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Issue Number One
Saving Money At the Pump; The Future of Energy; New Hot Spots; Travel Dollars
Aired April 30, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: Pouring more manpower on western wildfires, plane and additional crews are being brought in to battle the fire south of Grand Canyon National Park. It has already consumed about 2,000 acres. No structures damages. Officials think the fire was manmade. The fire has not yet been contained.
South of Reno crews are battling a brushfire. Half of the 1200 acres is contained. Officials hope to start bringing in fire-fighting planes. They believe this fire was sparked by downed powerlines.
The U.S. military says the recent killings of three American soldiers in Iraq pushed the monthly death toll to a seven-month high. The death toll for American forces killed in April now stands at 47, that makes is the deadliest month since September. An American military spokesman attributes the increase to a surge in recent fighting especially in Baghdad's Sadr City neighborhood.
And there is this, flexing military muscle, the U.S. now has two aircraft carriers in the gulf region. The "USS Abraham Lincoln" arrived there Tuesday. It will replace the USS Harry S. Truman. Defense Secretary Robert Gates insists it is not an escalation, he calls the move a reminder to Iran. It comes as Washington continues to accuse Iran of forging ahead with weapons to supply weapons and training to militants in Iraq. I'm Tony Harris at the CNN Center in Atlanta. More news headlines at the bottom of the hour.
But right now "ISSUE #1" with Ali Velshi and Gerri Willis.
ALI VELSHI, CNN ANCHOR: Today is the day, the day we come closer to answering the question, are we in a recession? Is the economy of the United States on the road to recovery? How all of this affects your house, your job, your savings and your debt. Gas prices are high, but wait until you hear the new Memorial Day prediction. One big sticking point with one of the presidential candidates, health care plans.
ISSUE #1" is the economy. ISSUE #1 starts right now.
Welcome to ISSUE #1. I'm Ali Velshi. Gerri Willis will be along in just a moment.
It's settled, the U.S. economy is not in a recession, this according to some. According to the government, GDP, gross domestic product, the largest and most commonly used measure of the economy was unchanged in the first three months of 2008. The government says the U.S. economy actually grew by six tenths of one percent. That's not much, but it's much better than some people expected.
How accurate is GDP as a measure? Let me tell you a little bit about GDP. Here's how we've been defining it. Gross Domestic Product is the total market value of goods and services produced within a given country in a given period of time. What's that got to do with you? A lot of people use GDP as a measure of whether or not we've gone into a recession.
You may have heard some false descriptions of what a recession is. The National Bureau of Economic Research is an organization that tracks and measures recessions, they're kind of the official arbiter of it. Here is what they had to say. "The NBER does not define recession in terms of two consecutive quarters of decline in real GDP. Rather, a recession is a significant decline in economic activity spread across the economy, lasting more than a few months."
If you take that description of a recession, you might think differently about where we are. We know we've had job losses, we know we've had lower home prices and falling home sales and high inflation and gas prices. So what's the problem right now. Let's ask some people who know about this.
Lakshman Achuthan is the managing editor of the Economic Cycle Research Institute and Peter Schiff is the president of Euro Pacific Capital, the author of Crash Proof, how to profit from a coming economic collapse.
Welcome to both of you.
Lakshman you've been pretty clear. By the way, the Federal Reserve is meeting right now. Within two hours or so they'll give us a decision on interest rates. Some people are expecting a cut. You think we are in a recession.
LAKSHMAN ACHUTHAN, MANAGING EDITOR, CYCLE RESEARCH INSTITUTE: Absolutely we are in a recession. As you are suggesting here in your preamble that the reality, the economic reality outside your window is much harsher than any of these numbers suggest. Also, I would not bank on these numbers staying these numbers. These numbers are going to be revised not once, but twice in the next two months. The revisions are likely to be downward.
Then you are going to get a really big revision a year from now, which around the vicinity of downturns, is almost always to the downside. So, I am not, even looking at this number being slightly positive, I am not at all challenged in my view that there is a recession. You've got months on end of job losses. That's the real economy for a lot of people.
VELSHI: Peter, you almost take a similar position. You just don't think these numbers represent what's going on in America.
PETER SCHIFF, AUTHOR, "CRASH PROOF": I thought we were going to have a bit of a debate here, but actually I agree. But you know, these numbers are phony. In order to get a six tenths of one percent annualized rate of growth for the first quarter, the government is telling us that inflation in the first quarter was only running at 2.6 percent.
That's ridiculous. There is no way inflation is that low. It's at least twice that, if not three or four times that. We're already in a decline.
VELSHI: Let's touch on that. In a little over two hours we're going to hear from the fed. Let's say they cut rates. What happens when you cut rates. It makes money cheaper to borrow. It means businesses can borrow money, perhaps they expand, perhaps they hire more people. Those people end up maybe paying more taxes.
They've got lower rates on their adjustable rates because the prime rate goes down and it gives consumers more money to spend. Peter you're nodding your head like that's not a good thing.
SCHIFF: It's not what's going to happen. All that's going to happen is, cheaper money is going to make goods more expensive like food, like energy. That's why prices are rising. Businesses aren't going to loan more money to American consumers. They can't pay back the money they've already borrowed.
VELSHI: Explain that to me, why is that going to make things more expensive?
ACHUTHAN: What's happening right now is you've got a credit crunch going on. People in the markets don't trust one another. So the fed is trying to give you and I and everyone else some cheaper money so that we can afford things a little bit better. What's happening is it's getting caught in the system.
The credit markets, instead of passing that on to consumers in the form of lower rates, are saying you know we don't trust everybody. What's the safest thing for us to do? What's a safe haven for us? It's actually going long, investing, making bets on food and energy which actually hurts the consumer. So the fed is in a very tight spot.
VELSHI: So as they lower interest rates in an attempt to goose the economy, what they've done is they've goosed the price of wheat, corn, soybeans, oil.
SCHIFF: Exactly. But they shouldn't be trying to goose the economy. The economy needs to go through this recession. The problem is we borrowed and spent too much money. What we don't need now is more of the same. We need to start saving again, we need to start producing again. That means a recession.
ACHUTHAN: Now we've got some disagreement. Finally.
Sure, we have excesses and you need to work them off and you have to pay the piper. Housing boom, a credit debacle. There is no way around dealing and paying for those mistakes. However, I don't think it requires a recession. A recession brings with it a lot of collateral damage to people who had nothing to do.
VELSHI: Who end up losing their jobs. ACHUTHAN: Yes, there's a guy, you know he's got a hardware story, he screws along, he had nothing to do with any of these shenanigans with the housing boom or the subprime market stuff, and he's in trouble here. People who are dealing with discretionary consumer spending, not food and energy stuff. These people are under pressure.
SCHIFF: But the problem is, if you've got an economy that is now 70 percent consumer spending and consumers have to stop spending and start saving, you just can't make that transition without a recession. So we don't want to resist it though. These are natural forces that we need to cleanse this economy.
ACHUTHAN: All right. We'll keep the debate going for two seconds here.
The credit crisis is a problem where the Fed's tonic of lower interest rates is toxic. It's spiking up food and energy. Now if we had avoided a recession, if we avoided these job losses that we're going to hear about later on this week, then your increases in foreclosures would start to dissipate a bit. Instead foreclosures are going up, pushing home prices down, making the credit problem worse. My only point is that avoiding a recession, the actual contraction gives you some breathing room.
SCHIFF: I don't think it's avoidable. I think the job losses are going to come and home prices are much too high. They have to collapse. There's no way to stop that. The government is trying to prevent it but the problem is they got bid up in a speculative bubble. They have to come down.
ACHUTHAN: They have been coming down for a little while. I'm just saying it's easier to deal with this stuff outside of a recession, inside of a slowdown.
VELSHI: In two hours we're going to find out if the fed is paying attention to both of you guys. Peter Schiff thank you for joining us. Lakshman Achuthan as well, thank you for joining us -- Gerri?
GERRI WILLIS, CNN ANCHOR: We're going to find some happier pundits. It's time for you to get involved and weigh in on today's quick vote. The question, six months from now do you believe the economy will be in better shape, worse shape or unchanged?
Log on to CNNMoney.com and cast your vote. We'll bring you those results a little later in the show.
Up next, Senator John McCain's health care plan, the big issue with it that you might want to pay attention to. And a big prediction on gas prices. Wait until you hear what you could be paying for a gallon of gas by Memorial Day weekend. You're watching ISSUE #1.
(COMMERCIAL BREAK)
WILLIS: Welcome back to ISSUE #1. Senator John McCain, the presumptive Republican nominee for president, has laid out his plan for health care. An he addressed one of the biggest health care problems that hits people's wallets, that's pre-existing conditions.
(BEGIN VIDEO CLIP)
SEN. JOHN MCCAIN, (R-AZ) PRESIDENTIAL CANDIDATE: Those without prior group coverage and those with pre-existing conditions do have the most difficulty on the individual market and we need to make sure they get the high quality coverage they need. I'll work tirelessly to address the problem, but I won't create another entitlement program that Washington will let get out of control.
(END OF VIDEO CLIP)
WILLIS: All right. Instead, McCain said he would devote federal dollars to a yet to be worked out high risk insurance pool. CNN'S Dana Bash was with Senator McCain yesterday and Senator Edwards also interviewed Elizabeth Edwards. Who thinks McCain's plan falls short -- Dana.
DANA BASH, CNN CORRESPONDENT: That's right Gerri.
You know what Senator McCain proposed this, working with the states to find a way to insure people with pre-existing conditions, people who can't get insurance through the open market. It's an idea even McCain advisors admit it still quite vague. But Democrats say it's not enough of a safety net.
One of the most vocal democratic critics of McCain's plan is Elizabeth Edwards who of course suffers from cancer. I interviewed her after McCain laid out his plan and she said she thinks the only way to help less fortunate people with pre-existing conditions like her or even like John McCain is to put the burden on insurance companies.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: I'd have to tell you, I was a healthy person until I was 56. I would have been a great insurance risk. Then two years ago what happened to me happens to a great number of people across this country. On a certain day you are no longer in that desirable pool. It's not, it's just not a moral thing for us to do to have a health insurance program that are great for the healthy, but are very unsatisfactory, expensive or unavailable for those of us who drew the short straw and had some disease.
(END VIDEO CLIP)
BASH: Edwards, right now the other Democrats think, another part of McCain's plan which is moving away from employer based to consumer based that, kind of insurance system that would hurt those with pre- existing conditions because she thinks premiums would go up even more in the free market.
Democratic candidates would make it illegal for companies to deny health insurance to anyone because of a pre-existing condition. Yesterday McCain said he would support "reasonable limits" but doesn't want to mandate anything. The bottom line Gerri as we discussed yesterday on this show, voters are going to have a very stark choice this fall on how each party's candidate addresses health care which affects so many families' budgets. Gerri?
WILLIS: The health care debate will continue. Dana Bash thanks for that. Danny Bash part of the best political television team.
VELSHI: All three candidates have talked a lot of issues on the campaign trail. But is there one key issue that defines each of their campaigns? CNN's senior political analyst Bill Schneider, part of the best political team in television is live right now in Los Angeles.
Bill, you've parsed these numbers since day one. Is there something they are breaking out and identifying with in each of these cases?
WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: I can tell you what the defining issues are for the voters. Compare 1992 when Bill Clinton first got elected. The issue was the economy stupid, the economy stupid and the economy stupid. Those were the top three issues. What is it now? The economy is number one, again. Number two is the war in Iraq, number three health care.
But you can't divide the candidates that neatly. I think all of them are talking about the economy and Iraq and health care. Each has a defining message. Hillary Clinton that she is a fighter and she'll fight for your interests. Barack Obama, that he's a uniter and he says we can't solve these problems unless we all work together. And John McCain that he is experienced and will keep the country safe. So each one has a designed message.
VELSHI: We're headed to another set of primaries next week. We are still months away from the conventions and months yet away from the election. What are you seeing based on your experience in the past? Are you seeing them trending toward something that works? Do you think they'll get to a point where they'll each identify with an issue or is it just going to be about who they are?
SCHNEIDER: I think it's going to be about who they are and what kind of message they are trying to convey to the voters. Again, that's a real choice. Obama says we can only solve problems like the economy and health care in Iraq if we work together, not if we keep on fighting. Hillary Clinton says I'm going to fight for you.
I know what the Republicans can do and I'm going to fight back. John McCain's whole message is about the fact that he'll keep the country safe, that he knows the world, that he'll protect you. That's a very different choice of messages and each candidate really is defined by that message.
VELSHI: Tough note for people who are looking for issues. Good if you are looking for the person whose personality or whose trait you think are strong. Bill Schneider, good to talk to you. Bill Schneider, part of the best political team in television. WILLIS: Up next, a new trend in this era of foreclosures, trashing a house. We'll take you behind the story and we'll tell you how to save money on gas right now.
You're watching ISSUE #1.
(COMMERCIAL BREAK)
WILLIS: Going through a foreclosure is tough. Losing your home is one of the worst experiences you can go through. Folks, they deal with this with a range of emotions. One of them can be anger and the result is often a nasty, costly mess.
CNN's Thelma Gutierrez has the story in Las Vegas.
(BEGIN VIDEOTAPE)
THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): Las Vegas realtor Steve Howell assesses foreclosures. He says he's seen it all and documents it for the bank. Yards teaming with trash. Plumbing that has been pilfered. Floors covered with feces.
Have you ever seen such a thing before?
STEVE HOWELL, PRUDENTIAL AMERICANA: In the nine years I've done it, no. And I've talked to people, agents that have done this for a lot longer than I have and they haven't either.
It's some pretty bad damage inside.
GUTIERREZ: Agent Joe Kraemer says he's seen the same trend. And never knows what he'll encounter when he walks into a foreclosure.
UNIDENTIFIED MALE: They took the island, they took all the cabinets, stripped the bathroom.
GUTIERREZ: Toilet's gone.
UNIDENTIFIED MALE: Toilet's gone. They took the top of the countertop.
GUTIERREZ: Kraemer says it could be frustration, anger and hurt that is taken out on the home.
JOE KRAEMER, CENTURY 21: It's the other ones that are revengeful, you know the walls are bashed in and there are so many different aspects that we're running into. It's kind of unchartered territory.
GUTIERREZ: If it's sold as is by the lender, the cost of cleaning, fixing and replacing is up to the buyer. The end result, the banks lose money because the home has to be discounted and the property is much harder to sell.
KRAEMER: These are one of the rare ones that you see. GUTIERREZ: Just ask Albert and Fatinmatti Gando. They are looking to buy a foreclosure because they can save up to 50 percent. They've seen more than a dozen.
FATINMATTI GANDO, HOME BUYER: I went through the house, it was like weird smell. I couldn't even look at it. I left. I don't want to see it. I don't want to take a house that smells.
GUTIERREZ: But the Gandos are interested in this foreclosure because it's near the strip, under $200,000 and hasn't been trashed.
Missing dishwasher and missing stove.
GUTIERREZ: In fact some lenders are offering a so-called cash- for-keys program to people who are about to lose their homes.
HOWELL: If they can give us a property in that condition, just kind of take their stuff and go, there is an incentive, if you will from the bank.
GUTIERREZ: How much?
HOWELL: It varies. It could be as little as a few hundred dollars to as much as $1,000 or more.
GUTIERREZ: A small price to pay when you consider the cost of this.
UNIDENTIFIED MALE: There were columns here, like he Roman type columns. Gone.
GUTIERREZ: Someone actually took the columns?
UNIDENTIFIED MALE: They took them.
(END OF VIDEOTAPE)
GUTIERREZ: Now the cash for keys program really isn't something the banks are too eager to talk about. But several realtors who negotiate with the homeowners told us the majority of people will take the money and leave so it can be a win-win situation for both parties. Gerri?
WILLIS: Wow, this is an amazing story. I'm wondering are the banks trying to get these folks prosecuted for trashing these properties.
GUTIERREZ: Well Gerri that's a good question and it's something that we asked, as well. But if you think about it, some of the neighbors have told us, they've actually called places and they've said someone is in that home, they're trashing that home. Police will show up, they'll ask for the ID.
If the person is able to produce a driver's license with that address on it, proving that that is their property, what can the police do but drive away? You're allowed to do whatever you want to with your own property. Many of these people will say we are in the process of fixing the house up. The cops have no other alternative but to drive away.
WILLIS: Are the neighbors here getting involved? I would think if I was a neighbor and I saw this activity going on I would be very upset.
GUTIERREZ: Oh they are and they are the people who are calling the police but at the same time, there is not much they can do. After all, it is your property and you have the right to do with it what you choose.
WILLIS: Wow, Thelma, thank you for that, great story.
VELSHI: Coming up next, there is a gas price prediction out for memorial day weekend and it is not pretty. Details are up next. Plus, where to get the best value for your dollar when you finally decide to retire. Why some countries in Europe are practically rolling out the red carpet for you. ISSUE #1 rolls on after a quick stop in the CNN NEWSROOM.
(COMMERCIAL BREAK)
VELSHI: Welcome back to ISSUE #1. We've talked a lot on this program about high gas prices. Oil nearly reaching $120 a barrel this week. Senator Maria Cantwell has asked President Bush and the department of justice to form an oil market fraud task force to investigate allegations of oil and gas market fraud and corporate corruption. We spoke to Senator Cantwell yesterday and today we hear from the other side of the senate. Republican Senator John Cornyn of Texas joins us now from Capitol Hill.
Senator good to see you on the show, thank you for being with us. $3.62 is the national average for a price of a gallon of gasoline. One of your Senate colleagues from your side of the aisle, Senator John McCain, thinks that we should take off the federal gas tax of 18 cents a gallon for the summer. Senator Hillary Clinton supports that idea. You don't think so.
SEN. JOHN CORNYN, (R) TEXAS: Well, the money is going to have to come from somewhere. Because as you know, the gas tax pays for construction of new roads and maintenance of the roads we have. So while it could provide perhaps some temporary relief, we really need a long-term solution. Frankly, Congress has been the one standing in the way, putting America's vast natural resources out of bounds. It used to be that that's something that was a matter of national pride, but now congress has basically blocked development of our own natural resources in favor of imported oil from around the world.
VELSHI: I feel like you're talking about the arctic national wildlife reserve. Tell us a little bit about that and what your position is.
CORNYN: We're talking about things like oil shale in the west and Colorado and elsewhere, a lot of it on federal lands. We are talking about the outer continental shelf. Many states like Florida and Alaska would like to develop oil reserves off their coastline, really beyond the horizon where you can't even see it, which would provide some royalty from the federal government for that oil that's developed there.
Congress is blocking it. Yes, there is the arctic national wildlife refuge in Alaska, which Alaskans overwhelmingly support, and which America needs that million barrels of oil that could be produced from that reserve.
VELSHI: What would it take? What would it take to achieve what you and some of your colleagues would like in terms of opening up some of America's resources for oil or some sort of fuel? What would have to happen?
CORNYN: Well, we would have to lift the moratorium on the arctic national wildlife refuge. Really something that could be developed in, I believe, an environmentally responsible way. We need to lift the moratorium on exploration in the outer continental shelf and much of the country on the coastline. Then we need to open up federal lands. Estimates I've seen say that we could produce as many as 3 million barrels of oil a day from those reserves here at home and not depend for those 3 million barrels a day on foreign sources.
VELSHI: Senator what about refining and refineries? We've had some expansion. We haven't had new ones, very hard to get a new refinery. A lot of them are in your home state of Texas. Why is your attention not on refineries and refiners?
CORNYN: Well you make a good point. That is another choke point in the supply of gasoline because while 70 percent of the cost of gasoline comes from the cost of oil, we don't have adequate refinery capacity. And frankly I think the one law that Congress really has no power over is the law of supply and demand. And I think that's the law, the economic law, that Congress has ignored. We know that we're competing in a globalized economy with fast growing countries, like China and India, for a commodity that, frankly, we've had mainly all to ourselves, cheap energy. But that's over.
VELSHI: Senator, good conversation. Thank you for being with us.
Senator John Cornyn of Texas.
Time now for your latest headlines. Don Lemon in Atlanta in CNN's "NEWSROOM."
Take it away, Don.
DON LEMON, CNN CORRESPONDENT: All right. Thank you very much, Ali. Always good to see you.
As you've been reporting there on ISSUE #1, another interest rate cut is expected from the Fed today. Stock prices have been surging this morning in reaction to analyst's prediction of a cut of a quarter of a point. The official word is expected in about an hour and a half and we'll carry that for you at the top of the hour right here in the CNN "Newsroom." Make sure you join us then.
Pouring more manpower on western wildfires. Planes and additional crews are being brought in to battle a fire south of Grand Canyon National Park. It has already consumed about 2,000 acres. No structures, though, were damaged. Officials think the fire was man- made. It hasn't been contained yet.
And south of Reno, crews are battling a brush fire. Half of the 1,200 acre blaze is contained and officials hope to start bring in fire-fighting planes there. They believe this fire was sparked by downed power lines.
Join me at the top of the hour in the CNN "Newsroom." We'll have the world's tallest mountain. We'll tell you about that. It becomes a site for one of the world's most protested Olympic torch runs. Veteran Everest climber David Brasheers (ph) will join us for an insider's view of the brutal conditions torch runners will face.
I'm Don Lemon. Now back to Ali Velshi and Miss Gerri Willis, ISSUE #1.
WILLIS: Thanks, Don.
You know, it's another day, another record for gas prices. Now it will cost you an average of $3.62 for a gallon of gas. And now AAA is predicting gas could hit $3.90, just a dime before $4, by Memorial Day weekend. That's one month from now. We're all addicted to our gas, but is there any hope that we can break the addiction? Robert Sinclair with AAA. He's here to help.
OK, give me the dollars and cents here. You're seeing $3.90 by Memorial Day. Is that the new floor?
ROBERT SINCLAIR, AAA: Probably because it could go higher than that. We're seeing already some pockets around the country, some cities, that are above that. San Francisco and Los Angeles right around $4 a gallon and many stations in the New York area had $4 a gallon. And many major cities across the country. So that might just wind up . . .
WILLIS: So where are we going? $3.90 by Memorial Day, but where do we go after that?
SINCLAIR: It's hard to say. The "fundamentals" say that gasoline prices should start going down by then. Demand is actually down 3 percent compared to last year.
WILLIS: People are reacting?
SINCLAIR: Yes, but you've got a lot of other things that are playing into the price of gas.
WILLIS: All right. Let's get some advice for people out there who are trying to cope with these high prices. We say, get the junk out of your trunk. Make sure your car is well tuned. Give me something new. I need a new solution for this problem. SINCLAIR: How about changing your driving style? Drive as if there's an egg between your foot and the gas pedal and the foot and the brake pedal. Driving gently saves a lot of gasoline.
In fact, we did a comparison with a local station a couple of years ago where we disabled one identical vehicle and drove a well- prepared vehicle. And we drove hard and had a disabled vehicle and we burned more than double the amount of gasoline in the vehicle that had bad maintenance and the aggressive driving style compared to the vehicle that was driven sedately and at a good state of tune. So those things are very important. But a lot of companies now are realizing that they can get involved by allowing employees to telecommute and things like that.
WILLIS: Yes, a lot of people out there are finding buddies to drive into work with.
SINCLAIR: Exactly.
WILLIS: Let's talk a little bit -- you know you are a membership organization. AAA is out there to help their members, consumers, people like me. What do you make of these ideas out there for the gas tax holiday? Taxing windfall profits of oil companies? Is it time to really hold oil companies accountable for what's going on here?
SINCLAIR: It may be. We haven't had that discussion as yet to determine what the policy should be. But one of the things that's being talked about is suspension of the federal tax on gasoline. And we think that would be a bad idea.
WILLIS: Why?
SINCLAIR: That money is used to fix the highways. And the American Society of Civil Engineers has given the overall infrastructure of the United States a grade of d. And the number one part of the infrastructure is the highway system. It's crumbling. It was built back in the '50s. We need to spend more money on it, not less.
WILLIS: More money, not less. I think that's what we're all talking about.
Robert Sinclair, thank you for your help.
SINCLAIR: Thanks for having me.
VELSHI: Well, it would be as if the Kennedy family trashed the Democrats or the Ford's announced that they think Chevy has a better approach. This morning, the Rockefeller family taking a harsh, public stand against Exxon Mobil, the company that traces its roots back to standard oil and the father of the oil and gas boom John D. Rockefeller. Miles O'Brien has been there for the remarkable news conference in midtown Manhattan.
Miles, what is the issue here? MILES O'BRIEN, CNN CHIEF TECHNOLOGY & ENVIRONMENT CORRESPONDENT: Well, Ali, the issue is the alternatives to fossil fuels. The Rockefeller family believes the management of Exxon Mobil is not investing nearly enough in finding new ways to provide energy to the world. They're concerned about climate change, sure, but they're also concerned about the adverse change to the bottom line at this amazingly profitable corporation over the long run.
They point out their great or great great grandfather, depending on who you're talking to, made his stunning fortune by, doing what, offering an alternative fuel. In that case, it was 1870s, kerosene instead of whale oil. All right. This led to the founding of standard oil, the creation of an epic fortune that morphed into Exxon Mobil.
Well, these days, Exxon Mobil has been very slow to acknowledge climate change, reluctant to invest in alternatives to fossil fuels and the Rockefellers, as the longest of long-term shareholders, are pushing a handful of shareholder resolutions to push the company in a new direction. They want a task force to study global warming, its impact on poor economies. They want the company to set goals to reduce greenhouse gas emissions. And they would like it to adopt a renewable energy policy.
(BEGIN VIDEO CLIP)
NEVA ROCKEFELLER GOODWIN, JOHN D ROCKEFELLER'S GREAT GRANDDAUGHTER: I want to stress that all of the resolutions from Rockefeller family members reenforce different aspects of the same concern -- the need for Exxon to identify energy-related opportunities and strengths to complement its strengths and skills in an industry that will soon look very different than it did when many of Exxon's managers started their careers.
(END VIDEO CLIP)
O'BRIEN: Now, Neva Rockefeller Goodwin is also an economist at Tufts (ph). So she knows from what she speaks. The Rockefellers spoke a lot about the man at the top of Exxon, the center of your screen there, Rex Tillerson. He is currently the CEO, as well as the chairman of the board. They'd like him to step down as chairman and keep those all separate. Sixty-six of 78 direct descendants of John D. Rockefeller have signed on to these shareholder resolutions which, of course, as you know, are non-binding.
VELSHI: This is the biggest publically traded company in the world. Are they going to have an impact? Do they have enough shares to influence this?
O'BRIEN: We asked them quite a bit about how many shares they own. They don't know. If you know how much you have, I guess you're really not rich.
VELSHI: I guess that's what it is. Is some sense that this could grow, this could become something (INAUDIBLE)? O'BRIEN: Yes. No, no, truthfully, there's a bully pull component to this. And they feel that other shareholders will march along with them and eventually they'll get to the point where some of these ideas will attain a certain amount of consensus than going after some of the big institutional holders of Exxon Mobil.
VELSHI: Excellent story, Miles. Thank you very much for joining us.
Miles O'Brien, our chief technology and environment correspondent.
Coming up next, the absolute best places to move when you retire, whether it's now or decades from now. And we'll open up the Help Desk. The e-mail address is issue1@cnn.com. Get those questions and we'll get you the answers. You're watching ISSUE #1 right here on CNN. We're coming right back.
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WILLIS: Welcome back to ISSUE #1.
Now you may be very happy living where you are right now, but at some point, whether it's a year, 10 years, 25 years from now, you may want to move away from it all, get away to a place where the value is great, the lifestyle a little more relaxed. Barbara Corcoran is a real estate expert. She was in the business for 30 years. And she is the author of "Nextville," a brand new book.
OK, Barbara, you say forget Florida. And I'm thinking that everybody I know right now, because of the prices in that part of the country, they're looking at real estate in Florida. What's wrong with that scenario?
BARBARA CORCORAN, AUTHOR, "NEXTVILLE": Well, Florida's hardest his and you're going to get your best deals. But there's a lot wrong in Florida. Now, it's for some people, but not for that many people any more.
WILLIS: How so?
CORCORAN: It's too old, number one. It's too crowded. Everybody looks like the guy next door. There's not a lot of excitement. There's beautiful palm trees, but you're not going to feel invigorated if you move to Florida and you're going to be just like everybody else.
WILLIS: All right. So you talk about not liking the word retirement.
CORCORAN: Ah, the worst word.
WILLIS: Because, you know, a lot of people, they don't really retire. They just keep on working in a different way. So you say you've got to think about how you're going to do that and how you're going to interact with your new location. Tell us about that. CORCORAN: It's totally different for an individual. What I believe is, depending upon how you're wired, what you are made of, what interests you, what floats your boat, so to speak, depends upon where you should be retiring. There's a place that's perfect for every single person, but unless you really know what's going to make you happy . . .
WILLIS: There's probably more than one.
CORCORAN: Well maybe three or four. I really believe in my heart is good for each individual. But you have to know yourself and pick out the right place. And some of the places are very different than you'd ever think about.
WILLIS: Well, OK, let's go to one of them. Burlington, Vermont, you say, is great. My only problem . . .
CORCORAN: (INAUDIBLE).
WILLIS: One hundred and fifty-seven days of sunshine a year. I may need more than that.
CORCORAN: Yes, but even the dull light can be beautiful once you get used to it. But there's a lot of other reasons to go there. If you could just drop in midday, a day in Burlington, Vermont, you would swear you were in a beautiful European village. If you go there at night, you'd close your eyes and open them and think you're in Tribeca at a hot little night scene (ph). It's half hippie, half whatever, I don't know.
WILLIS: We're looking at pictures of it right now and it does have a real charm. And you're sitting there nestled in the mountains. Very pretty. Very quaint.
CORCORAN: But pretty is just part of it. People there are 29 years old in average age. Six years younger than anywhere else in America. If you're there, you go to the university. There's free courses for you. There's great athletics. You just can't get old if you're going to be living in Burlington, Vermont.
WILLIS: Now let's go south to Knoxville, Tennessee. Now my mom used to live there. It is the land of the boat. You go there, you have to be in water sports. That's all there is to it.
CORCORAN: And it's specifically made for people who want like souls who love boats as much as you do. You know, in Knoxville, you could leave Knoxville and go to the Gulf of Mexico, 1,000 miles away on a boat without really stopping. You can't do that any where else in America. And they clean the water every single year. For three months they drain all the lakes, the damns and they clean it up again. It's probably the most beautiful water on earth. And the people who love boats love boat people.
WILLIS: Yes, and it's very warm there, too, we should mention.
Eugene, Oregon. I have been to Eugene, Oregon. What a pretty town.
CORCORAN: You've been everywhere.
WILLIS: I get around. What a pretty town. It's really lovely. And, boy, there's a lot of young people in school there. You sort of feel energized by the intellectual activity.
CORCORAN: Not only the intellectual activity, but you just can't just sit still in Eugene. It's, first of all, the greenest city in all of New York.
WILLIS: How so?
CORCORAN: The air is pure. The water is pure. It's run by windmills now. There's no -- nothing but hydro electric powering all the schools and buildings. But most important in Eugene is you have fabulous parks. You can't sit still in Eugene. You're going to be active. So you're never going to get old there.
WILLIS: Very interesting ideas. Thanks for your time today, Barbara. We appreciate it.
CORCORAN: My pleasure.
VELSHI: Well, take a look at this check. It is dated February 4, 1922, for the amount of $50,000. It is for the sale of Babe Ruth by the Boston Red Sox to the New York Yankees. The deal was for $100,000 in cash and another $300,000 in loans. This check is for the first of those three payments. A Florida company put the check up for auction yesterday. Bids will be accepted through the end of May.
Now later this year, they'll be auctioning off the second of the three checks. The third check is MIA. Many people doubt that it actually exists. For an expected $75,000 to$%100,000, if you win the auction, you'll even get an air-tight case and an official appraisal.
Well, coming up next, traveling overseas is quite expensive these days with the low U.S. dollar, but we'll tell you what some European countries are doing to lure you in.
And we will open up the ISSUE #1 Help Desk. Answers to your questions. E-mail us at issue1@cnn.com.
You're watching ISSUE #1 right here on CNN.
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VELSHI: Most video game publishers are happy selling 100,000 copies of a game, but Grand Theft Auto 4, which is out just yesterday, is expected to sell, get this, 6 million to 12 million copies at about $60 a pop. $90 for the special edition. That is a whole lot of money. But here's the extra money maker.
While playing, players can listen to more than 200 songs across 16 ingame (ph) radio stations. When a player hears a song he or she likes, they can dial a number on their ingame cell phone to receive a text message with the song title and the artist -- Gerri.
WILLIS: Well, it's time that we answer your questions on the Help Desk. We're going to get started in just a second here. But joining me, again, Barbara Corcoran. She is the author of "Nextville." Stephanie Auwerter is the editor at smartmoney.com. Allan Chernoff, he's our CNN senior correspondent.
Let's get started. We have a question here from Julie who's asking, "we're considering relocating to a different state to escape the high cost of living in Utah. What resources are the best" in trying to figure out where to go next?
What do you think, Barbara?
CORCORAN: Don't be so quick to leave Utah for two reasons. First of all, the cost of living there is some of the lowest in the nation. Next, prices haven't failed in Utah. So by leaving the state so quickly, you're apt to make a big mistake just yet because you're going to go into so many markets that are poor.
All of your resources are online. You can go to the Census Bureau to get all the information on employment and cost of living. You can go on bestplace.net. It's all listed there. Check out the information because you're so quick to move.
WILLIS: Great idea. No, a lot of people out in the west, they're always looking for the lowest cost option. High prices out there.
Let's take Gina's e-mail from South Carolina. She asks, "where is a good place to put a chunk of savings to grow while the economy recovers, since savings and CD rates are barely 2 percent." Inflation's at four.
Stephanie, what do we do?
STEPHANIE AUWERTER, EDITOR, SMARTMONEY.COM: It is a tough situation. My first tip here is to look at the online banks, like ING Direct, HSBC Direct. You will do a little bit better than the traditional brick-and-mortar savings accounts. But you really don't want to ratchet up the risk level. To get those higher returns, you're going to have to go beyond a cash account. So I would be happy with say 3 percent using one of these online bank accounts rather than looking at something that's more aggressive in today's market.
WILLIS: A lot of people are stretching for yield.
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: You know, I also like muni bonds. You can do very well right now. In fact, Sheldon, Texas, today is offering AAA bonds that yield 4.75 percent, 25-year bonds. That's before considering the tax implications. Add the tax implications. If you're in the top tax bracket, you'll end up with 7.3 percent.
WILLIS: I know, these deals are amazing and people are not seeing -- they don't understand it. OK. Let's go to Becky in Florida. She asks, "we all know that gasoline prices are skyrocketing and it seems to me that all the government would have to do is take crude oil off the futures market until further notice." That can't happen, can it, Allan?
CHERNOFF: It can't happen, no, but it sounds like a great idea in a way . . .
WILLIS: That's crazy.
CHERNOFF: Because there is no doubt that there is a lot of speculation now in the futures markets. A lot of investors are just pouring money in betting prices will keep soaring. But you can't do that.
For example, Southwest Airlines, other airlines, they depend on the futures market to lock in a price for fuel.
WILLIS: So it plays a role.
CHERNOFF: To hedge. Very -- it's critical to our economy. You can't just shut down a market like that.
WILLIS: All right. OK. It was a good idea. To our viewer, thanks for thinking. I like that.
We have one more e-mail here. "What are the advantages and disadvantages of buying a foreclosed home?"
So many people giving me e-mails, not just here but elsewhere. I want to get in on this foreclosure boom that's coming. Do you think that's a good idea, Barbara?
CORCORAN: he huge advantage is, you get 20 percent to 30 percent off the price? Why not do it. The bad news to it is, is you're buying with one eye open, one eye closed. You can't often get in to see the properties. You're having no contingencies in the purchase very often and you're bidding against a bunch of hot-blooded people who all want the same property and you have to over pay. So if you know what you're doing, great idea. If you're not a cool character and you're not a risk taker, pass on and buy a regular house.
WILLIS: These houses can be damaged. We just saw a report on just how damaged they can be. It can be bad stuff.
OK. Let's go to Jenny. She says, "should I transfer my home equity line that has a seven percent interest rate to a zero percent interest rate credit card?"
Stephanie.
AUWERTER: Well, here's the question is, where is that zero percent interest rate going to go six months from now or one year from now or what will it jump to?
WILLIS: Higher. It's going to go higher. AUWERTER: It could go into the double digits. So unless it's really locked in for the lifetime of the loan, I wouldn't even consider it. I think when you start to play these interest rate jumping games, lots of times you wind up worse off than when you started.
CHERNOFF: You will pay at some point.
WILLIS: Yes. OK. So next e-mail from Ruth in Washington. "Do mortgage companies provide any relief for individuals who are not in imminent foreclosure danger but who are struggling to make their monthly payments?"
Allan, I talk to people every day who say I'm having trouble but I can't get the attention of my mortgage lender.
CHERNOFF: It's the loan mitigation department that you want to am at. Call them and call them aggressively. Tell them, this is going to squeeze me. At some point I will be delinquent on a loan. At some point I may be in foreclosure. Scare them and they may play ball with you.
WILLIS: Yes, and Barbara, chime in.
CORCORAN: And could I just (INAUDIBLE), and put it in writing, certified mail. You always get a response from a bank if it's certified mail.
WILLIS: Oh, I love that idea. Great ideas.
Stephanie, pile on here. Any ideas?
AUWERTER: I think the key really is just to be proactive here. I think a lot of times when people are struggling, their natural inclination is to pull back, is to hide and that's when they get into really serious trouble. So be proactive and you may find that these lenders are more willing to work with you than you expect.
WILLIS: Time to get at it in front of the problem.
All right, Barbara, Stephanie, Allan, thanks so much for your time today. Great answers. Tough questions.
Ali.
VELSHI: Thanks, Gerri.
Well, you've seen how strong the euro is. Still ahead, visit Europe and pay in dollars. The dollar's down and out, but that doesn't mean you can't find ways to stretch it on vacation overseas. We'll tell you how to make your summer dream vacation come true.
And it is not too late to vote. Log on to cnnmoney.com and weigh in on the Quick Vote. Results are next. You're watching ISSUE #1 right here on CNN.
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WILLIS: Time now to get the results of today's Quick Vote. More than 27,000 of you weighed in. And 51 percent of you think the economy will be in worse shape six months from now. Twenty-nine percent of you disagree and think it will be better. And 20 percent of you think it will be unchanged.
VELSHI: Interesting numbers, Gerri.
All right. Well, for those of you who want to just take a break while it all happened, don't call off your summer vacation just yet. What if you could go to Europe and pay in dollars? It actually could be a possibility.
CNN's Alphonso van Marsh explains.
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ALPHONSO VAN MARSH, CNN CORRESPONDENT, (voice over): The European holiday Chevy Chase' Griswold family dreamed of in "National Lampoon's European Vacation" is increasingly harder for Americans to afford. A weak U.S. dollar is driving up holiday costs priced in euros and the British pounds.
SIMON HEATH, WORLDHOTELS: Unfortunately, there's been a downturn in the U.S. market for travelers coming back over to Europe.
VON MARSH: So Simon Heath, of World Hotels Group, is luring exchange rate-weary Americans by getting rid of the exchange rate all together. Book a room at this property in Madrid, advertised for say 200 euro a night, and Americans who reserve through World Hotels in the states pay just $200.
HEATH: In the past, the U.S. tourists have been very loyal to us and helped us get into a position that we're in now and, therefore, we want to repay some of this loyalty and offer them cheaper rates.
VON MARSH: And there are other ways for American tourists to protect themselves against a fluctuating dollars. Tour operators say smart travelers choose all-inclusive vacations, like beach resorts where prices are often set months in advance.
FRANCES TUKE, ASSOCIATION OF BRITISH TRAVEL AGENTS: With package holidays and tour operators, they contract with hotels and often pay up front for the beds as well so you know that you're locked into that price and that won't change.
VON MARSH: Same thing with cruise ships. One reason why, despite U.S. economic woes, the head of Britain's cruise industry trade says more than a million Americans cruised in Europe last year.
WILLIAM GIBBONS, DIRECTOR, PASSENGER SHIPPING ASSOCIATION: If you didn't have to worry about the exchange rate because you can pre- book your cruise in North America, in dollars, pay for your excursions in dollars as well. Incredibly good value for money. VON MARSH: And here's another tip to stretch the vacation dollar. Foreign exchange company Travelex will soon have a new currency card that is purchased in U.S. dollars, then loaded in euros or Great British pounds, the currency used here in London. And here's the thing. The currency exchange rate is locked at the time of purchase. So if the value of the dollar goes down, well, no worries. But if the value of the dollar goes up, you're stuck.
Alfonso van Marsh, CNN, in London.
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VELSHI: Yes, you and I share a view though that sometimes just budgeting and being able to lock it in, even if the dollar gets stronger, might make things easier for people. But I think I'm just going to stick around this summer. I cannot make a plan to go somewhere else.
WILLIS: I feel your pain. We're staycationing (ph). We're going to stay put. You know, I mean, you don't feel guilty about spending all that money.
VELSHI: Yes. Yes. It might not be that much more, but I just can't bring myself to pay for some of those things. So we're going to hang out here. Gerri and I will be here all summer.
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. And for more on how the news of the week affects your wallet, tune onto "Your Money" Saturdays at 1:00 p.m. Eastern and Sundays at 3:00.
VELSHI: And, like I said, we'll be here all summer.
The economy is issue number one. We here at CNN are committed to covering it for you. ISSUE #1 will be back here tomorrow at the same time, 12:00 p.m. Eastern, right here on CNN.
Time now for your latest headlines. Let's take it over to Don Lemon and Melissa Long.
