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Issue Number One
Food Limits: Rising Food Prices Lead to Limit on Consumption; Shrimp Worker Abuse Reported in Thailand & Bangladesh; What is Behind the Continual Rise in Gas Prices?
Aired April 24, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: All right. CNN NEWSROOM continues an hour from now.
TONY HARRIS, CNN ANCHOR: "ISSUE #1" is next with Gerri Willis and Ali Velshi.
But first, a quick check at the headlines.
WHITFIELD: Tornado or not. Before we get to that actually, we have an update on the polygamy case out of Texas in San Antonio, Texas. Let's check in - San Angelo, rather, Texas.
Let's check in with Susan Roesgen -- Susan?
SUSAN ROESGEN, CNN CORRESPONDENT: Hey, Fredricka.
I just want to let you know that the buses have started to roll. The last of the 300 children who have been living here at the San Angelo Coliseum for the last three weeks are now moving out. We've just gotten a new video. You can see some of the children on the buses waving out of the windows.
Apparently a mother held out a sign with an SOS sort of help us kind of sign. That's all we know at the moment but we do expect all 300 children to be moved out perhaps by the end of the day to group homes across the state of Texas -- Fred.
WHITFIELD: Already more than 100 moved out over the past couple of days and so now this is the remainder of those more than 400.
Thanks so much, Susan, for that late update.
Meantime, let's stick with Texas and let's talk about weather, whether or not it was a tornado that may have hit the area. Investigators still trying to figure it all out, but for now, take a look at these images right now.
A swath of damage from last night's severe storms that roared across the area. More than a dozen homes damaged in Crowley. That's in the Tarrant County area not far from Ft. Worth. Several downed trees and power lines you can see as well. No injuries have been reported despite 70 mile per hour winds and reports of baseball-sized hail.
Much more ahead in the NEWSROOM in an hour from now. Time now for "ISSUE #1."
I'm Fredricka Whitfield in Atlanta.
ALI VELSHI, CNN ANCHOR: The price of a gallon of gas hits another record. Who is to blame and how can you save money right now?
Why going to straight to the source can save you big bucks at the grocery store and why find out why some big box stores are putting limits on foods.
ISSUE #1 is the economy. We are watching gas prices, food prices, your job and your money.
ISSUE #1 one starts now.
Welcome to ISSUE #1. I'm Ali Velshi. Gerri Willis will be here in a bit.
We need to talk about rising gas prices. The price of a gallon of gas rose another two cents to $3.56 a gallon. A year ago you paid $2.86 a gallon for your gas. This just doesn't seem to end and you are probably wondering just how the price of a gallon of gas breaks down.
Let's take $3.50 as a base for that. Most of it, about 74 percent of that comes from the price of oil, $2.59 just for the price of oil. Taxes are about 40 cents. About 18 cents of that are federal taxes and the rest are state taxes. Refining is about 26 cents a gallon right now and distribution and marketing including profit for the gas station running at about 25 cents. Most independent gas station owners don't take home more than about 14 cents a gallon.
Now with prices at the pump so high, a lot of folks want to know who is to blame. Our next guest says oil companies and Wall Street investors are bidding up the price of oil. Tyson Slocum is the director of the energy program at Public Citizen, a non-profit consumer advocacy group in Washington.
Tyson, let's work through this. What does this mean when you say people are bidding up the price of oil? Does it mean it's not people who are just buying oil to use?
TYSON SLOCUM, DIRECTOR, PUBLIC CITIZEN'S ENERGY PROGRAM: That's correct. About 99 percent of the trades that occur on futures markets do not result in the actual physical delivery of oil. So these are just people that are buying and selling contracts.
There has been an enormous amount of speculation. A lot of new players have entered into these markets and groups like hedge funds and investment banks and that's been pushing up the price of oil.
VELSHI: Why are people buying oil who don't need oil? Because it's an investment? Because it gives them a better return than the stock market or real estate?
SLOCUM: That's correct.
The market has been very bad for a little while now and commodities, particularly energy commodities have been very hot from an investment standpoint and that's why these hedge funds and oil companies have been taking bigger and bigger stakes. There is a lot more volume of trading and as we have seen over the last couple of years, prices continue to climb on a very regular basis.
VELSHI: What is likely to make that stop? If this is speculation and some economists have told us it could be as much as $60 or $70 of the cost of a barrel of oil is because of speculation because people who are trading and making money off of it, not wanting to buy oil necessarily.
They are making money. Does that stop somewhere?
SLOCUM: Right. I mean you can take efforts to try to limit the amount of speculation going on. One way we could do that would be to re-regulate the exchanges where all of these trades are occurring that set prices of oil and gasoline. In the year 2000, congress deregulated those exchanges and the less government oversight we have over these markets, the more opportunities there are for these speculators to wreak havoc.
VELSHI: What would you do? What would the rule be? What would you regulate? Would you say that oil can't go up more than so many dollars a day or in a week? What part of the equation would you regulate?
SLOCUM: No. This wouldn't be talking about imposing price limits or price controls. All this would be doing is to enact basic standards. You would have to provide basic disclosures, who you are trading with, what positions you are taking, at what price you are buying and what price you are selling.
That basic amount of disclosure might dissuade some of these speculators from taking the kinds of positions they are today. It's amazing what a little bit of sunlight will do to people's actions and we think that the sunlight of increased disclosure would limit some of the speculation and that could drive prices down.
VELSHI: If you are right about this and others have said it's based on trading and speculation. Where could the price of oil be? Because we know that 74 percent of a gallon of gas now is directly tied to a barrel of oil, a price of a barrel of oil.
What could we see oil trading at?
SLOCUM: We could see it move down between 30 and 50 cents a gallon. It would probably move gasoline around $3 or so a gallon. The era of cheap gasoline and cheap oil is over. There are some global supply and demand issues like increased demand from China and India and less big mature new discoveries are oil fields but the fact is the current levels we are seeing, oil at over $115 a barrel and gasoline over $3.50 a gallon are not justified by supply and demand. We are seeing prices much higher than they would be if we had some sort of better disclosure and regulation over these markets.
VELSHI: Tyson, real quick, any chance of this happening, what you're suggesting? Any chance of regulating these exchanges that trade oil?
SLOCUM: Absolutely. The United States Senate passed an amendment to the pending farm bill that is right now hold up in congress that would do exactly that, re-regulate these markets. Currently congress is negotiating and so it's unclear what the outcome of that is going to be. If that farm bill passes with that senate amendment re-regulating those markets, consumers could see some relief at the pump.
VELSHI: Tyson Slocum, good to talk with you. Thank you for being with us.
SLOCUM: My pleasure.
GERRI WILLIS, CNN ANCHOR: So now the good news is that you are not entirely powerless. You can do something to fight back against high gas prices. Shopping around can mean savings of 30 to 40 cents a gallon, not chump change in today's market. Now here's how you do it.
First off, check out Internet sites that track gas prices in your area. Go to gasprices.mapquest.com. You just plug in your zip code and you will find information on the cheapest stations along with addresses, directions and phone numbers. Also, check out big warehouse stores or discount retailers like Costco and Wal-Mart.
Now these retailers sometimes have gas pumps with the lowest gas prices in town so that people are enticed to spend more money in the stores and finally a gas rebate card so you can get cash back on the purchases that is a great idea. To compare the offers, go to cardratings.com -- Ali.
VELSHI: All right.
This show is all about our viewers, Gerri. It's all about you. It's your turn to get involved. How do you feel about rising gas prices? I think I might know the answer to that.
For today's "Quick Vote," let's check in with Poppy Harlow from CNNMoney.com.
Hey, Poppy.
POPPY HARLOW, CNNMONEY.COM: Hey there, Ali.
Yes, another day and another record. On a daily basis, gas prices go up. Today AAA said $3.56 a gallon. We want to know if you think the U.S. government should step in. And remember it's not even summer yet. Gas gets more expensive in the summer. Should the U.S. government step in to lower gas prices?
Yes or no? Weigh in on the poll, CNNMoney.com. We'll bring you those answers later in the show. This is interesting and I think I know the answer.
VELSHI: Yes, we'll catch up on that. Poppy, thank you -- Gerri.
WILLIS: Up next, the rising cost of food and how bad it could impact you. The real way to save money when you buy food that doesn't involve coupons and we'll tell you why some folks are begin forced to chose between food and medicine and why they may not have to. We are watching ISSUE #1.
(COMMERCIAL BREAK)
WILLIS: Welcome back to ISSUE #1.
Food prices are going up. We spent a good amount of time on this show talking about it but one way to save money and some folks are doing it right now is to go straight to the source.
CNN's Ed Lavendera has the story.
(BEGIN VIDEOTAPE)
LYNN REMSING, OWNER, GNEISMER FARMS [corrected copy: GNISMER FARMS]: In a given day, everybody will come in and pick anywhere from one to two gallons.
ED LAVENDERA, CNN CORRESPONDENT: Everything Lynn Remsing grows gets gobbled up.
REMSING: We have seen a tremendous increase in the number of people that are picking their own fruits now.
LAVENDERA: Thousands of people are flocking to Remsing's farm in the Ft. Worth Texas suburb to pick their own fruits and vegetables. On this six acre plot, sales have doubled in the last year.
REMSING: This year has been an extremely good year for us because the number of people that I think have found fresh vegetables because they are looking for cheaper source of food out there in the market place.
LAVENDERA: Remsing says the organic fruits and vegetables he grows are consistently cheaper than the non-organic foods sold in nearby supermarkets. That's because he doesn't have transport or packaging costs. Here you pick strawberries right off the bush.
Do you think this is the wave of the future?
REMSING: I think it is. I think we're going to see this come. If you have ever been to European markets, they do a lot of green houses. They do a lot of local small farms.
LAVENDERA: Local farmers are reporting a boom in sales all over the country. The last 10 years, the number of farmer's markets has nearly doubled nationwide and for the first time the farm bill before congress will allocate nearly $2 billion to help specialty crop growers expand where they sell their food. ROBERT GUENTHER, UNITED FRESH PRODUCE ASSOCIATION: Expanding the availability of produce, creating commodities that -- those are the types of things that I think will help bring prices down. It's a global problem as you are aware.
LAVENDERA: Of course what many local farmers are fighting is the expectations gains. For example someone in Michigan come December or January and in the middle of winter wants an orange, that's not something that's grown locally so that has to be shipped in.
Ed Lavendera, CNN, Dallas.
(END VIDEOTAPE)
VELSHI: Unfortunately not everyone can shop at a farm and grocery stores are the only option for most people. One of the reasons prices are going up for food, high prices in the commodity markets. Commodity markets are where people trade in soy beans and rice and corn and wheat, amongst other things. Prices are high and they are only expected to get higher.
(BEGIN VIDEOTAPE)
VELSHI (voice-over): As the housing market continues its plunge and stock markets gyrate, one market, the market for commodities futures stays red hot. In the past year alone, corn futures have spiked more than 60 percent, soy beans over 90 percent and rice has more than doubled.
Hedge funds and other pools of big money are pouring billions into commodities. They want a better return than real estate, the stock market or the U.S. dollar can give them.
Why do you care? Because this speculative fever is finding its way here to the checkout line.
LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE: When we get momentum in a market going one way, smart people can make money doing that. That is what their job is. What's happening now is this is showing up and impacting people very much on Main Street and on their dinner tables.
VELSHI: Now to be fair, these high prices aren't just caused by speculators. Bad weather has caused the price of food grains to spike and growing demand from emerging markets like China and India and the weak U.S. dollar is also playing a part.
But as futures markets rally, companies that buy crops to make food must swallow higher prices to guarantee future delivery of the raw goods they need. That drives prices even higher.
KENDELL KEITH, NATIONAL GRAIN AND FEED ASSOCIATION: It also adds to the cost of the market place for merchandising and marketing grain.
VELSHI: Bottom line, at least some of the price boom appears divorced from the laws of supply and demand, proof say some economists, easily traded commodities like corn and wheat are showing historic gains while commodities that are not widely traded like rubber and burlap are up by a much smaller amount. Others say that connection is tougher to make.
VIC LESPINASSE, GRAINANALYST.COM: It's very difficult to say exactly how big of a role speculations play. I think it's relatively minor. The speculators are not setting the trend. They are just following the trend.
VELSHI: Traders say the fundamentals play a much bigger role than speculation. Draught in wheat-growing Australia, for instance, and they say don't forget that higher oil and gas prices make it more expensive to produce and transport food.
Now you'd think farmers here in the U.S. would be happy about these high prices but even some of them are complaining that all of this speculation has thrown the whole market out of whack. They say they are not feeling the full benefit of the price increases and they are asking the U.S. government to somehow limit speculation in food markets. Easier said than done, but speculation in commodities markets is provoking food rage.
ACHUTHAN: When you have your milk price doubled or your bread double or something like that because of some financial gyrations and you say something is wrong here and I think that's what people are reacting to that and feeling right now.
VELSHI: It may be wrong to some but a global market is a hard thing to stop.
(END VIDEOTAPE)
VELSHI: If you want to learn more about commodities or even track them, log on to CNNMoney.com.
WILLIS: From food to shelter, new home sales are still suffering. This morning the Commerce Department reported that newly built homes sold last month at a 17-year low. That's not good considering the median price of a new home dropped more than 13 percent from last year. It's the steepest decline in price since 1970. At the beginning of what should be the spring selling market, the drop in new home sales is weaker than experts' forecasted and suggests we are not yet at the bottom of the housing downturn.
Choosing between food and medicine is a reality for a lot of older folks, but it doesn't have to be.
Then a popular store is limiting how much rice you can buy. Who is doing it and why? Find out next.
And we'll answer your money questions. The address is issue1@cnn.com.
(COMMERCIAL BREAK)
VELSHI: Welcome back to ISSUE #1. It is lunchtime here on the East Coast and we've all heard the third time is a charm. That rings true for America's third largest hamburger chain. Wendy's has accepted a buy out offer reportedly worth $2.3 billion from fast food competitor Arby's. That comes after Wendy's balked at the company's two previous take over bids. This is going to be an all stock deal with Wendy's stockholders getting 4.25 shares of Arby's parent company for each one share of Wendy's stock.
WILLIS: It's an age old question for folks with fixed income, often being forced to choose between food and prescription medicine. A new report out says this shouldn't be the issue.
CNN's Judy Fortin is live right now in Atlanta with the story -- Judy.
JUDY FORTIN, CNN CORRESPONDENT: Well Gerri, this is one of those heart breaking stories, but it's a reality for so many elderly Americans on Medicare. Some are being forced to make a hard choice between paying for prescription medications or buying basic necessities such as food.
Two studies out in the journal of the American Medical Association this week look at how Medicare part D, the federal programs who subsidize the cost of prescription drugs is working and impacting those choices. In the first study, they asked Medicare recipients the following questions. Were you skipping doses to make the medicine last longer? Were you taking smaller doses? Are there any medicines you were prescribed that you didn't take?
Nearly eight percent of respondents admitted spending less on basic needs in 2006. That's compared with 11 percent in 2005 right before Medicare part D went into effect. Researchers also found and this is important, that Medicare users really didn't understand how the prescription drug plan works -- Gerri.
WILLIS: You know and this is a confusing plan. Medicare part D went into effect two years ago. Tell me the significance of that.
FORTIN: Well Gerri, there's a reason why we talk about it being confusing. Medicare part D did go into effect two years ago as the publicly funded way to privately sell and administer prescription drug insurance. But there are hundreds of plans to choose from many cost sharing and coverage variations.
So seniors must decide on deductibles, co-payments, coinsurance and coverage drugs to name a few. You really need to specialize in this to understand it.
WILLIS: No kidding. Certainly these folks are caught between rising prices that they are seeing at the grocery, rising oil prices.
If they are trying to sell the house, they get less for that. What is the end result? What is the impact on these people?
FORTIN: Well the bottom line, if you are on a fixed income, as most seniors are and you don't understand the benefit structures, how can you manage your medication costs and your monthly budget. One of the experts we spoke with pointed out an interesting statistic. The cost of brand-name drugs in 2007 increased at twice the rate of inflation and people seem to be finding creative and unfortunate ways of coping.
A second study in the journal of the American Medical Association this week looked at participants in one of the part D plans and they found that more than a quarter of those responding admitted to cost coping behavior like switching to cheaper medications. Fifteen percent reduced adherence like skipping doses and not telling their doctors about it. Seven percent said they were experiencing a financial burden like borrowing money or going without the basic needs like the food.
This is happening in a lot of homes across the country and with the state of the economy, you can tell us this directly. It's not probably going to get much better.
WILLIS: Not going to get much better. Is there a solution?
FORTIN: Don't you wish there was something easy? Well, we talked with a number of experts and they say the government really needs to simplify this Medicare program. Maybe even cutting it down to a number of program options, maybe 10 or 15 and getting involved in working deals with drug companies to get those deep discounts that are out there to get the cost down.
And another suggestion, I know it's controversial and not popular with some people, but that's importing drugs from other countries like Canada. There are some options out there, but no easy fix.
WILLIS: Wow. Judy, thank you for that report. A tough situation for seniors -- Ali.
VELSHI: Thanks Gerri.
More details on that shrimp investigation we told you about yesterday. You're going to want to stick around for that and why one big box store is putting a limit on how much rice you can buy.
Stay with us. You are watching ISSUE #1. The economy, the way it's slumping is affecting you in more ways than you know. Check out CNNMoney.com's special report, "Issue #1, America's Money." There's a lot of information that could save you money and misery, plus interactive tools and a lot more. That's at CNNMoney.com and ISSUE #1 rolls on after a quick check of the headlines.
(COMMERCIAL BREAK)
DON LEMON, CNN ANCHOR: Hello everyone. I'm Don Lemon, live at the CNN World Headquarters in Atlanta.
More ISSUE #1 within 90 seconds, but first we're checking what's happening right now in the NEWSROOM.
Spring weather extreme and unexpected like this widespread damage from an apparent tornado possibly touching down here in Crowley near Dallas, Texas. Storms pounded northern and western Texas, homes gone and trees and power lines down. So far though no word of any injuries.
It's moving day. Hundreds of children taken from that polygamist compound in Texas will be living with strangers. Right now they are being moved into group homes, shelters and foster care. Meantime, investigators are taking a closer look at Rozita Swinton, She is under arrest for making false claims of abuse against members of another FLDS community. Authorities say there is a connection between Swinton and the phone used to report abuse at the Texas compound.
On to Indiana and North Carolina, the two states have the next presidential primaries on May 6. Hillary Clinton is in North Carolina today for a couple of speeches. Barack Obama is off the campaign trail, today huddling with aides in Chicago. John McCain continues his week long tour of areas hit hard by job losses. He is in New Orleans to visit the ninth ward and hold a town hall meeting. He's also campaigned this week in Kentucky, Selma, Alabama and Youngstown, Ohio.
I'm Don Lemon.
Now back to ISSUE #1 with Ali Velshi and Gerri Willis.
WILLIS: Welcome back to ISSUE #1.
It is the basic way of living in this country. You go to the grocery store or maybe a big retail store and you buy food for the family. Any food. Any amount of food. But rising food prices are pushing some stores to the limit -- to limit the amount of certain foods people can buy. "Headline News" correspondent Jennifer Westhoven is here with the story.
Jen, what's going on?
JENNIFER WESTHOVEN, CNN CORRESPONDENT: And that's such a surprise in this country and yet we have two of our biggest warehouse retailers saying that they are limiting large sales of rice. Now Sam's Club says you can only buy four 20-pound bags of Jasmine, Basmati and other white, long grain rices. And, of course, Sam's is Wal-Mart's warehouse business.
Now Costco has limits on rice and flour, but only in a few stores. I want to be really clear that this is not rationing that we're talking about in the United States. The U.S. grows a very large supply of rice. That is happening, though, in some places around the world. But here, Sam's says this is just a temporary cap that's designed to make sure that supply is steady and that it stays steady.
WILLIS: Well, OK, you know, rice is a staple food for half the world. I would assume that the people buying these huge bags, they've got to be commercial players, restaurants.
WESTHOVEN: Yes, I mean, who's buying 100 pounds of rice for their family. That's enough to feed an American for an entire year. So mostly it seems like, yes, this is restaurants. Costco said it did see some customers hoarding, but mostly restaurants. Rice prices have nearly doubled in a year. And so this is a way for restaurants to cut out the middle man. They're struggling lately.
Now here in the United States, again, more of a glitch. But just, I think, the very idea that there would be any kind of limit on how much food you can buy . . .
WILLIS: It's crazy.
WESTHOVEN: Yes, it's very unsettling for a lot of Americans.
WILLIS: Well, you know, I don't think of rice as the essential food for Americans necessarily. Is there something I'm missing here?
WESTHOVEN: Well, it isn't here, but it really is for around the world. And that's something to keep in mind, that it's the staple food for half of the world's population and you need a lot of wet, flat land to grow rice and the available land in Asia is shrinking. There are droughts that are wiping out crops in Australia. There is a mill that made rice for more than 20 million people that they shut down recently because there's no water, so there's no rice.
So there is a real crunch around the world. The World Bank had said 33 countries could see unrest because of high food prices.
WILLIS: Wow.
WESTHOVEN: Yes. So this is a story that at CNN we are going to keep watching this because it's really going to keep unfolding around the world.
WILLIS: Lots of riots. Lots of concern. Lots tension.
Jennifer WEsthoven, thank you for bringing that story.
VELSHI: All right, let's stick with food. Americans do love shrimp. Each of us eats an average of three pounds of shrimp a year. But as Zain Verjee find out for the Special Investigation Unit, a new report wants consumers to ask tough questions before they buy. Zain joins us now from D.C. with a follow-up to a story that she first brought us to yesterday.
Hello, Zain.
ZAIN VERJEE, CNN STATE DEPARTMENT CORRESPONDENT: Hi, Ali.
It's the most popular seafood in the world. But could the shrimp you love to eat be a product of what even the State Department says could be slave labor half a world away?
(BEGIN VIDEOTAPE)
VERJEE, (voice-over): Police raid a shrimp processing plant in Thailand just a month ago. They shot this video and say conditions echoed findings of a chilling report detailing labor practices there. ELLIE LARSON, EXECUTIVE DIRECTOR, SOLIDARITY CENTER: They are treated in ways that I'm sure most of the American public believe went by the days of slavery. In fact, that's the kind of conditions these workers are engaged in. What I would call slave conditions.
VERJEE: That's the conclusion Ellie Larson and the AFL-CIO affiliated Solidarity Center reached after a three-year labor investigation in Thailand and Bangladesh. Findings supported by the work of the U.S. State Department, who's experts on human trafficking described his conversation with the rescued worker.
MARK LAGON, AMB. AT LARGE FOR TRAFFICKING IN PERSONS, U.S. STATE DEPT.: When she and a handful of others tried to escape, guards in the so-called factory, brought her back and punished her in front of all the other workers there as an example. Her head was shaven. She was beaten. You can't describe this in any other fashion except slavery.
VERJEE: The Solidarity Center's report says workers, including children as young as eight, face sexual abuse, low wages, long hours, filthy and dangerous conditions.
LARSON: And there's so much slime on the floor that you can hardly stand up. And that just keeping your bearing and your footing while you're trying to do work that involves using very sharp knives.
VERJEE: Events from the last few weeks show how desperate refugees from neighboring Burma are for any work in Thailand, often putting their lives in the hands of criminal traffickers. More than 50 suffocated in this truck from Burma just two weeks ago. The Solidarity Center credits the Thai government for trying to tackle the problem.
KRIT GRANJANA-GOONCHORN, THAI AMBASSADOR TO THE U.S.: We proceed from the same common premise that this thing is evil. This thing has to be tackled squarely.
VERJEE: Bangladesh, too, gets credit in the report for trying to improve its appalling shrimp plant.
HUMAYUN KABIR, BANGLADESH AMBASSADOR TO THE U.S.: Fifteen cases have come up and approximately half of them have been tried and the people responsible have been punished. So the government is doing that kind of -- or taking that kind of legal measures.
VERJEE: So what can be done outside the region? The U.S. imports $1.5 billion of shrimp a year from Thailand and Bangladesh and the report makes clear, not all imports come from problem plants, but . . .
LAGON: But if a consumer is worried about buying a can of tuna based on whether dolphins might be harmed in catching tuna, surely consumers would be concerned about the shrimp that they would buy based on whether human beings are being enslaved.
VERJEE: The report's authors say they did trace shrimp cargos to some well-known U.S. retailers from Thai plants with substandard working conditions, but only one, Wal-Mart, responded to CNN saying, "we are working with our suppliers to investigate the allegations shared by CNN. We're not aware of any issues in our supply chain."
The shrimp industry's global trade group says it's not aware of plants operating in the manner the Solidarity Center report describes, but tells CNN it's willing to take a harder look.
WALLY STEVENS, EXECUTIVE DIRECTOR, GLOBAL AQUACULTURE ALLIANCE: If those plants are in any way performing, conducting themselves in an inappropriate way, they'll be dropped from our program and we would love to work with whoever to investigate that.
(END VIDEOTAPE)
VELSHI: Now, Zain, is the State Department or anybody else in this report calling for embargoes of shrimp from Bangladesh and Thailand?
VERJEE: No, they're not calling for an outright embargo. But what they're saying here is, they really want to emphasize the power of the consumers.
What the Solidarity Center is saying, that its goal in publishing this report is really to raise consumer awareness. Kind of like how a report came out on diamonds that often fund wars and the result of that was to cause consumers to question the origin of their own jewelry. So that's the kind of effect that they want to have, but they're not advocating any boycott.
VELSHI: And is there anything they're able to do, or suggesting that they're going to do, to stop these practices that are going on?
VERJEE: Well, the State Department and the Department of Labor and other international organizations, like the ILO, they're working with the countries, like Bangladesh and Thailand, to try and improve these awful conditions for workers.
They're trying to focus on children and that they say they're going to try and improve -- they want standards and practices raised when they scrutinize these places. But, for now, they hope that the awareness level will be raised enough for people to think about it and think twice before they go shopping.
VELSHI: What a story.
Zain, thanks very much.
Zain Verjee in Washington.
WILLIS: Up next, in these tough times, find out which charities are running into a whole lot of trouble.
And with gas prices soaring, one man is bucking the trend by turning to, get this, horse power, literally.
You're watching ISSUE #1.
(COMMERCIAL BREAK)
VELSHI: Welcome back to ISSUE #1.
The pros and cons of the proposed world's largest airline. That's what lawmakers on Capitol Hill are discussing as it relates to the possible merger of Delta and Northwest. Both carriers say the deal is critical to their survival in light of sky high fuel costs. And quarterly reports from both companies underscore their position and their red ink.
Delta lost more than $6 billion in the first quarter of this year. Northwest more than $4 billion. The proposed merger is contingent upon approval from federal regulators, as well as from company shareholders.
WILLIS: Charities are having a tough time. More and more folks need help and fewer people are donating to charities.
Kareen Wynter has that story.
(BEGIN VIDEOTAPE)
BEN STILLER, ACTOR: Tonight I believe that we can raise a gugillion (ph) dollars.
KAREEN WYNTER, CNN ENTERTAINMENT CORRESPONDENT, (voice-over): Not quite. Today, "American Idol's" second annual "Idol Gives Back" fund-raiser has earned just $65 million. Significantly less than the $70 million the star-studded benefit generated at this point last year.
DR. GENE TEMPEL, EXEC. DIR., CTR. ON PHILANTHROPY, INDIANA UNIV.: When the economy takes a downturn, typically the growth of philanthropy on the national scale slows.
WYNTER: Dr. Gene Tempel, with the Center on Philanthropy at Indiana University says the famous fund-raiser may not be alone. He says, when money is tight, people feel less inclined to give. It's an equation that could spell disaster for a number of charities at a time when donations are need the most.
DAVID SCHWIMMER, ACTOR: A lot of charities in the country are suffering because of the recession or the, you know, potential recession we're in. And the charities I work with, like the Rape Foundation, is really feeling it.
WYNTER: Actor David Schwimmer has noticed the impact. So has actress and good-will UNICEF ambassador Susan Sarandon.
SUSAN SARANDON, ACTRESS: IF they're not already economically in trouble, they're afraid they're going to be, so they're holding on to their money.
WYNTER: Analysts say those who can't afford to give, like Hollywood's elite, can't do the job alone.
George Clooney, Matt Damon and Brad Pitt recently donated half a million dollars to the World Food program. However, the organization still needs $12 million to keep its food and supply drops active.
Trouble with the economy also means that human service organizations, like the Salvation Army, which provides food, housing and clothing to the poor, may be impacted the most.
TEMPEL: It's just at the point when they start seeing a slowdown in their incomes that they also see a demand for increased services. So people who need job assistance, people who need help with payments, people who need food from food pantries, for example, those organizations will be stretched.
WYNTER: Some charities with wealthy veteran donors and a global reach may feel less of an impact. Caryl Stern is the president and CEO of the U.S. fund for UNICEF.
CARYL STERN, PRESIDENT & CEO, U.S. FUND - UNICEF: We are, thankfully, still being supported by our major gift givers in ways that are allowing us to accommodate that slowdown. We are saving children's lives and Americans understand that's not an optional activity.
WYNTER: Kareen Wynter, CNN, Hollywood.
(END VIDEOTAPE)
VELSHI: Now in this tough economy, donating to a charity may not be on the top of your list, but there are ways that you can contribute without putting yourself in financial dire straights. Stephanie Elam has more on this story.
You know, I think people want to do things for people who are in tough times, but they're having tough times themselves. What do you know?
STEPHANIE ELAM, CNN CORRESPONDENT: And it's actually a good way to find something positive in a really down market. And as we just saw on Kareen's piece, charities are in a rough situation. More people are turning to them in need and fewer people are able to help. Americans are holding back, but I'm here to tell you, there are ways to give back, even if you don't have the cash.
First off, the most obvious way to help a charity, donate your time. Charities are busy and they could use more hands on deck. And if you happen to be unemployed or under employed, as the case may be, spending some time helping out others may even give you some time to get your mind off your own problems for a little bit and do some good there -- Ali.
VELSHI: Where do you find charities that can use your time?
ELAM: Well, it's easy to do. The first thing to do is just hop online. Go online and do some charitable searching. Web sites like searchkindly.org and goodsearch.com. That was actually founded by one of our former colleagues, J.J. Ramberg, and her brother. They donate advertising revenues to good causes.
And no matter how much money you have, you know, children still have to grow up and that means lots of outgrown clothes and toys around the house. Instead of just letting those things sit around and clutter up your place, consider giving them to charities. No doubt you'll help some parents relieve a bit of stress as they're able to clothe and entertain their kids and that's, obviously, something that's a good way to give back.
And, you know, you can also do like one of our staffers is doing and grow your hair out and then cut it off and donate it so you can help build -- weave wigs that are used for people who are going through cancer and other treatments.
VELSHI: Yes and I think this is something we should sort of stay with because it is tough but people do -- I think are really conscious of those who have lost jobs and are really suffering in this economy. So appreciate you bringing that to us, Stephanie.
ELAM: Thanks, Ali.
VELSHI: All right.
WILLIS: All right. So we at ISSUE #1 want to help you. Up next, the Help Desk with answers to your e-mail questions. The CNNMoney team is ready to go.
And we'll introduce you to Hit Man the horse and tell you why he's one man's answer to rising gas prices. You're watching ISSUE #1.
(COMMERCIAL BREAK)
WILLIS: Hey, get ready for some help. The Help Desk is open for business and we're going to answer your e-mails questions. Let's get right down to it.
Greg McBride is with bankrate.com, Greg Daugherty is with "Consumer Reports," Stephanie Elam is a CNN business correspondent with us as well.
Let's get right to that first question, guys.
Christopher asks: "why are oil prices rising? Is there something that the government can do to regulate the price of oil? Oil companies are turning out record profits each year."
We report on this all the time, Stephanie. What's the chances that the federal government could change oil prices?
ELAM: Let's see, about nill. It's not really going to happen too much. And here's part of the reason why we're going to even point out this. Worldwide demand for oil is up and so, therefore, the government can't really step in and say, for the world, this is how oil is going to be priced. And on top of it, the dollar, the value keeps going down. So that's not helping out oil either.
WILLIS: Well, let's look at the oil breakdown. I think we have some numbers. What is oil dollar -- what does it break down into? You can see right here, $3.50 for a gallon. $259 goes to oil, the big preponderant. A little bit for taxes, refining, distribution and marketing, but you're really paying for those higher oil prices.
Let's get to the next e-mail. Danielle asks: "I have about $20,000 in a savings account. I am 27 years old. Should I use some of this to fund an IRA, I have one with less than $1,000, buy a home or buy stocks?"
Greg McBride, what do you think of that?
GREG MCBRIDE, BANKRATE.COM: Well, she's off to a great start. But, absolutely, start off, take $5,000 of that money, put it into the IRA for 2008 and then that -- you also want to keep three to six months in that account for emergency expenses. And then that, coupled with the additional saving that you do, can help you achieve those longer range goals, like buying a home and like making other investments.
WILLIS: Yes, it's tough here to save money, Greg, don't you think?
GREG DAUGHERTY, "CONSUMER REPORTS": Oh, yes. Yes. And we'd agree with that advice. In the "Consumer Reports" money lab, we actually looked at the question of putting more money into your mortgage or putting it into the stock market. And almost any time period you look at, the stock market comes out ahead. And if you can put it into an IRA, you know, besides, you know, It's terrific.
WILLIS: All the better.
All right. OK. Greg asks, and he's from Oregon: "I am in a job that I fear may end in a layoff sometime before the year ends. However, I have taken on additional responsibility and been promised a bonus in my review next March. I don't know how much the bonus will be, nor do I believe I will have this job then. Do I stick it out with the hope of the bonus, or jump ship before the layoff?"
Do you want to take this, Steph?
ELAM: I think Greg has answered his own question really because he seems to think it's uncertain. So I think the best thing for Greg to do is to polish up his resume. And also, if he does decide to stick around, he needs to make some connections with the people who are higher up and throughout the division so that if people leave right above him, he's still in sync with others who are in the company. But overall, I say, start networking and looking around outside the company just in case.
WILLIS: I think it's time to start looking. A lot of people feel this way.
Let's go to Gerry's e-mail: "One of my children has authorized user privileges on my American Express Gold card, which has an unlimited credit line. When he had his credit report checked, my outstanding balance appeared on his credit report as an outstanding debt for him as well. If I take him off as an authorized user, how does this balance get removed from his credit report?"
Greg, what do you think?
DAUGHERTY: Well, Greg here and I were talking about this just before we came on. It turns out that it's not going to affect his credit score. So it's not a huge problem for him. He can get it removed, however, if they want to. But check back, get your free credit report, which you're entitled to, just to make sure that it happens.
WILLIS: I say get your own credit card. That's what I say. Why are you piggy backing on mom. I think you need your own credit card.
We've got another question from New York: "We are in the process of buying a home. We are currently renting. Are prices going to come down in the second half of 2008 or should we buy ASAP?"
Greg, I get asked this question every 20 minutes.
MCBRIDE: Me too.
WILLIS: And I wish I could give it a great answer. I'm going to give it to you so you can, you know, predict real estate prices. Good luck.
MCBRIDE: Well, whether prices are going to fall in your particular neighborhood or not is anybody's guess. But prices are not going to run away from you the way that they were a few years ago. So don't be afraid to take your time, use that as an opportunity to boost your savings, pay down other debts and raise your credit score that way you can put your best foot forward when you do take the plunge into homeownership.
WILLIS: I think that's a great -- you can't time this market right now.
Rick in Texas asks: "When a house is foreclosed on, does the person foreclosed on still owe what the loan company loses in the transaction?"
Somebody jump in here?
MCBRIDE: Yes. And that's one of the reasons why a short sale or deed in lue (ph) of foreclosure is so advantageous to consumers in this position because what you're doing is you're getting the lender to sign off that they're not going to pursue you for that deficiency balance.
DAUGHERTY: But -- I'm sorry -- but find out, you know, the laws differ by state, they differ by loan arrangement and there's some information on the HUD web site that's pretty good. I mean, with any of this kind of situation, it's better to deal with it sooner rather than later because it only gets worse.
ELAM: And the judgment can come out and say that they will garnish your wages as well. So you can't really escape it.
WILLIS: Well, I've got to tell you, great answers today, guys. Really appreciate your help. Greg Daugherty, Greg McBride, and, of course, Stephanie Elam too.
VELSHI: All right. Coming up next, don't forget to vote. This is your last chance to be heard in the CNNMoney.com "Quick Vote."
And you'll meet a man who has given up a car for a horse. You are watching CNN and ISSUE #1. We're coming right back.
(COMMERCIAL BREAK)
WILLIS: So it's that time when we get the results to today's "Quick Vote." More than 14,000 of you weighed in for how you voted. Let's check back in with Poppy Harlow from CNNMoney.com.
Hi, Poppy.
HARLOW: Hi, Gerri.
Yes, we asked, should the U.S. government step in to lower gas prices? Sixty-seven percent of you said yes, they should. Thirty- three percent said no. And, you know, we've seen oil companies making record profits and the gas station owners are not benefiting. One of our reporters spoke to a gas station owner. He said he's only getting eight cents per gallon. Most of the money is going to the oil company. So the question is, you know, is the U.S. government going to step in or not -- Gerri.
WILLIS: Well, how do they step in? What could they possibly do?
HARLOW: Well, some people say the government could further regulate the trading of oil futures. We talked about that at the beginning of the show. The government, some say, could also lower the taxes on gas.
WILLIS: Thank you for that, Poppy.
HARLOW: Sure.
VELSHI: All right, I've got a better solution. Forget the miles per gallon and go for the horse power. With gas prices soaring, that is what one Kentucky driver is doing, literally. He has traded in his car keys and he has picked out a saddle. Forrest Sanders of our Kentucky affiliate WBKO has the story.
(BEGIN VIDEOTAPE)
FORREST SANDERS, CNN CORRESPONDENT, (voice over): Allan Peerce is saddling up to make a statement. Diesel prices in Leitchfield are soaring. ALLAN PEERCE, GAS PROTESTER: I made the comment that if it ever reached $4 a gallon, I was going to do something about it. And, sure enough, it reached $4 a gallon.
SANDERS: So Alan's been hitting the road, doing some traveling around town on his eight-year-old Tennessee walking horse, Hit Man.
PEERCE: Everyone is just sitting back and complaining. Instead of complaining, do something about it. You know, every person can do something about it if they want to. I'm just making a statement for myself.
SANDERS: And he's also making a statement for small business owners like himself.
PEERCE: All small businesses and truckers are having a hard time.
SANDERS: Owning his own sign-making company, Allan's had no lack of protest signs.
PEERCE: What I'm doing isn't going to make a difference, you know, with the oil companies. They could care less what I think. If I can make a statement, then two people might make a statement. And if two people, then four people, then eight people, and it can be ongoing.
SANDERS: And with Hit Man as his companion, Allan's just hoping others follow his lead.
PEERCE: And get off their high horse and get on a real horse.
SANDERS: Just don't be surprised to see Allan out for a ride.
PEERCE: If the gas prices go -- or the diesel prices go to $4.25, you'll see me on my horse.
(END VIDEOTAPE)
VELSHI: Now Peerce says that if diesel prices, as he just said, climb to $4.25, he's going to ride the horse to city hall and he's going to camp out on the lawn. But credit to him because it's going to get people's attention.
WILLIS: I love it. I love it.
VELSHI: Maybe that's what we'll try. I'll try -- I don't live to far from here.
WILLIS: I love it. I want a horse, too.
VELSHI: That would be fun.
WILLIS: For more ideas, strategies and tips to save you money and protect your house, watch "Open House" Saturday at 9:30 a.m. Eastern right here on CNN. And for more on how the news of the week affects your wallet, tune into "Your Money" Saturdays at 1:00 p.m. Eastern, Sundays at 3:00, right here on CNN.
VELSHI: The economy is issue No. 1. We here at CNN are committed to covering if for you. ISSUE #1 will be back here tomorrow, same time, 12:00 p.m. Eastern, right here on CNN.
Now let's get up to speed with other stories. "CNN NEWSROOM" with Don Lemon and Brianna Keilar starts right now.
