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CNN IN THE MONEY

How Vulnerable Are U.S. Financial Institutions to Terror Attack?; Many U.S. Beaches Polluted But More Policing & Accountability Taking Shape

Aired August 8, 2004 - 15:00   ET

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


(BEGIN VIDEOTAPE)
ANNOUNCER: From New York City, America's financial capital, this is IN THE MONEY.

(END VIDEOTAPE)

JACK CAFFERTY, HOST: Good afternoon. Welcome to the program, I'm Jack Cafferty. Coming up on today's edition of IN THE MONEY:

Battening down your bucks: On the Street and online terrorist have an eye on America's money. We're going to take a look at how vulnerable the financial system might be.

Plus hard left, a former Nixon speech writer says extreme liberals are spewing hate about the country he loves. We'll let Ben Stein make his case on that.

And the big blue money spinner: A good beach could mean a hot summer for a smart tourist industry. We'll see if America's beaches are clean enough to keep the cash flowing?

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

The campaign is up and going and there's a lot of stuff playing into who might be the next president of the United States this week. We had economic numbers from a terrible jobs report to disappointing retail sales; we have a fed meeting where interest rates might go up; we had terror alerts that came out in Washington, New York and Newark, New Jersey, beginning last Sunday. Who wins and who loses, do you think based on the stuff that just happened in the last week or so?

ANDY SERWER, "FORTUNE": Well, I think both candidates are scrambling right now to grasp the issues and understand which ones are right for them. The economy is sort of a never-neverland, it's kind of weakening, but it's not really strong enough, I don't think, for John Kerry to grasp on to, although I think he will a little bit. Security seems to be an issue that maybe John Kerry could play on. But the candidate -- but the public seems to like the president more on that, and then you go state by state, different issues matter in the different parts of the company -- in the country. It's kind of a complicated situation. SUSAN LISOVICZ, CNN CORRESPONDENT: Why, just the jobs report was a terrible thing. All Americans can understand that. That there were estimates that there would be 200,000 or more jobs created coming in at 32,000? That's terrible; and big losses in the services sector and this is a manufacturing economy anymore, it's a service economy. So it's bad news and it's very tough. And nobody knows really, where it's going with oil prices skyrocketing; the stock market obviously is down on the year to date. It's a tough time.

CAFFERTY: The other thing that surfaced right at the end of the week is this commercial that the republicans started running about John Kerry's war record. Is that a valid issue 30 years after the Vietnam War? Or is that nasty partisan stuff?

SERWER: Listen, you have John McCain saying on the republican side that this is bad stuff.

CAFFERTY: Yeah.

SERWER: I think that is a smack down right there.

CAFFERTY: Cheap shot.

SERWER: I don't think that's a strong suit for the president to be criticizing John Kerry's war record. I don't think that's going to work. But again, you know, they are looking at angles to go at each other, it's not clear cut and that's what's going to be really crucial as we go forward towards November.

LISOVICZ: I think that ad will be short lived. I think it makes the president look bad even if he has nothing to do with it and in fact has distanced himself from it.

CAFFERTY: Well, and there's that old thing about glass houses.

SERWER: And get your dental records up, dude. Right?

LISOVICZ: Get you dental records out.

CAFFERTY: All right. It's natural to think about fighting terrorism in terms of protecting people, but there's lots of money at stake too, lots and lots of money -- yours and mine, especially if the focus is on a major financial institution. This week the alerts of war that al Qaeda could targeting financial centers in New York City, in Washington, D.C. and in Newark, New Jersey. A lot of surveillance is old, but then again al Qaeda is known for being very patient and taking its time before launching an attack.

We're going to try to find out how secure America's financial infrastructure is now as we talk to Michael Smith, the leader of business continuity for Marsh Risk Consulting. He's joining us from Toronto, Canada.

Welcome to the program. Nice to have you with us.

What safeguards are in place when it comes to protecting the financial systems of this country?

MICHAEL SMITH, MARSH RISK CONSULTING: Well, every one of these financial institutions is a regulated institution. I know they've been working very, very hard since September 11 to improve their posture with respect to resilience, to terrorist events, or any other interruption, for that matter. There's a whole alphabet soup of regulating agencies dancing around requiring these financial institutions to enhance their capabilities and be able to respond better.

LISOVICZ: It would seem, Michael, that some of these financial institutions know that they are a target for terrorism. For instance, at the New York Stock Exchange, one of the veteran traders said on Monday that the biggest danger down there on Wall Street was the camera crews tripping over the tourists who were congregating there. Do you like the idea -- do you support the idea of these kinds of widely publicized alerts?

SMITH: I think the alerts can only help, they only raise the consciousness of not just the population, but also of the businesses themselves. And the businesses all have additional things they do when the alert level goes from, say yellow to orange. Every one of these institutions puts up additional security measures, moves to an alert status in their response teams, and so it can only be good that these alerts assist businesses and people in realizing these things can happen.

SERWER: Michael, what about the scenario whereby a lot of companies leave New York. I know Mayor Bloomberg's probably not appreciating this question, neither is the Governor Pataki , but you know, given the Internet today and telecommunications, these institutions could be anywhere and wouldn't it make sense for them to do that -- to relocate? Is that being discussed?

SMITH: Well, it's not only being discussed, it's happening. Critical portions of the financial infrastructure, you know, 20 or 30 key institutions: banks, insurance companies, trading houses, have already decided that they're going to be splitting some of their critical operations and moving part of them a distance away, so that if one part of that critical function fails, for whatever reason, then the rest of that critical function that is maybe 100 miles away or even 500 miles away or even on the other side of the world will be able to continue doing business. And this is critical business that we need to have done for us, you know, as consumers of financial services.

CAFFERTY: But the business, most of that business is done on computers these days. And I just wonder whether the computers in New York City down on Wall Street or in Omaha, Nebraska, aren't they vulnerable? Can't sophisticated people attack the computer systems that are the backbone of these big financial institutions?

SMITH: Certainly they can attack them and they're already targets of attack, there have been a lot of, you know, cyber attacks happening for, you know, icon kind of American companies, companies with "America" in their name. Every one of these critical institutions, though, has back-up centers, typically more than one. I know of one major bank in New York that had two centers, data centers, is now building a third data center. So, if they lose one they will always have two operating. They are at a distance from each other. It's not particularly well publicized where they are. I think a concerted terrorist attack though, could well figure that out and might possibly target all three of those data centers.

LISOVICZ: You know, the New York Stock Exchange, for instance, has two back-up trading operations, one in Manhattan, undisclosed obviously, and the other undisclosed in another borough. Given the lessons of 9/11 and what we saw in terms of the economic fallout, would it be as severe -- I mean, the economy seems to be in a softer spot right now from the growth we've seen over the last year.

SMITH: Would the impact be as severe?

LISOVICZ: Yes.

SMITH: That's the question?

LISOVICZ: Yes.

SMITH: I don't think the impact would be as severe as we saw with September 11. It was an object lesson for all of us, including me and my industry of helping companies plan for these events. Very clearly, there's been several years of concerted effort, significant investment, dollar investment in multiple resilient functions, redundant functions, redundant infrastructure, and it's a much, much more robust community than on September 11.

CAFFERTY: All right. We're going to have to leave it there, Michael. Thank you for joining us. I appreciate you for being on this program. Michael Smith is the leader of the business continuity at Marsh Risk Consulting. Thanks again.

We're going to step out for a minute. When we come back, taming Chicken Little: Writer Ben Stein says famous lefties are telling us the sky is falling. Find out why he thinks America's pretty good after all.

Plus, bling on wheels: We will look at top contenders for car of the year.

And sunny side up: Summer time is the season for sand, surf, and swimming. Find out whether U.S. beaches are looking clean enough for a full and rewarding and meaningful vacation experience.

(COMMERCIAL BREAK)

CAFFERTY: Well, debating what's wrong with this country and how to fix it, that's as American as apple pie, it's what we do here, it's called "freedom of speech." Recently that's meant a slew of books from authors on the politician right and left pointing fingers at each other and getting down right nasty sometimes. Now Ben Stein is in the game. The former Nixon speech writer, economist, television game show host, and all-around interesting fellow, has co-authored a new book that blasts liberals for their harsh criticism of U.S. policies at home and abroad. The title says it all, "Can America Survive? The Rage of the left, the Truth, and What To Do About It." Ben Stein joins us now to talk about bur under his settle on this subject.

Sounds like a vast left-wing conspiracy out there, Ben. What's going on?

BEN STEIN, FORMER NIXON SPEECH WRITHER: It actually isn't a vast left-wing conspiracy, it's a fairly small group of nuts, but unfortunately they're very highly concentrated in Hollywood, so they get a lot of attention, and the things they say about America are, I think, hurting the war on terror.

We have a simple premise in the book, which is, America is an incredibly great country, it is the shining city on the hill, it is the light of mankind, the best thing that has happened to the human race. You can criticize Bush all you want, criticize Kerry all you want, criticize Nader all you want. That's politics. They volunteered for it, they deserve to get the criticism. But this system, the American system is an incredibly successful wonderful system. We should not be doubting ourselves, we should be absolutely certain that in the war against the bad guys we are the good guys, and we are backing ourselves and not thinking that we are the moral equivalent of the terrorists, it's that simple. We take issue by issue: The economy, environmentalism, racism, gender issues, go through them, talk about the progress that's been made, talk about the criticism and set -- we hope set the record straight. Sorry.

SERWER: Ben, I mean, but doesn't the right-wing sort of get a little bit tarnished here as well? I mean, stereotyping, name calling, calling people "liberal wienies," Willy Hortons, stereotyping, lack of tolerance -- isn't that anti-American?

STEIN: Well I -- I think you haven't touched the worst one.

CAFFERTY: Which is the worst one?

STEIN: I mean, there are some people on the right who are total psychos who said that the World Trade Center and Pentagon terrorism was brought on by our toleration of homosexuals. So those people are completely crazy. I mean, those people should be locked up in a loony bin. So, of course, there's some on the right, but I see a great deal more of it on the left. And unfortunately, as I say, a lot of it comes from my native -- not native, but hometown of Hollywood and I think we should bear in mind that a person may be a star in terms of getting to be a highly paid musician or actor, but the fact he says America is a "fascist country" or the American flag is a "joke" or American leaders are "evil," that's nonsense. I mean, that's just nonsense. America is an incredibly great country with problems, a very rich country with problems, a fair-minded country with problems. Let's concentrate on the positive, realize who the good guys are so we can be united in the fight against terrorism.

LISOVICZ: But Ben, can't you be a great patriot or patriotic and still be critical of the administration? The economy right now is...

STEIN: You know, the economy is not bad. The economy is great.

LISOVICZ: Really?

STEIN: Yes, it's absolutely great.

LISOVICZ: How so?

STEIN: Profits are at an all-time high, percentage of people owning houses are at an all-time high, by the household, (UNINTELLIGIBLE) measurement, employment is at an all-time high, wages per hour are at an all-time high, personal income is at an all-time high. The economy is doing great. By one measurement, which is -- seems to be a questionable measurement, employment is not doing anywhere near as well.

LISOVICZ: Well, that's important for consumer spending, that's important for corporate profits.

STEIN: Consumer spending is doing incredibly well, and although there have been blips just in the last couple of months, corporate profit are at an all-time high, although not on the DOW or the S&P, but for proprietorships in general, the corporate profits are at an all-time high. But, that's not really the issue. There will be fluctuations around the mean of a steadily -- a steady upturn in prosperity. I don't question people can ask what they want about the Bush tax cuts. I think the Bush tax cuts were excessive, to tell you the truth, I'm an upper income taxpayer, I'm sure as upper income as you, but I would be very happy to pay more taxes especially if it went to support military pay.

LISOVICZ: Part of the -- Ben, part of the reason why there's these corporate profits is because jobs have been cut.

STEIN: Well, that's the way corporations work, I mean, let's remember, the people who own those profits are overwhelming to the pension funds and widows and orphans of people who worked in corporations, those corporate profits are not owned by Daddy Warbucks, there are a number of very wealthy people in this country who own a big chunk of the corporate profits, but it's a good thing if corporate profits are up. And the people that lose their jobs, it's unfortunate. My grandfather lost his job during the most of the depression and suffered terribly for it, I it's a bad, bad thing, but they will find new jobs. It's unfortunate; any involuntary unemployment is too much. But, there is also a lot to be said for corporations having the freedom to let people go to improve bottom lines so their stockholders get more profits.

CAFFERTY: You know, but there's -- anything really new going on here, Ben? I mean...

STEIN: Yes.

CAFFERTY: One of the -- one of the byproducts of freedom of speech is that you have people that take it to illogical extremes, whether it's on the right or left. We have a long history of nuts periodically surfacing in the history of country and espousing all kind of weird positions on whatever including whether or not there are communists running throughout the country and all kinds of other things. Isn't the American public bright enough to understand that you don't listen to the right-wing conservative neocon religious zealots, or the left-wing limousine liberals out there in Hollywood, where you come from, that want to tell us all how to live our lives while they've got $50 million in the bank and 93 servants waiting on them in their mansions out in Bel Air? I mean, can't the average guy in the middle of the country figure out that those are extremists and they don't amount to a hill of beans when it comes to the center of the country that makes the whole thing kind of work?

STEIN: We, you know what, we're going to help those people make that sound decision, that's the point of the book. I think you're right. You know, a very famous European commentator said America is a much more stable country than the European countries because we have this vast Midwest, and Southeast, Northwest to absorb the shocks and the craziness from the East and West Coast. We are trying to help them put it into perspective. But, I think your point is well taken. But, how are people going to know what the real truth about America is if you have Tom Cruise and Susan Sarandon saying nonsense unless occasionally a person like me and my co-author, Phil Demuth, write down some statistics that tell the truth.

LISOVICZ: Well, bringing people together, that's what we aim to do on IN THE MONEY.

STEIN: Well, that what we aim to do -- that's what we aim to do too. You know, I saw you ciron (ph) that Nixon was one of my great heroes, and he is one of my greatest heroes, he was an incredible peacemaker. No one has done more to bring peace to this world in the last 100 years then Richard Nixon and I will never turn my back on a peacemaker.

CAFFERTY: Fair enough.

SERWER: OK.

LISOVICZ: OK.

SERWER: One man's meat.

STEIN: Yeah, he's my guy. But also Nixon said something smart, Nixon said -- well, I know...

SERWER: One thing?

STEIN: Well I know the rest of the line. Nixon said one thing -- well, more than one thing that was very smart, he said "If we are always shouting at each other, we can't hear each other." And so it is, it seems to me in a time of war, time to turn down the volume a little bit, if the left-wing has an idea on how to get out of Iraq in a safe, great way, I want to hear it, I'd like to get out of there tomorrow. If the right-wing has an idea of how to get manufacturing employment up, I want to hear it. I think we need to hear all the good ideas. LISOVICZ: Ben Stein, Nixon speech writer, game show host, prolific author. His latest book is "Can America Survive? The Rage of the Left, the Truth, and What To Do About It." Thanks for joining us.

STEIN: Thank you.

LISOVICZ: We've got a lot more to come up on IN THE MONEY. Up next:

Location, location, location: Now that Martha Stewart may be heading for jail, we'll see how her company's holding up.

And later, something worse than sand in your sunscreen. You don't want to really think about that. The biggest downer at the beach is finding junk in the surf. Find out how clean the water looks this year across America.

And the winner by a whisker: Check your eye for a face as we bring you our fun site of the week.

(COMMERCIAL BREAK)

LISOVICZ: Now, let's take a look at the week's top story in our "Money Minute." Oil prices continue to rewrite the record books this week. Tight supplies and surging demand pushed prices up to a series of intra-day highs and some analysts now say oil can hit $50 a barrel by the end of this year.

The Securities and Exchange Commission has slapped a fine on Halliburton. The agency ordered the oil services giant to pay a $7.5 million fine for changing its accounting practices. The SEC says the change allowed the company to report 1998 profits that were 46 percent higher than they would have been without the change.

And more American workers are getting raises this year. A new survey shows 87 percent of employees nationwide will get a pay hike this year, up from 83 percent in 2003, but don't go out and buy that Cadillac just yet, the study showed companies are planning on average raises just 3.5 percent.

SERWER: Whether you're making bundt cakes or license plates, you've probably heard of our stock of the week. Oh, that's cruel. Martha Stewart living Omnimedia shares took a hit this week after the company reported a loss of 39 cents a share in the second quarter. Company officials blame the loss on a drop in ad revenues tied to Martha Stewart's quote, "personal legal situation." Isn't that nice. Last month, Stewart was sentenced to five months in prison for lying about a stock sale. Shares of Martha Stewart Living Omnimedia have seen plenty of highs and lows over the past year and that makes the stock our -- the company, "Stock of the Week."

Of course, you know, it has been all over the place, there are speculators in this stock that came in after she was sentenced and drove the price of the stock up. We've been talking about how Martha Stewart needs to put all this behind her. So far she's doing an excellent job of not doing that, dragging things out. And I think this really going to, over the long-term, hurt her, because -- you know, it's not so much is she a crook or not, I just think that she has to get really get back to making her products because some people are saying, is Martha Stewart over? I mean, is she getting tired out, here?

LISOVICZ: Well, one thing you hear over and over again is: the market hates uncertainty. And what is Martha Stewart's situation? It's uncertain. She's appealing the verdict, there could be a new trial, so what does that do? It just prolongs the uncertainty.

SERWER: The agony.

LISOVICZ: In the meantime they continue to cut employees and cut the mail order catalog, and as someone who gets a lot of catalogs, that was a pretty good one.

CAFFERTY: Yeah, but she was sentenced to five months in jail.

SERWER: Yeah.

CAFFERTY: If she'd gone in the day she was sentenced, she'd be three and a half months away from getting out, now.

SERWER: Right.

CAFFERTY: That's 100 days, and the prison part would been over. The next part is sitting in her mansion doing house arrest for five months, but has access, obviously, to all the communications she needs to start run her company again. So, it's a big mistake to maybe just not go ahead and do the five months and get it over with and go on down the road and get back in business. The question we always have to ask thought on this program, about the stock of the week is, do you buy this stock here, given the fact that at least, she is getting somewhere near the end of the road on all this legal stuff.

SERWER: Well, this is where you get to the whole thing about Martha Stewart's going to come back because she always has, she's really tough. But, I really wonder about this now, and I've kind of change my mind about this, because I do think she'll come back. But, I'm wondering if the bloom isn't off the rose. You see this company, our company "Time" magazine, the Time Warner Company coming out with "Real Simple."

LISOVICZ: Which is a great success.

SERWER: And it's taken a lot of market share away from Martha Stewart, there are a lot of copycats out there, that's what the media business is all about, is copying someone else's idea. So, you know, she's not the new fresh idea, the kid on the block any more. The longer she's doing this legal stuff, the less time she has to focus on her business, and boy she'd better do that. So, I would avoid the whole thing.

LISOVICZ: I agree with you 100 percent. She is a pioneer in the business, she put out a great magazine, and nothing succeeds like success. You had Oprah Winfrey, "Real Simple," and others borrowing her layout.

SERWER: Yep.

LISOVICZ: You have the "Food Network" on now, so there's just one personality who owns the food and hospitality area, you have: "Iron Chef," emerable -- "Emeril," and everyone in between doing it. It's a much more competitive landscape, in other words.

CAFFERTY: And the competition isn't going to jail.

SERWER: Yeah.

LISOVICZ: Correct.

CAFFERTY: They're all going to be out there competing.

SERWER: And the whole thing about "Real Simple" -- you know, Martha Stewart, that magazine was always so complicated, how to guild your -- you know, curtains and all this stuff.

CAFFERTY: Yeah really.

SERWER: And "Real Simple's" sort of like, and again, owned by our company, but -- you know, just do stuff simple.

LISOVICZ: Simple.

SERWER: Because, you know, some of that stuff was just crazy.

LISOVICZ: I mean, it has -- it found an audience.

SERWER: Right. Right. All right.

CAFFERTY: Whether you make bundt cakes or license plates.

SERWER: Somehow, I have a feeling we're going to be talking about this lady and her company again, don't you?

CAFFERTY: Yes.

LISOVICZ: Yes.

SERWER: Up ahead on IN THE MONEY:

The pump verses the plug: We'll look at hybrids and other hot models that could wind up as the car of the year.

Plus, in the swim: Some American beaches look great, but others make you want to call housekeeping about Davy Jones' locker. Find out whether the beach scene is looking cleaner this year.

And, not by the hair of his chinny-chin-chin: See how good you are at telling a man by beard he wears.

(COMMERCIAL BREAK)

DEBORAH FEYERICK, CNN ANCHOR: IN THE MONEY continues after a check of stories now in the news.

Iraq issues an arrest warrant for Ahmed Chalabi a former Governing Council member. Chalabi spokesman did not know the charges and he could not comment on other reports that an arrest warrant was issued for Chalabi's nephew Salem Chalabi.

In Baghdad a mortar attack wounds at least six people. Police say at least seven mortars exploded in central Baghdad. Bomb experts were set to diffuse two that did not detonate near Amos (ph).

Pakistani intelligence officers say a top al Qaeda operative arrested in Dubai is now in their custody. Qari Saifullah Akhtar is accused of an assassination attempt against Pakistan's president. Though sources add Akhtar is the believed to have close ties to Osama bin Laden.

More on those and other stories coming up on "CNN LIVE SUNDAY" beginning at 4:00 p.m. Eastern, including an extreme diver who went into the water during a shark feeding frenzy. Yes, he lived to tell you about it. Stay tuned IN THE MONEY continues after a break.

(COMMERCIAL BREAK)

LISOVICZ: Trading in your ride for a new set of wheels whether you're looking for fast, affordable or funky, the class of 2005 has a lot to offer. "Money" magazine auto writer Lawrence Ulrich is here now to help narrow the field for you. Welcome.

LAWRENCE ULRICH, "MONEY" MAGAZINE: Hello.

LISOVICZ: You know, with oil, talking about $50 a barrel, I don't see SUVs in your top six, but I do see a familiar American icon. The Ford Mustang.

ULRICH: Well, yes, the Mustang's got to be considered one of the frontrunners for the various cars of the year awards. It's an American icon, has been since the mid '60s when it was launched. You know, frankly the old Mustang was ready to be put out to pasture and the new models solves those problems. It has got the retro '60s fast act styling that baby boomers will be fond of, but more than that, it is the first really modern redesign of this car from the ground up since the late '70s.

If it's a Mustang, it has got to be affordable. This car is going to start at about $18,000 with a 210 horsepower v6, and move up to the GT version for about $24,000 with a 300 horsepower v6. So it has the bang for the buck that all Mustang fans demand and terrific styling, slick interior, little bit tight in the back seat, but it is definitely a frontrunner.

SERWER: I like the sound of that engine there, Lawrence. Definitely some sizzle.

ULRICH: Nice rough little exhaust, definitely.

SERWER: Another car that is really hot these days is that Chrysler 300c; they call it the baby Bentley. What up with that?

ULRICH: Well they are indeed; this is the kind of big, bold all- American sedan that we just haven't seen since the days of tailfin Cadillac's. They're calling it the baby Bentley. For an all-American car, some things that are nailing people is that Bentley styling and actually German technology under the hood.

Of course, Chrysler is a corporate overlord as Mercedes. So we have got a Mercedes E class rear suspension design, we've got a Mercedes transmission, Mercedes based stability control system. So a lot of good stuff under the skin. And it is a very smooth, big, comfortable car.

As everyone from hip-hop videos to the suburbs seems to really be responding to the styling. Great affordability as well. Starts in the low $20,000 and moves up to the $30,000 with that fantastic 340 horsepower hemi v8. That really makes this move.

CAFFERTY: You have to do a little looking to find a car company that is getting it done any better than Toyota. And one of the new things that they have coming is something called Scion xB. What is that about?

ULRICH: Well for people who aren't familiar with it, Scion is Toyota's youth brand. And the xB is we found it...

CAFFERTY: Look at that. That's a funny-looking car.

SERWER: We'll put Jack in one of those.

ULRICH: The first time you lay eyes on this thing, you really don't know what to make of it. You laugh, your jaw drops, but you spend a little time with it and this little breadbox on wheels really grows on you.

CAFFERTY: Not on me it won't.

ULRICH: This is the hottest of the three Scion models. And it parts anywhere but inside it has really got enormous utility. This thing has more headroom than almost any car or SUV on the market. CAFFERTY: That is one funny-looking ugly little car.

ULRICH: Or a bulldog, it is so ugly, it's cute is the other way to look at it.

CAFFERTY: No, it's not.

ULRICH: OK. Beauty in the eye of the beholder definitely. But starts at $14,000 and it's a good economy and Toyota quality.

LISOVICZ: Well you know, Lawrence, I'm not into the breadbox look either and I'm not as much of a gear head as Andy. I like the idea of a luxury coupe and BMW has got something just for me.

ULRICH: This one is a little out of my price range at $70,000 for the coupe moving up to about $77,000. LISOVICZ: Maybe not for me.

SERWER: The installment plan.

ULRICH: $77,000 for the convertible. But for the lucky folks who can afford this car, this is the got to have luxury coupe and convertible of the moment. BMW has taken a lot of flack for its recent styling, but I think when the average person lays eyes on this car, they don't see controversy they see a gorgeous hot car that makes you look like a stud behind the wheel or a babe, as the case may be.

LISOVICZ: Jack.

ULRICH: Very sophisticated performance, sophisticated styling. v8 under the hood, 320 horsepower and all the hallmarks of BMW combining a very supple ride with incredible sporting performance.

SERWER: Hey Lawrence quickly, the Mini's has got a convertible coming out, those are kind of cute, right?

ULRICH: They do indeed and speaking of BMW of course, BMW who has revised this British classic. And it's absolutely a brilliant car.

SERWER: Brilliant.

ULRICH: Yes, thank you. And the top down version is just going to keep this in the news and keep it fresh. It's got it all. It's affordable. It's a hallmark of design. Should be required to study for designers of any car company, inside and out. Go-kart handling. Great urban car. The thing just parks anywhere. My neighborhood in Brooklyn, these things are just proliferating like crazy.

CAFFERTY: Oil went north of $44 a barrel this week with that in mind and the fact that I probably should redeem myself a little bit with Toyota; let's talk about this hybrid car that they plan to sell 300,000 this year the Highlander. You know a couple years ago you couldn't give a hybrid car away. Now they are saying maybe 300,000 will be easy to sell and there may be demand for more.

ULRICH: Yes, it's going to be tough, you know, just the other day, it looks like they're having trouble with production capacity and unfortunately now these SUVs hybrids are going to be delayed until February because demand for the popular Prius is so high, they just can't get it these. So we won't see these on sale until maybe February or March.

But you know the knock on hybrids of course has been lack of space and sluggish performance. These are the next wave of hybrids are going to put them into the kinds of SUVs which are for better or worse the cars that people want. So with these Toyota and Lexus hybrids, they're promising actually better performance, better acceleration than the gas only versions but with the kind of SUV all-wheel drive space and that high view that people kind of want in these cars.

We'll see these go on sale for roughly $35,000 for the Toyota and maybe $40,000 and up for the Lexus. But they're really interesting and they're sure to be hot in the marketplace.

LISOVICZ: I guess the day of the Hummer might be over.

ULRICH: Don't speak too soon, you know, SUVs have a lot of life left in them. We're seeing some softness in the market for maybe the very largest SUVs, but as they continue to morph into these more softer, kindler, gentler SUVs, they are more than 50 percent of the market and we don't see that going away any time soon.

LISOVICZ: I never looked at the SUV as kinder and gentler, thank you for pointing that out. Lawrence Ulrich auto writer for "Money" magazine. Great report.

ULRICH: Thank you.

LISOVICZ: You're watching IN THE MONEY the show that takes the starch out of financial news. Coming up, wave reviews; find out whether American vacationers are swimming in cleaner beaches this summer. And see how far some people will go in search for a quick buck. Alan Wastler, MONEY.com will give us the details.

(COMMERCIAL BREAK)

SERWER: If you plan on digging your toes in the sand this weekend, watch out for cigarette butts and those plastic rings that hold soda cans together. Yuck. Despite new regulations from the EPA, many beaches in this country are still a mess, but more and more coastal communities are being held accountable for shore pollution.

Here with more on this is Ava Reich; she is program manager at the National Healthy Beaches Campaign, a non-profit organization within Florida's International University in Miami. Thanks very much for coming on the program. So why don't you talk a little bit about what some of the countries cleanest beaches are. Where are they?

AVA REICH, NATL. HEALTHY BEACHES CAMPAIGN: They're all over the country. They're everywhere that a coast exists. What National Healthy Beaches Campaign does is joins with communities and beach managers around the country to help promote best practices, excuse me, at beaches and to make sure that people can find information about the places they'd like to visit.

LISOVICZ: You know Ava, I was curious to see that one of your cleanest beaches in your view is Fire Island, New York, in one of the most heavily populated areas in the country. That's great news. But population, itself, poses one of the big problems for beaches.

REICH: It's true that a beach can be very heavily weighed upon by large populations, but it is not so much the number of people in the area or attending the beach, it is what's going on with beach management in the region. How well does the community deal with run- off issues, sewage control and pollution issues that affect the beach from all directions?

CAFFERTY: What are some beaches you don't want to go to?

REICH: I don't want to go to beaches that might have --

CAFFERTY: No, I mean specific beaches like ABC Beach in South Dakota. Give me some names; you got some names of some rotten beaches in the country that you want to stay away from?

REICH: Actually I don't know specific ones, but as a beachgoer, I would say, if you go to a beach and you see a run-off line anywhere near the area you like to swim, don't do it.

CAFFERTY: What about a few years ago we had a problem I know, on some of the New Jersey beaches, this is kind of disgusting, but it was all over the news and actually made for closing the beaches and ruining a lot of the summer for people around here.

Medical waste that was washing up on shore. Apparently people were improperly disposing of stuff like this. How far have we come in tightening the regulations and better policing the way the beaches are being treated in terms of clean or not clean?

REICH: The Environmental Protection Agency passed the Beach 2,000 Regulation that requires a lot more stringent monitoring and the regulations are being obeyed in about 28 of the states around the country very nicely. Some areas aren't paying close enough attention and the EPA has work to do.

SERWER: Ava, I'm sorry, I'm a beach freak. I don't know about you, are you a beach person?

REICH: I certainly am, grew up on them.

SERWER: I hope you would with a job like that. Let me ask you a question. One thing that really I can't stand is Canada geese. I hate those birds. They're all over the place, they are all over the golf courses, on the ponds, the lakes, and they get on the beaches and they create this problem. Isn't there also a problem with "natural pollution?"

REICH: There absolutely is. The beaches are a dynamic environment, just like the human body, things happen. Things happen from natural causes, things happen from manmade causes. For example, recently, in the Cape Cod area there were seals that were passing through. Seals create seal remnants and...

SERWER: Seal remnants. You can say it, seal poop, is that what you're talking about?

REICH: Fecal matter.

SERWER: Yes.

REICH: And when those seals pass through that beach, they did have to close the beach, as does happen because of various natural...

SERWER: Seals.

REICH: Yes and you don't want to swim in that, of course you don't.

CAFFERTY: What a classy program, medical waste and seal poop. It would be a wonder if we get on the air tomorrow.

SERWER: You can say that on TV.

CAFFERTY: No, I understand. Just real quickly I was looking at lists here. Ocracoke Island in North Carolina, Wealth Leda (ph), Cape Cod, Canon Beach out in Oregon, Capalouia (ph) in Hawaii, Kiawah Island in South Carolina, there is some nice areas around the country.

LISOVICZ: And they are beautiful.

REICH: Those are some wonderful beaches. Now you might notice the name of Ocracoke Island, it was recently affected by the hurricane that just passed through. And they did have to ask tourists to head on their way home so that they could clean up the damage from of hurricane. The National Healthy Beaches Campaign, which is part of Florida International University, Internationals Hurricane Research Center looks at all these issues because storms have a big impact on our beaches, as well.

LISOVICZ: What about wetlands? Everybody wants to live by the beach. Is that still a big problem that the nation's wetlands are still being gobbled up?

SERWER: There are geese in there.

REICH: There are lots of geese and lots of places; you're going to have to deal with that. But, yes, people want to live on the shore, whether it's near wetlands or near beaches. Our populations are moving more and more toward those coastal areas. It is taxing the environment.

LISOVICZ: Ava Reich, overall, beaches are good? Quality is good?

REICH: I think we can safely say that beach management has improved dramatically and beaches are getting better. We need to ask our administration to be very fervent about taking care of our national resources and helping us keep standards up.

Beach managers and individual regions and individual counties are doing a very admirable job of taking care of their places.

LISOVICZ: And it's nice to end on an optimistic note after the conversation you had with Andy. Ava Reich, program manager, National Healthy Beaches Campaign, the National Laboratory for Coastal Research, thanks for joining us.

REICH: Thank you.

LISOVICZ: You're watching IN THE MONEY.

Coming up, the Web site that doubles as an IQ test. Allen Wastler will tell us why hundreds of surfers flunked out. And think of it as another kind of remote control. E-mail us about what's on your mind and we may read it on the air. Our e-mail address is inthemoney@cnn.com.

(COMMERCIAL BREAK)

CAFFERTY: Well, here's a bulletin. There is no shortage of get rich quick sites on the Internet. Really? CNNMoney.com's Allen Wastler though has a look at one particular site that has been associated with fraud in the past and of course he has the fun site of the week, which is my favorite part of the program.

ALLEN WASTLER, MONEY.COM: This is one froth with irony for you. You remember a little company called Enron?

CAFFERTY: Of course.

WASTLER: Sort of went down and a lot of people lost their jobs...

CAFFERTY: They hit upon hard times, I hear.

WASTLER: They sure did. There was this Web site called the DailyEnron.com and that is where people would go to share news of what happened, and tips for how to survive it and basically commiserate.

If you go there now, this is what you see the daily Enron randomizer. What's a randomizer you ask? It is one step removed from a pyramid scheme. Essentially you join, you pay a small administrated fee to the guy running the site and then you pay another five bucks which goes to somebody who is already a member of the site and now you are a member so you can get random payments in the future.

LISOVICZ: Is it paying anybody's legal bills?

WASTLER: Well, this is what happened. We found out about this, and we love irony at money.com. We are all about irony. Right? So we wrote a little story about it. Chris Crawford one of our writers she did a very good job.

People read our story and they went flocking over to the DailyEnron.com to check it out and then of those thousands that went over there apparently hundreds signed up for it. People, people, we tell you about this not to do it and you go and you do it.

SERWER: It's not an advertisement.

WASTLER: But anyway Pay Pal found out what was going on, and Pay Pal had a quick fix for that, they just sort of cut down the guy's account. Of course, other smaller services they can use, but anyway this is just what is going on.

CAFFERTY: There is no free lunch out there. What's the "Fun Site of the Week"?

WASTLER: Well, how do you feel about beards there, Jack? You think you can name that beard? CAFFERTY: Name that beard.

WASTLER: We've got a site here; let's throw one up. They have historical figures and popular figures and you have to name the beard. Name that one.

CAFFERTY: I have no idea.

SERWER: Karl Marx.

CAFFERTY: Wait a second what happened?

WASTLER: These are just some trial ones here. We are going to come-to-come up to the real ones. They're just showing you some of the beards. Different beards.

Can you name...

SERWER: That's a muskrat.

WASTLER: Name that beard, ZZ Top.

SERWER: Which one?

WASTLER: Then we got some longer shaggier ones to from history.

SERWER: Longer than that?

WASTLER: Yes. OK, name that beard.

LISOVICZ: Abraham Lincoln.

SERWER: Karl Marx.

CAFFERTY: That's a Russian. Is that a Russian beard?

WASTLER: I think you're right. There you go, baby.

LISOVICZ: He's putting a spell on us.

WASTLER: There you go. We did this one...

CAFFERTY: My role model.

WASTLER: ZZ Top, you got to love this one. Lots of beards on that site and its lot of fun.

SERWER: Jack, did you ever have a beard?

CAFFERTY: No. Never did. I have been on television since I was old enough to shave, I never had enough time off to grow one, I don't think.

SERWER: Jack with a beard I want to see that.

CAFFERTY: All right, coming up next on IN THE MONEY, it won't happen here, time to hear from you as we read some of your e-mails from the past week. You can send us an e-mail if you're so inclined. We're at inthemoney@cnn.com.

(COMMERCIAL BREAK)

CAFFERTY: A little programming note, we actually did not give you a chance to give you last week's question because breaking news required that part of this program be preempted, I think particularly on Sunday. But a lot of you sent in your thoughts anyway on our segment about how Theresa Heinz Kerry should handle being first lady should her husband John Kerry be elected president.

Karen in Hawaii wrote this, "Your show spent time on the most ridiculous of issues, how controllable is Teresa? She has given her husband unwavering support without appearing to be controlled and passive."

Another viewer Claudia wrote, "What bothers me, among other things, about Teresa Heinz Kerry is that if she were first lade, could you imagine her going with the president to some foreign country and after she says something, denies she even said it and then tells the reporters to shove it?"

And finally Margaret simply writes, "I tell you why people don't take to Teresa yet, it's because of her money."

Now, for next week's e-mail question of the week here it is, it's related to terror. Do you feel safer today than you did one year ago? You can ruminate on that and send your answers to inthemoney@cnn.com. And we also invite you to visit our show page at money.com/inthemoney, which is where you will find the address for our fun site of the week; all about beards as well as Andy's rap sheet and Susan's baby pictures.

SERWER: Nice.

CAFFERTY: That would be worth it.

SERWER: Who came up with that?

CAFFERTY: Thanks for joining us for joining us for this edition of IN THE MONEY. Thanks to our gang here. CNN correspondent Susan Lisovicz, "Fortune" magazine editor at large Andy Serwer, and money.com managing editor Allen Wastler.

Join us next week, Saturday at 1:00 Eastern, Sunday at 3:00 Eastern. Or you can watch Andy and me all week long on "AMERICAN MORNING" fine little week day breakfast type show starts at 7:00 Eastern time and that is all the way till 10:00. It is like a telethon with out a disease. Thank you for today. Hope to see you again soon.

(COMMERCIAL BREAK)

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


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