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CNN IN THE MONEY
Is America's Car Business Dying? The Rich Get Richer; Finding Jobs After Graduation
Aired June 11, 2005 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: From New York City, America's financial capital, this is IN THE MONEY.
JACK CAFFERTY, CNN ANCHOR, IN THE MONEY: Welcome to the program. I'm Jack Cafferty.
Coming up on today's edition of IN THE MONEY, engine trouble, as General Motors slashes jobs and closes factories. We'll look at whether America's car business is dying. Find out if it's too late for the motor city to get a jump-start.
And bucks deluxe. There is the rich. And then there is the rich rich. With the number of super wealthy rising, learn where the money is coming from.
And you can't eat that sheepskin, kid. A B.A. degree doesn't teach you to survive in the big, bad real world. See how colleges can begin to help their students deal with life after graduation, as in getting a job.
Joining me today a couple of IN THE MONEY veterans. CNN correspondent Susan Lisovicz and "Fortune" magazine Editor-at-large Andy Serwer.
So we have good news for somebody at Enron, when Citigroup agreed to settle a lawsuit that was brought against them by Enron for $2 billion. Now, count me stupid, but if you agree to hand somebody $2 billion to avoid going to trial, you were doing something pretty sleazy, weren't you?
ANDY SERWER, CNN ANCHOR, IN THE MONEY: But they didn't admit any guilt, as they usually do in these things. But Jack sort of figured out that perhaps there's some guilt here. You know we've seen these lawsuits and the money is going to go to some investors. Other banks still haven't settled. This bank paid $2.4 billion to settle a Worldcom suit last year. So they must have a couple billion dollars floating around.
Still no trial for Ken Lay and no trial for Jeff Skilling. And this goes back to the December of 2001.
SUSAN LISCOVICZ, CNN ANCHOR, IN THE MONEY: Yes. The company was quick to point out that it has plenty of reserves. Why, because Citigroup is one of the world's biggest financial services institutions, if not the biggest -- $1 trillion in assets. And by the way you know Charles Prince who is the CEO of Citigroup said you know we want to put this period behind us. We want to be a respected institution. Guess who's chairman of Citigroup? Sandy Weill. And all of this happened under his watch.
CAFFERTY: All of what? What were they accused of doing?
LISCOVICZ: Well --
SERWER: Aiding and abetting, basically. I mean doing investment banking for Enron and helping them sell bonds and helping them do investment banking, when they might have known that Enron was a house of cards.
LISCOVICZ: And Sandy Weill was the one, by the way, who pressured Jack Grubman to rethink his rating on AT&T stock. Jack Grubman of course was also very friendly, cozy, with Bernie Ebbers down in Mississippi, Worldcom. So I mean you know it is a cast of characters that we've come to know.
CAFFERTY: And there are other companies waiting in line that are suing Enron, are there not?
SERWER: Yes, there are. I mean there are all kinds of other litigation going on. But it's just amazing how long it takes for this to go through the court, isn't it?
CAFFERTY: Yes. It is. Quick justice in this country unless you're a real rich guy in corporate America.
SERWER: Yes. That's right.
CAFFERTY: The Motown slowdown in high gear this week. GM announcing it is wiping out 25,000 jobs, closing more of its plants. The company hopes that move will fire up its business a little. It could use a little jolt. Along with Ford, GM has been cutting back on output in recent years. That, as companies like Toyota crank out cars that people actually want to buy.
We've been wondering if it all adds up to the death of the United States auto business, as in the eventual demise of the big three.
"New York Times" business reporter Micheline Maynard is going to help us answer that question. She is the author of the book called "The End of Detroit." Welcome to our program. That is an ominous title.
MICHELINE MAYNARD, NEW YORK TIMES: Thanks, Jack. I realize that it is. But what I mean by, "The End of Detroit," is that Detroit in capital letters, where the Detroit companies sort of ruled the American automobile industry.
Right now, we really have two American auto industries -- the old Detroit and what I'm calling the new America auto industry, which is basically down south. LISCOVICZ: You know, Mickey, where do you begin with GM? So many questions to ask, but one of them is pretty obvious. The SUVs, a real profit center for GM. But it was predictable. The folks there knew there was going to be a shift out of them. But, ah, well, we're kind of greedy, we really like those profits on those SUVs. And what happens? Japan is kicking butt.
MAYNARD: Well Susan, there's another aspect to this. It takes the Big Three a lot longer to design and develop new products than it does these foreign auto companies. So even if GM had seen the light and believed there might be a slowdown in demand, say, two or three years ago, they already pulled the lever on these vehicles. Once they invest the billions dollars that takes, they kind of have to see it through. And I think what that says is they were just a step behind, and now it's really hurting them.
SERWER: Micheline, GM says that it has to pay $5.2 billion just to cover health care costs for its United Auto Workers employees. How much do you blame the unions for the mess that GM is in?
MAYNARD: Andy, I can't blame them completely. Because you can't -- you know, you look at the UAW and they have a policy of not giving anything back.
There are two people on each side of the bargaining table or teams of people on each side. At any point over the last 15 years, General Motors could have said, look, we can't afford fully-paid health care for you or your families anymore. The UAW could have said, well, OK, but what else are you going to give us? This could have been dealt with all along the way. And GM had a bad strike in 1998. They didn't want to push the subject. Why should the UAW offer to give up such a great benefit?
CAFFERTY: Where's this thing headed? Kirk Kerkorian started buying up massive quantities of General Motor stock. And as a matter of fact we tape this program on Friday for air over the weekend. And Friday morning, General Motor stock was actually up about 8 percent in early trading on the New York Stock Exchange.
Mr. Kerkorian is not in the habit of making foolish investments. He sees something. I'm just curious where you see this thing going with GM.
MAYNARD: Well, I think he sees opportunity. I think what you're seeing are investors that are hopeful that his presence, at least his sort of specter, will move General Motors a little faster than it might have acted on its own. I do think things will get tougher before they get better. I think there has to be even deeper cuts than the 25,000 jobs and the unnamed plant closings that GM has already announced.
LISCOVICZ: In fact some analysts were saying that over three years, that's just a natural attrition rate, over three years, 15 percent, 17 percent. But having said that, maybe what Kirk Kerkorian sees is GM's balance sheet. This is a very rich, troubled company.
Can you address that?
MAYNARD: There's a lot of cash. One of the reasons they have a lot of cash, is -- it's upwards of $25 billion dollars -- is that there now -- their bonds are now junk. They have to keep cash on hand in order to fund their product program.
One of the things they said in announcing these job cuts is we have to cut costs so we can fund new vehicles.
Well, on the surface, the balance sheet looks very good. When you get beneath it, they have an enormous amount of debt they have to service over the next few years. So if you start to drain that cash away, it really gets to be a crisis pretty quickly.
SERWER: Yes. Well let's get back to the fundamental point here, and that is, this company does not -- or doesn't seem to be able to make hot cars, cars that Americans want.
Do you think they will be able to get back to that?
MAYNARD: I'm concerned that they won't be, because I think you look at the GM culture and that's what gets in the way. You know 40 years ago, General Motors itself had almost 60 percent of the American car market. Today, GM, Ford and Chrysler have less than 60 percent of the car market. But GM is used to being in this sort of global dominant position. They think they know what's best for us. They don't go down to street level, necessarily, and spend time hanging out with kids in California who are souping up their cars, you know? They study them to death and then they make decisions based on focus groups.
CAFFERTY: To borrow a phrase from MTV, the high powers that be at GM need to learn how to pimp their ride.
MAYNARD: There you go.
LISCOVICZ: All right, Jack.
CAFFERTY: Micheline Maynard is a reporter for the "New York Times," author of the book "The End of Detroit". Thanks for being with us.
MAYNARD: My pleasure. Thank you.
CAFFERTY: When we come back on IN THE MONEY, kings of bling. America's rich are getting even richer. And there are more of them around these days. See what's behind all this wealth and whether there's a piece of it out there for you.
Also ahead, a B.A., without the B.S. See how colleges can help make an expensive degree pay off.
And wild game. Some parents get a little too hung up about how their kids perform on the field. We'll look at what's up with this screaming parents acting like children on the sidelines. Stay with us.
(COMMERCIAL BREAK) JACQUI JERAS, CNN WEATHER ANCHOR: Hello, everyone. I'm Jacqui Jeras in the CNN Weather Center.
Arlene still holding steady as a tropical storm, with maximum sustained winds around 70 miles per hour. Still getting gusts beyond that about 85 miles per hour. It slowed down a little bit. It's moving north-northwest at 14 miles per hour. So we're not expecting it to make landfall until mid to late this afternoon, somewhere near the Mobile area. But remember this could move a little bit either way. Right now we're expecting it to stay on the north to northwesterly track, make landfall this weekend, and make its way inland. Rain is going to be a big problem. We could see three to five inches of rainfall widespread across the Southeast. Isolated amounts a little bit heavier.
You can see in the red box here, this is a tornado watch. We are seeing very little activity for rotation so far today. However, take note of this line of thunderstorms developing here just to south and west of Tallahassee this is an area of concern for tornadic activity. We think this could happen a little bit latter on this afternoon and flood watches remain in effect across much of Mississippi, Alabama, even on up into Tennessee.
Now back to IN THE MONEY.
CAFFERTY: Well, if you feel like the rich are getting richer, and they are more of them out there, you're right on both counts. An article in "The New York Times" this week says that's absolutely what's going on. The newspaper found the top 0.1 percent of U.S. income earners are raking in cash faster than any other group. And the number of households with assets over $10 million is way up.
Pulitzer-prize winning "New York Times" investigative journalist David Cay Johnston worked on that story -- and a fine story it is. He's here to help us sort through what's going on. David, nice to have you with us.
DAVID CAY JOHNSTON, NY TIMES REPORTER: Good morning, Jack.
CAFFERTY: The rich getting richer is not a new phenomenon.
Is there something particularly newsworthy though about the rate at which they're getting richer and the degree to which they're getting richer right now?
JOHNSTON: Yes. It began about 20 years ago. We analyzed income data back to 1920. There's very good tax data back to that year. And what we found is it's sort of like the Golden Gate Bridge. In the '20s, the top one-tenth of the 1 percent had a big share up here, their share came down, then it has gone back up, starting in the '80s. In the period from 1950 to 1970, for every dollar that people in the bottom 90 percent got in additional income -- and this is after adjusting for inflation -- for each dollar they got, the top 0.001 percent got $162 bucks. From 1990 to 2003 -- now that's after stock market fell back, and it is only a 12-year period -- the ratio was $1 to $18,000. CAFFERTY: Wow.
SERWER: Yes, David. Let me ask you a question. Andy Serwer here, how are you?
JOHNSTON: Yes hi, Andy.
SERWER: Good. Why did you suggest, though, that mobility in America has lessened? And does that mean -- why does that mean that it's harder to get rich just because the rich are getting richer?
JOHNSTON: Well, the first article in the series we were running was about mobility. I just made passing mention to it. There seems to be substantial evidence in lots of studies that mobility -- that is the tendency if you're born into one income group you will move to another, has radically declined in the United States and maybe even stopped. A lot of this probably has to do with education.
My household, two people are college educations, kids go to college. If you don't have a college education -- we've raised the cost of education enormously in this country. And, therefore, I've actually talked to kids who are too poor, even to go to community college. We've put barriers in the way of developing this human capital. That's a major factor in it. There are a number of others.
LISCOVICZ: One of the others is something we've been reporting every year, is the growing disparity between the CEO pay and rank and file pay. Because when you get into a very wealthy income, you have more -- you have access to people who can find shelters for you. We will hope most of them are legal that kind of thing. There is that growing disparity.
JOHNSTON: Well in addition to that, Susan, the pay pool of any company is only so big. So as the senior executives have taken a larger and larger share of that pool and they made use of things like the deferred compensation programs I've written a great deal about that have hidden costs in them, then that has to be made up somewhere. It's being made up by going to the rank and file and saying, gee, folks, we can't afford the kind of pay raises we used to provide to you.
Not only has the income shared at the bottom 90 percent of Americans has fallen, but when you get to the bottom third of Americans, their slice of the pie is smaller today than it was 35 years ago, even though the economy is enormously bigger.
CAFFERTY: How much of this is due to fact that the economy tends to work this way when Republicans are in power? And how much of this is due to something else? And what's the "something else"?
JOHNSTON: You know, I don't know, Jack. I write about the things that I know about and I write about --
CAFFERTY: I understand.
JOHNSTON: One of the themes of my career has been to ignore what politicians say and look at how the tax laws actually work on our economy.
CAFFERTY: And address the tax laws, in the context of what we're talking about here.
JOHNSTON: Well, we now have a situation in which people who make $50,000 to $75,000 in the United States pay the same share of their income in income, Social Security and Medicare taxes, as people who have an average income of $174 million each. That's the top 400 taxpayers. In income taxes alone, people who make $500,000 to $1 million a year -- that's very well off, you're in the top 1 percent in that group, but you pay a higher share of your income, if you're in that group, than people who make more than $10 million.
Instead of having a progressive system, we have a system that goes up and it falls back. Now, the Bush administration says if your measure is the top tenth of tenth of 1 percent or 1 percent, you may be able to show that the system is less progressive because of the Bush cut. Their argument is the top 40 percent pay more and the bottom 60 percent pays less. And the charts that we ran, and the analysis shows exactly what we reported -- that 15 percent of the Bush tax cuts in the first 15 years go to 0.01 percent of the population, they're the only group whose cuts are bigger than their share of income, and 53 percent of the cuts go to the top 10 percent. It is not true, as President Bush said in the debate last fall, that most of the cuts go to the middle and lower classes.
SERWER: David, quick last question here. You talk about disparities in taxation and income, but isn't the real way to get rich in America is by not spending money? And we're so bad at that. We buy all this junk and don't save.
JOHNSTON: No. Saving and investment are fundamental. If you want to increase the entire wealth of the country, you need to have people saving and investing because you need capital. But what amount of money people make in their opportunities is governed by rules set by the government. And so when we look at income distribution, tax distribution, we need to remember this is not a natural market. This is a market shaped by government rules, and the federal government is about one-fifth of our economy.
Well, very insightful analysis, David, thank you for coming on the program, David Cay Johnston, "New York Times" reporter. And also the author of "Perfectly Legal: The Covert Campaign to Rig Our Tax System to Benefit the Super Rich and Cheat Everybody Else." Thanks David.
JOHNSTON: Thank you Andy.
SERWER: Coming up after the break, chips ahoy. Intel just can't crank them out fast enough. We'll go inside Intel for our "Stock of the Week".
Also what can you get for $160,000? How about a lousy job flipping burgers? Even with the eye-popping cost of tuition, most colleges won't teach you how to cut it in the real world. We'll talk with one school looking to change all that.
And do parents belong on the sidelines or in the penalty box? Experts say sports parents are out of control and getting worse. We'll find out why.
LISCOVICZ: Now let's take a look at the week's top stories in our "Money Minute."
Fed Chairman Alan Greenspan gave Congress a familiar view of the economy. Greenspan played down fears about inflation and of a housing bubble, and gave no sign the Fed will stop its rate-hiking policy. But he did issue a warning about the growing number of Americans taking out interest-only loans to purchase homes.
Justice Department lawyers are now asking for less than 8 percent of the $130 billion penalty they originally wanted from cigarette makers for anti-smoking efforts. The lawyers made that change while summing up the case against the companies charged with misleading Americans about the dangers of smoking. Politicians and even the judge in the case are asking for more information on why the penalty request was so drastically reduced.
And grillers are getting gouged. The average retail price for a pound of choice beef rose to $4.25 in April. That's up 17 percent from two years ago. Cattlemen blame poor rainfall for a reduced herd.
SERWER: Also this week, computer chip giant Intel came out with sales forecasts that beat Wall Street expectations. Intel seems to be riding a wave of good news these days. At the beginning of the week, Apple announced it is switching from IBM-made chips to Intel's brand. Intel shares are trading near 52-week highs and have been steadily rising since mid-April.
But is Intel, and the chip sector as a whole, a good investment bet right now? That makes Intel our "Stock of the Week".
You know, the Apple thing is more symbolic than anything else because it's got less than 5 percent of the market share. I guess that's sort of a little bit of good news. I mean it always is on the cutting edge. Intel was a $70 stock in 2000, it's now in the 20s, had been in the 30s. And traders love this stock because it goes up and down and up and down. But I wonder if there's a real big up trend here over the next several years.
LISCOVICZ: Well, a lot of news, though, this week in terms of chips, though, is fantastic. Texas Instruments earlier in the week, another big chipmaker, also revised its revenue forecast higher. Then we also heard from the Semiconductor Industry Association that talked about healthy demand. So when you are talking about a bellwether like Intel and your seeing that it's got strong demand for notebook computers that kind of thing, you are thinking maybe the stock -- maybe not $70 but it has room to move higher.
CAFFERTY: They came out with the quarterly guidance. While the numbers are certainly positive, they weren't good enough to drive the stock higher as Andy was kind of alluding to --
LISCOVICZ: But it did have a move higher earlier.
CAFFERTY: Yes. But the numbers they came out with were not far enough toward the upper end of what the street had estimated they might be to give the thing a real goose.
SERWER: They weren't really far out in other words.
I think what is going on here; you know one thing that's been happening, there's been so much money spent by companies on technology, going into Y2K. I mean, still --
CAFFERTY: That's true.
SERWER: There are still companies that have a hangover from that. They don't really want to replace all the desktops and the notebooks out there. They want to do it as little as possible because they got so burned back then. At some point, companies will spend a lot of money on technology again. But they're just not doing it quite yet. That's what's really going to drive Intel stock, overall, in the long run.
CAFFERTY: All right.
SERWER: All right. Maybe a couple months off.
Coming up on IN THE MONEY, here's a radical idea. A college course that actually teaches you how to get a job. We'll take a look at one school's innovative program.
Plus, looking at pot like the cash cow that it is. Well then. Allen Wastler turns the Supreme Court's decision on medical marijuana inside out. And this week's fun site salutes the real men of genius.
FREDRICKA WHITFIELD, CNNHN ANCHOR: Hello. I'm Fredricka Whitfield at the CNN Center in Atlanta. Here are the headlines right now.
The first named storm of the Atlantic hurricane season is expected to strike the Gulf Coast sometime in the next few hours. Arlene is a very strong tropical storm, and nearly a category one hurricane. Meteorologist Jacqui Jeras is tracking Arlene from the Weather Center. Jacqui.
JERAS: Hi Fredricka. Yes, still holding tropical storm status with 70 mile per hour winds. Some of the stronger thunderstorms associated with Arlene now are trying to make their way on to the coastline. There you can see, right around Gulf Shores, Alabama. This is live radar out of Mobile. And you can see some pretty intensive thunderstorms pushing through here. You may see some gusts around 40- plus miles per hour just associated with these thunderstorms as it moves on through. But generally, we are just seeing wind gusts around 20, maybe 30 miles per hour. Still a couple hours away, we think, from making landfall -- at least the center of the storm -- as it continues to move north, slightly northwest of north, around 14 miles per hour. The main things that you need to know about Arlene for today, this is your bottom line for you, heavy rain, three to six inches, those gusty winds. Isolated tornadoes are possible and some coastal flooding with storm surge around three to five feet.
WHITFIELD: All right. Thank you, Jacqui.
As the search continues for Natalee Holloway in Aruba, a hearing is set to begin in 30 minutes. A judge will decide whether prosecutors have enough evidence to keep three youths detained for another eight days. Earlier today a spokeswoman for the prosecutor's office would not confirm, nor deny, a report a senior police official had told CNN a suspect had confessed to killing the Alabama teenager.
I'll have all the day's news at the top of the hour. Now, back to more of IN THE MONEY.
LISCOVICZ: The time for college kids to start thinking about a career isn't when they're throwing that graduation cap skyward. And if you've got a recent grad hanging out at your house this summer, nobody knows that better than you, and Jack.
The thing is, colleges can help. What's surprising is that more of them don't. But the University of Chicago does, with a program called "Taking the Next Step."
Bill Michael is the university's assistant vice president for student life and associate dean of the college. He is with us from Chicago. Welcome.
BILL MICHAEL, UNIV. OF CHICAGO: Thank you.
LISCOVICZ: You know what. It sounds like taking the next step is basically an in-house networking.
MICHAEL: It absolutely is. In fact, it's one of the first programs we started in the mid-'90s, and we invite over 150 alumni to come back and talk to students when they're juniors in the college to help them think about what they want to do when they graduate and give them real-world examples of the kinds of things that they should be doing to prepare before they graduate when they're seniors.
CAFFERTY: Should this even start earlier? I ask the question in this context. I've been in broadcasting since they invented radio. And I'm continually approached by kids who come up to me and say, I have a degree in journalism or I have a degree in radio and television, and how do I become whatever?
And you look at them and you say who the hell told you, you had any potential to even be in this business? What college or university gratefully took your money for four years and led you to believe that you could be in front of a television camera to make a living? They ought to be arrested.
I mean, don't schools really need to be a little more honest with the aptitude of the kids that are on the campus and not just pluck the bucks out of mom and dad's pocket because junior thinks he wants to be a rocket scientist, when we all know junior ain't going anywhere near the moon?
MICHAEL: Well, I hope we're honest. We certainly start a lot earlier -- in the first year. But part of the great thing about a liberal arts education is at least we believe they can do almost anything once they figure out what they're good at and what they like doing.
And I absolutely agree with you. We have to start before they're juniors. And, in fact, "Take the Next Step" started in the mid-'90s. Now we start talking to students about this almost after they've been on campus for several weeks. And in fact more and more students are coming from high school, thinking about what it is they want to do. And our job is to help them both work on the things they think they want to do, but help them figure out what kinds of things they're good at, and what they'll be successful in when they graduate.
SERWER: Bill, think I should let Jack know at this point that I was going to be a poet afterward, after college, and I still consider myself a poet. I'm of course completely deluded.
Let me ask you about the job market right now. Isn't it getting better? We've heard such horror stories over the past couple years. Are things looking up a little bit?
MICHAEL: Things are looking up. We're seeing more and more companies interviewing on campus and more and more -- and it's both an uptick in the financial services sector. But across the board, it is getting better. It was tougher a couple of years, but things are absolutely looking up.
LISCOVICZ: You know, Bill, there's always been pressure for kids who are just about to get to college, what am I going to do with the rest of our lives. But with education costs increasing so astronomically -- I just happened to be talking to a government economist this week, 500 percent, the cost of education has increased over the last 25 years, more than even health care -- doesn't that increase sort of the pressure that kids feel, they got into college, they're going to have to pay it off or mom and dad have to pay it off?
MICHAEL: It absolutely does increase some of the pressure. And parents and students are asking questions about how this helps prepare them for their future. The good news is we've got lots great answers for that. And one of the things we're doing at the university -- the university's always offered a great education. And we've always helped students be great critical thinkers and sort of think strategically and be good problem solver.
What we weren't doing as well, and what we're doing better now, is helping them think about how to talk about that education in a way that's attractive to employers and helps them -- to use the phrase -- "Take the Next Step" when they graduate.
CAFFERTY: What about the value of a college degree in this country today, compared to what it was say 10, 20 years ago? Meaning, that there was a time that not everybody went to college. But that was OK because there were plenty of employment opportunities for those who didn't. We were a manufacturing country. Kids learned trades. They went into a family business. The economy has changed to the point where most of the stuff is oriented in service-type things or technology now and not everybody with a college degree is going to fit into that particular environment out there. What's a degree worth today, versus what it was back then?
MICHAEL: I think the degree's worth a lot. Part of the question is what gives that degree value. And it's both the education you receive, but in our case and in lots of school's cases, it's the network it plugs you in with. And part of what all these programs are doing is trying to highlight the important role that alumni and students play together in creating a community and a network that can help each other succeed and provide real support not only while you're in college but once you graduate.
LISCOVICZ: Yes. I got my first couple of jobs right out of school through connections I made in college through some of the university professors.
Bill Michael, associate dean at the University of Chicago, thanks so much for joining us.
MICHAEL: Thank you.
LISCOVICZ: Lots more to come here on IN THE MONEY. Up next, father knows -- least. Some parents seem totally unable to cool it when it comes to their kids and sports. We'll try to find out why.
And did the Supreme Court's decision this week on medical marijuana burn a potential hole in the U.S. economy? Allen Wastler has some answers.
JERAS: Hello everyone, I'm Jacqui Jeras in the CNN Weather Center.
Breaking information here. Latest update 2:00 advisory on Arlene in early. It's still a tropical storm and it has weakened. Aircraft reconnaissance planes flew into this and the winds are down now to 60 miles per hour. It is weakening now, although it still remains a fairly strong tropical storm. It appears much less likely now that Arlene will become a hurricane before it makes landfall. The exact position is 30 north and 87.5 west. And that's about 20 miles south- southeast of Gulf Shores, Alabama. So that means maybe about an hour, hour and a half from now is when the center should be making landfall.
Hurricane warnings remain in place from Pascagoula to Destin even though this is a tropical storm just for precautionary reasons. But be aware, about an hour and a half from now, should be making landfall. And again Arlene has weakened slightly, packing winds of around 60 miles per hour.
We'll have a complete update with the newscast coming up at the top of the hour. Now back to IN THE MONEY.
SERWER: The most dangerous place to be these days may be the Little League Baseball park. Reports of violent, out-of-control parents are becoming commonplace in America.
Joining us to talk about what the heck is going on is Darrell Burnett sports psychologist and author of "It's Just a Game: Youth, Sports and Self-esteem, a Guide for Parents." Welcome to the program, Doctor.
You know I'm a parent with two girls who play sports. And I can tell you, you get very passionate as a parent out there watching your kids play. Doesn't this have to do, at least somewhat, with the fact that college scholarships are so important, $50,000 a year, it really matters. Is that a part of the equation as well?
DARRELL BURNETT, SPORTS PSYCHOLOGIST: That's one of the big parts of the equation because in the old days there wasn't much talk about that. What we're seeing now is the emphasis on this brass ring. And the parents hear things about a scholarship and say, my, here's our chance. And with girls especially, when the Title IX came out in 1972 making more scholarships available to girls in sport, that was a real drawing card. So yes. They're all thinking about it. They're being told they have a good shot at it. My concern is this -- that the statistics don't really bear that out.
LISCOVICZ: Right. And when -- go ahead. I'm sorry, Darrell. I was just going to ask you. I've noticed when I've gone to see my nieces and nephews play their various sports that there's this almost like reprimand for parents who are not at every game. I'm thinking, gosh, when I was growing up, my parents were working. I mean you just can't get to every game. There's almost this expectation that the parent has to be there, you know, urging, you know, little Mary to kick another goal.
BURNETT: Oh, yes. That's right. And the other problem is those other parents -- talking about them coming. Sometimes the coaches in reality would rather have the parents just be on the sideline and watch the game. The problem we're getting now, is when the parents do come, they're yelling out instructions during the game which is confusing for the kids. It amazes me.
You go to a soccer game or baseball game, the parents are all yelling, go to the ball, watch your shoulders, all this kind of stuff for instructions. That would never happen at a local play if dad's going to see my son as a dancing tomato. You know, he's not going to say, come on, smile more, look out at the audience. They don't do that. In sports, it happens.
CAFFERTY: These people doing that, they're losers. If they --
SERWER: Excuse me.
CAFFERTY: If they knew what they were talking about, giving these instructions --
SERWER: I do it, Jack.
CAFFERTY: I rest my case. If they knew what they were talking about, they wouldn't be at some stupid Little League game to begin with. They would be playing for the New York Yankees or the Metro Stars. You know these are a bunch of folks who are reliving their lost youth.
SERWER: All right.
CAFFERTY: And lack of ability to do anything.
LISCOVICZ: Tell it, Jack.
CAFFERTY: Through their poor, misguided children that they just browbeat and pound on mercilessly. How will you get these people to read your book?
BURNETT: I have to say, the majority of parents are fine out there --
CAFFERTY: No, they're not.
BURNETT: But the ones that do go overboard -- the ones that do go overboard, are usually the ones that have not been the athletes. In other words, parents who have been there, done that, usually don't make a big deal out of it.
SERWER: What should you do, then? As I just pointed out, I sometimes yell instructions -- I mean, just a little bit --
BURNETT: We all do. Everybody's done it.
SERWER: Now they have all these training seminars for parents because it's all politically correct. We had a national "shut up" week where the parents were not allowed to say anything on the sidelines. Some of this stuff is funny. What should parents really be doing?
BURNETT: I think, when I see parents in my office, a lot of times, my first message to them is to step back. Let's take a look at youth sports and put it in perspective.
I always say, now look at your kid. Do you think of your kid as a kid who happens to be an athlete? Or an athlete who happens to be a kid? Because if they're putting the athlete first, that's when the problem comes up. So I usually have to get the parents and say look, back off. This is a child. I understand you're excited about his skills and somebody told you somewhere he's a phenom, he is a natural, and he is going to make it big. But just step back. This is a kid first.
And I ask the kid the same thing. Do your parents relate to you as an athlete first or a kid first? Because if it is reversed, it is a problem. I had a kid, for example out here in California, he had a four-year scholarship to a Division I school in football, and he blew out his knee in spring of his senior year. Lost all offers, lost his scholarship. He tried to commit suicide. When I talked to him I said what is this about? He said, that is the thing I had in my family. That was my role.
I always talk to the parents, step back, just relax. The problem is it's too alluring to the parent. I just read the other day in Texas, there is some newspaper or some magazine that is identifying the top fourth graders as potential NBA basketball stars.
SERWER: That's out of control.
LISCOVICZ: That's a little too -- you know, once I went to my niece's soccer game and my brother was yelling instructions to her and she started yelling back to him. Like she does at home.
BURNETT: That's enough --
LISCOVICZ: It's a little disruptive. What's good etiquette for a parent? Where do you draw the line?
BURNETT: Well, here's -- my gut feeling about why there's a problem right now is there aren't any, really, consequences for their behaviors. The etiquette is going to come if we spell out what our expectations are with consequences. You know, the road range and the harassment at the work place, all that stuff is starting to be curbed because there are real consequences. I think parents think about the youth sports as the last vestige where they can just let it all out.
Unless there are consequences, you're not going to see much. Here's an interesting thing. New Jersey, their legislature is trying to get something through which would have it, if two adults are duking it out at some event where the kids are 16 years or younger, that it would be considered aggravated assault -- a felony. And if they get thrown out of a youth sports game, they're trying to pass a law that require the parents to take anger management courses to get back in to attend again. I think if we start having consequences, that's going to make a difference.
LISCOVICZ: All right. Anger management in New Jersey, I like that. Darrell Burnett, sports psychologist -- that's my home state, that's why I say it. That's where I saw my niece playing soccer. Thanks so much for joining us.
BURNETT: Ah, my pleasure.
LISCOVICZ: Coming up, toking for dollars. The Fed may say no, but regulating marijuana could give our economy a nice buzz. We have a closer look.
And put our producers to the test with your e-mail insights. Drop us a line. The address is INTHEMONEY@CNN.com.
But first this week's edition of "Money & Family." Has a new home put you in the poor house? Well you might want to borrow money against the value of your house through a home equity loan.
There are a couple of things you need to figure out first. Calculate how much debt you can take on. Don't forget if you take out the money, you have to pay it back. If you don't crunch the numbers first, you could find yourself unable to manage this new debt. Put mortgage payments first. Remember when you take out a home equity loan, your house or condo is on the line. Banks are watching and they could freeze your credit if you're not paying your bills.
Be prepared. It's always a good idea to keep some equity freed up for emergencies. You never know when you're going to need a cushion.
Finally, watch what you use the money for. You don't have to use this loan specifically for home projects, but it shouldn't be used to pay day-to-day expenses. Those should come out of your current income.
Good luck, I'm Susan Lisovicz for "Money & Family."
CAFFERTY: This week, the Supreme Court ruled to allow the federal government to ban medical marijuana. Most of the experts say the case is about drug use and personal liberty. Money.com Allen Wastler says not so fast. It's really about the money. That's the focus of this week's "Inside Out."
ALLEN WASTLER, MONEY.COM: When people discuss marijuana legalization it gets wrapped up in emotional issues. And I should being doing this and I -- but when you strip that all away, it's an economic argument. As the Supreme Court was handing down its decision, I called up this professor, who has just completed -- Harvard Professor Jeffrey Meyer and he has just completed a study of how much money is involved in the whole question of legalizing marijuana.
Now, going through all the federal and state records of enforcement and taking out proportions and calculating it out, he figures that the country spends about $7.7 billion a year policing against marijuana, prosecuting marijuana, and keeping the marijuana users in jail.
WASTLER: All right. That's the cost side of the equation. Now, he says if he took marijuana and if he legalized it and taxed it at the same rate you did cigarettes or alcohol, you would make conservatively $6.2 billion. Add them together, that's just about $14 billion a year conservatively that you could get for the public good. And that doesn't count ancillary benefits, like supporting industries, bond makers. Jobs involved. But you have this overwhelming economic argument, which is funny when you think about what gets argued in front of the Supreme Court, because, well, medical marijuana use -- for people who are suffering. Well, that's a Trojan horse. You know the moment the doctor is able to write a script. You know, "I'm suffering, please doc, dude, I'm suffering so bad."
CAFFERTY: I know people in this company that would take advantage of a ruling like that.
CAFFERTY: Are you surprised?
LISCOVICZ: Even on this set?
CAFFERTY: Well, we're not going to name any names.
WASTLER: There's important other arguments, too. You have to go through health effects, people debate back and forth. Does it lead to harder, you know more addictive drugs? Well you could make the same argument with liquor. But get down to economics, $14 billion.
CAFFERTY: Not insignificant.
SERWER: Up in smoke.
CAFFERTY: What about the fun site?
WASTLER: Now we've been talking about pot all this time, I'm a little hungry.
SERWER: Got the munchies.
WASTLER: This is a commercial, OK. It is viral commercial but we thought it was funny enough to show you. Let's talk tacos and beer, what do you say?
(BEGIN VIDEO CLIP)
ANNOUNCER: Bud Light presents real men of genius. Real men of genius. Today, we salute you, Mr. Giant Taco Salad Inventor.
UNIDENTIFIED MALE: Mr. Giant Taco Salad Inventor.
ANNOUNCER: Ground beef, refried beans, guacamole, cheese, sour cream, and if there's any room left, a few shreds of lettuce. A culinary creation that baffles the human mind. A 12,000-calorie salad. Ay carramba. Some may ask, is your taco salad healthy? Of course it is, it's a salad, isn't it? You can eat that deep fried crunchy bowl.
So crack open a nice cold Bud Light. You put the beast --
(END VIDEO CLIP)
CAFFERTY: That is priceless. That's one of your best ever.
WASTLER: There you go.
CAFFERTY: Of course it is it's a salad isn't it? That's terrific. Thanks, Allen. Coming up next on IN THE MONEY, it's time to hear from you as we read some e-mails from the past week. And you can send us a e-mail right now. We're at INTHEMONEY@CNN.com.
(COMMERCIAL BREAK) CAFFERTY: All right it's time now to read your answers to our question about whether religious or activist boycotts affect your buying decision. About 99 percent of you said absolutely not.
Vanessa from Houston wrote this, "It used to be the whining, ultra liberal groups with a new cause and boycott everyday. Now, it's the whining, ultra conservative Christian groups trying to tell us what to do. Whenever I hear about these boycotts, I do my utmost to undermine them!"
SERWER: Hear, hear.
CAFFERTY: A viewer named Linda was one of the few who disagreed. She wrote, "What is wrong with trying to interfere with something that I perceive to be wrong? Moral issues are important to me and if we stand on the sidelines, we'll never make things right."
And Al just wrote this: "The only thing I pay attention to is whether a product is made in the United States. I don't pay attention to religious crusades. I only want to protect American workers and industry."
Now for next week's e-mail question of the week -- is spending $40,000 a year on college tuition the best way to help your child find a career? Send your answers to INTHEMOMEY@CNN.com. And you should also visit our show page at Money.com/InTheMoney, which is where you'll find the address for our "Fun Site of the Week", which is an absolute, knockdown, laugh-out-loud funny site.
On that note, we'll thank you for joining us for this edition of IN THE MONEY. My thanks to CNN correspondent Susan Lisovicz, "Fortune" magazine's Editor-at-large Andy Serwer, and Money.com managing editor Allen Wastler. Join us next week, Saturday at 1:00, Sunday at 3:00. We hope to see you then. Until then, enjoy the rest of your weekend.
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