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CNN IN THE MONEY
Improving American Relations In Middle East; Former. Police Chief Argues To Legalize Drugs; Why Aren't People Going To Movies?
Aired October 29, 2005 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: And this is enough to make you want to perhaps dust off your skies and your ski boots because, look, some fresh snow there in Vail after finally getting some cooler temperatures. And now this means some of the resorts there, like Breckinridge, Copper Mountain, and Keystone, say they just might be able to open as early as next month for the skiers.
So much more ahead on CNN LIVE "SATURDAY." In a few moments, IN THE MONEY at 2:00 Eastern examining health care expenses for companies. Is it wrong to hire only healthy workers in order to cut costs?
And at 3:00, the "IRAQ WAR: Voices from the Home Front," understanding why public opinion about the war is so divided.
But first a check of what's happening right "Now in the News."
India's prime minister says terrorists are to blame for explosions that rock three separate areas of New Delhi today. At least 33 people were killed, almost all of them in a marketplace packed with shoppers preparing for India's largest festival. India has not named any suspected group. Long time foe Pakistan has condemned the attacks.
The attorney for Lewis "Scooter" Libby is hinting his client may rely on a defense or -- of faulty memory, that is. The White House insider was indicted yesterday on five counts related to the leaking of a CIA operative's identity. Libby immediately resigned his post as chief of staff for Vice President Dick Cheney.
Meanwhile, President Bush may well turn attention away from the probe and its lingering focus his top political adviser, Karl Rove, with a much anticipated nomination for the U.S. Supreme Court. Earlier this week the president withdrew the nomination of Harriet Miers -- that is, she withdrew her own name amid vocal opposition from conservative groups.
The owner of a Texas health care company is under arrest for allegedly ordering fake flu vaccines to be given to more than 1,000 Exxon Mobil employees. Tests show the syringes contained purified water. There have been no side effects reported but health officials are recommending that more testing be done on those who received those fake shots.
I'm Fredericka Whitfield in Atlanta. More news at the bottom of the hour. IN THE MONEY begins right now. ANNOUNCER: From New York City, America's financial capital, this is IN THE MONEY.
ANDY SERWER, CNN ANCHOR: Welcome to IN THE MONEY, I'm Andy Serwer, sitting in for Jack Cafferty. Coming up on today's program: the war behind the war. With U.S. deaths in Iraq above 2,000, see what your tax money is doing in another fight. The struggle to boost America's image in the Islamic world.
And raising the white flag: America spends billions every year on fighting drugs.
SERWER: ... police chief who says it's time to...
SERWER: ... cash and go for legalization.
Also ahead, high-flyers and turkeys. The holiday movies are the last chance for this year for Hollywood to pull out of its nosedive. See if this season's lineup has what it takes for a comeback.
Joining me today, money.com managing editor Allen Wastler, and HEADLINE NEWS correspondent Carrie Lee.
You know what? It's been a roller coaster week for the markets, you guys. First of all, we have a lot of stuff going on in Washington, D.C., not making investors happy, on the other hand, the economy continues to grow...
CARRIE LEE, CNN HEADLINE NEWS CORRESPONDENT: It does. On Friday, we saw GDP coming in stronger-than-expected, 3.8 percent to the upside. Of course, this is a very important report because it measures all of the goods and services produced in our economy.
So when this report is stronger-than-expected that's good news overall. So markets reacting favorably to that. Of course, Thursday, we saw the Dow down over 100 points on some not-so-great economic news. So kind of up one day, down the next, but overall, third- quarter profits have been good so far, mainly because of oil.
But hey, growth is growth, and that's definitely a good sign.
ALLEN WASTLER, MANAGING EDITOR, MONEY.COM: And they sprinkled in some of that corporate news, too. You had Microsoft being gloomy in there and then you had GE beginning the week with, hey, we have got subpoenas, oops, things might be going wrong there. And then you throw in all the political stuff, the CIA hoo-ha, and then Bernanke's appointment, it just -- a frothy, frothy mess for investors. Gosh, it's fun!
SERWER: Yes, well, it is a swirl of news. And I think a lot of times what happens in Washington is ignored on Wall Street, but it does start to catch up after a while. Consumers' confidence, investors' confidence, and so it all does tie together I think a little bit, doesn't it?
WASTLER: Yes, it certainly does. And I think, to get to Carrie's point, the economic news, it wants to go forward. The economy wants to keep going, keep going, keep going. These other things are holding it back but I think we're going to see a breakout in the fourth quarter. That's what I'm hoping for at least.
SERWER: All right. That's Allen's prediction, right?
LEE: Q4 usually strong, we're seeing signs of the housing market start to slow down, but we all knew this was going to happen sooner or later. I mean, it's been crazy, it's been a great ride for people. Q4 usually strong and most people are thinking that once this hurricane fallout starts to end, then it's going get even better.
SERWER: All right. Well, we will see what we see. The battle for Iraq isn't simply about who's got better guns and tactics. It's also about who can win the support of the people and the region. That fight on two fronts, feels even more poignant this week. The number of U.S. military dead in Iraq is over 2,000 now.
But in the campaign for public opinion, Iraq is just part of the territory. Throughout the Islamic world, Washington has spent $670 million this year to boost its image, but our first guest says you can't sell the U.S. like Uncle Ben's rice. James Zogby says it's time for Washington to adjust its attitude towards the Middle East. James is president of the Arab-American Institute.
James, welcome to the program.
JAMES ZOGBY, PRESIDENT, ARAB-AMERICAN INSTITUTE: Thank you.
SERWER: So assess for us, if you please, Washington's track record so far trying to win the hearts and minds in that region.
ZOGBY: Well, let me just correct a little of what you said in the beginning. You can actually sell something like you sell Uncle Ben's Rice. The point is that when we sold Uncle Ben's Rice, we understood the market we were selling to first. You listen to the market, you judge the market, what it needs, and then you tailor the advertising campaign to the needs of the market.
We haven't sold America in the same way. We haven't listened to what the Arab world is saying to us and therefore we've been providing them answers to questions they're not asking and we're the issues that they are raising. While we focus the 2,000 Americans who have died, they focus on the estimated 20,000 to 30,000 Iraqi civilians who have died. That all takes a toll.
We have to recalibrate not just how we convey the message, but what we're doing in the region and what impact that has on the image that we have. LEE: Dr. Zogby, Carrie Lee here. Anti-Americanism in this part of the world, certainly there are different levels of prices to pay, but what about the economic impact? Do you talk about people liking American products, liking the freedom aspect of our culture, but what is the economic price that we're paying on both ends? Certainly, we would like to sell more products. Certainly some people in the Mideast would like to buy more products, do business together. We talked about the globalization of the world today. What is that economic price? To what extent?
ZOGBY: Well, a couple of things we can say about that. One is, it's not a very elastic market in that sense. We don't sell that much and what we buy from there doesn't have a whole lot of give, and we buy oil and they sell it and they're happy with it. And some products that we're selling aren't going go away.
People are going to continue to buy American cars and American franchises are doing very well in most areas. In fact, there's a bit of a tension. They may not like what we stand for and that has a negative impact, but that tension is offset by the fact that American culture and the values inherent in that culture have a tremendous draw.
I was just in Saudi Arabia a short while ago, staying in a hotel. In the lobby of the hotel is a Saks Fifth Avenue, there's a Planet Hollywood, across the street is a McDonald's, there's a Pizza Hut and a KFC on the other side, and kids walking around in T-shirts with Barkley and Jordan on the back, and American jeans, and even the girls wearing their abayas, but under the abayas are jeans, and they're wearing sneakers.
The fact is that our -- we don't just sell products like the Germans and the Chinese do. We also sell our culture, and our culture has a draw and an appeal. And so you talk to American businessmen and they feel that tension. If they sit down and talk to an Arab partner about business, they can do business, but the minute the conversation shifts to politics, the well is poisoned and the conversation ends and it's a problem.
We need to understand that there is an impact, but it's not being felt yet in as dramatic a way as I think it may be in the years to come.
WASTLER: Dr. Zogby, given what you're saying then, that there's going to be this animosity there any time we shift to politics, why bother with the PR campaign? I mean, isn't that just money wasted? Let just business speak for itself and let policies speak for themselves?
ZOGBY: Let me tell you that I don't think that public diplomacy ought to be about PR. I think public diplomacy ought to be about listening and about coming back and talking to policymakers about how we recalibrate policy and how we deal with the region in terms of what people are saying to us and how they're viewing us.
So that if Karen Hughes is I think -- who I think is an extraordinarily smart woman and a very sensitive and alert woman to the needs of both the administration, our country, but also I think she got an earful when she was in the region, if she comes back and says, oh, here's the new TV advertising campaign, her trip would have been a waste.
But I don't think that's what she came back with. I think what she came back with is that you can't escape the policy. You have to deal with the policy. And she has the ear of the president to say to him, you know, we can do all of the advertising in the world. We can do all of the TV networks and magazines in the world, but if we don't begin to alter how we deal with these people, if we don't put a control on other messages coming out of our country that end up trumping our image, like Pat Robertson, like Congress, et cetera...
SERWER: I'm sorry to jump in...
ZOGBY: ... it's going to hurt -- yes.
SERWER: ... Mr. Zogby, but we've got to go. Obviously a lot more to talk about here, but our time is up.
ZOGBY: Thank you.
SERWER: James Zogby, president of the Arab-American Institute, thanks.
When we come back: stiffed. Some companies that promised their workers a pension are walking away from the deal. See how they can get away with it and how much damage it causes.
Also ahead: going with the flow. Those rising gas prices are tough, but not on the oil companies. See if Chevron is a smart place to park your money right now.
And doom and gloom or dollars and cents: Hollywood is in trouble and the holiday movie season could go either way. We'll get Leonard Maltin's take on the films that will fight the fight.
LEE: Life in corporate America used to be based on a deal: work hard, do what you're told and you'll get a salary now and a pension later. But now many are finding that the pensions they worked for all those years simply aren't there anymore because the companies they trusted are breaking their word. TIME magazine editor-at-large Jim Steele is an award winning journalist and the co-author of an article on the retirement crisis. It's in this week's issue of TIME, property of CNN's parent company, Time Warner.
Jim, thanks for joining us.
JIM STEELE, EDITOR-AT-LARGE, TIME: Nice to be with you.
LEE: You know, it seems like no one is safe anymore, no matter how long you've worked for the same company, no matter how secure you believe your benefits are, you could lose it all. We see it happen every week it seems. Why isn't there any recourse in corporate America today?
STEELE: I think this is one of the big surprises we had. People just feel betrayed all over the country. They've worked their entire lives for what they thought were pension, health benefits, severance arrangements, death benefits, a whole range of things. In many cases, they've contributed to these plans which then turn out at end of their life to be worth nothing.
In most cases what a lot of people don't realize is really at the stroke of a pen, sometimes it can be a bankruptcy court, sometimes corporations don't even have to do that, if they've gotten themselves into difficulty, they can end those benefits.
Most people are under the impression that corporations put these monies away for them in funds, put them away for their retirement, put them away for their health benefits, but that's not what's happening and that's in large part a failure of Congress. Congress could do something about this if it wanted to, but it's let this go on too long.
SERWER: Jim, I don't think this comes as a surprise, perhaps, but the CEOs and the top executives are still making out just fine. One takeaway from your piece that I thought was amazing was Treasury Secretary Snow and his pension plan. Could you talk about that a little bit?
STEELE: Well, what Secretary Snow has is something that's very common in the upper ranks of corporate America. He -- when he left CSX, the largest rail network in the East Coast, he collected a pension of $33 million, a lump sum payment. This was based on 44 years of service, but truth to tell, that's 18 more years than he actually worked for the railroad.
And that's a very common thing you see at the top of a lot of corporate America, bores of directors add more years of service to their executives who retire. And the amazing thing about this to us when we looked into this, this is in stark contrast to people who -- very often average folks, who work 10, 20, 30 and 40 years and think they're going get a pension based on that and very often end up with just a fraction of that if anything at all.
So it's the exact opposite of what you see at the top ranks and it's typical of the kind of unfairness that's going on in terms of pensions in this country.
WASTLER: Jim, very shocking story and as I read through it I got more and more incensed. And you get the sense that Congress is sort of in cahoots with corporate America on these kind of moves. You mentioned the Congress could do some things, what do you suggest?
STEELE: One thing they could do would be simply to change the bankruptcy laws. I mean, the way they are now, if a company goes into bankruptcy, the employees go to the end of the line and secured creditors and others have much higher priority on whether the assets are in that corporation. Employees have nothing at all. They have no standing, basically. And by the time they get through divvying up what's left they usually get nothing. So one thing is we could put a higher priority on the claims of people who have spent 10, 20, 30 years, working for that corporation. That's one thing they could do.
The other thing they can do is simply insist that companies properly fund their pensions. For years, they just haven't done this, they've looked the other way as some companies simply have let their unfunded liabilities grow. I mean, they're now up totally to $450 billion for single employer plans. They could make those requirements tougher and insist that the companies that are in a weak position clean up their act.
LEE: Jim, what do we do if Congress does not change things? In other words, what does the future of our country look like? You have Baby Boomers aging, a lot of them tremendous health care bills. Certainly it seems like there would be some rather bleak aspects to the future if things continue this way.
STEELE: You are absolutely right, unfortunately, and for an increasing number of people, middle class Americans who thought they were going have a certain safety net there, that's simply not going to be there. They're going have increased health care costs that they thought in many cases their employers would bear. They're going to have higher costs from Medicare and so forth.
So Congress needs -- I mean, we as a nation, need to really focus on this issue because substantial numbers of our population are going to be facing poverty or near poverty which is going to be in stark contrast to what the situation was a few years ago when people were going in the other direction.
So we need to do some things to protect that safety net or we're going have some tremendous poverty for people -- older Americans in this country.
SERWER: Right. All right, we are going to have to leave it at that. Award-winning journalist Jim Steele, an author of a fascinating and devastating article in TIME magazine. Thanks for coming on the program, Jim.
STEELE: Nice to be with you.
SERWER: Coming up after the break, don't mention the money. Oil companies are scoring big with rising prices, but they don't want you to focus that. See how Chevron's stock is looking.
Living the high life: calling off the fight against drugs could save America billions of dollars. We'll hear from a former police chief who says the savings would be worth it.
And that lip-syncing feeling: we'll try to connect the dots between a couple of guys in track suits and a business powerhouse.
(COMMERCIAL BREAK) LEE: Now let's take a look at the week's top stories in our "Money Minute." President Bush nominated Ben Bernanke to replace Federal Reserve Board Chairman Alan Greenspan. Bernanke is a former Fed governor, Princeton professor, and he currently heads the President's Council of Economic Advisers. Most Wall Street observers portray Bernanke as something of a Greenspan clone which could mean continued interest rate hikes for the foreseeable future.
More than half a million people have now lost their jobs because of Hurricanes Katrina and Rita. And employment experts expect more job losses in the coming week thanks to Hurricane Wilma, but the jobs picture does seem better in the rest of the country as overall jobless claims nationwide fell last week.
And Ford is ready to go into some forbidden territory to improve productivity. The Detroit News reports the auto giant issued a memo complaining about workers who are taking too many bathroom breaks at its plant in Wayne, Michigan. The memo reportedly warns that Ford supervisors will begin collecting weekly data on the amount of time workers spend in the bathroom.
SERWER: It was a bang-up week for the major oil companies. Most of the attention was focused on Exxon Mobil because it booked record third-quarter profits, but investors may be more interested in the nation's number two oil company, Chevron. Chevron announced huge profits of its own this week and its stock might be a better value. Chevron shares have had their up and downs this year, but over the past three years, the stock is up more than 60 percent.
Chevron and the entire oil sector are our focus for our "Stock of the Week." And what's interesting is the numbers are huge. They're staggering, $100 billion in revenues for Exxon. The first time that's ever been done, almost $10 billion of profits. Chevron, $3.6 billion. People complain. I tell them to go out and buy the stock, right?
LEE: If it's not too late. The stock peaked out at late September. A lot of people buying in. The stock ran up and now they're seeing some profit-taking. But still, that's the big debate. Is there still a lot of room for this industry going forward?
WASTLER: And there are some headwinds coming out, too, mainly political headwinds, because people are like reading the reports and going, $10 billion in profit! That's piracy! And they're going at it and the Congress -- and Congress, let's face it, Congress could use a few distracting issues these days and what better to say, it's time that we did a windfall profit tax on big oil.
And they can talk about it, talk about it, talk about it, and then quietly let it die and the lobbies are happy and it just goes forward.
SERWER: Well, of course, and you know who is calling for those hearings was old Senator Frist, and I wonder if he sold his Exxon stock. Just kidding, Senator. (LAUGHTER)
SERWER: Anyway, that's a low blow. The thing about what you were talking about, Carrie, I think is very apt, because the stocks had a huge year actually, last year, and a big year up to the hurricanes and then smart money, the hot money sold out. So they're all down a bit. But I really think this is a pause that refreshes.
I mean, if you really think we're going back to the old days where the price of oil is going to be $25 a barrel, I think you're wrong. And so I think these companies, while this may be a record quarter for a couple of years, maybe even, I think these companies have a lot of room to go.
We were talking about Chevron being cheaper than some of the other stocks based on a price-to-earnings multiple, in other words, the number -- the earnings relative to the shares outstanding. It's cheaper than Exxon, cheaper than BP, cheaper than Royal Dutch. So, you know, you have got to look at the sector, maybe look at that one.
LEE: And as you were saying, Chevron, the stock chart you showed, it's not just straight up, it does have cyclical peaks and valleys like every other industry. And to Allen's point on that, lawmakers wanting to tax excessive profits -- or they say, excessive.
Well then, what do you do when the oil companies start to come down a bit and another sector comes up? Drug stocks a few years ago. Are you going to tax drugmakers, too? It's just a very slippery slope I think when you get into that kind of policy idea.
And hey, this is America, right? It's all about capitalism. You can't penalize companies, yet even these companies and the profit reports, almost apologetic or downplaying these record results.
SERWER: Well, it feels good, it looks good and it's cheap, that's why they're doing congressional hearings.
Coming up on IN THE MONEY, it's a bust. A former Seattle police chief says we're wasting billions of dollars on fighting drugs. Stick around and hear a cop making argument for legalize the stuff.
And retirement dreams shattered: the story of one Gulf Coast couple trying to rebuild the retirement in the wake of a devastating storm.
Plus, get them while they're hot: we'll tell you about the Wal- Mart memo that calls for saving money by hiring the young and fit.
WHITFIELD: Hello, I'm Fredericka Whitfield at the CNN Center in Atlanta. Here's what's going on right "Now in the News." India's prime minister blames today's explosion in New Delhi on terrorists. The string of blasts killed at least 40 people. Most of the victims were at a crowded marketplace in India's capital preparing for a major festival. No group has claimed responsibility for the attacks.
A truck bomb went off north of Baquba, killing 20 people and wounding 30 others, that's according to an Iraqi interior ministry official. He says the explosives went off in a busy market. They were apparently hidden in a pickup truck.
People in Nicaragua are bracing for the brunt of Hurricane Beta. A hurricane warning has been issued there and thousands are evacuating the coastal areas. Beta is churning about 100 miles off the country's Caribbean coast with 85 mile-per-hour winds. Forecasters believe Beta could strengthen before making landfall in Nicaragua on Sunday morning. CNN is your hurricane headquarters. Stay tuned for frequent updates and online at cnn.com.
Well, time is standing still for Big Ben. The London landmark has been stopped for a necessary check-up and for maintenance to ensure its reliability. Rubber hammer buffers on some of the chimes and bells are being changed and then retuned. It's going to be back in service late tomorrow afternoon.
More headlines in 30 minutes. I'm Fredericka Whitfield. Now back to IN THE MONEY.
SERWER: While the nation my be divided on the war in Iraq, many Americans stand united on another front, the war on drugs. But our next guest is a veteran of that battle and he says it's not worth fighting anymore. Norm Stamper is the former chief of Seattle Police Department and a proponent of the legalization of drugs in the U.S. He is also the author of "Breaking Rank: A Top Cop's Expose on the Dark Side of American Policing."
Norm, welcome to the program. Surprising, of course, to hear this coming from a chief of police, I wonder, though, is it politically tenable?
NORM STAMPER, FMR. SEATTLE POLICE CHIEF: That's the paramount question because I think the science supports regulated legalization as a means of reducing deaths and disease and crime and addiction in this country. I think we need to develop the political will and the courage necessary to make that happen.
WASTLER: Norm, you know, I sort of believe in the legalization of marijuana too from an economic standpoint. And I wrote a column to this effect a few months ago. Throwing out some numbers from an economic study, much less from the ones you're quoting, but still pretty significant, and the e-mail I got, first, A, accusing me of being a stoner and then saying this ignores the health costs, all of the people who are going to become addicts, how we deal with that in society, lost productivity, how do you answer those kind of challenges?
STAMPER: Well, by suggesting to you that the illegal drug trafficking figure is $500 billion. That's a United Nations figure representing the international illegal drug trafficking scene. The lion's share of those drugs are coming into this country from Latin America and from the Middle East. So we are feeding and fueling a vast underground drug trafficking industry.
That money is untaxed. It's certainly laundered. And because the industry deals in an illicit commodity, governments can simply -- are simply unable to get its arms around it and to do the kinds of things necessary to reduce those costs, not merely financial, but social and health costs as well.
LEE: But, Norm, you talk about feeding these industries, bringing drugs into this country. You've argued that if you legalized drugs, or at least tolerate it here, prices would come down. They're artificially high. Wouldn't that be feeding drug habits for a lot of Americans? You make it cheaper, you make it easier to get and more people are going do it. Surely there are other economic implications to that, health care costs just to name one.
STAMPER: Well, I think that assumes that it is cost that is keeping so many Americans from indulging in the drug scene and I don't believe that that's the case. I think what we find is that if we can reduce dramatically these astronomical costs associated with illegal drugs simply because they are illegal, we can begin to convert so much of our time, our energy, and our money into prevention and education.
I do not advocate the taking of any drugs. I advocate the right of adult Americans to in fact purchase and use drugs responsibly and to use the costs associated with the -- or the savings, I should say, that are associated with the regulated legalization of drugs for, as I mentioned, prevention, education, and treatment.
SERWER: You know, I see this problem and I see, you know, a situation where a cancer patient is unallowed -- not allowed to pull a weed growing in their backyard, roll it up and smoke and make himself feel better, but they can spend $1,000 on a drug from one of the big drug companies that ends up making them even more sick, it's ironic, it's terrible, it's wrong.
On the other hand, if we legalize drugs, isn't it true that 17- year-old and 16-year-old kids will get drugs from their parents, maybe find where their parent's heroin is, for goodness sake, I mean, you saw junkies in the streets of Seattle, wouldn't that make it worse?
STAMPER: Most of those junkies that I saw on the streets of Seattle did not get their drugs from their parents. They scored them on the street. And I think that that would continue to be the case for as long as we wage this unwinnable war against drugs. If we were to regulate -- legalize and regulate drugs, we could much more effectively control those drugs.
WASTLER: Norm, you don't usually expect a cop to be advocating legalizing drugs. Have you always had this viewpoint or did it change at some point in your career? Tell us a little bit about that.
STAMPER: I've had this viewpoint, I think, since my second or third year as a police officer, after transporting a number of users to jail and wondering the wisdom of that investment of police resources. We had burglaries and robberies and car prowls and thefts and domestic violence cases that to my way of thinking deserved much higher priority.
Later in my career, certainly by the early '90s I was speaking out in favor of regulated legalization of drugs because I had come to the appreciation that that's a way to reduce deaths and disease and crime and addiction. We're just simply ignoring so much of the suffering that is actually caused paradoxically by the war on drugs.
WASTLER: Norm, we appreciate you coming in and telling us your viewpoint. Thanks a lot. Norm Stamper...
STAMPER: Could I also -- just add that LEAP, Law Enforcement Against Prohibition, is an organization of other police officers who feel the same way I do.
WASTLER: OK. Thanks, Norm. Norm Stamper, former Seattle police chief, thank you very much.
Lots more coming up here on IN THE MONEY. Up next: flicked off. Audiences have been deserting movie theaters in droves. See if Hollywood's for the holidays can salvage a bad year for the biz.
And offbeat or on-key? Judge for yourself as we bring you our "Fun Site of the Week."
LEE: Got your holiday wish list ready? Well, Hollywood does and it's pretty short this year. After a lackluster year for movie ticket sales, all Tinseltown wants is a big fat blockbuster. Will Santa deliver? "Entertainment Tonight's" Leonard Maltin is here with a look.
LEONARD MALTIN, "ENTERTAINMENT TONIGHT": Hi there, nice to see you.
LEE: Mr. Maltin, I'll start. Question, you talk about people not wanting to go to movies and what is the main reason for that? I mean, there are a lot of options. People can rent a DVD at home. They can often download a movie online. What is the main reason and what is the solution, in your opinion?
MALTIN: Well, if I had definite answers to that I could make an awful lot of money. Hollywood is scratching its collective head right now. They're really puzzled because the first two-thirds of this year people weren't going. People just weren't going to the movies. Well, a lot of people were asking why. Well, the moves were terrible the first two-thirds of this year. That's the one reason people weren't going and that's the one thing that articles and stories didn't really cover. They talked about the competition of DVDs and all these other reasons, but the biggest problem was they weren't giving us movies we wanted to see.
Now there's a different problem. This fall there have been some good movies, in fact, quite a few good movies, and people still aren't turning out in great numbers. I think the problem now is that Hollywood, which is so used to sort of buying an audience, in recent years, their theory has been if you throw enough money at it people will come, not only in making the movie, but also in promoting the movie, and now it isn't happening.
I think part of that is that they underestimate the audience. They sell their own audience short. There have been good movies like "In Her Shoes," and "The Prize Winner of Defiance, Ohio" with Julianne Moore and Woody Harrelson, and today "The Weather Man" -- this weekend, "The Weather Man" opens with Nicolas Cage. The only way they seem to know how to sell these movies is to pretend they're all comedies and they're not.
But they think that if they tell people what they really are, which is interesting, somewhat complex stories, that people will stay away. So when they finally have a good movie they don't even know what to do with it anymore. I think there's a real disconnect in Hollywood between the people who make the films, the people who market and promote the films, and the people who actually want to go and see a good move.
WASTLER: Leonard, it seems to me that this is the third year we've had this sort hand-wringing right out of the summer and into the fall season. Oh, Hollywood, they can't do this, they can't do that. And yet they line up all the blockbusters right at the end of year. You know, we've got "King Kong" coming...
MALTIN: You noticed that.
WASTLER: Yes, we have got "Harry Potter" coming. All of the movies I want to see are at the end of year. So isn't it sort of like an exercise in feeling bad for Hollywood and then bang, they throw out the blockbusters and that takes them through it?
MALTIN: Well, somewhat. That's certainly true about their stacking the deck toward the end of the year, but people do go to the movies 52 weeks a year and the movie theaters are open 52 weeks a year. It has never been that seasonal a business. What happened this year was a lot of the so-called summer blockbusters really tanked, big movies like "The Island" and even "Bewitched," films that they thought had all the ingredients of blockbusters and nobody cared. Nobody came. That was the difference this year.
SERWER: Yes, well all those sequels and remakes. I told you that...
MALTIN: "Stealth," that was another one that lost...
SERWER: When they redo "F Troop" -- when they make "F Troop" the movie then I'm really going throw up my hands.
SERWER: I think it has a lot to do with the value proposition, though, Leonard. I mean, you know, it costs the family $25 to go to the theater, they have got to park, the gas is expensive, concessions is $20, now they have to sit through all those ads. And I really believe that the stay-at-home pay-per-view thing is really starting to make in-roads. You sit there, you go boom, you get $7 your cable bill. Isn't that starting to really take its toll on the biz?
MALTIN: Of course, it is. Of course, it is. But the difference is -- the one factor is that people still like to go out now and then, even parents, even people who normally don't go out that much. Young people certainly like to go out. Movie-going is a social experience. That's why movie theaters still exist in spite of all of the alternatives that are available, video and video-on-demand and DVD and streaming video and all of these things.
I mean, do you want to stay cooped up in your house or your apartment all of the time? Nobody does, but they make it so insulting when you go out. Not only do you pay all of that money and get bombarded by commercials and overpay for refreshments, all of those things, and then some theaters can't even get the film in focus or center it on the screen. I've had this happen in the last couple of months.
LEE: That's only one part of the problem. Cell phones ringing, you have to get there so early for seats, listen to 20 minutes for ads. And it's a rather unpleasant experience. So I'm wondering...
MALTIN: I know lots of people who say just that. They say, you know, it's no fun to go to the movies anymore. Well, if you're turning off your own customer base, you have no one but yourself to blame. Part of it has to be left at the feet of the theater owners who don't do a good enough job of putting on a good show and not insulting their customers.
LEE: What about the idea...
LEE: ... of tiered seating?
MALTIN: ... no one ever wants to talk about the dirty little secret, which is that moves cost too much to go to and that's a subject that no one ever wants to address.
LEE: What about the tiered seating where you can maybe pay a little bit more, reserve your seats in advance. We're talking about fundamental changes at the theater level experience, make it more pleasant...
MALTIN: This is already happening.
LEE: ... maybe charge a few bucks more. Is it viable enough though to really change this industry and turn things around for the movie industry?
MALTIN: It's worked in several situations and several cities. There's a theater here in Los Angeles called the Arclight that's been very successful with just that policy. They charge a couple of dollars more. You reserve a specific seat. They don't show any commercials or trailers. There is somebody who greets you at the beginning of every screening and says, hi, I'm Brian and welcome the Arclight. And when we begin the film, if there's anything wrong with the projection or sound, I'll be right here. Please let me know. It's a small thing, but people like it and it's been very successful.
SERWER: Well, it actually sounds like it would be a good experience. All right, we're going to have to leave it that at that. Leonard Maltin, from "Entertainment Tonight," keep me posted on that "F Troop" project, by the way, OK?
MALTIN: I certainly will. I'll send you a postcard as soon as I hear definite word.
SERWER: Thank you.
There's more ahead here on IN THE MONEY. Coming up, bouncing back: how one couple's best laid retirement plans got derailed by a hurricane and what they're doing to pick up the pieces.
And if you have got a bright idea for retirement or you just want to sound off and drop us a line, the address is firstname.lastname@example.org.
WASTLER: Whether you're in your 40s or nearing retirement age, it's never too early to start thinking about protecting your most important investment: your home. That's a lesson many people along the Gulf Coast have learned the hard way. Gerri Willis has the story of one couple who lost their home when they could least afford it.
GERRI WILLIS, CNN CORRESPONDENT (voice-over): Ray and Joan Heiser (ph) are used to living the good life.
UNIDENTIFIED MALE: My idea of retirement was to retire, enjoy my house on the lake, enjoy my friends, my family, and also have something as far as a nest egg for my grandkids, for their education.
WILLIS: After 38 years at Xerox and AT&T, Ray thought he was set. And with Joan's savings from her career in real estate, they were ready to enjoy the fruits of their labor.
UNIDENTIFIED FEMALE: The ultimate dream retirement for me in my mind was my home. I'm a home person. I love my family.
WILLIS: But instead of the dream they now have only memories since their Lakeview home and most of their possessions were destroyed by Hurricane Katrina.
UNIDENTIFIED FEMALE: This is the building that we stayed at for the past three days.
WILLIS: This video was shot by Joan two days after Katrina hit New Orleans. UNIDENTIFIED MALE: In situations like that, I hope I never have to face that again, but you just -- you are concerned about living, you know, the hell with things, it's about living.
WILLIS: Ray and Joan are now living in Las Vegas temporarily, taking care of relatives with fewer assets and more debts. As they try to plan a very different future, Ray and Joan say their biggest frustration is settling their insurance claim. The Heisers say their home was worth at least $400,000 and they have the records to prove it. Their insurance company was offering much less.
UNIDENTIFIED MALE: We know what's in our policy. We've always taken care of our business. We've always paid our bills on time.
WILLIS: Their insurers say they're still working with the Heisers to address their concerns.
UNIDENTIFIED FEMALE: It feels like you just have no control. You have to solely depend upon someone else for your future.
UNIDENTIFIED MALE: Whether we could rebuild and replace what we have had, I don't think we can do that. It would take 29 more years that I probably don't have but we can come pretty close.
Gerri Willis, CNN, New York.
SERWER: Coming up next on IN THE MONEY, internal bleeding: a leaked Wal-Mart memo spells out a plan to cut benefit costs by hiring only healthy workers. With the company out to project a nicer image, we'll check the damage.
And it's time to hear from you as we read some of your e-mails from the past week and you can send us an e-mail right now, too, we're at email@example.com.
SERWER: Here's one way for companies to cut down on health care costs, don't hire any sick people. That may sound like a joke, but it could actually become true at the world's biggest retailer. Allen Wastler has that story and the "Fun Site of the Week."
WASTLER: Well, you had a big ha-ha this week about this leaked memo from Wal-Mart where their VP of human resources sort of outlined a plan for reducing health costs at the retailer. And one of them was, you know, well, you know, we could make part of every job physical activity to sort of scare off the sick and infirm, you know?
WASTLER: And if you read the memo, a little subtext there about eyeball candidates and make sure -- we want to shift it to the young and healthy. My inside out on this, yes, so? That's what VPs of HR do, I mean, that's their job, is to figure out how to reduce costs for the company by whacking the employees. This is what VPs of HR do. It's not that big a deal.
And you know sort of this already goes on to a certain extent in corporate America. Pretty sure during the interview, that's why you dress nice. That's why you try to look perky. That's why you try to come forward. But for Wal-Mart, which everybody is looking to smack around, it's the biggest retailer so it's a big "target," get the joke?
SERWER: Ooh! Yes, I'm sure they'd like to be described as a big "target."
WASTLER: But anyway, there is new Web site, WalmartWatch. It's out to try to get every "gotcha" you can on the retailer. And well, of course, if you're going hold applicants up to the standard, I do think the CEO and the vice president and all of the other executives have to drop, do a few push-ups too, maybe a little calisthenics before every staff meeting, you know, get it up and get it going.
LEE: These are the types of memos and information in the memo that I'm sure every company in the country, if not the world, has somewhere.
SERWER: You just don't want it to get out, right.
LEE: Yes, you just don't want it to get out, exactly. But you have to have every statistic. You're right, it is their job to do it. Unfortunately for Wal-Mart now they're having to do even more damage control. I look at everything with Wal-Mart skeptically. I will say, though, instituting a new health care plan for workers, they did that earlier this week.
SERWER: Yes, they're trying.
LEE: And that's not a bad thing.
SERWER: What about the "Fun Site."
WASTLER: Well, you know, we've often talked about the competitive threat from China and how their colleges and universities are producing students able to excel in many ways among American students. We have more proof coming up for you right here.
(MUSIC PLAYING "I WANT IT THAT WAY")
SERWER: Whoa. Is that a Yao Ming jersey we're wearing there perchance?
WASTLER: Yes, you bet you.
LEE: What's the guy in the background doing? He's not even interested.
WASTLER: You see, that's the competitive threat. He's just studying.
WASTLER: None of this is phasing him. He's just studying.
SERWER: We are quaking in our boots on that one, don't you think?
LEE: That proves Andy Warhol was right, everyone will be famous for 15 minutes or maybe 15 seconds.
SERWER: Well, yes, as long as -- what was the name of that guy with that other thing.
WASTLER: The Numa-Numa (ph) song?
WASTLER: That was another one we made fun of.
SERWER: That was a step up. That was a step up.
All right. Now it's time to read your answers to our questions about what President Bush can do to get his approval ratings back over 50 percent.
Andres wrote: "He could install a federal sales tax, exempt that tax on groceries and medical costs, and then eliminate the IRS. That way, those who spend money will carry the nation while the rest of us will fare much better." All right.
Alison wrote: "He can prove he values integrity over cronyism by firing Karl Rove. He can prove he's really for the middle class by rolling back the tax cuts for the rich. And he can prove he means what he says about true freedom in Iraq by giving all the rebuilding contracts to Iraqi companies, not Halliburton."
And Dale wrote: "President Bush can boost his ratings the easy way, he can just choose to invade France."
I wonder what Jack Cafferty would think about that?
WASTLER: Sacre bleu!
SERWER: Now for the next week's e-mail question: Will more companies follow Wal-Mart's cue in trying to hire only very healthy job applicants? Send your answers to firstname.lastname@example.org. And you should also visit our show page at money.com/inthemoney. That's where you'll find the address for our "Fun Site of the Week."
Thanks for joining us for this edition of IN THE MONEY. Thanks to HEADLINE NEWS correspondent Carrie Lee, and money.com managing editor Allen Wastler. We'll see you back here next weekend, Saturday at 1:00 p.m. Eastern and Sunday at 3:00 p.m. Eastern. Until then, enjoy the rest of your weekend.
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