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CNN IN THE MONEY

In Washington, Iyad Allawi Lends Support to the Iraq War; Interstate Bakery Files Chapter 11 Protection

Aired September 25, 2004 - 13:00   ET

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


ANNOUNCER: From New York City, America's financial capital, this is IN THE MONEY.
JACK CAFFERTY, CNN ANCHOR: Welcome to the program. I'm Jack Cafferty.

Coming up on today's edition of IN THE MONEY, notes from underground. The Iraq has a batch of insurgents groups; they're fighting a common enemy. See if the stage might be set for a classic guerrilla war there.

Plus, why the polls sometimes don't add up. If they're so scientific, how come the numbers are all over the place? A polling expert will join us and walk us through that deal.

And fake news with a real edge. There's a new book from "The Daily Show" people explaining America and how it works, or doesn't many some cases. We're going to talk to correspondent Steven Colbert a little later in the show.

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

Be still my heart. Only, what? Five more days until the first presidential debate, more tightly orchestrated than an Off Broadway show. They've turned these things into a non-event.

ANDY SERWER, EDITOR-AT-LARGE, "FORTUNE" MAGAZINE: It's all about the choreography. Isn't it? And you know, I remember in school, a debate was you put two kids together and had them go at each other, right? Like, you pointed fingers. You said this, that. There is not even going to be any interaction now. There's a commission that the candidates control that sets these things up, and it has become milquetoast.

SUSAN LISOVICZ, CNNFN CORRESPONDENT: Yes. It is all in the details, according to a lot of critics. First of all, Bush had this big victory because the president wanted to talk about the strong suit that a lot of people say is his, which is foreign policy. Then you have -- well, but for that, then the Kerry camp got three debates instead of two. So it's all of this and it all comes down to sound bites it seems. CAFFERTY: Yes. The only one I'm interested in is the Cheney- Edward debate. I think that Bush/Kerry thing would be predictably dull and boring. But the Cheney/Edwards thing has potential. I mean there's real potential.

SERWER: Yes.

CAFFERTY: There's just a whole lot of things there. And I just hope that it is not as tightly orchestrated as these others because...

LISOVICZ: We'll ask Comedy Central since we have them on the show about that.

CAFFERTY: Yes. But I mean don't you think that would -- that could be good stuff. And in the meantime, of course, the voters, again, left out in the cold because they've, you know, they've gone to bed with both campaigns. And let them take all the meat out of the pot roast. I mean it's just now, it's all, like you said, it's orchestrated. It's bland. And the viewership historically has gone down, down, down.

SERWER: Unlike this show.

CAFFERTY: Yes. Yes. We're still in our ascending phase.

SERWER: We are.

CAFFERTY: The Interim Iraqi Prime Minister Iyad Allawi told the joint meeting of Congress Thursday that Iraq is on the path to success. This, after a particularly bloody week of insurgent attacks.

Brent Sadler joins us now live from Baghdad.

Iyad Allawi has been saying elections will take place in January come hell or high water. How realistic is that, do you suppose?

BRENT SADLER, CNN BEIRUT BUREAU CHIEF: Well, that's what he's saying. And it's also what top U.S. officials are saying, Jack. You know, it is very hard to sell success when you live in Iraq of today. A spiraling violence over the past couple of weeks and more than 300 Iraqis have been killed in suicide bombings, shootings, and clashes in some of the No Go areas, like Fallujah and Sadr City, one of the suburbs of Baghdad.

CAFFERTY: What is the reaction been in Iraq to Allawi's comments that he made here in Washington this week?

SADLER: Well, certainly Iraqis are far more educated than they were under Saddam Hussein, obviously in terms of reading the tealeaves, as far as what is happening among their political elite. They know that Iyad Allawi is in Washington and in New York, really like kind of P.R. blitz to lend support to the invasion of Iraq, the unpopular invasion of Iraq in many parts of the world, particularly Europe, excluding Britain. And that Mr. Allawi really is trying to put a positive spin on the country's hopes for moving towards a democracy. Certainly he was saying that out of Iraq's 18 provinces, 15, he said, are safe enough to hold elections now. A hundred and thirty thousand election workers, he says being prepared to take part in voting and 30,000 for polling stations across the country. But look at the overall security status of mortar attacks, of bombings; more attacks will be at low level and in Iraq today in Baghdad, the capital. But still very hard to sell this notion of success in that kind of environment.

CAFFERTY: CNN's Brent Sadler joining us from Baghdad. Brent, thanks very much. I appreciate it.

Iraq's insurgents may be facing the same enemy. But they are fighting for different agendas. Some are religious. Others just out and out now political. But if the insurgent groups begin figuring out what they've got in common and they start banding together, well, the whole fight could change dramatically. For a look at that, we're joined from San Francisco now by Ivan Eland, who specializes in national security at the Independent Institute in Oakland.

Mr. Eland, nice to have you with us.

IVAN ELAND, INDEPENDENT INSTITUTE: Thanks for having me on.

CAFFERTY: Are we looking at the possibility, a realistic possibility of some sort of coordinated guerrilla war developing in Iraq, do you think?

ENLAND: Well, I think we've already got the guerrilla war. But that's the key thing if the Shiia and Sunnis, and any other foreign fighters can unite under one command structure, that send shivers up the Bush administration's spine.

CAFFERTY: Well, I mean why would they want -- these groups hate each other in many ways. I mean religiously, socially, they don't get along at all. There has been an, you know, ongoing struggle between them for generations over there.

ENLAND: Well, we would have a marriage of convenience. And I think we've already seen that once in Fallujah, where the Shiia came and at least gave symbolic support to the Sunnis in Fallujah. But when you have a common enemy, and I think the foreign invader here, the United States is the common enemy, you see groups of disparate religious, ethnic and political persuasions, you know, submerging those differences to fight. and that's what could happen here.

LISOVICZ: The enemy of my enemy is my friend, in other words, that kind of thinking. You know, it's interesting. You say that it's feared that this could be a guerrilla war because guerrilla warfare is the most successful type of warfare in human history.

ENLAND: Yes, it is. It is the weak against the strong. And frankly, I think we may not be able to win this. I think it may be over already because it -- guerrilla warfare, no matter how many guerrillas we take out, and we took out a great ratio in Vietnam, the guerrillas. It is a political war, not a military war. SERWER: You know, but Ivan, I want to ask you about what the Bush administration calls the media gap, perhaps. Which is that we report all these bombings and they certainly exist. But we just heard Brent Sadler say, for instance, that the administration believes in 15 of the 18 provinces in Iraq, it is safe enough to hold elections. In other words, how much of the country is actually in pretty good shape?

ENLAND: Well, of course, the media in any war will focus on the out of the ordinary, the shootings, bombings, et cetera. And frankly, I think Iraq is not as good as the administration says by a long shot. I think they're in fantasyland. But even if they weren't, what gets on the media, gets in the hearts of Americans because they see it on TV. And that's where the real battle is with the American public opinion in a guerrilla war.

And already after the year and a half, the American people have said -- the majority have said that this wasn't worth fighting. Now, that's a phenomenal. It took years for the Vietnam War to become so unpopular. But we have 24-hour news, such that is channel and others. And it is a -- we're on a much more accelerated time frame. And so I think what happens on TV to some extent becomes reality.

CAFFERTY: On the other hand, what happens on the battlefield is reality. And militarily it is hard to make the case that the insurgents stack up against the Armed Forces of the United States. What is the missing ingredient? Why aren't we enjoying more military success against these people?

ENLAND: Well, if you look at it throughout history in guerrilla warfare, guerrilla is the weak against the strong. So in any of those wars, Vietnam, Algeria with the French, in the late '50s and early '60s, the objective of the guerrillas is to isolate pockets of the superior force and blow them up, shoot them, et cetera. And the objective is to make it so uncomfortable for the opposing power that they get exhausted. Their public opinion gets exhausted as ours did in Vietnam and go home.

And I think that's why it is so successful. The guerrillas will never be able to stand toe to toe with the American military. We have the greatest military on the planet by a quantum margin. But that doesn't really matter in a guerrilla warfare if you can keep the struggle alive.

LISOVICZ: So what does the U.S. do? Does it go ahead with the elections, for instance? I mean there has been talk about having election in most of Iraq, but not all of Iraq. Does it amp up that mighty military? What does the U.S. and the coalition do?

ENLAND: Well, I think if they hold elections without the Sunni areas, which are the ones that are in most contention militarily, that aren't stabilized, you risk alienating the Sunnis completely. That is even the people that aren't fighting, because they got left out of the election. I think that's very dangerous. If they're going have an election they need to postpone it.

CAFFERTY: But if the Sunnis want to participate in the election, why don't they take it upon themselves to quell insurgent? So they can get in the game and participate in the new form of government that's probably going to come at some point to that country? I mean isn't that their responsibility up to a point?

ENLAND: Well, I'm not sure that the Sunni leadership really wants to participate. They're not going to do very well in the elections simply because they don't have any -- they're a minority and they've traditionally ruled Iraq. And they're frankly scared that the Sunni -- or, excuse me, the Shiia majority is going to pay back -- give pay backs for all the oppression that the Sunnis put on both the Shiia and the Kurds. So I think the Sunnis are a wild card. And if you can eventually pacify that...

CAFFERTY: Ivan Eland, director of The Center of Peace and Liberty at the Independent Institute, thank you for being on the program. I appreciate it.

ENLAND: Thank you.

CAFFERTY: Coming up after the break, the smart way to read a poll. See why the results can say such different things about the very same candidate.

Plus, and bubble, bubble, housing trouble. We'll look at whether the hot real estate market is sitting on solid ground.

And all the stuff about democracy that they never told you in school. Find out why when we hear from Steven Colbert of "The Daily Show." Stick around.

(COMMERCIAL BREAK)

CAFFERTY: It says here political polls can only tell you so much. And they won't all tell you the same thing at the same time. Which makes the whole thing a bit confusing. Look what happened last week. There was a poll out from Pew Research Center showing President Bush ahead of John Kerry by a single, that's a statistical dead heat. But at the same time, a Gallup poll came out that showed President Bush with a 13-point lead, far beyond the statistical margin of error.

To make sense of something like that you have to know a little bit about how the polls work. And that leads us Lee Miringoff, who is our next guest. He's going to help us figure this out. He's the president of the National Council of Public Polls. He's director of the Maris College polls. He is an old friend of mine and his very first television interview was done by this reporter back about 128 years ago at WNBC here in New York City.

(LAUGHTER)

CAFFERTY: And he joins us on IN THE MONEY.

Lee, it's nice to see you. Welcome to the broadcast.

LEE MIRINGOFF, PRES., NATIONAL COUNCIL OF PUBLIC POLLS: You were the first one, Jack. What can I tell you? CAFFERTY: I don't know if that was good or bad for you, Lee. But it looks like you've held out all right; in spite of the fact that you were the first interview that you did was with me.

So what about the disparity in the national polls? And how much attention should people pay to the national polls versus, for example, the tracking polls that are done in battleground states. Which are really where the election, I suppose, is going to be decided.

MIRINGOFF: And of course, and we learned if nothing else in the year 2000 that the state-by-state situation is where the Electoral College is. And then that's ultimately determines winner or loser. I think the national polls, of course, are tied to that. And in that they give a sense of where the overall direction of the race is.

You have an incumbent, George Bush, how do people think about him? His handling of Iraq, his handling of the economy, his handling of the war against terrorism, do people think we're headed in the right direction or wrong direction? Those are important questions.

I think the horse race, who is ahead and who is behind, by how much, tends to drive the coverage a little too much, because people like that kind of detail and that focus. But I think also that the issues and a sense of the context of the race is very important. Because look, Bush and Kerry are polling all the time, too, they know what is going on. The public polls at least lets the public in on the secret a little bit.

LISOVICZ: And Lee, that's what I wanted to ask you about. I mean polling is such big business. We, the media, should be paying attention to what those camps show. That's what determines where they're going to spend their ad money. And obviously it matters a lot to them what their poll numbers show.

MIRINGOFF: Sure. And the strategies that the candidates pursue and where they do their advertising, and what they say, and whether they go on the attack or whether they try to be more upbeat. You know, the whole thing from the candidate's standpoint is very much driven by that.

But as Jack indicated in the beginning, the polls do tend to diverge. And I think we tend to look at polls a little too much as a science. There is a statistical basis to them. But it is also an art form. And You have different groups using different questions, picking different people to interview. They have a different quality to the interviewers. They look at the data differently.

It is not totally shocking that the polls sometimes show divergent results. I know the current Maris poll and the current Associated Press polls right now, that the most current showing it almost identical, 6 points for Bush, versus 7 points for Bush. So, a slight lead for Bush, not as close as the Pew numbers, not as wide as the Gallup numbers.

SERWER: Yes. I mean, Lee, so that brings us to the question. I mean just how accurate are polls? I mean it is a very global question. And obviously it changes over time as you get towards the event.

MIRINGOFF: Sure. Absolutely.

SERWER: So what should we look for? Are the polls a week before the election a pretty good reflection of what happens?

MIRINGOFF: Well, the closer you get to the collection, clearly the more accurate the polls are going to be. There's a whole thing about likely voters versus registered voters. And without getting into the technical aspects of it, the closest you get to Election Day, the more you're -- the more accurately you're able to define and measure who is actually going to vote and that does make a difference, obviously in terms of who is going to win and who is going to lose.

A lot of people don't vote. More are going to vote this time than last time. But you want to be able to be talking about those who are probably the ones that are going to vote, and you know that better the closer you get to the collection itself.

So the polls, which are a little wider sometimes, several weeks out, several months out, by the time we get to the last couple of days, last week, last weekend, the polls tend to be a little closer. And then don't have the kind of confusion that they sometimes create right now.

CAFFERTY: Help me out with something, Lee.

MIRINGOFF: Sure.

CAFFERTY: Sixty-three percent of the people surveyed think President Bush is going to be re-elected. Fifty-three percent of the people surveyed say they think the country is going in the wrong direction. I can't do that translation. Can you?

MIRINGOFF: Well, what it means -- it is complex. And of course, public opinion is complex. But what you have here is you have a public who you know is uneasy about President Bush. They think the country is headed in the wrong direction. They're not comfortable with the economy. They're not happy with what is going on in Iraq. On the other hand, they're not sure that John Kerry is up to the job. Bush hasn't closed the sale. But they're not sure in a post 9/11 environment that John Kerry is the commander-in-chief, strong leader that they're also looking for.

So that's why these debates next week, the stakes couldn't be higher. People are paying attention. They're following it closely. They're talking about politics. It looks like turnout is going to be up this time. They know it is close. But right now people think, well Bush looks like he's more than used to this kind of give and take. And certainly during August and into September, was getting the better from his campaign standpoint of Kerry than Kerry was of Bush.

CAFFERTY: So who's going to win the election, Lee?

(LAUGHTER)

SERWER: Come on, Lee. Come on, Lee.

LISOVICZ: You're a friend of Jack's.

MIRINGOFF: Well, let's put it this way. Obviously it could still go either way. It is still close, it could go either way. We're looking at the so-called battleground states to see -- you tell me who wins Pennsylvania and Ohio, and you probably can figure it all out.

LISOVICZ: But nobody is telling us that.

MIRINGOFF: Well, we will soon. We will soon. It is getting there.

LISOVICZ: OK. We're going to hold you to that pledge.

MIRINGOFF: I hope it doesn't go into extra innings this time, like it did last time.

CAFFERTY: Yes. I know.

MIRINGOFF: That was tough on everybody.

LISOVICZ: We can say that as well. Lee Miringoff, president of the National Council on Public Polls, who began his TV career with Jack Cafferty. Thank you for joining us.

MIRINGOFF: My pleasure. Have a good day.

LISOVICZ: Up next, shelf life. See why the company behind the Twinkie is counting its lunch money.

Plus, taking the real out of real estate. We'll look at whether the housing market is running on fact or fantasy.

And skip the ball of string. This calls for a net. Meet a kitty with a dark side on our fun side of the week.

(COMMERCIAL BREAK)

LISOVICZ: Now let's take a look at the week's top stories in our "Money Minute."

Fed Chairman Allen Greenspan and company boosted interest rates another quarter point. Greenspan believes the move is warranted because the economy is improving.

A federal judge granted Martha Stewart's wish to start serving her jail term right away. Stewart will now report to a federal prison by October 8. But Stewart also signed a deal with reality TV king Mark Burnett. The creator of "Survivor" and "The Apprentice" is looking at a primetime, network TV series featuring Stewart and possibly revamping her daytime program as well. Martha Stewart Living Omnimedia shares predictably soared on news of that deal. And those free cars Oprah Winfrey handed out to her studio audience earlier this month, they came with one piece of optional equipment nobody wanted. About $7,000 in taxes, the IRS says the free cars count as income. Now the winners have three choices: they can keep the car and pay the tax, sell the car and pay the tax with the profits, or forfeit the car.

SERWER: War in Iraq, a lame stock market, those things we could all take. But Twinkies going out of business, say it ain't so! The company that makes Twinkies Wonder bread and Drake's cakes is filing for Chapter 11 protection. Interstate Bakery says it has been hurt by the low carb diet craze and rising employee health care costs. The company was trading in almost $30 a share as recently as 2002. But now it is barely more than two bucks.

The good news is interstate says its problems shouldn't keep Twinkies and those other tasty treats from getting on the store shelves. Good news there. Interstate Bakeries is our stock of the week.

You know, this could be the first of the ultimate -- the biggest casualty of the low carb craze. I mean this company had a lot of other problems, too. It had a billion dollars of debt. It was not very well managed. But it didn't keep up with the times. I mean Wonder bread? Come on.

LISOVICZ: And it's also it should -- it is not only the nation's biggest bakery with Wonder bread and Twinkies. It also is responsible for Drakes, Drake's cakes...

CAFFERTY: I like those.

LISOVICZ: Dolly Madison ice cream, Marie Callender...

SERWER: Did you bring any?

LISOVICZ: No. I Didn't bring any.

SERWER: You didn't bring any. Ho-Ho's, Ring Dings, all of the Cafferty favorites.

CAFFERTY: I love all those things.

SERWER: Devil Dogs!

CAFFERTY: All that junk food, especially the ones that have -- Devil Dogs are good. What happens to the company now, though? Are they a takeover target? Is somebody going to come in and buy them? Are they going to continue to operate and try and dig themselves out of the hole? What do you think is going to happen?

SERWER: Well, they brought in this turn around expert, Tony Alvarez. And I was reading this article in the...

LISOVICZ: The CEO is gone. SERWER: ... "Kansas City Star" -- yes, the CEO is gone. This is a guy who, you know, works these companies out. And he did say look, there is probably a lot of pain to come. They've got 30,000 employees, over 50 bake bakeries, over 9,000 trucks. And he said they're going to have to make cuts. They're also very slow to do things, like have premium products and low carb bread. I mean they're going to have to get up with times.

CAFFERTY: Get with the times, yes.

LISOVICZ: If you look at the things that are blamed for this bankruptcy filing, I mean the list goes on and on. It is health care and pension costs, higher costs for ingredients and energy. Then you have, of course, the low carb diet; you have a high fixed cost structure, excess industry capacity, et cetera, et cetera, et cetera.

SERWER: You know, really there was only one reason why this company went bankrupt, poor management. OK? I mean...

CAFFERTY: Remember the slogan, Wonder bread helps build strong bodies 12 ways? That was their slogan in 1953, I think, when I was just a lad. I mean they are really kind of out of touch with the times.

SERWER: And all those regional bread brands like Sunbeam and this, and they own all that too all over the country.

CAFFERTY: I like those Ring Dings and Ding Dongs and Ho-Ho's and stuff. I hope they don't cut those because I really like that stuff.

SERWER: And a huge big mistake made by Susan, not bringing them on to the set. Don't you think?

LISOVICZ: Well, they might be out in the back.

SERWER: All right. We'll check it out.

(LAUGHTER)

SERWER: Next time Susan.

Up ahead on IN THE MONEY, how to tell a bubble from a boom. Find out if the housing market has finally said bye-bye to reality.

Plus, a political science lesson from the class clown. We'll crack open the new book on democracy from the people behind "The Daily Show."

And majors that need major bucks, check out the year's most lucrative subjects for college students.

(COMMERCIAL BREAK)

SERWER: If you're among the hoards of investors who flock to real estate after the stock market turned cold, listen up. Some observers say the real estate market may be heading south in many areas of the country. And what was once a sure fire moneymaker may be going back to being nothing more than a nice place to hang your hat.

The real estate boom was the topic of a recent cover story in "Fortune" magazine. Shawn Tully, my colleague, is a senior writer for "Fortune" and joins us now with more.

So, Shawn, bearer of bad news, come on. What is going on here?

SHAWN TULLY, SENIOR WRITER, "FORTUNE" MAGAZINE: Well, we have seen such a huge run-up in home prices in last few years, and including right through the recession of 2001. Something that never happened before happened during that recession. Typically, home prices go down when economic activity falls off. It just kept soaring on through and then people's ability to borrow against those homes is what kept consumers spending very high during that period and kept the economy now rolling. And we're still benefiting from all of those loans.

However, these -- nothing goes on forever. These prices cannot keep going up. The multiples of rents, incomes, have just gotten way out of whack with the traditional ratios. So the smart money is saying they're going to go down or they're going to sideways for a long time.

LISOVICZ: What you're seeing, though, that's really disturbed you lately, is that people really are using real estate as an investment vehicle. And that could really spell disaster when property taxes are also going up.

TULLY: Right. Yet, there is a movement away from just looking at your home as shelter and instead looking at your home as a source of retirement savings, big increases in value. People are banking on their homes for retirement. And they're not just buying homes to live in. In fact, a lot of people are buying multiple homes.

In Florida there is incredible speculation in the condo market. People are buying contracts, putting down 5 percent, flipping contracts when the prices go up. See the same thing in Las Vegas. Investors from California buying multiple houses in Las Vegas. And then they can't rent them and pay the mortgages. And so they dump the houses and the inventory have gone way back up in Las Vegas. We're seeing that in a lot of parts of the country.

CAFFERTY: You know, there have been periodic stories over the last year about the potential decline of the bubble in the housing market, or the bursting of the bubble in the housing market. Andy mentioned that the start of run-up in real estate coincided to a degree with the bursting of the bubble in the stock market. Stock prices are still kind of treading water. We had a little bounce back rally last year. But this year the market has fallen, for all intents and purposes, flat.

Interest rates remain very low. There is no inflation to speak of out there. And for the want of something better to invest in, why wouldn't real estate continue to be the investment of choice until some of these other things begin to change? TULLY: Well, it is like buying stocks. When multiples are very, very high, or when yields are very, very low on bonds, the expected returns you're going to get are very, very low. If interest rates now are low, they got nowhere to go but up. That is not a positive for housing prices. It is not a good time to buy. It is better to buy when rates are going to go down than it is when rates go up.

SERWER: Well, you know what, Shawn? I mean so many people -- it is such conventional wisdom that interest rates are going to go up. What if interest rates went nowhere for five years, they just stayed flat?

TULLY: Well, first of all, property taxes, which is a subject of the housing bulls don't want to discuss, are soaring.

SERWER: We can talk about it here, though.

TULLY: OK. We can talk about it here. We're going to break this story here. But real estate taxes are going up, 10, 15 percent on many suburbs in both coasts. When that happens, that's 13, 14 points more than inflation. And what really is driving is all this municipal spending, which has really gone out of control in a lot of ways. And it is being heaped on houses. People haven't minded it so much because the value of their house keeps going up.

But even if the value goes down, they'd just raise the tax rates. They've got to cover that spending. That is a very, very big weight on the housing market. But if rates stay the same, you're still in a position where the ratios to incomes and to rents is huge. I mean there is 11 percent vacancy rate now in the U.S. rental market. Rents are very, very cheap. And housing prices keep going up. The stock prices kept soaring and earnings weren't growing. It's the same thing. That can't go on forever.

LISOVICZ: All right. So let's just say that it doesn't go on forever. What will a collapse look like? We know what it looked like when there was speculation in tech stocks and Internet stocks. Will it be as bad?

TULLY: No. No. Housing prices adjust at a different way than an auction market, like the stock market. What they typically do, if the economy stays strong, is they go sideways for a long time. So if inflation is 3 percent and your house stays at exactly the same dollar price for five years, you lose compounded at 15, 16, 17 percent. Because you don't get the inflation premium you would normally get. So that often happens.

Now, the real problem happens when you have either a section of the country -- and again, this bubble is pretty much limited to the coast, not to the Detroit and Rochester, New York, and Dallas and Houston. It is the Miami's and the Washington, D.C.'s and the New York and the San Jose's.

If the economies in some of those areas go bad, and people have to move, and they have to get rid of their house, they have to change houses, even though they may have a very favorable mortgage. And it really hurts people to do that, and understandably so, then the prices decline even in nominal terms.

And that would be nothing new. We have seen that dramatically happen in Boston and the early '90s, in the Texas market in the late '80s. Housing prices just don't keep going up in all these markets. We have seen substantial declines. The New York market, prices didn't get back to 1989 levels until '97 or '98. Nothing happened for seven, eight years.

LISOVICZ: So hang on to our houses, right?

TULLY: Yes. Well, if you can, do it.

LISOVICZ: Shawn Tully, it's a cover story in "Fortune" magazine, and you're a senior writer. Thanks so much for joining us, Shawn.

TULLY: Thank you.

LISOVICZ: And there's lots more to come here on IN THE MONEY. Up next, the people who can make you laugh at a phrase, like House Appropriations Committee. It is in "The Daily Show" and it has a new book out. Steven Colbert is going to tell us all about it.

And down, kitty. See if you'd give this cat a home, as we show you our "Funsite" of the week.

(COMMERCIAL BREAK)

LISOVICZ: I'm laughing already. A Comedy Central's "Daily Show" with Jon Stewart has built a brand on skewering everyone from the pope to the president. And this week the cast gets some fresh material after CBS was forced to apologize for airing bogus documents linked to President Bush's National Guard record.

(BEGIN VIDEO CLIP)

JON STEWART, HOST, "THE DAILY SHOW": You're the senior media analyst here at Comedy Central. Steven, you have to think this is a huge blow for CBS News to have been this misled. Do you think that this apology is sufficient?

STEVEN COLBERT, "THE DAILY SHOW" CORRESPONDENT: Well, first off, Jon, let as not jump the gun here. Remember, this is CBS News. Given their track record of late, how do we know they aren't getting this whole apology story wrong as well?

(LAUGHTER)

STEWART: They're the ones apologizing. Are you saying that they're lying about being sorry?

COLBERT: No, I'm saying that they were duped.

(LAUGHTER)

STEWART: Dan Rather went on the air himself and personally apologized.

COLBERT: Yes. He's a credible source.

(LAUGHTER)

(END VIDEO CLIP)

LISOVICZ: Steven Colbert, Jon Stewart and other writers of Comedy Central's hit comedy are out with a new book to entertain us even further. It is called "America: the Book, a Citizen's Guide to Democracy Inaction." In action is all one word, by the way.

"Daily Show" correspondent Steven Colbert joins us now.

Welcome and congratulations should be said, two Emmys, not only for best show, outstanding variety show, comedy show, two in a row now.

COLBERT: Yes. Hmm-mm. Yes.

LISOVICZ: And also...

COLBERT: Yes, I have got them both on my mantle piece and I make them fight to see who I love more.

LISOVICZ: Also for writing. Writing the show as one of the writers.

COLBERT: Absolutely.

LISOVICZ: But isn't it sort of an easy job? I don't want to diminish from the award, the fact you have so much material...

COLBERT: I don't know why they pay me, Sue. Thank you. I'm in the middle of a negotiation right now. Thank you very much.

LISOVICZ: Sorry.

COLBERT: Absolutely. A monkey could do it.

(LAUGHTER)

COLBERT: Thank you. Next question.

LISOVICZ: Well, you do have a lot of material. Let's face it. It is an election year.

COLBERT: Thanks to you people, yes, we do. The 24-hour news cycle is an endless supply of fertilizer for our comedy. I think it is a polite way to call it.

SERWER: Hey, Steven. Let me ask you a question. I mean don't you hate it when people say it is really terrible, all these young people are getting their real news from "The Daily Show?" And that's a terrible thing. I mean...

COLBERT: Terrible that they watch us. That's horrible.

SERWER: I mean but actually you sort of have to know a little bit about the news or a lot about the news to enjoy yourself.

COLBERT: People quote studies, like a -- the Pew Center did a study that said that more people got their news from late night, and specifically "The Daily Show" than anyplace else. But I don't necessarily believe it because they wouldn't get our joke if they came. You know? We don't educate the audience that much. It is not our goal. Our goal is just to make them laugh.

And so -- also they miss half the joke, because if you don't really know how the news is reported by the news media, half our joke is the style and lampooning the, you know, sort of self-inflated, self-important style of, you know, curmudgeons.

LISOVICZ: Not anyone here.

CAFFERTY: Who do you have in mind? Talk to me a little about -- it is a very sharp, well written on the money presentation. I watch it a lot at home. Preparing and doing it five days a week is no mean feat. "Saturday Night Live" manages to do 13 a year or 26 a year. You guys are doing five shows a week. Go inside the production meeting for a minute and talk about how this thing is born every day.

COLBERT: Well, we're up at dawn. We all get in our tracksuits. We run a couple of miles.

SERWER: There is snow. Often snow.

COLBERT: There's often snow. As a matter of fact, we truck in snow.

CAFFERTY: Why do I ask you a serious question? Excuse -- I -- what a stupid thing for me to do.

COLBERT: Well, when we get in the morning -- we get in the morning and we all read the papers and have been watching you guys all night long.

CAFFERTY: Yes!

COLBERT: Everybody is a news junkie there. And then we scream at each other over what drives us crazy about the news. And this is a lovely thing to be showing while I'm talking seriously.

LISOVICZ: You were badly behaved at the convention.

COLBERT: And then we take the next five hours to try to distill our rage down into jokes. So it doesn't come across, you know, as strident.

LISOVICZ: Well, since you're news junkies, you can really see it coming out in the book. And you really hit a little bit close to home. I might say that.

COLBERT: OK.

LISOVICZ: I'm going to give you my most sincerely interested in what you're going to say look, because you have...

COLBERT: Then I can give you mine.

LISOVICZ: ... your news anchor expressions.

(CROSSTALK)

LISOVICZ: Let's talk about some...

COLBERT: Yes. Dueling pomposity.

LISOVICZ: Yes. Let's show one of the news anchor expressions that we have in the book. You discovered the gene that causes MS, and yet I make more money than you.

COLBERT: Fascinating. That's interesting.

SERWER: That is good. Do you have another one?

LISOVICZ: I believe we do. Yes. We do. This one is -- you're mad.

COLBERT: I want the truth. How the hell did Charlie Rose get on the guest list and not me?

SERWER: Is it the politicians or the journalists? I mean what's fun? Is it all part of one -- part of the same thing?

COLBERT: Well, if there is actually news during the day, then it is the politicians.

SERWER: Right. No. But I mean are we -- is the politicians stupider than the journalists, or is it all the same thing?

COLBERT: Now, that -- you're being so harsh on yourself.

SERWER: I know. I can do that. Beat me.

COLBERT: To compare yourself to politicians is really unfair.

SERWER: It is low and lower.

COLBERT: It is totally different games to play. I mean politicians are hypocritical, and news people are hilarious.

(LAUGHTER)

SERWER: Oh, sweet. Intelligent, yes.

COLBERT: Because they pretend to be humble.

SERWER: We keep setting ourselves up, Jack. We're not going to win here. LISOVICZ: Who is your favorite news anchor to parody, though?

SERWER: Yes, put him on the spot.

COLBERT: Oh. Well, I've said this a lot of times. But there is just no beating Stone Philips. And I would give anything -- he's got so much neck, you know?

CAFFERTY: Yes. It is all there.

COLBERT: Don't you get jealous of his neck?

CAFFERTY: Absolutely.

COLBERT: It is so manly. It says I played lacrosse at Princeton. And his ears almost tilt out from the bottom. That's how manly his neck is.

(LAUGHTER)

LISOVICZ: What about politicians? Who is your favorite candidate or politician to parody?

COLBERT: I'm a Kennedy fan. You know? But you can't do Ted Kennedy jokes anymore. They've just been running through the ground. It's like making Nixon jokes. There is just no life to them anymore.

LISOVICZ: Why not?

COLBERT: What are you going to do? Talk about his drinking or how fat he is?

SERWER: Or that he's a liberal.

COLBERT: There is nothing left. He's a walking talking parody of himself. He's beaten us to the punch.

(LAUGHTER)

CAFFERTY: Blind.

SERWER: So to speak.

COLBERT: Yes.

SERWER: We're going to have to leave it at that, Steven.

Steven Colbert is a correspondent for "The Daily Show."

COLBERT: But we were just breaking some new ground here.

SERWER: I know.

LISOVICZ: We'll bring you back.

SERWER: Well, let's look into the camera. And the co-writer of "America: the Book, a Citizens Guide to Democracy Inaction." Thank you, Steven.

COLBERT: It has been my pleasure.

SERWER: You're welcome.

COLBERT: OK, thank you.

SERWER: All right. College degrees that pay you back. We'll look at which majors bring in big cash after graduation.

And until we develop psychic powers, you'll just have to stick with e-mail. Tell us what is on your mind at this address, inthemoney@cnn.com.

But first this week, "Money And Family."

(BEGIN VIDEO CLIP)

LISOVICZ (on camera): School is in, but this lesson is up to parents. And it is one of the most important things you can teach your kids, how to be smart with their money. So here are some tips on how to raise money conscious kids. Start by discussing the four uses of money. Spending, saving, giving and investing. This will highlight the value of charity and the wisdom of planning for the future.

The best way to give your kids hands on experience with money is to give them a weekly allowance. You want to give your kids a chance to learn how to make decisions with money. So even $5 a week will work. Help your child set both short-term and long-term goals. An example of a short-term goal is saving for a computer game. Saving for college or summer camp is a long-term goal.

And finally, introduce some real world experience. Open a savings account with your child. This is the first step to saving success.

I'm Susan Lisovicz for "Money and Family."

(COMMERCIAL BREAK)

CAFFERTY: The recently graduated class of 2004 is doing pretty well out there in the workforce. But some graduates are doing better than others. Joining us now for our annual look at the best college degrees and the "Fun Side of the Week" is my friend Allen Wastler.

How are you doing?

ALLEN WASTLER, MONEY.COM: How are you doing, Jack?

CAFFERTY: So what is my sheepskin worth if I have it in this versus that?

WASTLER: It could be worth, you know, a difference of $10,000, $20,000. But actually, the good news is this year, two-thirds of the sectors they survey for degrees, showed increases over the previous year.

CAFFERTY: Its pretty good indication the economy is not at least in the doldrums.

WASTLER: It's going back. And actually, it's going to show you a little bit more about the economy and which way it is going. If we look at the first set of just what the highest paying degrees right now are, look at this, engineers, baby.

SERWER: Science!

WASTLER: Science and engineers.

CAFFERTY: These are the starting salaries.

WASTLER: These are the starting salaries. Average starting...

CAFFERTY: Fifty-two thousand, that's pretty good bucks.

WASTLER: And chemical engineering, you know? You sort of worry this is the stuff that sci-fi movies are made of. But you know, they're going boldly forward.

Now, let's take a look. Here's a surprise for you on the next set. These are the ones that showed the biggest jump in terms of starting salary.

SERWER: English.

WASTLER: Let's hear it for the English majors.

(APPLAUSE)

WASTLER: All right.

SERWER: Coming from a low base, no doubt.

(LAUGHTER)

WASTLER: Going far -- very low. Actually, now their average starting salary is about $31,000 for the English major. Information Science, which is sort of like a little computer science and little library science mixed in together, that's about 42 grand.

LISOVICZ: I find it optimistic that there are jobs out there for the graduates.

WASTLER: Well, and that's sort of the tricky thing about this survey.

LISOVICZ: Oh, there aren't?

WASTLER: Once they get in, that's the starting salary. But it doesn't guarantee -- it doesn't mean everybody who's an English major, come, we will give you $31,000. No. No. No. No. If you get that nice, you know, library assistance job or magazine associate editor... CAFFERTY: I was reading a little thing the other day, though, if you want to do little planning, nurses. Be a nurse.

WASTLER: And actually...

CAFFERTY: We're going to need millions of nurses in the next few years.

WASTLER: Nursing starting salary is around 38, $39,000. It showed a little bit of an increase too.

CAFFERTY: Now we have the "Funsite of the week."

WASTLER: "Funsite of the week." A little movie going around the Internet showing the perils of pushing pet adoption. Let's take a look at it.

CAFFERTY: All right.

(BEGIN AND VIDEO CLIP)

WASTLER: We saw the get antsy there.

SERWER: Oh! Wow!

WASTLER: Oh, the cat's like -- oh, no.

SERWER: Is that one adoptable?

WASTLER: Oh, yes.

SERWER: Jack needs a cat.

CAFFERTY: Look at the idiot trying to put the box over it. I mean that's good.

LISOVICZ: Wild thing.

SERWER: Yes. That will work.

WASTLER: Oh, dear.

CAFFERTY: That's terrible. My goodness. It's going to get worse.

SERWER: Wow. Wow. It's about to get a whole lot worse. Ouch! Ow!

(LAUGHTER)

CAFFERTY: You know what? Good for the cat. Good for the cat. He got exactly what he deserved.

SERWER: How would you react to someone who is trying to put a box over your head? Right? I mean...

CAFFERTY: What was that? All that -- got him by the neck. Look at the nice kitty. The kitty is going hey, that hurts, you mutant.

(CROSSTALK)

SERWER: He doesn't know the end to that story, Susan. You don't want to know.

CAFFERTY: The end of the story is the guy is now a soprano. OK? That's the end to the story. How do you find that thing?

WASTLER: Go to our show page and we'll be happy to give you the address.

CAFFERTY: All right. I'll be checking that out. Thanks, Allen.

Coming up next on IN THE MONEY, it is time to hear from you as we read some of your e-mails from the past week. And you can send us an e-mail right now. We're at inthemoney@cnn.com.

That's very funny stuff.

(COMMERCIAL BREAK)

CAFFERTY: All right, it's time to read some of your answers to our question of the week last week, about whether it is worth it to live in an area that's prone to disasters, like hurricanes or wildfires.

Tyler in Boca Raton, Florida wrote this, "Show me one place on earth that isn't prone to some kind of natural disaster or other. And I'll show you a place that probably doesn't exist. The real question is what disaster risks are you willing to live with? I choose hurricane-prone areas because we have plenty of advance notice and the rest of the year is lovely."

I buy that logic.

Barb wrote this, "People should be allowed to live on dangerous shore lines and flood plains all they want. But the rest of the taxpayers should not have to bail them out every time something happens. Many of these disaster-prone areas are beautiful spots that should be left to nature, and not to building developments."

And Susan wrote -- no relation to our Susan, "It would be worth living in such an area as long as Jack Cafferty were my neighbor. I'm sure as soon as the storms see Jack, they would turn the other way in fear."

(LAUGHTER)

WASTLER: Hear. Hear.

CAFFERTY: That's funny.

SERWER: Wow. Very funny, Susan. That was terrific.

CAFFERTY: Ha. Ha. Ha. Time now for next week's e-mail question of the week. "How do you like your news, objective or opinionated?"

Send your answers to inthemoney@cnn.com. And you should also visit our show page at money.com/inthemoney, which is where you'll find the address of our "Fun Site of the Week." See the nice, little kitty tear the man's situation to ribbons.

(LAUGHTER)

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

Join us tomorrow at 3:00 Eastern Time. We'll look at the upcoming presidential debates. Not only will we discuss strategy, but we'll talk about the history of the contest and what role they now play in the election process. That's tomorrow at 3:00. Hope to see you then.

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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