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Interview With Despair Inc.'s Co-Founder Lawrence Kersten; Iraq's Retook Control Over Their Country; Federal Reserve Ups Interests To 1.25

Aired July 3, 2004 - 13:00   ET


JACK CAFFERTY, HOST: Thanks. Coming up today on "IN THE MONEY," Iraq's new government racing the clock to deliver a country that works. We'll look at what's at stake.
Also today, high class: college tuition is up, but for some students the pain isn't as bad as it looks. Well tell you why.

And seldom is heard an encouraging word. Find out about a company that's making money by making fun of motivational gimmicks. All that and more right after this quick check of the headlines.

A big bust in Baghdad. U.S. Troops have uncovered several weapons factories. They've also detained members of a suspected insurgent ring. U.S. Soldiers found four potential car bombs at one site and a large amount of weapons, including 50 pounds of plastic explosives at another.

Back in this country, a sixth person has died from his injuries after Friday's shooting spree at a meat packing plant in Kansas. Police say they're still trying to determine why Elijah Brown opened fire on his co-workers at the ConAgra food plant in Kansas City then turned the gun on himself.

Last night's Mega Millions lottery drawing have left at least one person very rich and likely very happy. $290 million was up for grabs and one winning ticket was sold in Lowell, Massachusetts. The owner has not come forward yet.

More news 30 minutes. IN THE MONEY begins right now.

ANNOUNCER: From New York City, America's financial capitol, this is IN THE MONEY.

CAFFERTY: Welcome to the program. I'm Jack Cafferty.

Coming up on today's edition of IN THE MONEY use it or lose it. Iraq's new government has to get the country working quickly or risk facing more trouble ahead. With U.S. troops caught right in the middle, we'll take a look at the chance for success.

Plus, damage control. We keep hearing college costs are rising these days. Find out why that's more true for some students than it is for others.

And the velvet whip, boy, that got Andy's attention. Bosses thinks posters of sunsets and seagulls will get all motivate. We'll show you a company that's hijacking the medium and messing around with the message.

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

So the job's report came out on Friday and was way below the consensus estimate of more new jobs created. But I noticed right away the bond market seemed to like that idea as interest rates began to come down. Read the tea leaves for me.

What did you think?

ANDY SERWER, "FORTUNE": It's sort of right down the middle. It's not over the 250 forecast. But I actually think, if we had exceeded it and created more jobs, that would have been worse because, it would have shown the economy accelerating too fast. I really think it's OK news and I think we're on our way. But you can't help but feel that the economy is kind of running out of steam a little bit. I mean, I may be premature saying that, but few things are not as fast as they used to be.

SUSAN LISOVICZ, CNN CORRESPONDENT: But that's a good thing, because we're now in a rate tightening mood and so you don't want the job market to become too strong, that is, unless you want interest rates to skyrocket. And we had a couple pieces of information this week that may have been missed, which is one that first call which is the bible of research companies that followed S&P 500 raising its estimates for S&P 500 companies. Eighteen percent estimates now for year-end profits. Also the number of companies going public for the just ended second quarter four-year high. And that's a true barometer also that things are improving. So, you kind of -- maybe we're in the "Goldilocks" scenario, not too hot, not too cold, just right. At least that's what a lot of people are hoping.

SERWER: Don't mess with my porridge, though. Sorry.

CAFFERTY: On to other things. Iraqis began running Iraq again this week for the first time in a long time and the whole world is watching to see if they can do the job as well as everybody hopes they can.

Of course, about 140,000 U.S. soldiers are on the ground in Iraq right now and their future depends very much on how well and how quickly the new government gets Iraq on track.

To find out how we're expecting those things to turn out, we're joined now by, Fouad Ajami, professor of Middle East Study at John Hopkins University in Baltimore.

Professor Ajami, nice to have you with us. When you look at this interim government, how optimistic are you that they're going to be successful?

FOUAD AJAMI, JOHNS HOPKINS UNIVERSITY: Well, this is the best we can do. In fact, we to transfer sovereignty to the Iraqis. We had no choice in the matter. We were not destined to stay long in Iraq. This was always a temporary assignment. We were not there to rule Iraqis.

And I think the transfer of sovereignty was the right thing to do. It was the message to the Iraqis. It was a message to Arab world. We have no colonial ambitions over Iraq. We were even willing to grant them sovereignty two days early. So, it is -- their own journey will have to begin.

CAFFERTY: Well, that was not exactly a magnanimous gesture, that transfer of sovereignty two days early, wasn't that to avoid rocket attacks from the many insurgents who would have tried like as best they could to disrupt that handover?

AJAMI: Well, exactly it had many things. It had exactly what you said, it also had a stage craft because President Bush was in Istanbul and his national security adviser pass him a piece of paper saying there have been a transfer of sovereignty and he could scribble on it let freedom reign. It had many elements in it, but I think it was symbolically of great importance. And no sooner than do it, than the Iraqis took control of the most important symbol of the old tyranny they had, which of course, this trial we have been witnessing of Saddam Hussein. But after the trial, the issue -- the matter that really remains, the matter that is upper most in Iraq is what you said at the beginning, what you led with, the insurgents and security.

Can we defeat this insurgency, because if we can't defeat our insurgency our work will be in vain.

LISOVICZ: You know, professor, something interesting that happened on Friday, there were reports that Jordan might be willing to send in troops if the interim government requested it.

How critical would that be to get some sign of support from the Middle East?

AJAMI: Well, Susan, I hate to be a skeptic and pour cold water on this one. We already have one Jordanian in Iraq, don't we, which is Abu Musab Zarqawi, from the Jordanian town Zarka, sewing death and destruction in the streets of Iraq. We already have the entire bar association of Jordan waiting to go to Iraq to defend Saddam Hussein, of all the neighboring governments and all the neighboring countries of Iraq, Jordan was unique in its support for Saddam Hussein. I doubt, I very much doubt that we can use the Jordanians and in fact the Iraqis were telling us in no uncertain terms that states of the neighborhood whether it's Jordan, whether it's Iraq or whether it's Saudi Arabia or whether it's Syria are unusable in the streets of Iraq. So I think it's just idle to think that the Jordanians can pull our chestnuts out of the fire.

SERWER: What I want to turn back to the insurgency that you mentioned and ask you just how much popular support do you think the insurgency has, and aren't there really two insurgency, the Ba'athist on the one hand, and the supporters of Al-Sadr and Shia on the other hand. AJAMI: No, you're absolutely right. One thing about this insurgency is it's absolute stubbornness. We insisted all along that it would come to an end. We thought bagging Saddam in December of 2003 would bring it to an end, it didn't. It has defied our expectations. There has been a hardcore to it. I think the subtle rebellion, the rebellion of this young cleric Muqtada Al-Sadr has pretty much run out of steam, because he lost the support of the Shia and he lost the support, above all, of the people of Najaf and Karbala, who wanted him out of their holy city so they can live, so they can make money from the traffic of the pilgrim s. So I think we are talking about the jihadists who come from Jordan and Saudi Arabia and Syria and so on, and the remnants of the Ba'ath. This is the hardcore of this resistance in the Sunni triangle of Iraq.

CAFFERTY: How is the parading of Saddam Hussein and many of henchmen into a courtroom going to play out in that country over there?

There's a poll out that almost denies belief that some 40 percent of the Iraqis surveyed in this poll would like to see Saddam Hussein released, despite record of atrocity and cruelty and all the things that we all know went on when he was in control over there. He walk under to the courtroom the other day, on Thursday I guess it was, looked the presiding judge right in the eye and was -- I don't want to say arrogant, but certainly was not cowed by his circumstance and that has to be something that I would think would be of some concern, at least to the American authorities when he goes into court after being in custody for that long and doesn't seem to have lost a step, if you get my drift.

AJAMI: Right. Right. Well, Jack, I think in a way, if you take a look and watch what Saddam was trying to do, in fact, his views on Kuwait have never changed. That he conquered Kuwait because, well at any rate Kuwait was part of Iraq. This was his message and this was his insistence. He never heard of Halabja and the gassing of the Kurds. And as far as that poll that 40 percent of Iraqis would like to see him go, I treat this poll with great skepticism.

You know, Jack, I'm skeptical about the value of polls in a country where people are dodging roadside bombs and explosions and car bombs. The idea that 40 percent of Iraq would like to forgive him. If you break down the stats of Iraq, when you realize that 80 percent of Iraq are Shia and Kurds who are victims of Saddam, I would treat this with great, great caution, this public opinion poll.

LISOVICZ: Nonetheless, though, there's that cult of personality and to a certain part in the Arab world here is this leader with this culted personality who's totally defiant and unrepentant and he's on TV screens all over the world.

That gives him some sense of influence still, does it not?

What should the government do, in other words?

Should they conduct this trial in private? AMAJI: No, I think it's very important for the Iraqi people and to lesser extent the Arab people beyond Iraq. We can talk about the Arab people beyond Iraq to watch around Saddam and the (UNINTELLIGIBLE) around Saddam. It's not just Saddam, it's "Chemical" Ali, it's Tariq Aziz, the silver tongue apologist for the dictator. It's very important for the Iraqi's and for the other Arabs to watch the spectacle of justice. And I think if you watch the deep response of the Arabs, not the things they say on Al Jazeera and on the satellite channels, there is tremendous belief that this is a good thing for Iraq and a good thing for the Arab world. I think if you look at Egypt and Syria, people are watching and seeing that a despot has been brought to justice. And for Saddam, I think, this whole skeptical is trying to erase from the minds of his followers and from the minds of Arabs, that humiliating surrender on December 13, 2003 when he was flushed out of the spider hole without firing a shot. He was shown to be a coward and I think people discount a lot of this bravado.

CAFFERTY: It's a good thing to have you on this program, as well, professor. And I thank you for being here.

AJAMI: Thank you, Jack.

CAFFERTY: Fouad Ajami, professor of Middle Eastern studies at Johns Hopkins University.

When we come back, the terrorism bug. Video of terrorists beheading their captives can spread fear like a virus. Find out how it works, why it works and why so many people want to watch something that is absolutely unwatchable.

Plus, Mike Wright (ph) and super tight Sports; Olympics; World Affairs. As the new Spiderman movie swings into the theaters, see what Wall Street thinks of Marvel Comics, the company behind the blockbuster.

How to get a sheep skin without getting fleeced. We'll look at why a college education might not cost as much as you think. Stick around.


CAFFERTY: Terrorists spread fear one of the ways by publicizing their acts and for a long time they relied on mainstream television and newspapers to spread the pictures and accounts of their dirty deeds. But in today's Internet age, terrorists are not settling for a news clip when they can post terrifying videos on the Web, like the gruesome beheading of Nicholas Berg and others.

Joining us now to talk about how terror has gone high-tech is Josh Devon, who's an analyst at the Site Institute of Washington D.C., a group that studies terrorism.

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


Why is the Internet the media of choice for the terrorists?

DEVON: It's a way to reach a global audience with very little cost and very little technical ability, you can publish a video, a picture, virtually any type of video file easily to Internet and you'll instantly have a global audience.

SERWER: Hey, Josh, you know, these terrible images are up there, there pervasive and most of us choose not to watch them. But the question is, how do we fight against this?

The terrorists are using this as a weapon, what can we do about it?

DEVON: This is exactly the problem, I mean, it's propaganda and, you know, it's grotesque and some people are drawn to it and how do we combat it. And we're not going to stop them from making these type of tapes. What we can do is try to establish our own sort of counter- propaganda, similar to what we saw during the Cold War. And to sort of establish individuals you know, who are part of the culture that's being affected by this propaganda to go out and sort of, you know, be amongst the people and establish alternative media sources that aren't necessarily American or Western, but that promote tolerance and peace.

LISOVICZ: But, Josh, let me play the other side of this. I've never seen one of these beheadings, I certainly never plan to. I think that is the ultimate propaganda as to why these people behind such heinous acts are, in fact, the devil themselves. I think that if you ever did happen to see it, it would just increase the reasons why terrorism needs to be fought.

Can't you accept that type of view?

DEVON: Yes, I mean, terrorism definitely needs to be fought and sometimes needs to be fought with guns and weapons. But we are dealing with two types of audiences here. One is the audience of people who are obviously repulsed by these sort of images and people meant to be scared by it and that's the reason they're putting this tape up. I mean, they want to drive westerners out of Saudi Arabia. But on the other hand, these tapes are appealing to people who support al Qaeda and you know, al Qaeda has ratings, you know, just like any media station and they have to appeal to their audience. And these kinds of, you know, blood thirsty videos are very appealing to al Qaeda and its supporters who are basically just out for blood.

CAFFERTY: You almost make it sound like al Qaeda is a marketing campaign. This is the most heinous, subhuman, gory, ridiculous kind of behavior that mankind is capable of. How can this do anything but engender additional hatred for the people who are capable of doing stuff like this. This isn't human behavior, this is something else.

DEVON: And to 99 percent of the world, I think that everyone would agree with you there, but there is a small percentage of people who are, who are rallied by the type of material who sort of see, you know, these beheadings as symbolic of the beheading of America itself, and the west itself.

CAFFERTY: What about the idea that the longer they put stuff like this on the Internet, the more they may be shooting themselves in the foot. That anyone with an ounce of civilization in their bones is going to see a couple of these and say, I don't want anything to do with people who are capable of this kind of behavior.

DEVON: And you know, I think, that will happen to a lot of people, but again there's will always be that small minority of people who are rallied by this type of material.

SERWER: You're preaching to the choir a little bit, though. I think in the West, some people will watch this and view this stuff for the first time and then never do it again and if you've got people, say in the Muslim world, supporters of al Qaeda, I mean, how many times will they watch it?

How sustainable is this campaign I guess is what I'm asking.

DEVON: There are stories of just young men who are unemployed sitting in cybercafes who are watching these Web sites and listening to the audio clips and watching these videos and just being totally indoctrinated by this type of material.

LISOVICZ: It should be said of course that, none of the mainstream television networks have aired, including CNN, any of these awful atrocities and crimes against humanity.

Josh Devon, analyst with the Site Institute, thank you so much for joining us.

DEVON: Thank you.

LISOVICZ: Coming up after the break, Wall Street minus this boring stuff. Get up to date as we jam six months of market action into just a few minutes.

Plus, less than meets the eye. See why a college education may not cost as much as you think.

And times of the (UNINTELLIGIBLE), cynicism about businesses is running high and that's helping a company in the business of cynicism. Check out that product line, Despair Incorporated.


LISOVICZ: This week not only marks the long expected interest rate hike from the Federal Reserve, but it also is the end of the first half of the year.

Christine Romans joins us now for a look at how the first six months of '04 have been for the market.

Hi, Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: Hi there, Susan. It was a maddening first half of the year. If your like most people you, own stocks or mutual funds, your mutual funds statement won't make you very happy. You probably earned 2 percent or 3 percent on those stock investments. The Dow actually fell the first six months of this year and the S&P an the Nasdaq up only slightly higher. You know, you had to be invested in Japanese stocks, natural resources or wireless stocks to get any decent returns, frustrating because so many of the so-called experts actually recommended selling small cap holdings after last year's big rally, so you may have missed that move.

And now, the economists are optimistic on the second half of this year, but you know, we started the third quarter with troubling news this week. You mentioned the disappointing jobs growth. Also GM's sales fell 15 percent, Wal-Mart, Target, the discount retailers saying that June looks a little softer than they thought. Taken together, that my indicative of a weakening consumer. So, June is turning out to be a real interesting turning point to watch for the rest of the year.

CAFFERTY: What are you hearing about the Fed decision on interest rate, Christine, the much anticipated quarter point rise didn't take anybody by surprise and then later in the week some data came along that tended to suggest they might have had the right idea. I'm talking about the jobs' report that only showed 150,000 jobs. Perhaps preempt any thoughts of a more aggressive interest rate action on the part the Fed on Wednesday.

ROMANS: Jack, that's exactly what I'm hearing. I'm hearing a lot of people saying, any thoughts of a 50-basis point next time around have now all but disappeared. Because you know, you still have 35 states in this country that have fewer jobs than when the recession ended and, so, that is something that people are still looking to. Also, Boston Consulting report out saying American companies should be outsourcing as many jobs as they possibly can. So, some people are saying that, you know, this job situation is going to be really interesting and it might be something to watch for the Fed. It might mean the Fed might continue to go pretty slowly if jobs don't start growing more quickly now.

SERWER: All right, Christine, lots of data flying around there, right?

ROMANS: Sure, yes.

SERWER: Christine Romans, thanks for that report.

"Spiderman 2" is sure to be a big hit at the box office this weekend, and that is music to the ears of the company that owns the Spiderman character, Marvel Enterprises. In addition to movie books, Marvel is also expected to make a webful, get it, of cash on the merchandising tie-ins to the film. Marvel is trading near it's 52 week high, but is Marvel already at it's peak?

That make Marvel Enterprises our "Stock of the Week." And I've got to tell you, this has been a tortured, tortured company. Finally getting it right after years. Goes back to 1962 with Stan "The Man" Lee. He's the guy who created Spiderman.

LISOVICZ: He's a legend.


SERWER: Then you get people like Ronald Perelman, the writer who owns the company and Carl Icahn coming in was a big mess, finally seem to have it right.

LISOVICZ: Filed for chapter 11 bankruptcy protection five years ago. But when you have a sequel that comes out like Spiderman with reviews that say it was better than the first, yes, it is a marvelous time for Marvel -- I was waiting to use that. I was waiting to use that.

SERWER: No more of those.

LISOVICZ: There are 4,700 characters and they includes X-Men, Fantastic Four, the Hulk and their sequels coming out for a lot of these characters.

CAFFERTY: I was reading that the price of the stock, you mentioned, is already baked into the returns that their going to get on "Spider-Man 2." But it occurs to me, you know, when they made the first couple James Bond movies, they didn't stop. They kept making because people kept going to see them. Their's nothing to say they could have Spider-Man 3, 4, 5, 6, 7. I mean, look what they did with Superman, the same thing.

You know, once one of these character gets into the public consciousness, the sky's the limit. Maybe buy the stock now in anticipation of another half a dozen Spider-Man movies.

SERWER; I don't know if you own any of the action figures, Jack, I hope that isn't true. OK, but those are big, too.

CAFFERTY: My action figures are all in a covered wagon.

SERWER: And you know, what was so maddening for the people who ran this company though, is they watched Spider-Man and those movies in the 70's and they say, watch Batman which, Warner's rolled made huge amounts of money. And they're sitting there in litigation with Spider-Man year after year. They finally were able to get these things going. You know, these are properties that are hot, you're right, they can keep going on for a long time. I wonder how fadish this is. Hulk, they rolled out tons of toys. I was in a Wal-Mart and they were just sitting there not selling. So, it's not a straight shot. It really is kind of a gamble I think.

LISOVICZ: What the company is trying to do now is get that growth overseas and there's a lot of potential there and it really help, of course, if you have a blockbuster sequel like Marvel has now to tie into with Spider-Man.

SERWER; But once I find out what Jack's action figures really are, then maybe I'll invest in that company. CAFFERTY: They're old. Very old.

SERWER: Like "Toy Story" going back.

CAFFERTY: Same idea.

SERWER: Right.

All right, the producers are going to yell at us if we don't run some commercials, so we're going to stop here for a minute.

Coming up, big money on campus, nobody said college is cheap, but we'll tell you why it may cost less than it looks for some people.

And every silver lining has a cloud. Huh? Find out about a company that took the boss' motivational posters and put in what the workers really think.

And bad hair and weird ties. It's all come rushing back when we show you a Web site that tests your knowledge of '80s song lyrics, hints flock of hair do's.

LISOVICZ: Oh my God, Seagulls.



WHITFIELD: Hello, I'm Fredricka Whitfield. Here's a quick check of the head lines.

Six members of Iraq's National Guard were killed today when improvised explosive device went off at the oil storage facility they were guarding. Five others wounded. Also today a U.S. Marine died of wound he suffered during fight fighting yesterday.

An emotional homecoming today for two former hostages from Turkey. Their Iraqi captures decided to let them go, after the air conditioning company they worked for agreed to stop doing business with the U.S. military in Iraq. The two technicians were first reported missing more than a month ago.

Hundreds of Alaska residents have been on the move due to a huge wildfire that's threatening their homes near Fairbanks. An the evacuation order remains in effect for 300 homes and businesses, about 30 miles north of the city. Firefighters say cooler temperatures and calmer winds may help their efforts today.

National mourning for President Ronald Reagan ends. It was supposed to last 30 days from June 5, but the White House ordered flags to fly at full staff again. A White House spokesman says, flags are being raised for the fourth of July weekend in honor of Reagan's memory.

A first for Russia. Maria Sharapova becomes the first Russian to win the Wimbledon crown. Playing in her first Grand Slam final, the 17-year-old beat two-time defending champion Serena Williams, 6-1, 6- 4. Sharapova sank to her knees in victory and then rushed to hug her father.

More news in 30 minutes. Now back to more of IN THE MONEY.

LISOVICZ: Rebates, incentives and comparison shopping. I'm not talking about buying a car, I'm talking about getting an education. While base tuition prices at most colleges are going way up, our next guest says not everyone is paying full price.

Sandy Baum, is a senior policy analyst with The College Board, and she joins us now from Washington.

Great news. It sound like my approach to shopping, always avoid paying retail. The fact is, the good news is it really can be done, increasingly for college tuition.

SANDY BAUM, SENIOR POLICY ANALYST, THE COLLEGE BOARD: Well, it's true that very -- a very large number of people do pay less than the published price of college. That's very important for people to understand because otherwise they'll think that college is out of reach. And in fact, over the last years of the 1990s and the first couple of years of this decade, financial aid for students was increasing very rapidly. There was more and more grant aid available and that is very good news for students. The question is, which students are getting that grant aid and are we doing enough to help low-income students pay for college?

SERWER: Hey, Sandy, can you quantify this because, of course, you read about six-figure cost of sending those dear little ones to college and it's just daunting. I know because I got two, and I'm looking at saving oodles of money.

But how much off of retail price are we looking at here?

Can you give us a number?

BAUM: Well, it really depends on what kind of institution a student attends and it also depends on who that student is. We do know that on average at public colleges and universities students are getting about $2,500 of grant aid. That comes from the federal government, it comes from state governments and also comes from institutions. Some students don't get any grant aid at all. The federal government gives grants to low income students. And institutions and states give grants sometimes to low-income students and sometimes to other students that they're eager to enroll.

CAFFERTY: You mention who the money is going to. If a student can demonstrate financial need, then they probably can get some sort of financial aid. On the other hand, the middle class students why who may not be in dire straits, but unable to meet the huge costs of college, particularly private schools in the country, are getting an increasing number of grants.

What's wrong with that? BAUM: Well, an increasing number of grants are going to both middle and upper income students although, it's important for low- income students to know that many, many grants still go to them. The problem is that there are limited funds. Middle and upper income students are likely to go to college anyway and while it's difficult to pay giving them additional grant aid doesn't really increase the possibility that they'll go to college, it might change their choice of institutions. And for low-income students the issue really is can they go to college at all. The tax credits that the federal government has instituted helped primarily middle income students because the lowest income students don't pay taxes and, therefore, are not eligible for them. The federal government's Pell Grants do help low-income students. They can get a maximum of $4,050 to help pay college tuition.

CAFFERTY: There are a lot people that suggest, though, that giving middle class a break on some of the expense of college education is probably a good idea.

BAUM: Well, that's right. And certainly many middle class people do need help going to college and the problem is not that there is money out there to help middle income students, that's a good thing. The real issue is that there should also be enough money, more subsidies for low-income students.

LISOVICZ: Where are we on that -- on that score, since clearly the upper income levels have benefited nicely in terms of grants and some aid?

BAUM: Well, that's right, it's a mixed story. Many colleges do meet all the need of low-income students. So, if you can, for example, get into Harvard or a number of other institutions like that, you will be able to go regardless of your financial circumstances. Many other institutions don't have enough money to help low-income students as much as they might like to. But everyone should apply for financial aid and look for the money because there is money out there. In terms of the federal government, in 2001 and 2002 the federal government significantly increased its Pell Grant funding, but it's not looking good for the coming years. Right now federal government, because of budget constraint, is not planning to do much to increase those Pell Grants that are so important for low-income students.

SERWER: Sandy, we're running out of time here. But what you're saying the real cost of college is 10 to 15 percent less than the advertised price. The government is making up the difference, but it's not some sort of mandated program, it happens sort of subrosa, shouldn't taxpayers know about this and shouldn't this be out in the open?

BAUM: Well, I think it is out in the open. First of all, institutions are making up a big part of the difference and the part the government is very making out in the open. There are Pell Grant and there are tax credits, they are very programs. We would like students to know more about them so they could take advantage of them more effectively. CAFFERTY: Well, one of the ways they can do that is by watching this fine program IN THE MONEY on which you have been so gracious to appear with us, and I thank you for that.

BAUM: Thank you.

CAFFERTY: All right, Sandy Baum, senior policy analyst, The College Board.

You're watching IN THE MONEY, where the business news show that addresses shirt and tie, but thinks more Levis and boots.

SERWER: Yeehaw.


Coming up, service with a sneer. Find out about a company that makes a motivational poster which makes motivation look like desperation. My kind of outfit.

And drop a dollar in your metal juke box, the fun "Site of the Week." We'll check your knowledge of the music of the 80's. Welcome to VH1. Back after this.


SERWER: What would it take to motivate you a little more on the job.


SERWER: A pay increase, absolutely, an extra week of vacation, that would probably help. But how about a poster of two attractive mountain climbers helping each other up a cliff with some inspirational catch phrase written below. Some HR executives think motivational products do pep up worn-out workers. But who's really getting a lift?

Lawrence Kersten is co-founter of Despair Inc, an anti- motivational company. He joins us today from Dallas. Welcome, Lawrence.


SERWER: Listen, if what you were doing is debunking message statements and those kind of things in corporate motivational things, then more power to you. Is that what you're up to here?

KERSTEN: Well really, we're poking fun at what we believe are some of the excesses and foibles and weaknesses that often occur in organizations both with managers and with employees. We take a lot of shots at management, but we also take shots at employees, as well.

CAFFERTY: Well, since the people on this program are all employees of CNN, let's focus our tax on management what do you say?

KERSTEN: That's a good idea.

CAFFERTY: Hear, hear.

You know, Andy mentioned in his lead-in, HR departments spend huge amounts of money coming up with these things that you see on the wall someplace, going, do a better job because it's the right thing to do. And you're going, wait a minute, I asked for next Friday off and the guy said you can't have next Friday or the Friday after that, or any Friday for the rest of this year off. Is this misplaced use of resources in the corporate world in your opinion, or does this stuff really work?

KERSTEN: Well, I believe that those posters generate cynicism. If you've got posters slapped all over the office that say excellence and quality, but, yet, you believe that you're leaders are engaging mediocrity, then how is that going to inspire you? People aren't going to put up with hypocrisy in their leaders very long.

LISOVICZ: Let's critique some of your own best work, Lawrence. We have the rainbow poster, for instance, that says dreams, dreams are like rainbows. Only idiots chase them. I also like the one on team work. Can you tell us that?

KERSTEN: Let's see, team work. Is that the one with the snowball.

LISOVICZ: A few harmless flakes working together can unleash an avalanche of destruction.

KERSTEN: That's exactly right. And anybody who has worked on a team has had that feeling.

SERWER: Yes, Lawrence, Can you talked to us a little bit about how you got into this line of work? It's a little twisted. I agree with what you're doing here, but to sort of take it up as a full time occupation is a little different, isn't it?

KERSTEN: It is. And it actually grew out of an unpleasant experience in my own work history. I had a couple friends who were working for an Internet service provider in Dallas and the president of the company had made all of us promises of a certain amount of stock ownership in lieu of compensation. And he continued to delay rolling out the stock ownership plan until he had made so many promises of ownership in the company that he couldn't keep them all.

And the three of us who started the company were three of the people who he chose not to keep his promises to and the day we found out that we weren't going to get what we had expected, we got together to kind of compare notes. And one of the guy husband gotten a catalog for motivational products and we picked it up and just began to spontaneously make fun of it because it seemed so absurd given our most recent experience.

And this president of the company was a big fan of motivational products. And one of the guys said that we have to start a company that sells parodies of these and when that company was sold, we didn't make a lot of money, but we made a little bit of money and we took that money and started Despair Incorporated.

CAFFERTY: Are you making any money with this sort of making fun of the guys who want to inspire us? Is this a financially viable operation you're involved in here?

KERSTEN: We've been profitable for several years now. Last year we grew at 100 percent, and our revenues are close to $4 million a year and currently we only have three employees, the three founders.

CAFFERTY: Ever think of going public? Because I'd buy some shares of your company. It kind of fits a lot of the things I think.

KERSTEN: Well, we have to get a little larger.


LISOVICZ: Lawrence Kersten, co-founder of Despair Inc. And a man who is making money on cynicism. Good luck to you. Thanks for joining us.

KERSTEN: All right. Thank you very much.

LISOVICZ: There's more to come on IN THE MONEY. Up next, don't look now, we'll peel back the leopard skin spandex for a look on a new Supreme Court ruling on Internet porn.

And get on the air without having to wear any makeup. That's a concept. Drop us an email and we might read it on the air. The address, We'll be right back.


CAFFERTY: This week the Supreme Court struck down a law that stopped kids from getting access to Internet pornography. Our webmaster, Allen Wastler, has the latest on this. And I might suggest in all the years I've known him seen him work quite so hard on the stories.

LISOVICZ: Side comment there.

SERWER: Research and research and research.

CAFFERTY: Work, work, work.

ALLEN WASLTER, MONEY.COM WEBMASTER: Actually, it gets down to the heart of the Internet. Should the Web site be responsible for letting kids in or out, or should the parent in the family be responsible for keeping kids at bay. And that's where the decision comes down.

In 1998, Congress passed the law saying, hey, Web sites, you got to put blockers on, age verifiers, credit checks so that no kids can get into your dirty little Web sites. Of course, online publishers and the ACLU and other free speech groups all went, no, no, no and took it to the court and took it to court. Now, this last week the Supreme Court did essentially a legal punt. They sent it back to the lower court saying, hey, we're not going to rule on free speech versus protecting kids right now. What we are going to say is lower court, now that it's six years later, because our justice system works with such blinding speed, what about the technology now for filtering?

So, the lower court will have to figure it out and weigh it out. Let's see, we've got filter and we got checks.

I think if you look in the grand scheme of things, though, you have to show an I.D. for cigarettes, you got to show an I.D. for liquor. If there are certain places that you have to be 21 years old to enter, seems to me, you can extend the same kind of logic to the Internet and say, hey...

CAFFERTY: But doesn't just say, Allen, right now, are you 21? Click yes. I mean, how could you get beyond that?

WASTLER: Yes, because the law is not being enforced right now. But what if you had to click and say you're 21, you get to this part. If you're 21 then you probably have a credit card, don't you? Why don't you give us that. Or if you don't, then you probably signed up with one of these adult check services that essentially you proved to them that you're an adult. And then it's a third party referral that can say, yep, he's an adult, let him in.

CAFFERTY: And then you'll get lawsuits for invasion of privacy and trying to take information from a person that they're not entitled to have.

WASTLER: And, there's also this simple thing, you can just go to a computer that sort of resident information and just boost it anyway. Kids are smart.

CAFFERTY: On to the fun site of the week, which is guaranteed...

WASTLER: Eagerly anticipated site.


WASTLER: You know, I put these fun sites out on my daily eye opener newsletter. This one got such a response, had to share it with you. It's a site, they have a long list of song lyrics from the '80s, you've got to fill in the blanks. Let's check out the first one right now.

Blank corvette, baby you're much too fast.

CAFFERTY: Little red, little red.

WASTLER: Little red corvette

LISOVICZ: By Jack's favorite artist, the artist known as Prince.

WASTLER: Very, good. Very good. Let's try the second one, let's see how you do. We'll get a little tougher with you.

Oh, we're halfway there

Oh, oh, living on a prayer...

LISOVICZ: This is Bon Jovi.

WASTLER: Oh, yes. And the blank is?


WASTLER: We're halfway there. I'll give you half credit on that. Notice the producers put in music this time, I guess they didn't like my singing.

OK. Third one, final one. This will be the tough one here. OK, Mom threw away your best blank blank.

LISOVICZ: Got to party.

SERWER: I don't know this lyrics, though. I know the tune.

WASTLER: It would be: porno mag. There you go. From the Beastie Boys, of course.

CAFFERTY: You're proving that the same kinds of issues that are confronting the Supreme Court today were around 25 years ago when the Beastie Boys made the movie.

All right. Thanks, Allen.

Coming up next on IN THE MONEY, it's time to hear from you as we head towards some of the e-mails we received in the last week. You can send us an e-mail right now. We're at


CAFFERTY: It's time now to read some of your answers to our question about, how you think will change for our troops for Iraq, now that the Iraqis are running the government there, sort of.

Dave wrote this, "nothing will change. A lot depends on the Iraqi people, not the government. Will the people fight for themselves, or keep asking us for help? We'll be in Iraq for quite some time. I feel for every soldier over there."

Dan in West Virginia wrote this, "the biggest difference will be that the Bush administration is going to try to distance itself from Iraq more and more, but the insurgents will eventually take over Iraq and use it as a base for terror. The United States did the terrorists a big favor by removing Saddam Hussein."

Joe in North Carolina takes an opposing view with this letter, "as the Iraqi military gets stronger, our troops will see less action. Iraq will become a long-term ally of ours and this will be another step in the right direction of the war against terror." Time now for the email question for this week, which is as follows: "What makes you proud to be an American on this Fourth of July?" Send your answers to And the most enterprising of those will be read next week on the program.

Should you also choose to do so, we invite you to visit the show page,, which is where you'll find the address for our fun site of the week. Which I might add, I knew the answer to absolutely none of the questions.

SERWER: Zippo. Zippo lighters.

LISOVICZ: Zero for Three.

CAFFERTY: If it wasn't I'm Earl Haggard, I don't know anything about them.

Thank you for joining us for this edition of IN THE MONEY. Appreciate it. Thanks to CNN correspondent Susan Lisovicz, "Fortune" magazine editor-at-large Andy Serwer and managing editor Allen Wastler.

Join us tomorrow, 3:00 Easter time. We'll discuss how the founding fathers would view America if they could see it today. We'll talk about whether or not they would be proud of what they got started 240 years ago. That's tomorrow at 3:00, IN THE MONEY. Hope to see you then.


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