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Inflation Worsening?; Mortgage Meltdown

Aired March 18, 2007 - 15:00   ET


All right. A look at our top stories coming up in a moment. IN THE MONEY is coming next and here is a preview.

ALI VELSHI, CNN CORRESPONDENT: Thanks. Coming up on IN THE MONEY you know you are paying more for the things you buy, but inflation might actually be worst than you think.

Plus the home loan mess and what it means for your bottom line.

And open and say ah without leaving your office. Companies are bringing healthcare in house. All that and more after a quick check of the headlines.

WHITFIELD: Our top story, in Iraq's Anbar Province a scene of deadly chlorine gas attacks. Two Iraqi police officers were killed and 350 civilians and six coalition troops were sickened when suicide bombers detonated three chlorine filled trucks. Two of the attacks were near Fallujah, the third near Ramadi.

Protesters on the march as the fourth anniversary of the Iraq war draws near, this demonstration in Washington. One of several planned over the weekend in the nation's capitol. Protesting also planned in other cities across the country. Monday is the actual anniversary of the invasion.

An update on the top stories at the bottom of the hour, now IN THE MONEY.

VELSHI: Welcome to IN THE MONEY, I'm Ali Velshi.

Coming up on today's program, does General Motor's return to profitability mean a better deal for you?

Find out why the CEO of GlaxoSmithKline took a pay cut last year and we will show you how bringing healthcare to the office can save you time and money.

But first inflation. The consumer price index came out Friday. Prices are up, as expected. The biggest jumps are in food and energy. We're seeing it in gas prices but does some government number really have to do with me?

Joining me today, Jennifer Westhoven and Polly LaBarre and managing editor Allen Wastler, and my basket.

ALLEN WASTLER, MANAGING EDITOR, MONEY.COM: Right. Is that the legendary basket?

VELSHI: Got milk, shoes, there's a shirt in here. There's stuff that you read. This is the inflation basket. It's not really; it's our inflation basket.

WASTLER: Well, you take a basket. What's inflation? How much you can buy versus how much you used to be able to buy. OK? And how do they do that? They hand you a basket of goods. The government's basket, though, is a lot bigger, because they go to 87 different cities. They talk to about, oh, about 23,000 retailers. They talk to about 50,000 landlords that charge rent and there is other stuff that can't fit in that basket. You can't fit a dentist in there can you? Or a funeral, no, no. They price everything they can possibly find, and then whoosh it around and come out with their consumer price index. Very important number, because that's the first line of inflation that affects the consumer.

VELSHI: But it doesn't, they strip out certain very important things.


VELSHI: In order to make this measurement. And two of those important things are food and energy.

WESTHOVEN: Right and everybody uses food and energy. Well, without them, everybody uses them what does that mean? Just a way economists watch the numbers.

POLLY LABARRE, CNN CORRESPONDENT: How do you decode it as an individual? Say you're a single mother with six high school athletes. All you're doing is buying food, food, food, and driving around a car pool. Those are the two things that matter.

VELSHI: Driving SUVs, the index is based on sort of an urban.

WASTLER: Very urban. The theory behind that is that if you start factoring in a lot of rural costs, because of transportation factors involved you're not really getting a uniform rate. If you do it more in the city, but you know a lot of economists, want to watch economists fight? Throw this basket in front of them and ask each one, which is more important in this? And they will just go back and forth and back and forth.

LABARRE: Chop it up.

VELSHI: And the point is, Polly, this may be in this basket. This ain't mine. And we all buy different things. So your inflation, you know if you're paying more for healthcare, you know if you are paying more for gasoline, you know if you are paying more for your food. I guess this is, this number allows the government to measure it and the government needs to know about this, because they're going to make decisions, and based on these numbers, the stock market trades. Let's bring in Susan Lisovicz; she has been down at the New York Stock Exchange all week looking at a bunch of things. Particularly at the end of the week, inflation.


SUSAN LISCOVICZ, CNN CORRESPONDENT: Hey Ali, hey guys, we have our own basket that we examine here, and the basket is a heavy one this week. We've had a one-two punch. The beginning of the week, it was the mortgage meltdown, at the end of the week; it's the ugly inflation. This is just really the worst of scenarios, because you see clear signs that the housing sector, a big part of the economy, is slowing down and the ramifications for the U.S. economy as a whole, and at the same time, the inflation rate is just not going away.

WESTHOVEN: Susan, isn't this, you know, the kind of scenario that raises that boogeyman, the financial boogeyman from the 1970s, stag inflation, that the Fed cannot drive that stake through the heart of inflation if they've got to worry about the horrible things going on in housing and we've got weakness in manufacturing. Their hands are tied.

LISCOVICZ: That is exactly right, and it comes just a few days before policymakers meet, and so the -- you know, the general consensus is that the Fed will do nothing and really can't do anything. It has to decide whether what is the bigger danger? The slowing economy or rising inflation. Well, the Fed, based on all of its past statements is worried about inflation and we know that that korn flation is well outside the comfort left. It is about 3 percent so far this year and the Fed's upper range is 2 percent. So the Fed I think most folks on Wall Street expect the Fed will do nothing, it will keep rates unchanged.

VELSHI: Hey Susan we've all been in this business long enough to remember Alan Greenspan. And how you could never decode what he says. And now in the last month, he can't stop talking, talking about recession and -- I.

LISCOVICZ: Ali, I am so glad you raised that point, because I am calling it, the liberation of Alan Greenspan! I could not understand. I actually called an economist yesterday, read him a quote. One of, you know, Alan Greenspan's many quotes. I read it to him twice. This guy's been in the business 40 years, couldn't understand it. This week no problem. He says, the problems in the sub-prime sector, if housing prices fall; it's going to hurt the rest of the economy. It is as simple as that. He's never been clearer. So you know, he's weighing in and he has been weighing in a lot and he certainly said several times in the past month that there's one in three chance that the U.S. economy could, and, go in to a recession later this year. Pretty clear.

VELSHI: I got one question. Allen Wastler is with us. Allen you track what's goes on in the Website. This sub-prime thing, I got to tell you I never said sub-prime so many times in my life. Are people interested in this story? Do they get it?

WASTLER: Yeah. Actually when we put up a sub-prime story. That word triggers, I got those little meters that I watch to tell me what people are clicking on, all of a sudden sub-prime is the hot headline word. Lights right up. VELSHI: Susan, are the folks down on the floor feeling it? We've been talking about it all week. It really been driving the way the stock market is trading?

LISCOVICZ: No question about it. There is fear in the market, and it's reasonable. A lot of economists are saying, they are all saying not sure how far this is going to go, but we have a couple of different viewpoints. The point is that Goldman-Sachs says it's going to get deeper in to the business. You want to buy low, and certainly bargain basement prices this week. On the other hand, you feel more casualties. Everything from Carnival Cruise Lines, right what does that have to do with sub-primes? Well the "Wall Street Journal" says that shorter, cheaper trips to the Caribbean. They're getting hurt, because folks who typically take those kinds of trips, well they can't pay for them. They're not going to do it, they're getting squeezed. And you also saw H&R Block, synonymous with tax preparations. Guess what it has a unit that deals with sub-prime loans. Guess what is it had to bring it's numbers down because of losses in that unit. So that's a domino effect and that's really is what has been driving the sell-off on Wall Street, the most recent sell-off on Wall Street I should say.

VELSHI: Susan, you always earn your pay. But the last few weeks I tell you, I hope they are giving you a raise.

LISCOVICZ: I think we've all earned our pay. It is great talking to you guys.

VELSHI: Susan Lisovicz at the New York Stock Exchange.

Coming up, the story never gets old. The home loan mess, is it going to hurt your chances for a mortgage or it is going to cost you more money?

And later in the show, we'll see if it's makes any difference at all to you that General Motors is back in the black? You're watching IN THE MONEY.


VELSHI: Whether you have a mortgage or just think you might want one some day, the lending industry crises could hit you where you live. Let's check the impact of the sub-prime loan mess with Bill Emerson, he is the CEO of Quicken Loan, he is joining us from Farmington Hills, Michigan. Bill good to see you. Thank you for being with us.


VELSHI: What's your end of the business with respect to sub-prime loans? What does Quicken Loans have to do with the sub-prime market?

EMERSON: We really don't have anything to do with the sub-prime market. We've done it in the past; it has been about 2 percent of our business. We're familiar with it and we certainly have an idea what's going on with it. VELSHI: A whole bunch of people is out of the business. Like you got out of the business. Why? What did you find out about sub-prime, was it to risky? Too expensive?

EMERSON: Well I mean it is certainly risky, it is certainly expensive, I mean you are talking about clients who have less than perfect credit. As a result, delinquencies are going to be higher. Everybody knows that. When you evaluate where you can play in the market, we just decided that we would play on the prime side of the market versus playing in the sub-prime part of the market.

WESTHOVEN: Bill, for everybody who pays their mortgage on time and they see this happening they may say this doesn't really affect me. But there's this concern, there are some forecasts that 2 million homes could get foreclosed. They're going on the market. They may need fire sale prices, that could really end up putting a damper, some people say, this is the argument, on other home prices. What do you think most people are going to experience from the fallout from this sub-prime implosion?

EMERSON: That is a great question. I think that day-by-day the market is changing as far as what's happening with sub-prime, what is happening with the rest of the market. Clearly, as homes go to more and more delinquent that will impact the real estate market, I do believe that that will have an affect on it here and it could impact other people on what they're doing with their homes. If you can't sell a home, somebody's got a home they can't sell, somebody isn't buying it, and it will have overall affect on the market when it comes to the real estate side.

LABARRE: Bill, what's your advice to people who are in the prime category, who, for instance, might have an adjustable rate mortgage that is coming up for adjustment? How would you give them some advice? How should they behave in this situation?

EMERSON: Well the first thing they should do is understand their adjustable rate mortgage. Go back and look at their paperwork, understand when the loan adjusts and look what they think the loan will adjust to and then contact the lender. Contact the person that they've been working with and ask them, what's going on? What's my situation? Because fixed rate mortgages are still very low and there's a great opportunity for someone to get out of that adjustable rate mortgage and get into a low fixed rate and put their mind at ease.

VELSHI: Bill we don't often get to talk to people who run mortgage companies. Take it beyond the curtain a little bit. What exactly happens with a sub-prime loan? How is it different? Say I'm prime and I miss some payments on something, which I've been known to do, do I become sub-prime? Is my mortgage all of a sudden handled differently?

EMERSON: Really, Ali, sub-prime is driven by credit score. Most of the time sub-prime will be a credit score below 620 and a lot of times below 600. If you miss a payment, it doesn't necessarily mean you become a sub-prime client. It really depends on your overall credit picture, what does your credit report look like what is your score? If you fall in to that credit score, you could be looked at as a sub- prime client. The most important thing for anyone to do, figure how to make sure they can mach their mortgage payment. That is mow highly weighted on a credit report.

WESTHOVEN: Actually where I want it go. What if you're someone, you got a $3,000 payment it suddenly goes up to $4,000. You know you'll have a problem meeting it. If you miss it, suddenly all of these fees that can skyrocket higher and higher, you get a vicious circle going on there. The loaner doesn't want to you default either. They'll be in trouble. What do you do in that case?

EMERSON: First of all, 3,000 to 4,000, that's a big jump and a pretty high mortgage payment. Probably closer to reality might be $1800 to $2500. Well what happens, I mean any lender wants you to make your mortgage payment. So if you are experiencing that situation, the first thing I think you should do is contact the lender, talk to them about what the options are and figure out a way to get your mortgage current. They usually work with you. A lender tries to figure out a solution for you, because the expense of going through foreclosure and that kind of thing is not something the lender wants to do.

First thing is pick up the phone and call the lender. Again, the second thing is evaluate everything you're paying and figure out how you can make your mortgage payment first.

VELSHI: Bill, if I, sub-prime, prime, no problems meeting my payments, I am making my payments, my mortgage shouldn't change? This doesn't affect me if I'm not stuck in this mess?

EMERSON: No it shouldn't affect you, because you have the mortgage you have in place, you are making the payment you're making. On the fixed mortgage today and your not planning on touching that mortgage you shouldn't have any impact. If you are on an adjustable rate mortgage like I said, evaluate where you are and then see what you can do about potentially moving out of that.

VELSHI: Bill thanks for joining us, always a pleasure to talk to you.

EMERSON: My pleasure, thanks.

VELSHI: Bill Emerson is the CEO of Quicken Loan.

Coming up after the break, see if GM's profits come back means better choices and better deals for car buyers.


VELSHI: General Motors announced this week that it had posted a quarterly profit for the first time in two years and a full year profit for the first time in, like 100. Rebecca Lindland is going to tell us if that means better options for car buyers. She is the associated director of Global Insights North American Automotive Group. Rebecca good to see you.

REBECCA LINDLAND, ASSOCIATED DIRECTOR, GLOBAL INSIGHTS NORTH AMERICAN AUTOMOTIVE: Nice to see you Ali. VELSHI: A bit of an exaggeration. The fact is it's need neat to see an American carmaker posting a profit and is GM sort of living up to expectations but after all the people they've laid off and all the stuff they've had to turn around, kind of about time.

LINDLAND: Well you know, it always reminds me of the analogy of when you are trying to get in shape. It's never really pretty to watch somebody work out. Nobody really looks that good, and yet that is kind of what we are seeing GM do. They are getting in shape, they are cutting out Ali. Basically excess employees, excess capacity, things that they really need to trim everything in order to get themselves into better shape.

LABARRE: So Rebecca what they are doing is cost cutting their way to these results, what I worry about is are they investing in new cars, new products that people are really going to want to drive. What does that picture look like going forward?

LINDLAND: Well the thing with GM is that they are not just getting these results through cost cutting they are absolutely coming out with new products. There are 21 new or redesigned products that are in showrooms between 2006 and 2007. And so there's a lot of R & D investment going on, there is a lot of capital expenditure, a lot of upgrades of facilities that they are keeping open. So they really are doing both that diet and exercise that they need to do. They're cutting costs and they're generating revenue. That's why we're starting to see the positive results that we're seeing from them.

WESTHOVEN: Rebecca, I don't want to be the nay sayer here, but even GM management it seems like isn't quite so sure when they'll be profitable. We just had "Consumer Reports" come out and announce all their top picks, none of them were GM, none of them were even made by American companies and they said GM has a lot of reliability issues to tackle as well. I'm a little concerned. I know you're really upbeat about this, but we know that GM has a lot of hurdles to face. Doesn't it?

LINDLAND: Yes and no. Their reliability has gotten significantly better and a lot of the "Consumer Reports" they don't really have a way of evaluating the all new products. Vehicles like the Saturn Outlook, the GM Arcadia, witch are large crossovers, there is no precedent for those. I had a GM Chevy Trailblazer in 1999 that started every morning but I had a lot of interior issues with it. It's not fair, though, to compare that vehicle to the new ones that are coming out, because they've done such a tremendous re-creation of their, inside the company, how they evaluate products, how they evaluate what they're spending on products that they want to feel a certain -- a certain feel within the vehicle.

Now they're dedicating money to getting that. Whether it's a steering wheel or it's a suspension or different tires. So the company itself is really going through resurgence, and that comes about. A lot of changes at GM and it are difficult to recommit to a brand as you go back in to a showroom if you've had a bad experience, but consumers need to look at the possibility that GM is coming back and has some really interesting new products out there. VELSHI: And let's just, so viewers know, Bob Lutz is the design chief at GM, came in some years ago. He's really heading this; let's make these cars sexy again?

LINDLAND: Right. Bob Lutz is sort of the automotive guru. He is the vice chairman at GM, and he just has a tremendously golden gut, as we call it. Just a real appreciation for beautifully designed vehicles. The other thing is that GM is returning to their roots in terms of real American cars. So when you go in to a Chevy show, it doesn't just look like a bad copy of a Toyota or something.

LABARRE: So Rebecca, when you actually look at the quality and the reliability, that's great, one thing. But going forward and looking to the kind of cars that customers really want. We've reached a fascination with hybrids. What is GM doing in that world, and the people (INAUDIBLE) have the hybrids, how will we push this to the mass market and what is GM doing about that?

LINDLAND: They're really coming out with, they are continuing to study the hybrid market and offer hybrids and flex fuels. Rick Wagoner says this is the future of it. But I also really like the electric car. The Chevy that they came out I think is really interesting. A concept that they showed at the Detroit Auto Show back in January. And the electric car is something that needs to be explored further as well. With electric cars, it runs off of, you can have a whole variety of transmissions in there. A whole variety of sizes of vehicles. Kind of expands the appeal of alternative just beyond hybrids.

VELSHI: Rebecca good to talk to you. Thanks for being with us.

LINDLAND: Thanks so much for having me on again. Good to see you guys.

VELSHI: Rebecca Lindland joining us from Global Insights. You know I was at the Detroit Auto Show and saw that Volt. The second question, when will I be able to buy one of these? You're not. It's not even you'll be able it buy it in a few years. You're not. Car companies have some great ideas. We just have to actually see them happen.

WESTHOVEN: Right. In the meantime, so many, for me, so many negatives headlines. Again, great last month, that the Silverado did really well, this new --

VELSHI: The truck of the year and then one of the Saturn cars, which I had never seen before, won the car of the year. First time that GM's taken both of those.

WESTHOVEN: Some good news.

VELSHI: We will take the win.

Coming up on IN THE MONEY a reality check from the CEO of GlaxoSmithKline about the companies that make the drugs you buy. Stay with us.


WHITFIELD: Hello. I'm Fredricka Whitfield. Now in the news, triple chlorine gas attack in Iraq. Suicide bombers explode chlorine filled trucks in Anbar Province. Some 350 civilian and six troops are being treated for exposure. It's the fifth time chlorine gas has been used against Iraqis in the region since January.

School bus terror alert, Homeland Security and the FBI warned that foreign nationals with tied to extremist organizations are buying school buses and they are getting licenses to drive them. So far, no known plot or threat.

Coming up at the top of the hour, thousands of anti-war protesters stir it up in the nation's capital. A live report here from the newsroom. Back too more IN THE MONEY.

VELSHI: Good news this week for the world's second largest drug manufacturer, GlaxoSmithKline. The Food and Drug Administration approved a sale of its new breast cancer drug Tykerb. It will be used to treat women with a certain form of breast cancer who aren't responding to other drugs. About 20 to 30 percent of breast cancer patients. Tykerb along way soon to be reviewed cervical cancer vaccine could make big bucks for GlaxoSmith Kline. But analysts say Tykerb is years away from posting blockbuster sales. I sat down with GlaxoSmithKline's CEO Jean-Pierre Garnier and asked him what the approval of Tykerb means to the company.


JEAN-PIERRE GARNIER, CEO, GLAXOSMITHKLINE: I think Tykerb is a prestige product, because its life saving, it works when there's nothing else. So it's really great. It demonstrates the value of innovation. What led to the discovery of Tykerb is first class and shows the company can move ahead in medicines, which are really helpful to society.

VELSHI: We talked about this years ago, the science of it. The idea that you were fostering an environment where your scientists were more empowered in the development and the creation of drugs. Is it true that one of those units sort of identified Tykerb as a drug that they should go forward with and didn't have that priority until it was identified by the scientist groups?

GARNIER: Roughly speaking, that's exactly had the way it happened. This was a drug that was invented quite a while ago but it was kind of lingering and there was no certainty on how to go about it, and this unit, the oncology unit, under the influence of very good oncology said, no, wait a minute. You got a winner here. But it's easy to see it now that it is a winner.

VELSHI: We're expecting a cervical cancer vaccine out of GSK. Tell me about that and what you expect from it.

GARNIER: We're going to find the dose earlier, any day now, and we're very excited. This is a way to prevent cervical cancer, and it's very meaningful for all women in America and elsewhere. VELSHI: One of your major competitors, Merck, was probably a little surprised at the reaction that rolled that that vaccine got in the United States from people who thought it inappropriate to vaccinate young girls against the things that cause cervical cancer, because that sort of is allowing them, giving them permission to have sex?

GARNIER: Well I mean, as a parent, of course, you have to make that decision, but frankly, I think that the reality is, you want the best for your children. And if you can protect them against a potential risk that they will face their entire life, even after they've been married, they face the same problem and the same risk. So I think that the outcome indeed is never to have sex with anybody for your entire life. Most parents would agree that's not a viable alternative. So I think we need to educate and part of the problem is a lack of education of some of those groups. They need to understand exactly what we're talking about and once they do, as with all the medical associations they line up and in favor of the vaccination, and that's where we're going to get in a few months.

VELSHI: The industry, the pharmaceutical industry has gone from being savior to public enemy number one, to savior, to public enemy number one, depending on the month or the year. Where do you see this industry right now? It's got struggles, it's got public opinion problems and it has a pipeline problem, you have one and your competitors have one.

GARNIER: You said it well. It's got a pipeline problem. I think society accepts the pharmaceutical industry, if we discover major new cures, new treatments. If we stop innovating and discovering new drugs, such as Tykerb, then, of course, society doesn't need us anymore. So we are completely dependent on our ability to be productive and that's has we are completely focused on at GSK. People love the drugs we invent. They don't want us to stop doing that, but they also are demanding in a way we market those drugs and price them. I think we've given an example that at GSK, we get it.

VELSHI: One last question. We have a big question that we're facing in the United States with executive compensation, irate investors and customers who feel that sometimes the way in which CEOs are paid is unfair. You have had personal experience with this. Tell me what's happened with you and your view on the matter.

GARNIER: We have resolved this issue a long time ago, because if in our system I don't get any long-term compensation unless our company outperforms half of our competitors in any given year from a stock price return. So I'm completely lined up with shareholders. We have to do real well for our executives and myself to get access to significant compensation. Now, that means an average, yes, I've been receiving less money than, let's say, my counterpart, American CEOs, but frankly, I'm very well paid, and it's not going to make a big difference to me, as long as there is a pay for performance element in my package, I'm not going to you know, have any difficulties with this. And I think that that's what needs to happen in the U.S. That nobody gets paid for failing, and I think once this is well established, and the most intelligent boards have already put that in effect, for the great majority of the companies in the U.S. it is a non-issue. There are too many out layers that, of course, hit the first page of the newspapers and create a reaction in the public, totally understandable.

VELSHI: GlaxoSmithKline's pay for performance structure seems to be working out nicely for executives. Garnier still made around $5.4 million last year, even though that was 18 percent less than what he made in 2005. When he says he gets paid well he does.

WESTHOVEN: It is still great to see a CEO you know saying that straight, putting it on the record, and you know just being responsible about it.

LABARRE: I was more intrigued by fact that he realized he didn't have all the answers, he didn't know which drugs were the ones to approve, he put it in the hands of the scientists on the front line saying you figure where to go, what paths to follow. They actually took Tykerb off the shelf.

VELSHI: There, sitting around. A group of scientists who said, hey look let's pursue this. Interesting things to watch out for in GlaxoSmithKline, particularly in industry that gets a lot of bad press these days.

Up next on IN THE MONEY why the drugs that cost you hard earned cash have such ridiculous names. Polly's goes to tell us about that.

And later, work places where you can stop by the pharmacy without even leave the office. Stay with us.


VELSHI: Prozac, Lipitor, Paxil, none of those is a real word but each hugely profitable in the process of names those drugs are usually difficult and expensive. Polly LaBarre is here to answer the question, what is in a drug name?

LABARRE: This is a big business. It's a cottage industry outside of the pharmaceutical company. Since 1997 when the FDA loosened the regulations on advertising drugs directly to consumers, basically they said you can put it out there as long as you put all the adverse effects, that's why you have the commercials, a couple tripping through a field of flowers saying you might bleed through your eyeballs when you take this drug.

VELSHI: Ads are great. Where you got people walking around telling you all this.

LABARRE: I mean do we really need to see another Clairton ad? Assaulting us again as again. Because of the switch in the advertising approach, the industry has grown up around how do we actually name these drugs so 15,000 drugs on the market. There are only so many letters in the alphabet, how do we put it together?

WESTHOVEN: Doesn't it seem like if you're going straight to human beings, not just doctors, you would want a name that made sense and they never do. LABARRE: You would think so. Right? We don't know what any of these names mean. Here's the problem. So there's a sort of tricky calculus how you name these drugs, the companies come up with something original, new, with something that gives a hint of what it stands for. You get what is the, Levitra the Viagra competitor. What is that? It means you elevate, vitality and the look is French, the masculine pronoun, make you feel vigorous. Viagra, not so subtle Niagara Falls. That is sort of how they named it. But the FDA has this pushback saying you can't offer too many medical benefits, you can't have the words wonder, cure, max, ultra in your drug.

VELSHI: What JP Garnia was saying about it Tykerb. They're out of letters. The name of the new drug can't sound like the name of another drug. This issue of confusing drugs is a big deal. Xs were popular for a while.

LABARRE: X's and V's and C's and D's look good in print, they sound good, they seem powerful. You get into a scrabble, bogging approach to naming --

WESTHOVEN: Ambien makes sense. Sounds Ambien, you go sleep.

VELSHI: And there is an A.M. for morning. Ambien, which is French for good.

LABARRE: Let me give you a little quiz to see if you can figure out what some of these drugs mean. A clue. Provigil what do you think that is for?

WESTHOVEN: Alertness.

VELSHI: Like a vigil.

WESTHOVEN: I'm making it up.

LABARRE: Good. It's a narcolepsy drug.


LABARRE: One out of one. Houseon (ph).

WESTHOVEN: Feel better.

VELSHI: I just know it because of the terminology in which it's used.

WESTHOVEN: Fight depression.

LABARRE: Houseon (ph). It is a sleeping pill because there's a Greek bird calming.

VELSHI: I thought was the other way around.

LABARRE: Exactly. I took this drug because I had a back pain and had no idea what it was. Voltaran.

WESTHOVEN: It sounds like Voltron? LABARRE: It was an anti-inflammatory.

VELSHI: I don't understand that one.

LABARRE: Blockadrin.

VELSHI: Running nose?

WESTHOVEN: Clogged arteries.

LABARRE: Beta-blocker. Here's my last quiz. What do they call Viagra in the Middle East?

WESTHOVEN: I love this.

LABARRE: Erector. Not so subtle there.

VELSHI: No. Not at all.

LABARRE: Can we say that on TV?

VELSHI: You just did.

Now for this week's "What Works" on-site medical care was once the norm for many American workers especially in the manufacturing and heavy industries. On the decline since the '70s, in-house clinics are not seeing resurgence as companies take a page from an old playbook as way to cut medical costs. Jen Rogers has the story.


JEN ROGERS, CNN CORRESPONDENT (voice over): The company nurse is back. And doling out a lot more than just aspirin.

UNIDENTIFIED FEMALE: We've seen cardiac, seizures.

ROGERS: After falling out of favor, in-house health care centers are the newest way companies are beating rising medical costs. The good news for employees, it's usually fast and free.

MARNE BELL, WATSON WYATT WORLDWIDE: In most cases, it's always going to be less expensive for them to go to the clinic than it would be to go to their doctor's office, and they take less time off of work in order to go receive care.

ROGERS: Healthcare consultant Marty Bell says nearly a quarter of Fortune 1,000 companies either have or have plans for clinics. This healthcare center at Credit Suisse, the investment bank in New York had over 21,000 visits last year. The average time employees spent away from their desk, just 30 minutes.

STANLEY ZAREFF, CREDIT SUISSE: The real perk for me is that it is quick. I don't have to make doctor's appointment; I don't have to wait a week. They take me immediately.

ROGERS: Stanley Zareff, diagnosed with diabetes, two years ago, appreciates the quality of care.

ZAREFF: It was one day that I came, that I really was not well at all, and the next day I got a phone call from the nurse here, wanting to know how I was doing. And that made it worthwhile, because I know they care, and they really followed through.

ROGERS: Frank Martin, the chairman of CHD Meridian which manages nearly 200 on site clinics for companies around the country says business is growing at 20 percent a year.

FRANK MARTIN, CHAIRMAN, I-TRACK CHO MERIDIAN: We're the doctor that goes or work with you, or the nurse that goes to work with you and I bet your doctor doesn't even know what you do for a living.

ROGERS: CHD Meridan Research shows not only productivity gains for companies with clinics, but also a healthier employee population that uses emergency rooms and specialists less frequently. One thing that doesn't change, whether it's your doctor's office or company clinic, Monday morning is still the busiest time of the week.


ROGERS: Jen Rogers, CNN, New York.


VELSHI: What a, an efficient, we have one of these in this building. I haven't had a chance to use it. But very efficient, in and out, and back here.

WESTHOVEN: And I was in the emergency room recently. It's whether or not wonderful if you have healthcare and you work at good company. It's difficult to navigate the healthcare maze of bureaucracy and widens the gap between people who can't get good care. Can you get it, but other people can't.

VELSHI: Polly you are a bit of an expert at companies that do things that make them better places to work at. This has got to be one of the biggest perks around.

LABARRE: I think it is part of the table stakes right, I mean yoga classes are one thing, but this is really your health. It is the bottom line. Your health, it's important.

VELSHI: Good story.

All right. Coming up next on IN THE MONEY we'll check out how much cash is being won, lost and spent on March Madness.


VELSHI: It's NCAA Tournament time. That means headaches for a lot of bosses around the country who are dealing with distracted workers. I've been hearing them all week. Are those people paying more attention to the tournament brackets than their jobs? Is that really such a big deal? Wastler rejoins us now to weigh in on that. We hear this all time.

WASTLER: With every big event, there is this outfit, like a job outfit what they do, is they do a little math exercise. They figure out how many workers are in there, how many have Internet access, how many are basketball fans and they just run up the numbers and they come up with this huge number. Ready for the number 1.2 billion dollars. Before Jennifer starts to hack that number to shred, let me point out that Challenger, Gray, Christmas they always get grief from us journalist types over this number. Because we say you guys are over blowing it.

So they actually revised it down. OK? This year it's $1.2 billion. The year before, they had, it was like $3.8 billion. Sort of aware of the criticism and ratcheting down the estimate a little bit, but it's a funny little game they like to play around March Madness time. Right Jen?

WESTHOVEN: It is. But they do this with every major event; these are estimates of the biggest magnitude ever. If you are not talking basketball, you're calling your mother, or calling your school principal, planning -- being nice to your colleague. How are you? This is what we do. We're human. We work really hard and sometimes we go, what's going on in the world?

LABARRE: Social. If you're not getting people to interact, not just in ok where is that memo, hand me that report? They are not going to interact as human beings.

VELSHI: I was over at Google's new offices in New York. It's like the old Dotcom stuff but they see if folk dos what they want to, it makes them more creative, it makes the better workers.

WASTLER: We are getting a growing pile of anecdote's evidence of some companies saying, I'm going to use this to my advantage and actually sponsor the whole March Madness thing. Set up a TV set in the room.

WESTHOVEN: You're kidding?

WASTLER: Short of betting. Watching the game, getting around, maybe a little in-house betting, not for monetary rewards, that is the more serious number here, I got another number for you. Ready? Four billion that's how much is going to be bet on March Madness. Of course, a lot is lost and why are people even going it bother? Now that my beloved Blue Devils are no longer in it. It's a serious big business. Some companies are taking advantage making it work for their morale boosting activities and there's a lot of money going down and it ties in to the whole Internet gambling argument as well too.

VELSHI: I don't have much of a view on gambling. But if I think if people are happy talking about March Madness or anything else, let them talk about it. They work hard.

LABARRE: Maybe a little more play, I may sound heretical, but I think it helps loosen people up, helps them be more innovative.

WESTHOVEN: You want to be lit up. I agree. VELSHI: You want to be lit up? Stay here. The NCAA College Basketball Tournament has launched many careers on and off the court. In this week's 's "Life after Work" a story of a Duke alum who landed first in the NBA and is now in the real estate business.


VELSHI (voice over): It's been 15 years since Duke University cut the nets down after winning back-to-back college basketball championships. A few of those players went on to have successful careers in the NBA. Others, like Brian Davis, gave the pros a try, but ultimately found a different path.

BRIAN DAVIS, MANAGING PARTNER, BLUE DEVIL VENTURES: I knew I was at a great school playing on a great team, but I wasn't Michael Jordan. You know? I recognized that very early. Being not that good, you are trying for a life after basketball.

VELSHI: After playing for a few years in the NBA, and in Europe, Davis retired to focus on his other passion. Working to revitalize inner cities through real estate development. Davis formed a company called Blue Devil Ventures in 1995 with a couple of partners including former teammate Christian Laettner.

DAVIS: We are an urban development firm and our focus is historic preservation, and the rehabilitation of urban environments.

VELSHI: Their first development was a group of abandons the tobacco mills they converted in to apartments near downtown Durham, North Carolina. After the success of that project, Davis and his partners built a second phase and decided to develop similar projects in other cities.

DAVIS: I think to buy neighborhoods where young people grow up to be positive and make contributions. We thought we'd create neighborhoods that would create jobs.

VELSHI: Davis hasn't completely left the sports world behind. He made a failed bid to buy the NBA's Memphis Grizzlies, but he did succeed in becoming the owner of another team, a soccer team earlier this year. Davis was part of a group that purchased the D.C. United.


VELSHI: We'll be right back with more IN THE MONEY. Stay with us.


VELSHI: There were probably a few stories you missed during this busy week in the news. The labor market remained strong with first-time claims for employment benefits down to their lowest level in more than a month that is a good thing. Career Builder Dotcom shows that four out of ten U.S. workers are now living from paycheck to paycheck. Americans are cutting their costs by hopping on the bus apparently. The American Public Transportation Association says rider ship on public transportation last year jumped to its highest level in nearly five decades. Stands to reason.

WESTHOVEN: All had cars.

VELSHI: Yep. Now we're getting on the bus. Cadbury Schweppes says it plans to split its candy and drinks business a well know candy brands including dairy milk, chocolate bars and Trident chewing gum and drinks include, Dr. Pepper and Snapple. A coincidence. I happen to have some.

WESTHOVEN: Looking good! Dibs on the chocolate bar!

LABARRE: I just split up that bar!

WESTHOVEN: Share it over here.

VELSHI: You guys want to talk about, while we're opening up the candy bar?

WASTLER: Pure play, almost. Under pressure.

LABARRE: Really intrigued by the four out of ten U.S. workers --

VELSHI: Working paycheck to paycheck.

LABARRE: And that women are more likely to work paycheck-to-paycheck, 47 percent versus 30 some percent for men and really feel more strapped. They earn 77 cents to every dollar men make, they are more likely to be single mothers, and have more expenses.

WESTHOVEN: Buy more shoes.

Also in that study, it was something like one out of five people whom make six figure or more. Even they are living paycheck to paycheck at times. Sometimes it's not how much you're making. There is this real human tendency I think that we have to spend a lot which is fine, except for that if you have an emergency, you can end up in real financial trouble.

WASTLER: I heard that study, one thing I wondered about. I heard the same thing since I've been in the business. Every year, women don't earn as much as men, there is real pressure against them. Yet it never changes. Why is that? I keep wondering -- we keep doing the studies to flag the problem.

VELSHI: Who's going to change?

WASTLER: It never changes. One would think that we'd go with the government or something --

LABARRE: And the wage gap keeps increasing, still the bad feeling and this goes on and on. We still have only seven or eight women in the Fortune 50 as CEOs.

VELSHI: Which is why we do stories every time we have them. It's still a fascination to us. Hopefully becoming less of a fascination because it's becoming less of a novelty. WESTHOVEN: Not yet.

VELSHI: A lot to talk about. While I say good-bye, enjoy yourselves with some of this chocolate from Cadbury while it's still one company.

Thanks for joining us on this edition of IN THE MONEY. Thanks to Jennifer Westhoven and Polly LaBarre and managing editor Allen Wastler. We are going to see you back here next week Saturday at 1:00 and Sunday at 3:00. See you then.



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