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Job Cuts: Why It Should Matter to You; Out of Touch on the Trail: Which Candidate Feels the Pain of the American Worker?; Candidates and the Economy; Home Ownership Rates Falling

Aired March 9, 2008 - 15:00   ET


STEPHANIE ELAM, CNN ANCHOR: Continental canceled 50 flights out of Cleveland hub. Delta, about 60 out of Cincinnati.
The first results are coming in from the Wyoming presidential caucuses right now. You can see them on the bottom of your screen there. Early returns give Barack Obama the lead. Just 12 delegates are at stake today for the Democrats. A tight race, every delegate counts for Obama and Hillary Clinton.

President Bush vetoed a bill today that would have barred a water boarding. Many experts say the technique constitutes torture. The president says he won't ban a practice that has prevented attacks on the U.S. Senator Ted Kennedy calls the veto one of the most shameful acts of the Bush presidency.

CNN's "BALLOT BOWL" in one hour. Now, it's time for YOUR MONEY.

ALI VELSHI, CNN HOST: Welcome to YOUR MONEY where we look at how the news of the week effects your wallet. I am Ali Velshi.


Coming up on today's program: plunging payrolls. Employers make their deepest cut in jobs in almost five years. Why it matters to you whether you have a job or not.

VELSHI: Also ahead, out of touch on the trail, which of the remaining candidates is best when it comes to feeling the pain of American workers. We will talk to somebody who says, none of those.

First, the largest job cuts in 5 years. U.S. employers slashed payroll by 63,000 jobs in February. That is another troubling sign that American's financial security is wearing thin. Minutes before the job reports came out on Friday, the Federal Reserve announced new steps to ease the credit crunch by pumping more cash into the system. Is that going to be enough?

ROMANS: Too soon to say at this point. For the first time since 1985, homeowners actually own less than half of their house. So much for the American dream of home ownership. Almost 6 percent of homeowners are at least 30 days late with their mortgage payments and home foreclosures rose to an all time high Ali in the final three months of last year. In fact, 900,000 properties now in foreclosure process. VELSHI: Also, this week, oil reached new highs above $105 a barrel. The U.S. dollar hovered around all-time lows against other major currencies. The stock market continues their steady, southern migration.

ROMANS: It is an awful lot to process. It is important for you and your money. We are going to spend the next hour explaining what it means to you. We are going to start with jobs.

We are joined by Peter Morici, professor at the University of Maryland School of Business. He is a former chief economist in the International Trade Commissions. Peter what happened in the jobs market? How grim is this report?

PETER MORICI, UNIV. OF MARYLAND SCHOOL OF BUSINESS: This is a whole sale meltdown. The private sector shed 101,000 jobs. The next figure was in the 60,000, because the government added some employment. Overall, the private sector shed 101,000 jobs. Manufacturing lost more than 50,000 jobs. Construction is contracting. Finance is contracting. Across the board the economy is shrinking.

Over 600,000 Americans left the labor force. The labor department reports that unemployment is falling. That is simply because so many people have quit the labor market. They only count those that are looking for a job, not all those that are discouraged and decided to stay at home.

VELSHI: If you are looking at that headline and saying, wow the unemployment number actually went down from 4.9 percent to 4.8 percent, that's pretty low, the issue here is that we are just not creating jobs. Christine and I talk about this all the time. You need a certain amount of net jobs every month just to the keep up with labor force growth. What do we need and what are we getting?

MORICI: We need 115,000 jobs to break even. We lost over 100,000 jobs. So, by all rights, the unemployment rate should have gone up to over 5 percent. The labor department only computes it on the basis of people that are actually participating, those that are employed and those that are looking. Those that quit looking don't count in their mind.

If we counted all the people that have quit, if we adjusted it for the labor force participation rate we had seven or eight years ago, the unemployment rate would be near 7 percent.

ROMANS: You mentioned government jobs. Helping, I guess is the operative word, helping mitigate some of the losses here. We saw other job creation. Hospitals, doctors' offices, restaurants. Where is the job's growth? In some of those service jobs is not necessarily at the same pay scale as the jobs we are loosing is it?

MORICI: No it is not, we always increase the number of doctors in the economy, because we have new graduates. The real growth is in the low wage jobs, those support positions in hospitals, restaurants, and people waiting on tables and functioning as cook's assistants. The high-wage jobs are going away. The average hourly wage last month fell for the first time in a very long time. That's very depressing. There are no wage push at all. Workers aren't getting any better off. Meanwhile, gas prices rocket. Americans are strapped. They can't borrow money because of the terrible situation in the housing market. The situation is pretty grim.

VELSHI: It is going to cost you about $1.54 more to buy a euro now. That is hardly helping to strengthen the leisure and hospitality side because we are getting a lot tourists in here. One of the things you put in your note Peter after the jobs report came out that caught my attention.

You said the economy is sailing through dangerous, uncharted waters. Henry Paulson treasury secretary and Ben Bernanke, Fed chief seem confused and unsteady, adding to pessimism about the outlook for GDP outlook and jobs. Tell me about that. That is pretty harsh.

MORICI: If you look at the testimony last week, Ben Bernanke's testimony and Paulson's speech in Chicago, according to Paulson, our manufacturing sector is just plain healthy, and there is nothing to worry about, even though it lost 50,000 jobs last month and over 3.5 million jobs during the course of the Bush administration. As for Bernanke, he keeps cutting interest rates thinking that is going to push the economy forward. But as he cuts interests rates credit card terms are becoming more difficult. Housing loans have all but dried up.

The reason is that we have a wholesale breakdown in the credit markets. Normally, banks loan money to homeowners and they turn around and turn them into bonds and sell them to insurance companies. Because of the sub prime meltdown and all of the bad bonds they wrote, all of the bogus securities that are melting away in value, the fixed income buyers, the insurance companies, large private buyers, foreign governments and investors are no longer willing to accept paper that Citibank and the other large banks create.

Bernanke has showed no recognition of this problem. He is not addressing it, instead he tells the banks to mark down the debt a bit. The credit markets are not functioning. Cutting the Fed rates will not help.

VELSHI: Thanks a lot, Peter for that. Peter Morici is economist and processor at the University of Maryland School of Business.

ROMANS: Coming up, the one issue that could decide the presidential race and why the remaining candidates, you know what, they are not so good at talking about it.


VELSHI: Nearly all Democratic voters in Ohio rated the state of the economy as either not so good or poor. According to exit polls, and that was a state Hillary Clinton carried to spur her come back on Tuesday. ROMANS: The bottom line, the Democratic race for the nomination is not ending any time soon. The economy tops voter's concerns. Joining us now is Mark Halperin, author of "The Undecided Voters Guide to the Next President." These three frontrunners now, these three senators now, how are they positioned to actually appeal to people about what's going on in the economy?

MARK HALPERIN, SENIOR POLITICAL ANALYST, "TIME:" They all know it is a huge issue that will decide this election. All of them are pretty weak in talking about the economy. They don't have specific plans and they are not very good at what President Clinton was good at or George Bush was good at, giving people a sense that they understand there is a problem and the world economy is changing. It's international. You have to give people a sense; here is what I am trying to do.

VELSHI: I just can't fix this. It is kind of interesting. They have fairly clear positions on taxes, which, over the long-term might be the most important. That's not what people on the street are talking about, they are talking about gas, inflation, jobs, houses, mortgages, health care. What can they say that would actually help them? There must be some reason ...

ROMANS: They do have pages and pages of briefs about where they stand on these issues.

HALPERIN: They do. You can read lots of ideas on their Web sites. Short-term things like stimulus and gas. Longer-term problems, the problem is, this is a difficult issue for all of them. There are no easy issues. Senator McCain has not made a career about talking about domestic policy. It is the biggest challenge for him.

Even the other two, somewhat surprising to me, have not been able to stress these issues. They have had fights over NAFTA, fights over healthcare. They are not giving people a concrete sense or an inspirational sense of fixing the economy.

ROMANS: Let me ask you about that fight over NAFTA. That played out big in Ohio. You might see it play out in the general election, because John McCain calls himself the biggest free trader out there. Do you think that what that means for the average worker will resonate in the fall?

HALPERIN: It is clearly an emotional issue. I think Hillary and Barack Obama are probably more committed to free trade. It is a big issue. I don't think either of them is going to beat it. They have to think about the business community in this country. They can't be running against trade. I think you will see some move from the senators.

VELSHI: I did hear when I was in Texas a lot of talk about I am going to vote for them, they are going to scrap NAFTA. Lets be clear with our audience right now, it is entirely unlikely that anybody running for office is going to scrap NAFTA.

ROMANS: And they said they haven't said they are going to scrap NAFTA. HALPERIN: They are not going to scrap it. Will they be more aggressive than seeking new deals than John McCain or negotiate parts of NAFTA, probably? Fundamentally, they both say it. We need free trade. This country depends on trade with Canada and all over the world.

ROMANS: You can draw this direct link in the campaign when you talk about international trade agreements and workers losing their jobs in Ohio. This is something out in the economic atmosphere. Then, you can really drill it down. That's what's resonating.

HALPERIN: What Bill Clinton said, the world is clanging dramatically. You are going to have to change jobs a lot. I can help you with education, worker training, with health care. We need to be in a global world. None of the three of them have the balance. Here is what I can do for you. We have to accept the reality. Clinton and Obama are talking less about reality than I think they believe. McCain is very weak at saying; here is what I can do on health care and jobs.

VELSHI: A similar situation with gas prices. America can't solve the gas price situation on its own. Gas prices are high everywhere in the world.

ROMANS: all plays in together too. You can't address one without the other. You throw politics in it and it gets interesting. Mark Halperin, "Time" Magazine. Thanks so much.

VELSHI: Coming up after the break, where freaked out investors are stashing their cash. Plus tax tips for those of you who are still putting off filing. I think I'm one of those. We will be right back.


ROMANS: Welcome back.

Now, a look at some of this week's top headlines. U.S. bankruptcy filings jumped last month. Close to 4,000 bankruptcy petitions were filed every day on average. Those numbers come from the automated access to electronic records, a bankruptcy data management company. That's up 18 percent from January and up 28 percent from a year earlier. Bankruptcy experts warn that those numbers could be a bit misleading, tied to holiday debt and not pointing to a trend.

VELSHI: Bank fees are on the rise. Many Americans are kept in the dark about them. That is according to a report out this week from the government accountability office. In 2006, consumers paid more than $36 billion in fees to banks, including overdraft fees, which were up 11 percent from a year earlier. GAO staffers posing as customers tried to get information about these fees at 150 different financial institutions but only received the information from about one-fifth of the branches.

ROMANS: 2008 has been a very rough year for the stock market. This week no exceptions. Susan Lisovicz is here to tell us how average investors are responding.

Susan are they taking money out, putting money in, what are they doing?

SUSAN LISOVICZ, CNN CORRESPONDENT: Yes to the first part of that question. I think we know the answer in the sense that we know it has been a terrible start of the year, no wonder whether it is a jobs' report from Friday. Whether it is all-time lows against the dollar or all-time highs against foreclosures.

There are some amazing statistics that have yet to be seen. This was startling. There is a private research group that I know called Trend Tabs. It actually keeps track of this. In January and February, there was $40 billion taken out each month in U.S. equity funds. This us the bread and butter of your basic investment portfolio.

VELSHI: People selling their mutual funds.

LISOVICZ: Yes. It washed away anything that was coming in. Not only that. This is the 10th consecutive month that the outflows over road anything that was coming in. It really increased this year and the news got worse this year.

ROMANS: If you can't take money out of your house, in fact, now you own less of your house than any other time in history and you have stagnant wages and you are not creating jobs, where are you going to pull money from if you have to pay for tuition?

LISOVICZ: It's interesting. You first have to assume that people have money to put somewhere else. Also, very interesting stats now from the Federal Reserve, since last August that is when we really started to learn the shocking, that borrowers with risky, spotty records are in trouble. The big, giant financial institutions and the credit crunch that came.

The Federal Reserve has some interesting stats as well. People are fleeing risk. Take a look at these numbers, savings accounts they have gone up, 2.3 percent. CD's, up 3 percent, money markets, up 18 percent. These are highly liquid, very safe, you are talking 2 or 3 percent. When you get a positive return as opposed to negative, that's where you are seeing the money. It's startling.

About the Trim Tabs, that information, for instance, compared to 9/11, we are seeing 10 consecutive months of outflows. After 9/11, it was nine months of outflows. If you are really optimistic, you will say, there is an opportunity for me here or maybe not.

VELSHI: Information to chew on. Which one is right? Are you right to take your money out or should you run ...

LISOVICZ: You know, Ali, you are courageous.

VELSHI: I do see it as the opportunity.

LISOVICZ: Warren Buffet said it the other day. He said, stocks aren't cheap enough yet.

VELSHI: But they will be. ROMANS: There is always an opportunity when these things happen. The question is, is that opportunity 20 percent lower than it is here now?

LISOVICZ: I want to mention one other thing quickly. We have been talking about oil. A lot of people, say, hey, how do I get into that? For the average investor, you don't buy futures. That's like buying the barrel you so often pose with. They are fun and they are ETFs, oil ETFs. The folks at the Trend said there was $11 billion that has gone in there since January of 2006.

VELSHI: Exchange Traded Funds we are going to be talking a bit about that later. Good to see you, Susan.

LISOVICZ: Likewise.

ROMANS: Any day you are going to get a letter from the IRS. Don't panic it is actually good news. The tax man wants to make sure you don't miss out on a tax rebate check. Part of the recently passed $168 billion stimulus plan Washington is hoping will jump-start this economy.

VELSHI: That's the good news. Before you can get a tax refund check, you have to file your 2007 tax return, which means even if I was eligible for one; I wouldn't see it for months. Tax attorney Donna Cocovinis joins us now.

Hello Donna, good to see you.

DONNA COCOVINIS, TAX ATTORNEY: Hello. It is nice to be back.

VELSHI: You don't get a free ride. You have to file your return?

COCOVINIS: It is a great incentive to have people file their return. That makes it more important to get down your income and qualify for every dollar of that rebate check.

ROMANS: We need to save money and so does everybody else out there. What are some things to keep in mind as we are preparing our returns? File even if you can't pay? Walk us through some of these things.

COCOVINIS: The most important thing is to file. If not, you are going to owe more than you already owe. The IRS is never going out of business. You are not going to outlast them. The amount you are going to assessed on the unpaid balance is going to be higher. So it is in your best interest to file, file an extension, but definitely get ahead of the curb. They will work with you to set up an installment plan.

VELSHI: The first extension is free.

COCOVINIS: It is six months now. So you have until October 15th.

VELSHI: You don't get your refund tax until you have dealt with that? COCOVINIS: You are not in a status where you are trying to evade or haven't filed.

ROMANS: You also say number two on your list is avoid the kitty tax. What's that?

COCOVINIS: Well, the kiddy tax is investment income. A lot of people have savings bond. You can do that when they are six, 10, 14, and they don't have any income. So likely you won't pay any tax on the interest.

VELSHI: Choose the right filing status? How do you determine what your filing status is?

COCOVINIS: You could be a head of household if you support a parent or a relative. For someone who may have lost a spouse, qualifying widow status will give you benefit of a lot of the joint filing status and deductions.

ROMANS: Every year people forget deductions. What are the most overlooked deductions?

COCOVINIS: Job hunting resumes production, taxes, filings, medical testing that you need to get the job, gambling losses. So you have to have won to get those losses. Legal fees to collect alimony any, unfortunately, that's the way you to have get it. Also, medical expenses. Transportation and lodging if you need medical treatment someplace else in the country.

VELSHI: You put a silver lining around pretty much every cloud, gambling losses and alimony. You can make it all look good. Tell me very quickly; using an accountant, what are the circumstances under which you should decide to use somebody to prepare your taxes?

COCOVINIS: When you have a big change in your status, buy a house, sell a house, get married, if you are uncomfortable doing your taxes. They will get you the right forms and you can forward know you get all the deductions you deserved.

ROMANS: Ali doesn't have any hair because he tried to do it himself. Thank you, Donna, for joining us.

COCOVINIS: Thank you for having me. .

VELSHI: Donna really is great. She makes taxes fun.

Coming up after the break, Americans are cutting back in an area that threatens the entire economy. We will tell you exactly what that is next.


ELAM: I'm Stephanie Elam at the CNN Center. Stories now in the news. The first results are coming in from the Wyoming presidential caucuses right now. You can see them on the bottom of your screen. Early returns give Barack Obama the lead with 12 delegates at stake. A tight race, every delegate counts for Obama and Hillary Clinton.

Police in Alabama have arrested a suspect in the killing of 18 year old Auburn University student Lauren Burke. This man that you see on the screen, Courtney Lockhart. He is charged with capitol murder, kidnapping, robbery and attempted rape she was found wounded Tuesday by the side of a road and she later died at a hospital.

Police have released these ATM pictures of a suspect in the killing of University of North Carolina student body president, Eve Carson. They say, he used her ATM card. Carson was found dead on the street Wednesday; she had been shot three times.

Coming up at the top of the hour, a new edition of CNN "Ballot Bowl." Right now, back to YOUR MONEY.

VELSHI: For years, we have heard over and over that America's middle class is growing and it is strong and more people were achieving the American dream by buying a home.

ROMANS: That's what we all hoped for, everyone can own a home. That can be the stepping stone of the American dream. In reality, home ownership rates are falling, foreclosure rates are rising and homeowners don't really own even half their home.


ROMANS (voice-over): Americans own less of their homes than ever before. Not even half of the house is paid for. It's the latest sign of declining middle class wealth since the home is most American's largest asset.

DEAN BAKER, CENTER FOR ECONOMIC POLICY: A lot of people are in really bad trouble right now.

ROMANS: He is referring to new data from the Federal Reserve that shows for the first time America's debt on their home exceeds their equity. What we actually own has tumbled over the past four years from almost 54 percent to less than 48 percent by the end of last year.

BAKER: That's not that big of a deal if we are talking about a family in their 20s, early 30s. We have this huge baby boom at the age of retirement that doesn't have defined benefit pension or money in 401(k)s. What they had was equity in their home and in many cases that just disappeared.

ROMANS: Some people used their homes as piggy banks for years, paying for cars, tuition, basic living expenses, some used new kinds of mortgages that allowed them to put so little money down, they essentially own nothing. A disaster when home prices fall.

LAURA TYSON, UC BERKELEY: We are in a vicious downward spiral of declining home prices, increasing foreclosures, increasing foreclosures causing increasing asset pressures in the financial institution, cutting back on all sorts of credit and that, in turn, leading to declining housing prices. ROMANS: A record 900,000 homes are in foreclosure according to the Mortgage Banker Association. More people are at least 30 days late with their mortgage payment, the highest rate since 1985.


ROMANS: It's remarkable. Over the past few weeks, I have been talking with people who are in default, who have lost their homes, who have walked away from a home. The scale on which this is happening is amazing. Most of the Democrats in Congress and some economists are saying, more has to be done. The housing market is worsening by the day when you look at these numbers.

VELSHI: Jennifer Westhoven is joining us now with other discussions about things going on. One of the things I learned when I was on the road I was talking to a lot of people in Texas who were concerned about gas prices. Just this week, OPEC said it is not going to increase the output because it feels with this entire slowdown; people are going to consume less gasoline.

JENNIFER WESTHOVEN, CNN CORRESPONDENT: In fact, that's what we are seeing here in the United States. We haven't seen anything like this in 60 years where people actually changed their driving patterns because they are paying so much now. Americans are using less gasoline. This is a sign they are really struggling to keep up with food and gas prices, higher monthly mortgage payments.

It is forcing this real change. National gas consumption is down about 1 percent from last year. It may not sound like a lot. Again, what a huge trend here. Some analysts say, in a way, if we are trying to become a green nation, that's something that could really help. Boy, the pain we have to go through to do that.

ROMANS: One thing we talk about is how they shift their spending patterns at the mall, whether they go to discount stores. They can benefit when people shift their spending there.

WESTHOVEN: This way people are trying to save money. We are seeing some evidence, that when they go out, they are going to discount stores. B.J.'s Wholesale says their profits were four times then what they were in the quarter last year, Costco said its profits were up 31 percent, Wal-Mart saw a gain as well. People are heading to stores where they can save a buck. We are hearing from the other stores, like Starbucks they have been cutting back, Coach Bags, the frills is where people are trying to just deal with the basics.

VELSHI: One of the things that we were all very surprised to hear from Ben Bernanke during his testimony about a week and a half ago, was a comment about the fact that banks could actually fail in this recession. That sort of seems to be hovering.

WESTHOVEN: Sure. It almost sends a chill down your spine. That's the kind of thing that can start the word that nobody likes to utter in this business, panic. I want to make sure you know we are talking about small banks. It looks like some of the dominoes in the credit crises are falling. A lot of banks have got a big hole ripped into their balance sheets from the mortgage mess.

While a big bank can withstand that, what about the small banks? It says there has been a 50 percent jump in problem institutions compared to last year. Again, Ben Bernanke mentioned this. Of course, what we know is that even though the discussion is mostly about small banks, it hasn't taken much to get rumors going on about bigger banks.

ROMANS: That is right. We know the FDIC was very careful to point out in testimony this is down significantly from the levels of the S&L crisis when there were 1400 banks on their crisis list. We know that 76 banks may be the tip of the iceberg.

VELSHI: One of the things that the Fed did on Friday morning was they released a little bit more money. They lowered standards so that banks that are in trouble could get more access to about $100 billion dollars.

WESTHOVEN: I think this is a good time to remind people that there is $100,000 of your money is backed by the FDIC. If you have less than that, you are covered.

ROMANS: Certainly, when you are starting to talk about banks and failures with a straight face in this economy and job losses like we saw on Friday, bottom line, we are the biggest economy in the world. It is faltering at this point. There is no question about this at this point.

VELSHI: So, some people think you should invest in gold. That's what we are going to look at. Jennifer, thank you. If you think you missed your golden opportunity, maybe not. You could still win big investing in gold.

We will have a few people's perspectives on that when we come back. You are watching YOUR MONEY stay with us.


VELSHI: Well, Greg Hunter joins us each week with a financial security checkup. You know he is coming; a shadow arrives as the black cloud that he brings with him settles upon us.

GREG HUNTER, CNN CORRESPONDENT: Wait, wait. If I am your doctor and I check you up here ...

VELSHI: I don't want to go to my doctor either.

HUNTER: And then I come to you and say, I knew you had cancer two years ago, I didn't want to spook you.

ROMANS: That's horrible.

VELSHI: For once, he is coming with good news.


VELSHI: A silver and gold lining. HUNTER: First, the story about the declining value of our money. A month ago, I go to get a cup of coffee. Here is two bucks. He gives me back 50 cents. I said, dude, you gave me back three-quarters, one of these little state quarters. That's a new one right here. Then, he gave me back a 1944 quarter. Any before 1964 is 90 percent silver.

This is today's fake money. This is the real money. That's 3 bucks, 90 percent silver, trades for 12 times face value, and shows you the declining value of our money. Nobody cared until recently. The price of gas, bread, and cheese. More and more people are buying gold and silver, precious medals.

ROMANS: They are buying the real thing, in coins and bars.

HUNTER: Two ways to buy precious metal. A $10 gold piece, let's talk about bullion. Let's talk about gold. I have all this stuff in stacks. The oldest coin dealers in the country, 1934, they are on 57th Street here in New York City. See the two coins here. Here is a gold eagle. You need to know your commission.

The commission on this U.S. eagle is higher than on a krugerand (ph). The value you have, let's take a look at numismatic value. They gave me two identical 1901 $10 gold pieces. This one is worth about $500. This one right here is worth $2000 because of how good it looks. It is kept in some kind of case, I assume.

This is just regular silver, the poor man's gold. It goes up and down. Not held by central banks. It is a precious metal. There is a way to buy that. This is the bullion value.

ROMANS: How do you buy that?

HUNTER: You go to a coin shop and say, I want to buy a bullion bag of silver eagles. Don't get ripped off on commission. For example, I was on vacation. Some guy was selling silver eagles at a coin shop. I said, what do you want for those? Silver was selling for $15. He said, I want $28 a coin. You have to do research. One easy way to find out what a bullion value coin is worth, the weight of the coin is going,

ROMANS: You are assuming these things are going to go up in value. They have had a huge run-up in value. Maybe the worse in this entire global economy is behind us and maybe it won't be a good time to buy this stuff.

HUNTER: I am not telling you to buy it or not to buy it. I am telling you how to do it and what to look out for. Coin dealerships are saying they have an increase in people buying it. I don't want to see people getting fleeced. You can buy junk silver, these quarters here, two half dollars equal -- 90 percent silver and I got some pitfalls to watch out for.

According to stats, no your commission. You have to know your commission. That is good for what your commission is on a numismatic value coin or on a bullion coin. The guy you are going to have next will tell you to buy GLV. Do your homework. No your commissions and premiums on coins. Finally, the last thing is, don't buy the farm on this. Guys at stack say, listen, if you are going to get into this, start small.

VELSHI: That's one way to invest in gold with coins.

Another way is to buy Exchanged Traded Funds. We talk a lot about those on this show. An ETF is a grouping of stocks that allows you to invest in an industry or a commodity. Gold ETFs have gold as a commodity. You can here that GLD up about 50 percent from a year ago. Recently, I sat down with the CEO of the world's biggest gold company. I asked him whether people should buy ETFs or the shares of a company like Barrick.


GREG WILKINS, CEO, BARRICK GOLD: If you think that gold is going up and we have a well-managed company that has some new assets coming on stream and you get the benefit of not just the increase of the price in gold but the benefit of the value that's being created by the management, that carries some degree of risk.

What the ETF has done is to legitimize the risk profiles of the various investors. Before, when it was expensive and difficult to own physical gold, people were buying senior companies and there have been disappointments. Companies have disappointing results. I think that kind of people wanted to own it but didn't want that risk profile. Now, you have a way to own it without having to take on that risk. It's broadened the market and broadened the market.

VELSHI (voice-over): So when you hear somebody like Ron Paul saying we should go back to the gold standard, does that get everybody around the board salivating?

WILKENS: That would put a price tag on gold of about $3,000 almost overnight. In order for the gold standard, which would be good for the currencies, I must say, the currencies are just a liability of the printing nation of the eastern nation. So are the controls on that. It's just a discipline that the central bankers contain. At the end of the day, they are not going to allow the economies of the world to really struggle. So you get that cycle of inflationary pressure. If you go back to the gold standards, there is only so much gold.

VELSHI: Is there anybody in the gold standard anymore?


VELSHI: We have heard these stories about prospectors in Arizona going into the hills trying to find gold. From what you tell me, that doesn't sound all that lucrative for an individual to be looking for their own gold.

WILKENS: I wish them luck. I wish them luck. There are probably little bits of deposits and various things. Panning for gold is a function of historical gold coming out of the surface of the earth and then erosion takes place over many years. The state of erosion I find. They are very, very small and not meaningful. It could be meaningful for an individual. I am lucky enough to find one I many not so sure that there is any more gold sitting up on the surface of the earth.


VELSHI: Now, you know everything you need to know about buying gold. Different ways you can do it, remember, everybody I have talked to about gold says it is a way to diversify. Do not bet the farm on this thing no matter how good you think it is.

ROMANS: What we can't tell you is whether gold is going to go up or down.

When we come back, we are going to talk about jobs, where they are, where they aren't and how to survive a falling job market.

VELSHI: Stay with us. You are watching, YOUR MONEY.


VELSHI: The big news we have to deal with is the jobs number that came out on Friday. The unemployment rate dropped from 4.9 to 4.8 percent. We are experiencing job losses in February, the biggest in five years.

ROMANS: If you take out government jobs, you lost 101,000 jobs in the month. There is some jobs growth here and there. For some people who are finding jobs, those jobs are coming at much lower pay.


ROMANS (voice-over): It's the end of the work day for Mark Golden, just a few weeks on the job after two-and-a-half years of scrambling for IT work.

MARK GOLDEN: I have done a lot of temporary positions. As you know, temporary is just that, nothing permanent. It is not a regular career position where you are going to hang your hat and retire.

ROMANS: He finally found work but making significantly less money. He is not alone. Many jobs the economy is creating pay less. Overall the economy is losing jobs, in manufacturing, construction and even last month in retail. Alarming since consumer spending drives economic growth.

According to the Labor Department, the number of long-term unemployed remains high, especially in the Midwest and northeast. Those are people out of work for at least six months. At this New York City career center, the number of people looking for work has sky rocked 50 percent in the last year.

UNIDENTIFIED FEMALE: I am noticing there are more people coming in in certain sections of the economy. I notice that people in the service industries are coming in; people in retail sales are coming in more than normal.

ROMANS: In Washington, a picture emerges of what middle class Americans have known for a while. MR. CUMMINGS: There are a lot of people apparently who don't have jobs.


CUMMINGS: When we look just at the unemployment rate, we don't necessarily with just looking at the unemployment rate; we don't get a true picture, do we?

UNIDENTIFIED MALE: No. You need to look at other things besides the unemployment rate, that's correct.

CUMMINGS: That's because so many people have probably given up?

UNIDENTIFIED MALE: That happens, yes.

CUMMINGS: And perhaps the jobs are not there?



ROMANS: Let's talk about where there was jobs growth in this report again. Government jobs, health care jobs. Peter told us earlier in the program that those health care jobs are low wage jobs and restaurant jobs. That's where we are seeing jobs growth. You are seeing a lot of jobs lost in construction, housing, financial services, even retail.

VELSHI: People are pulling back from going to the store. One of the things we did, we calculated the unemployment rate nationally. We compared that to unemployment rates in different states.

Take a look at this. We put in red the states where the unemployment rate is higher than the national average by about half a percentage point. Those in green are lower. You can see in places like California and some spots in the northeast, Michigan, places like that, have unemployment rates that are higher. There is a whole swap in the west and Midwest where the states are green.

ROMANS: How easy is it for people to move?

VELSHI: That's tough.

ROMANS: The labor market isn't as mobile.

VELSHI: You have the right to move. You can sell your stuff and move. If you have a family and they have jobs or connections to the society, it is not a simple thing to do. If you are starting off or looking at a career change, it is worth at least saying here are the areas of the country where there is ...

ROMANS: You hear a lot about retraining and education. If you are a machinist, you need to find your strength and go into carpentry where there is growth or apprentice to be a plumber. We are going to spend a lot of time over the next weeks and months telling you about mobility and making sure that you are best positioned in the labor market to weather what could be maybe only a few months, could be more than that, in terms of jobs. We know the last couple of months have been very, very tough.

VELSHI: We are going to take a break. We will be right back with more after this week's right on YOUR MONEY.


ROMANS (voice-over): A higher education is more expensive then ever. And getting help to pay for college may seem nearly impossible.

ROBERT FRANEK, THE PRINCETON REVIEW: Parents and students should embrace the financial process. It can be a scary process. It is a many-headed beast but it can be the process that is going to make your student bloom when they are in college.

ROMANS: When your student is ready to enroll, Robert Franek of the "Princeton Review" recommends asking plenty of questions.

FRANEK: What are the general scholarship dollars that that school will give out? Is there an average indebtedness after a student graduates? Are there other performance-based scholarships, if he is gifted in music or athletics?

ROMANS: Become familiar with forms like the EFC, expected family contribution and FAFSA, free education for federal student aide. Never eliminate a school because of price.

FRANEK: The truth is many schools will be aggressive to bring it down to a viable number.



VELSHI: All right. That's about it for this weeks YOUR MONEY. We want to hear what is on your mind, what is worrying you most about the economy.

ROMANS: E-mail us, the address is, we will read some of those responses next week.

VELSHI: Let us know what you want us to explain, what you don't understand about the economy. Thank you for joining us. You can catch Christine later today at 6:00 p.m. Eastern on "LOU DOBBS THIS WEEK."

ROMANS: And you can see Ali every week day 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.