs in America, and I would say about 70 percent of services that we all experience, they are manufactured locally. So things like -- think about the deliveries that happen, social services, education, many of these services are local services, those are insulated.

The other things that are insulated is, as you keep moving up in the value chain, where either it's complex problem-solving or complex communications, those are the kind of things that are very difficult to offshore. So I think it's also important to recognize that not everything can be offshored. So the majority of the jobs will stay in the U.S. So if you look at what's going offshore, it's the data entry, it's the programming, it's the support kind of systems that are going offshore.

SERWER: All right, we're going to have to leave it at that, obviously a hot-button topic. Atul Vashistha, CEO of neoIT, thanks very much for coming on the pleasure.

VASHISTHA: My pleasure.

SERWER: Just ahead IN THE MONEY, we'll talk to a man who sends U.S. jobs overseas. He says if American workers want to save their jobs, they need to act now. And let us know what you think. Our e- mail address is inthemoney@cnn.com.

(COMMERCIAL BREAK)

LISOVICZ: Soldiers and veterans have overwhelmingly voted Republican since U.S. military became an all-volunteer service in 1973, but the turbulent situation in Iraq may give Democrats a chance to finally win a significant chunk of the military vote. One former soldier who has switched his vote from Republican to Democrat is Steve Brozak, a Marine Corps veteran and investment banker. He left the Republican Party a year ago and is now running as a Democrat for a congressional seat in New Jersey.

Welcome.

STEVE BROZAK (D), NEW JERSEY CONGRESSIONAL CANDIDATE: Thanks, thanks very much for having me on.

LISOVICZ: What was the decisive issue or instance for you that made you switch your party? It happened to in the last year, did it not?

BROZAK: Yes, it did. It actually happened back in April and I really didn't switch my party. I felt that the values that I had and have today are the same. I felt that I was watching the Republican Party move away from the core beliefs that I held.

SERWER: What do you think -- how is the military looking at the election right now? Obviously we know how important it is from last election in Florida, military, obviously, also somewhat of a more conservative bias because you don't have beatniks from Greenwich Village volunteering to go into the Army. Where do you think they stand right now?

BROZAK: Well, I think what they stand for is the same thing that all Americans stand for. They're looking for leadership. They want a clear vision. They want a map. They want answers. They just don't want to be told, well, today this is what we're doing, and tomorrow we'll try something different. They're tired of spin the same way the American public is.

CAFFERTY: At the risk of letting you do a campaign commercial for John Kerry, I am interested in your thoughts of what it is about him to you that appeals to you as a military guy. If you believe a lot of the commercials we are seeing, and granted they're being put together by the Bush people, John Kerry is not the greatest fan that the American serviceman has ever had.

BROZAK: Well, that's what I am talking about. For instance, a couple of weeks ago when George Bush went on TV, I wanted to see my president go out there and iterate a real clear, meaningful strategy of what was going to happen in Iraq. I didn't see it. The American fighting men and women, the 17-, 18-, 19-year-olds, the 25- to 45- year-old the reservists, the people that have been called back and their spouses, their loved ones are the ones that are paying the price. They're the ones that are sacrificing, and that's where you are starting to see some great discontent.

LISOVICZ: But Steve, you have other issues as well, for instance, economics, health care for your fellow men and women in uniform.

BROZAK: Absolutely. And those economic issues play throughout for the people in uniform and for the people in my district, in New Jersey and in the country.

LISOVICZ: Can you give us specifics, though, what isn't happening?

BROZAK: Well, right now we're seeing the force overseas, here in the United States, stretched thin, probably close to the point of breaking. We don't have enough people. We don't have enough equipment. It's not being acknowledged. As far as the economy is concerned, you're seeing plans and spin that says that we've got a robust economy. It's the furthest thing from the truth. The letters, the e-mails that I'm getting are reflecting that opinion, not just people in uniform.

On the health care side, if you look at the Medicaid bill that just passed, it doesn't acknowledge real facts. The people that have been called back to active duty have to deal with a system called Tricare, the system simply isn't up to the job. And when you're talking about defense, you know, do most people feel that they are actually safer today than after 9/11?

SERWER: Hey, Steve, even as someone who presumably supports John Kerry, aren't you concerned with the way the campaign has been going lately?

BROZAK: I'm really concerned about the fact that you're starting to see people attacking John Kerry on his military record. And that is simply unacceptable. Right now, John Kerry served. That is what all Americans should really focus on. Right now, what people should focus on is, do we have a plan, not just a plan overseas, but an economic plan, a health care plan? Do we have someone that's going out there and voicing real issues? That's the reason I'm running.

CAFFERTY: Let me ask you, one of criticisms we hear about the Democrats who are on the outside looking in before the election, is that they haven't been very specific about offering solutions to any of this stuff. What's the solution to Iraq? What's solution to veterans' health care benefits? What are specific ideas, and why aren't we hearing them from the Democratic side?

BROZAK: Well, right now this is a work in progress, as you are seeing overseas. Right now, there isn't really a whole lot that this administration has done or probably can even do now. We have to make sure that in Iraq we bring the rest of the world in, so that for the people of Iraq, it isn't just an American occupying force. That's the way they look at it. It's not true, but that's the way they look at it. I think that a new administration can come in there and start to address the rest of world and say, hey, this is not just our problem, this is a problem involving the rest of world. And a destabilized Iraq will mean a destabilized Middle East. Those are important issues that are simply not being addressed right now.

CAFFERTY: Steve Brozak, retired Marine Corps veteran and congressional candidate, New Jersey. I guess, maybe I should have been nicer, I live in New Jersey, you may be my congressman one day.

BROZAK: I very much look forward to it if I am.

SERWER: That's good. That's good.

CAFFERTY: All right. Thank you, sir, nice to have you on the program.

BROZAK: Thank you, a pleasure.

CAFFERTY: All right, we have got to make a buck or two for the home office, but we will be back right after this break. And just ahead, gaga for Google, Wall Street licking its chops at the prospect of one of the biggest IPOs ever.

Plus, play now or pay later, a guy who is sending U.S. jobs overseas. And we will tell you how to get your revenge. Stick around, back after this.

LISOVICZ: Shopping for car insurance? If so, here are some tips for your search. First do your homework by getting at least three insurance quotes. Rates for comparable coverage can vary by more than $500 depending on the company.

If you have a good driving record, check out the rates that Geico and Amica, they tend to have the cheapest policies because they sell auto insurance directly to the consumer. That means you don't pay the extra expense of a broker.

But if you've got a few fender benders on your record, you may need to go through an agent at one of major providers, such as State Farm or Allstate insurance. Be sure to compare the prices of large insurance providers with those of independent agents who aren't tied to a particular company. They may be able to offer you a better deal. To find an independent agent in your area, go to independentagent.com. And don't forget to negotiate. Some companies will beat your best quote, but you do need on ask.

Next week, I'll tell you about the discounts you should ask your auto insurance provider before signing a policy. I'm Susan Lisovicz for "Money & Family."

(COMMERCIAL BREAK)

CAFFERTY: Well, no matter what stock market is doing, there's always someone blaming the business news media, that would be us, for blowing the whole thing out of proportion. Our Webmaster Allen Wastler is here now with the solution as well as the fun site of week.

ALLEN WASTLER, MONEY.COM: We're all familiar with this, right?

CAFFERTY: Of course.

WASTLER: You write the headline, "Stocks Slide On Econ. News" or something, how can you call that a slide? It's just a little dip. What, do you have an agenda? Are you trying to trying to talk the market down? All right. So, all right. You don't like it? I'm going to set up a scale. OK. Market goes up from 0 to 50, OK? We're going to have certain words that are approved for that. All right?

SERWER: Nice.

WASTLER: Rise, jump, advance, we can get traipse, I like traipse.

CAFFERTY: Van Halen.

WASTLER: Now if it goes a little bit higher, let's say 51 to 100.

CAFFERTY: I like this.

WASTLER: All right, we'll take it a little bit more like boom, soar, spike, rally. Up above 100, all right, then we're going get into like real, oh, baby, skyrocket, fly, take off. And if you're over 200, hey, just say yippy and be happy.

(CROSSTALK)

CAFFERTY: What about on the downside?

WASTLER: Now we've got the downscale, OK, and this is where people get really sensitive, all right? So 0 to 50, OK, we'll call that maybe a slump, all right? or a drop, a stumble, stumble is good, falter, a little trip. Fifty to 100, all right, we'll get a little bit more, tumble, fall, tank, I love tank, choke, and dive. Now if we go above 100, then we start using the fight terminology. You got pummeled and stomped and beaten and stuff. And if you go over 200 or if you throw in your adverbs like, really stomped. And if it's getting beyond 200 down there, you just go...

(WASTLER MAKING FEARFUL NOISES)

LISOVICZ: So where is the market now, Allen? What kind of terminology?

WASTLER: The market, I would say was waffling in a zone. OK? Waffle is a good one

LISOVICZ: Wastler says it's waffling.

WASTLER: So there you go.

CAFFERTY: Now for the fun site of the week. For those of us who remember the days when we used to get nervous before going out on a date, that was a long time ago.

WASTLER: This is one for you for Zefrank (ph) who does a little comedy on the Web, a he has a wonderful pre-date confidence builder, OK? So you are there getting dressed. Just turn on your terminal, click on a little bit and you'll get something like this.

UNIDENTIFIED MALE: Are you fat? What are you, joking? What, do you want to be one of these Calvin Klein girls? They gnaw on their own bones to make themselves skinny. No, it's out. Jennifer Lopez and the Mariah Carey, she's a little too much...

(LAUGHTER)

CAFFERTY: I love it.

UNIDENTIFIED MALE: ... but you know...

WASTLER: He's making me feel better about my weight, already.

SERWER: I guess so.

(CROSSTALK)

SERWER: Some people just take medication before it these days.

WASTLER: Whatever you are nervous about, you can click on it. I think we have got another example I believe.

CAFFERTY: Good, let's go.

UNIDENTIFIED MALE: Use your butts like the magic wand here. Wave it around. Wave it around.

(LAUGHTER)

LISOVICZ: Do we need to have that on PG, parental guidance here?

WASTLER: We're always PG.

CAFFERTY: Thanks, Allen.

Coming up next, we'll hear your answers to our e-mail question of the week and you can let us know what are you thinking about by e- mailing us at inthemoney@cnn.com.

(COMMERCIAL BREAK)

CAFFERTY: Time now get your answers to our e-mail question, about whether the United States favors Israel too much in its policy in the Middle East?

Diann (ph) in Los Angeles wrote this: "Of course, the United States favors Israel. And it amazes me when our politicians are asked why the Arabs hate us so much, and they just lower their heads and say they don't know. Arabs look at the way the U.S. blindly protects Israel's taking of Palestinian land and lives.

Jarrow (ph) wrote: "This is like asking whether U.S. support for Great Britain in 1940 against Hitler was appropriate. Israel is a democratic country, striving against the racism, sexism and theocratic extremism that dominates the region."

Chris from Waldorf, Maryland, wrote this: "Yes, we do favor Israel, but we must be ready to back Israel up when its existence is threatened. A better way to even things out would be to let the other Arab nations fund the cost of rebuilding housing settlements. That would do a lot to defuse Palestinian anger."

Now, our e-mail question for this week is as follows: What can be done to stop U.S. corporations from sending jobs overseas. Send your answers to inthemoney@cnn.com. And you should also visit our show page at money.com/inthemoney, that's where you will find the address as well as the fun site of week and other fascinating little tidbits about this here program which is now over.

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

Join us next week, Saturday at 1:00, Sunday at 3:00, or you can catch Andy and me all week long on "AMERICAN MORNING," very fine morning program, much better than the "Today Show," "Good Morning America" or any of those other things that are out there, starts at 7:00 Eastern time. Enjoy your Sunday, thanks for being with us.

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


Aired May 2, 2004 - 15:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: From New York City, America's financial capital, this is IN THE MONEY.
JACK CAFFERTY, HOST: Welcome to IN THE MONEY I'm Jack Cafferty. On today's program:

The fight for the future of Islam: Muslim extremists are pulling their guns on moderate Arab states. We're going to see what that could mean for the Middle East and for America.

Plus, the power behind the veil: Find out why democracy in the Islamic world ultimately could depend on women.

And, will the little search engine that could become a profit machine for investors? Google is our stock of the week.

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

So, the stock market investor has to be a little frustrated. We're coming off one of the best quarterly earning seasons in a long, long time and the market's going nowhere. On the one hand we got great corporate profits, on the other hand the fear of rising interest rates, there's the uncertainty about the war in Iraq, there's a hint of inflation in the pipeline, now. Who's going to ultimately win the battle here?

ANDY SERWER, "FORTUNE" MAGAZINE: Well, you know, Alan Greenspan is acutely aware of this, Jack, and what he's trying to do is pull off a balancing act. I think there's no question, interest rates will be going up. But he hopes is that that's offset by economic growth. So in other words, rate goes up, that's bad for the stock market, the economy grows, that's good for the stock market and a rise in tide, we hope.

SUSAN LISOVICZ CNN CORRESPONDENT: And, the Federal Reserve is very good at telegraphing its sentiment well ahead of time. So, you can see that the federal reserve will meet this week, no decision on interest rates expected, but we've certainly seen increasing signs of inflation. That's also these tremendous earnings, not only because the earnings have been good, but you're seeing signs of revenue growth. That's what we haven't seen in previous quarters. Cost cutting amounts, really accounted for a lot of the profits, here you're seeing real revenue gain and some optimism about the future. But yes, fears of what a rising interest rate will do to business spending and consumer spending, definitely holding back investors.

SERWER: But the big thing is -- you know, interest rates have been declining since 1981. The fed funds rate then was 20 percent, it's now one percent and the real point here is it looks like we're at one of these sea change moments where rates will begin a long rise again and that's a big unknown.

LISOVICZ: And we should also mention the Middle East finally.

CAFFERTY: Sure.

LISOVICZ: You heard trouble spots, not only Iraq, but we have Syria, Jordan, Saudi Arabia. Places where you don't typically hear some very disturbing news about terrorism and threats and that also shook up investors.

CAFFERTY: And, we'll get a lot more focus on the overall economic situation on Friday when we get the jobs report for the month of April.

SERWER: That's it. Yeah.

CAFFERTY: So, that should be interesting too.

The fighting this week, changing topics here, in Fallujah, has not changed the administration's target date for handing political control back to the Iraqis, if even only symbolically. June 30 is the date. The question is, how do Iraqis and Americans in Iraq feel about how the occupation is going right now, or liberation, if you choose that word. And do they think that the handover June 30 will be successful?

For a look at the mood in Iraq we're joined, from Baghdad now, by CNN's Ben Wedeman.

Ben, nice to have you on the show, as always. Some interesting polling done in Iraq, among Iraqis, in the last week or ten days about how they feel about all of these topics. Give us some of the highlights, if you would.

BEN WEDEMAN, CNN CORRESPONDENT: Well basically, they have, Jack, a long-term optimistic feeling that things, after five years, will get better. A majority of Iraqis said that. But increasingly we're seeing more disappointment, more frustration with the American presence, for lack of a better word, in Iraq. That there's a feeling that they haven't really been able to really put the country back on its feet again, that by and large, in some cases American soldiers haven't treated Iraqis as well as they would like. But as we look ahead to the June 30 handover of sovereignty, we see that the situation is becoming evermore cloudier with uprisings in Fallujah and in Najaf and elsewhere. And there was a lot of concern when the Marines went into Fallujah earlier this month and they're so-called Iraqi allies, the security forces on the ground, chose not to join in the fight, and basically melted away. So that really raised some alarms about what the Iraqi security forces that exist in Iraq today can actually do when it comes to maintaining and imposing law and order.

But interestingly, what we're seeing going on in Fallujah, at the moment, is the creation rather rapidly under the command of several former generals in Saddam Hussein's army of a new security force that's composed almost exclusively of former Iraqi army soldiers. And you're seeing here the Americans are beginning to have a second thoughts about distancing themselves from former members of the Iraqi army, possibly giving them a greater chance to impose security as we're seeing in Fallujah, and in fact, the situation in Fallujah, as this new force goes in may be the test of whether some sort of new kind of Iraqi security force will be able to do what the old force wasn't able to do, and that's create law and order out of what, at the moment, is really chaos -- Jack

CAFFERTY: Thanks, Ben, very much.

CNN's Ben Wedeman joining us from Baghdad. The ultimate irony, I suppose, we're going to give control of the armed forces back to Saddam Hussein's general...

SERWER: Back to the general who we threw out.

CAFFERTY: Go figure.

This week brought a shoot-out in Syria and word of a failed bomb plot in Jordan, both blamed on terrorists and that's not to mention the unrest in Saudi Arabia recently. Extremist Islamic violence is cropping up a lot lately in moderate Arab states. It could be terrorism, then again it might be a fight for the very heart and soul and future of Islam. To help us understand the situation we're witnessing, we're joined now from Washington by Bernard Lewis, professor emeritus of northeastern studies at Princeton University.

Professor, it's a pleasure to have you on the tonight.

PROF. BERNARD LEWIS, PRINCETON UNIVERSITY: Thank you, I'm delighted to be here.

CAFFERTY: Give us your take on the escalating terrorist or violent activity we're seeing in the so-called moderate Arab world.

LEWIS: I think we have to understand what all this is about and that terrorism is an expression of a growing feeling of frustration and resentment in most of the Islamic world and more particularly in the Middle East. They have become increasingly aware that things are going badly in their society. This is especially aggravated by the development of modern communications. Previously, they couldn't make comparisons, now they can. And they know how badly they're faring as compared with the west with the Far East and even with much of Africa and the resentment is very understandable.

CAFFERTY: So the resentment, in many cases, you're suggesting, is against their own government and perhaps rightfully so. The people's standard of living has not kept pace with the resources provided by the crude oil fields and all of the wealth that's been accumulated by the governments in those countries as a result of selling oil to the West, right?

LEWIS: Quite so. The resentment is directed against their own governments. Now, where their own governments are seen, as we would put it, as American friends and allies, as they would put it, as American puppets, that resentment also affects their attitudes to the United States. Where their governments are hostile to the United States, as in Iran, that resentment translates into very warm and friendly feelings towards the United States.

LISOVICZ: You know, Professor, everyone in the United States is obsessing about how long the U.S. should stay there and what conditions will be in place before the military leaves. Is, perhaps, the bigger question in your mind whether the real battle is between reformers and Islamists?

LEWIS: Yes. I think that's true. I mean, in this awareness that things have gone badly wrong, they are relatively poor and weak, and there are two -- broadly speaking, there are two schools of thought. One school are those who say, well, what was lacking was modernization, we did not keep up with the modern world, and the answer is to modernize, to become more modern, to become part of the modern world. That is, for example, the dominant view in Turkey.

The other view is the exact opposite. They say no, modernization has been our problem rather than our remedy. All that befell us was because we abandoned our own true heritage, the faith of Islam and went aping foreign infidel ways bringing in degenerate foreign customs. And the remedy is to go back to authentic Islam.

That is the message of the 1979 revolution in Iran, of al-Qaeda on various other radical Islamic groups. And obviously there are many sub-variants in each of these, but these are the two main responses those who want to modernize, which also means democratize and become part of the modern free world and those who reject that and see what we call the modern free world as a world of degenerate infidels and feel that the remedy to their problems is a return to authentic Islam which means, very often a return to a rather imaginary past.

SERWER: Right.

LEWIS: And in every Muslim country now, the struggle is going on between these two views.

SERWER: Professor, let me ask you a question. Does this call for a reassessment of how U.S. foreign policy is conducted? In other words, instead of taking a country by country approach, maybe marrying that with a more holistic approach towards this Islamic situation worldwide?

LEWIS: Yes, I think that would be wise. The tendency the Middle East, as in Latin America and other places, is to make the main aim stability. Don't interfere with things -- otherwise you'll get upheavals and these civil wars and general disorder. The underlying assumption is these people are not like us, whatever we do they will be ruled by corrupt tyrants, and the aim of foreign policy should be to ensure that they are friendly tyrants and not hostile tyrants. We know the results of this approach in Central America, in Southeast Asia. On the whole, the Middle East fared rather well by comparison to those two.

CAFFERTY: Interesting stuff. Professor Bernard Lewis, thank you very much for your time, I appreciate it.

Professor at emeritus of northeastern studies at Princeton University Still ahead on IN THE MONEY as we continue:

How half the Muslim world could change the whole Muslim world. We'll look at how equal rights for women could be crucial in bringing democracy to Islamic countries.

Plus, the relevant Bangalore of booking (ph): U.S. Jobs shipping out to places like India. Find out why one outsourcer thinks there might be a bright side in outsourcing for American workers.

You're watching IN THE MONEY.

(COMMERCIAL BREAK)

LISOVICZ: The U.S. hopes to build democracy in Iraq, but can democracy exist in a Muslim nation without equal rights for all citizens including women? That's a question worth asking as the U.S. prepares to hand over authority in Iraq this summer. Our next guest is here to help us sort out the complicated place where women, democracy, and Islam meet. Zainab Salbi is the president and founder of Women for Women International a nonprofit women's rights group.

Welcome.

ZAINAB SALBI, FOUNDER WOMEN FOR WOMEN INTERNATIONAL: Thank you.

LISOVICZ: You know, one of the things that we heard prior to the invasion of Iraq, that in terms of equal rights or rights for women, Iraq wasn't such a bad place considering the geography -- the geographic area, where it was. What's the situation for women now in Iraq?

SALBI: In many ways it has gone down actually. In terms of security, for example, right after the war mothers starting pulling their daughters out of school because of the security, because of kidnapping incidents. They were actually raping and kidnapping women for trafficking purposes, and impacted their economic opportunities.

A lot of especially poor women who were doing small income (UNINTELLIGIBLE) projects within their homes or small factories, or all of these things, had actually stopped working because of the security tension and because of the lack of facilities, such as electricity and transportation and things like that.

So, in many ways there has been a step back. There are other ways in which actually there is an opportunity for Iraqi women now to define their role in the new Iraq. To define their role in the politics of the new Iraq, in the new constitution, in the future of how the country is assigned in a civil society. So there's a give and take and we need to understand the history of Iraqi women to understand what is going on right now and what is the potential for them in the future.

SERWER: Zainab, I want you to try to broaden out, and I know you make this point that it's very hard to generalize about the conditions of women in the Islamic world, because conditions obviously are so diverse country from country. But have things worsened in terms of women in Islamic countries or not over the past decade or so, because of the rise of fundamentalists, for instance?

SALBI: Well, definitely. I mean, fundamentalists of course, do reach out to women. As a matter of fact, there are lots of women who are supporting Islamic fundamentalists. We need to understand why. And in my opinion, in understanding why we really need to look a economic realty.

Muslim fundamentalists a lot of times are reaching out to the grassroots, are reaching out to women in poor neighborhoods, to widows, to single heads of household, to unemployed women, to mothers who have eight, seven children and cannot have the food or the means to feed them, and they are reaching out to that sector and addressing their immediate economic realities, help with their needs, all of these things.

If you look at Hamas, for example, in the West Bank and Gaza, Hamas addresses that sector of the population and is providing them services. Same thing in Egypt, same thing in different countries, in different Muslim countries. So in order for us to understand why Arab women are actually even supporting fundamentalism to some extent, we have to understand their political, economic, and social reality. And, we need to understand that the way to get out of that is to give them other alternatives.

If you think of Afghanistan, for example, a lot of times during the Taliban time, a Talib would go to a woman who is a widow and has seven to eight children, for example, and would tell her, "here is a food package, give me your son, I'll send him to the medreta (ph) and teach him how to read and write and I'll feed your children." She's making a cost/benefit analysis. She's saying, "OK, well, I don't have any choice." What we need to do is provide her with alternatives with more choices, and our choice is actually much more attractive than the choices that they are providing.

CAFFERTY: Let me address the domestic issue in a relationship between the sexes. Equality for women in the Middle East or anywhere else can't come unless there is freedom from fear. The Koran is very explicit in its instructions of the issue of equality between the sexes, and yet violence against women at the hands of men in the Middle East and Arab countries is notorious. And it's condoned, and in the case of the Taliban, it was even advocated in some sense.

There was a very popular Saudi Arabian newscaster who was severely beaten here just a short time ago by her husband, wasn't the first time, and she allowed her story to become public. She was damn near killed, for want of a better way to phrase it, by a husband, and traditionally nothing happens to the men who perpetrate this kind of violence on women. Can you address that issue?

SALBI: We need to distinguish between -- and the "we" is not only "we" in the West, but even Muslims need to distinguish between culture and between religion. The religion itself, Islamic religion itself, does protect women and does provide women equal legal, economic opportunities. In many ways, there's a lot of opportunities for women within Islam.

The culture on the other hand, has actually brought out different elements of the previous pre-Islamic cultures from different notions and it has become actually more oppressive, to combine the religion with the culture and became more oppressive habits towards women. So, we need to distinguish between the two.

In a lot of Arab countries, for example, the whole concept of iab (ph), it is a shame, shame for women to talk about the oppression that she's facing, shame for a woman to talk about a rape if she's been raped, a shame for a woman to talk about domestic violence if he's been beaten.

And so, with the Saudi woman, for example, has done is gone beyond the shame, a very strong concept in Arab society, and Muslim society, in general and she went to her Islamic rights, which is no man has a right to violate her the way the husband has the right to violate her. No man has the right to force sexual intercourse with a woman, no man has the right to beat a woman, all of these things.

So part of the solution is for Muslims to actually distinguish religion from the culture and for women to more -- to go beyond the concept of shame and say, we want our rights, the rights that are protected for us by Islam and by our new society, by the new world. We need to catch up in many ways with the new concepts of women's rights.

CAFFERTY: Right. A lot of work to be done obviously.

Zainab Salbi is the president and founder Women for Women International. Thank you for being on the program.

SALBI: Thank you.

CAFFERTY: Coming up on IN THE MONEY, as we continue, a lot of investors hate it when they try to describe how the market is doing. Web master Allen Wastler has some ideas on how we can go about fixing that by perhaps standardizing some of the terminology.

And, you can let us know your ideas by e-mail us at inthemoney@cnn.com. We are deeply concerned about issues that concern you.

(COMMERCIAL BREAK)

LISOVICZ: Let's look at the week's top stories in our "Money Minute." Comcast withdrew its $48 billion offer to buy Disney saying it was obvious the house of mouse just wasn't interested in the deal. Disney said all along it thought the offer was too low. People attending IBM's annual meeting in Providence, Rhode Island were greeted by demonstrators protesting "Big Blue's" outsourcing policies. But, IBM chairman and CEO, Sam Palmisano was able to grab some of the attention away from the protesters by announcing that the company was boosting the annual dividend by 12-1/2 percent.

And Thursday marked the end of the line for America's oldest car company. The last Oldsmobile rolled off the assembly line in Lansing, Michigan. Oldsmobile was founded by Ransom Eli Olds in 1897 and it became part of GM 11 years later. GM says it discontinued the line because it was no longer profitable. So sad.

SERWER: All right, our stock of the week hasn't even hit the trading floor yet, but how often does a company with a product that millions rely on go public everyday? Not often.

We're talking about Google, of course, the king of all internet search engines announced plans to launch a $2.7 billion initial public offering and the news has internet stock watchers partying like it's 1999. That's Prince.

But the question is can Google be a good investment in 2004 and beyond?

You know, the question here is, this is a company that does things differently. I call it the "my way" IPO -- Frank Sinatra, right?

CAFFERTY: I know.

SERWER: I mean, these guys are going to do this dutch auction deal instead of a regular IPO, which presumably will allow ordinary investors to get in rather than just super-connected people. It's a big experiment; we'll have to see how this one goes.

LISOVICZ: You got to love this story, because a lot of times when you have an IPO, it's a company that you haven't heard from, there's a little buz, this is a giant company that, with its public offering, it's going to be -- have the market value -- market cap of say a FedEx or a Sears. And it's big enough and strong enough and hot enough to say, we're going to do it our way. We're going to minimize -- minimalize Wall Street.

CAFFERTY: You know what else occurs to me, there is no country in the world except this one where stories like this happen over and over and over. These were a couple of students at Stanford University sitting in some dorm smoking socks or whatever saying, :hey, what about this technology..." and they came up with an idea. And when this thing rolls out, they will both become at the age -- what is it 30 or 31?

SERWER: Thirty and 31.

CAFFERTY: Billionaires.

LISOVICZ: A few times over. SERWER: Right.

CAFFERTY: I don't really know if they were smoking socks, but you know what college kids do.

SERWER: The only bad thing about this...

LISOVICZ: They surf the net. The surf the net.

SERWER: The only bad deal is they've got in two classes of stock situation where these guys retain control, so, I mean, it's great that they want to do it their way. But, you know, this means that the whole thing is that the ordinary investors actually won't be in control of the company, these two 30 or 31-year-old guys will be.

LISOVICZ: They want it both ways. And they also won't give quarterly guidance.

SERWER: Yeah right.

LISOVICZ: Which is another interesting aspect.

SERWER: Well, it's going to be a lot of fun to watch this one.

Just ahead, on IN THE MONEY, we'll talk to a man who sends U.S. jobs overseas. He says if American workers want to save their jobs, they need to act now.

And let us know what you think, our e-mail address is inthemoney@cnn.com.

(COMMERCIAL BREAK)

SERWER: All right, that crunching noise you're about to hear is the sound of TV sets across the land getting busted. Our next guest is an outsourcer, one of those guys who sends U.S. jobs overseas, and that's enough to make some people want to put a foot through their TV screen. But hold your fire, because he thinks American workers can bounce back if they wise up. Atul Vashistha is the founder of a California company called neoIT and he joins us from Atlanta.

Welcome.

ATUL VASHISTHA, FOUNDER, NEOIT: Thank you.

SERWER: Can you explain to us why what you do is not destroying the American economy?

VASHISTHA: No, what we are doing is actually helping the American economy, because if you look at outsourcing, it reduces cost which in turn reduces prices. And that's enabling American companies to stay competitive. The competition for these companies is no longer local, it's global. And so they have to compete in the most efficient manner possible, but also, because of these lower costs, it's benefiting the consumers because their buying power is a lot higher than what it can be. LISOVICZ: And we've seen it certainly with Wal-Mart, which certainly gets a lot of its products from overseas. But Atul, consumers don't spend if they are worried about their jobs or in fact they don't have jobs, and jobs are going overseas. So can you address that?

VASHISTHA: Yes, you know, I don't want to downplay the pain that displaced workers are going through right now. But I think it's important to recognize that in the last two, three years we've lost millions of jobs in the U.S., but less than 150,000 are because of offshoring. And in fact, there was a study done by the ITAA, the Information Technology Association of America, and they saw that 90,000 jobs last year were actually created by this global sourcing. I think we are blaming the wrong thing. And instead of focusing on what we need to do as a country to create these jobs, we are trying to blame something that's actually benefiting our economy.

CAFFERTY: I don't understand the logic of how it's benefiting our economy. Even if we look at numbers you just gave us, there are still 60,000 families that don't have a bread winner as a result of this thing that that's going on, that the critics suggests simply is a way to increase corporate profits. If I can send a $10-an-hour job in the United States to Bombay where I can get it done for $1 an hour, I net $9 bucks an hour and that makes my stock worth more money and even though the family who doesn't have the $10 an hour job anymore is out looking for work.

VASHISTHA: So if you look at that, what you're seeing is companies are doing this. I can give you examples of companies without naming them that have had to do layoffs because they didn't address the competition by trying to figure out lower ways of doing business. So you have to also have to look at the other side. What would happen to some of these companies if they didn't take advantage of this?

Now, of course we should answer the question is what happens to these displaced workers and what should we be doing, but I think we ought to focus on creating jobs for innovation. So these workers have to be re-skilled. We've had people in technology that have been working for four years and five years that haven't gone back to school, haven't learned new technologies, and technology is changing. Re-skilling is our way of making sure we continue to stay ahead of the game. And I think that's an area that we ought to focus on, is how do you create these jobs rather than how do you try to protect these jobs?

SERWER: Hey Atul, let me ask you, what if there is legislation banning outsourcing, what would that do to the economy?

VASHISTHA: You know, if it applied right now, they're trying to do that, but mainly applies to federal and state governments, if they did that to corporations, I have to tell you, what will happen is many companies will no longer be able to compete in markets, which in turn will lead to layoffs, which will in turn lead to lower spending. I think that's a downward spiral. LISOVICZ: Atul, you said something about workers constantly getting reeducated about technology, but you actually say there are several areas that are insulated from exporting overseas. Can you quickly just name them?

VASHISTHA: Yes, absolutely. I think there is three key areas that I would say are insulated or at least they are long away from being offshored, things that are special, specialized, or localized. And what I mean by that is there's so many jobs in America, and I would say about 70 percent of services that we all experience, they are manufactured locally. So things like -- think about the deliveries that happen, social services, education, many of these services are local services, those are insulated.

The other things that are insulated is, as you keep moving up in the value chain, where either it's complex problem-solving or complex communications, those are the kind of things that are very difficult to offshore. So I think it's also important to recognize that not everything can be offshored. So the majority of the jobs will stay in the U.S. So if you look at what's going offshore, it's the data entry, it's the programming, it's the support kind of systems that are going offshore.

SERWER: All right, we're going to have to leave it at that, obviously a hot-button topic. Atul Vashistha, CEO of neoIT, thanks very much for coming on the pleasure.

VASHISTHA: My pleasure.

SERWER: Just ahead IN THE MONEY, we'll talk to a man who sends U.S. jobs overseas. He says if American workers want to save their jobs, they need to act now. And let us know what you think. Our e- mail address is inthemoney@cnn.com.

(COMMERCIAL BREAK)

LISOVICZ: Soldiers and veterans have overwhelmingly voted Republican since U.S. military became an all-volunteer service in 1973, but the turbulent situation in Iraq may give Democrats a chance to finally win a significant chunk of the military vote. One former soldier who has switched his vote from Republican to Democrat is Steve Brozak, a Marine Corps veteran and investment banker. He left the Republican Party a year ago and is now running as a Democrat for a congressional seat in New Jersey.

Welcome.

STEVE BROZAK (D), NEW JERSEY CONGRESSIONAL CANDIDATE: Thanks, thanks very much for having me on.

LISOVICZ: What was the decisive issue or instance for you that made you switch your party? It happened to in the last year, did it not?

BROZAK: Yes, it did. It actually happened back in April and I really didn't switch my party. I felt that the values that I had and have today are the same. I felt that I was watching the Republican Party move away from the core beliefs that I held.

SERWER: What do you think -- how is the military looking at the election right now? Obviously we know how important it is from last election in Florida, military, obviously, also somewhat of a more conservative bias because you don't have beatniks from Greenwich Village volunteering to go into the Army. Where do you think they stand right now?

BROZAK: Well, I think what they stand for is the same thing that all Americans stand for. They're looking for leadership. They want a clear vision. They want a map. They want answers. They just don't want to be told, well, today this is what we're doing, and tomorrow we'll try something different. They're tired of spin the same way the American public is.

CAFFERTY: At the risk of letting you do a campaign commercial for John Kerry, I am interested in your thoughts of what it is about him to you that appeals to you as a military guy. If you believe a lot of the commercials we are seeing, and granted they're being put together by the Bush people, John Kerry is not the greatest fan that the American serviceman has ever had.

BROZAK: Well, that's what I am talking about. For instance, a couple of weeks ago when George Bush went on TV, I wanted to see my president go out there and iterate a real clear, meaningful strategy of what was going to happen in Iraq. I didn't see it. The American fighting men and women, the 17-, 18-, 19-year-olds, the 25- to 45- year-old the reservists, the people that have been called back and their spouses, their loved ones are the ones that are paying the price. They're the ones that are sacrificing, and that's where you are starting to see some great discontent.

LISOVICZ: But Steve, you have other issues as well, for instance, economics, health care for your fellow men and women in uniform.

BROZAK: Absolutely. And those economic issues play throughout for the people in uniform and for the people in my district, in New Jersey and in the country.

LISOVICZ: Can you give us specifics, though, what isn't happening?

BROZAK: Well, right now we're seeing the force overseas, here in the United States, stretched thin, probably close to the point of breaking. We don't have enough people. We don't have enough equipment. It's not being acknowledged. As far as the economy is concerned, you're seeing plans and spin that says that we've got a robust economy. It's the furthest thing from the truth. The letters, the e-mails that I'm getting are reflecting that opinion, not just people in uniform.

On the health care side, if you look at the Medicaid bill that just passed, it doesn't acknowledge real facts. The people that have been called back to active duty have to deal with a system called Tricare, the system simply isn't up to the job. And when you're talking about defense, you know, do most people feel that they are actually safer today than after 9/11?

SERWER: Hey, Steve, even as someone who presumably supports John Kerry, aren't you concerned with the way the campaign has been going lately?

BROZAK: I'm really concerned about the fact that you're starting to see people attacking John Kerry on his military record. And that is simply unacceptable. Right now, John Kerry served. That is what all Americans should really focus on. Right now, what people should focus on is, do we have a plan, not just a plan overseas, but an economic plan, a health care plan? Do we have someone that's going out there and voicing real issues? That's the reason I'm running.

CAFFERTY: Let me ask you, one of criticisms we hear about the Democrats who are on the outside looking in before the election, is that they haven't been very specific about offering solutions to any of this stuff. What's the solution to Iraq? What's solution to veterans' health care benefits? What are specific ideas, and why aren't we hearing them from the Democratic side?

BROZAK: Well, right now this is a work in progress, as you are seeing overseas. Right now, there isn't really a whole lot that this administration has done or probably can even do now. We have to make sure that in Iraq we bring the rest of the world in, so that for the people of Iraq, it isn't just an American occupying force. That's the way they look at it. It's not true, but that's the way they look at it. I think that a new administration can come in there and start to address the rest of world and say, hey, this is not just our problem, this is a problem involving the rest of world. And a destabilized Iraq will mean a destabilized Middle East. Those are important issues that are simply not being addressed right now.

CAFFERTY: Steve Brozak, retired Marine Corps veteran and congressional candidate, New Jersey. I guess, maybe I should have been nicer, I live in New Jersey, you may be my congressman one day.

BROZAK: I very much look forward to it if I am.

SERWER: That's good. That's good.

CAFFERTY: All right. Thank you, sir, nice to have you on the program.

BROZAK: Thank you, a pleasure.

CAFFERTY: All right, we have got to make a buck or two for the home office, but we will be back right after this break. And just ahead, gaga for Google, Wall Street licking its chops at the prospect of one of the biggest IPOs ever.

Plus, play now or pay later, a guy who is sending U.S. jobs overseas. And we will tell you how to get your revenge. Stick around, back after this.

LISOVICZ: Shopping for car insurance? If so, here are some tips for your search. First do your homework by getting at least three insurance quotes. Rates for comparable coverage can vary by more than $500 depending on the company.

If you have a good driving record, check out the rates that Geico and Amica, they tend to have the cheapest policies because they sell auto insurance directly to the consumer. That means you don't pay the extra expense of a broker.

But if you've got a few fender benders on your record, you may need to go through an agent at one of major providers, such as State Farm or Allstate insurance. Be sure to compare the prices of large insurance providers with those of independent agents who aren't tied to a particular company. They may be able to offer you a better deal. To find an independent agent in your area, go to independentagent.com. And don't forget to negotiate. Some companies will beat your best quote, but you do need on ask.

Next week, I'll tell you about the discounts you should ask your auto insurance provider before signing a policy. I'm Susan Lisovicz for "Money & Family."

(COMMERCIAL BREAK)

CAFFERTY: Well, no matter what stock market is doing, there's always someone blaming the business news media, that would be us, for blowing the whole thing out of proportion. Our Webmaster Allen Wastler is here now with the solution as well as the fun site of week.

ALLEN WASTLER, MONEY.COM: We're all familiar with this, right?

CAFFERTY: Of course.

WASTLER: You write the headline, "Stocks Slide On Econ. News" or something, how can you call that a slide? It's just a little dip. What, do you have an agenda? Are you trying to trying to talk the market down? All right. So, all right. You don't like it? I'm going to set up a scale. OK. Market goes up from 0 to 50, OK? We're going to have certain words that are approved for that. All right?

SERWER: Nice.

WASTLER: Rise, jump, advance, we can get traipse, I like traipse.

CAFFERTY: Van Halen.

WASTLER: Now if it goes a little bit higher, let's say 51 to 100.

CAFFERTY: I like this.

WASTLER: All right, we'll take it a little bit more like boom, soar, spike, rally. Up above 100, all right, then we're going get into like real, oh, baby, skyrocket, fly, take off. And if you're over 200, hey, just say yippy and be happy.

(CROSSTALK)

CAFFERTY: What about on the downside?

WASTLER: Now we've got the downscale, OK, and this is where people get really sensitive, all right? So 0 to 50, OK, we'll call that maybe a slump, all right? or a drop, a stumble, stumble is good, falter, a little trip. Fifty to 100, all right, we'll get a little bit more, tumble, fall, tank, I love tank, choke, and dive. Now if we go above 100, then we start using the fight terminology. You got pummeled and stomped and beaten and stuff. And if you go over 200 or if you throw in your adverbs like, really stomped. And if it's getting beyond 200 down there, you just go...

(WASTLER MAKING FEARFUL NOISES)

LISOVICZ: So where is the market now, Allen? What kind of terminology?

WASTLER: The market, I would say was waffling in a zone. OK? Waffle is a good one

LISOVICZ: Wastler says it's waffling.

WASTLER: So there you go.

CAFFERTY: Now for the fun site of the week. For those of us who remember the days when we used to get nervous before going out on a date, that was a long time ago.

WASTLER: This is one for you for Zefrank (ph) who does a little comedy on the Web, a he has a wonderful pre-date confidence builder, OK? So you are there getting dressed. Just turn on your terminal, click on a little bit and you'll get something like this.

UNIDENTIFIED MALE: Are you fat? What are you, joking? What, do you want to be one of these Calvin Klein girls? They gnaw on their own bones to make themselves skinny. No, it's out. Jennifer Lopez and the Mariah Carey, she's a little too much...

(LAUGHTER)

CAFFERTY: I love it.

UNIDENTIFIED MALE: ... but you know...

WASTLER: He's making me feel better about my weight, already.

SERWER: I guess so.

(CROSSTALK)

SERWER: Some people just take medication before it these days.

WASTLER: Whatever you are nervous about, you can click on it. I think we have got another example I believe.

CAFFERTY: Good, let's go.

UNIDENTIFIED MALE: Use your butts like the magic wand here. Wave it around. Wave it around.

(LAUGHTER)

LISOVICZ: Do we need to have that on PG, parental guidance here?

WASTLER: We're always PG.

CAFFERTY: Thanks, Allen.

Coming up next, we'll hear your answers to our e-mail question of the week and you can let us know what are you thinking about by e- mailing us at inthemoney@cnn.com.

(COMMERCIAL BREAK)

CAFFERTY: Time now get your answers to our e-mail question, about whether the United States favors Israel too much in its policy in the Middle East?

Diann (ph) in Los Angeles wrote this: "Of course, the United States favors Israel. And it amazes me when our politicians are asked why the Arabs hate us so much, and they just lower their heads and say they don't know. Arabs look at the way the U.S. blindly protects Israel's taking of Palestinian land and lives.

Jarrow (ph) wrote: "This is like asking whether U.S. support for Great Britain in 1940 against Hitler was appropriate. Israel is a democratic country, striving against the racism, sexism and theocratic extremism that dominates the region."

Chris from Waldorf, Maryland, wrote this: "Yes, we do favor Israel, but we must be ready to back Israel up when its existence is threatened. A better way to even things out would be to let the other Arab nations fund the cost of rebuilding housing settlements. That would do a lot to defuse Palestinian anger."

Now, our e-mail question for this week is as follows: What can be done to stop U.S. corporations from sending jobs overseas. Send your answers to inthemoney@cnn.com. And you should also visit our show page at money.com/inthemoney, that's where you will find the address as well as the fun site of week and other fascinating little tidbits about this here program which is now over.

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

Join us next week, Saturday at 1:00, Sunday at 3:00, or you can catch Andy and me all week long on "AMERICAN MORNING," very fine morning program, much better than the "Today Show," "Good Morning America" or any of those other things that are out there, starts at 7:00 Eastern time. Enjoy your Sunday, thanks for being with us.

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