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Interview with Michael Tucker; Paul Wolfowitz Named As New Head of World Bank; China Continues To Build Toward Superpower Status
Aired March 20, 2005 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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ANNOUNCER: From New York City, America's financial capital. This is IN THE MONEY.
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CHRISTINE ROMANS, HOST: Welcome to IN THE MONEY. I'm Christine Romans in for Jack Cafferty. Coming up on today's program:
Time to sign up for those mandarin lessons: China is starting to play like a superpower and it's making connections to match. After a tough ruling on Taiwan, we'll look at America's up-and-coming rival.
Plus, from the heat of battle to the lap of luxury. The new movie "Gunner Palace" brings the Iraq War home. We'll speak with the director about the things the news doesn't show you.
And a ride on the wild side: Videogames, like Grand Theft Auto grab the hottest demographic of all -- kids with cash. Find out about the game business and how it grew.
Joining me today, a couple of IN THE MONEY regulars, "Fortune" magazine Editor-at-large, Andy Serwer, and "money.com" Managing Editor, Allen Wastler.
And gentlemen, almost two years on now from the toppling of Saddam Hussein, and a man who's an architect of that is getting a new job.
ANDY SERWER, "FORTUNE": Paul Wolfowitz has gotten tapped by President Bush to head the World Bank. And what was funny to me is that one of the first things he did was to reach out to Bono. I mean, you know, the front man of U2. It's, you know, a lot of people sort of made a joke and suggested he would be the right man for the job and I guess maybe Wolfowitz thinks he is someone who should be called upon.
ALLEN WASTLER, "MONEY.COM": Well, I think that's sort of part of trying to soften his image a little bit. But appointing Wolfowitz to this, basically, glad-handling for America's economic aid, that's willing to do that, I think the administration's sending a message, saying, hey look, economic aid, defense, where we work with you on one, maybe we'll work with you on the other. And you know what? I don't think that's a bad thing to do a little... ROMANS: There's a lot of buzz on Wall Street about Carly Fiorina, perhaps, being considered for this job. That would have been interesting, loses her job at HP and then very quickly running the World Bank. It turned out, of course, not to be true, but interesting who they're considering for this position.
SERWER: Yeah, I think -- right.
ROMANS: What is this position anyway?
SERWER: Well, first of all, as far as Carly Fiorina goes, I think they were throwing her a bone. In other words, you know, making her feel good by putting her name in a hat and I don't really think that she really stood a chance. You know, it is a job where you represent world economic interest, but everyone knows that the U.S. is really the power behind the World Bank. And I think that Allen is dead on when he says, you know, this is not a soft shoe approach. It's linked to national security. It's linked to our military interest, to our political interest and they are one in the same with our economic interest.
ROMANS: All right, interesting.
China, meanwhile, got Washington's attention, this week, with a new law aimed at preventing Taiwan from breaking away. It calls for the use of military force if the Taiwanese formally declare independence. The Bush administration labeled that decision, "unfortunate," and a White House spokesman warned it could raise tensions in the region. Beijing's move comes as its influence is growing both economically and politically.
For a look at where the situation could be headed we're joined from Tucson by Mr. Ted Fishman. He's the author of "China Inc.: How the Next Superpower Challenges America and the World."
We know that China is on the political and the economic stage, front and center. Are we doing enough? Are we positioned enough, in Washington, to meet this challenge?
TED FISHMAN, AUTHOR, "CHINA, INC.": No. I'd say the answer's no. We have a lot on our plate around the world. The war in Iraq is a perfect example. Wolfowitz has been very strong, for example -- you were just talking about him -- about the Middle East and about regime change in the Middle East. There's very little focus in the administration on China. Before 9/11, they were focused very intently on China and much of that concern seems to have gone away.
SERWER: Well Ted, I'm a little -- I'm a little confused by the fact you say there is very little focus. I mean, I seem to think that there's a lot of focus. Obviously the situation the Middle East is taking up the bulk of the time, but second to that I would say China is very much on the agenda. But, I want to ask a little bit about the military. You know, we've been talking about the Chinese military since the Korean War. Is this a situation where the military could get even bigger than it is today? FISHMAN: Actually in the recent past, China's military has shrunk. What the Chinese are trying to do with their military is make a leaner, meaner, more efficient, but smaller military that will have more resources thrown at it. Primary among its objectives are to make it a technologically-advanced military, in which it wouldn't need all of that manpower, but it would have very sophisticated aircraft missiles. China doesn't really have a navy that matches up against the world navies at the moment, but it's interested in acquiring one.
WASTLER: Ted, there's a lot to be worried about with China and its growth, but one thing that happens to countries as they get bigger, a little richer, their citizens get a little better off, is that they tend to start having problems domestically. People start having arguments with their own government and whatnot. Do you think maybe that might be a factor that may obviate some of the worries that we should have?
FISHMAN: You know, it's part of all the same mix. It's a really good question. What happens is when things in China get mixed up domestically is that these foreign issues come to the fore and the government trots out Taiwan is an issue when it's worried about controlling its own people.
I think people don't realize about the Taiwan issue it is that it's part of the belief system of the Communist Party and in order to get the Chinese people on the mainland behind the Communist Party, they do things domestically. They're very interested in narrowing the wealth gap that's come about as part of market reform, but Taiwan is a tried and true issue that they can bring out over and over again. That's why you see this parade of declarations on Taiwan, you know, very regularly.
ROMANS: Where does the U.S. stand officially on the Taiwan issue? I know that there were some hawks who were concerned with this, Lenovo, a Chinese company, buying IBM. A lot of people were saying, you know, there could be -- IBM R&D that sometime in the future could be used, you know, in a MiG cockpit as we're staring down Chinese MiGs in the Taiwan Straight.
Would the United States put itself in a position where we would have to take on China over Taiwan?
FISHMAN: We talk a very strong game. You have to wonder what would we really do if China came to blows over Taiwan, especially if that were a very swift move. I'm very hard-pressed to think that we would do much if China moved very aggressively on Taiwan. We have too much going on elsewhere in the world, there's a lot of diversions that would take us away from Taiwan. It's probably not important enough for us, right now. Plus there's a very large economic constituency in the United States that would demand the United States having the best relationships with the mainland, because there are so many billions invested there. It is so much part and parcel of our domestic economy, now.
SERWER: Ted, you're talking about economics, and I think that's a really good point, because there's so much friction between China and the United States -- trade deficits, piracy. What leverage do we really have with the Chinese? It seems like we try to get them to do our bidding and they just sort of nod and go about their business.
FISHMAN: Well, we're in a country in search of leverage against the Chinese. It seems, right now, the Chinese have all of the leverage, because they are the place that our best corporations want to go to to establish a beachhead to get low-cost production to bring goods back here. So, in a way, you know, we have the interest of our private sector being weighed against our interest as a public sector. And for the long-term strength of our economy, we need a consensus. And the only way we can get that consensus is if we agree, as a country, to use our power as China's leading consumer in the world to affect some reforms over there that would reward our economy.
What I'm talking about here is how we can sell the products of our knowledge economy to China's economy which makes things. Right now the things that we make in this country -- great brands, great products, great patented products, great software, great entertainment -- they all get transferred to China with the click of the mouse or, you know, with this -- a DVD duplicating machine. We don't get paid in China for the top-dollar goods that the rest of the world pays for it, and that's why you have these enormous imbalances.
WASTLER: Ted, real quick here, China has not only been taking some of the intellectual property, but they've also been taking some of our financial instruments, like our bonds.
FISHMAN: Quite a few.
WASTLER: With the falling dollar, how worried should we be if China decides, you know, maybe we don't like the bonds anymore, let's sell them all off?
FISHMAN: You know, there's a kind of balance of financial terror here, that's a term that the notorious Larry Summers likes to use. We shouldn't worry too much that the Chinese are going to shift out of the dollar.
But if it became a political issue, they might start moving out of the dollar and that would be about as dangerous a financial move, for both China and the United States, as you can imagine. It would raise interest rates around the world. That would chill the buying of Chinese products, not only by Americans, but by others. It would change the real estate market worldwide.
But it is a very powerful political lever that the Chinese have right now and, as you know, the Communist Party is very politically savvy; they are interested, above all, in staying in power. And if the political lever becomes more important then the economic leaver, that is something that they might be willing to do.
ROMANS: Ted Fishman, "China Inc." thanks so much. Bottom line, we got to keep an eye on China, watch it. And Washington needs to have some more clear strategy in that direction.
Ted Fishman, thank you. FISHMAN: Thank you.
ROMANS: When we come back, forget about the news, a new documentary called "Gunner Palace" shows the war in Iraq. In more than a minute 30, we'll speak with the director.
Also ahead, sticky trigger fingers: See how a whole industry developed around kids who like to blow things up. Look at the rise of the videogame.
And not safe for work: We'll show you, Whack Your Boss. It's our "Fun Site of the Week."
SERWER: Yeah! Get it!
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UNIDENTIFIED MALE: Part of our $87 billion budget provided for us to have some secondary armor put on top of our thin-skinned Humvees. This armor was made in Iraq. It's high-quality metal, and it will probably slow down the shrapnel so that it stays in your body instead of going clean through. And that's about it.
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SERWER: Laugh until you cry with that. As we mark the second anniversary of the start of the war in Iraq, a new documentary film is putting the spotlight on the daily lives of the soldiers in combat. Michael Tucker is the director of "Gunner Palace" and he joins us, now.
Michael, welcome to the program. The film is real. It's cinema verite, it's alive, and it looks like a really compelling thing to watch. I guess I am curious, what compelled you to go out and make this film?
MICHAEL TUCKER, DIRECTOR, "GUNNER PALACE": Well, I think what drove me it make the film was just to tell this day-to-day story. I mean, what is it like for these soldiers? And now two years into this war with 150,000 soldiers deployed, you know, there's a huge disconnect between the civilian population back in the States and what's happening with these soldiers on the ground and what their families are experiencing, and I'm really glad that we made it.
ROMANS: It's pretty fair to say these guys and women are experiencing a pretty chaotic existence. What's missing seems to be some sort of rhyme or reason or pattern of events, there. Is that what this film shows?
TUCKER: Well, I think it's, you know, it does not lend itself well to a traditional narrative arc. It is chaotic there, it is fragmented. You know, every day is completely different. And there is no goal post, so it's not exactly what most of us think that it is.
ROMANS: Yet it's so powerful, without a narrative, without a narrative arc. It is very, very powerful, these fragments and these snippets of what these people are going through, on both sides.
TUCKER: Exactly. I mean, it's incredibly, you know, profound experience for these young men and women. And you know, the film gives them a (SIC) opportunity to articulate those experiences.
WASTLER: Michael, it looks like a fascinating piece. Tell us a little bit about how you put it together. I can't imagine the Pentagon really wanted to have that little bit we just saw with the soldier out there. What did you have to do to get some of the material? I mean, did you stay with them a long time? How many camera crews? Give us a little detail.
TUCKER: Well, I'd already been there twice. I started going in May 2003. When I linked with these guys it was already September 2003, and the permissions really came from a, you know, very localized level. You know, it was brigade-level permission. I mean, there were a lot of journalists at the time. I mean, Baghdad was still relatively safe then. I made a second trip in February-March 2004 when it was getting definitely a little bit more hairy; in fact, between the visits three members of the battalion I was with were killed.
WASTLER: Were you there for that?
TUCKER: No, I was not there. You know, all told, while we were filming this, eight people were killed whoever -- who where either in the film or attached to the unit. And fortunately, you know, I wasn't there on location when those events happened. But, you know, this battalion did get hammered pretty bad. You know, four killed in action, 60 wounded.
SERWER: Boy, that's -- that is horrifying stuff. Talk to us about distributing the film, obviously always a big challenge. A major studio picked this up. Is it going to be on television, in theaters?
TUCKER: It's in theaters, right now. Our distributor is Palm Pictures. This weekend we're in about 60 theaters nationwide. We're trying to reach out to some military communities who are playing in places like near Fort Bragg and Fayetteville, near Fort Carson, Colorado Springs Fort Hood, Killeen, Texas. Plus, you know, larger cities across America. But we're really trying to get, you know, people who care about the subject matter in the theaters this weekend.
ROMANS: The film is called "Gunner Palace." Tell us about the palace. Tell us about the putting green and the pool and the strange juxtaposition of what these people are going through every day and their environment.
TUCKER: Well, the palace was Uday Hussein's palace, so that's Saddam's son. Heavily damaged during the "Shock and Awe" campaign. And the soldiers made it their home, so they had a pool. It was incredibly hot; the pool was a place that they could kind of, you know, let off some steam. By the time I was back with them the second time, though, the pool was a mortar target, you know, they were literally fishing mortars out of the pool. The back side had been hit by rockets. You know, a very, very, very volatile place.
WASTLER: Michael, one thing I saw that was very interesting about this movie was blogs are involved in it. I think it's one of the first documentaries I've seen where blogs seem to have an active role. Tell us a little bit about that.
TUCKER: Well, the blogging community has been hugely helpful to us. I mean, bloggers were a way for me to kind of take the pulse of both soldiers and their families. You know, what they are going through? What are they I thinking? And blogs have afforded us a completely different perspective on the war that is probably more emotional than political. I mean, there is some fantastic writing coming out of blogs and bloggers have spread about this film, both on the left and on the right. And, I think, you know, bloggers have really created a conversation about this war.
SERWER: Michael, is this an anti-war film?
TUCKER: Well, I think it's impossible to make a movie about war that's not anti-war. I mean anyone who has been in that experience, it's very profound, it's very emotional. I tend to view the war more emotionally than politically, having known so many people who are not with us any longer and, you know, I will never forget them.
ROMANS: A bit of controversy about the language -- the foul language in the film. But foul language, expletives, just very extreme thoughts and behavior and language is part of war, right?
TUCKER: Exactly. I think Norman Schwarzkopf said that war is profanity and we went to the MPAA and we appealed our original "R" rating and got a "PG-13" based on context. And I think that the majority of American parents realize that this country's been at war for three-and-a-half years and these soldiers are in a very difficult place and if they drop a few "F"-bombs it's OK, but we need to hear their experiences.
ROMANS: I want to ask you, what are the people who are in this film say about it? Are they excited about it? Have you heard much about their feedback?
TUCKER: I talk to them every day and for the young soldiers, they're really excited and for them it's a great platform to articulate what they've been through. And again, to connect with that audience, to tell people at home, you know this is what we went through and this is who we are.
ROMANS: Michael Tucker the film is "Gunner Palace," thank you so much for joining us.
TUCKER: Thank you for having me.
ROMANS: Coming up after the break, looking for traction? Find out how Wall Street reacted to GM's latest news on financial health.
Also ahead, that pool at work is only the start: We'll get the big picture on the economic impact of March Madness.
And pity the poor beleaguered CEO. On second thought, don't bother. Allen Wastler will tell us why.
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ROMANS: Now let's take a look at the week's top stories in our "Money Minute."
Two investment firms and a real estate company teamed up to buy all of Toys 'R Us for about $5.7 billion. Toys 'R Us has struggled to keep up with Wal-Mart's lower prices, but it became an attractive buyout target because of its well-located stores.
Shares of Viacom jumped higher after the company said it's considering splitting into two separate companies. One would be dominated by its fast growing cable networks. The other would be led by its CBS television unit. Viacom says splitting things up could be the best way to keep share prices higher in the long run.
And if you're looking for a growth industry, this year, try cell phone porn. Mobile phone users spent an estimated $400 million downloading pornographic pictures on their cell phones last year. And the research group, Strategy Analytics, says that could jump to $5 billion this year. And you thought cell phone users were annoying when they talked too loudly.
SERWER: Another big story this week was GM's surprise warning to Wall Street that it expects a big first quarter loss. General Motors says weak sales and stiff competition are hurting the bottom line, not to mention rising oil prices. Investors punished the stock, sending it down 14 percent on Wednesday, alone. And GM shares are at a 12- and-a-half-year low. That makes GM our "Stock of the Week," I guess.
ROMANS: Wow.
SERWER: You know, it's not just a 12-and-a-half-year low, I went back and looked at the chart and this stock is trading where it was 43 years ago, in the 1960s, early 1960s. Here, listen to this, in 1960 -- in 1975 it was $14. In the late 1960s it was $50, but to point to point story, it's almost exactly where it is right now and that's because its market share has declined and the Japanese have made inroads and you see something like this happening over your entire lifetime. It's amazing.
ROMANS: Bottom line, this is a company, General Motors which, you know, is the big name in automotive, in this country, and it is having trouble selling its products into the biggest car market in the world.
WASTLER: That's because its products, nobody likes its cars. I mean, they're -- they don't have hot models that anybody wants anymore. They're also in for some big trouble because the Fed keeps raising interest rates and when you buy a car, usually you have to take a loan. If the loan's going to cost you more, I think I will wait on that car for a little bit.
ROMANS: If it's cheap do you have to buy it? I mean, does it have to have some kind of a new strategy?
SERWER: It's got a value trap. Every five years it looks cheap, it gets cheaper. And what you said about interest rates, very important, because GMAC, their financing arm, has been their big profit center, that's going to be hurting. Health care costs are going to be huge. They've made bets on SUVs and pick-ups, that's been good, but you can see the pendulum swinging, there. And I think we have to say this, we have to say that what's good for GM is no longer good for America.
ROMANS: Well, it hasn't been for some time.
SERWER: Decades.
ROMANS: Because, for -- I mean, so, at this point, you look at Ford, a few years ago even, people were saying Ford's a great buy, Ford's a great buy, and it's just been going down, down, down. GM also really weak. Maybe making cars isn't Detroit's best thing anymore. Maybe we've been completely overturned by foreign automakers.
SERWER: Well, we can make good cars. And you talk about Ford, they're wrapping up production of the Mustang, right now. But basically, you know, the Japanese Toyota, of course, the best carmaker in the world and they have really have eaten our lunch here in this country. I think it's still possible; it's so difficult with GM, with its legacy of factories and health care costs. You know, they talk about jobs and who's going to be next CEO, and Rick Wagner, how -- what kind of job he's done at GM. I just think that's almost an impossible job to run General Motors, now. I wouldn't wish that on anyone. I mean, it's just very difficult.
ROMANS: Is there any dividends? Is there some reason for GM shareholders to at least say at least, well, at least now it's a seven percent dividend?
SERWER: Yeah. It does yield over five percent, that some solace, though. But when you go absolutely nowhere for 43 years, that's a very tough ride.
ROMANS: Ouch.
SERWER: Yeah.
All right, coming up on IN THE MONEY, amazing how much can ride on somebody putting a ball through a hoop. We'll look at the economic impact of March Madness.
Also ahead, the babysitter you only pay once? Videogames do more than just keep the kids occupied. See how they become an entertaining powerhouse. And the killer mouse: See how to knock off the boss on our "Fun Site of the Week."
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SERWER: The NCAA basketball tournament is in full swing and you don't need to understand the difference between a pick and roll and give and go to get in on the action this year. Colleges, corporations, even the quirky guy in HR who entered the office pool this year. At the last minute, they're trying to cash in now. Why all the hype? Let's find out. Rod Kurtz is editor of "BusinessWeek" online. Welcome, Rod. They talk about football being the number one sport in America. The NCAA tournament, not far behind, right?
ROD KURTZ, BUSINESSWEEK ONLINE: It's great to be with you. My job all week has been to talk about college basketball. It doesn't get better than this. Andy, you're right, this is a huge event. It's a huge economic event. You mentioned the Super Bowl. Yeah, it draws a lot of people. Let's look at some numbers with the NCAA tournament. Throughout the 16 days, they're going to get more than 700,000 spectators to this event. So, I mean, we're talking about a lot of money coming in here and it's interesting to look at some of the numbers.
ROMANS: Why the attraction? Why the attraction to athletes who are still pure and untainted and don't have big, you know, contracts?
KURTZ: We hope so.
ROMANS: I mean, why the attraction?
KURTZ: Well, I think -- you have to start with the fact that this is really a national championship. It's held in cities across the country. It involves teams across the country, 65 teams and it's a great story line. The little tiny college that barely made the tournament can knock out the number one seed. It's single elimination. You can move on and it's really -- you have some dramatic finishes to the games. And I think part of that brings in a lot of non-sports fans. You talk about the brackets. Everyone at work can fill out a bracket and they have a vested interest in what's going on on the court, even if they're not basketball fans.
ALLEN WASTLER, MONEY.COM: Every year, Challenger, Gray & Christmas, HR outfit on the west coast, comes out with -- they take how much time people are likely to spend watching it out, multiple it out by the average wage and they come up with lost productivity. And this year it's $889 million and they do it for this. They do it for the Super Bowl. They do it for everything. We don't really put much stock in these numbers, do we?
KURTZ: You have to be -- you're absolutely right -- you have to be careful with these numbers. I mean $889 million, it sounds look a big, scary number. The way they did this, to cut to the chase, they estimated that big college basketball fans, and they're in the millions will spend 13 minutes a day checking Web sites, checking their brackets, talking by the water cooler and they add up the average wage of the average worker and then come up with this big number. Thirteen minutes a day is not a lot of time. You can waste 13 minutes very easily doing a lot of other things, chatting on instant messenger, sending e-mails, checking headlines. So I think you have to be careful. I don't really think this is going to send our economy into a tail spin.
SERWER: Well, it actually helps the economy Rob. When your team loses, you go out and get anti-depression medicine. My team, Maryland, didn't even make the tournaments.
KURTZ: The pharmaceutical industry is watching.
SERWER: So I'm in the not invited tournament, the NIT which I guess we're not talking about today.
KURTZ: Well my Penn Quakers were bounced in the first round so -
SERWER: Oh, the Quakers were killed by BC, that's right. Hey, listen to this though. One thing that really tees me off about the tournament, especially in the early rounds is you can't watch the game that you really want. They switch back and forth. There are too many games. When are we going to be able to watch the game that you really want online or in pay-per-view? I know you can on the margins right now. How come they won't put these things online, just watch the game you want?
KURTZ: Actually, there's a handful of sites popping up that are offering some of these packages that allow you to tune in online. That gets back to the productivity: people are scared, employers are scared that people are going to be watching all day long. But in term of getting out and seeing it on a big screen, I think the best option is really to go to your local sports bar -- watch the satellite TV.
SERWER: Oh, the sports bar. My wife doesn't like that.
ROMANS: Let's talk about the pools, the brackets, sports bars have them, so do offices. Should companies be trying to kind of push back against that a little bit? I know it's pretty rampant. There's so many different pools you can be in for so many different parts of the tournament.
KURTZ: Right. I've got two brackets filled out myself, so guilty as charged here. But I really think employers are better off accepting this as a cost of doing business. I was talking to an --
ROMANS: It builds team work in the office place.
KURTZ: Exactly. It builds morale and the last thing an employer wants to do is look like the bad guy and try to restrict Internet access.
SERWER: We could have a meeting at the sports bar.
KURTZ: Right, exactly.
ROMANS: It is illegal though, right? KURTZ: Andy, I like the way you think. But I really think this is something that companies can use to their advantage and curry favor with their employees and not look like the bad guy. I think it does build morale. I was talking to an economist the other day who likened this to America's version of the world cup. It's two weeks where we're all swept up in this and there's really no sense in trying to stop it. I think it's become so big and as I mentioned, it brings in a lot of non-sports fans. Everyone's swept up in this.
WASTLER: All right. Well, Rod, we're going to watch the games and we appreciate you joining us.
KURTZ: I'm headed out right after this.
WASTLER: There you go, Rod Kurtz, editor of "BusinessWeek" online. There's lots more to come up here on IN THE MONEY. They don't call it a joystick for nothing. We'll look at how video games turned into a multibillion dollar business.
And, they don't all wind up like Bernie. We'll tell you why you don't have to feel too sorry for CEOs.
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WASTLER: You may not be hooked, but chances are you know someone who is. No, we're not talking about drugs. We're talking about video games, games like "Grand Theft Auto" and "Halo" have reeled in kids of all ages, particularly those in the 18 to 34-year old demographic. So what keeps them playing? Let's find out. Trip Hawkins is founder of Electronic Arts, the top publisher of video games in the U.S. And his latest venture is "Digital Chocolate." a company developing games for cell phones. Trip, welcome.
TRIP HAWKINS, DIGITAL CHOCOLATE: Thank you.
WASTLER: I just -- not too long ago, I didn't watch TV for a whole week, actually a little more than a week. I played "Half-Life 2" instead, right up there, just playing away. And I had so much fun.
HAWKINS: Great game.
WASTLER: Trip, am I future and should the TV industry worry about me?
HAWKINS: Well, you know, people are interactive and we're not potted plants. We don't want to just sit in the corner. We like to get all our senses involved in our media. That's a big part of the digital revolution that's taking place. I think we're finding that a lot of people. They don't have the appetite to dive in at the deep end of games like "Grand Theft Auto" and "Half-Life 2." That's more of a hard-core market. And this is what I think is fascinating about the mobile phone is that it's turned into a social computer and a much wider audience of people are now carrying around a computer and doing all kinds of fascinating things with it.
SERWER: Hey, Trip, I mean are you suggesting that the console business is dead, the Play Station, the Xbox, the Game Cube? And you've got the phone, you've got the web. Is that the future of gaming? If so, how do companies make money?
HAWKINS: Well, the video game business is a huge business, but they serve a core audience. A little bit like a theatrical film- making. The average American actually only goes to the movie theater about five time a year now. But of course, you see a lot of storytelling on television and what's happened is with the digital revolution, this idea of a game, an electronic game, it can be a console game. It can be PC game. It can be an Internet game. There's a lot of casual games on the Internet that actually have bigger audiences than the traditional video games and now you've got games on your mobile phone. So with all of these different ways to play, it's opened up a much larger audience.
ROMANS: Trip, on the mobile phone, I mean if my morning commute on the subway is any indication, this is a big market because a lot of people are always playing these little games on their phone. Can you get the big "Grand Theft Auto," "Halo," the ones that -- the really elaborate games on to that little thing or do you need to design special games that are more simple and easy to use?
HAWKINS: It's a very casual market and in a lot of cases, the customer only has a few minutes while they're waiting in an airport or they're waiting in line somewhere. And you want to give them something that's more like instant gratification -- hence the name, Digital Chocolate, and our slogan which is to "seize the minute." We don't want to seize the whole day.
ROMANS: It's also addictive, chocolate you know?
HAWKINS: Basically, people want to be socially connected. I think that's the key thing, is what they're looking for in a gaming experience is a lot more like the social communities that have become very popular on the Internet. And the key to having it with a mobile phone is that you always have access, because you're always carrying that little computer around with you.
WASTLER: Trip, as the industry gets bigger and starts raking in more and more dough, it's beginning to have some growing pains. Labor issues all of a sudden have popped up because people want more and more and different games. They burn through the games. They push the developers. You got to write more code, write more code. They put in extra hours. The old thing of paying them with stock options that out the window right now. How much more trouble are we going to see as this industry grows up with its own infrastructure, so to speak?
HAWKINS: I think you're seeing the production of traditional video games is becoming very much like making a big-scale movie. As you know, in Hollywood, everything is unionized and there are different labor specialties doing all the different kinds of creative work and it may go that way with video games because they're becoming very expensive to produce.
You have a lot of people involved over a long period of time and it's a challenge. I mean here in Silicon Valley, of course, there is a strong culture of entrepreneurship and stock options and that's a very different way of compensating people, but you have to figure out how to take care of people correctly if they're working extra hours and making big sacrifices.
SERWER: Trip, talk about the future of this business and how to tie in different medias. Matt Damon and Ben Affleck had this show called "The Runner" that was supposed to go on ABC -- the lawyers killed it -- where it was going to be television and online. You could track this person you were searching for all over the country, sounded very cool. What are some things like that over the horizon?
HAWKINS: I think those are really intriguing ideas and they provoke a lot of really useful, creative discussion. But again, that's kind of a very hard-core experience. I think most people want to have a more casual involvement. So we find for example, a product like "Bubble Ducky" that's an extremely simple game to play and yet it's addictive, that's the kind of thing that a lot of people want to participate in. But then over the phone network, they're able to connect with other players and, they're able to see where they rank against other players and that creates this feeling of social community. That, I think is really the wave of future, is things that have the feeling of being very very casual approachable, easy to get into but that are really allowing you to have a better social life.
SERWER: All right, Trip Hawkins, the CEO of Digital Chocolate, founder of EA and a Silicon Valley legend, thank you very much for coming on the program, Trip.
HAWKINS: My pleasure.
SERWER: All right. There's a lot more to come on IN THE MONEY. Coming up, how to get revenge with just a twitch of your index finger. Stick around for a website that lets you whack the boss without whacking the boss.
And if you've got a stupid boss story for us or you just want to let off a little steam, fire up your e-mail. Our address is inthemoney@cnn.com.
(COMMERCIAL BREAK)
ROMANS: Call it CEO whoa. Bernie Ebbers' recent conviction and the firing of Boeing's Harry Stonecipher reportedly has some corporate leaders running for cover. But before you shed a tear for America's chief executives, let's see how much they're really suffering. Allen Wastler has that and the fun site of the week. Oh, sort of don't cry for CEOs.
WASTLER: All these poor CEOs. Martha Stewart went to jail -- Bernie Ebbers is just like -- now, let's not forget, this week we got two big pay packages were announced. One was for Charles Prince, heads up Citigroup. Citigroup, OK, Citigroup, which was just ordered by the Fed, no more acquisitions until you straighten out regulatory problems. You had a little problem there in Japan. Ooh, you're bond trading in Europe. We don't like that too much either. $20 million, Mr. Prince -- SERWER: That makes sense -- he's got a lot of different businesses.
WASTLER: It was a pay cut, we will say that. But still $20 million
ROMANS: $20 million was a pay cut.
WASTLER: I wish I could mess up like that and get $20 million. The CEO of Occidental Petroleum.
SERWER: Oxy Pete (ph).
WASTER: $31 million. Of course oil was booming this year, $31 million just to ride a commodity up?
ROMANS: This jury in the Ebbers' case basically said, if you're making $20 million, if you're make $30 million, you have to know every single thing that's happening in your company because that's a lot of money. This whole CEO "ah shucks" defense, I'm just the strategy guy.
SERWERS: (INAUDIBLE) CEOs over the past couple of week, haven't we?
ROMANS: Absolutely. These people are making a ton of money. Beware, because the jury is going to hold you responsible for everything that happens.
SERWER: So you want to be poor and irresponsible. It's safer.
WASTLER: You might have a point there. Actually William Donaldson started getting on this bandwagon too. This week he gave a speech down in Duke University, and pointed out that we've got sort of the imperial CEO thing is still going on with these high pay packages. The reason is, every company's board of directors sort of gets together and says, well our company's got to be the best so our CEO has to be paid -- everybody is above average. That is not going to work. Need to bring that down.
ROMANS: We've been saying this for five years and nothing changes. These people still get paid an awful lot of money. The studies show, the more a CEO makes, it has an inverse relationship with the stock price.
SERWER: The one good thing, they are getting the boot, right and left. We're seeing a lot of CEOs being outed.
ROMANS: We could talk about this forever. But now let's turn to something nice. Let's talk about how to get rid of the boss, instead of paying the boss $20 million.
WASTLER: We're talking about video games and high fallootin individuals. Video games are a way of -- I will play "Grand Theft Auto" and I will beat up things and I won't do it in real life. I found a Web site for where you can go whack the boss just beat him up... SERWER: Whack-a-boss.
WASTLER: Ah, go get him. Yes.
ROMANS: Where can I see this?
SERWER: I wonder what that guy's compensation was? Never mind. It's not worth it.
WASTLER: You can go to the show page at money.com/inthemoney and there it is. You can whack the boss to your heart's content.
ROMANS: Like whack a mole, whack the boss. Excellent. All right. Thank you very much. Whacking your boss.
Come up next on IN THE MONEY, it's time to hear from you as we read some of our e-mails from the past week and you can send us an e- mail right now, too. We're at inthemoney@ccn.com.
(COMMERCIAL BREAK)
WASTLER: Now it's time to read your answers to our question about which one of your expenses has risen the most over the past year.
Mario wrote: "For me, it's been the cost of gas. But I realize that higher gas prices will soon lead to higher costs for other necessities like food because shippers will have to pass their higher expenses on to us."
Rick wrote: "My health care costs are through the roof. And this is one instance where average consumers have something in common with most big businesses. No one can afford decent health plans anymore. That's the politicians fault for handing that responsibility over to the business world when they should have fixed the problem themselves.
And Joe wrote: "The cost of educating my three children in college and law school is my fastest-rising expense. And with more outsourcing going on, I'm worried their education won't land them a job anyway."
Now, for next week's e-mail question of the week -- do you check, or even care, where an item is made before you buy it? Send your answers to inthemoney@cnn.com and you should also visit our show page at money.com/inthemoney. That's where you can whack the boss and get the address for our fun site of the week.
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Aired March 20, 2005 - 15:00 ET
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(BEGIN VIDEOTAPE)
ANNOUNCER: From New York City, America's financial capital. This is IN THE MONEY.
(END VIDEOTAPE)
CHRISTINE ROMANS, HOST: Welcome to IN THE MONEY. I'm Christine Romans in for Jack Cafferty. Coming up on today's program:
Time to sign up for those mandarin lessons: China is starting to play like a superpower and it's making connections to match. After a tough ruling on Taiwan, we'll look at America's up-and-coming rival.
Plus, from the heat of battle to the lap of luxury. The new movie "Gunner Palace" brings the Iraq War home. We'll speak with the director about the things the news doesn't show you.
And a ride on the wild side: Videogames, like Grand Theft Auto grab the hottest demographic of all -- kids with cash. Find out about the game business and how it grew.
Joining me today, a couple of IN THE MONEY regulars, "Fortune" magazine Editor-at-large, Andy Serwer, and "money.com" Managing Editor, Allen Wastler.
And gentlemen, almost two years on now from the toppling of Saddam Hussein, and a man who's an architect of that is getting a new job.
ANDY SERWER, "FORTUNE": Paul Wolfowitz has gotten tapped by President Bush to head the World Bank. And what was funny to me is that one of the first things he did was to reach out to Bono. I mean, you know, the front man of U2. It's, you know, a lot of people sort of made a joke and suggested he would be the right man for the job and I guess maybe Wolfowitz thinks he is someone who should be called upon.
ALLEN WASTLER, "MONEY.COM": Well, I think that's sort of part of trying to soften his image a little bit. But appointing Wolfowitz to this, basically, glad-handling for America's economic aid, that's willing to do that, I think the administration's sending a message, saying, hey look, economic aid, defense, where we work with you on one, maybe we'll work with you on the other. And you know what? I don't think that's a bad thing to do a little... ROMANS: There's a lot of buzz on Wall Street about Carly Fiorina, perhaps, being considered for this job. That would have been interesting, loses her job at HP and then very quickly running the World Bank. It turned out, of course, not to be true, but interesting who they're considering for this position.
SERWER: Yeah, I think -- right.
ROMANS: What is this position anyway?
SERWER: Well, first of all, as far as Carly Fiorina goes, I think they were throwing her a bone. In other words, you know, making her feel good by putting her name in a hat and I don't really think that she really stood a chance. You know, it is a job where you represent world economic interest, but everyone knows that the U.S. is really the power behind the World Bank. And I think that Allen is dead on when he says, you know, this is not a soft shoe approach. It's linked to national security. It's linked to our military interest, to our political interest and they are one in the same with our economic interest.
ROMANS: All right, interesting.
China, meanwhile, got Washington's attention, this week, with a new law aimed at preventing Taiwan from breaking away. It calls for the use of military force if the Taiwanese formally declare independence. The Bush administration labeled that decision, "unfortunate," and a White House spokesman warned it could raise tensions in the region. Beijing's move comes as its influence is growing both economically and politically.
For a look at where the situation could be headed we're joined from Tucson by Mr. Ted Fishman. He's the author of "China Inc.: How the Next Superpower Challenges America and the World."
We know that China is on the political and the economic stage, front and center. Are we doing enough? Are we positioned enough, in Washington, to meet this challenge?
TED FISHMAN, AUTHOR, "CHINA, INC.": No. I'd say the answer's no. We have a lot on our plate around the world. The war in Iraq is a perfect example. Wolfowitz has been very strong, for example -- you were just talking about him -- about the Middle East and about regime change in the Middle East. There's very little focus in the administration on China. Before 9/11, they were focused very intently on China and much of that concern seems to have gone away.
SERWER: Well Ted, I'm a little -- I'm a little confused by the fact you say there is very little focus. I mean, I seem to think that there's a lot of focus. Obviously the situation the Middle East is taking up the bulk of the time, but second to that I would say China is very much on the agenda. But, I want to ask a little bit about the military. You know, we've been talking about the Chinese military since the Korean War. Is this a situation where the military could get even bigger than it is today? FISHMAN: Actually in the recent past, China's military has shrunk. What the Chinese are trying to do with their military is make a leaner, meaner, more efficient, but smaller military that will have more resources thrown at it. Primary among its objectives are to make it a technologically-advanced military, in which it wouldn't need all of that manpower, but it would have very sophisticated aircraft missiles. China doesn't really have a navy that matches up against the world navies at the moment, but it's interested in acquiring one.
WASTLER: Ted, there's a lot to be worried about with China and its growth, but one thing that happens to countries as they get bigger, a little richer, their citizens get a little better off, is that they tend to start having problems domestically. People start having arguments with their own government and whatnot. Do you think maybe that might be a factor that may obviate some of the worries that we should have?
FISHMAN: You know, it's part of all the same mix. It's a really good question. What happens is when things in China get mixed up domestically is that these foreign issues come to the fore and the government trots out Taiwan is an issue when it's worried about controlling its own people.
I think people don't realize about the Taiwan issue it is that it's part of the belief system of the Communist Party and in order to get the Chinese people on the mainland behind the Communist Party, they do things domestically. They're very interested in narrowing the wealth gap that's come about as part of market reform, but Taiwan is a tried and true issue that they can bring out over and over again. That's why you see this parade of declarations on Taiwan, you know, very regularly.
ROMANS: Where does the U.S. stand officially on the Taiwan issue? I know that there were some hawks who were concerned with this, Lenovo, a Chinese company, buying IBM. A lot of people were saying, you know, there could be -- IBM R&D that sometime in the future could be used, you know, in a MiG cockpit as we're staring down Chinese MiGs in the Taiwan Straight.
Would the United States put itself in a position where we would have to take on China over Taiwan?
FISHMAN: We talk a very strong game. You have to wonder what would we really do if China came to blows over Taiwan, especially if that were a very swift move. I'm very hard-pressed to think that we would do much if China moved very aggressively on Taiwan. We have too much going on elsewhere in the world, there's a lot of diversions that would take us away from Taiwan. It's probably not important enough for us, right now. Plus there's a very large economic constituency in the United States that would demand the United States having the best relationships with the mainland, because there are so many billions invested there. It is so much part and parcel of our domestic economy, now.
SERWER: Ted, you're talking about economics, and I think that's a really good point, because there's so much friction between China and the United States -- trade deficits, piracy. What leverage do we really have with the Chinese? It seems like we try to get them to do our bidding and they just sort of nod and go about their business.
FISHMAN: Well, we're in a country in search of leverage against the Chinese. It seems, right now, the Chinese have all of the leverage, because they are the place that our best corporations want to go to to establish a beachhead to get low-cost production to bring goods back here. So, in a way, you know, we have the interest of our private sector being weighed against our interest as a public sector. And for the long-term strength of our economy, we need a consensus. And the only way we can get that consensus is if we agree, as a country, to use our power as China's leading consumer in the world to affect some reforms over there that would reward our economy.
What I'm talking about here is how we can sell the products of our knowledge economy to China's economy which makes things. Right now the things that we make in this country -- great brands, great products, great patented products, great software, great entertainment -- they all get transferred to China with the click of the mouse or, you know, with this -- a DVD duplicating machine. We don't get paid in China for the top-dollar goods that the rest of the world pays for it, and that's why you have these enormous imbalances.
WASTLER: Ted, real quick here, China has not only been taking some of the intellectual property, but they've also been taking some of our financial instruments, like our bonds.
FISHMAN: Quite a few.
WASTLER: With the falling dollar, how worried should we be if China decides, you know, maybe we don't like the bonds anymore, let's sell them all off?
FISHMAN: You know, there's a kind of balance of financial terror here, that's a term that the notorious Larry Summers likes to use. We shouldn't worry too much that the Chinese are going to shift out of the dollar.
But if it became a political issue, they might start moving out of the dollar and that would be about as dangerous a financial move, for both China and the United States, as you can imagine. It would raise interest rates around the world. That would chill the buying of Chinese products, not only by Americans, but by others. It would change the real estate market worldwide.
But it is a very powerful political lever that the Chinese have right now and, as you know, the Communist Party is very politically savvy; they are interested, above all, in staying in power. And if the political lever becomes more important then the economic leaver, that is something that they might be willing to do.
ROMANS: Ted Fishman, "China Inc." thanks so much. Bottom line, we got to keep an eye on China, watch it. And Washington needs to have some more clear strategy in that direction.
Ted Fishman, thank you. FISHMAN: Thank you.
ROMANS: When we come back, forget about the news, a new documentary called "Gunner Palace" shows the war in Iraq. In more than a minute 30, we'll speak with the director.
Also ahead, sticky trigger fingers: See how a whole industry developed around kids who like to blow things up. Look at the rise of the videogame.
And not safe for work: We'll show you, Whack Your Boss. It's our "Fun Site of the Week."
SERWER: Yeah! Get it!
(COMMERCIAL BREAK)
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UNIDENTIFIED MALE: Part of our $87 billion budget provided for us to have some secondary armor put on top of our thin-skinned Humvees. This armor was made in Iraq. It's high-quality metal, and it will probably slow down the shrapnel so that it stays in your body instead of going clean through. And that's about it.
(LAUGHTER)
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SERWER: Laugh until you cry with that. As we mark the second anniversary of the start of the war in Iraq, a new documentary film is putting the spotlight on the daily lives of the soldiers in combat. Michael Tucker is the director of "Gunner Palace" and he joins us, now.
Michael, welcome to the program. The film is real. It's cinema verite, it's alive, and it looks like a really compelling thing to watch. I guess I am curious, what compelled you to go out and make this film?
MICHAEL TUCKER, DIRECTOR, "GUNNER PALACE": Well, I think what drove me it make the film was just to tell this day-to-day story. I mean, what is it like for these soldiers? And now two years into this war with 150,000 soldiers deployed, you know, there's a huge disconnect between the civilian population back in the States and what's happening with these soldiers on the ground and what their families are experiencing, and I'm really glad that we made it.
ROMANS: It's pretty fair to say these guys and women are experiencing a pretty chaotic existence. What's missing seems to be some sort of rhyme or reason or pattern of events, there. Is that what this film shows?
TUCKER: Well, I think it's, you know, it does not lend itself well to a traditional narrative arc. It is chaotic there, it is fragmented. You know, every day is completely different. And there is no goal post, so it's not exactly what most of us think that it is.
ROMANS: Yet it's so powerful, without a narrative, without a narrative arc. It is very, very powerful, these fragments and these snippets of what these people are going through, on both sides.
TUCKER: Exactly. I mean, it's incredibly, you know, profound experience for these young men and women. And you know, the film gives them a (SIC) opportunity to articulate those experiences.
WASTLER: Michael, it looks like a fascinating piece. Tell us a little bit about how you put it together. I can't imagine the Pentagon really wanted to have that little bit we just saw with the soldier out there. What did you have to do to get some of the material? I mean, did you stay with them a long time? How many camera crews? Give us a little detail.
TUCKER: Well, I'd already been there twice. I started going in May 2003. When I linked with these guys it was already September 2003, and the permissions really came from a, you know, very localized level. You know, it was brigade-level permission. I mean, there were a lot of journalists at the time. I mean, Baghdad was still relatively safe then. I made a second trip in February-March 2004 when it was getting definitely a little bit more hairy; in fact, between the visits three members of the battalion I was with were killed.
WASTLER: Were you there for that?
TUCKER: No, I was not there. You know, all told, while we were filming this, eight people were killed whoever -- who where either in the film or attached to the unit. And fortunately, you know, I wasn't there on location when those events happened. But, you know, this battalion did get hammered pretty bad. You know, four killed in action, 60 wounded.
SERWER: Boy, that's -- that is horrifying stuff. Talk to us about distributing the film, obviously always a big challenge. A major studio picked this up. Is it going to be on television, in theaters?
TUCKER: It's in theaters, right now. Our distributor is Palm Pictures. This weekend we're in about 60 theaters nationwide. We're trying to reach out to some military communities who are playing in places like near Fort Bragg and Fayetteville, near Fort Carson, Colorado Springs Fort Hood, Killeen, Texas. Plus, you know, larger cities across America. But we're really trying to get, you know, people who care about the subject matter in the theaters this weekend.
ROMANS: The film is called "Gunner Palace." Tell us about the palace. Tell us about the putting green and the pool and the strange juxtaposition of what these people are going through every day and their environment.
TUCKER: Well, the palace was Uday Hussein's palace, so that's Saddam's son. Heavily damaged during the "Shock and Awe" campaign. And the soldiers made it their home, so they had a pool. It was incredibly hot; the pool was a place that they could kind of, you know, let off some steam. By the time I was back with them the second time, though, the pool was a mortar target, you know, they were literally fishing mortars out of the pool. The back side had been hit by rockets. You know, a very, very, very volatile place.
WASTLER: Michael, one thing I saw that was very interesting about this movie was blogs are involved in it. I think it's one of the first documentaries I've seen where blogs seem to have an active role. Tell us a little bit about that.
TUCKER: Well, the blogging community has been hugely helpful to us. I mean, bloggers were a way for me to kind of take the pulse of both soldiers and their families. You know, what they are going through? What are they I thinking? And blogs have afforded us a completely different perspective on the war that is probably more emotional than political. I mean, there is some fantastic writing coming out of blogs and bloggers have spread about this film, both on the left and on the right. And, I think, you know, bloggers have really created a conversation about this war.
SERWER: Michael, is this an anti-war film?
TUCKER: Well, I think it's impossible to make a movie about war that's not anti-war. I mean anyone who has been in that experience, it's very profound, it's very emotional. I tend to view the war more emotionally than politically, having known so many people who are not with us any longer and, you know, I will never forget them.
ROMANS: A bit of controversy about the language -- the foul language in the film. But foul language, expletives, just very extreme thoughts and behavior and language is part of war, right?
TUCKER: Exactly. I think Norman Schwarzkopf said that war is profanity and we went to the MPAA and we appealed our original "R" rating and got a "PG-13" based on context. And I think that the majority of American parents realize that this country's been at war for three-and-a-half years and these soldiers are in a very difficult place and if they drop a few "F"-bombs it's OK, but we need to hear their experiences.
ROMANS: I want to ask you, what are the people who are in this film say about it? Are they excited about it? Have you heard much about their feedback?
TUCKER: I talk to them every day and for the young soldiers, they're really excited and for them it's a great platform to articulate what they've been through. And again, to connect with that audience, to tell people at home, you know this is what we went through and this is who we are.
ROMANS: Michael Tucker the film is "Gunner Palace," thank you so much for joining us.
TUCKER: Thank you for having me.
ROMANS: Coming up after the break, looking for traction? Find out how Wall Street reacted to GM's latest news on financial health.
Also ahead, that pool at work is only the start: We'll get the big picture on the economic impact of March Madness.
And pity the poor beleaguered CEO. On second thought, don't bother. Allen Wastler will tell us why.
(COMMERCIAL BREAK)
ROMANS: Now let's take a look at the week's top stories in our "Money Minute."
Two investment firms and a real estate company teamed up to buy all of Toys 'R Us for about $5.7 billion. Toys 'R Us has struggled to keep up with Wal-Mart's lower prices, but it became an attractive buyout target because of its well-located stores.
Shares of Viacom jumped higher after the company said it's considering splitting into two separate companies. One would be dominated by its fast growing cable networks. The other would be led by its CBS television unit. Viacom says splitting things up could be the best way to keep share prices higher in the long run.
And if you're looking for a growth industry, this year, try cell phone porn. Mobile phone users spent an estimated $400 million downloading pornographic pictures on their cell phones last year. And the research group, Strategy Analytics, says that could jump to $5 billion this year. And you thought cell phone users were annoying when they talked too loudly.
SERWER: Another big story this week was GM's surprise warning to Wall Street that it expects a big first quarter loss. General Motors says weak sales and stiff competition are hurting the bottom line, not to mention rising oil prices. Investors punished the stock, sending it down 14 percent on Wednesday, alone. And GM shares are at a 12- and-a-half-year low. That makes GM our "Stock of the Week," I guess.
ROMANS: Wow.
SERWER: You know, it's not just a 12-and-a-half-year low, I went back and looked at the chart and this stock is trading where it was 43 years ago, in the 1960s, early 1960s. Here, listen to this, in 1960 -- in 1975 it was $14. In the late 1960s it was $50, but to point to point story, it's almost exactly where it is right now and that's because its market share has declined and the Japanese have made inroads and you see something like this happening over your entire lifetime. It's amazing.
ROMANS: Bottom line, this is a company, General Motors which, you know, is the big name in automotive, in this country, and it is having trouble selling its products into the biggest car market in the world.
WASTLER: That's because its products, nobody likes its cars. I mean, they're -- they don't have hot models that anybody wants anymore. They're also in for some big trouble because the Fed keeps raising interest rates and when you buy a car, usually you have to take a loan. If the loan's going to cost you more, I think I will wait on that car for a little bit.
ROMANS: If it's cheap do you have to buy it? I mean, does it have to have some kind of a new strategy?
SERWER: It's got a value trap. Every five years it looks cheap, it gets cheaper. And what you said about interest rates, very important, because GMAC, their financing arm, has been their big profit center, that's going to be hurting. Health care costs are going to be huge. They've made bets on SUVs and pick-ups, that's been good, but you can see the pendulum swinging, there. And I think we have to say this, we have to say that what's good for GM is no longer good for America.
ROMANS: Well, it hasn't been for some time.
SERWER: Decades.
ROMANS: Because, for -- I mean, so, at this point, you look at Ford, a few years ago even, people were saying Ford's a great buy, Ford's a great buy, and it's just been going down, down, down. GM also really weak. Maybe making cars isn't Detroit's best thing anymore. Maybe we've been completely overturned by foreign automakers.
SERWER: Well, we can make good cars. And you talk about Ford, they're wrapping up production of the Mustang, right now. But basically, you know, the Japanese Toyota, of course, the best carmaker in the world and they have really have eaten our lunch here in this country. I think it's still possible; it's so difficult with GM, with its legacy of factories and health care costs. You know, they talk about jobs and who's going to be next CEO, and Rick Wagner, how -- what kind of job he's done at GM. I just think that's almost an impossible job to run General Motors, now. I wouldn't wish that on anyone. I mean, it's just very difficult.
ROMANS: Is there any dividends? Is there some reason for GM shareholders to at least say at least, well, at least now it's a seven percent dividend?
SERWER: Yeah. It does yield over five percent, that some solace, though. But when you go absolutely nowhere for 43 years, that's a very tough ride.
ROMANS: Ouch.
SERWER: Yeah.
All right, coming up on IN THE MONEY, amazing how much can ride on somebody putting a ball through a hoop. We'll look at the economic impact of March Madness.
Also ahead, the babysitter you only pay once? Videogames do more than just keep the kids occupied. See how they become an entertaining powerhouse. And the killer mouse: See how to knock off the boss on our "Fun Site of the Week."
(COMMERCIAL BREAK)
SERWER: The NCAA basketball tournament is in full swing and you don't need to understand the difference between a pick and roll and give and go to get in on the action this year. Colleges, corporations, even the quirky guy in HR who entered the office pool this year. At the last minute, they're trying to cash in now. Why all the hype? Let's find out. Rod Kurtz is editor of "BusinessWeek" online. Welcome, Rod. They talk about football being the number one sport in America. The NCAA tournament, not far behind, right?
ROD KURTZ, BUSINESSWEEK ONLINE: It's great to be with you. My job all week has been to talk about college basketball. It doesn't get better than this. Andy, you're right, this is a huge event. It's a huge economic event. You mentioned the Super Bowl. Yeah, it draws a lot of people. Let's look at some numbers with the NCAA tournament. Throughout the 16 days, they're going to get more than 700,000 spectators to this event. So, I mean, we're talking about a lot of money coming in here and it's interesting to look at some of the numbers.
ROMANS: Why the attraction? Why the attraction to athletes who are still pure and untainted and don't have big, you know, contracts?
KURTZ: We hope so.
ROMANS: I mean, why the attraction?
KURTZ: Well, I think -- you have to start with the fact that this is really a national championship. It's held in cities across the country. It involves teams across the country, 65 teams and it's a great story line. The little tiny college that barely made the tournament can knock out the number one seed. It's single elimination. You can move on and it's really -- you have some dramatic finishes to the games. And I think part of that brings in a lot of non-sports fans. You talk about the brackets. Everyone at work can fill out a bracket and they have a vested interest in what's going on on the court, even if they're not basketball fans.
ALLEN WASTLER, MONEY.COM: Every year, Challenger, Gray & Christmas, HR outfit on the west coast, comes out with -- they take how much time people are likely to spend watching it out, multiple it out by the average wage and they come up with lost productivity. And this year it's $889 million and they do it for this. They do it for the Super Bowl. They do it for everything. We don't really put much stock in these numbers, do we?
KURTZ: You have to be -- you're absolutely right -- you have to be careful with these numbers. I mean $889 million, it sounds look a big, scary number. The way they did this, to cut to the chase, they estimated that big college basketball fans, and they're in the millions will spend 13 minutes a day checking Web sites, checking their brackets, talking by the water cooler and they add up the average wage of the average worker and then come up with this big number. Thirteen minutes a day is not a lot of time. You can waste 13 minutes very easily doing a lot of other things, chatting on instant messenger, sending e-mails, checking headlines. So I think you have to be careful. I don't really think this is going to send our economy into a tail spin.
SERWER: Well, it actually helps the economy Rob. When your team loses, you go out and get anti-depression medicine. My team, Maryland, didn't even make the tournaments.
KURTZ: The pharmaceutical industry is watching.
SERWER: So I'm in the not invited tournament, the NIT which I guess we're not talking about today.
KURTZ: Well my Penn Quakers were bounced in the first round so -
SERWER: Oh, the Quakers were killed by BC, that's right. Hey, listen to this though. One thing that really tees me off about the tournament, especially in the early rounds is you can't watch the game that you really want. They switch back and forth. There are too many games. When are we going to be able to watch the game that you really want online or in pay-per-view? I know you can on the margins right now. How come they won't put these things online, just watch the game you want?
KURTZ: Actually, there's a handful of sites popping up that are offering some of these packages that allow you to tune in online. That gets back to the productivity: people are scared, employers are scared that people are going to be watching all day long. But in term of getting out and seeing it on a big screen, I think the best option is really to go to your local sports bar -- watch the satellite TV.
SERWER: Oh, the sports bar. My wife doesn't like that.
ROMANS: Let's talk about the pools, the brackets, sports bars have them, so do offices. Should companies be trying to kind of push back against that a little bit? I know it's pretty rampant. There's so many different pools you can be in for so many different parts of the tournament.
KURTZ: Right. I've got two brackets filled out myself, so guilty as charged here. But I really think employers are better off accepting this as a cost of doing business. I was talking to an --
ROMANS: It builds team work in the office place.
KURTZ: Exactly. It builds morale and the last thing an employer wants to do is look like the bad guy and try to restrict Internet access.
SERWER: We could have a meeting at the sports bar.
KURTZ: Right, exactly.
ROMANS: It is illegal though, right? KURTZ: Andy, I like the way you think. But I really think this is something that companies can use to their advantage and curry favor with their employees and not look like the bad guy. I think it does build morale. I was talking to an economist the other day who likened this to America's version of the world cup. It's two weeks where we're all swept up in this and there's really no sense in trying to stop it. I think it's become so big and as I mentioned, it brings in a lot of non-sports fans. Everyone's swept up in this.
WASTLER: All right. Well, Rod, we're going to watch the games and we appreciate you joining us.
KURTZ: I'm headed out right after this.
WASTLER: There you go, Rod Kurtz, editor of "BusinessWeek" online. There's lots more to come up here on IN THE MONEY. They don't call it a joystick for nothing. We'll look at how video games turned into a multibillion dollar business.
And, they don't all wind up like Bernie. We'll tell you why you don't have to feel too sorry for CEOs.
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WASTLER: You may not be hooked, but chances are you know someone who is. No, we're not talking about drugs. We're talking about video games, games like "Grand Theft Auto" and "Halo" have reeled in kids of all ages, particularly those in the 18 to 34-year old demographic. So what keeps them playing? Let's find out. Trip Hawkins is founder of Electronic Arts, the top publisher of video games in the U.S. And his latest venture is "Digital Chocolate." a company developing games for cell phones. Trip, welcome.
TRIP HAWKINS, DIGITAL CHOCOLATE: Thank you.
WASTLER: I just -- not too long ago, I didn't watch TV for a whole week, actually a little more than a week. I played "Half-Life 2" instead, right up there, just playing away. And I had so much fun.
HAWKINS: Great game.
WASTLER: Trip, am I future and should the TV industry worry about me?
HAWKINS: Well, you know, people are interactive and we're not potted plants. We don't want to just sit in the corner. We like to get all our senses involved in our media. That's a big part of the digital revolution that's taking place. I think we're finding that a lot of people. They don't have the appetite to dive in at the deep end of games like "Grand Theft Auto" and "Half-Life 2." That's more of a hard-core market. And this is what I think is fascinating about the mobile phone is that it's turned into a social computer and a much wider audience of people are now carrying around a computer and doing all kinds of fascinating things with it.
SERWER: Hey, Trip, I mean are you suggesting that the console business is dead, the Play Station, the Xbox, the Game Cube? And you've got the phone, you've got the web. Is that the future of gaming? If so, how do companies make money?
HAWKINS: Well, the video game business is a huge business, but they serve a core audience. A little bit like a theatrical film- making. The average American actually only goes to the movie theater about five time a year now. But of course, you see a lot of storytelling on television and what's happened is with the digital revolution, this idea of a game, an electronic game, it can be a console game. It can be PC game. It can be an Internet game. There's a lot of casual games on the Internet that actually have bigger audiences than the traditional video games and now you've got games on your mobile phone. So with all of these different ways to play, it's opened up a much larger audience.
ROMANS: Trip, on the mobile phone, I mean if my morning commute on the subway is any indication, this is a big market because a lot of people are always playing these little games on their phone. Can you get the big "Grand Theft Auto," "Halo," the ones that -- the really elaborate games on to that little thing or do you need to design special games that are more simple and easy to use?
HAWKINS: It's a very casual market and in a lot of cases, the customer only has a few minutes while they're waiting in an airport or they're waiting in line somewhere. And you want to give them something that's more like instant gratification -- hence the name, Digital Chocolate, and our slogan which is to "seize the minute." We don't want to seize the whole day.
ROMANS: It's also addictive, chocolate you know?
HAWKINS: Basically, people want to be socially connected. I think that's the key thing, is what they're looking for in a gaming experience is a lot more like the social communities that have become very popular on the Internet. And the key to having it with a mobile phone is that you always have access, because you're always carrying that little computer around with you.
WASTLER: Trip, as the industry gets bigger and starts raking in more and more dough, it's beginning to have some growing pains. Labor issues all of a sudden have popped up because people want more and more and different games. They burn through the games. They push the developers. You got to write more code, write more code. They put in extra hours. The old thing of paying them with stock options that out the window right now. How much more trouble are we going to see as this industry grows up with its own infrastructure, so to speak?
HAWKINS: I think you're seeing the production of traditional video games is becoming very much like making a big-scale movie. As you know, in Hollywood, everything is unionized and there are different labor specialties doing all the different kinds of creative work and it may go that way with video games because they're becoming very expensive to produce.
You have a lot of people involved over a long period of time and it's a challenge. I mean here in Silicon Valley, of course, there is a strong culture of entrepreneurship and stock options and that's a very different way of compensating people, but you have to figure out how to take care of people correctly if they're working extra hours and making big sacrifices.
SERWER: Trip, talk about the future of this business and how to tie in different medias. Matt Damon and Ben Affleck had this show called "The Runner" that was supposed to go on ABC -- the lawyers killed it -- where it was going to be television and online. You could track this person you were searching for all over the country, sounded very cool. What are some things like that over the horizon?
HAWKINS: I think those are really intriguing ideas and they provoke a lot of really useful, creative discussion. But again, that's kind of a very hard-core experience. I think most people want to have a more casual involvement. So we find for example, a product like "Bubble Ducky" that's an extremely simple game to play and yet it's addictive, that's the kind of thing that a lot of people want to participate in. But then over the phone network, they're able to connect with other players and, they're able to see where they rank against other players and that creates this feeling of social community. That, I think is really the wave of future, is things that have the feeling of being very very casual approachable, easy to get into but that are really allowing you to have a better social life.
SERWER: All right, Trip Hawkins, the CEO of Digital Chocolate, founder of EA and a Silicon Valley legend, thank you very much for coming on the program, Trip.
HAWKINS: My pleasure.
SERWER: All right. There's a lot more to come on IN THE MONEY. Coming up, how to get revenge with just a twitch of your index finger. Stick around for a website that lets you whack the boss without whacking the boss.
And if you've got a stupid boss story for us or you just want to let off a little steam, fire up your e-mail. Our address is inthemoney@cnn.com.
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ROMANS: Call it CEO whoa. Bernie Ebbers' recent conviction and the firing of Boeing's Harry Stonecipher reportedly has some corporate leaders running for cover. But before you shed a tear for America's chief executives, let's see how much they're really suffering. Allen Wastler has that and the fun site of the week. Oh, sort of don't cry for CEOs.
WASTLER: All these poor CEOs. Martha Stewart went to jail -- Bernie Ebbers is just like -- now, let's not forget, this week we got two big pay packages were announced. One was for Charles Prince, heads up Citigroup. Citigroup, OK, Citigroup, which was just ordered by the Fed, no more acquisitions until you straighten out regulatory problems. You had a little problem there in Japan. Ooh, you're bond trading in Europe. We don't like that too much either. $20 million, Mr. Prince -- SERWER: That makes sense -- he's got a lot of different businesses.
WASTLER: It was a pay cut, we will say that. But still $20 million
ROMANS: $20 million was a pay cut.
WASTLER: I wish I could mess up like that and get $20 million. The CEO of Occidental Petroleum.
SERWER: Oxy Pete (ph).
WASTER: $31 million. Of course oil was booming this year, $31 million just to ride a commodity up?
ROMANS: This jury in the Ebbers' case basically said, if you're making $20 million, if you're make $30 million, you have to know every single thing that's happening in your company because that's a lot of money. This whole CEO "ah shucks" defense, I'm just the strategy guy.
SERWERS: (INAUDIBLE) CEOs over the past couple of week, haven't we?
ROMANS: Absolutely. These people are making a ton of money. Beware, because the jury is going to hold you responsible for everything that happens.
SERWER: So you want to be poor and irresponsible. It's safer.
WASTLER: You might have a point there. Actually William Donaldson started getting on this bandwagon too. This week he gave a speech down in Duke University, and pointed out that we've got sort of the imperial CEO thing is still going on with these high pay packages. The reason is, every company's board of directors sort of gets together and says, well our company's got to be the best so our CEO has to be paid -- everybody is above average. That is not going to work. Need to bring that down.
ROMANS: We've been saying this for five years and nothing changes. These people still get paid an awful lot of money. The studies show, the more a CEO makes, it has an inverse relationship with the stock price.
SERWER: The one good thing, they are getting the boot, right and left. We're seeing a lot of CEOs being outed.
ROMANS: We could talk about this forever. But now let's turn to something nice. Let's talk about how to get rid of the boss, instead of paying the boss $20 million.
WASTLER: We're talking about video games and high fallootin individuals. Video games are a way of -- I will play "Grand Theft Auto" and I will beat up things and I won't do it in real life. I found a Web site for where you can go whack the boss just beat him up... SERWER: Whack-a-boss.
WASTLER: Ah, go get him. Yes.
ROMANS: Where can I see this?
SERWER: I wonder what that guy's compensation was? Never mind. It's not worth it.
WASTLER: You can go to the show page at money.com/inthemoney and there it is. You can whack the boss to your heart's content.
ROMANS: Like whack a mole, whack the boss. Excellent. All right. Thank you very much. Whacking your boss.
Come up next on IN THE MONEY, it's time to hear from you as we read some of our e-mails from the past week and you can send us an e- mail right now, too. We're at inthemoney@ccn.com.
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WASTLER: Now it's time to read your answers to our question about which one of your expenses has risen the most over the past year.
Mario wrote: "For me, it's been the cost of gas. But I realize that higher gas prices will soon lead to higher costs for other necessities like food because shippers will have to pass their higher expenses on to us."
Rick wrote: "My health care costs are through the roof. And this is one instance where average consumers have something in common with most big businesses. No one can afford decent health plans anymore. That's the politicians fault for handing that responsibility over to the business world when they should have fixed the problem themselves.
And Joe wrote: "The cost of educating my three children in college and law school is my fastest-rising expense. And with more outsourcing going on, I'm worried their education won't land them a job anyway."
Now, for next week's e-mail question of the week -- do you check, or even care, where an item is made before you buy it? Send your answers to inthemoney@cnn.com and you should also visit our show page at money.com/inthemoney. That's where you can whack the boss and get the address for our fun site of the week.
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