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Your Money

Where the Jobs Are; Oil Crosses $100 A Barrel: How That Might Not Matter So Much to Your Wallet; Taking Emotion Out of Investing?; Politics and the Economy

Aired January 05, 2008 - 13:00   ET

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

(COMMERCIAL BREAK)
TONY HARRIS, CNN ANCHOR: A look at our top stories in just a moment. YOUR MONEY is next. Here's a preview.

ALI VELSHI, CNN HOST: Thanks. Coming up on YOUR MONEY, from jobs to tax cuts to health care. Which candidates are talking the economy the loudest and what does it mean to you?

CHRISTINE ROMANS, CNN HOST: We'll look at the employment picture it grows bleak; we will tell you though where the jobs are.

VELSHI: You think you're so smart, but most Americans invest with their hearts, not with their heads and why that's not such a good idea.

ROMANS: We're ready to go right after "Now in the News."

HARRIS: And, hello, everyone.

Now in the news, a fierce winter storm is pummeling the west. Heavy snow, rain and strong winds are closing roads and knocking out power and stranding travelers. Forecasters say the storm can dump up to ten feet of snow in some areas. Adding to the misery, a levee break 40 miles from Reno, Nevada, has flooded homes and forced many residents to evacuate. Two U.S. Navy helicopters are being sent there to help with the evacuations if needed.

In Georgia, searchers are, again, combing rugged mountains for a hiker missing since New Year's Day and police are questioning a man they call a person of interest. He was reportedly seen with Meredith Emerson shortly before she disappeared.

An update on your top stories at the bottom of the hour. Now, it's time for YOUR MONEY.

VELSHI: Welcome to YOUR MONEY, where we look at how the news of the week affects your wallet. I'm Ali Velshi.

ROMANS: I'm Christine Romans.

Coming up on today's program the jobless rate hits 5 percent for the first time in two years. We'll tell you where the jobs are.

VELSHI: Plus, oil crosses the $100 a barrel threshold this week. Why, though, that might not matter as much to your wallet as you might think.

ROMANS: Taking the emotion out of investing, is that possible? How to make money decisions with your head not your heart.

VELSHI: Well, Barack Obama and Mike Huckabee were the big winners in Iowa, and now it is on to New Hampshire for round two.

ROMANS: A frightening unemployment report put the economy in full focus as the candidates head towards Tuesday's primary in New Hampshire. Mary Jacoby is covering the 2008 presidential race for the "The Wall Street Journal." And joins us now from New Hampshire, welcome to the program.

MARY JACOBY, "THE WALL STREET JOURNAL:" Thank you.

VELSHI: Mary I got it tell you, before Christine starts, I'm glad we started doing this show because I couldn't keep up with the doom and gloom of Christine enumerating everything that was wrong with the economy. I want to give you a background. Go ahead, Christine.

ROMANS: He's making fun of me. We have $100 oil, we have record gold prices and we have rising wheat prices and food prices across the globe and weak job's report on Friday and we have everyone focused on taxes and tax cuts for next year. Are all of these things playing out in on the campaign trail or not?

JACOBY: Well, surprisingly, they're not playing out as much as I would think. Now, I've been in New Hampshire for this whole week, not Iowa and I've been following Republicans like John McCain and Rudy Giuliani. And when prices, questions about prices of oil come up, for example, it's often in the context of national security and the candidates will link it back to economic security. But that is often what the context is for oil prices, for example. And ...

VELSHI: In terms of our polls, you've seen the same polls shows that the economy now for a few months has been the number one concern for voters out there. It's ahead of security in Iraq.

JACOBY: That's right. And that's why a candidate like Mike Huckabee, who just had this huge win in Iowa, is doing well among certain Republicans because he does talk about these issues. He talks about main street Republicans, not Wall Street Republicans and that does resonate with certain part of the Republican electorate.

ROMANS: What do Republican voters want to hear overall, I guess then about the economy from their candidates? Do they want to hear about tax cuts? Do they want to hear about monetary policy, fiscal policy? What do they want to hear about on the economy?

JACOBY: It depends on which party you're with and which candidate you're following. Monetary policy is something that the Ron Paul people are incredibly interested in, believe it or not. But the health care is an issue that's universally addressed by all the candidates, but you don't hear too much about tax cuts when you follow the Democrats around. Surprisingly, I haven't heard that much about tax cuts either on the Republican side of the trail. VELSHI: Which is interesting because long term that is probably of more interest or more importance to people. Take a look at a recent poll, a CNN/WMUR New Hampshire primary poll; this was taken just before the primary. Republican voters who would best handle the economy? Mitt Romney takes it away with 47 percent. McCain is a distant second and then Giuliani.

Look at Huckabee who walked away with this thing, 5 percent. Ron Paul who wants to bring back, as you said, the gold standard to deal with the dollar, there doesn't seem to be a whole lot of faith that the candidates are all that equipped to handle an economy that could be going into recession.

JACOBY: Yes and I think that Romney benefits from the aura of having been in business, a successful venture capitalist and a turn around artist and he has the aura of confidence and that's what he projects. That's where he benefits. Hillary Clinton on that same poll, she benefits because of her association with the '90s when the economy was roaring and a lot of good feelings about how the economy was doing under Bill Clinton.

ROMANS: Mary, you make a good point. Clinton in that same poll scored 39 percent who thought she could handle the economy well and do a good job handling the economy and yet she came in third in Iowa. I mean, what does Iowa tell us, I guess, going forward. Especially for you sitting there in New Hampshire.

JACOBY: Well, Iowa and New Hampshire are two very different states, very different electorates, maybe more so on the Republican side than the Democratic side. But what I think it says is that the Democrats are focused incredibly focused on change and are very interested in taking back the White House and are more focused on the candidate and the personality there than usually, I mean these economic issues are what John Edwards was stressing.

He's riding around here in the middle class express, that's the name of his bus and he did well, as well as Hillary Clinton in Iowa but it's not really something, the cult of Obama a, the personality is what seems to be taking the day with the Democratic voters here and the economy, it's sort of a back seat.

ROMANS: Mary, this job's report this week, a bleak 18,000 jobs created. The job's growth of the year really, really came to government jobs, construction, housing jobs lost. That really plays into that Edwards' theme, doesn't it?

JACOBY: Yes, it does. Yet, Edwards is not, not the front-runner right now. So, it's an interesting election.

VELSHI: Yeah, it is. It will get more interesting as this economy starts to touch more and more people. Mary, thanks for talking with us. Mary Jacoby is a reporter with "The Wall Street Journal."

You were just talking about that job's report, that's something we will talk about a little bit today. ROMANS: We'll break it down and show you where the jobs are and aren't. The jobless rate reaching a two-year high in an increasingly bleak job's picture. We'll bring you a ray of sunshine. If you're looking for a job, if your kid needs a job, we'll show you where the jobs are.

VELSHI: Stay with us.

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VELSHI: Here now is Dr. Doom. Go ahead, Christine.

ROMANS: Oh, Ali. This is true. There is more evidence that the jobs markets is weakening. The jobless rate now 5 percent that is the highest in two years. New numbers out Friday showing we are losing jobs in construction, manufacturing, retail, even at a good time of the year.

VELSHI: Retail, there are 24,000 retail jobs lost in December. That's when they hire retailers hire people.

ROMANS: Overall 18,000 jobs added in December. The labor economist who I follow, 115,000 jobs a month just to keep up with the growth and working age population. We're not there.

VELSHI: Economists and job watchers say that employers have become more cautious about hiring new workers and that is a trend that is likely to continue into 2008. Jonas Prising is president of the staffing firm Manpower North America. He has, obviously a very good look at the job's picture here in the United States. Jonas, thank you for joining us.

JONAS PRISING, PRES., MANPOWER NORTH AMERICA: Thank you for having me.

VELSHI: This is an issue for you people. You know very closely what happens because you are responsible for placing so many people in jobs; this is reflective of what you're seeing. Am I right? There are fewer people being hired.

PRISING: We've seen this trend now for the last two or three quarters where employers have said that they are more cautious in their hiring intentions. When you look at the numbers and you can also see it in the labor numbers that we have just seen this morning, it is really tale of two cities. You have the goods producing part of the economy that is having a much, much tougher time and an accelerated tougher time especially in the last report with manufacturing and construction.

VELSHI: The stuff we've been losing for years plus the construction.

PRISING: Yes, so those are things that have been going on for quite some time where as the service sector has continued and our employers in those sectors continue to say that they will, they will be hiring also going forward. You have those two parts, which on the average, have held us up very nicely and we've been close to historical low unemployment rates at 4.7 percent and now we've moved up to 5 and it's still a relatively low number if you look at this on a historical perspective.

ROMANS: A jump from 4.7 percent to 5 percent really rattling the market this week. At the same time, keep it in perspective, 4.7 percent was pretty low. A lot of people argue about this until the cows come home about people dropping out of the labor market, et cetera.

Let me ask you about the shift then. From the goods producing side of the equation to the service side of the equation, are the jobs that are out there paying as much as the jobs that we're losing? If I'm out looking for a job and somebody says, look, you're not going to get one of those manufacturing jobs any more and you can get a service industry job, can I make as much money?

PRISING: Well, I think if you look that kind of jobs that are being created in the service sector, certainly you have some food service related and that's been a fast-growing part of the sector and job creation in 2007. And there the salaries are probably slightly, slightly lower than what you would have in the manufacturing environment. If you look on the other side at the health care sectors and the professional service sectors, those are higher-paying jobs and they are also jobs that will continue to evolve and grow when you think about the changing demographics.

VELSHI: I get that. We were just looking at that graphic where it showed where you think jobs are going to be projected. Get the health care part of things. I heard an analyst saying don't invest in anything that uses a fork in 2008. And we just saw that retail shed jobs in December, in the time that you've been in this business, is it common to see a loss in retail jobs in the busiest month of the year for retailers?

PRISING: Well, you saw a strong run up in November in the jobs, so I think it reflects clearly a softening of the market that retail jobs dropped off in December. But if you look at the food service, between food service and health care, two-thirds of the job creation in 2007. And there's no reason to believe that when we talk to our clients that they see a sharp drop off there. I think employers are more cautious when they hire. They're more surgical about their hire and better tools to understand where and when they should hire but there is still hiring going on.

ROMANS: That's what we really want to draw away with this from our viewers is where there is hiring going on. Show you a map of the United States and show you where you can see unemployment rate that is better than the average and that is worse than the average because every state is different. The red here, these red states out west, California, higher than the National Unemployment Rate. Green is lower than the National Unemployment Rate. Oh, my home state of Iowa is lower than the National Unemployment Rate.

VELSHI: Is that a way to think about things, Jonas. Geographic areas of the country that are better job opportunities if you're mobile and you care to move.

PRISING: I think that if you look at this in general, it's very difficult to draw any conclusions looking at the averages. You have to look at the moving parts of the economy and the economy consists of different sectors. Some are doing great and some are having a tough time. Some states are strong and those sectors that are doing well and others suffering well because they have a higher proportion of those industries not doing as well.

You have to look at each situation and mobility of the labor force is going to be extremely important for us as we go forward and people are looking for jobs where in sectors as well as geographies that are more suitable for them.

ROMANS: Health care is a place where you'll look for jobs growth next year. We've heard that a lot that in getting health care training or retraining, if you're leaving a different industry and going to health care, there are some jobs there. But you see a decline in hiring in construction, the trend that we've seen, as Ali pointed out. Stable hiring in finance and those-related jobs and insurance and real estate. Stable I guess would be an improvement for some of those after the sub prime crises. You think the worst is over for the real estate and housing part of this equation?

PRISING: I don't think we've seen the full effects of the events that we've had in the last two to three to four months. I think we still have, we still have some changes to come. The employers are always looking forward. They've take on the situation where they are especially in the finance sector can see and pretty tough in saying OK I don't think there will be major changes to this. We'll know over the next two to three months where exactly and how hard this is going to come and hit, whether the sectors are doing well and continue to do well and the others stabilize somewhat or continue a soft decline or whether it's more general situation.

ROMANS: So, Jonas, just between the three of us, if Ali found himself looking for a job in the next year or so, where are his best, his best prospects.

VELSHI: I hear truck driving is big. There is a lot of demand for truck drivers.

PRISING: There is a lot of demand for truck drivers, when you think about the manufacturing sector, centralizing and becoming more productive and you need to shift goods all across the country to be able to get to the consumer. So, logistics is an area where that is projecting growth. I think you'll find growth in particular in the service economy. Continues to be a strong, strong generator of opportunities for talent and then I think you need to look at where you're geographically and how your state or city is positioned for those industries that are doing well.

VELSHI: That is a good calculation. We should try to work that out some time, Jonas. Thank you for being with us.

PRISING: Thank you very much for having me. VELSHI: Jonas Prising is the president of Manpower North America.

ROMANS: Notice he did not say hair model.

VELSHI: Look, Christine, we have time. Any more gloomy stories for our viewers?

ROMANS: Yes, I have another one. A major milestone for oil this week. Prices crossed the $100 a barrel mark for the first ever on Wednesday.

VELSHI: There are a lot of things; by the way that is my oil barrel. We don't tend it see it a lot here, but during week this is my own personal -- CNN's /oil barrel but I travel with it at all times. Sometimes when I work late I stay in it. Prices of oil were driven up and there was violence in Nigeria, which is a major oil- producing nation. And there was bad weather in Mexico which closed some oil facilities, and then there's this weekly inventory report in the United States, which shows how much oil we have and that showed a very large drop in U.S. crude oil supplies.

ROMANS: A lot of people making a big deal about that $100 a barrel mark. I mean it is a number. Crude oil is up 70 percent this year.

VELSHI: The trend is there. Even though it's just a round number.

ROMANS: So Velshi is down where all the action was this week. You were down there on the floor with the traders.

VELSHI: It is a real trading spot. You and I have worked on a number of real trading floors. They scream and wild hand gestures and basically a big fraternity.

ROMANS: Usually there is hazing involved.

VELSHI: Just like a fraternity.

ROMANS: We spent a day on the floor with one trader to figure out exactly what it is that they really do down there.

(BEGIN VIDEO CLIP)

CHRIS MONTRONI, INDEPENDENT TRADER: I'm an independent trader here on the New York Mercantile Exchange in the crude oil options pick. I was brought up in this business. I had at 15, I had my first summer job was here. If you are a trading right, you're making right decisions. You're saying this is a trade, there's value here.

That's the way you want it look at it. And you're supposed to scream from your stomach. You actually can track down here and project better. If I didn't know that, I would have a raspy voice like a lot of these guys do. Since it's so loud here in here you have to have up with essentially a sign language so you can understand each other. You know, for every month there is a hand signal. This is peace, there is March, April, May, June, July, August -- and, so, and then even the numbers are different. You know it's one, two, instead of three this way you do three this way because this can be misconstrued. We're a big fraternity.

As much as it is cut throat and competitive, it's almost as we still respect each other. People say, oh, you work five hours. Try it. Come here and do what I do and try it. If you come in and work hard you'll get rewarded, on every level. If you come in and work 50 percent, you'll get 50 percent rewarded.

(END VIDEO CLIP)

ROMANS: I mentioned hazing before, Ali, because long time ago I got hazed on the floor of the Chicago Mercantile Exchange and you got a little bit of attention.

VELSHI: I did.

(BEGIN VIDEO CLIP)

VELSHI, (voice over): Lots of activity, Rob. Not sure what they're getting excited about. Oil is at $99.33.

(END VIDEO CLIP)

ROMANS: They're excited about you.

VELSHI: I got spurred, that's what they call it.

ROMANS: What does that mean, spurred?

VELSHI: They make little paper spurs and they were cheering me on. Apparently, it could have been worse.

ROMANS: I got sharked but it wasn't on camera. They put a fin on your back and you walk around all day with the fin on your back.

Do you invest with your heart instead of your head it could cost you big time, so get out a pen and paper. We are going to Ali and you to the test on how you invest.

(COMMERCIAL BREAK)

ROMANS: So, we learned this week that President Bush is considering a fiscal stimulus package.

VELSHI: A physical fitness package? He's pretty fit.

ROMANS: That's to prop up a struggling economy. A spokesperson for the president said a number of weeks until a decision are made. On Friday the president met with treasury secretary Henry Paulison and Federal Reserve Chairman Ben Bernanke and other members of his working group on financial markets.

VELSHI: That's funny, I think he looks quite fit.

Automakers closed the books on a very disappointing 2007. It was the weakest for full year's sales in nine years, down 2.5 percent. Domestic brands barely beat their overseas rivals in U.S. sales. GM remained on top, but look at that, losing 6 percent. Toyota posting its 12th straight year of record sales in the United States overtook Ford. It is now the number two seller of cars in the United States. Notice Honda and Toyota are up. GM, Ford and Chrysler down.

ROMANS: Another reason why Ali calls me the women of economic darkness on the show. Personal bankruptcies were up 47 percent last year that is according to a report out from the American Bankruptcy Institute. The head of the ABI says the situation will likely get worse in 2008. Turmoil in the housing market and growing consumer debt levels have led more people to seek protection from their creditors.

All right Ali, are you ready? Play along at home, if you can. It is time to determine whether you invest with your head or your heart. So, Ali, which is the better investment strategy? Is it, "a," gaining $300 for sure or "b" an 80 percent chance of gaining $400 with a 20 percent chance of gaining zero.

VELSHI: "B" entails risk and there is no reward without risk. I think "b." Take a little risk for more gain.

ROMANS: So you take the easy $800, we'll see. An easy $400 or risk for $800. Author Jason Zweig says many go for "a" but over time "b" is the better choice. And 80 percent chance of gaining $400 works out to an average gain of 320.

VELSHI: Interesting. Well Jason is here with us now. He's fortune writer and the author of "Your Money and Your Brain." How the new science of neuroeconomics can make you rich. That's a chewy title. Welcome.

JASON ZWEIG, AUTHOR, "YOUR MONEY AND YOUR BRAIN:" Thank you Ali.

VELSHI: Thank you so much. I suppose the answer to that question, you may have shown that it actually works out better to take that little bit of risk, but risk and your risk profile and how much risk you can take is very personal, right?

ZWEIG: Extremely personal. Obviously, you get an "a" for answering "b" but most people in that question will take "a" because the sure thing feels a lot more comfortable and taking that risk, that chance of getting zero is very frightening to people.

ROMANS: And this is something that we're wired for, isn't it? We think, you make a point, you can look at a piece of cake and say, no, I'm not going to eat that. I'm not going to eat that piece of cake because I'm dieting, but the person will still eat the piece of cake. We're wired for this.

ZWEIG: It is very easy before you take a risk or take a gain, I'll be rational and logical when the moment comes. But when the moment comes, when the cake comes sliding across the table all your resolve melts and you just eat the cake.

ROMANS: As an investor you want to know, you need to realize you're not as rational as you think you are. If you can come to grips with that, it can make your investing decisions more profitable.

ZWEIG: One of the keys that really come out of the research in neuroeconomics is in order to invest successfully you have to have a plan and put rules in place in advance because otherwise you'll always be making your decisions based on what the market does and you'll be responding to short-term market conditions and getting away from your own long-term plan.

VELSHI: There are some ways of investing and some people who invest entirely based on evidence and rules and data and there are some people very successful people who sort of impose some of their gut feeling into their investment decisions. As a regular average investor who might be watching us and does something else for a living, how much should your gut play a role in any of your investing decisions?

ZWEIG: I think gut feeling can be helpful if you turn it inside out and one of the best rules I know of for investing successfully is not to turn your emotions off but to turn them inside out. You think about Warren Buffett, for example, who is very fond of saying we try to be greedy when other people are fearful and fearful when other people are greedy. When you get an emotion in your gut, you're excited about the market going up or you're miserable about it going down. You should recognize that feeling but then you should ask yourself what happened the last time I felt this way.

VELSHI: Right.

ZWEIG: Have I learned the right lesson from my own feelings? Chances are the last time you were miserable because the market was going down shortly after that it recovered. Maybe that is the lesson you should learn ...

VELSHI: It is very hard for people in a market like this where we started off the year with such a rough market, bad employment numbers and $100 oil, I don't think most people you find on the street are thinking, this is the time to buy.

ZWEIG: Exactly. I think if you ask the typical person in the street how did the market do in 2007? Most people would say, oh, terrible.

VELSHI: Badly, yeah.

ZWEIG: In fact, it was up 5, 6, 7 percent or even more if you invested overseas. It just didn't feel like a good year to people because of all the turmoil.

ROMANS: Every market I covered, every market I covered somebody who has made a fortune in that market said, my secret is letting my winnings run and cutting my losses and having rules for cutting losses and letting winnings run. It's a very simple strategy that for some reason people don't do.

VELSHI: Jason thank you for being with us.

ZWEIG: Thanks for having me.

VELSHI: Jason Zweig.

ROMANS: All right. Coming up, do all those political ads change your vote? We'll check out what the candidates are spending to get that vote.

And later, reality TV out of control or here to stay.

(COMMERCIAL BREAK)

HARRIS: Top stories now in the news. A winter nightmare in Nevada. A levee break 40 miles from Reno has flooded homes and forced many residents to evacuate. The same winter storm is wreaking havoc in several other western states. Hundreds of thousands of customers are without power in California, Oregon and Washington. Threats of mudslides in southern California have forced scores of people from their homes and heavy snow has closed roads in the three-state area.

The presidential candidates are cutting a frenzied trail across New Hampshire today. They will regroup for debates tonight in Manchester. The state's primary, the first of the year, is just three days away and CNN's ballot bowl is back. We're doing it again, a short half hour from now at 2:00 Eastern. All about the candidates in their own words. Now, back to YOUR MONEY.

VELSHI: In my wonderful co-anchor's home state of Iowa alone, presidential hopefuls blew a total of $40 million on advertising, most of that was on television, to try and sway voters in order to vote for them.

ROMANS: To vote for them, to make them the queen or the king of the caucus. Here to tell us whether advertising works in changing your vote. Ken Goldstein professor of political science at the University of Wisconsin Madison and director of the Wisconsin Advertising Project.

Over the holidays I was home in Iowa where the phone rang and rang and rang and the television ads were nonstop. How did that work out? I mean, if Huckabee and Obama were the clear favorites, did they spend the money for those votes?

KEN GOLDSTEIN, WISCONSIN ADVERTISING PROJECT: Well, they were the clear favorites on caucus night and Obama actually spent the most on the Democratic side on political advertising, but Mike Huckabee got vastly, vastly outspent by a margin of 15-20-1 overall and 10-1 when it came to television advertising.

VELSHI: Romney was spending a ton of money. Romney spent all that money in Iowa and Huckabee wins. Is that to do with advertising or is that something entirely different? GOLDSTEIN: Listen, people assume that whoever spends the most money automatically wins. People assume whoever spend the most on political advertising automatically wins. That is simply not the case. There is fundamentals that drive elections and many, many factors that influence an election.

That said, advertising, at the margin, clearly is going to help candidates. The fact of the matter is for Romney, he wasn't able to get within field goal range on other factors, personal factors, and issue factors to make that television advertising kick in for him and get him over the goal line.

ROMANS: Forty million bucks. Other countries they look at this and they just cannot believe the money we're spending so far. Who is spending more on the TV ads, the Democrats, the Republicans, what are the trends?

GOLDSTEIN: So far the Democrats are spending more. That $40 million in Iowa. The strong majority of that money was spent by the Democrats. Obama about $9 million, Hillary Clinton about $6 million and Edwards $3 million to $4 million and plus there were a host of groups that were involved on the Democratic side, as well.

And there's more energy in the Democratic race, there is more money flowing to the Democratic candidates and we also saw there was more people attending the Democratic caucuses yesterday in Iowa than Republicans did.

VELSHI: Hey Ken we in the media talk about negative ads whether they're good or bad and who's spending and who's doing what. That is another issue during this primary season. Do they work? Do they work or do people see through them?

GOLDSTEIN: I think pundits and commentators and even some political scientists sometimes complain too much about negative advertising. Listen, a good negative advertising that's substantive on a policy issue will work. Contrary to conventional wisdom, those people who are exposed to negative advertising are more likely to vote than less likely to vote.

ROMANS: Very interesting and I guess counter intuitive advice. Any ad so far this season stand out? You have Chuck Norris, Huckabee, Bill Richardson, he had a job ad and any others that are really standing out to you?

GOLDSTEIN: I have to say that there really aren't any major ads that stand out. I am sure we'll see some this cycle. When advertising is likely it be effective, advertising will be effective when it's speaking to the message and the theme of the candidate and also creates some kind of buzz when folks in the media like you also cover the ad in a big way and that ad can get even more coverage. The Huckabee cross ad and the Chuck Norris ad, the Bill Richardson interview ad, some John McCain ads that I thought were well done. But not that one ad that you would say, wow, I remember significantly that ad from the primary season so far. ROMANS: All right. Ken Goldstein, Wisconsin Advertising Project, thanks for stopping by. We only have a few more days, oh, I mean ten months until the election. I'm sure plenty of opportunities to talk to you again. Thank you, sir.

VELSHI: Coming up after the break, the reality of what you can watch in prime time this year. Stay with us, we'll tell you where to tune your TV.

(COMMERCIAL BREAK)

VELSHI: Are you 1 in 100? Are you the big loser? At least keeping up with the ...

ROMANS: I have never seen it before. I think its cardashians.

VELSHI: I have it become one because reality TV has taken over primetime.

ROMANS: That is right with the writer's strike still going strong. Scripted programs are being replaced by reality TV shows.

VELSHI: We now know that none of us are as smart as a fifth grader.

ROMANS: Joining us now is Tom O'Neil, he is the columnist for the LA Times entertainment site, Theenvelope.com. Is this a good thing? I guess it's good from the point of view if you're trying to produce these things, they're cheaper and filling the space that the scripted shows is leaving behind right now. Are we ready to be bombarded with a bunch more reality shows?

TOM O'NEIL, LA TIMES: It depends on which ones we end up watching. Oprah has a new one, Oprah's big give and some of the other ones really kicking up a lot, literally, "Dancing with the Stars." They celebrate the talents of people. When you get into the "Cardashians" where the stars are trashy Hollywood types and have no talent and hunger for fame and you see them getting in, arrested for dui, it's like the Britney Spears' show.

ROMANS: The difference between watching "Cops" or a train wreck and the 1960s show. Wasn't that the original reality show?

VELSHI: I didn't know that. Is it really that much cheaper to make reality show than the normal TV productions?

O'NEIL: Yes.

VELSHI: By what degree?

O'NEIL: $1 million to do one hour of reality TV in primetime compared to $3 million for the realities and comedies.

O'NEIL: It is driven by both; it is also driven by demographics which lead to the economics of this. The kid, the 18 to 34 year olds will tune into reality show. ROMANS: That's your age, Ali.

O'NEIL: He's buying all those sneakers. That is, of course, the target audience that the advertisers want. But the problem is, remember, just a few years ago if you had a hit show on TV, you had $20 million viewers. Now the broadcasters are lucky to get 6 million to 7 million.

ROMANS: Everyone is fighting for their piece of the pie. Let me ask you about the writers of the reality shows. There are writers of reality shows, right? Don't the writers guild, don't they want them to come on board? Isn't there controversy there?

O'NEIL: That was one of the biggest issues on the table when both sides busted up in early December was the guild saying rightfully, come on, we know reality shows are written. That these aren't real, real.

ROMANS: That's all real and spontaneous.

O'NEIL: Absolutely.

ROMANS: Unedited.

O'NEIL: Of course.

The writers are disguised under the title of editor and producer and the guild is saying call them writers and make them join the guild.

VELSHI: Where are we with the strike right now?

O'NEIL: I don't know. I think we're in terrible shape because the biggest problem is these issues like what defines a writer. Back in '88 when the writers essentially lost that strike, to make things up to them the networks said we'll give you a producer credit. When you see credits now you see written and produced by -- now given the declining and scaled back economics they want to take away the producer. They are trying to redefine everything according to the new definitions. It's a mess.

VELSHI: Tom O'Neil from the LA Times thanks for joining us.

ROMANS: Up next on YOUR MONEY, the price of gold has sky rocketed. Jennifer Westhoven will stop by to tell us why.

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ROMANS: My only regret for our viewers is they can't hear what happened between the commercial breaks.

VELSHI: You have to buy the DVD for that one. Our good friend Jennifer Westhoven putting a smile on our face, as always, when we have to have such bleak news. You have, at least to some people, good news about gold. JENNIFER WESTHOVEN, CNN CORRESPONDENT: Yeah, it really depends if you were somebody who listened to some of those ads that come on sometimes. Invest in gold, but gold has been an amazing investment but it really has gone along with the commodities. The price of gold this week rallied to a record of more than $860 for a troy ounce. Now, partially that's because gold is considered a safe haven.

When people get really worried about what's going on in the rest of the world, the dollar, recession, inflation, they park their money into gold. It is often a good gauge of fear levels out there. But gold has been benefiting on this bull run, this five-year Bull Run in many commodities. Really been rising as the economies of countries like China and India have been rising, as well.

ROMANS: We've been watching the wholesale and consumer prices that we pay at the grocery store. We have been seeing some of those rallies and those commodities start to come back to us.

VELSHI: I really like this one. I'm a Netflix user; I think you are, too. Really easy because I never have to leave my house. I leave my house to come it work, other than that ...

WESTHOVEN: I speed of this idea may appeal, but maybe not the price. If you like the ease of a service like Netflix where you can have a whole queue of everything you want, but you hate waiting those few days when it comes in the mail, this is great. LG is designing this set top box so the movie would get beamed straight to your TV. Almost instantly. Right now you can do that online, but maybe Ali does this, but I'm not going to spend the hours.

VELSHI: I have a similar service from Tivo which has partnered with Amazon so you can buy, you can buy the movie online and pay money for it and you can download it to your TV.

ROMANS: I just download Curious George and that's the only thing I download in my house.

WESTHOVEN: At the same time this set up, we don't have a price on this one, but similar devices can cost between $300, $400. For me, that's not something I'm interested in and also a $17 a month subscription.

VELSHI: This is what works for me with Netflix. I have a movie sitting in my house that I have not watched for weeks. In the old days I would rack up charges or wouldn't watch it.

ROMANS: Let me ask you about the Social Security debit card. A new move for people who are Social Security recipients this week. What do you know about that?

WESTHOVEN: This is a debit card but for people who don't have bank accounts. This could affect millions of people. Now, the hope is that it would save money, first of all, for you, because if you're somebody who doesn't have bank account and you're getting the checks in the mail, you have to go to a check casher and they can take a big chunk. The ATM where you use it or the store might also charge you a fee.

ROMANS: Also theft problems with these checks, too. Some people say they're kind of preyed on for these checks.

WESTHOVEN: I.D. theft and there are checks that are forged. All of that, this is supposed to make things cheaper and safer for a lot of people.

VELSHI: You were asking earlier, are you concerned many people who are Social Security recipients are older. Are they entirely familiar and comfortable with the idea of a debit card?

WESTHOVEN: The "Wall Street Journal" said they'll have to pay a lot of money to market this and teach people about it, it avoid the check cashing fee and that could avoid an extra trip and a lot of people don't want to make an extra trip, not just because of gas prices.

VELSHI: The insurer that I used switch to the system where your co-pays and all that you have to pay with a particular debit card. I stopped doing it. The insurance company is making a lot of money off of me. I went to the drugstore and had a prescription filled and got gum and they denied the claim.

WESTHOVEN: This works at the ATM and at the store. This is for whatever you want.

ROMANS: We could fill a whole hour. Thanks, Jennifer.

VELSHI: Coming up next on YOUR MONEY, a very unusual way that some towns are letting folks pay their tax bill. Maybe Jennifer has an idea on this one. Stay with us.

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VELSHI: As if rising mortgage payments were causing enough pain for home owners, property taxes have been jumping across the country.

ROMANS: That is right and it's putting a squeeze on many Americans, especially those that live on a fixed income. As our Allan Chernoff reports some towns are trying to help by putting their seniors to work.

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ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT (voice over): Greenburg, New York, home to some of the highest property taxes in the nation, averaging more than $11,000. The tax burden is a real challenge to seniors like Shirley Edwards, a retired nurse and teacher.

SHIRLEY EDWARDS, HOMEOWNER: Very nice community. I have wonderful neighbors, we look out for each other, we socialize and it's sort of like family community.

CHERNOFF: She just hopes she can hold on to her home. EDWARDS: When you're on a fixed income, you have to find ways to manage your budget and still have a semi-decent quality of life.

CHERNOFF: So, a town proposal to let seniors work off as much as $750 of their taxes is enticing.

EDWARDS: Show me where to sign up. I think that this program will go a long ways to alleviate some of the stress and help us financially.

CHERNOFF: Town supervisor is pushing to adopt the plan after seeing long-time residents move because of struggles to pay their taxes.

PAUL FEINER, GREENBURGH TOWN SUPERVISOR: People are voting with their feet and a lot of people are finding that it's too expensive to live here and people are opting to move out, unfortunately, of a community that they lived in for many, many years.

CHERNOFF: Greenburg would join dozens of towns around the country that are trying to help seniors to stay by hiring them to work off part of their property tax bill. Sally Kay Nelson is one of ten seniors in Concord, Massachusetts, earning $8.50 an hour as a part- time town employee.

SALLY KAY NELSON, HOME OWNER: I'm a record's clerk so I get records, I organize the records, and I take them off the computer.

CHERNOFF: she can earn up to $850 towards her property taxes, which helps her remain in the home where she's lived for more than 30 years.

GREG HOWES, SELECTMAN, CONCORD, MASS: People can work, contribute to the town. It's a win/win for both because the town now has access to an experienced, talented, pool of employees.

CHERNOFF: The earnings help seniors with just a portion of their tax bill, but perhaps even more important the program gives them a sense of purpose in their long-time community.

Allan Chernoff, CNN, Greenburg, New York.

(END VIDEOTAPE)

ROMANS: I think that's a terrific idea, especially when people are getting hit by these property taxes. Taxes are always a big issue in the presidential elections, as well. Some other big money issues that we will be seeing play out on the campaign trail in the next year.

VELSHI: Housing, jobs, oil prices, just a few of them.

ROMANS: Think of it as America votes meet the financial security watch.

VELSHI: CNN has the best political team in television. We'll do our part on this program to make sure you know everything about the candidates and what their issues, what their stand on those issues mean to your money.

ROMANS: Thanks for joining us for this edition of YOUR MONEY.

VELSHI: You can catch Christine later tonight at 6:00 p.m. Eastern on "Lou Dobbs this Week."

ROMANS: And you can see Ali every weekday morning on "American Morning." We will see you back here next week.

VELSHI: Saturday at 1:00 and Sunday at 3:00. See you then.

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