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CNN IN THE MONEY
How High Will Oil Prices Go; A look at Shiite Cleric Mutada al Sadr
Aired August 21, 2004 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN ANCHOR, IN THE MONEY: And the impulse that drives an impulse shopper. Find out what you're really getting when you buy stuff that you don't need. All that and more, but, first, a quick check of the headlines.
FREDRICKA WHITFIELD, CNN CORRESPONDENT: Now in the news, more gunfire around the Iman Ali mosque in Najaf today. Inside, followers of radical Shiite cleric Muqtada al Sadr are preparing to hand the whole shrine over to representatives of the grand Ayatollah Ali al Sistani. The move may calm down the situation in Najaf which has seen constant fighting between rebels loyal to al Sadr and Iraqi and U.S. troops.
A deadly grenade attack killed more than a dozen people in the capital of Bangladesh today. Hundreds of others were wounded when several grenades exploded as Bangladesh's former prime minister was ending a speech at an opposition rally. Many of her supporters, angered over the attacks, smashed vehicles and set them afire. Protests spread to about a dozen other cities and towns. The former leader was uninjured seriously.
Democratic presidential candidate John Kerry is taking on the group Swift Boat Veterans for Truth and their latest ad that challenges his Vietnam service. The Kerry campaign has filed a complaint with the Federal Election Commission regarding the ad, saying it was illegally coordinated with the Bush/Cheney campaign. The Bush camp calls the complaint frivolous and false. The controversy was not mentioned in President Bush's Saturday radio address. Mr. Bush instead, focused on education, praising the no child left behind act.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We are already seeing hopeful results. Math scores are up from fourth and eighth grades across the country. Fourth graders in urban schools are showing strong gains in both reading and math and from Georgia, North Carolina and Maryland, to Illinois, Wisconsin and New Mexico, minority children are improving test scores and narrowing the achievement gap.
WHITFIELD: Another day in the dark for more than 241,000 Florida residents. Power companies are working around the clock to restore electricity to those homes hit by hurricane Charley. The storm hit the state last weekend destroying thousands of homes. Charley is also blamed for 25 deaths.
And there's some strong storms threatening the northeastern U.S. Meteorologist Rob Marciano has a check of the weather.
ROB MARCIANO, METEOROLOGIST: Not a bad-looking Saturday in many spots, especially across the Midwest and great lakes, diving south across the central plains. But this blue line is a cool front and behind it is some cool comfortable air, but ahead of it some warm tropical air and when the two collide, we get showers and storms so that will be the focal point throughout the day and the evening today. Some of those shower and storms could be heavy at times across the northeast, maybe some hail, maybe some gusty winds and that stretches all the way down to the Gulf of Mexico.
But behind this front is a really nice dry air mass and that will be pushing east through the overnight tonight and in through the day tomorrow. Isolated monsoon thunderstorms expected across the inter mountain west. A little late season cool front sliding into the Pacific Northwest. Boston, New York and Philadelphia will see a threat for showers and storms today, some of which could be heavy at times, but cooler, dry weather expected tomorrow.
Atlanta up to about 82 (UNINTELLIGIBLE) seeing some thunderstorms throughout the evening and there's your Midwest, cool and dry forecast today, a little warmer, a little more humid tomorrow. Denver a high of about 80, Houston 93 degrees, kind of steamy there the next couple days. And there you go, Los Angeles, 72, good living on the west coast, the Bay area, temperatures right around 70 or 72 and there's that weak front sliding into the Pacific northwest, Portland, Seattle could see a shower today lingering into your Sunday. I'm Rob Marciano. That's the latest check on weather. Enjoy the rest of your weekend.
WHITFIELD: Well, thanks a lot. I'm Fredricka Whitfield at the CNN center in Atlanta, more news at the bottom of the hour. IN THE MONEY begins right now.
CAFFERTY: Welcome to the program. I'm Jack Cafferty. Coming up on today's edition of IN THE MONEY, bullet points: Iraq's insurgents using violence to make their case and try to control the future of the country. We'll look at what that means for the coalition troops and for every day Iraqis.
Plus, putting the commander in commander in chief, military service, one of the hottest issues in this year's campaign for the White House. See if time in uniform really makes a better president.
Getting a life. We will speak with an author who says you're not just buying stuff when you shop. You're buying an experience. Joining me today a couple of IN THE MONEY veterans, Lou Dobbs correspondent Christine Romans and money.com managing editor Allen Wastler.
So we've got oil being speculated and driven and traded ever higher, getting near $50 a barrel toward the end of the week. I got a letter from a guy who said, hey, remember that idea from 10 or 15 years ago about extracting oil from shale? At the time that idea was around, it was estimated they could do it for about $40 a barrel. I wonder if these oil prices are eventually going to drive some innovation of that kind and hybrid cars and, you know, change a little bit about the equation that runs the economy.
CHRISTINE ROMANS, CNN CORRESPONDENT: Didn't we say that back in 1973, '74 and '75 and here we are 30 years later, right back where we were before. There is only about 35 years left before we hit the peak amount of oil in the ground and after that it's only down hill from there. Yet we're spending all this money on infrastructure to keep pulling oil out of the ground. We got more cars in this country -- I keep saying this, more cars in this country than people to drive them. Why? We're going to run out of oil eventually, not in our life times, but...
ALLEN WASTLER, MONEY.COM: There's still an inflation factor to consider. Oil today would have to get to over $70 a barrel to hit the same amount as what it actually cost back in the 1970s oil crisis. We're not there yet, so we're not going to do anything innovative or forward-looking or anything until the price of oil gets up there and then we'll go, oh, gosh I guess we should do something.
ROMANS: The difference though that this time it's not supply driven. It's demand driven, because it's not -- look at China, 41 percent increase in demand for oil this year over last year. China's building the equivalent of Los Angeles freeway system every I don't know how many months and 95 percent of the people with driver's licenses in China have only been driving for less than a year. Imagine how that is just going to explode as an oil consumer.
CAFFERTY: Although the biggest consumer of oil is still us right here. All right. We'll see what happens.
No matter how the battle ends in Najaf, many other insurgents are fighting across Iraq like there is no tomorrow, or at least if there's no plan for tomorrow. Read the headlines. It looks like they're more committed to blowing thing up, than building something new in that country. But each insurgent group really does have a vision for tomorrow's Iraq and the visions problem is, don't match up, not at all in some cases.
To help us understand what the insurgents want, we're joined by Jonathan Schanzer, who's a research fellow with the Washington Institute for Near East Policy. His book "Al Qaeda's Armies" is due out early next month. Jonathan, nice to have you with us. Let's begin with Muqtada al Sadr who has been in the news almost daily, hourly, minute by minute for the last couple of weeks. What does this guy want? It seems he's been offered everything from immediate annihilation to a role in the new government and he doesn't like any of the options. What's this guy after?
JONATHAN SCHANZER, WASH. INST. FOR NEAR EAST POLICY: This guy wants to bring the Iraqi government down. This is a man who is completely opposed to the U.S. presence in Iraq, doesn't like the interim government, doesn't like the way things have been going, wants to create more of a Shia policy throughout Iraq and wants to play a leading role in that, but not through the rules that have already been created.
WASTLER: Jonathan, OK, he's the latest one grabbing the headlines right now, but there are other insurgents groups out there. Can you give us just a very brief overview of the major ones and how big a threat they are?
SCHANZER: Sure. I would say number one, the other one that's making a lot of headlines is the group called (UNINTELLIGIBLE) Jihad. This is the one that's headed up by Abu Musab Zarqawi, al Qaeda associate that's been operating in northern Iraq and in the center of Iraq. This is an al Qaeda-affiliated group that is hell bent on essentially destroying the U.S. presence inside Iraq and to help create an Islamic calcify (ph). This is a group that is not going to negotiate with anyone under any circumstances and they're really interested in creating spectacular attacks that are going to make the United States look like they're suffering a mortal blow inside Iraq.
Then you have what I would just call the Shia -- or the Sunni insurgency, rather and this is just an insurgency of former Ba'athists, as well as Sunni fundamentalists inside the Sunni triangle that are very unhappy with the fact that on the eve of the war they were the decision makers inside Iraq. Overnight, it seems, they lost power and they want that power back. They want the United States out of Iraq. This group, however, I think is a little less dogmatic and would actually be able to work with the U.S. government, if given the proper conditions.
ROMANS: It's interesting because all of these groups have two goals in common, to get rid of the United States and to have power. They all can't have power. Beyond that, you have some that are secular, some that are -- want a pure Islamist state. After whenever, we are out of the picture, do these groups just degrade into civil war?
SCHANZER: Well, this is the fear. I mean in other words, one of the things that we're seeing right now is what these groups are able to do is work together because of their common anger at the U.S. presence, but it's quite possible. Analysts have continually talked about the possibility of civil war after, you know, after the U.S. leaves. You know, the only thing that I think, you know, we can say for sure is that the Shia aren't interested in a civil war at all. In other words, what they're looking for is power and they believe that if they're able to keep it together long enough, they will have power. I think the Sunnis in general are the ones that could be more interested in sparking a civil war. These are the people that have less to lose and the people that I think we need to worry about the most.
CAFFERTY: Let's go back to Muqtada al Sadr. Based on what you just got through saying, the senior Muslim Shiite clerics have no use for this guy. He arguable represents a very small band of people. The Shia were the bulk of the population, but they were subjugated and oppressed by the Sunnis, who were the guys under Saddam Hussein who ran the country. The coalition has come in, taken the Sunnis from power, kind of opened the thing up, but Muqtada al Sadr is answerable at some point to the senior clerics, the senior Shiite clerics who have already said publicly, this is not the future of our country. So let me get back to what you do about this guy. Obviously, the coalition possesses the military tools necessary to eliminate him, if that's the decision it's comes to, but it seems like he is just being allowed to fester on the stage here and continue to be problematic. What is the answer to this man?
SCHANZER: Well, I think the answer is what we're doing right now. You're watching Allawi trying to present options to al Sadr to perhaps be able to bring him into the fold. That's the first step. If it doesn't work out after that, I really see this guy as really being cannon fodder. I think his days are numbered and it's not going to be that difficult to get in there. What he's banking on though is the fact that perhaps he might be able to spark an Arab outrage. In other words, the Arab world may be watching and saying, hey, I can't believe the United States is going into the Imam Ali mosque and desecrating one of the holiest sites in Islam. The thing that's different here...
ROMANS: He's not desecrating it, though? That's what is so ironic, talk about booby trapping it, people are concerned that he could blow it up.
SCHANZER: Well, you know, he is an Arab. He is a Muslim and therefore he has the right to do that. Having a foreign power go in is something very different entirely. But I think the difference here is that, if this was happening at the (UNINTELLIGIBLE) mosque in Jerusalem or if it was happening at the grand mosque in Mecca, you would see an absolute outrage, but the fact that we're dealing with the Shia population which doesn't really speak to the Sunni Islamic fundamentalist population in the Arab world, that's the -- I think the main reason why you're not seeing that kind of outrage and why the United States may have an easier time getting a handle on the situation.
CAFFERTY: Jonathan, we got to leave it there. Thank you very much for your insight. I appreciate it. Jonathan Schanzer, research fellow, Washington Institute for Near East Policy and the author of "Al Qaeda's Armies."
Time for a little message from our advertisers. Coming up after the break, we have the following, the Uncle Sam seal of approval. Military experience counts big in this year's White House fight. We'll see if it really makes a difference though when it comes to running the country as president.
Plus, later death should not be pricy. Find out where the smart money goes when it's time to plan a funeral. Here's a hint, might be Costco.
And might over mouse. We'll show you an online destination that will put your brain to the test. Stick around for the fun site of the week. You're watching IN THE MONEY you lucky thing.
CAFFERTY: The war on terror is one of the things that turned this presidential campaign into a virtual war of the generals. Before we get caught up in the hype of whose war record is more impressive, President Bush's as commander in chief in Iraq or John Kerry's as a naval lieutenant in Vietnam, i might be worthwhile to ask if it even matters.
Our next guest doesn't think it does and he's here to tell us why history is on his side. Dan Roberts is an assistant professor of history at the University of Richmond and the host of NPR's "A Moment in Time." Dan, nice to have you with us.
DAN ROBERTS, UNIVERSITY OF RICHMOND: Thank you, sir. Good to be here.
CAFFERTY: If the conventional wisdom is right, that the military background is not the key ingredient in whether or not you'll make a great president, why has it become such an overwhelming topic of discussion in this campaign, do you think?
ROBERTS: Well, look, war is the most significant social event in any generation. But I don't think that military service is a direct connection between success as a president. Some of the best presidents have served; some of the best presidents have not served. Washington did, Jefferson did not. Madison was a war president, he didn't serve. Jackson was a hero of the battle of New Orleans and was basically an excellent president. Lincoln only served for about six weeks during the Blackhawk war during the 1840s but no one would question his ability as a war-time president, but he made fun of his service, thought they were marching around in the mud more than they were actually fighting the Indians.
In the 20th century, one Roosevelt served as a member of -- as the leader of the Rough Riders, but Franklin Delano Roosevelt, one of the greatest presidents, was just assistant secretary of the Navy during World War I. On the other hand, some of the biggest presidential duds have been war heroes, Harrison, Tyler were relatively inconsequential chief executives. The two terms of Ulysses S. Grant were slow motion death and Rutherford B. Hayes, elected under circumstances similar to the election of 2000 was an ultra-religious presidential cipher.
ROMANS: If that's the background, it's interesting, why would there be this perception that a military president, someone with, you know, the pictures and the uniform that is something that could be sold to the electorate for an election?
ROBERTS: I think it is -- pardon me. I think it is a question of validation. It's kind of getting your ticket punched. Particularly after the Civil War and World War II which were the two great conflagrations after the American revolution. Voters basically asked two questions. Where were you in the republic's hour of greatest need?
Where were you in 1863?
Where were you in 1942?
Were you on the slopes of Chicamanga (ph)?
Were you on the beaches of Guadalcanal and if you weren't, why the hell weren't you? So political candidates had a hard time processing that and that's the basic question.
Did you know that after World War II, no presidential ticket was elected until Bush and Cheney that did not have a combat, at least one combat veteran on it? No presidential ticket was elected until Bush and Cheney. So that's the first question. Where were you in the hour of the republic's greatest need?
But the second question and I think this one is playing out most effectively in this campaign is, will you waste my children's lives and the treasury of the republic on what is basically an ill-conceived or poorly managed war? That is the (UNINTELLIGIBLE) question that the voter is asking. The assumption that a combat veteran, someone who has actually been under fire and under the pressure of direct combat will not -- the last thing in the world they'll do is send somebody off to experience that exact same thing. See, John Kerry is asking a very interesting question, something that has not happened ever before in the history of the United States of America. He's basically saying -- I want --
WASTLER: Let me interject here because you were talking before about punching tickets and the importance of certain factors of the vote. The vet vote is out there and that's a very important part of the electorate. Is the image of ticket punched, of, I'm a veteran, here's my uniform and everything, is that a way of securing the vet vote?
ROBERTS: It not necessarily will secure the vet vote but those who do get one more question raised against them eliminated and those who don't have to deal with that question. Kerry is asking an interesting thing. He's saying, for the first time in the history of the United States, I want you to throw the captain from the ship or throw the captain from the bridge in the midst of what he defines as a firefight. It's never happened before, 1812, 1940 with the war clouds gathering. Americans did not do it. In 1864 and 1944, they looked at it. They thought about it and they basically said they would stick with the pilot in the time of trouble.
ROMANS: All right, Professor Dan Roberts, assistant professor of history at the University of Richmond. Thank you so much for joining us today.
ROBERTS: Thank you.
ROMANS: Coming up after the break, oogling Google. We'll look at whether the search engine's Wall Street debut shined as brightly as investors had hoped.
And the price of expressing yourself. Find out what we're saying when we buy things we absolutely don't need.
Plus, a little box shopping at a big box store. The discount coffin has come to Costco. When you get all that toilet paper, you can pick up a coffin. See if the funeral business is ready to go low budget.
ROMANS: Now, let's take a look at the week's top stories in our money minute. Think the refinancing boom is over, not so fast. Most interest rates may be on the rise, but mortgage rates have taken a dip this summer much to the joy of homeowners. Refinancing soared 21 percent last week as mortgage rates hit a four-month low.
The state of Illinois has abandoned attempts to get Federal approval and announced this week a plan to buy prescription drugs from Canada and other countries anyway. The state's governor says an Internet site will be ready by next month that will allow Illinois residents to get cheaper medications from abroad. The FDA refuses to go along with the move because it says it can't guarantee the drugs' safety.
And hurricane Charley may soon be hitting you right at the breakfast table. Prices for Florida orange and other citrus products could rise sharply after the storm knocked ripening fruit to the ground, destroyed fruit trees and damaged processing plants.
The folks at Google tried and failed to put their own spin on the IPO process, but they made out pretty well in the end. The stock opened at $85 a share, closed up more than 18 percent after the first day of trading. Lots of things, though, went wrong in Google's long trip to the market, including an idea to auction shares before its IPO in hopes of getting a higher price.
Also, regulatory questions and a controversial interview in "Playboy" slowed the whole process down. Google is our stock of the week and when we say Google rallied 18 percent, let's keep in mind, it is still well below where they thought that they could take this thing public, up to $135 a share.
CAFFERTY: Despite the fact that the price is still lower than $135 a share, if you look at its projected earning's per share, the price is still less than what Yahoo! is based on its earnings per share. So is there upside left in Google's stock or when the lockdown period expires, will they be running for the exits, I guess, is the question.
ROMANS: 40 million shares eligible will become eligible to be sold over the next four months. That is a lot of stock and there are a lot of people who (UNINTELLIGIBLE) unlock a little bit of it.
WASTLER: I don't think it's a good investment, not only for the short-term reasons, but for the long-term either. Because the management -- if you're going to goof your IPO that much, what does it say about your management, OK? You go, you talk to "Playboy" when you got an impending IPO.
ROMANS: I love the idea of SEC lawyers and analysts reading "Playboy." I just love that picture of those guys --
CAFFERTY: We just read it for the articles. In this case, they probably really do.
WASTLER: Also, it's a competitive business. I mean so you're the big search maven right now, but you got Microsoft breathing down your neck. You got Yahoo! breathing down your neck. There's a lot of competitive threat there and all the contextual (ph) advertising that they've done, that they've made their real bone on, that's only like a year or two old. You do not have a track record there and a lot of ad things come and go. They were fads once.
ROMANS: They might get a little pop if S&P puts the stocks in any of its major indices. That means all the fund managers would have to buy some of it. But you talk to a lot of the tech mutual fund managers, they're not really sure they want to buy it quite yet and when you look at sort of an analysis of the trading yesterday, it looks as though it was a lot of retail trading and there was some of the big institutional, the 10,000 share trades or more were all on the down tick, meaning those were all sells. So that is kind of spooky, I think.
CAFFERTY: The retail investor is the one that usually will wind up on the short end of a deal like this, just if you look back through history. We all buy it a few shares at a time when the price is high and the smart money is buying it when it falls.
WASTLER: This is not a good investment. I would urge people to stay away from it.
ROMANS: Wait six months, wait six months and watch what happens and then decide if you want to buy it.
CAFFERTY: There you go. Coming up next on IN THE MONEY, as we continue here, you can't always get what you want, but that doesn't stop you from trying, right? We'll speak with an author who says she knows why you buy stuff that you really don't need.
And later, when the boom goes bust, we'll tell you why foreclosures on homes are rising sharply in some parts of the country.
Plus, you think you're so smart. Well, you'll get a chance to prove it when we show you our fun site of the week a bit later. Stick around. We're going to have a great time.
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