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Your Money

Longer Hours, Lower Pay; Candidates and the Economy

Aired June 09, 2007 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

VERONICA DE LA CRUZ, CNN CORRESPONDENT: Now in the news, new concerns as the shuttle "Atlantis" speeds towards the International Space Station. NASA scientists are analyzing this small tear in a thermal blanket on the rear of the shuttle. It happened during last night's launch. "Atlantis" with seven astronauts onboard is due to arrive at the space station tomorrow.
Warming relations with the Vatican, President Bush meets Pope Benedict for the first time. The two talked about the treatment of Christians in Iraq. The president called it a moving experience and says he was in awe of the pope.

Montana prison officials say a man once accused of plotting to kidnap David Letterman's one-year-old son has escaped. Kelly Frank was arrested back in 2005. Kidnapping charges were eventually dropped but Frank was sentenced to ten years in prison for lesser charges.

And Paris Hilton waking up in an L.A. jail cell today. She is expected to undergo physical and psychological evaluations over the weekend. A judge ordered a tearful Hilton back to jail yesterday. She spent one day in home detention after the sheriff became concerned about an undisclosed medical condition.

We're going to update your top stories at the bottom of the hour. Now IN THE MONEY.

CHRISTINE ROMANS, CNN CORRESPONDENT, IN THE MONEY: Welcome to IN THE MONEY. I'm Christine Romans. Coming up on today's program, how the price you pay at the pump affects the price you pay in the supermarket.

Plus, the perils of treating your 401(k) like your personal piggy bank.

And we'll tell you how to take that little vacation time you're entitled to.

But first, for all the idea pitching and blame slinging we're hearing from the White House candidates lately, there's one big issue they don't talk much about. That's the economy, which was a make or break deal for you, the voter, in past elections. Greg Valliere is going to help us figure out why the politicians aren't saying more about your money. He's the chief strategist at the Stanford Washington Research Group in San Francisco. Greg, welcome back to the program.

GREG VALLIERE, STANFORD WASHINGTON RSCH. GROUP: Great to see you, Christine. ROMANS: So we've had debates, we have 17 months before the election. We have some, I think, 18 declared candidates for president of the United States. I think that's only going to grow. What are they saying about my pocketbook? Much at all?

VALLIERE: Very little. Obviously the Democrats would like to raise taxes on the wealthy. Obviously the Republicans would like to curb spending but right now I don't think the economy gets that much traction. Clearly the big issue dwarfing everything is Iraq.

ROMANS: That's exactly right and that is what we've been hearing in the debates, both the Republican and Democratic debate. We have heard a little bit about health care but no concrete plans from anyone, certainly. We have budget deficits to talk about. We haven't heard the nitty-gritty on much of this.

VALLIERE: No, but I think it will pick up, Christine. With gasoline prices as high as they are and probably going to stay that high, I think you'll hear about energy independence, you will hear a lot about public angst over health care, you will hear a lot about immigration. So I think some economic issues will creep in, but right now I think the parties are preaching to the choir and the idea that you're going to raise taxes on the rich is not a big change for Democrats. The idea you want to cut spending is not a big change for Republicans. So I think the more specific issues come later.

ROMANS: It's social issues right now, staking out their positions on some of the big social issues and putting those out there and then I suppose these other things follow. But it is true, right, that voters vote on the economy.

VALLIERE: Well, they do. Right now the economy is OK. It's not great. It's not terrible. Unemployment is 4.5 percent, that's a great number. The overall GDP number is going to be much stronger in the second quarter, this quarter, than it was in the first. So it's going to be hard to get a lot of traction on the economy when things are pretty good.

ROMANS: Pretty good. We've had the Dow last week hitting records, the S&P hitting records. This week not so good, last week Ned Riley said, hey, this could keep going. This week there are concerns the bears might be in control. Where do you fall on the very near term for stock investors?

VALLIERE: I would tell all the viewers to beware of people who overreact. We had an overreaction during the winter and into the spring. Everyone said, oh, the Fed is going to cut rates several times in the second half. Of course they're not going to cut rates. Now everyone's overreacting saying, oh, the Fed is going to hike rates later this year. They're not going to hike rates. They don't know where housing is going. The Fed is going to stay on hold. So it seems like the market's overreacting to the upside and they overreact to the downside.

The basic fundamentals on a wide range of areas, Christine, including the budget deficit witch is plunging the fundamentals are pretty good right now.

ROMANS: Well tell me more about the deficit issue because this is something that whoever is in control, you know, it affects basically and there's been a lot of talk about trying to cut that budget deficit in half. How are we doing?

VALLIERE: Unbelievably well and no offense to the media but --

ROMANS: None taken.

VALLIERE: You never hear about this in "The New York Times" or on TV because it's such a good news story and sometimes I worry that we only report bad news. The good news is the budget deficit is plunging. I think in the new fiscal year that starts on October 1, we could actually have a surplus. The main reason is not spending. Everyone talks about spending and I agree they should cut spending. The main story is receipt growth. Receipt growth has exploded and all of your viewers who have paid the AMT, paid capital-gains taxes, it's receipts and I think that trend continues. A very good story for interest rates and the bond market.

ROMANS: I think one of the reasons why, and I can't speak for the rest of the media, there may be the perception that's been ignored is there is incredible amount of spending going on for the war in Iraq and that is something that, you know, we have to pay for.

VALLIERE: And believe it or not, Christine, aside from Iraq and entitlements like Social Security, spending is growing by about 2 percent, lower than the rate of inflation for everything else which is not a bad number.

ROMANS: Bottom line, recapping, we're going to get more nitty-gritty on the economy from these candidates as we get closer but you say it's not all that bad.

VALLIERE: Each party will get a little edge on certain economic issues. The big issue, the one that will determine the next president who I think will be a Democrat is Iraq. That's the big one by far.

ROMANS: OK. We'll put you down there. You're picking a Democrat at this point.

VALLIERE: Tentatively.

ROMANS: Greg Valliere, thank you so much Greg.

VALLIERE: You bet.

ROMANS: When we come back, why the price of a gallon of milk is connected to the price of a gallon of gas.

And investing like a tycoon. See if you can pick up some financial chops from Carl Icon and Warren Buffet.

(COMMERCIAL BREAK)

ROMANS: Ali is out this week. Our regular contributor Polly LaBarre has graciously agreed to copilot today.

POLLI LABARRE: Great to be here.

ROMANS: Thank you so much. America has fallen in love with ethanol, an energy source from corn; it is used as widely believed to be a win- win-win situation. That is it's good for farmer, it is good for the environment, and it's a good quick fix to our oil problem.

But now we're starting to see some of the unintended consequences. Consider this. It takes 450 pounds of corn to fill up a 25-gallon gas tank in an SUV. That same amount of corn provides enough calories to feed one person for a year. Ethanol's popularity is now pushing up food prices. Ben Senauer is going to tell us more about that. He is the professor of Applied Economics at the University of Minnesota and co-director of the Food Industry Center there. Welcome to the program.

BENJAMIN SENAUER, UNIVERSITY OF MINNESOTA: Well, thank you very much. It's my pleasure to be here.

ROMANS: First, what are some of the unintended consequences of this love affair with corn, with ethanol, as an alternative to oil?

SENAUER: Well, we're just beginning to realize some of the implications of having linked food prices to oil prices. Right now a bushel of corn sells for $3.70. If oil went to $80 a barrel, ethanol producers could pay $5 a bushel for corn.

ROMANS: And that will mean higher prices for the food we eat?

SENAUER: Yes, it is, because corn is at the very center of the entire U.S. Food and Agriculture system. It's our largest crop; it's our largest agricultural export. We are the largest exporter of corn in the world. It is the key feed ingredient for cattle, pigs, poultry, and dairy cows.

LABARRE: So, Ben, it's clear who this booming market for corn-based ethanol benefits, agribusiness, some farmers, speculators in the grain markets, but who does it really hurt and how does it hurt them?

SENAUER: Well, at the moment you're correct in saying there is a love affair with it. It helps on energy independence. Corn-based ethanol is somewhat greener than gasoline. Not a great deal. There is a net benefit/gain in energy. Not as much as many people might think. And so far we haven't seen a big impact on food prices but going forward that may really change. With our 2006 corn crop, the crop harvested in the fall of 2006, ethanol produced used a little less than 20 percent of the total crop. With the plants we now have in place, those that are being built by the end of 2008 ethanol producers will be using over 30 percent of the corn crop. And some estimates are that within the next several years' ethanol producers may be using as much as 50 percent of the total U.S. corn crop.

LABARRE: Is this going to become a hot button political issue for the campaign and what would be your advice if you were advising one of the candidates on what the policy should be? SENAUER: Well, it could become really a hot button issue. I heard your previous speaker saying that at the moment the economy really isn't an issue. If we were to have an adverse growing season, the main factor would be a drought in the Midwest. There's no indication there would be one at the moment, and to not really have a great crop this year, which we need, and then we really would see a significant pickup in food prices. Then there really are going to be some questions about do we want to be paying this 51 cent a gallon subsidy to ethanol which in effect is saying corn is 51 cents more valuable as a fuel than it is as a food ingredient.

ROMANS: Ben Senauer at the University of Minnesota. Thank you, sir.

Coming up after the break, see if you'd be smart to make the same investments as money aces like Karl Icon.

Plus find out whether it is too late to fire up a 401 (k) what ever your age.

(COMMERCIAL BREAK)

ROMANS: Carl Icahn is one of those financial wizards that investors and corporate employees used to fear back in the 1980s but now he's casting himself as someone who has ordinary investors like you and me in mind when he goes after companies. Can you gain something from his portfolio? "Fortune" senior editor Shawn Tully joins us now with a look. He used to be feared. I guess the people who fear him now are overpaid board members or board members who are sitting on too many boards. This guy comes in and he buys up the company stock and starts to tell them how they can fix themselves. Is that good for me as a shareholder?

SHAWN TULLY, SR. EDITOR, "FORTUNE" MAGAZINE: Well, he had a bad reputation in the '80s because one of the pioneers of green mail, not good for shareholders because someone like Carl Icahn would go in, he wasn't the only one who did it but did it with B.F. Goodrich and lots of companies. He would start a proxy battle and the company would buy him out at a premium using the shareholders money to bribe --

ROMANS: To make it go away.

TULLY: But now there's no more green mail. That is over, it's illegal in some states and corporate charters have outlawed it and there's a tax for 50 percent on green mail gain so green mail is dead. So when Karl Icahn buys into a company and threatens a proxy battle, he usually has a very good reason and the shares typically go up because he's very good at identifying undervalued companies.

The same with Warren Buffett has the same strength. Karl doesn't want to stay in for 10 or 20 years. He wants to be in for a few months a lot of times. But essentially the skill at identifying assets that are way under priced is similar.

LABARRE: So he's refashioned himself in a way as a champion of the shareholder and you cannot argue with his results, but what about the managers in the long-term health of the company? How does he really help them out?

TULLY: This is a very good question. There's the kind of cliche in business that guys like Icahn just want to pump the stock up. They just are strictly financial engineers, that they add no long-term value. That's not really correct because financial restructuring can add lots of value. Just take a few examples. Fairmont Hotels, a company with a very conservative board. They didn't want to sell the company. They were afraid that hedge funds would come and bid for it. It was a Canadian like heirloom. Icahn went in, bought shares, threatened to buy the company, and the board was so terrified they put the company in play and the stock soared. Time Warner, very, very undervalued.

ROMANS: Parent of this network.

TULLY: Parent of this network. Sixteen when he came in. He demanded an enormous share buyback. Shares were bought at $17; the stock is now in the low $20s. So clearly that was a very good thing, because the shareholders who still own the shares are now bigger proportional owners of the company and the money was very well -- their money was very well spent in buying in shares.

ROMANS: Shawn, how do I invest like a tycoon? Can I jump on his coattails? I mean if we put all of our money together can we invest in his hedge funds for a mere $25 million, the three high net worth individuals we are.

TULLY: The three of us together couldn't do it. He's pricing us out.

ROMANS: Right. But is there a way to look at what he does or what Warren Buffett does and say I see that he bought a bunch of shares in this company. Should I invest, too?

TULLY: It's a little difficult because once he gets in there's typically a bump in the stock.

ROMANS: Right.

TULLY: So if there's an enormous bump in the stock it might not be a great idea. If it's ignored the way Time Warner didn't move at all when he came in, it could be a very good thing to follow him because either he'll force changes that move the stock up within a few months or if he doesn't, he'll stay in. Look what he's doing with Motorola. He almost got a board seat and would have got on the board and created a lot of noise and held feet to the fire. He didn't but accomplished the same thing by making management very nervous about getting results up in the cell phone business.

ROMANS: It is kind of a reality check I guess for some of these boards and management, isn't it? Someone like Carl Icahn.

TULLY: And he's on the board, also, of Blockbuster, which is a company, he's been on the board for 2 1/2 years. That company was disappointing. After he got on the stock dropped substantially, but he's going to demand big changes. He is at Blockbuster. So in a lot of cases he's either going to stay in and get the stock up, or he's going to get the stock up fairly quickly. What you don't want to do if there's a really big run up right prior to his getting in, the fund might be over.

ROMANS: It might be too late. He has a lot of money; he might be a lot smarter than all of us. Shawn Tully, thank you so much for joining us.

TULLY: Thank you.

ROMANS: It was a rough week on Wall Street. Stocks took it on the chin. Susan Liscovicz joins us now from the New York Stock Exchange. Susan what happened?

SUSAN LISCOVICZ, CNN CORRESPONDENT: Well you know, it's interesting, Christine. We saw the biggest pullback since that Shanghai shock, as I like to call it, in late February. On Monday we had Shanghai's biggest pullback since that shock in late February. On Tuesday and entirely different story we started seeing rising interest rates around the world, European central banks in a surprise move by New Zealand and the sense that an interest rate cut here in the U.S. is off the table because of some good numbers.

Jobs market, we talked about that, as well as rising labor costs. That it's just not going to happen. And that really spooked the market and what you saw was a three-day sell-off that took the major averages down, the three major averages down about 3 percent each.

ROMANS: So a little bit of an interest rate reality check, but what are the bears saying -- I mean, they're not really that confidant quite yet, right? Every time there's been a pullback there's leveraged buyouts, there's stock repurchases, a lot of reasons why folks say that stocks have a good underpinning.

LISCOVICZ: There's no question that's what the U.S. stock market has been incredibly resilient and this was overdue in the minds of a lot of people, not just bears, Christine. But I think that you have to consider this. If interest rates are going to go higher and we saw that big move in the bond market in the past few days over the psychologically important 5 percent, you're going to see perhaps some restrictions or some inhibition in maybe the private equity deals which have been so rampant and which has really fueled a lot of the rallying in the stock market.

That and also we got another report at the end of the week from the Federal Reserve saying that consumers, U.S. consumers, are borrowing less and taking less equity out of their homes. So if you're seeing that, the private equity deals and consumer spending pulling back a little bit, well then, your big bull market may slow down considerably. But we're also, you know, going into the dog days of summer, and so it's not surprising that you would see things slow down.

The question, Christine, is whether it's a slowdown or whether it's really a real change in investor sentiment and you're starting to head for the exits.

ROMANS: Thanks, Susan. Susan Liscovicz.

Coming up on IN THE MONEY, find out how dumb it is to not be investing in your 401(k).

(COMMERCIAL BREAK)

DE LA CRUZ: Now in the news, a smooth liftoff but now a new concern for NASA as the space shuttle "Atlantis" heads for the International Space Station. There is a tear in a thermal blanket. NASA says the tear is not in an area that is prone to heat problems during re-entry but engineers are analyzing the tear very carefully.

At the Vatian the president and the pope held their first meeting. President Bush says it was a moving experience. He and the head of the Roman Catholic Church discussed Iraq and other world crisis.

President Bush also met with Italy's president and prime minister.

In Los Angeles, Paris Hilton back behind bars. She is now scheduled to serve the remainder of her 45-day jail sentence for a reckless driving parole violation. A judge ruled she was improperly released to home confinement by the sheriff's office.

In Iowa a woman accused of trying to trade her son to pay off a wedding dress is back in the court system. Marcie Gant (ph) withdrew her guilty plea to child endangerment charges yesterday. The judge rejected a deal that recommended probation. She faces up to ten years if convicted.

And those are your headlines. Coming up at the top of the hour, a backlash against al Qaeda in Iraq.

Now back to IN THE MONEY.

ROMANS: The 401(k) just might be your most important investment vehicle. For many people in the private sector it's the only company- sponsored retirement option. But it often intimidates people. After all, it requires employees to take action, to pick funds, to manage their own future. Scary stuff. Walter Updegrave, senior editor with "Money" Magazine is going to try to calm all those fears whether you're just getting started or your playing catch-up. Welcome to the program.

WALTER UPDEGRAVE, "MONEY" MAGAZINE: Good to be here. .

ROMANS: If you're just getting started or if you are not in your company's 401(k) wake up it is called a reality check. You should be.

UPDEGRAVE: That's the first thing. Sign up. Try to contribute at least enough to get the full employer match because most employers are giving you 50 cents for every dollar that you contribute.

ROMANS: This is free money. This is free money from your company.

UPDEGRAVE: One of the few instances where there is a free lunch so you want to take advantage of that and a lot of people get overwhelmed. They think I don't know what to invest in. There are so many options but sign up for the plan. You can start the investing plan later. Get onboard first.

ROMANS: Let's talk about where you should be, what kind of portfolio you should have at certain times. If you're in your 20s, you need to be aggressive. You should have a lot of stocks in the portfolio in your 20s.

UPDEGRAVE: You do need a lot of stocks. You want that money to grow faster than inflation. You want to increase the purchasing power of that money. If you put money away when you're young and it's not worth anymore in purchasing power when you're older, then you haven't done a whole lot for yourself. So you want most of it in stocks. When you're in your 20s, you may want as much as 80, 90 percent in stocks.

ROMANS: And then you have this whole longtime horizon for those stocks to grow and to weather volatility. A little bit of bonds maybe?

UPDEGRAVE: You want some bonds. You don't want all your money in one asset class and they can provide a little bit of a cushion when the market goes down. You don't want to focus on that, be one of these people checking their 401(k) every day. If the market goes down 10 percent they get all worried. If you're in it for 20, 30, 40 years, you don't really care about the little bumps along the way. It's where you want to be at the end that's important.

ROMANS: We all checked it every day in the '90s. Look where that got us. When you're in the 30s and 40s, you need to start scaling back a little bit on the stocks and putting some more sort of capital preservation in there, right?

UPDEGRAVE: Exactly, because as you get closer to retirement and you're going to begin drawing on that money, you don't want to be in the position where there's a market drop and all of a sudden you have 20, 30 percent less than what you thought you had when you were ready to start pulling money out.

ROMANS: Retirement is ten years away. Where do you need to be in that allocation?

UPDEGRAVE: Usually you are probably with ten years away you want to have scaled down to maybe something like 70, 60 percent stocks. You have to remember even though retirement is ten years away; you may be spending 30 years in retirement.

ROMANS: Right. Hopefully.

UPDEGRAVE: Yes, you hope. And you still need some growth during that period because after you retire, prices are still going to be going up and you want to maintain your purchasing power in the face of inflation So there's a tendency among some people, they hit retirement or very close to retirement. They think, oh, I should be all in bonds. I want to keep this safe. But it's not really being safe because you can lose the purchasing power of that money.

ROMANS: Let's talk a little bit then about sort of these targeted funds. Say I don't have enough time to look at this and change the portfolio and how do I make sure that if I want idiot proof investing on my 401(k)?

UPDEGRAVE: Well a lot of people don't want to take the time to figure out how much they have in stocks and bonds and then which ones should I own. So there's this great option that a lot of plans now offer, it is called a target date retirement fund. All you do is pick a fund that has a date that roughly correspondents to when you plan to retire. If you're 45 years old and you are going to retire in 20 years you might pick a 20-35 or 20-30 fund. And what that fund has is it has a mix of stocks and bonds that is appropriate for somebody your age. So you don't have to worry about which, how much to put in stocks or bonds, which ones to invest, it is all there for you. The other neat thing about it is it gradually shifts more into bonds, as you get older.

ROMANS: It does it for you.

UPDEGRAVE: It's all behind the scenes. All you have to do is put the money in and it takes care of all the investing.

ROMANS: Are fees higher for that because they're doing all the work?

UPDEGRAVE: They are not usually to much higher, the way the funds work is there is the fund itself and then it will invest in sort of subsidiary funds that have their own expense ratio and you pay a portion of the expense ratio of these underlying funds so a lot of them are relatively inexpensive and you can always check the expenses and find the more inexpensive one. You may have only one choice in your 401(k) you can invest in these outside your 401(k).

ROMANS: All right. So bottom line here is that you have to be in your 401(k) especially if you're getting free money from your company. Do it. Do it early. Take the money out. Make sure you have the right kind of portfolio or do a target kind of target date portfolio and don't have too much of your own company stock, right?

UPDEGRAVE: Company stock is one of these things a lot of people think, oh, I know this company. I can invest in this because I know what I'm doing here. The truth is, though, anytime you have a concentration in one individual stock that makes your portfolio a lot more volatile and the more a portfolio jumps up and down generally speaking, the lower its long-term returns. People have this illusion of safety with company stock. In fact, it's not a very good idea to have very much in there, 10 percent absolute tops.

ROMANS: Walter Updegrave, "Money" Magazine, senior editor. Thanks for joining us.

UPDEGRAVE: Thank you.

ROMANS: Make sure you're getting your free money. Get in your 401(k).

Up next up on IN THE MONEY, find out how an old-school hotel chain is using technology to show guest as good time.

And later the thing Americans can't stop thinking about but can't get around doing.

(COMMERCIAL BREAK)

ROMANS: If you've done any amount of traveling you know the name Marriott. What started as a small D.C.-area restaurant chain is now an 11.5 billion dollar a year hotel giant. At age 75, CEO Bill Marriott is just the second person to hold the top position in that company. He succeeds his own father. Ali Velshi caught up with Bill Marriott and asked him how the company has managed to grow so big.

(BEGIN VIDEO CLIP)

J.W. MARRIOTT JR., CHAIRMAN AND CEO MARRIOTT INTERNATIONAL: My dad started the business with a drive-in restaurant chain in the '30s. We've grown today; it will be 80 years this year. Started in Washington, D.C., really with a root beer stand and added hamburgers and hot dogs and turned it into a drive-in restaurant and we had about 40 drive-in restaurants by the end of the '40s and then finally in '57 opened our first hotel in Washington.

ALI VELSHI, CNN CORRESPONDENT (voice over): If you look back to 1957 to now, what's changed in this industry? What's changed in the business? What's the biggest thing that's different now from when your father started this?

MARRIOTT: We're doing a lot more than just renting a room and giving somebody a breakfast.

We have thirteen hundred people just in the systems department in that company, at headquarters that is not on the property, that's at headquarters. Just designing systems to be able to better take care of our customers.

VELSHI: It sort of correspondents with the way the technology in every field has allowed the consumer to customize their experience, to tell their retailer, the business that provides them with goods or services what they want be a how they want it. Has that had a big impact on how you do business?

MARRIOTT: Sure. We're doing a lot of business online. We did $4 billion on Marriott.com last year. We developed in our rooms what we call a connectivity panel, part of our television sets so you can plug in your ipod and listen to music on the speakers from the TV. You can plug in your DVD through your computer and watch movies. You can plug your computer in, you can split the screen, watch sports, read your e- mails. All kinds of things you can do with this connectivity panel.

VELSHI: How do you come around to that? You have witnessed all of that change, I mean are you a consumer of these things? Do you have an ipod? I know you blog. How connected -- how much of this is because it's good business and how much of it do you really think is the way things go?

MARRIOTT: It is the way things go and it is good business. The younger generation today is so wired with computers and with technology that if you ignore this end of the business, you're ignoring it at your peril.

VELSHI: Can you tell us about branding? It's an embarrassing question to ask you about this more than most business leaders because I imagine you worry a great deal about branding. Your name is on so many hotels. But your empire has a lot of brands that don't carry your name. Tell me how the customer is supposed to respond to these different hotels within the Marriott family?

MARRIOTT: We have two brands that don't carry our name. One is Renaissance and the other one is Ritz-Carlton. And Renaissance is a competitor really with Marriott and Ritz-Carlton is a step above both Marriott and Renaissance. All the courtyards, Springhill suites, all those brands are by Marriott so we do have our name on those brands and it's very important for us to differentiate by purpose of trip.

We might have a person attending an investment conference at Ritz- Carlton take his family to Disneyland in Florida and he'll get his family a car, stay at a Fairfield Inn or stay at a Courtyard. What is the purpose of your trip?

VELSHI: I want to ask you a little bit about the economy.

MARRIOTT: OK.

VELSHI: We have oil prices that are relatively high. We have some people finding their interest rates on their homes readjusted and having trouble making those payments. We've heard of foreclosures, we've got gas prices that are high. Does this translate into your business? Do you see the impact of people and their financial issues in your business?

MARRIOTT: We very closely track the economy. It's very important to us to have a very strong economy. People around the world are buying our products. With the dollar so cheap, buying American products around the world is the real deal. One much of the problems we have is we're not getting enough inbound tourists coming to the United States that we should. Our inbound tourists are growing 3 to 4 percent a year. They should be growing at 10 or 12 percent. This is a very good place to visit and very inexpensive to visit.

Part of the problem is the trouble people have overseas getting visas, getting through immigration. We're really do believe in strong borders because we lost a hotel here in New York in 9/11. Our hotel at the World Trade Center was destroyed. We lost a couple of our associates and we've had terrorist incidences around the world. We understand the great importance of security. At the same time the Department of State and Homeland Security have to get their act together in terms of getting an opportunity for people to have easier access to visas and a greater opportunity to visit this country.

(END VIDEO CLIP)

ROMANS: Fascinating stuff. Ali Velshi and Bill Marriott.

By now most Americans are itching for a summer break. However, a new survey finds that those who actually have the time and money to take a vacation can consider themselves lucky. Lucky to take a vacation, lucky to have the time. Polly LaBarre is going to tell us more about our itching to take a vacation and Americans aren't.

LABARRE: No, we work longer hours, we work harder, we work with fewer breaks than any other industrialized nation on Earth and every year there's a new study out to document the gory details whether it's Expedia's vacation deprivation or no vacation nation report. This is my favorite comparison. You put this in perspective. We work more than medieval peasants used to work.

ROMANS: I kind of feel like that sometimes around here.

LABARRE: When you compare it to the dark ages, it's time for a change. The striking thing is that U.S. people take fewer vacations about 14, 15 days on average they get. They don't use three days of that, 35 percent of American workers report not taking all or some of their vacation.

ROMANS: Why don't they? Are we overachievers, Are we afraid of someone climbing over us on the corporate ladder? We can't afford it?

LABARRE: Well, it's all of those things. It is the work culture where basically we live in a world where only three-quarters of companies actually offer paid vacation and paid holidays so one in four Americans don't get paid vacations and then does your boss model behavior of taking days off? Do you feel like you're indispensable? You don't have enough time? You don't have enough energy is another problem. The bigger problem is we're a country that has no mandated paid vacation whereas the European Union has a floor of 24 days and vacation chance like France and Sweden offer 39 to 40 paid days.

ROMANS: I say compare the GDPs of the countries.

LABARRE: Even Japan, Japan takes 25 days off on average.

ROMANS: Good point.

LABARRE: When we do take vacation, we're really bad at it I think.

ROMANS: Is it a vacation if you take your Blackberry? That is what I want to know.

LABARRE: I say ban the Blackberry. I know that's a radical statement, but could you possibly try like one day. One-day deprivation of the Blackberry and e-mail and voice mail and see how you feel. Two days, three days. It's an addiction. I think you need to get rid of it. The other thing is we try to be overachievers on our vacation just like we are in life. So whatever happened to reading a book on the beach?

ROMANS: How about the stay-cation. I am actually doing this next week, just spending a couple days hanging out with my kids, not going anywhere and having a vacation at home.

LABARRE: I applaud you and think it's a good idea.

ROMANS: But I will have a Blackberry.

LABARRE: You can't totally disconnect yourself.

ROMANS: All right. Polly LaBarre thanks.

Coming up next, some of the weeks top stories from MONEY.com including a retirement move you don't want to make.

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ROMANS: And now a look at the business stories you've been checking out online. Joining us now is Jeanne Sahadi, senior writer for CNNMONEY.com. Jean everyone is clicking on stories about home prices and a couple that were popular on CNNMONEY were the drop in home prices and also how it pays to landscape your house properly. I guess for the curb appeal if you're trying to sell that house.

JEANNE SAHADI, CNNMONEY.COM: That is exactly right. Home sellers were not happy with the news this week; they were the ones probably clicking. We heard two unfortunate news for home sellers, one, the National Association of Realtors came out with a more negative forecast for home prices. They expected it to go down a little bit more this year than they forecast a couple months ago.

Two, we hear mortgage rates went up a bit. They're not as high as a year ago but, still, buyers are going to say this house is going to cost me a little bit more, so people think if the mortgage rates come close to 7 percent, that could have a negative effect on prices. Home sellers are thinking I have to price my home aggressively and I have to make it sexy relative to other homes in the neighborhood. What can I do?

And "Money" Magazine has a great article. Seven fairly inexpensive landscaping tips that cannot only attract buyers but boost the value of your home.

ROMANS: So you have to make your house look pretty. Because people are just not buying anything any more, there's some competition.

SAHADI: And you know appearance is everything. You only get to make a first impression once. My favorite tip from the whole thing, and I'm not a gardener so it's the only one I understood, if you change the curve in your flower bed that can add as much as 1 percent. The curve.

LABARRE: Nice. So now you not only have to stage the inside of your home, you have to stage the outside of your home.

SAHADI: That's correct.

ROMANS: Now you wrote an interesting story about mistakes that baby boomers can make with their Social Security. This is incredibly important, because they're living longer. We need a lot of money to retire with. If you're taking your Social Security early, is that a bad idea?

SAHADI: It's a good idea for some people, a bad idea for others. There are a lot of factors that go into the decision. Baby boomers, the first wave of them, are turning 62 next year. That's when they have to start thinking about it. That's the first year you are allowed to take Social Security benefits. For retirement age has moved up to 66 so should you take those benefits for the extra four years? You're going to get a reduced check, so in some senses you're going to be ahead of the game for several years because you're going to be pocketing money before you would have gotten a check to begin with. There's some point called the break even point where taking the check early and taking the check on time --

ROMANS: Hurts you.

SAHADI: It evens out and beyond that point it would have been better to wait so the article looks at how you can think about that, how you can calculate that number. It's not the easiest calculation I learned after two days of looking at it and thinks of some other factors. It is not just a break-even age; it's your tax situation, your plans to work in retirement, your health situation, and your current finances. Can you afford to always have a permanently reduced check if you take early retirement?

ROMANS: If you have income and you're healthy and looking at a long, long retirement, god willing, you should not be doing this early?

SAHADI: That's generally true, but there are a lot of other things that go into it. I did talk to one pension expert and he said that half of all people who apply for Social Security whether you do it on time or early, you actually would benefit, you would pocket more money if you waited until age 70 to take your benefits because not only will you get more than you would have when you retired early, you get what's called a premium. So because if you're going to live very long, say age 90, you really can maybe get away with more money.

LABARRE: When people are working a lot longer these days, so what's the strategy there? Is that complicated, too?

SAHADI: You can collect your benefit while you're working. Again, complicated. They reduce your benefit while you're working and then you get back the withheld benefits after you stop working or after you turn your full retirement age. It is not a simple calculation.

ROMANS: Bottom line is be very careful but think about all these things through. There are literally millions and millions of people this is going to impact over the next few years as the baby boomers start to retire.

All right. Jeanne Sahadi thank you so much.

SAHADI: Thank you.

ROMANS: This week marks the 63rd anniversary of D-Day when allied forces launched their invasion of Europe on their way to defeating the Nazis in 1945. It marks the beginning of another battle, to reclaim the lost cultural treasures that have been looted from European museums. Randi Kaye has the story.

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RANDI KAYE, CNN CORRESPONDENT (voice over): Da Vinci, Michelangelo, these masterpieces grace the walls of museums today but might have been lost forever if not for the work of a group nicknamed monument men.

ROBERT EDSEL, AUTHOR, RESCUING DA VINCI: The monuments men and women are my heroes, a group of men and women, about 350 or so, museum directors, curators, who volunteered for service during World War II and ultimately were involved in the leadership of what I say is the greatest treasure hunt in history, trying to find the greatest works of art through out Europe hidden in more than a thousand hiding places.

KAYE: Robert Edsel uncovered the story at a crossroads in his own life. In the late 1990's Edsel sold the oil and gas company he built in Texas and decided to take a break from work. He moved his family to Italy to renovate a villa, study art, and discover his next passion. Little did he know it would find him on a bridge in Florence.

EDSEL: I stood on the bridge in Florence, the only one of the bridges that wasn't destroyed and blown up by the Nazis when they fled Florence in 1944 and thought to myself how did all this stuff survive World War II? Who are the people who saved it?

KAYE: And so Edsel discovered the story of the Monuments men and his new passion is sharing their stories through a book he's authored, a documentary he helped produce, and speeches he gives.

EDSEL: Literally tens of thousands of paintings, hundreds of thousands of cultural items hidden in more than 1,000 caves, salt mines, and other places by Hitler and the Nazis was a circumstance no one contemplated and resulted in an extraordinary effort on the part of this special group, these monuments men and women to try and find these things and ultimately restitute them to the countries in which they were stolen.

KAYE: Earlier this week Congress passed a resolution honoring the monuments men. In attendance were four of the 12 surviving members. Fittingly the event took place on the 63rd anniversary of the D-Day invasion.

Randi Kaye, CNN, New York.

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ROMANS: Still to come on IN THE MONEY, Virgin Group of Richard Branson's latest move in the airline business. We will be right back.

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ROMANS: Virgin Group and its founder Richard Branson announced plans this week for a business class only airline. Phil Black has a closer look at what this means for business travelers and the company's already cashing in on this growing market.

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PHIL BLACK, CNN CORRESPONDENT (voice over): Richard Branson loves a big entrance. This is how he announced Virgin Atlantic's entrance into Kenya with daily flights from London to Nairobi. And now he's revealed an even bolder plan to launch a new service between European cities and the United States all in business class.

PAUL CHARLES, VIRGIN ATLANTIC: The market is buoyant. It's a solid economy out there at the moment, and we feel that the time is right to start this venture.

BLACK: Within 18 months Virgin Atlantic may spend up to $700 million on a fleet of new jets that will look something like this on the inside. Flat beds throughout, lots of space. But business only is not a new idea. There are already three carriers offering the same service out of London. Silver Jet, and Virgin executives say they are not worried about this exclusive market becoming overcrowded; they say there's still plenty of room for growth. They're confident the powerful virgin brand can muscle in on the competition. And the competition agrees there's more than enough business to go around.

KATHERINE GERSHON, SILVERJET: London-New York is one of the biggest routes in the world and there is more than enough premium customers for ourselves, British Airways, Virgin Atlantic, and anyone else who chooses to compete on the route.

BLACK: Virgin Atlantic hasn't revealed detailed pricing but says it will be cheaper than its rivals. They currently start at around $700 one way from London to New York.

Phil Black, CNN, London.

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ROMANS: Thanks for joining us for this edition of IN THE MONEY. Thank you Polly. Ali will be back next week; I'll be back later today for "Lou Dobbs Weekend" at 6:00 p.m. We will see you back here next week Saturday at 1:00 and Sunday at 3:00. See you then.

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