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CNN IN THE MONEY
Middle East Crisis Hurts Financial Markets; Shrinking the Deficit While Spending; America's Highway System Turns 50 This Year; Nielsen Will Track Viewing of Commercials
Aired July 16, 2006 - 15:00 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: Welcome to the program. I'm Jack Cafferty. Coming up today's edition of IN THE MONEY: fighting in the Middle East rattling the financial markets this week, and it isn't just about the price of oil. We'll take a look at whether the markets can bounce back from the initial shock.
Plus, how to shrink the deficit and keep on spending. President Bush is showing off new budget statistics. We'll see if he's found a deficit fix or a way to make the numbers look prettier than maybe they really are. Here's a hint, the latter.
And the road to riches. America's fast food and hotel chains were borne on the highway system as the network turns 50. Find out if we're better off for it?
Joining me today, a couple of IN THE MONEY veterans, my pals, Jennifer Westhoven and Andy Serwer. The situation in the Middle East is getting tense, as we went to press, as they used to say in the old newsrooms, Lebanon had been virtually isolated by the Israeli military, they blockaded the ports, they've blown up the airport runways and they've bombed all of the bridges on highways leading in and out of places like Syria. What's their agenda and what's the United States' role in this going to be at some point?
ANDY SERWER, CNN CORRESPONDENT: That's the question as always with these problems. How do we respond? Where is the U.N.? What are they doing? What does the U.S. do? Do we consult our Western allies and try to respond somehow? We don't have a lot of leverage.
JENNIFER WESTHOVEN, CNN CORRESPONDENT: It's interesting that the Bush administration, which earlier just acted on its own is now going for talking to different parties, we're seeing that happen with Russia in all kinds of different ways, now with North Korea, so at least we've set sort of the stage work to have talks with lots of other countries and get some kind of a multinational force to start dealing with this diplomatically.
CAFFERTY: On the other hand in the United Nations, last week, the United States voted against a resolution to censure Israel for its incursion into Gaza. So, some of that made-nice with the other countries is maybe a bit of a two-way street. When it comes to Israel, we were the only country to say no.
SERWER: Yeah and you know, as you're speaking about this, the question about whether we go it alone or not, you know, "Time" magazine had a cover story "the end of cowboy diplomacy" from the president, but (INAUDIBLE) is it really there?
CAFFERTY: I wish we'd have had the picture of the magazine cover, it's one of the great magazine covers I've ever see.
SERWER: Right. Very cool.
CAFFERTY: There was this great big 10-gallon Western hat and a little bitty pair of cowboy boots underneath, that's all you could see.
CAFFERTY: Telling. All right, it bears watching. Earlier this week, it was terrorist attacks on crowded trains in India. It's been a tough week around the world. Later, it was Israel's decision to move back into Lebanon in response to attacks from Hezbollah, and the kidnapping of soldiers. For the markets, it was a case of pick your poison and investors were pretty rattled. The markets were headed down right straight across the board during the latter half of the week. Oil prices hitting record highs.
Joining us for a look at whether this is the beginning of a long news-related sell-off on Wall Street or a bump in the road is Greg Valliere who is the chief strategist at Stanford Washington Research Group. He joins us today from us San Francisco.
Greg, it's nice to have you here, this week especially. There is a lot going on, conventional wisdom is Wall Street likes a wall of worry. Well, they've got one.
GREG VALLIERE, STANFORD WASHINGTON RESEARCH GROUP: Yeah, I hate to hate to start our conversation today by issuing a cliche, but it's a true cliche that the markets hate uncertainty and I think there are a lot of big issues that won't be resolved quickly such as does Syria get involved, does Iran get involved? This could persist for awhile. Some other incidents like a train bombing in Madrid are over the market's recover. This story will have legs, unfortunately.
WESTHOVEN: We have so much concern right now, where the price of oil is trading as sort of a proxy for what's going on in the Middle East and we haven't had a major storm yet. If we get oil to $90 a barrel, is the world economy going to be able to handle that?
VALLIERE: Probably not, Jennifer. I think, though, trying to find a silver lining somewhere, there is one positive story. I think the bigger impact is going to be on GDP, some inflationary impact, but a bigger impact on growth. If that's true, I think the chances of improved in the last few days that the fed is finished, the bond market rallied because it's a safe haven and who'd have thunk it, maybe this is a good story for housing. Maybe the housing crash won't happen because we're going to start looking at interest rates coming down quite a bit.
SERWER: Greg, we were talking about this at the open of the show and this is, what can Washington do and how do we respond to violence that drives up the price of oil that wrecks ours economy?
VALLIERE: Sadly, Andy, I don't think Washington can do very much at all. The president's credibility in the Mideast is not great, as we all know. I don't think we're going to open up the strategic we petroleum reserve. You know, if oil goes over $100, all bets are off, but right now, we're not opening the strategic petroleum reserve and I don't see this president talking about any big sacrifices so there'll be intense diplomatic activity, but I don't see any panaceas here.
CAFFERTY: How bad could this Israeli/Lebanon/Gaza thing get? What's the downside to that situation?
VALLIERE: Not that I'm predicting it, Jack, but the downside clearly is Syria and even more ominously Iran. I mean, the leader of Iran has said some breath-takingly anti-Semitic things against Israel, like -- I mean just recently, in the last couple of days he says "now we have to wipe Israel out." He keeps saying that, you know, that is the meltdown scenario if the Iranians get involved. Again I'm not predicting it, but I think even the threat of that is going to keep upward pressure on the price of oil.
WESTHOVEN: Is oil the Achilles Heel of our economy? It seems we have a great military and this is the big chink in the armor, what should we be doing about this?
VALLIERE: Well, I mean if I was god for a day, I mean I would have tougher auto efficiency standards, I'd drill in Alaska, there's so many places where we can explore, there's so many things we can do, but Congress and Washington is largely paralyzed. This has become a theological issue between the two parties. So unfortunately, there's not a lot we can do on energy now. One other thing, I'd probably take a serious look at nuclear. There are lots of things we can do, but we're doing very little.
SERWER: If you were running for election, and you were a congressman, Greg, coming up in the midterms what, would you do here? I mean, do you talk about the war? Do you talk about the economy? I mean, does this have everyone sort of we drawing their playbooks at this point?
VALLIERE: That's a very good point and history would show, in the last few decades, that when there's a crisis, and this looks like it could be a genuine crisis, the party in power usually benefits. The democrats have shown an inability to sell their story. It's still unclear what they would do in Iraq. If this crisis persists, the party in power could actually be helped a little bit.
CAFFERTY: You know, I was looking at some late poll numbers on Friday as we got ready to tape this show. The approval rating of Congress is 27 percent and the approval rating in terms of the direction this country is going in is 30 percent. These are as dismal as it gets. It makes me wonder if this midterm election might be a bit of a watershed event for this country. Will, in fact, the voters vote the rascals out or will all the incumbents get reelected like they always do?
VALLIERE: Well, the dirty little secret is that both parties have rigged the system through gerrymandering of districts to guarantee their reelection. You almost have to be under indictment to lose you House seat. So, I think it's unlikely that the Senate would go back to the democrats and I still think the republicans will narrowly keep the House as well because they've rigged the system.
WESTHOVEN: I just want to talk a little bit about gas prices before we wrap up. It looks like they're about to hit $3 because we have this spike in oil to a record level, and now we've suddenly got these developments going on in the Middle East. How worried are you about consumer spending? It's supposed to be the lifeblood of the economy and we're seeing Wal-Mart say high gas prices are starting to hurt things.
VALLIERE: You got to say, Jennifer, that an economic slowdown in moderation is virtually certain. It's -- the question is how much are we going to cool? But I think consumers' disposable income will take a hit, I think this economy will soften and that ain't a good story for corporate earnings.
SERWER: Greg, quick prediction about the Federal Reserve and rate hikes. Do you think we're done?
VALLIERE: I think as more and more people worry about a cooling economy, yes. The thing to watch for, obviously next week, is Ben Bernanke who'll be testifying on the 19th. That's going to be crucial and I think he'll indicate they're about done.
CAFFERTY: Well, let's hope he does a better job of conveying his intentions to the listening audience than he has in the past. Greg, we got to leave it there thank you.
VALLIERE: Great to see you guys.
CAFFERTY: Always a pleasure. Greg Valliere, chief strategist, Stanford Washington Research Group, joining from us from the city by the bay. When we come back on IN THE MONEY, the have and have not. President Bush likes the new numbers forecasting a lower budget deficit. See what needs to be done to keep the stats down.
Plus short timers, the Army is canceling its Iraq deal with mega- contractor Halliburton. Gee, can you tell if the elections are getting closer? We'll find out if it's hurting the stock price of Halliburton. And later, where food got faster, the quick roadside meal came of age on America's interstate highway system. As that road network turns 50, see how it transformed the nation and its way of doing business.
WESTHOVEN: If you remember the last time the federal budget deficit was shrinking, you're doing better than we are. But the White House, projecting this week the deficit's actually going to drop in fiscal 2006. President Bush says his tax cuts are making it happen. Democrats and some fiscal conservatives think the deficit is still out of control. Robert Greenstein's going to give us his take on who's right. He's director of the Center on Budget and Policy Priorities, this is a nonpartisan organization out of Washington D.C.
Welcome to the program. My first question, president taking some credit here, does he get to do that? Is that fair?
ROBERT GREENSTEIN, CTR ON BUDGET & POLICE PRIORITIES: Not really. The news here is simply that the situation isn't quite as bad as we had thought earlier in the year. The president's trying to say the economy is booming, the deficit's under control, and his tax cuts are reducing rather than increasing the deficit. But when you look at the hard numbers, none of those three things is really true.
The economy always grows after recessions. It's growing more slowly in this recovery than in the average post World War II recovery. We've had the biggest budget deterioration from the end of World War II from sizable surpluses five years ago to deficits still projected at $300 billion a year and while tax revenues are coming in higher than the president predicted in February of this year, tax revenues for the current year are $300 billion lower than the White House had predicted for 2006, back at the start of the administration. If the tax cuts were working and reducing deficits, we'd have higher revenues than were predicted a few years ago, not $300 billion lower, and we wouldn't have had the biggest budget deterioration since the end of World War II.
CAFFERTY: Do the deficits numbers that the president was talking about include money for Iraq, Afghanistan, and Katrina?
GREENSTEIN: Yes and no. The numbers the president has put out for the current year include money for all of those things, but the president released this week also had forecasts of what the deficits would be for each of the next five years. And after 2007, they've left out most of the money for Iraq and Afghanistan, even more noteworthy, after 2006 they left out all of the money to continue relief what's called the "alternative minimum tax." And if there's one thing we have bipartisan consensus on in Washington it's that this alternative minimum tax will not be allowed to invade the middle class and raise average families' tax bills, but the president's deficit forecast for every year after the current one assume that the AMT, the alternative minimum tax, will invade the middle class, we all know that's not going to be allowed to happen. The president doesn't favor it himself, so that the deficit forecast after the next year or two aren't worth much.
CAFFERTY: So, is it too harsh to suggest that they're lying to us about the deficits?
GREENSTEIN: I'm not sure I'd use the word lying. I'd say there's an all of lot of spin going on here. You know, one of the things I thought was fascinating was the president on Tuesday made a statement, in the White House, that the tax cuts were more than paying for themselves. His budget office put out this big document, if you read the document carefully, and looked at all the numbers, which people don't always do, you find buried in it, an analysis in which the White House's own best case scenario is that the tax cuts will increase economic growth by an amount that would bring in enough tax revenue to offset one-tenth of the cost of the tax cuts, leaving 10 years from now nearly $300 billion a year in extra cost deficits and debt still in place. Their own numbers don't back up the spin they're putting on them.
SERWER: Robert, I'm not going to ask you to use the "L" word but is the president guilty perhaps of playing the expectation game? After all, isn't this the third year in a row that all of the sudden, great news! The deficit's not as bad as we thought?
GREENSTEIN: No question about it. Every year for the past few years, the president has started the year by predicting much bigger deficits than all the other budget experts said would occur. Then in July they do a big media event saying, "our policies are working, the deficit is lower than forecast" and there's one more round to come. We actually believe that the deficit this year will be about $275 billion, not the $296 billion they estimated this week, the reason we think they didn't come all the way down is the final numbers will come out in October, a few weeks before the election, and we think they'll do another media spin at this point.
WESTHOVEN: One of the things I noticed is that it seems analysts are saying the reason things look better than they do is because corporate America is paying more taxes and wealthy Americans are paying up a lot more taxes, I think they're up 19 and 11 percent, respectively, and if you look at the middle class, they're not paying a lot more taxes. Was it always like this, when you look at the breakdown? What's happening in our society? Is this the way it was always spread out across the spectrum?
GREENSTEIN: Well, we need to be clear about what's going on. After recessions, the economy grows, and we really like that growth to be broad-based. We like all Americans to share in it. The current recovery is very unusual. When the economy grows it generates an increase in income, in the current recovery, the share of that increase in income that's going to corporate profits is larger than in any other recovery since the end of World War II. The share that's going to wages and salaries is lower than in any other year since the end of World War II.
The degree to which incomes are rising at the very top of the income scale is huge. The average American in the middle of the income scale, for four years in a row, treaded water or actually didn't even have their income keep up with inflation. So the main reason that more tax revenue is coming in from corporations and people at the top is that they're getting a larger share of the income in the country.
People at the top are actually paying a significantly lower percentage of their income in taxes than before, the average tax cut is worth over $100,000 a year for people with million-dollar incomes. But because there's so much more income at the top and in corporate profits, more revenue is coming in from that part of the economy.
CAFFERTY: Mr. Greenstein, we have to leave it there. It's fascinating stuff. The next time you're on the show we're going to discuss the difference in the definitions of the words "spinning" and "lying."
SERWER: That's another subject for another day.
CAFFERTY: Thank you very much for being with us.
GREENSTEIN: My pleasure.
CAFFERTY: Robert Greenstein, he's the executive director of the Center on Budget and Policy Priorities. There ain't no difference.
Now it's time for this week's look ahead. On Wednesday and Thursday, fed Chief Ben Bernanke's going to make his semi-annual appearance before both houses of Congress and testify on monetary policy. Members of Congress are hoping that they'll give them a solid handle on the future of where interest rates are headed.
Also on Wednesday the government releases a Consumer Price Index for June. The CPI a key inflation report, it helps spark a major sell-off in the stock market when it edged higher than expected in April.
And the catch-all Leading Economic Indicators report is due Thursday, LEI as it's called, tries to get a handle on the future of the economy by averaging data like gas prices and unemployment.
You can keep up with all of the economic and market news by logging on to CNNmoney.com or you can call Andy Serwer at home, and we'll be happy to answer your questions, we'll give you the number later in the broadcast.
SERWER: Yeah, put that up on the screen. Would you?
CAFFERTY: Coming up, the party's over of Halliburton, the Army's going to allow other companies to bid for the job of feeding and clothing our troops in Iraq. We'll see how investors are reacting. And oh yeah, have you noticed the midterms are getting closer?
Plus, Men are from mars, women from Madison Avenue. I know this to be a fact. Alan Wastler has a theory about who's running your TV remote, see how that could put spin on a new move by Nielsen.
And also ahead, the long road to the big box: As the interstate highway system turns 50 years old, we'll look at how it's changed corporate America. Stick around.
WHITFIELD: Have been stranded in Lebanon a long with many Americans who are also stranded there, U.S. efforts are under way to try to get many of the 25,000 Americans who are stranded in Beirut and other parts of Lebanon out of that country.
Now let's see if we have Nic Robertson back. Nic, are you there, in Beirut? All right, we're going to try and reconnect with Nic Robertson there in Beirut, where the crises in the Middle East only intensifies by the moment with activity taking place in Beirut in the suburbs in southern Lebanon, as well as in other parts along Israel.
We'll break in again if we get any more developments. For now we go back to IN THE MONEY.
SERWER: After the army announced it would end Halliburton's exclusive logistics contract in Iraq; the company's stock only fell less than 1 percent. But can Halliburton keep it going in what's been a great year that makes Halliburton eligible for our "Street Talk" segment this week.
You know Halliburton is a very misunderstood company with a lot of different wrinkles. Yes Dick Cheney was the CEO. Yes it has a huge contract business in Iraq but it is also an oil field services business. It has a lot of different pieces, it was bankrupt, now it is coming out, going to do an IPO but it has also been a great stock for investors.
WESTHOVEN: Years of complaints, $1 billion that's missing in terms of the audits, the army auditor --
SERWER: You had to bring that up.
WESTHOVEN: It is crazy and yet they're ending this contract shorter than it was supposed to. The spin is great. KVR said their work was nothing short of amazing and the Pentagon said oh --
CAFFERTY: You don't suppose the announcement of ending the contract earlier than usual would have anything to do with the midterm elections now, do you? I mean, come on! How dumb do they think we are? Well, let's don't answer that question. The answer is pretty stupid I think. The stock's not going anywhere as long as Dick Cheney the former CEO of this company is the vice president of the United States. Is it?
SERWER: Well, that's one view, probably a correct view, but you know, it's also in the oil business and the oil business has been doing very, very nicely this decade and that has a lot to do with the fact that this company has been going up, what was it, nine bucks in '02, it is now at $75. Can you imagine? And for all of you Democrats out there, if you can't beat them, join them. I mean if you don't like what's going on in the world, buy the stock for goodness sake. It seems to be going up and up and I'll tell you when they finally spin off this KBR thing, this might make the company easier to understand as well, and you know, they are going to lose some business here because 24 percent of the revenues are from Iraq. OK? But that means 76 percent of the revenues aren't. So you got to look into this thing a little bit, but basically, I think you're right, Jack, it probably isn't, shall we say, a sweet spot, right.
CAFFERTY: And after the elections are over, I mean, who's to keep them from going --
SERWER: They actually are allowed to bid on some of those contracts and I think the bidding will happen in November.
WESTHOVEN: There's also outdoor auditing.
SERWER: That's true, lots to talk about.
Coming up on IN THE MONEY, the coast-to-coast food court, the interstate highway system sets the stage for America's big roadside chains. We'll look at how a 50-year-old idea transformed the look of the land.
And don't worry, honey, I think we can walk to the curb from here. Test your parking skills with our "Fun Site of the Week."
CAFFERTY: America's interstate highway system turns 50 years old this year. Whether you love it or hate it, you can't escape it. The system is the pathway for the stuff you order online; it is the incubator that hatched the big fast food and hotel chains. The interstate made it easier to get to different places all around this great land of ours and it made those different places look more or less the same.
Dan McNichols is the U.S. interstate highway expert and he is here today to talk a little bit about how the system has changed this country in so many ways. It's nice to have you with us, Dan. Welcome.
DAN MCNICHOLS, U.S. INTERSTATE HIGHWAY EXPERT: Jack, it's great to be here, thank you.
CAFFERTY: One of the outgrowths of World War II, which was arguably one of the horrible events of mankind in all of its history, was without that war we may not have the interstate highway system, that President Eisenhower who was General Eisenhower running the campaign in Europe developed something that they described as autobahn and brought the idea for the system back from the European theater, right?
MCNICHOLS: Exactly right. The autobahn was designed to help move troops to and from the borders and Germany. When Eisenhower was slogging his way across Belgium and northern France, when he finally got to the autobahn system his troops got ahead of the surrendering retreating Germans and that impressed Ike.
SERWER: Dan let me ask you, everyone knows it's a great accomplishment and really helped our country grow but isn't it also true that the interstate highway system really put the kabash on the growth of mass transit in this country and really put us behind the eight ball when it comes to wean ourselves from foreign oil and gasoline. It's kind of a problem, isn't it?
MCNICHOLS: It is, and it was a reason why we saw such a damage to the infrastructure of the urban areas, both physically, going through neighborhoods and also derailing a lot of those trolleys and those mass transit systems. But what's happening now on projects, you see interstate highway projects specifically is this bundle of money to also build up light rail. You see it in Salt Lake City, you see in Denver, as well as Boston.
WESTHOVEN: So we built this thing to move missiles and troops. Did we ever really use this for that or is it just a great place for McDonald's to mushroom up?
MCNICHOLS: Good question. We definitely used it to move missiles. The minuteman missiles out west especially were moved from silo to silo to keep the Russians and the Chinese guessing about where they were and the designs of the bridges allowed these huge trucks that carried these missiles to go under the interstate bridges. They needed 16-foot clearances and even the missile carriers were designed to drive on the interstate system's 12-foot-wide lanes.
CAFFERTY: Take a look at the future a little bit if you would. I read a report the average American uses the interstate highway system spends 90 minutes a day on those roads commuting back and forth to work. With the growth of the population of this country, and the lack of building a new interstate system, the outlook that I read said its probably only going to get worse. What needs to be done, in your opinion, to at least stop the lengthening of that commute time or is there anything that can be done?
MCNICHOLS: Well, you're dead-on, on this. The system was built for our grandparents, and it is now overused. It's under funded. People are driving about 4 00 percent more miles with 300 percent more cars than in 1956. And the only thing that they can do for a quick fix in Washington is to let more money go to fix the interchanges. That's where the chokepoints are that would be a band-aid, but truly what is missing in Washington is the leadership that Eisenhower offered to build and lead and create this remarkable system.
Only 2 percent of our entire interstate highway system our entire network of roads, 4 million miles is the interstate system itself and that 2 percent of roads, the interstate systems, carry 25 percent of all of our traffic. We depend on it for everything.
SERWER: We talked about the growth of businesses like McDonald's and Holiday Inns, based on, to a degree, the U.S. Interstate system. Is that growth sort of tapped out? Is there any way that the highways are going to continue to change business in the United States? MCNICHOLS: No, that growth is just getting started, in my opinion. We have $9 trillion traveling over the interstate system every year. It's like a brick and mortar stock exchange and that trade on the interstate system is vital to companies not only like McDonald's and Holiday Inn that got their start along the interstate system, these founders of these companies flew over the construction sites pinpointing where they wanted to build their empires but now Wal-Mart, U.P.S., even Starbucks, believe it or not in Alabama putting 20-foot-signs along the interstate system, their growth is dependent on the very system these other companies grew up along.
WESTHOVEN: Dan, before we let you go, you're talking to us from Boston, they are having something of a highway fiasco, shall we say, it went from a slow and expensive to deadly. Is this the worst highway project ever?
MCNICHOLS: No, it's a tragic, it is a dark day for the people in the civil engineering infrastructure world. The tunnels I don't believe are safe and the governor has asked the chairman to step down. It's a grim day because these tunnels are over built, they're not safe I wouldn't drive through them.
WESTHOVEN: Well your passion for the highway system is great, it is an elegant system, intuitive, easy to use. Thank you very much for telling us about it.
MCNICHOLS: Thank you for having me.
WESTHOVEN: There's more to come on IN THE MONEY. Up next, small sells. There's a major market in things with a minor following, and you can thank the Web for that. We'll find out how the so-called long tail works.
And around the world by mouse, learn how good (INAUDIBLE) in our "Brainstorm" segment.
WESTHOVEN: Google Earth is a year old this month. And to mark it's anniversary it is beefing up your connection to the virtual world and Daniel Sieberg has more in this week's "Brainstorm."
DANIEL SIEBERG, CNN CORRESPONDENT (voice over): It's not like actually standing on the rim of the Grand Canyon, but it's just about as close as a virtual tourist can get.
JOHN HANKE, DIRECTOR, GOOGLE EARTH: The goal is to create this very realistic, very high performance simulation of the whole world.
SIEBERG: This is the home of Google Earth, a small corner of Google's Headquarters in Mountain View, California. Hear a handful of workers merge satellite and areil images to make them user friendly. Google Earth was born in July 2005 after Google bought Keyhole, a satellite mapping service you might have seen during CNN's coverage of the U.S. invasion of Iraq. Google Earth's director says more than 100,000 people have downloaded and activated the program.
HANKE: We've been surprised at the way people use Google Earth. We initially conceived of it as an application that would be fun and entertaining for people to use. We found that people used it for a lot of serious applications.
SIEBERG: Applications like directing relief workers to hurricane victims in New Orleans and earthquake victims in Pakistan, as well as mapping the spread of avian flu.
HANKE: We can show you where we are now.
SIEBERG: For its first anniversary Google Earth has announced a new version of the program and a big increase in the number of higher resolution maps, those sharper images that show details, for instance the lifeboats on "The Queen Mary." Experts say the real magic for Google Earth and similar offers will happen when the mapping services are readily available on mobile devices for folks who are making more than just a virtual journey.
Daniel Sieberg, CNN, Mountain View, California.
CAFFERTY: The nice folks who report the TV ratings are going to track just how many of us are watching the commercials. If you don't think that's potentially bad news for TV networks you're kidding enough. Web master Allan Wastler is here, he has more on the potential winners and losers in this kind of change of strategy by Nielsen. What's going on?
ALLAN WASTLER, EDITOR AT LARGE, CNNMONEY.COM: This is big news both for the industry and for TV watchers, like you. OK. Basically what Nielsen is doing, is they are going to start dividing up by minutes. They can give you ratings for the commercial time itself. Previously they'd do it in half hour blocks and we'd get our show ratings and when the broadcast networks would negotiate with the ad buyers, it would be based on a show's rating.
WASTLER: Now they'll go and say oh the first spot of ads in this show goes really, really hot, we think you should pay more but then the advertisers fire back oh, but if I buy a whole slew of them, later in the show, nobody watches them. Two reasons this is happened. One your DVR, your tivos and your cable services, people go speeding through the ads and buyers are saying wait a minute, we're paying all of this money, nobody's watching it. Second thing, the Internet. Ads on the Internet, we can tell you exactly how many people click through them, going through ad buyers more and more they want that instant is it working or not, yes or no. This is Nielsen's way of responding to that. What does that mean will happen to commercials? You are going to see the content in commercials change. Suddenly we'll have a lot more maybe racing commercials, humorous commercials to grab you at the outset to get you to stay through the whole commercial.
WESTHOVEN: They have to get better to keep up.
WASTLER: They have to get a lot better. What does that mean? How racy are the commercials going to get in an attempt to keep as many people as they can? We saw Janet Jackson in the Super Bowl.
CAFFERTY: Advertising prices on television continue to go up and up and up. You never see the up fronts at the Super Bowl that the prices are coming down.
WASTLER: We're just getting the first results of the up-fronts this year and looks like it's down 2 percent.
CAFFERTY: The up fronts will be watching the networks go out and sell a portion of the available advertising ahead of the season, ergo the term up front because they like to lock in a certain amount of that money ahead of time.
WASTLER: That is right and they've gotten 2 percent less. Oh, no!
CAFFERTY: Might be the first time it's come down.
SERWER: Isn't it also true that shows that you have to watch live, like the Super Bowl and "American Idol."
WASTLER: Exactly, those will come in premiums and also you might see a little bit of skewing of the ad market, generally advertisers will always want it 18 to 34, the hot market. Those are the flippers baby; those are the ones going back and forth. They might skew toward bigger shows where people are more sedate, Jack, and stay through the whole TV show.
CAFFERTY: Or comatose. No tivo.
WESTHOVEN: Jack those are so great.
CAFFERTY: Maybe next year.
Coming up next on IN THE MONEY, Allan's back with the "Fun Site of the Week." It is pretty good; you got to check it out. Plus send us an e-mail and tell us what you think of this here broadcast, we are at INTHEMONEY@cnn.com. We got a guy named Jake who will write back to you because he has no life.
CAFFERTY: Says here parking is an art but it is also a skill that can be learned. Alan's "Fun Site of the Week" offers everyone a chance to do just that. This should be required viewing for my teenage daughters.
WASTLER: All of them, my wife, too.
WESTHOVEN: Hey! Hey!
WASTLER: We found this great little site, where you got to try to beat the clock to park the car a certain way. It's trickier than you may think. Take a look at this. There we go. Try to maneuver it in. Try to maneuver it in.
WESTHOVEN: He started at a bad angle.
SERWER: Is this a woman on the computer or a male?
WASTLER: You don't want to go there, man.
WESTHOVEN: You and your gender. Perfectly.
SERWER: She did a great job.
CAFFERTY: Parking more morons. Anybody can pull in a place like that. The challenge is to parallel park.
WASTLER: It gets harder to parallel park and do complicated turns and stuff and the time you get is less and less.
CAFFERTY: Do you have parking experience Jennifer?
WESTHOVEN: I did but I made a u-turn right into that spot and I was on a mountain road.
CAFFERTY: And the bus driver came by and said what?
WESTHOVEN: He said "great job, ma'am."
SERWER: Oh, "ma'am"?
CAFFERTY: At least he was respectful.
WESTHOVEN: He didn't mean it.
SERWER: OK, thanks a lot for that one, Allan.
During the 30-year career law enforcement, Tom Gates often found himself in stressful situations; now that he's retired he's still behind the eight ball but this time by choice. He was able to retire, thanks to a state pension and his new career is turning out to be more lucrative than his former one.
Gates currently manages 270 pool teams and makes good money doing it.
SERWER (voice over): Fifty seven year old Tom Gates has made money and friends running amateur pool leagues. He's the league operator for the American Pool Players' Association in northern New Jersey.
TOM GATES: My job is to sell fun. That's what I do, I sell fun.
SERWER: Gates manages over 2,000 players and regulates league rules. He also works for the bar or billiard hall owners to give the teams a home. His interest in the game stretches back decades.
GATES: I worked my way through college, I'd make the book money shooting pool.
SERWER: After college Gates continued to earn a paycheck in the pubs but the work became much grittier as an undercover investigator for the New York State Liquor Authority. He answered complaints dealing with issues such as gambling and under age drinking.
GATES: This career change is fun. It's a lot safer. I'm not going to be hit over the head with a bottle if I have to arrest somebody.
SERWER: Gates retired three years ago to pursue pool full time.
GATES: I can enjoy meeting people.
SERWER: Gates can't play while he's in charge, that would be a conflict of interest, but that should change in the future.
GATES: Once I retire full-time, I'll be shooting in the APA.
SERWER: Next week on "Life after Work" 64-year-old John Furyn spent a career cutting meat, now he does his hacking on the golf course. He plays up to five rounds a day every day. Next week we'll join him for an early tee time.
We'll be back with more on IN THE MONEY.
CAFFERTY: Time to read your answers to our e-mail question of the week, about why you think Americans are using more gasoline this year despite the higher prices at the pump.
Ron in Jupiter, Florida wrote this, "I've noticed people driving faster and faster in South Florida over the last few years. I think people are so happy to be out of traffic jams that they floor it whenever they can. But if you drive at 55 to 60 miles per hour you can reduce fuel consumption and be safer too."
Sally in California, "It is very difficult for Americans to cut back on usage. Driving is not optional for most Americans. Poor folks need to get to work and rich people can afford the prices."
Paul wrote, "It's all mental. Cutting back on driving would mean admitting that we have a problem. By driving more, Americans are actually ignoring the issue. I guess that works until you max out your credit cards."
Here is next weeks email question of the week. Do you watch TV with the remote in your hand, ready to flip at any time, or do you just sit back and relax? Send your answers to INTHEMONEY@CNN.com. You should visit our show page at CNN.com/INTHEMONEY, which is where you will the address of our "Fun Site of the Week." If you are parallel parking skills need a little work that is the place for you to spend the next seven days.
Thanks for joining us for this week's edition of the program. My thanks to "Headline News" correspondent Jennifer Westhoven, "Fortune" Magazine editor at large Andy Serwer, and CNNMONEY.com managing editor Allan Wastler.
Hope to see you back here next week, Saturday at 1:00, Sunday at 3:00 Eastern. Until the next time enjoy the rest of your weekend.
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