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IBM Sells Thinkpad Line To Chinese Company; Holiday Tipping Rules; Congress Passes Intelligence Reform Bill

Aired December 11, 2004 - 13:00   ET


FREDRICKA WHITFIELD, CNN CORRESPONDENT: Doctors say they suspect a third party poisoned Viktor Yushchenko. They confirmed the Ukraine opposition presidential candidate was poisoned with dioxin. Doctors at an Austrian hospital are treating Yushchenko. He first got sick in September and later his face became bloated and pot marked. Yushchenko had long blamed political enemies for his illness. Meanwhile, the U.S. State Department is urging Ukrainian authorities to investigate.
Doctors say the commander in chief is fit for duty. President Bush had his annual checkup today at a naval medical hospital in Maryland. It's the fourth physical of the president's administration. The White House says President Bush is in great shape.

The steroid scandal rocking major league baseball remains in the spotlight as baseball's winter meetings continue today in Anaheim, California. A Federal grand jury has been looking into the alleged distribution of steroids to some baseball players and other professional athletes. Among those testifying before the grand jury, San Francisco Giants slugger, Barry Bonds.

I'm Fredricka Whitfield at the CNN center in Atlanta. More news at the bottom of the hour. IN THE MONEY begins right now.

JACK CAFFERTY, CNN ANCHOR, IN THE MONEY: Welcome to the program. I'm Jack Cafferty. Coming up on today's edition of IN THE MONEY, I spy. Now that Congress has finally pushed through the new intelligence bill, we're going to talk about the most urgent things our cloak and dagger type should be doing right this very moment.

Also, social insecurity. Is the retirement safety net really in need of such a major overhaul and if it is, is it worth the political price for President Bush and the Republicans?

And greasing the wheels. A lot of programs tell you how much to tip this holiday season. We'll talk to an expert who says sometimes tipping is a waste of time.

Joining me today, a couple of IN THE MONEY veterans, CNN correspondent Susan Lisovicz, "Fortune" magazine editor at large Andy Serwer. So we got one of those good news, bad news deals this last week. The good news is, for the last couple of weeks, oil prices have been falling like a rock. The bad news is because of that, or at least partly because of that, OPEC got a little meeting together and said, well, we're going to tighten production and cut back on the world supply of oil, which, of course, will drive prices back up. ANDY SERWER, "FORTUNE" MAGAZINE: But it's only six weeks ago that we jawboned them into increasing production when oil hit $55 a barrel and how quickly the worm has turned. And now, you know, of course, they're just trying to ratchet it back. They only control about 40 percent of the world's production these days, which is a lot less than it used to be. So there are a lot of other sources, Norway, the North Sea, the North Slope, Mexico and so I don't think things are so dire. Plus, this has been a great wakeup call, oil at $55 a barrel. We've got to look at our consumption.

SUSAN LISOVICZ, CNN CORRESPONDENT: Exactly. I couldn't agree with you more, Andy. But when you think about why did oil get to $55 a barrel? Well, because there's all this demand for it, not only from the U.S., but from places like India and China and there are all these troubles like Nigeria, Iraq and Russia. Guess what? They haven't gone away. "USA Today" had an article in Friday's newspaper saying that there is going to be record demand for assistance for home heating bills because of the rising levels of poverty and because of these very high heating bills. Yes, conserve, but it's going to pose a lot of problems.

CAFFERTY: The other problem in all of this is the value of the dollar because oil is bought and sold in dollars and the dollar has been tumbling and so the value of the dollar's worth of a barrel of oil is a lot less than it was six months ago.

SERWER: I'm not shedding too many tears about that, that OPEC is getting less dollars.

CAFFERTY: What a shame.

SERWER: You remember the story about Kuwait, the Kuwaitis getting this huge year-end bonus because for all the people in Kuwait, because they had such a great year last year, pumping oil and taking money from the west. So a little pay back time maybe.

CAFFERTY: There you go. All right. We're going to do something different now and be optimistic for a moment and we're going to say that the new intelligence reform bill will actually help America's intelligence-gathering efforts. Bureaucracy aside, what should our spies and other experts be doing right now and where should they be going? To get some answers, we have Peter Brookes, who's (INAUDIBLE) national security affairs at the Heritage Foundation who joins us from Washington, D.C. Peter, nice to see you. Thanks for being on the program.


CAFFERTY: The critics saying, nothing but another layer of government bureaucracy. You like this piece of legislation. What's it going to do for us?

BROOKES: It's a big bill. It's 600 pages, Jack, as you know. What it's going to do is it's going to give somebody, make somebody responsible and accountable for the performance of the intelligence community. Previously we had a director of central intelligence and he had two hats. He was dual hatted. He was not only director of the Central Intelligence Agency, but he was also the overseer of the intelligence community, which is a $40 billion organization, 200,000 people, 15 agencies.

What we've done now is we've decided to create a new position. We bifurcated that job into the director of the Central Intelligence Agency and now the director of national intelligence and this person will oversee the entire intelligence community. So now instead of having all the responsibility and none of the authority, the individual not only will have the responsibility and be accountable, but he'll have the authority for directing the policies, the plans, the programs and the budgets of this large intelligence community.

LISOVICZ: Peter and that's great to have somebody accountable for such an important mission, but to follow up on Jack's question, I'm sure that you saw Tom Friedman's (ph) column on Thursday where he said the intelligence bill isn't so intelligent because it just adds another level of bureaucracy. What you need is people on the ground speaking Arabic who can give us a heads up as to what might happen. Do you agree with his thoughts?

BROOKES: Can't argue with that, but that's already going on. I mean, one of the things that President Bush did a couple of months ago was he ordered Porter Goss, the new director of the Central Intelligence Agency to come up with a plan within 90 days to tell him how we're going to field new case officers, put people in the field and also fix our analysis so this is already going on. The intelligence community has not been static since 9/11, 9/11 happened and then all of a sudden, three years later, we passed an intelligence bill. We've made some significant changes.

What we've done here is made some structural changes that needed implementing legislation from the Congress. This is the first change, structural change in the intelligence community, big change since 1947 when we had the National Security Act, which set up the Department of Defense and the Central Intelligence Agency. So no, this is not the panacea. This is not going to answer all our problems and I can't argue with Tom Friedman, but that is already being done. The problem is, is that there's a lag time between developing a case officer, bringing him into the CIA, training him, giving him language training. That could be a couple years. That's one of the problem we really have.

And the other thing is, is that this bill can't change the corporate culture of the CIA which has been criticized by the Congress as saying they're not aggressive and they're not penetrating hard targets like terrorist organizations, Iran, North Korea or even Iraq previously. These are things that you can't legislate. So what this does is this gives us a framework, but really the changes are going to have to take place within the organizations where the rubber meets the road and as you mention, that's in the field.

SERWER: All right. Peter, I must confess, I think I got bogged down on page 543 of the new bill. But I want to ask you to do a little Washington handicapping, a little beltway handicapping. Who do you think is going to be named or would be a good name to be the new national intelligence director?

BROOKES: That's very interesting. A lot of people have been talking about that. In fact that's become almost a parlor game in Washington. Who's going to fill this job? And what I'm hearing is Porter Goss. The problem with that is, I think, is that Porter is up to his waders in the work he's doing at the CIA and he's really doing great work there. He's a gutsy guy. He's got some real challenges ahead of him and we need a fully functional CIA.

But then I'm hearing the rumors on the street is that they may free him up to become the new director of national intelligence, so then you'd have to replace him at the Central Intelligence Agency. So I'd like to see Porter stay in place where he is now. But I've also heard that, remember, he was the chairman of the house permanent select committee on intelligence. He knows the intelligence community. He's actually been an intelligence officer and he knows Capitol Hill and he has the confidence of the president. So he might be that person. But I'd hate to see them pull him out of CIA where he's doing really great work and move him up to be more management and bureaucratic as opposed to hands-on at the CIA, which needs some direction.

CAFFERTY: One of the most glaring weaknesses when it comes to the security of United States is the absolute lack of control over the borders of this country. This legislation was a perfect opportunity to address that and yet it was ignored. And nothing has changed. So while we can put CIA agents on the ground in the middle east who speak Arabic and infiltrate North Korea, we don't know who the hell is crossing the border every day by the thousands from Mexico. Why was this issue avoided do you think when it came time to address this legislation?

BROOKES: Well, Jack, I think one of the things here is that they're going to have another bill. They decided to do the immigration in another bill itself and they'll do that in the new Congress. I think they decided that this wasn't germane to the intelligence bill, the immigration issue. It is part of our national security, no doubt about that and I agree with you. But what I think they're going to do and I think the reason that Sensenbrenner, Congressman Sensenbrenner gave in and supported this bill is that he's going to get his own bill that comprehensively addresses immigration in the new Congress which will start in January.

LISOVICZ: Oh, boy. Andy got bogged down on page 546. For me, it was page 750. This is so sweeping, most sweeping legislation we've seen on security in decades. How long is it realistically going to take to implement? Do you think most people are familiar -- most people in Congress are familiar with it?

BROOKES: Well, you're right. It's big. It's not as bad as the omnibus appropriations bill that they passed which was 3,000 pages double-sided. But yeah, it's very important that people do become familiar with this, especially the oversight committees. And it is going to take some time, but this one thing the president has to do is he has to name a new director of national intelligence. This person's going to have to get in there, get a staff, take stock of what's going on, the threats that we face.

And once again, this is not a panacea. We have evolving threats that we're dealing with and we're going to have to adjust as we go along. This is not going to be perfect. It's like the Department of Homeland Security. It's like the Defense Department. We have to change things to meet the evolving threat. So this is a start. It's a good point of departure. We're all in agreement here. It was generally bipartisan, overwhelmingly supported not only by the White House but by the Congress and now it needs to be implemented. But there's no - you should not be believed that this is the final issue we're going to have to address in terms of intelligence reform.

CAFFERTY: Peter Brooks, senior fellow for national security affairs, the Heritage Foundation in Washington, D.C. and one might add, a former CIA operative, his own self, during the cold war. Peter, thanks.

BROOKES: Thank you.

CAFFERTY: Good to have you with us.

We have to step out for a minute or two. When we come back, don't mess with grandma. President Bush wants to overhaul Social Security, but it could cost him a lot more than he thinks.

Plus, some call blogging just a form of high-tech graffiti but that graffiti is turning into cash for some outspoken web surfers and I hope during the course of this program to find out what blogging is.

Plus, having trouble finding a job? Why not try putting something new in your resume, like a cartoon? Our fun site of the week is all about animating your life.


CAFFERTY: The experts are spending a lot of time talking about whether privatizing parts of Social Security is the answer to all our woes. President Bush may end up paying the biggest price just for trying to change one of Washington's most sacred cows, the well known third rail of American politics. Joining us to talk about the plans for change and the political fallout is Greg Valliere, political economist and chief strategist at the Stanford Washington Research Group, joins us from Washington, D.C. Greg good to see you again.


CAFFERTY: Let's clear up a couple of the misconceptions that are swirling around this topic. One, how desperate is Social Security's problem? And two, to what degree is the administration really advocating this privatization?

VALLIERE: It's not that desperate a problem. It doesn't fully go bankrupt until 40 years from now and even that is based on a premise of unbelievably low GDP growth. So this is not an imminent crisis. But as far as privatization, sure, it's a big deal politically. On the right, you have people who want to wean people away from government. On the left, you want to make sure that this sacred safety net is preserved. Philosophically, a huge difference between the two parties.

LISOVICZ: OK. So Greg, why don't you do us Social Security 101 on the privatization? How actively would people be managing their accounts? Or would it be managed sort of like a 401k?

VALLIERE: Good question. First of all, this would be voluntary. It would not be a mandatory program like say Chile and if people were uncomfortable with it, they won't have to go into it. Secondly, I think that all of us of course pay that FICA tax, the payroll tax every two weeks of 6.2 percent for individuals. I think this plan would envision us putting two or maybe even three of those 6.2 percentage points into a self-directed account, which ironically, government workers can do now. And I think this self-directed account would allow us to put a little money into a stock fund or fixed income or cash. But it would be a very, very conservative program. It wouldn't allow us to invest in derivatives or hog bellies or anything like that.


SERWER: Hey, Greg, I want to follow up on this point you made when you were speaking with Jack about the philosophical notions behind this whole thing. Krugman (ph) was writing the other day that what's really going on here is the Republicans and the conservatives are against the whole notion of Social Security. Why do they want to partially privatize I guess is a good way to get at that?

VALLIERE: Well, the traditional answer is that we run into a demographic problem 20 or 30 years from now. I think, though, you've got to go back to a classic line that was uttered by a gentleman we all miss, Daniel Patrick Moynihan, who was an expert on this subject and many other subjects. Moynihan said that if these private accounts work well and people really get interested in them, they'll all become Republicans. And --

LISOVICZ: And he was a Democrat.

VALLIERE: It's a classic line and Moynihan recognized that. And believe me, Andy, there are many Democrats in this town who realize that if most of America starts to have little private accounts, it would make the electorate even more conservative.

CAFFERTY: What about the other idea that it would actually draw down the available amount of funds for those guys in Washington to toss around on their various little pork barrel projects? The FICA money that's collected from all of us now goes into the general treasury. There's no trust fund. There's no surplus set aside for our old age. These guys spend it faster than it comes in. Well, if half of all of this FICA money was suddenly allocated to private accounts, that would create a problem for all those politicians, wouldn't it?

VALLIERE: You have hit on the big issue I think, Jack and it's the fact that, how do you fund these transition costs? At a minimum $1 trillion over 10 years, many people say $2 trillion over 10 years. Is it going to be funded exclusively from new borrowing? Apparently the White House is going to lean in that direction and try to put this borrowing off budget. Whether that passes the smell test with Alan Greenspan and the bond market remains to be seen.

My bottom line is that it's a combination of things. You have some new borrowing, maybe you have very small new accounts, but you've got to do something about curbing benefits, changing the COLA, changing the retirement age. I think all of these things have to be on the table. It can't just be new borrowing.

LISOVICZ: Greg, President Bush has a good track record so far of pushing things that he wants to through Congress, whether it's tax cuts or the intelligence bill, but he's going for the first time against those silver haired activists known as AARP. Can he do it?

VALLIERE: It's a tough fight, Susan. I think that it's not going to happen quickly. I'm in a minority camp that says he doesn't get much done in the next two years. He gets more done in his last two years. That usually doesn't happen. But I think the Senate goes from 55 republicans now, maybe up to 58 or 59 in the '06 election. If you look at who's up in '06, a lot of Democrats from red states. So I think Bush may get a victory, but it comes later rather than sooner.

SERWER: Greg, $64,000 question or maybe even more than that. For everyone out there, will they get their Social Security benefits through all this sturm und drang (ph) that we're talking about here, all us baby boomers, are we going to see our money or not?

VALLIERE: I think anybody who's watching now who is 55 or older will get their benefits. I think younger people...

SERWER: I'm younger than that.

LISOVICZ: Greg is smiling.

SERWER: I'm young.

VALLIERE: I think younger Americans are going to get something different but I think the president's right and he will not go back on his word that retirees who are already getting it or people who are close to getting it, will get their full benefits, no doubt in my mind on that.

LISOVICZ: Andy and I will be working until we're 85, I'm afraid. Greg Valliere, the political economist and chief strategist, Stanford Washington Research Group, always good to see you Greg. Thank you.

VALLIERE: You bet.

LISOVICZ: Coming up after the break, big blue goes red. We'll look at IBM's decision to sell its PC business to a Chinese firm. Plus, are you a 15 percent tipper, a 20 percent tipper or a stiffer? We'll look at how and why you tip at holiday time.

And online sales are growing, but you might be surprised to learn who's benefiting the most. IN THE MONEY is going to be right back.


LISOVICZ: Now let's take a look at the week's top stories in our "Money Minute." Washington insiders all said he was a goner. But President Bush asked Treasury Secretary John Snow to stay on. Snow could be the president's point man for changing Social Security and reforming tax laws, but those same Washington insiders don't expect Snow to play a major role there.

Colgate-Palmolive is cutting about 12 percent of its work force or about 4,400 jobs. The company is closing about one-third of its 78 factories worldwide. Colgate-Palmolive's news not unique as American companies cut more jobs from September through November than during any three-month period in 2 1/2 years.

And Eliot Spitzer is at it again. Now the New York State attorney general is looking into whether the insurance companies, not the lawyers, are most responsible for the rising cost of malpractice insurance. The probe could be Spitzer's last crusade in his current office because he also announced he's a candidate in New York's 2006 governor race.

SERWER: IBM sold its signature PC business to China's Lenovo (ph) for $1 1/4 billion this week. Big blue says the deal will allow it to focus on its more profitable software and business consulting divisions, but there's already some worries about the deal because some computer analysts say Lenovo is known for being a little cheap. And then there's also the emotional effect of seeing the first big personal computer company basically getting out of the personal computing business.

IBM shares have been on a pretty steady climb since November, getting closer to their one year high. IBM is our stock of the week. You know, they sold this business for $1.25 billion. It makes $10 billion in revenues, not very profitable at all. Thinkpad used to be a real big brand about three years ago. I haven't really heard of anyone buying a Thinkpad lately. Dell is the only big major computer company that makes money in the United States anymore making PCs.

LISOVICZ: A clear concession to Dell, even though I guess it is sad that IBM was a pioneer in the business, but just making a whole lot more money --

SERWER: She's getting emotional about it.

CAFFERTY: She might even shed a tear.

LISOVICZ: a Chinese company, no less. That's really interesting.

CAFFERTY: They're going to be in sourcing some jobs. I read that the company that's buying the PC business from IBM is going to actually move its headquarters here to New York City and they may in fact list the company on either the Nasdaq or the New York Stock Exchange at some point. The deal won't close until next year, maybe the year after. But I'm just thinking, there's a lot of folks over there in China might one of these days want to buy an old PC. If that stock ever got listed, it might be worth a second look see.

SERWER: That's right. Lenovo, which used to be called Legend and I don't like that. I mean I know what a Legend is. I don't know what a Lenovo -- what is a Lenovo? I don't know what it is. IBM is going to own 20 percent of this company. You know, it's sort of like we're getting out of the business and we're sort of not. IBM itself is going to be using a lot of these machines.

As far as what it's going to do for IBM overall, I mean this stock has been an average performer at best over the past five years, two years, one year. So they're looking for ways to, you know, get ahead for an angle. The consulting business is very big for them and services. But making hardware is not where it's at in this company - unless in this country, unless you're like Dell, which has just a very different way of doing business.

LISOVICZ: It has a lock on it right now. That's for sure.

SERWER: Yes. I think that's right.

All right. Coming up on IN THE MONEY, good service, great tip. If you think you're getting a little extra out of the kindness of your heart, think again. We'll tell you the real reason why you tip so well.

Plus cashing in on the blog boom. The popular web commentaries could end up at a newsstand near you. We'll explain.

And pounding the pavement -- or pounding your head? You might be taking this job search thing a little too seriously. We'll show you one man who isn't in our fun site of the week. Stay tuned.'

(COMMERCIAL BREAK) FREDRICKA WHITFIELD, CNN CORRESPONDENT: I'm Fredricka Whitfield in Atlanta, more of IN THE MONEY in a moment, but first, a check of the headlines.

Doctors at an Austrian hospital say dioxin poisoning is responsible for Viktor Yushchenko's condition. The Ukrainian opposition leader has been sick for months, suffering bloating and scarring on his face. Yushchenko, who is currently running for president of Ukraine is back in the hospital. Jill Dougherty has more in a live report coming up at the top of the hour.

Bernard Kerik, the president's nominee for secretary of the Homeland Security Department withdrew his name for consideration. He says it's because of unpaid taxes for a woman who worked for him as a nanny and housekeeper. Kerik says the former employee may have also been an illegal immigrant.

Yasser Arafat's nephew has turned over a 558-page file of the late leader's medical records to a Palestinian panel investigating his death. Arafat died in a French military hospital last month. I'll have all the day's news at the top of the hour. Now back to more of IN THE MONEY.

SUSAN LISIVOCZ, CNN CORRESPONDENT: 'tis the season for giving and that means a little extra for everyone from your hair dresser to your mail carrier to your garbage collector. But do all these people really deserve a holiday tip or are you just worried about getting a bad dye job, late mail pickup and garbage on your front lawn? Michael Lynn has the answer. He's from Cornell school of hotel administration. He's an associate professor of consumer behavior and marketing there. Welcome, just in the nick of time. Michael, can you hear me?


LISOVICZ: OK. I don't know my mail carrier. I don't know my garbage collector. Do I have to give them tips?

LYNN: Of course you don't have to. And your mail carrier presumably because he's a Federal employee, is prohibited from accepting monetary payments. Many people, though, could give them a gift, a gift rather than a monetary tip.

LISOVICZ: And but what kind of gift would be appropriate for something like that?

LYNN: You know, I am not an expert on etiquette, but I suppose if I was going to give my mail carrier something, I'd give him a bottle of wine, a bottle of Jack Daniels or something like that.


ANDY SERWER, "FORTUNE" MAGAZINE: Hey, Michael, be careful because he might go postal. Michael, let me ask you a question here. When did this whole cultural thing happen where every single retailer allows their employees to put a little cup next to the cash register, every single store you walk into has a little cup.

LISOVICZ: You're just bitter.

SERWER: I mean just for giving me change at the drugstore I'm supposed to tip them? It ticks me off. I'll tell you something else that ticks me off. I bet these employers are counting on us giving them money and they're holding wages down. They're saying, we don't have to pay you as much because you guys get 20 bucks divided by five guys in the tip cup every day. What's going on here?

LYNN: Well, first off, I think that that started happening in the 1990s. It irritates me as well. Most Americans, 70 percent of Americans say in surveys that they dislike having these tip cups out there so we're not alone in being upset. I'm not so sure that the employers are benefiting that much directly from this, though. Federal law still mandates minimum wages to retail employees. So they're not really getting a break on employee wages. I think that what's going on is that there's a labor shortage essentially, especially for these low-level positions. And in order to attract more people, they've had to start allowing those employees to collect tips. And it's just a way of keeping their employees happy, keeping them there on the job, so that they have a labor force.

JACK CAFFERTY, CNN ANCHOR, IN THE MONEY: You know, when I was a younger guy, which granted was a long time ago, tipping was something you did because the person who was serving you or waiting on you did an extraordinarily good job and so it was a reward for an effort made on your behalf. It has become, now that I'm much older, a form of extortion almost. It's expected. It's not quite demanded but the implication is, as was alluded to in the lean-in, you don't give me a tip, maybe we don't pick up your garbage next week. By the way, I leave a little cash in the mailbox for the mailman. I've never gotten it back on the 26th of December, so at least one guy in the postal service ain't adverse to taking a little cash. But how did the psychology of this all change?

LYNN: Well, certainly in restaurants it's true that tips today are obligatory and they are not very strongly related to service. I would have guessed that tipping in other occupations, less traditionally tipped occupations, that still the tips reflect at least in part, some gratitude for the services received. But much of the holiday giving, whether you're tipping your doorman or your son's teacher, a lot of that has to do with just not wanting to appear cheap. You don't know what other people are giving, but if they're giving something and you're not, obviously you're going to look bad in comparison.

LISOVICZ: Michael Lynn, associate professor of consumer behavior and marketing at Cornell School of Hotel Administration. Thanks for your advice.

LYNN: You're welcome.

LISOVICZ: Lots more to come here on IN THE MONEY.

Up next, blah, blah, blog. They're the hottest things to hit the web since chat rooms. We'll talk to one tech entrepreneur who wants to cash in on the craze.

Plus you're not the only one shopping in your PJs this weekend. We'll look at how point, click and shop is reaching new audiences this holiday season and what that means for e-tailers.


SERWER: So you set up your own web page and a webcam to go with it and now you think you're a techy. Get with the program that was so 1999. You're not hip to the Internet these days unless you have your own blog. Tony Perkins has built an entire business on blogs. He's editor in chief of Always-On. He joins us now with a look at this new phenomenon. Tony, welcome to you.


SERWER: Hey, listen, I thought this whole web thing ran counter to a magazine. I mean, magazines are so old school. Webs are new school. How can you put them together?

PERKINS: Well, the real interesting thing is that, you know, I think we should step up about 30,000 feet here.


PERKINS: Web blogging became popular, because they're now free, very easy to use web publishing applications where you can set up your own blog site, literally in five minutes. So what we've seen over the last couple of years is there are now 5 million blog sites out there, now watching all sorts of activities. We have bloggers on the streets of Baghdad. We've got bloggers watching presidential elections, offering expert opinion, breaking news. We saw the first pictures coming out of the bombing in Jakarta back in September coming on a blog site. So this is a new alternative media format and what I've done is take the tech business community and allowed them to come under Always-On's website and in essence, guest blog and interact with the members of a global community. And then we're spinning out some of the most popular posts and some of those best member comments that are coming in to a magazine. So in essence, the whole beauty of blogging is it allows people, every day people, to become commentators and really editors and influence what kind of editorial we're publishing on Always-On.

LISOVICZ: What you're saying, Tony it's really a very old-fashion term. You're editing because blogging is so indulgent. Who's got the time to go through all these blogs. You're going for the best, the most provocative, the most popular. Who do you have, for instance? Who do you have and what are some of your regular features?

PERKINS: Well, again, to be a consistent blogger takes a lot of work, as you noted. So what we've done is created a group blog environment where FCC Chairman Michael Powell as an example comes in every couple of weeks, posts some blogs and dialogues with the global Silicon Valley community that we serve. We have venture capitalist Tim Draper (ph) out hustling for business plans on our site. We've had Eric Schmidt, the CEO of Google talk about education and some of the ideas that are important to him beyond his business at Google.

So it allows them to come in, dialogue with the community, the whole world that comes in and views it gets the benefit by being able to view this dialogue. And our rules as editors are really just picking who we think are the most interesting people that can come in and guest blog for us.

CAFFERTY: Tony, Jack Cafferty. I was actually contacted by someone a couple weeks ago who suggested that I might be interested in setting up one of these blog sites. You said there are 5 million bloggers in the country. I will admit to a certain ignorance. I told this guy and I'm almost embarrassed to admit this, I told this guy, well, I'm really too busy, I don't have time for this. Because I was ashamed to tell him I have no idea what the hell what you're talking about. So for me and presumably that one other person watching this program who ain't hip when it comes to the Internet, what are these sites? If I set one up, what would I do with it? Tell me how it works because I really want to learn about it.

PERKINS: Well, I don't want you to feel too bad. Webster just reported that the number one word looked up on their Internet dictionary was the word blog.

CAFFERTY: That was me.

PERKINS: So a lot of people like you, they're trying to figure out what this means. In essence, it's like, think of it as like talk radio where a guy like a Howard Stern or a Rush Limbaugh start out in a small market, starts dialoguing with their listener and most of us go in and listen to that dialogue but aren't actually actively participating. So it's a text version of that where you would just wake up in the morning, drink your cup of coffee and start, read the newspaper maybe and talk about things that you feel like you're an expert in.


PERKINS: And over time, people will come to you and say this guy knows a lot about this particular subject. So I'm going to check into his website every once in a while and then you'll attract other people that are interested in that subject and they'll post comments to your original post and that's the value proposition of blogging.

CAFFERTY: And as you get this group of people together, then presumably it gets larger, there becomes then a commercial application if you want to take it in that direction, correct?

PERKINS: Exactly. The culture of blogging is to link to each other's blog sites. So it's kind of this organic community that self- supports each other. What I've done is taken the low-cost platform, blogging platform, built it out and asked people such as yourself and you're welcome to be one of our contributors.

LISOVICZ: He'd be a natural.

PERKINS: Exactly because you don't have the time to do it every day, so you can come in to Always-On, guest blog for a while, go back, go back to work, do whatever you have to do to make a living (INAUDIBLE). What's neat for me is --

SERWER: I guess that means no.

CAFFERTY: Notice how he didn't answer that question.

PERKINS: You pay me for this, I pay you for that.


PERKINS: That's the way it works. But the bottom line is, it is a great way to create a lot of web traffic and we have supporters such as IBM, Sun, Accenture, KPMG.

SERWER: Hey Tony --

PERKINS: Advertising and sponsoring for us because they like our audience.

SERWER: Let me jump in. I think Jack would be a natural because really a blog is just a rant where people respond.

PERKINS: That's what it is.

SERWER: It's true. Where does the word come from and can't you come up with a better name? It's an ugly word. What does the word mean?

PERKINS: It's memorable. It's actually an abbreviation for web log a diary or a log, when you log your thoughts. That's where it comes from. But I'll tell you, this is the greatest breakthrough in media since CNN and the birth of cable news, because what you guys did is strap cameras on people, let them be free to go out into wars or whatever and start reporting in real-time. That's what's happening in the blog sphere. For instance, Dan Rather was hurt by the blog sphere because they produced these documents that the bloggers said these are not authentic documents and were taken down by the blog stream.

LISOVICZ: Here to say, I would think that you could make the argument. Tony Perkins, it's good to see you. A lot of folks remember you from Red Herring and you're back with a good name, Always-On, magazine, founder and editor in chief. Thanks for joining us.

PERKINS: Thank you.

LISOVICZ: Coming up, selling yourself online has never been so amusing or pathetic. We'll let you be the judge when we unveil our fun site of the week.

And put our producers to the test with your e-mail insights. Drop us a line, the address,


CAFFERTY: Major retailers have been seeing increased online sales year after year at Christmastime. Now those little boutiques on Main Street are also getting into the act. Web master Allen Wastler has that story and a possibly innovative or maybe just pathetic fun site of the week. Good afternoon.

ALLEN WASTLER, MONEY.COM: Good afternoon and we're seeing some fun stuff in the online sector this year. If you look at all the figures from comscore (ph) and the usual folks that sort of keep the little tabulations and what's going on, they figure there will be about a 25 percent pop this year in Christmas spending on the net.

SERWER: That's big.

LISOVICZ: That's huge.

WASTLER: Think about it. In previous years though that was more like 30 plus, 35 plus. So you're seeing a little slowing down. That could be the law of large numbers, of course. As it gets bigger, it's harder to get those gains or some people say it could be a sign of maturing of the sector. Either way, we're seeing that sort of leveling off coming in. Second thing to look for, you're seeing more and more of the bricks and mortar folks getting into the game now. If you look at the figures that came back from the black Friday weekend, of course eBay and Amazon are big honkin top of the pop. But now you're seeing the walmart.coms, the target.coms, all those places that have stores begin to creep into the equation a little bit.

SERWER: And Wal-Mart is rolling it out very slowly. They're just watching it, not spending too much money, moving slowly because I've talked to them about it a little bit. (INAUDIBLE)

WASTLER: Sooner or later...

SERWER: If it's a big business (INAUDIBLE)

WASTLER: But here's the trick now. It's a little bit different about the sector. Usually when you see that market share question come out and the big players all jostling, it's all between them, think about the new search technology that's started. Contextual links, for a little bit of money, a little tiny boutique can get their name out there into the search engines. So you're going to see the little players out there become more and more of a factor in this. So I think by the end of the season when we're finished counting it all up, you will see the big kahunas up there with their usual take, but you're going to see a lot more of it go to small business as a whole. And we're already beginning to see...

LISOVICZ: And that's because, partly because people are getting more comfortable with buying on the net.

WASTLER: Buying on the net systems and if you're a merchant, it's very easy now to set it up with the credit card people. Hey I want to have a web site. I want to do this. I want to take the payment, (INAUDIBLE) payments, whatnot.

SERWER: Are you buying my present online?


SERWER: Not yet.

LISOVICZ: There is no present.

WASTLER: Lump of coal.

SERWER: How about a tip? How about a tip? What about just a tip?

LISOVICZ: Don't play the horses.

WASTLER: More innovative things about the net, OK. We found this one person who decided to distribute his resume in a bit of a different way. Part of it that's different is he's French, too. Let's take a look.

SERWER: Oh, Jacques. I would sooner shoot myself than work with someone like that. WASTLER: He goes on and on, goes through all his qualifications.

LISOVICZ: That's for real.

WASTLER: It's for real and at the end he goes, -- he gives a way to get in contact with him.

LISOVICZ: Is he still unemployed?

SERWER: I would leave. I would move to North Korea.


SERWER: If he did it sort of in not such an obnoxious and/or pathetic way it might be --

LISOVICZ: Other than that, you loved it right.

CAFFERTY: It's a tough room in case you (INAUDIBLE). Coming up next on IN THE MONEY, it's time to hear from you as we read some of your e-mails from the past week. We'll be back.

And you can send us an e-mail right now as we're talking about it. We're at Write to us.


CAFFERTY: It's time now to read some of your answers to our question last week about whether you can survive a big increase in interest rates. Jeff from Florida wrote this, there's no way most Americans could survive. Too many of us have bought homes only thinking about whether we could afford the payments, not whether it was overpriced and could sustain a drop in market value. Massive personal bankruptcies are in our future if the rates ever skyrocket like they did in the 1970s.

Janice wrote, rising interest rates would help me because I need the added income from CDs. But my kids would be screwed and wouldn't be able to pay a house or car off or their credit card bills if interest rates go up.

And don wrote to us, it depends on which interest rates you're talking about. Higher bank rates would be OK, but if I know I couldn't survive if my interest rate in the opposite sex rising higher, I'm in trouble. I've emptied most of my wallet trying to impress women. I think we may have found the guy who came up with the resume on Allen's fun site of the week.

Next week's e-mail question of the week is as follows: Do you think Washington should make any major changes in Social Security? Send your comments to Do not, do not animate them or set them to music. You should also visit our show page at That's where you'll find the address of our fun site of the week. The verdict is in. It is truly pathetic this week. Thanks for joining us for this edition of the program. Thanks to CNN correspondent Susan Lisovicz, "Fortune" magazine editor at large Andy Serwer and my pal Allen Wastler,'s managing editor. See you tomorrow at 3:00 Eastern when we'll continue this high class exercise. We'll talk about the run-up to the Iraqi elections, whether they should go on as planned, just seven weeks away now. That's tomorrow at 3:00 Eastern. Hope to see you then.


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