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CNN IN THE MONEY

President Bush's New Budget Calls For $2.7 Trillion Spending; U.S. Scientific Superiority Is Being Threatened; Bogle Says Corporate Corruption Is Widespread; Music World Has Dark Secrets; Richard Barton Interview

Aired February 11, 2006 - 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 a look now at those top stories. Prime Minister Ariel Sharon is still unconscious, but doctors in Jerusalem say that his life is no longer in immediate danger. Earlier today surgeons removed about 20 inches of his large intestine due to gangrene. To date the Prime Minister has had seven surgeries since having a major stroke on January 4.
A large but peaceful demonstrations by Muslims today in downtown London. The rally is supposed to protest recent drawings of Mohammed considered blasphemous by Muslims and also they were protesting to denounce Muslim violence over the drawings that have erupted around the world.

In Iran, the country's president today hinted that Iran may withdraw from the nuclear treaty. The speech came during ceremonies marking the 27th anniversary of the countries Islamic Revolution.

And global adventurer Steve Fossett has a white knuckle ending to his unprecedented solo flight around the world. Fossett's experimental plane landed safely a short time ago on the southern coast of England after he declared a may day because of mechanical problems. He broke the world's flight distance record by logging more than 26,000 nonstop miles. The flight took him across the Atlantic Ocean twice.

Those are the headlines more news as it happens. IN THE MONEY starts right now.

ANNOUNCER: From New York City America's financing capital, this is IN THE MONEY.

JACK CAFFERTY, CNN ANCHOR: Welcome to the program. I'm Jack Cafferty. Coming up on today's edition of IN THE MONEY, big bills. President Bush's new budget calls for $2.7 trillion in spending. As the Republican party abandoned its long time belief in smaller government."

Plus stacked deck. Ever feel like mutual fund investing is stacked against you. We're going to talk to one expert who says it absolutely is.

And sour notes meet an author who worked in the music industry found out how crooked it is, he didn't have to work very long to find out either and he has the names of some well known recording artists that got clipped good. We'll get the dirt.

Joining me today, a couple IN THE MONEY veterans: Headline News correspondent Jennifer Westhoven; "Fortune" Magazine editor at large Andy Serwer.

So, Scooter Libby is throwing a little gasoline on a pretty well burning fire down in Washington with revelations that his superiors authorized him to release classified information to the press.

ANDY SERWER, EDITOR AT LARGE, "FORTUNE" MAGAZINE: Who would that superior be? It has to be Dick Cheney. I mean he suggested as much. What that says to me is that you are going to ask this question. Why will Fitzgerald not indict Dick Cheney? How can he not indict Dick Cheney. That's a big question. This has been smoldering for a while now Jennifer but maybe there's sparks and fire now.

JENNIFER WESTHOVEN, HEADLINE NEWS CORRESPONDENT: I have this question too, which is what does authorize mean? He believes he was authorized. Sometimes, anybody in a job you think your boss would let you do something, did he think he was authorized or was there a specific communication that we can point to?

CAFFERTY: Well apparently there was some specific communication according to the prosecutor Fitzgerald. He said that he has testimony in front of a grand jury that believes apparently little doubt about where the finger might point. The open question is and Fitzgerald was careful to point this out there was no testimony by Libby that he was authorized to release Valerie's name. This is other stuff that they are talking about.

SERWER: Here is my question. Would you ever tell a secret to man named Scooter?

CAFFERTY: President Bush the Republicans, pretty much stayed on message when it comes to tax cuts over the last five years. The GOP is also supposed to be the party for cutting government spending. But this week the president set a record $2.7 trillion budget to Congress and not all of the extra spending is to fight terrorism.

Joining us now from Washington, D.C. to talk about this, CNN political analyst and former Republican Congressman J.C. Watts. Congressman nice to have you with us.

J.C. WATTS, CNN POLITICAL ANALYST: Hey Jack, Jennifer, Andy hello.

CAFFERTY: So $2.7 trillion and contained there in are cuts to Medicare, Medicaid, education, student loans, veterans benefits, this is the kind of a budget you would expect from a come passionate conservative?

WATTS: Well you know Jack a $2.7 trillion budget; we have over 250 million people in the country, so there will be some spending if we're going to try to be all things to all people. Concerning those reductions that's interesting, I kind of liken that to my son coming in or me giving my son a $10 a week allowance and he comes in and asks me for $20 and I say no I'll give you $15 and he comes to you and says Jack, my dad cut my allowance. He's getting 50 percent more than he got last year.

I think the key in this budget is to look at if there's continued growth in Medicare, Medicaid, student loans, all of those things, it just doesn't grow as fast as some would like but in Medicare you have about, it was a proposed 8.1 percent increase and it's going to about a 7.7 percent increase. So the fact is they'll get more money next year than they got this year. I'm not sure that I would define that as a cut.

WESTHOVEN: Hi J.C., this is Jennifer Westhoven. I wanted to ask but the deficit. It looks like if the projections stick President Bush will keep his promise to cut the deficit in half by 2009. Still leaves it is at $200 billion and change right at a time when you have baby boomers starting to retire. What do you think about that?

WATTS: Jennifer we have about 68 to 70 percent of the federal government's money spent in mandatory spending programs. When you see Congress fussing and fighting over spending, it's that other 30 cents that 70 percent has been determined how it will be spent. I don't think we're ever get serious about our deficit until we have some reforms and mandatory spending programs.

We're seeing a discussion now about whether or not those programs should grow at 8.1 percent or 7.7 percent. Until we can get serious about some reforms and mandatory spending programs to make them more efficient and more effective and proper productive, I suspect we'll continue to see $200 billion plus deficits.

WESTHOVEN: I just want to have a follow up on that because I'm under the impression that the new budget has 50 percent to Homeland Security and Defense which is just a little different so those entitlement spending are less. So I wanted to ask you about that but also are we now at a time where that is just never going to change if the war on terror is something that is permanent?

WATTS: Well I think the American people are concerned about safety and this president obviously in his budget is very strong and in terms of security spending. I think it is here to stay. I think we are in a different world. I think we have to constantly ask ourselves what price are we willing to pay for safety?

Now I think that Homeland Security and Defense, we ought to hold them accountable and make sure that they are spending wisely and being efficient in the programs that they are initiating just like we do everybody else. I don't think we ought to just give it for the sake of giving it but I do think there will be a price for us to pay in terms of keeping our safety or protecting our homeland.

SERWER: Right J.C., you did some comparisons I saw here between the public sector and private sector when talk about reforms just a second ago. You're suggesting why can't the post office work as well as Federal Express? You know, are those kinds of ideas really realistic, do you think? WATTS: Well Andy, maybe not to those extremes but when you look at the private sector, ten years ago when we talked about a blackberry, it was a fruit. Today it's a hand held platform that you can get data and email and you use it as a phone and all of these different components to it.

Why couldn't we take some of the private sector ingenuity and apply it to the government and the government seems to always be on the downside of change and reform and trying to make systems work better so that's my point.

I have kids that we have spent a lot of time in McDonald's. Very seldom do you spend more than eight or ten minutes in a line in McDonald's regardless of how many people are there. That's because of their systems. Think government should always be looking for better ways to deliver services to the American people, whatever those services are, including Homeland Security and Defense.

CAFFERTY: All right. J.C. Watts, former congressman from the great state of Oklahoma the Schooners got anything next fall?

WATTS: We're going to be good Jack, look out.

CAFFERTY: All right we will be watching.

SERWER: You said that last year.

WATTS: I said that last year. That's right. I mean it this time.

SERWER: OK.

CAFFERTY: Talk to you later.

Up next on IN THE MONEY sleeping through science, young Americans seem to prefer science fiction to the real deal. We'll look at the impact that is having on global business.

Plus taking back the street. The well know industry veteran says Wall Street is failing the individual investor. Will be here to tell us why he thinks that.

Not so happily ever after, after all a new study says marriage is a smart investment but our Allen Wastler says don't rush to the alter just yet. He'll explain in our "Inside Out" segment. Stick around.

(COMMERCIAL BREAK)

CAFFERTY: From Ben Franklin to Thomas Edison to Bill Gates, this country America has always been a nation of inventors and innovators. But surprise this is changing now but not for the better. In fact growing competition from overseas and declining investment here at home is threatening our scientific superiority like never before. It is a subject that's on the cover of "Time" Magazine this week.

Joining us now with more is "Time" senior writer Michael Lemonick. Mike nice to have you with us.

MICHAEL LEMONICK, SENIOR WRITER, "TIME": Thanks for having me.

CAFFERTY: What are the implications of this and why is it happening? Why is this country sort of surrendering its lead in areas that determine the future of civilization for a better way to say it?

LEMONICK: It is happening because over the past 20 or 30 years, the investment by the Federal government in basic science research has continued to drop because we're short of money and we want to talk about spending it on other things and that's just not seen as a priority. Private industry at the same time is also stopped doing as much research on basic science and they are interested in product development and that's where they put their money.

SERWER: Michael, is it your concern though somewhat unnecessarily nationalistic? Isn't it good thing that Belgium and China have more scientists and more engineers? So what's the problem?

LEMONICK: It's good thing for Belgium and China.

SERWER: I'm saying what if we consistent, I mean do we have less scientists and they have more or do they have more and we have more and they are just catching up?

LEMONICK: No, we are out of the growth in the number of scientists that we have is demising and their growth is picking up. It matters because yes, if interesting new products are invented over there we can buy them and send the money out of the country to get them. Our economic growth over the past 40, 50 years has been dependent on American companies being great innovators. With new technology especially.

WESTHOVEN: Michael when you talk about part of this being a structure of what's going on with companies is part of it that so many scientists and research companies are going public early to get locked into this quarter and quarter cycle where they have to come up with growth and profits and they don't have long-term view to think about spending?

LEMONICK: That's exactly right. The new companies do that quickly but the old companies like AT&T, IBM are also public companies and they felt enormous pressure to deliver a better stock price and more profits in the short run and they are spending less and less on long-term investment and research.

CAFFERTY: This is a bleak picture. Got any bright spots?

LEMONICK: Well the president in the State of the Union message proposed what he called the competitiveness initiative. This is something that actually business leaders have been pushing politicians to do for a long time now. Both Democrats and Republicans seem to be behind this.

He's proposing to train 70,000 more high school science and math teachers and to double federal investment in research and maintain investment tax credit for businesses that are doing this kind of research. So there's awareness among politicians and people that make these decisions that something has to be done. That's a small step in the right direction.

SERWER: Michael again, you know how serious a problem is this? I look at the biotech industry for instance and it is thriving. It is U.S. based to a large degree. You know, aren't there things here that are still leading the world in and we're ahead in many parts of the science game?

LEMONICK: Absolutely, we are still ahead but the problem is that our lead in many, many areas especially computer science is shrinking. If it continues to shrink it will go the other way. Biotech industries, that is an industry originated here mostly but that's starting to go overseas, as well. Places like Singapore are creating new research labs and actually luring American scientists to them to do their research there. We're still in good shape today. It's the trend that's worrisome.

WESTHOVEN: You called the president's plan, I think small, a small step. What other kinds of things would you have liked to see there? What would you like other government people to come up with?

SERWER: What about the private sector? What can they do?

LEMONICK: I wish I had an easy answer. With the huge budget deficits we have now and the cuts in so many programs that the president has proposed, it's hard to imagine how the government can ratchet federal spending back up again. Private companies, if their stockholders that is publicly held private companies -- if they can convince their stockholders to hold off and wait for long-term investments to pay off, that's great. I don't imagine how that will happen.

CAFFERTY: Stockholders want to buy stock in the morning and sell in the afternoon and make 10 percent on their money. So it is the climate we live in. Mike thanks for being with us. I appreciate it.

LEMONICK: Thank you.

CAFFERTY: Mike Lemonick, senior writer at "Time" magazine.

Time now for our look ahead. Here's what's coming up this week in the world of business. Tuesday, of course Valentine's Day unless you forget. Consumers, get this number, consumers are expected to spend $13.7 billion on gifts, candy, cards, flowers and dinners out on the town. We'll get a better picture of the housing market on Thursday. Housing starts and building permit numbers will be released they come out at 8:30 a.m. Eastern Time. You want to set your alarm for those.

And also on Thursday, a big day for business of major league baseball. Always look forward to this day because it's a sign to me that winter is on the downhill slide. Pitchers and catchers report to spring training. The rest of the crew shows up a few days after that. Coming up on IN THE MONEY after the break a Spanish language television Univision network might be putting its self up for sale. We'll find out if the market is interested. It may be a big price tag.

Just because you're retired doesn't mean you belong in a museum. Our "Life after Work" segment is coming up.

(COMMERCIAL BREAK)

SERWER: Spanish language power house Univision saw a boost in share price this week after published reports say the company may soon be in play. Media experts estimate Univision is worth $10 billion but it could fetch a much higher price as a larger media giants go for the piece of the growing Spanish speaking market.

It's not bad idea in cities like New York and Los Angeles. Univision programming there beats its English language competitors in the ratings. Univision shares shot up more than 11 percent when news of the possible sale hit the street on Wednesday. Univision Communications is our "Stock of the Week." You know I find this whole thing about the Hispanic market a lot of bunk.

I tell you what, because all these people are discovering it. Hello. Wake up. It's not something that's about to happen. It's here. What are the numbers here, 12.6 percent of the U.S. population is Hispanic and by 2020 it will be about 18 percent. So to just discover it, these companies are big, established players and the Hispanic market is here and it's big.

CAFFERTY: Why do they want to sell the network then if it is doing so well in the market and the market is growing?

SERWER: Well there's a guy behind it that wants to bail out I think. Don't you, you know Jerry Perrichecko (ph) I think is his name.

WESTHOVEN: Well also I mentioned it Univision isn't just discovering it, it's NBC and Fox but companies who do this tend to see a boost in profits.

SERWER: Putting Spanish names on paint. That is really smart. I think -- sort of wake up. It makes sense.

WESTHOVEN: It's a lot of growth for a big broadcasting company.

SERWER: It is, I think the problem with this particular company is that it is an expensive stock already. And then I wonder about who will buy this company. Time Warner? We're occupied with Mr. Icon, Disney; they have their thing with ABC. You have Newscorp and CBS owned stations.

They may have conflicts there and then GE, which owns NBC, has the other one. So I just wonder where this thing is going to go. Probably some Wall Street operator will buy it and then they'll cut costs and get rid of the Spanish programming and make it English. That will save money. Something stupid like that. I'm not sure about this.

CAFFERTY: So your not going to go out and buy a few thousand shares?

SERWER: No, I'm not going to do that.

WESTHOVEN: It's up 10 percent just on speculation so that means that you really hoping for a really high premium here. They may not get it

SERWER: The other thing that is interesting is Mexican TV owns a bunch of it and so does and get this our friends in Venezuela. They have a slice of it, so there is a lot of moving parts going on here. Interesting stuff it will be interesting to see who actually ends up buying this one.

All right. Coming up on IN THE MONEY, greed Enron style may be an exception to the rule but there are more subtle practices plaguing the financial world. Out next guest explains.

Plus, consumers aren't the only ones who sometimes get a bad deal at the record store. Meet an undercover author that found out how some recording artists got the shaft, too.

A hot new Web site that tells you the value of your home and your neighbor's place, too. This is cool. Stay tuned.

(COMMERCIAL BREAK)

WHITFIELD: Hello. I'm Fredricka Whitfield. Here's what's happening now in the news.

Israeli Prime Minister Ariel Sharon remains in critical but stable conditions following emergency intestinal surgery. Doctors removed nearly two feet of Sharon's large intestine today. The 77- year-old leader has been in a coma since he suffered a stroke in early January.

And global inventor Steve Fossett has a white knuckle ending to his solo flight around the world. Fossett's experimental plane landed safely a short time ago on the southern coast of England after he declared May Day because of mechanical problems. He broke a world record with his 26,000 mile nonstop trip.

In the U.S. the northeast is bracing for a big blast of winter weather. Forecasters say major snowstorm will hit the Mid-Atlantic States later today and move northward before slamming into southern New England tomorrow up to 14 inches of snow is expected in some places.

I'll have all the day's news at the top of the hour plus a look back at the memorial services and funeral services for Coretta Scott King. That's happening at the top of the hour in the 2:00 hour Eastern Time. Now back to IN THE MONEY at CNN.

WESTHOVEN: A handful of bad apples have been weeded out of the business world but our next guest says we have a lot more work to do. Mutual fund legend John Bogle says that corporate corruption is widespread and it is having a tremendous impact on the way you and I invest.

John Bogle is the founder of the Vanguard Group; He is the author of the new book, "The Battle for the Soul of Capitalism." We're pleased to have you with us today. John I want to ask you first about big CEO pay since the 1980s this has skyrocketed. CEO can now make something $240 times what the average worker can make. That is mind boggling.

JOHN BOGLE, AUTHOR: It's not only mind-boggling but it is disgraceful. When you think the average worker's compensation in that period adjusted for the cost of living real dollars has gone from $14,900 to $15,900 when CEO are now making in real dollars almost $5 million dollars a year, it is absurd.

SERWER: Hey Jack what about the mutual fund industry itself, that obviously you know so well. A lot of scandals in the business? Has the business been cleaned up or are there still abusive there as well?

BOGLE: I think a lot of the basic abuses that were caught in the spotlight of scandal have been pretty much eliminated. The biggest abusers are subtle abuses that are hard to catch. I would say that grossly excessive management fees are costing investors tens of billions a year.

Heavy marketing expenditures which the fund shareholders pay for are drawing people in the wrong funds at the wrong time which cost investors something like $600 billion a year in the 50 percent market crash a few years back. There are plenty of subtle abuses that are still prevailing.

CAFFERTY: Jack Cafferty, John. How much responsibility does the investor shoulder in all of this? You want to invest with an outfit that has huge management fees as a portion of your investment in mutual funds or do you want to the buy Vanguard S&P 500 Index Fund and pay a quarter a point a year for management and if you look back it probably does as well as all of the ones that charge all of the money. Investing in companies where who knows who runs the place. How much responsibility is mine before I put money on the table?

BOGLE: Well surely the investor has an obligation to educate himself or herself and understand how the financial system works and simply put, the way the financial system works is that we're all average and we share the market return as a group.

If the market goes up eight percent a year, we get eight percent. Before these costs are inflicted on us by our intermediary. Those costs come to about 2.5 percent a year. Meaning in an eight percent market you get 5.5 percent and it is just not enough and it compounds away from you over time.

So yes we ought to wake up. We also have these directors of mutual funds, these fiduciaries are suppose to be fiduciaries make sure the managers are running the fund in your interests. You have a right to that. It's two sided. The industry is going wrong and investors aren't paying enough attention to it.

WESTHOVEN: All right. If I can just go back to CEO pay for a minute. It's important to me. What do you think are some of the best ways that we can do something about that so CEO's don't keep making more and more money even when their businesses aren't doing to well and stocks are going down?

BOGLE: The ideal thing and it's a tough problem, let's pay CEO's on performance and not on peer groups. We pay CEO's a lot of money because other CEOs make a lot of money. When CEO a gets a big raise, the directors for CEO b want to give him a big raise to keep him competitive.

But the reality is when the directors are paying CEOs they are paying them with other people's money, the shareholders money. You would be amazed how cheap things are when you can buy them with other people's money.

SERWER: Let me ask you a question, Jack. Is the golden age of mutual funds over? I mean back in the 90s and the 80s we had Peter Lynch over at Fidelity and of course John Nefton (ph), Windsor in your operation, there have been the scandals and now you have exchange traded funds, ETFs isn't it become a backwater even, mutual funds?

BOGLE: Well I think there's a lot of evidence that that's what's happening but I believe it's happening because we have strayed from our roots and this used to be a relatively small managed company run by investment professionals and now at relatively low costs and now it's an industry dominated by giant companies in business to make a return on their capital and not to make a return on your capital as a mutual fund shareholder.

If we go back to our roots as an industry that's trying to serve the individual investor I think we can be successful but even ETFs I mean they are a departure. What do you do with ETFs? You trade them every day. That's the way the pattern is. Three billions every day are traded in -- $10 billion every day are traded in the Standard and Poor's spiders and the NASDAQ cubes.

CAFFERTY: What about government's responsibility to kind of watch out for the little guy? Are they doing the job they're supposed to be doing? I think I know the answer but I want to hear you say it.

BOGLE: The government has tried to do the right thing, they were very late. The federal government was very late in getting into the fund scandals I think in excusably late but most recently they have been trying to give the body of fund directors, not the management company directors but the independent directors of mutual funds more standing to represent the interest of the fund shareholders.

They want to have for example a chairman of the board of a fund who is negotiating with somebody else as chairman of the board of the management company to be independent but the industry is fighting that tooth and nail and the decisions left to a courtroom down in Washington, D.C. at this very moment.

WESTHOVEN: John Bogle, author of "The Battle for the Soul of Capitalism." We all hope we all win it. Thank you so much.

BOGLE: We the investor. I'm the investor.

WESTHOVEN: There is more to come here on IN THE MONEY. Up next everyone makes mistakes. Even big-time recording stars. We'll talk to a former record producer about some costly career mishaps and how we can all learn from them.

And later training day. We'll introduce to you two former railroad employees who are reliving their path by volunteering at a museum.

(COMMERCIAL BREAK)

SERWER: The recording industry pulled out all of the stops this week for the annual Grammy Awards. But behind the fairytale success stories and the platinum albums and platinum hair, the music world had some dark secrets.

Our next guest is a music industry consultant and former record producer and author of a new book, "Million Dollar Mistakes." Moses Avalon joins us now. Moses first of all, I have got to ask you. You are wearing a hat and glasses; Moses Avalon is a pseudonym, what's up with the disguise, man?

MOSES AVALON, AUTHOR: I'm just hung over from my Grammy party, that's all.

SERWER: Come on.

AVALON: Plus you got the lights are so bright in here. What's up with that?

SERWER: You got to get shades.

AVALON: Way too early for the music business.

SERWER: Listen to you dude. Now let me ask you, are you hiding from someone?

AVALON: No. I wouldn't say that. I'm on television.

SERWER: Fair enough. We'll leave it at that. You are somewhat in disguise though. Let me ask you, so how bad is the record industry? It used to be life with everything is it still that way?

AVALON: Well there's been a lot of change in the music industry. There's a lot of business structures because of the Internet and because iTunes, because of iPods and all kinds of new media. Record companies are definitely afraid of some of these things and are trying to find ways to fit into it.

CAFFERTY: Let's get right to the dirt. I want names, recognizable names and embarrassing information about them. So give.

AVALON: Sure. Well, you know, in the book I outline a whole bunch of big ones and ones you never heard of like a guy who sold all of the rights to a hit song called "Girls on Film" by Duran Duran he sold all the rights for about $1,000.

CAFFERTY: Was that the industry's fault or is that just an indication that he's a moron?

AVALON: It would be great if it were that simple if everyone was dumb and it was black and white but many times people are misled by trusting the wrong person. You know, a big problem in the music industry is that we overpay for talent. In the 80s and 90s, maximizing earnings and stock manipulation was the game and Wall Street played this game by taking the company's best year and going public with it and using the press to manipulate that stock.

In the music industry the pop star version of this is to take your best year, hit your record company up for enormous advance and then make yourself so unpopular the record company decides they want to drop you and with someone like Michael Jackson for example it kind of backfired because he still owes so many records close to three quarters of a billion dollars that they have advanced him and his reputation is in the sewer. He may have to give that money back. A million dollar mistake on both sides.

SERWER: I know you have a good Billie Joel story. I want to get to that in a minute. But first of all I want to ask you about rock 'n' roll music itself. You suggest that it is a just going to be something like swing music or something like that. I guess maybe the Grammys pointed that out U2 not exactly cutting edge green day, it is a retro group basically. Is rock dead?

AVALON: I don't know -- I didn't say rock was dead. Pop music as a format that we understand it, the 3 1/2 minute song, I'm not sure it's dead but it may be moving into the same place as jazz, classical and other things. It may take another 20 or 30 years but I do believe it's going in that direction because of how music is being sold and listened too.

In the industry we use the term liquid music or wallpaper, which means that music, will exist everywhere but not be noticed. Kind of like when you shop in the supermarket. The good news is this means we'll sell more music into more venues and making more money. The bad news is it means music becomes insignificant. Buying a new album of your favorite artist was a personal event.

You would listen to the record. Turn off the phone. That was it. Now you can come introduced to a new song by a ring tone and it exists in your hard drive. There's no real pride in your hard drive the way there was in your massive record collection 15, 20 years ago.

CAFFERTY: I take pride in my hard drive. Besides the trouble he periodically has keeping his car on the road out in the Hamptons, what's the Billie Joel story? AVALON: Billy Joel signed a deal with his manager back in the early 70s and traditionally manager deals run by year. He may be your manager for five years and the contract might read that I make 20 percent of everything you do for five years and then I might make 10 percent after the contract is over for a couple years.

In Billy Joel's case the contract was structured based on number of albums and not number of years. And an album can sometimes take two to three years to do. So a ten-album contract can become a 20- year contract. Billy Joel ended up giving up probably close to $15 or $20 million that he didn't have to give up because of that bad deal.

WESTHOVEN: All right Moses. Thank you so much.

In this week's "Life after Work" segment, staying on track. Harry Eck and Harry Wilgar spent their careers working on Baltimore and Ohio railroad. Now they're retired but their reliving their past by volunteering at the B&O Railroad Museum in Baltimore.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: If you have good eyes, I'm in there, 7594 is the last steam locomotive that we built. Brand new one.

WESTHOVEN: Harry Eck and Harry Wilgar spent their working lives building and running trains.

HARRY WILGAR, RETIRED RAILROAD WORKER: I was in front as a machinist when I came here in 1947. I was an 18-year-old brat that knew it all.

WESTHOVEN: Both Harry's still work together but now they're back at the tracks as volunteers at Baltimore B&O Railroad Museum.

HARRY ECK, RETIRED RAILROAD WORKER: Well after I had been retired about five years the management asked me to come down and help prepare a locomotive that was going to be recognized as a national engineer -- civil engineering landmark. I just stayed. They started a program and I joined that and here I am 15 years later.

WILGAR: Put your pajamas on because we're going to talk all night long.

WESTHOVEN: With more than 80 years of experience, the two Harry's share their stories about life on the railroad with visitors.

WILGAR: Well for me I enjoy meeting and talking to people in here and I have knowledge that I can also tell to people that do come in here and we can help them understand what railroading is all about

ECK: That's the high point of the week for me.

(END VIDEO CLIP)

WESTHOVEN: Still to come on IN THE MONEY, get real about real estate. A new Web site puts a price on your humble abode without the help or the cost of a real estate agent.

And later a different take on an Oscar hopeful. "Top Gun meets Broke Back Mountains," that s Our "Fun Site of the Week.

(COMMERCIAL BREAK)

SERWER: Richard Barton is hoping to change the real estate business like his brainchild Expedia helped change the travel industry. His new site Zillow can give you an estimated value for your home in matter of seconds, no real estate agent needed.

Richard Barton, chairman and CEO, Zillow joins me now to explain how it works. Richard welcome to the program. First off congratulations sort of to you because you kicked off your site and there was so many users it crashed a bit. Is it back up to speed yet?

RICHARD BARTON, CHAIRMAN & CEO, ZILLOW: It is back up and stable. We were just overwhelmed to the response this very powerful concept of trying to place a value on every home in the country and give people a bird-s-eye view of that. People just rushed the gates. But we're back up and stable. We are hoping it continues that way.

SERWER: Tell us how it works.

BARTON: It works by going to Zillow.com it is a beta right now, you go to Zillow.com and you type in your address or the address of a home you are interested in perhaps making a bid on and we will come back with a map a satellite map and a birds-eye view with a current market valuation on every rooftop in that neighborhood. It is a completely new way to look at a neighborhood. It's like a Kelly Blue Book for homes is what we're trying to do.

SERWER: Now where is this information from Richard? Is it secret information or did you compile public information?

BARTON: We compiled public information. Most of it comes directly from counties that report home transaction information and bathrooms and bedrooms in many cases and square feet. We compile that information and then put a layer of interesting advanced mathematics on top of that so we can take a look at all of the historical transactions in your neighborhood and come up with a very educated guess for what your home is worth.

SERWER: How do you make money? Do you use the site -- does the consumers use the site and pay you or is it ad driven? How does that work?

BARTON: It's completely free. No registration required to get into the site, which is kind of unlike a lot of real-estate sites out there on the Internet. We make our money like you make your money. We are an information and content company. We sell ads around that information and content. It turns out that people who are shopping for homes or selling homes are very attractive audience to reach.

SERWER: We like content companies here. Let me ask you, do you feel like the concept is nosey? Are their privacy issues? Have people talked to you about that?

BARTON: There is a lot of snoop appeal to this product. Beyond my expectations people have really engaged with this for the entertainment value. I hadn't really anticipated that. There are some privacy issues but we're treading very lightly on this.

We think it's important to have transparently to have properly functioning marketplaces. I'm not just being grand here, it is imagine going to buy a stock and not being able to see what the last ten trades traded at. We're trying to do is throw open the curtains and let a little sunshine into this market that has been a little bit in shadow and fog until today.

SERWER: All right. Well Richard you mention entertainment value and I can attest to that I've been on your site. It's a lot of fun to use. We'll leave it at that. Richard Barton, chairman and CEO, founder of Zillow.com. Thanks for coming on the program.

BARTON: Thank you.

SERWER: Coming up next on IN THE MONEY, love American style. A new report says taking the plunge can boost your bottom line. Allen Wastler of Money.com explains why he is not so high on that notion.

Plus it is time to hear from you as we read emails from the last week. You can send us an email right now too we are at INTHEMONEY@CNN.com.

(COMMERCIAL BREAK)

CAFFERTY: Valentine's Day is one way to get people to spend a lot of money but getting a divorce is another. I know. Web master Allen Waster joins us now with an inside outlook at love, marriage and the bottom line. That's the Ken and Barbie joke. The divorced Barbie she comes with everything Ken had.

ALLEN WASTLER, MONEY.COM: I went in search of actually facts, because we all sort of infer that this may be the case and believe it or not there's been, I have it right here a recent study looking at basically the rate of return on marriage and divorce. You know what?

Sure enough for married people they tend to make 16 percent more and gain 16 percent every year and they tend to have an overall net worth that's 93 percent greater than your average single person. I called up the professor that did the study Mr. Jay Zorkorsky (ph) and said why is that? He said well you know basically economies of scale. Two people can live cheaper than one person.

WESTHOVEN: I got to pay all of the bills myself.

WASTLER: I started to think about this. There's cost that are not involved in this. Start up costs. All right. If this was company and we were putting it on the spreadsheet, I want the costs up. Every Valentine's Day you spend an average of $100.89 this year; you have different dates, all the courtship. The wedding. And then maintenance costs. And the average expenditures go up, too. I can get by on just regular -- no. We have to have leather one. All of these costs go up. That would bring the rate of growth down.

WESTHOVEN: Single people have startup costs, too. They just fail.

WASTLER: If you become single, divorce rate that net worth, it goes in the opposite direction 77 percent according to ...

SERWER: Is it true, Jack?

CAFFERTY: Yes, it is. I've been married twice. I'm still married to the second wife. Lovely relationship, dear. I'm very happy with it. But, when the first one went south, I was out the door with the clothes and golf clubs and that was it.

SERWER: Someone got the gold mine and someone got the shaft.

CAFFERTY: She got the gold mine and I got the shaft. So the message here is from an economic standpoint if you can work it out, work it out.

WASTLER: Yes basically.

CAFFERTY: What's the "Fun Site of the Week?"

WASTLER: Well "Brokeback Mountain" the movie about the gay cowboys has been in the news a lot lately. What if other movies were sort of portrayed the same way. Let's look at a popular one.

SERWER: Look at that. Did you see that look? This movie was erotic.

CAFFERTY: That's silly.

SERWER: I'm offended.

WASTLER: It's been going on reediting a lot of old favorites. It's all done in fun.

CAFFERTY: It is time now to read your answers to our question of the week about whether could you find all of the things you need without big stores like Wal-Mart.

Glenda wrote, no but she also wrote about her unusual lifestyle. "The only think I buy at Wal-Mart is insulin. My husband and I bake our own bread and have filled 500 to 600 jars of fruit this past year. We also make our own Christmas gifts."

Now Karen in California wrote, "There are things at Wal-Mart that I can't find anywhere else. Wal-Mart also seems to be the only chain that understands that women come in a variety of sizes. And I also need the convenience of finding things in one place rather than take the bus to six different stores." And Allison wrote, "Without stores like Wal-Mart, we wouldn't need half the stuff we buy. A typical family goes to Wal-Mart for groceries and walks out with those groceries but also shower curtains, candles, and DVDs they could do without. My family can do without Wal-Mart because we only buy the things we need."

Here is next weeks email question of the week, "Did you and your children learn any real job skills in high school?" Send your answers to INTHEMONEY@CNN.com. You should also visit our show page at MONEY.com/inthemoney, which is where you will find the address of our "Fun Site of the Week." "Top Gun," "Broke Back Mountain."

Thank you for joining us for this week's edition of IN THE MONEY. My thanks to Headline News correspondent Jennifer Westhoven, "Fortune" Magazine editor at large Andy Serwer and Money.com managing editor Allen Wastler.

Hope to see you back here again next weekend, Saturdays at 1:00, Sunday's at 3:00. Enjoy the rest of your weekend.

(COMMERCIAL BREAK)

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