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A Look at the Week's Economic And Financial Events

Aired December 10, 2006 - 13:00   ET


FREDRICKA WHITFIELD, CNN CORRESPONDENT: Hello again I'm Fredricka Whitfield. Now in the news. Five dead, more than forty wounded the grim total of a suicide car bomb attack outside of a Shiite shrine in Kabala. In northern Iraq a car bomb exploded in Mosul killing three people and wounding three.
Cold and still without power. That's the case for 1800 people in Illinois and Missouri. More than a week after a winter storm, at one point, more than 500,000 people in the region were without power.

Pushing and shoving at a funeral for a Texas teenager allegedly killed for refusing to join a gang. The boy was shot just steps away from his high school. No arrests have been made.

We'll update your top stories at the bottom of the hour. Now time for IN THE MONEY.

ALI VELSHI, CNN CORRESPONDENT, IN THE MONEY: Welcome to IN THE MONEY. I'm Ali Velshi in for Jack Cafferty. Coming up on today's program the 98-pound weakling of the currency world. The U.S. greenbacks getting sand kicked in its face by other countries. But we'll tell you why that might actually work in your favor.

Plus bling with strings attached. The new movie "Blood Diamond" shows why some gems have a dirty history. And we'll hear from hip-hop Russell Simmons who says don't get all worked up about the story. Diamonds aren't all that bad and bigger isn't always better.

Pfizer's latest shot at a blockbuster drug turned out to be a big bust. We will see if big pharma is so hefty that is no longer nimble.

Joining me today a couple of IN THE MONEY veterans, Jennifer Westhoven and Christine Romans. Welcome to both of you. I feel kind of weird it is like I'm borrowing somebody's house and welcoming other people to it.

Thoughts what is going on in this economy? People are shopping, house prices are dropping, and interest rates are better than they were a year ago.


Watching the jobs market as well, those construction jobs down, manufacturing jobs down, the latest report. That will be very important to watch coming into the middle class jobs and those construction jobs have really been a driver of jobs. We'll watch to see if that continues. There's a housing slowdown and it is down from very, very strong levels. So I guess not to be surprised.

JENNIFER WESTHOVEN, "HEADLINE NEWS" CORRESPONDENT: Yes but the jobs report today a little bit better than expected. So there's some hope that if it can stay there, and we don't know that it can in retail jobs, that's a holiday seasonal blip. If that could stay it would help the economy ride out the housing market suffering we're seeing.

VELSHI: The only thing I know is that I'm going to have to stay here for the holidays. My dollar is not worth as much.

WESTHOVEN: For a lot of people understanding what the U.S. dollar is doing is a little bit like figuring out how mortgages work, meaning you don't bother learning unless you really need to. And if you do, there is a lot of weird jargon to learn. We are going to give it shot here because the green back has been tanking lately. It slid to a 20-month low against the Euro last week. Diane Swonk is going to tell us what is up. She will do it in even terms that even I can understand.

She is chief economist at Mesirow Financial. Diane, welcome back to the program. Thank you very much. Every time we talk about the dollar what does it mean to the ordinary American? It sounds terrible, but what's the impact at home?

DIANE SWONK, MESIROW FINANCIAL: There are two impacts that are initial and upfront and that is the first one is it's real expensive to travel abroad. If you're thinking about going to Europe or Japan, you might want to revise your plans and stay in the United States or go someplace where we don't have, where it's price in dollars. Go to China maybe.

With that said, on the other end of it, especially for us in the industrial Midwest, a weak dollar. The dollar has been weak the last couple of years. We are starting to see a rejuvenation in exports this is really important. Because the trade deficit has been widening. That's money we owe the rest of the world. So the more that we can pay the rest of the world back a bit and exports and those are jobs in manufacturing, as a matter of fact.

Not auto manufacturing where the blood money is going on but in the non-auto sector those exports are picking up particularly to Germany and Japan. And these are economies now the rest of the world growing with a little extra pricing advantage in our favor going abroad, that is big news for us here, particularly in the manufacturing sector.

ROESGEN: Diane, Christine here. I think a lot of middle class Americans that might not even understand that we're borrowing $2 billion a day to finance that balance that we have with the rest of the world. Does the weaker dollar go to help sort of write that lifting or is it just such a big imbalance that it might not help.

SWONK: Well there is symmetry. One, we are the biggest buyers in the world just in general. So we tend to bring in more imports than we export. The other issue is that when we ship goods abroad, we can take advantage of the dollar depreciating so it shows up more in exports. But foreigners, one, many don't price in a flexible exchange rate. So they are still pricing dollars to the movement and the dollar doesn't mean anything. So the import prices are not affected very much.

It is good news in the sense that prices aren't being pushed up but we're still importing a lot. You see some narrowing of the trade deficit. But much of it done on the export side, it's an economy that's not as fun as we would like but the positive news is we aren't getting inflation from it either, which is good news to the Fed and anyone shopping at Wal-Mart or any of the discounters that heavily import from China.

VELSHI: Hey Diane it is a good discussion to have about what the falling dollar means to you. But can anybody do anything about it? This is an economy where the dollar flows freely amongst different countries. Can we do anything if we don't like a low dollar or do like it?

SWONK: You know not even the U.S. government is very good at doing anything. In the 1990s we did see a lot of what we call currency interventions led most directly by the New York Fed as they traded in this market. But this is such a huge market where frankly 80 to 90 percent of the behavior in the market is driven by speculation and things not related to basic economics, like I need to exchange my currency to go to Europe for vacation.

As a result, when they try to do interventions at the government level, they try to coordinate across country and get maybe they get a day or two of an impact and that is about it. This is really something that we have to accept, work with it. Interesting, from our perspective, it's good news for some jobs in a very weak sector that we need jobs. But on the other side of it, because everybody wants to be in the market so much, they're not passing those prices back on to us when it comes back in. So good news for shoppers, too.

WESTHOVEN: So if no one can really do anything about it, what is your fearless treasury secretary up to? He is going to China, there is likely to be talk about currency while he is there. He has recently, you know gotten on board with what our treasury secretaries normally say. That they back a strong dollar. What's his goal?

SWONK: Well you know China doesn't have a floating exchange rate. So they are not part of this whole story and so they have moved their currency a little bit to appreciate. When the dollar moves, it doesn't really matter they are still going sort of subsidize their own manufacturing by keeping the exchange rate current, at a stable level, target.

With that said, we would like them to move a little bit but be careful what you wish for. If we were to see a big movement in the Chinese currently, 27 1/2 percent tariffs from China, all of a sudden you know although all of that wouldn't come in increased prices, think of all the things we buy that are made in China how expensive life would be.

WESTHOVEN: And the Treasury Department says that there are long- term discussions with the Chinese about any changes in policy at this point anyway because it's tricky. The Chinese have a very big national interest to keep that currently pegged.

SWONK: Exactly. We have a national interest as well. Be careful what you wish for because you might get it and then if you get it all of a sudden our purchasing power will go down in the U.S. We have to be careful how we tread in those waters. We don't want the situation so much so that the idea that we get protection of someone sucking jobs out of the U.S. We don't want to go down those roads. We want to mitigate some of these really tough trade tensions right now.

WESTHOVEN: Diane thank you so much for coming back on the show telling us all about the double-edged sword that is the dollar.

SWONK: Thank you.

WESTHOVEN: When we come back, a multi-faceted debate. A new movie has both sides of the diamond industry all fired up. We will hear from hip-hop mogul Russell Simmons back on the show. You might be surprised to find out which side he's on.

Plus, changing faces. Find out if Yahoo's big executive shuffle gives Wall Street something to Yahoo about.

And hitting the field, nurses hitting the books. We will look at whether big money college sports should get a tax break or get kicked off campus.


VELSHI: Well, a film "Blood Diamond" opened this weekend. It a portrayal of the violent world of the diamond trade during one of Africa's most brutal civil wars. But is the movie going to make anyone think twice about buying a diamond? Well the oldest name in the business sure hopes it doesn't.


VELSHI (voice over): You may think it's been there forever, but it hasn't. DeBeer's Flagship store on New York's 5th Avenue opened just over a year ago. Why does the name sound so familiar? For most of the 20th Century, DeBeer's was diamonds. No other industry has been so dominated by one company, one brand for so long. DeBeer's was the only place most diamond dealers could buy the rough stones to cut, polish and sell to jewelers around the world. With a virtual monopoly DeBeer's controlled how much it sold and how much it charged.

ROSALIND KAINYAH, DIRECTOR, DEBEER'S GROUP PUBLIC AFFAIRS: If they're the only one selling bottled water, I guess you set the price because you are the only mining at the village who sells the bottled water.

VELSHI: DeBeer's isn't the only man in the village anymore. Diamond prices are now driven by real supply and demand. But a relentless marketing campaign by DeBeer's turned a diamond into definitive proof of a young man's devotion. MATTHEW HART, AUTHOR, "DIAMOND:" The diamond is the hardest natural substance in the world. It is the idea of eternal and DeBeer's managed to conflate these diamond qualities with the idea of eternal love.

VELSHI: That created demand for value in small packages. While DeBeers didn't intend it, diamonds became the currency of choice for warlords who needed to buy arms.

HART: That great big jet would land on this dirt strip, off would come a tank, on would go the diamonds.

VELSHI: In places like Angola, conflict diamonds were mined from rivers often using force or slave labor. DeBeer's says it never knowing traded in those stones.

KAINYAH: DeBeers was never involved in conflicts of black diamonds.

VELSHI: Conflict diamonds have prolonged the number of civil wars in Africa. By 2002 public pressure on governments and on the diamond industry led to the establishment of the Kimberly Process. It's a certification of sorts, a passport for rough diamonds. The world diamond council said conflict diamonds now account for less than 1 percent of the trade and it is concerned that the movie "Blood Diamond" could dull the stone's luster.

UNIDENTIFIED FEMALE: People back home wouldn't buy a ring if they knew it cost someone else their hand.

VELSHI: "Blood Diamond" is a fictionalized account of the very real role that conflict diamonds played in that country's Civil War. The diamond industry is bracing for some impact from the movie. They just hope it doesn't last forever.


VELSHI: Whatever you think of the diamond's industry's past, that's the past. Given they supposedly last forever, now is a good a time as any to see what the future of diamonds is all about. Hip hop mogul Russell Simmons is a founder of many things, he is also the founder of Simmons Jewelry Company, he says conflict diamonds don't pass through his business and he's also talking about not getting too worked up over the issue. It might do more harm than good. He joins us now from Miami. Russell good to see you. Thank you for being with us.


VELSHI: You're in the diamond business, not necessarily something that people always associate with you. You're kind of concerned that people might be getting the wrong impression about diamonds particularly from this new movie.

SIMMONS: Well there's a series of documentaries, movies and records that talk about this history, which is a true history. It's very important to know history, of course. And I commend the promoters of these movies. I only have a question to as to what the affect of the movies and documentaries are on the Africans who live off diamonds today.

VELSHI: I saw you sitting at a press conference with some folks from DeBeers. Obviously they tell you more than they tell me. I was trying to press them for how they blend their history, which has been a little checkered with what they say diamonds 're doing for Africa now. You went to Africa; you took a look at it yourself.

SIMMONS: Yes I did. I went to the number one diamond mine in the world, in Botswana. I saw how simple it was the mining process, and how the conditions were, and I saw the schools, the factories, the HIV clinics, the polishing and cutting of factories. I saw the whole industry. In that one country, almost everything that is funded whether it's lawyers, doctors, is funded by diamonds.

We have to be careful when we send a message that diamonds are bad when in fact for Africans diamonds are good. I don't want to defend the history of DeBeers or anybody. No one is here to defend it. We're talking about present reality, how we can cut and polish the future. So say Africans don't cut or polish. I think the history or the future of diamonds is maybe we cut, polish, manufacture and build stores from Africa.

Give them the opportunity to go downstream for the Africans and continue the process that's been moving and push forward for a new reality. Maybe oil and uranium and other kind of industries can learn from what is going on in South Africa. We can push for the rest of the country for the rest of the diamond business. That is what I am here to talk about.

VELSHI: It's interesting you bring in all the other things. There are so many things where the money is made very close to the retail end, not the production end. You can talk about coffee. You can talk about a lot of the minerals you talked about. But the big diamond mine that you visited it's still half owned by DeBeer's, this is the company that for over a hundred years has been, I don't know if there's any other company or industry in the world that's so closely tied to one thing are you OK with doing business with them, are you OK with sitting next to them?

SIMMONS: I'm not doing business directly with them. But I will say to you that 50 percent you're referring to, after the government taxes them, there's like 85 percent of all the proceeds out of the richest diamond mine in the world go back to the people of Botswana to a non corrupt government. It is a country with 38 percent HIV. Everybody is getting HIV treatment, one of the most sophisticated treatment centers in the world. This country would be dirt poor without diamonds. I have to look at where we are today. History is very critical in every development process. But we have to be careful to guard the future and protect the truth about the present. That's what I'm here to do.

VELSHI: I think you know about how to influence things and you know how to use pop culture to do so. And I look at this movie and all my research tells me no one gave a hoot about "Blood Diamonds" in Africa when it was happening for the last 30 years. People aren't going to give much of a hoot about it right now. And still no one is really going to go to a store and say is this diamond conflict free because I don't want to buy it if it is not? Do you think it has any impact?

SIMMONS: This is important. Nelson Mandela, the president of South Africa today, these people asked me to carry a message. Diamonds are empowering Africa, and so I want to promote, I never wore diamonds I thought they were like representing not diamonds but love. I thought diamonds meant I'm rich and you are not. But now realize there's a great benefit to wearing and buying diamonds and I'm very happy to promote a new reality and also be part of that new reality.

That's what I'm doing. I hope the movie doesn't affect the lives of the Africans who are depending on diamonds. I hope that Warner Brothers will be responsible; I think it is great to sell the movie; it is great to tell a true. I'm not knocking them. I'm not knocking anybody except that I would like for them to recognize what the affect of their marketing campaign could do to the Africans who were suffering and need diamonds to pay for their future.

VELSHI: Russell Simmons thanks for taking the time to talk to us about this.

SIMMONS: Thank you for having me on the show.

VELSHI: Russell Simmons joining us from Miami. Now is the time for a look ahead at this week's news.

It's interest rate time again, investors expect the Fed to hold rate steady at 5 1/4 percent at its meeting next Tuesday. A couple of key economic indicators out this week as well, retail sales numbers for the month of November will be released on Wednesday. Those numbers are pretty good indicator of how you're spending as we head into the holidays. Then on Friday we'll get a look at inflation when we see the consumer price index.

We will have more on these stories next week on the show.

Coming up after the break find out who is saying boo-hoo at Yahoo. We will look at how changes at the Internet Company are playing on Wall Street. 0

Plus, the pharmaceutical equivalent of gone with the wind. Find out about the drug industry's blockbuster problems.

And physical education. See if college sports are about higher learning, higher earning or none of the above.


WESTHOVEN: There were plenty of stories moving the markets this week on Wall Street and Susan Lisovicz joins us now from the New York Stock Exchange where she watches it all. Taking a look at some of them. One I wanted to ask you about, you know, the peanut butter manifest was just one of the calls that Yahoo has been hearing about lately for that company to shake off this number two status. What happened with the management shuffle? What did Wall Street think?

SUSAN LISOVICZ, CNN CORRESPONDENT: Well, in a way, Jennifer, that peanut butter manifesto which was an image of spending peanut butter too thin on a slice of toast overshadows what happened this week with Yahoo. Which was a major a reorganization, what's happening to Yahoo is this one time darling is getting beat at its own game by these new entity like Myspace and YouTube these social networking sites. They are not only attracting eyeballs but also attracting online advertising dollars.

So Yahoo announced that it was going to do a major reorganization, a simplification if you will. Investors did not respond favorably. If you look at the stocks, if you compare Yahoo, shares are down 32 percent this year. Jennifer, you know this is a great year for stocks overall.

The Dow is hitting high after high. It's at 14 percent. And Google is up 17 percent this year. So that explains the story. And I think investors still are somewhat in the show-me state. They want to see more before we're convinced that this is actually going to work.

WESTHOVEN: And another company hammered this week is Pfizer. It got hammered this week when it got word that it was pulling the plug on basically the biggest drug in its pipeline. What's next for Pfizer? What is Wall Street thinking?

LISOVICZ: That's the thing. When you measure a company's financial health, a pharmaceutical company's financial health, you're not looking at it's sales, what's in the marketplace right now, you're looking at what's in the pipeline. If you have a drug like Lipitor, which Pfizer has $12 billion dollars a year in global sales the patent is going to expire in a few years. And this new cholesterol drug was one of the most promising drugs in Pfizer's pipeline. And guess what, late in trials, very late in trials after $800 million dollars of development cost 15,000 patients. This research came in that showed higher than expected deaths. And Pfizer decided to pull the plug. And it's not a problem that is unique to Pfizer. And that is why you're not only seeing Pfizer dived 11 percent on Monday when that news came out.

WESTHOVEN: There's lots of concern right now about what big pharma is going to do. Susan thank you so much for joining us.

LISOVICZ: Great to see you.

WESTHOVEN: All right. Coming up next on IN THE MONEY, slow and steady doesn't win the race when it comes to the business world. And that is bad news for what we were just talking about, the big, slow pharmaceutical industry. We'll find out what it will take for big pharma to stay big in the future.

And that old school spirit may be costing your college its shirt. Find out why big money college sports aren't the profit bonanza they sometimes seem to be.

And spam e-mail is on the rise. We'll tell you what's behind all the junk in your in box. It's me, Julia. It's me Jennifer. It's us on IN THE MONEY.


WHITFIELD: Hello. I'm Fredricka Whitfield at the CNN Center in Atlanta. With a quick look at the headlines.

More than a week after wintry storm hit the Midwest, hundreds of homes and businesses in Illinois and Missouri are still in the dark. The power company says it's doing everything possible to restore electricity.

A pair of deadly car bombings in Iraq today, at least five people were killed and scores more wounded in Kabala. And three people were killed and three others wounded in Mosul.

Despite weather concerns, NASA still hopes to launch space shuttle "Discovery." Officials ended a lengthy meeting today with a decision to beginning loading fuel. Tonight's scheduled launch is set for 8:47 p.m. Eastern. CNN will bring that to you live.

And New York restaurants are under orders to lose the transfats. Public health or government meddling? We'll talk it over during our 2:00 Eastern hour of "The News Room." Now back to IN THE MONEY.

LISOVICZ: Big companies and innovation don't usually mix. That's the problem in the pharmaceutical industry. Big drug companies are getting bigger just as the need grows for new treatments. Pharmaceutical giant Pfizer took a major hit this week when it pulled the cholesterol drug in the testing stages because many trial patients were developing heart conditions and some even dying. "Fortune" Magazine writer John Simons joins us now from Washington, D.C. to talk about what is wrong with big pharma. John welcome to the program.


LISOVICZ: This was a big hit for Pfizer and a lot of other drug companies and investors in drug stocks were watching this very closely. This company had a drug that wasn't even on the market yet, that was supposed to raise good cholesterol. They wanted to market it with Lipitor and then all of a sudden an independent study group comes out and says you know what we recommend you take this off the market. It's not safe. You don't even market it and don't even continue to go down this road.

And all of a sudden it looks like the pipeline is real dry. They got bigger and bigger and bigger over the 90s and the early 2000s and now they're right back where they started.

SIMMONS: That's right. One thing that this proves is that being a large company doesn't necessarily mean that it will help you discover drugs any quicker or any better. Having 13,000 scientists on the staff and having a $7.5 billion R&D budget, annual R&D budget, doesn't guarantee that you will discover drugs any quicker. And it's because science is not an efficient sort of business.

VELSHI: John, I think I take issue with that, it is 7.5 billion a year and 13,000 scientists they can find a way to grow hair on my head. You can find anything you want. They're not finding other things, because they have to find ones that are going to sell the way Lipitor sells and those kinds of drugs. They've only got to find the big ones.

SIMONS: That's very true. They do need to keep replenishing their product portfolio with very big drugs in order to show Wall Street, in order to show investors that they're growing.

WESTHOVEN: So that really begs the question, I think, science, should that be a business? As a business model something suitable for when we're looking for advances in health care, we are trying to save people's lives, we are trying to cut back on disease, which is so costly. Does it work?

SIMONS: There's certainly debate out there among academics, business academics, among consumer advocates and so on about whether medicine can be -- medicine making can be a viable business. People looked at this in the past certainly think so.


SIMONS: It's always been drug companies have always been a very sold investment until now.

LISOVICZ: And a lot of people have argued that without for- profit returning shareholder value companies in the game, you wouldn't have had a lot of the advances that we've had.

SIMONS: Yes. It's true. Pfizer, with its $7.5 billion annual research budget, has the largest; they spend the largest amount of money on medical research in the world, more than any government. More than any other entity in the entire -- on the entire planet.

LISOVICZ: John, do you think that the next big thing is going to come from some little tiny company or it is going to come from a little biotech or from three professors in a lab at a university somewhere and that's where we're going to see the innovation?

SIMONS: That's where things are happening now. Everything seems to be bubbling up from the bottom. Small companies, academia, like you said. Typically what's happening is smaller companies are coming up. There are these hungry operations. These companies are started by people who made a discovery, who were motivated for big payoffs. And they're operating in small groups. And as we all know in many businesses, things seem to creativity seems to happen at a higher rate when you're working in smaller groups.

VELSHI: But the 800 million to a billion dollars, the 10 to 12 years, the tests the studies, all that kinds of stuff takes money that those small groups don't have. So in the end it's got to go back to the big drug companies. SIMONS: That is true and what is happening these days is the larger drug companies are going to the smaller companies and saying, hey, would you like to make a licensing deal? We will license that drug from you, we will do the later stage development, we'll do the marketing and sales and manufacturing, and we'll use our big company expertise to help you market that drug for a price.

They're either doing that, making those deals, or they're buying the smaller companies whole clock. So that's where most of the innovation is coming from. A lot of people are wondering, well, why doesn't some large pharmaceutical come just say, you know what, we're not going to do early stage research anymore. We're just going to be in the business of locating really good products, really good innovation at smaller companies and buying them in at a decent price and doing what we do best.

WESTHOVEN: Yes. That would be very interesting for a lot of the big companies embrace that way. John Simons a writer for "Fortune" Magazine thanks for all your writing about the pharmaceutical industry and for coming on the program today.

SIMONS: Thank you very much for having me.

WESTHOVEN: All right. We have a lot more ahead. Up next, the quarterback fake. See what happens when college sports get labeled as education and there's money at stake.

Also coming up, back seat surfers. Find out how new technology is connecting car passengers to the Web.


VELSHI: So who is going to win college football championship game between Ohio State and Florida? It almost doesn't matter. Because with the multi-million dollar ball game payout guaranteed, both schools already have reason to celebrate. What about everybody else? Are big time college sports really a moneymaker for the schools or are they a money pit.

Well joining us now to help sort this all out is Andrew Zimbalist, he is a sports consultant and professor of economics at Smith College. Andrew thanks for joining us. Thanks for being with us. What is this story about? I thought sports teams just make money.

ANDREW ZIMBALIST, AUTHOR, "THE BOTTOM LINE:" The average NCAA Athletic Department, there are over 1,000 of them in the country, has a deficit of $3.6 million and that is without counting facility costs. Certainly as a general principal, big time athletics do not make money at the college level. There are some exceptions, there might be a half dozen or as many as ten schools in any particular year that will have a modest surplus in their athletic department. But all the rest of them, 990 plus have deficits.

LISOVICZ: The BCS, I mean there's already people banking the money from the bowl games already. There are coaches who make, am I right, a million dollars. Almost as much as coaches in the NFL. It doesn't sound like an academic program to me.

ZIMBALIST: Yes, I agree with you on that. Some coaches actually make between $2 and $3 million. And they have compensation packages that include perks like multiple memberships at country clubs and other things that bring their total packages over $3 million. Yes, many of them are at the same level as NFL coaches. The average NFL team has revenues of about $170 million. The average division One A football team has revenues of about $20 to $25 million.

LISOVICZ: Just like the French department or the music department, right?

ZIMBALIST: The strange thing is they talk about market forces. We have to pay the coaches this much because this is what the market is. This is a skewed market. This is a market in which you don't have to pay the producers. The players don't get a salary. It's a market in which the school subsidizes the losses of the team, it is a market that has -- there are no stockholders of a college football team that demand profits at the end of the year. So they spend money handover fist.

WESTHOVEN: Just to stick with the coaches' salaries for a minute. You know there have been all kinds of legal wrangling wear in Pennsylvania some of the pension funds say state taxpayers are paying Joe Paterno's salary. We think we have a right to know how much he's being paid. What do you make of all of that?

ZIMBALIST: Most of the coaches salaries are public information. I certainly agree that the public does have a right to know. Most of the big time college football schools are public universities and, hence, public money is behind it. Certainly the public has a right to know.

VELSHI: Who is subsidizing it? I mean they are making some money and some of these schools are making some money. The ideas I have always thought that money subsidizes the schools. I'm learning two things, one is there isn't a lot of subsidizing going on other then subsidizing the team and number two for those schools that do make money it may not be buying new French departments or libraries or things like that.

ZIMBALIST: No, fundamentally the successful football teams as football teams can make money. They can make 10, 20, 30 million dollars. The rest of that money, though, goes to support the other programs, the other sports within the athletics department. There might be another 25 or 30 sports being subsidized by the surplus generated by the football team. That only holds for 30 or 40 of the largest programs in the whole country. The other football programs do have a deficit.

LISOVICZ: I'm wondering, then, what happens? The players are not paid but they have to keep certain grade standards.


LISOVICZ: They're traveling all around the country. And the fans, the alumni are very strong on this. They want to see the status quo continue. We'll never see anything change, will we?

ZIMBALIST: I don't think so. There have been problems, scandals, and corruption in college sports since the 19 teams. And there have been reform movements that go back to the 1920's. Every time somebody emerges and says we're fixing the problem. But the point is that the underlying incentive system is not being changed. There's a commercial juggernaut process that's under way. And it is really much to strong to be stopped by changing the graduation rate index of the academic progress rate index, so you could make incremental improvements over time but the fundamental reality of college football hasn't changed and I don't think you can look forward to a change anytime soon.

WESTHOVEN: Luxury boxes, multi-million dollar television deals. It's not a lot to do with the sheepskin, is it? Andrew Zimbalist thank you very much for joining us.

ZIMBALIST: My pleasure.

WESTHOVEN: He is a professor at Smith College.

Do you ever feel like you live in your car? That might not be so bad in the future. This week's "Brain Storm" segment features the latest in high tech in car entertainment.


WESTHOVEN (voice over): It used to be if you left your house you left your TV and Internet behind but now you can bring them along for the ride.



CHRISTOPHER WATSON, KVH INDUSTRIES: This is it. You're now sitting in a vehicle that is equipped with live satellite TV and mobile high speed Internet.

WESTHOVEN: With the two new KVH systems you can watch up to 185 channels of live satellite TV, including local channels, in your car. Passengers can surf the Web, check e-mail and instant message with a wireless keyboard or you can bring your own laptop on board.

WATSON: Our Track Net 100 also turns the vehicle into a mobile hot spot.

WESTHOVEN: An office on wheels.

WATSON: Absolutely. So you can open up your laptop and you have a live Internet connection. Basically it works the same way as if you walked into the Internet cafe.

WESTHOVEN: The high tech fun is for passengers only. If you're driving, you can't use the system. But these high tech wheels don't come cheap. PETER VALDES-DAPENA, CNNMONEY.COM: It will be purchased by people who have a lot of money. This isn't for your average family or someone with a mini van and it will be for someone with more than one vehicle.

WESTHOVEN: It will set you back almost $5,000 for the satellite dish and Internet receiver, and $1,000 for a monitor, and subscriptions range from $75 to $140 a month.

VALDES-DAPENA: There's nothing more distracting than bored kids in the back seat. There are portable DVD players, video games that plug into the screen.

WESTHOVEN: Choose one with all the fixings and let the battle for the backseat begin. I wonder if my husband was a big sports fan, he would probably make me drive on Sunday.

WATSON: It's a good possibility that he would. Then just make him drive you around the rest of the week.

WESTHOVEN: OK. That would be all right. That's a fair trade.


WESTHOVEN: To find out more about entertainment in your car go to

VELSHI: Those kids look cationic in the back seat.

LISOVICZ: Five grand to shut up the kids.

VELSHI: Coming up next on IN THE MONEY, spam with a side order of spam. Allen Wastler is going to tell us why there is so much of it clogging up your inbox these days.

And it is time to hear from you as we read some of your e-mails from the past week. So you can send us an email right now to we are at


LISOVICZ: If there's one thing the world wanted more of this year it's spam. And that is a joke. Sarcasm dripping here. Internet monitoring group say the number of junk e-mails has tripled in the last six months. managing editor Allen Wastler joins us now to explain in this week's edition of "The Number." Hi. It's me Christine.

WESTHOVEN: Hi. It's me, Jennifer.

ALLEN WASTLER, CNNMONEY.COM MANAGING EDITOR: The number this week is 7 billion. And I think that's a light number but that's the latest one about how much unwanted spam floats out there.

LISOVICZ: That's billion with a b? WASTLER: Billion with a b. And some other folks put it much higher. Three years ago we had the spam Act. We were going to fix this bad boy.

WESTHOVEN: They said we would have this problem solved by now.

VELSHI: And they talked about charging people to send it.

WASTLER: I don't think that's a bad idea. We were talking about this earlier. People wouldn't send spam if there were money out there. And there's somebody out there buying a lot of herbal Viagra.

LISOVICZ: Don't click on these things. They're ridiculous.

WASTLER: For most of us its delete, delete, delete.

LISOVICZ: How come your company, our company can't get rid of these things before we see them on my computer.

WASTLER: I will come to the defense of Time Warner, someone must. They're tricky folks and smart folks. They figured out ways to get away with it. It used to be we'll look at the message, sender and contents. You saw spam go down. They figured out instead of writing a message, we'll take a picture of the message and put it in there. And then I'll change the pixel every so often so it thinks it changed. Have you heard of zombie's? Computers get infected. And you can use those to go spread it out so it looks like legitimate computers are sending these things.

And the Spam Act, we were going to punish them. Now it's people in Asia and Europe and everything and they're doing operations from there. So economics. Economic problem, economic solution.

LISOVICZ: So they'll be sending a billion more messages in January and I should just get over it?

WASTLER: I would bet there will be even more and more until we face it. You know we have to have a postage system for email. Sorry, folks. You flame me every time when I bring this up.

VELSHI: Don't shoot the messenger.

WESTHOVEN: 1st amendment. That's what it's all about.

LISOVICZ: I don't like it. I'll take the postage.

WESTHOVEN: Rain or snow can't keep this 78 year old from his mission. Richard Shore walks over a mile each morning to get to the school where he volunteers. And Valerie Morris has the story.


RICHARD SHORE, VOLUNTEER TEACHER: I may not be the most perfect person in the world here, but I feel like I'm an important person to these kids. VALERIE MORRIS, CNN CORRESPONDENT (voice over): Soon after Richard Shore retired, he walked into the Inter-district downtown school in Minneapolis and said he wanted to volunteer. That was five years ago.

SHORE: The most critical thing to do is provide kids with assistance in learning and to hopefully enable them to experience satisfaction in learning. That's why I do it.

MORRIS: As an aide to teachers, Shore gives students that one on one support they may need to succeed. For these young minds this special attention can go a long way. Many of these students have put aside their insecurities and are facing their work assignments head on.

SHORE: Trying to enable them to appreciate that this isn't a major challenge they're going to face in their life.

MORRIS: Shore's career included many years of work for both the U.S. government and the educational system. He said he has traveled the world and now tries to bring the world to students and that's the satisfaction this 78-year-old retiree gets every day.

SHORE: If you are asking how long I intend to do this? As long as I can take that mile and quarter walk to school every morning and back.

MORRIS: Valerie Morris, CNN.


WESTHOVEN: You really want to know what we've been saying behind the scenes. We're going to be right back with more IN THE MONEY.


WESTHOVEN: Now it's time to read your answers to our question, what will it take to get Americans to save more of their money?

Ervin wrote, --

VELSHI: Security guards with tranquilizers.

WESTHOVEN: Here is Ervin's idea, "Americans will have to learn that it's OK to live without the latest and greatest of everything. Enough is a real word and that life without credit card debt is a lot better than what you get out buying stuff and forgetting about it later.

Good point.

Maureen wrote, "Maybe if the government started saving money instead of wasting it on unwanted wars, Americans would learn something from that example. Right now, the government overspends and it's the middle class that pays for it with the biggest real tax bill." And Grady wrote, "It is simple. Throw away your credit cards, set them on fire and then say, burn baby, burn."

All right. Next week's e-mail question of the week, is the world too dependent on the pharmaceutical companies for health care? Send your answers to Any thoughts you have, ideas, go for it. And visit our show page at

Thanks for joining us for this edition of IN THE MONEY. And thanks to Ali Velshi, Christine Romans for joining us. And managing editor Allen Wastler.

We will see you back here next week Saturday at 1:00, Sunday at 3:00. See you then.



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