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Issue Number One

Mortgage Meltdown; Homelessness Hits More People as Home Foreclosures Increase

Aired May 15, 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: Quandary, what to do with a super talented young girl. The general manager of the Hoops says the facility would host co-ed play if enough teams expressed an interest. They don't want to compete with her, against her.
TONY HARRIS, CNN ANCHOR: She's fierce. Step up guys, compete.

WHITFIELD: We'll see you in the CNN NEWSROOM one hour from now. I'm Fredricka Whitfield, my little commentary.

HARRIS: "ISSUE #1" with news on the economy begins after a check of the headlines.

Well, severe weather and reports of tornadoes in parts of the south. Chad Myers joining us from the weather center.

Chad what's the latest?

CHAD MYERS, CNN METEOROLOGIST: Tony, a little damage around Lafayette as it moves on by New Orleans. Especially north of the city. Still a tornado watch from Panama City Beach right through Mobile. I do believe this is going to be a gulf coast kind of scenario today. There is just too much rain across Birmingham not moving into Atlanta. The cloud cover keeping the temperatures down. And when you don't get the heat, you won't get the big, big storms. That's great news because Atlanta just needs the rain.

It could rain all day in Atlanta and there's not going to be one person, unless maybe you are working outside, complaining. Rain showers and thunderstorms all the way through. Some damaging winds and isolated tornadoes along the gulf coast and heavier showers. Still could see thunder and lightning, but I don't think you will see any tornadoes across the northern half of this area it could get sunny and warm up. Right now, I don't see that in the cards.

HARRIS: Doesn't sound like it. That's the news for now. I'm Tony Harris. "ISSUE #1" starts right now.

ALI VELSHI, CNN ANCHOR: Fast forward, 2013. An American president will have just completed his first term in office. If it's John McCain, how will he have addressed "ISSUE #1"? And ...

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: This is my bed, my dog, this is my life in this car right now. (END VIDEO CLIP)

VELSHI: America's new wave of homelessness and foreclosed homes, which plans will save you and your neighbors? ISSUE #1 is your economy. ISSUE #1 starts right now.

Welcome to this Thursday edition of "ISSUE #1," I'm Ali Velshi. Gerri Willis is on deck.

Record high gas prices are keeping some of you parked for the upcoming Memorial Day weekend. Less than 38 million plan to travel. That is the first drop in Memorial Day weekend driving since 2002, the first Memorial Day after the 9-11 attacks.

Beware, Uncle Sam could be direct-deposit continuing your tax stimulus checks into someone else's bank account. Fellow Republicans embarrass President Bush by passing a $290 billion farm bill that he is threatening to veto. There is enough support on the hill for an override even if the president says no.

An unusual speech today from presidential candidate John McCain. In 2013, the next American president will have just completed a first term in office. If it's Senator McCain, he outlined what he will have done by then to address issue No. 1, the economy. Listen to what he says.

(BEGIN VIDEO CLIP)

SEN. JOHN MCCAIN (R-AZ), PRESIDENTIAL CANDIDATE: Older workers who accept lower-paying jobs while they acquire new skills are provided assistance to make up a good part of the income they have lost. Community colleges and technical schools all over the country have developed workers retraining programs suited to the specific economic opportunities available in their communities and are helping millions of workers who have lost a job that won't come back find a new one that won't go away.

(END VIDEO CLIP)

VELSHI: That's an interesting approach. Jobs are a top concern for voters in Kentucky. One of the next big primaries is five days away. That's where we find CNN's Dan Lothian with the CNN Election Express.

Dan, look into your crystal ball, if you will with John McCain. Who will have Kentuckians have carried into a first term of office?

DAN LOTHIAN, CNN CORRESPONDENT: I locked up by crystal ball years ago. Kentucky is a state that voted for George Bush twice and for President Clinton twice.

Over the last couple of days we've been talking to voters here. These are Reagan Democrats who are saying now because of the economy, because of the war in Iraq, they are thinking about coming back home. You point out an important issue here. Issue number one, the economy. That is on the minds of voters here.

We talked to a business owner. She own as restaurant. Has had a restaurant two years and talked about how it's more expensive to buy fish. Up $3 from what she was paying. It's more expensive to buy cooking oil. Another business owner says he is concerned about jobs lost out of states and gone overseas. A lot of textile jobs. The auto industry filled in some of the gap here, but it's not been nearly enough.

So yes, there has been a lot of concern here about the economy. What voters are telling us is that whichever candidate can best address those issues, they are the one who will win.

VELSHI: You've got blue collar workers, blue grass where you are this week. John Edwards support for Obama, does it tie up support among the working class workers and voters he may need come November?

LOTHIAN: That is a good question. A lot of times people will say endorsements don't add up to anything that they really don't mean anything.

I was talking a few minutes ago with a Democratic official here in the state of Kentucky. He believes that it really will help Barack Obama because this is an area among the white working class voters, the rural voters where Senator Clinton had strong support. We are seeing how they came out in big numbers to support her in West Virginia. She has had strong support among that group here in the state of Kentucky and that is where John Edwards has had really some strengths speaking out for the working class voters with his populous message. The thought is now among the Democrats of this state that he is supporting Senator Barack Obama, it could help Barack Obama in the straight of Kentucky.

VELSHI: Dan, good to talk to you. We'll visit with you again.

Dan Lothian in Kentucky.

GERRI WILLIS, CNN ANCHOR: This afternoon on Capitol Hill, Senate Banking Committee will debate housing aid. Does it have a chance to pass? The Stanford Group, a Washington policy research firm, reports all eyes will be on the Republicans when the bill gets to the Senate floor.

The group expects all 51 Democratic senators to vote for the measure, but they'll need nine Republican votes to pass it. Stanford Group says plenty of Republicans will face pressure to vote for the measure, despite the fact the president said he would veto it. The reason? They all come from 15 states that have at least one county seriously hurt by the subprime crisis.

Of those Republicans, eight are up for re-election. Wayne Allard, Saxby Chambliss, Mitch McConnell, Susan Collins, Norm Coleman, John Sununu, Gordon Smith and John Warner. These will definitely be key votes. One other state suffered severely with work closures, Arizona has two Republican senators, Jon Kyl and John McCain, the presumptive Republican candidate.

The House and Senate versions of this bill are similar, but incredibly complicated for the average home owner. CNNMoney.com senior writer Jeanne Sahabi joins us now to break down this bill which already passed.

OK Jeanne. Let's start with who gets helped here. Everybody wants to know. Am I going to get some assistance?

JEANNE SAHADI, SENIOR WRITER, CNNMONEY.COM: Under the House- passed version, if you are a home owner under water, you owe more on your home than your house is appraised at, this plan potentially could help you stave off foreclosure. You would have to prove to your lender you are an owner occupied residence.

WILLIS: This can't be a second home.

SAHADI: You have to have a mortgage debt-to-income greater than 35 percent. You made $4,000, you'd have to be paying more than $1400 today on your mortgage to qualify.

WILLIS: You're talking about monthly payments.

SAHADI: Talking about monthly payments. If you have a second mortgage on your house, you have to get the holder of that second mortgage to agree to let you join the program and they have to cut a deal to the first mortgage holder as to what they will get out of it.

WILLIS: Holy cow. This is complicated.

All right. Let's move to lenders. Lenders here do not get off Scot -free. They take a haircut, as well.

SAHADI: Lenders will pay about 5 percent in loan costs to the FHA upfront in closing costs and fees. They have to agree to write down your loan to 90 percent of appraised value. If I owe more than appraised value, they have to forgive anything above appraised value and give me 10 percent equity in the house.

WILLIS: All right. Lenders are paying to get these loans taken off their books. This is ultimately help them because these loans are so devalued. If I'm interested here, as a borrower, what am I on the hook for?

SAHADI: You have to pay 1.5 percent annual premium on the principal amount you owe. It's going to go down over time. But every year you have to pay 1.5 percent on that amount. They divide it up monthly. When you sell or re-fi your home you have to pay an exit fee. The exit fee is either 3 percent of the total loan amount to the government or between 50 percent and 100 percent of what are called the net proceeds after you sell the house.

WILLIS: If you make a lot of money on this house, you don't get to keep it.

SAHADI: You share the equity with the government. WILLIS: One other question I think is really important. How do you take advantage of this? I hear about all this good stuff. If this bill becomes law and we don't know if that will happen, how do I get involved?

SAHADI: That is not clear yet. They haven't worked out the administrative part of this. The White House has the FHA secure program at the FHA. It's like this but much narrower in scope.

WILLIS: Do you think they'll have an 800 number?

SAHADI: That is my guess, but that is far down the pike.

WILLIS: The president promised to veto this, too. Devil's in the details. We'll have to wait and see what happens in the Senate today. Jeanne, thanks for that.

SAHADI: Thank you very much.

WILLIS: From the comforts of home to a parking lot. The harsh reality of being homeless. What a nightmare for some Americans next. You're watching ISSUE #1.

(COMMERCIAL BREAK)

MCCAIN: Congress has just passed by a single up or down vote a tax reform proposal that offers Americans a choice of continuing to file under the rules of the current complicated and burdensome tax code or use a new, simpler, fairer and flatter tax with two rates and a generous deduction. Millions of Americans and tax payers are expected to file under the flat tax and save billions in the costs of preparing their returns.

WILLIS: That was Senator John McCain speaking this morning as if it was the year 2013 about what he'll accomplish as the president of the United States. He's not the only candidate with an economic plan for the country, but what is the right approach?

This week "Time" magazine looks at what the next president needs to do to take the economy grow again. Justin Fox wrote that article. He is a business and economic columnist with "Time."

Great to see you, Justin. Thanks for joining us.

JUSTIN FOX, "TIME" MAGAZINE: Thanks for having me.

WILLIS: Way thought was interesting about the article, it starts out with this interesting discussion about, have we lost our mojo? Has the U.S., has growth slowed in a way that makes it hard to overcome this recession? What do you make of that? What are the issues the next president needs to tackle?

FOX: What's really going on, we focus on the top-line growth numbers, how fast GDP is growing. The issue with the U.S. economy since the beginning of this decade is even when it's growing, most Americans aren't really feeling that they are growing with it. WILLIS: Right. Absolutely. You can see that in the income numbers. I was going to bring that up. Seems like all the income gains go to folks at the top end of the income scale, the really wealthy people. How can a president impact that?

FOX: There is this easy way. You can tax rich people and give money to poor people. We do that in a big way in country. There are limits how much more you can do. Actually, what is interesting is that 75 percent of income gains between 2002 and 2006 went to the top 1 percent of earners. Basically, the way our tax code works now, it's progressive. The rates get higher and higher up until the beginning of that top 1 percent which is around $380,000 a year. Past that people pay at lower rate.

WILLIS: Can a president really impact the economy?

FOX: Yes a president definitely can. I would say most of the time the impact is pretty minor. I would say once in a generation you get a president who comes in and utterly shifts the whole way the nation is going in terms of economic policy. I don't know if that's what we are getting, but it's a possibility.

WILLIS: If they were to do that, what would they tackle first?

FOX: Income distribution is one thing. In the end we Americans, at least the only time within the' 30s people thought we should take money away from the rich. It's people's health care, retirement plans, both of which for middle class Americans have gotten significantly less secure than they were 30 years ago.

WILLIS: Fascinating. Health care, what should the next president do or what are his best options?

FOX: Universal health care is something that there is a lot of hunger for out among middle class America. I don't know the best way because I'm not a health care economist, happily. I think not addressing that, and McCain has sort of danced around it. Clearly both Democratic candidates say they are for it. Clinton, it was issue no. 1 for her, less so for Obama. I think that's this area where Congress and the president could have a huge impact. They could totally mess it up, but could make life more secure for millions of Americans while continuing to have an economy.

WILLIS: So many problems to solve. We didn't even get to oil or your plan for retirement. Lots of issues, Justin Fox, thanks for bringing them up.

FOX: Thanks for having me.

VELSHI: The only thing that puts the smile on my face is the ability to do this and show you this new thing about the record price for a gallon of gas. Here we go, almost, here we go. All right. We do have a new record. There we go. $3.78 is a new record for a gallon of gasoline. That's the national average. Oil about $125 a barrel. We consistently hear people talking about the role of speculation in the price of oil. What does that even mean? Oil has a couple of things that go into the price. One is supply and demand. The other one is speculators who use it as an investment. A speculator in oil does not produce or use oil. They put up their own money and they trade oil futures and they profit from the change in price of oil. Sometimes that's up, sometimes that's down. Fundamentally, they do not want to get caught holding the bag. They don't use the oil in the end.

What role does speculation have in the price of oil? When looking at oil about $125 a barrel we talked to a lot of people and the range is between 30 percent and 60 percent of the price of $125 a barrel of oil comes from speculation, people who don't use that oil who are just using it as an investment. If you take 30 percent to 60 percent out of the price of $125 a bearable, what you should be left with when thinking about supply and demand is oil price between $50 and 88. There is always going to be speculation in the price of oil, but that might help you understand when they are talking about speculation what it is.

Soaring gas prices will help keep Americans closer to home this Memorial Day according to AAA. Still, 11 percent will fly for the holiday and pay 8 percent more for their ticket. We want to go out there where people are feeling the pitch.

CNN's Kathleen Koch is stand buying at Reagan National Airport at Washington, D.C. and for folks in Washington, this could be the start of their log weekend. It's still a long time away before Memorial Day.

That's a decision a lot of people have to wait -- Kathleen.

KATHLEEN KOCH, CNN CORRESPONDENT: Ali you know, people here in the airports, while they may be avoiding paying that very high $3.78 a gallon for gas are not avoiding paying higher prices. Ticket prices are up some 8 percent according to AAA to an average of $179.

With us now is one of those travelers, heading to Ft. Lauderdale.

What are you finding or are you having to pay more for airfare?

UNIDENTIFIED FEMALE: Definitely. Was difficult to find the right ticket to go for personal reasons to Ft. Lauderdale this weekend. We have some family affair we need to attend. It was difficult finding the right price.

KOCH: How much more than in the past year?

UNIDENTIFIED FEMALE: At least $100, I would say, $100 to $200 more for our tickets.

KOCH: The Memorial Day weekend is coming up. AAA is saying many, fewer people are going to be traveling over the holiday, what are you doing? UNIDENTIFIED FEMALE: We are not doing anything. We are going to have a picnic at home because it's so expensive right now to go traveling. We would love to go on a family vacation, but that is not possible right now.

KOCH: What is going to happen if these gas prices keep coming up?

UNIDENTIFIED FEMALE: I guess more people are going to have to stay home and trying to find ways to enjoy the area instead of traveling.

KOCH: Thank you so much for joining us.

Ali, that is what AAA is finding. Travel overall, air and on the road down almost 1 percent over the Memorial Day holiday. Yes, you will be paying more at the pump. They are predict buying that weekend it will be up to an average $3.80 a gallon.

VELSHI: We are almost there. Kathleen, thank you very much for that.

WILLIS: At least if you stay home you don't have to worry about flight delays, I guess. The high price of oil and gasoline is hot topic when it comes to summer travel. That leads us to today's Quick Vote question. Poppy Harlow is here.

Hi, Poppy.

POPPY HARLOW, CNNMONEY.com: Hey, Gerri.

There is no relief in sight. U.S. Airlines ceased operations yesterday. Filling up your car is going to cost more than ever. We want to know what you are going to do over summer in terms of travel. Here is our money.com quick vote question. How far do you plan to travel this summer? Within your state? Within the country? Outside the country? Or are you going to stay on your couch? Keep in mind gas generally gets more expensive over the summer. People have to think about that, as well.

WILLIS: Thank you for that.

It's primetime for student loans. Does your lender do enough to protect your credit score? The fun doesn't stop for kids because mom and dad are stretched financially.

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UNIDENTIFIED MALE: A lot of good different things they could do without having to spend the whole day or a lot of money.

(END VIDEO CLIP)

WILLIS: All right.

Are your parents trying to convince you of that? Spend less, stay closer to home next.

(COMMERCIAL BREAK)

WILLIS: Welcome back to ISSUE #1. The nation's largest student lender sally may apologized for a coding error this week that made the repayments of nearly a million borrowers show up as delinquent. The mistake sent credit scores plummeting. They are working to fix those now. It raises the question, could it happen to you? Lynnette Khalfani Cox is the author of Zero Debt.

Lynnette, good to see you. This burns me up. If Sallie Mae could get this and there is no penalty, is this the only time it ever happened or does it happen repeatedly? What do we know?

LYNNETTE KHALFANI COX, AUTHOR: We don't know the extent of the problem. They said 10 percent of the customers were affected, about a million people. People in the process for applying for any loan, loan consolidation for student loans, credit card, mortgage, some people saw their credit scores drop by as much as 100 points.

WILLIS: Obviously it matters to students. The federal government is making a mess to college students now.

KHALFANI COX: Not to mention the credit crunch that's going on.

WILLIS: What do you do if there is a mistake on your credit report?

KHALFANI COX: It does happen. Consumer groups say 70 percent of all credit reports contain mistakes. The bottom line is that it's up to you as a consumer to diligently watch your credit history. If you were students or graduates with loans with Sallie Mae, I would log on to their Web site or call their number and make sure you weren't impacted by this. Personally I think Sallie Mae should offer one month free credit monitoring.

WILLIS: Go to Sallie Mae's Web site. Make sure your credit score is unaffected. Thank you for that.

KHALFANI COX: Thank you.

VELSHI: From the comforts of home to a parking lot. The harsh reality of being homeless.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: This is my bed, my dogs. This is my life in this car right now.

(END VIDEO CLIP)

VELSHI: An emotional story from Thelma Gutierrez. Stay with us. You're watching ISSUE #1 on CNN.

(COMMERCIAL BREAK) VELSHI: It's almost summer. School is almost out. You want to go somewhere, but a fancy vacation is not in the cards, not in this economy. Where can you go on a budget?

We have got a list of places that you'll like in a few minutes, but first let's have a look at the headlines with Don Lemon in Atlanta -- Don.

DON LEMON, CNN ANCHOR?: Hello to you, Ali Velshi.

Thank you very much. We want to talk about some severe weather real quick. Chad Myers is in the severe weather center.

What is going on Chad?

MYERS: Tornado watch across parts of the deep south, a couple of warnings but nothing on the ground right now. We'll keep watching it for you. Another big story is all the heat back out to the west in California. Temperatures will be above 100 degrees in many of the valleys out here today. That weather moves all the way east into Idaho and Montana and to Salt Lake City. These are areas, temperatures over 100 in some spots that have had hundreds of inches of snow over the winter.

If you get temperatures that hot, some of the snow is going to melt too fast. We could see some flooding over the weekend. If you are near a river and stream and you know it's happening, you need to pay attention this weekend. It's is going to be a big weekend for flooding out to the west. We'll watch it for you. We'll also watch the severe weather throughout the afternoon -- Don.

LEMON: All right.

We'll be checking back with you Chad at the top of the hour, that and much, much more news.

Now back to "ISSUE #1" with Ali Velshi -- Ali.

VELSHI: Don, thanks very much. Listen, think of Santa Barbara, California. I bet the image of people scrambling to find a place to sleep doesn't come to mind first, but that is what is happening to a growing number of women there who went from the comforts of home to life in a parking lot.

Thelma Gutierrez has the story.

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THELMA GUTIERREZ, CNN CORRESPONDENT (voice-over): Santa Barbara, a picturesque city on the coast where the median price of a home is more than $1 million.

It's where Barbara Harvey made a good living processing mortgage loans. So it may surprise to you learn that when Barbara leaves work, she heads for this parking lot behind the historic Santa Barbara mission. This is where Barbara sleeps at night in the back of her car with two golden retrievers.

BARBARA HARVEY, LIVES IN HER CAR: Get my suitcase out. That goes underneath the car.

GUTIERREZ: It isn't how this 67-year-old planned on spending her golden years.

(on-camera): How did you find yourself in this predicament?

HARVEY: I worked as a notary public signing loan documents. It went to hell in a hand basket.

GUTIERREZ (voice-over): She lost her full time job and now works part time at $8 an hour. And even though she also gets Social Security, she still cannot afford an apartment.

HARVEY: This is my bed, my dogs, this is my life in this car right now.

GUTIERREZ: Nancy Capps who was once homeless herself is an outreach worker with a nonprofit New Beginning. She says she's noticed more women living on the street.

NANCY CAPPS, NEW BEGINNINGS: The way the economy is going, it's just amazing, the people that are becoming homeless. It's hit the middle class.

GUTIERREZ: It's a tough existence. People who live in their cars like Barbara have to constantly move them in search of parking. In California, it's illegal to sleep in your vehicle. The city of Santa Barbara, together with New Beginnings came up with the safe parking program. They opened up 11 lots where people are allowed to sleep in their cars from 7:00 p.m. to 7:00 a.m. This gated lot where Barbara sleeps is for women only.

(on-camera): Describe for me a typical night.

HARVEY: Well, I arrive here before dark because that's when I can rearrange the car.

GUTIERREZ (voice-over): It's an exhausting juggle, turning her car into a sleeping space every night.

HARVEY: This is actually some Bavarian China and is part of a china set that I have.

GUTIERREZ (on-camera): Pieces of her former life before she lost her condo two months ago. It's 10:00 and already there are a half dozen women who settle into this parking lot for the night. There is no running water here. There's no bathroom facilities, but the women say at least they feel safe. You sleep sitting up? Lynn Lague lives in her car with four cats. She is 54 and used to be in the Army national guard. Now she is on a waiting list for government housing, but the list is a year long.

What is the most difficult part of living like this? LYNN LAGUE, LIVES IN HER CAR: It's hygiene, staying clean.

GUTIERREZ (voice-over): When Barbara lost her condo, her 19-year- old went to live with friends.

HARVEY: My daughter, especially, is very unhappy. Sometimes she'll cry. She'll call and say mom, I just can't stand it that you are living in the car. She'll be very upset. I say you know what? This is OK for right now because I'm safe. I'm healthy. The dogs are doing OK and I have a job and things will get better.

GUTIERREZ: Another chapter in her life that she is certain she'll get through.

HARVEY: Good night.

(END VIDEOTAPE)

GUTIERREZ: The safe parking program in Santa Barbara is just one of the few across the country and it's being used as a model in other cities. As long as participants follow strict rules, no drugs or alcohol and carry a valid driver's license and registration, there is no limit to the amount of time they can stay, though most are trying to find housing -- Ali.

VELSHI: Thelma, what a story. What a sad situation. It's a pilot project and other cities are having to develop these parking lots. You go to Santa Barbara, it looks like a paradise.

Where are these parking lots? Are they hidden away from public sight?

GUTIERREZ: No, Ali.

They are actually typical parking lots, right across the street from the beach, also Santa Barbara mission, a major tourist attraction. But this is a very carefully monitored program. So they make sure that these people are in at 7:00 at night, but they have to be out by 7:00 in the morning. They can't even put a cot out near the car to be able to stretch out. They can't leave their dogs out in the parking lot. It is a very carefully monitored program. They want to make sure that these places remain parking lots and that they don't become eyesores for the tourists who come to Santa Barbara.

VELSHI: Now Thelma, one of the women you featured Barbara, she works, she gets Social Security, but she can't afford an apartment?

GUTIERREZ: It's just absolutely amazing. Barbara makes $8 an hour. She works part time so she is bringing in about $600 a month. She also makes $760 in Social Security. When you put them together it's about $1400 a month. Yet typical price of a studio in Santa Barbara is about $1600. There is absolutely no way that she can afford to really get a house there. On top of it, she can't leave because her daughter lives in Santa Barbara. Most of the 55 people who live in these parking lots, it's still home. So it's a very difficult situation. VELSHI: Thelma, $8 an hour is a lot more than the Federal minimum wage. And I know I'm going to get e-mails for saying this, but I hope people who think the minimum wage shouldn't go up are listening to this and they can see what happens to people earn that kind of money. It's a real shame.

Thelma, thanks very much for bringing us that story -- Gerri.

WILLIS: Wow, sad story.

Time now though to take a look at what is happening with issue No. 1," the economy today. General Electric is reportedly shopping around its appliances division. The CEO apparently wants to unload all those (INAUDIBLE) that are weighing down the company's bottom line. The "Wall Street Journal" says appliances actually made up just 4 percent of the company's revenue last year.

Another brand in just about everybody's household, JCPenney is reporting problems today. The company says profits were chopped in half in the first quarter of 2008. That got blamed (ph) on a big drop in consumer spending and just because Microsoft withdrew an offer to buy Yahoo!, that doesn't mean the deal is off the table. If you ask activist investor Carl's Icahn that is, he is trying to buy as much as $2.5 billion in Yahoo stock to earn a spot of authority on Yahoo's board in hopes of reigniting the merger deal.

And by the way, the people who keep track of these things said today that Google has just surpassed Yahoo! as the most popular Web site in the U.S. -- Ali.

VELSHI: Gerri, I have one word to describe our next story - mermaids, live mermaids, underwater, swimming mermaids. Do you really need to hear more? You don't. But what you need to make sure is you stick around to see the story. John Zarrella's take on how to spend less on leisure this summer and it involves mermaids. You need to watch, ISSUE #1.

This is CNN. We're coming right back.

(COMMERCIAL BREAK)

VELSHI: Those are live pictures of mermaids here on CNN. I know that doesn't sound as urgent as it often does when we've got live pictures of something. Those are just mermaids. I am not certain that they are real mermaids, but John Zarrella's on that story. We're going to get back to that in just a minute. Poor guy, you often see John Zarrella in some sort of disaster or hurricane. This is what we do for our reporters when they put in a good job. They get to cover mermaids.

But first we're going to take a look at the weak dollar traveling overseas. For many of you and some of us, the summer might be out of question for traveling away from the United States because of the dollar and because of the increase in costs, but fear not. My next guest says you don't have to travel overseas to get your money's worth. Patricia Schultz is the author of this fantastic book called "1,000 Places to See Before You Die."

This is the U.S. and Canada edition. This is as thick a version for international stuff. It's great ideas. It's small bits on places and why they might be interesting to Americans.

You are saying don't forego your vacation, just retool it so that you can get maybe more value for your money. You brought us some highlights from the book and I want to go through some of them. In the Pacific northwest, if that's where you want to end up or that's where you're starting from, what are some of your suggestions?

PATRICIA SCHULTZ, AUTHOR, "1,000 Places to See Before You Die.": My favorite is the San Juan Islands floating off the coast of Seattle. I think it's where the Seattlites go to decaffeinated. There are hundreds of them. There are four that are connected by ferry that you can take from Seattle, perfect, beautiful, quintessential vignettes of the Pacific northwest beauty, going kayaking with the orcas. Great seafood, beautiful B&Bs, biking, very agricultural, very beautiful, serene, remote, lovely.

VELSHI: I was reading somewhere this weekend about all the Shakespeare festivals across the country. Oregon has a great one.

SCHULTZ: There are quite a number of them in the U.S. Oftentimes they are free of charges, as well. The longest and the largest is in Ashford, just north of the California border and it goes on forever until October. The centerpiece is a beautiful Elizabethan theater, outdoor, al fresco theater that's kind of fashioned after 17th century theater, dozens and dozens of different productions, Tony-award winning, very excellent quality performances.

VELSHI: The southwest never grows old. To be in New Mexico, it's stunningly beautiful. An opportunity not to travel overseas might be an opportunity to get to the southwest.

SCHULTZ: Yes. It's the area of the four corners and it's one of my favorite. Santa Fe, to base yourself in Santa Fe. They have an excellent opera season in the summertime. The Native American presence is there, the festivals and the marketplaces. You are very close to Taos. You're very close to national parks, very beautiful and also great driving. Kind of that "Thelma and Louise" type of road trip with your best friend and you kids in the back seat.

VELSHI: Beautiful red rock.

SCHULTZ: Gorgeous area.

VELSHI: Let's talk about the southeast. One of the places that really has been drawing a lot of attention is North Carolina, Asheville, in particular is one the places you think is worth a visit.

SCHULTZ: I love Asheville, especially in the summertime. It's elevated, it's cool. It's in the mountains, leafy, green, lovely. The Biltmore estate built by the Vanderbilts in the late 1800s, the largest private residence built ever, 30 bedrooms, 45 bathrooms at a time when running water, electricity, elevators were unheard of. That whole area in the highlands around in the summertime is just music festival after music festival.

VELSHI: And North Carolina is home to our great co-anchor Gerri Willis.

Good to talk to you, Patricia Schultz, the author of "1,000 Places to See Before you Die" and this (INAUDIBLE) is in the U.S. and Canada. Definitely a good read.

Thanks for being with us -- Gerri.

WILLIS: Thank you, Ali.

Tight purse strings may crimp your summer vacation plans, but the tough economic times may be just the ticket for budget-minded tourists. We are going to the mermaid story.

CNN's John Zarrella has it.

(BEGIN VIDEOTAPE)

JOHN ZARRELLA, CNN CORRESPONDENT (voice-over): The mermaids drop down 16 feet into the well. When you next see them they are swimming in crystal clear spring water. This is Weeki Wachee. The roadside attraction has been around for 60 years. It has seen its share of struggles. The big theme parks drying up Weeki Wachee's business faster than a mermaid out of water. Today's slumping economy may actually help.

JOHN ATHANASON, WEEKI WACHEE SPRINGS: We know people are becoming a little bit more frugal. Where can we go and still have a wonderful family outing but for a lot less money?

ZARRELLA: That is what Kate and Mark Hopenschted (ph) were looking for, an inexpensive place their little girl could enjoy.

UNIDENTIFIED MALE: It's just a lot of different things that they could do without having to spend the whole day or a lot of money.

ZARRELLA: Many smaller attractions are counting on families to stay closer to home looking for deals.

UNIDENTIFIED MALE: Everything is going up right now. We've got to take advantage of all those discounts that we can find.

ZARRELLA: Orlando's Fun Spot is doing everything it can to bring in the locals, free admission, free drinks and...

MARK BRISSON, FUN SPOT: This year we're giving away a car on Labor Day, a 2008 Dodge Charger.

ZARRELLA: The park needs new revenue to offset rising costs for electricity and gasoline. The go carts run of course on gasoline. The price of gasoline is, as we know, going up. The cost for Fun Spot, hey, what are you doing -- is going up. To cut costs, Fun Spot is looking into powering its go carts with used vegetable oil from the snack bar. Talk about a slick track. (END VIDEOTAPE)

ZARRELLA: Now, I wasn't a believer either, but there they are, right there behind me, mermaids. The local roadside attractions all say that while it's great to get the out-of-state tourists to come, they really are relying on the instate tourists more than ever. In fact, some new statistics just came out today from visit Florida, the state agency saying in the first quarter this year, overall tourism was actually up 3.4 percent.

Most importantly, good news for the roadside attractions like Weeki Wachee that the locals, people in the state of Florida staying in the state of Florida is actually up 10.5 percent. And Weeki Wachee's been up about 14 percent. But Gerri, the real concern is the summer months and what's going to happen because of the high, high gas prices. Everybody is banking on the fact that people are going to stay closer to home and come to places like this to see the mermaids.

WILLIS: Well, I know one traveler who probably doesn't care what the price of gas is.

VELSHI: I'm not making summer plans yet. So doing a little watchy at Weeki Wachee seems like - and frankly the number of times that this has been on TV today. And by the way, you are probably some kind of Internet star now, you realize that? I mean this who idea that you have delivered statistics and this whole sort of money-oriented business report with three mermaids synchronized mermaiding behind you.

WILLIS: I don't know about that. Couldn't we just do the bumper cars?

ZARRELLA: It's a whole new level. I enjoyed this better than the bumper cars. That was fun though too. See I found a way to work the economy into some fun stories.

VELSHI: You definitely get the award on this one. John Zarrella at Weeki Wachee. Coming up, John just showed us those go-carts that were running on used oil by the way from the snack counter, so apparently cooking oil is a hot commodity. By hot I mean stolen. We'll have that story ahead.

WILLIS: Plus the help desk is standing by to answer your questions about money, debt and jobs. Send us an e-mail, the address issue1@cnn.com. Stay with us.

(COMMERCIAL BREAK)

WILLIS: Welcome back to ISSUE #1.

The help desk is open for business. That means it's time to get answers to your questions. Terri Cullen is with the wallstreetjournal,com, Ryan Mack is with Optimum Capital Management and Lynnette Khalfani-Cox joins us again. She is the author of "Your First Home," among other books. Let's get right to that first e-mail.

Ronald asks: "I want to give my grandson share of a good stock for high school graduation."

Any suggestions? Ryan, what do you say?

RYAN MACK, FOUNDER & PRES., OPTIMUM CAPITAL MGMT: This is definitely a great gift for high school graduates. I think that first you ought to set up a Roth IRA for our grandson and explain to him the concept of retirement. Secondly, don't just give one stock. Look for an ETF, the spyders, the diamonds.

WILLIS: An index fund.

MACK: Yes, gives the diversity of the market.

WILLIS: I love that idea.

OK, Fenissa (ph) asks: "I'm a single working mother of a 12-year- old and 16-month-old. I've really been struggling to get my bills paid. I have until Friday to come up with $800 or they are going to foreclose on my house. I really need some advice on what to do."

Lynette, this is a tough, tough situation. What kind of emergency purse strings might there be here?

KHALFANI COX: Probably none, unfortunately, is the answer. I assume that she's tried to tap family resources, her own savings accounts, things of that nature and the money is not there. The problem with your lender is that if foreclosure is imminent Friday, the longer you wait, the least amount of options you have.

If somebody does institute foreclosure proceedings against her, there will still be a couple of months before she is actually sort of evicted from the home, so that may buy her a little more time to negotiate something. But the key for everybody is to talk to your lenders before. Don't wait until the last moment.

WILLIS: She might go to hud.gov or call the Department of Housing and Urban Development and talk to a counselor, see if there is any last-minute move she could make. That's what I would try.

OK, Claire in Illinois asks: "We have $80,000 in credit card debt. Is there any hope we can pay this off without going bankrupt?"

Terri, people have such a hard time out there with credit card debt. This is one of the biggest bills I've seen in a long time. What do you say to somebody who is overloaded?

TERRI CULLEN, ASST. MANAGING EDITOR, WSJ.COM: I think the first initial response is always going to be, should we file for bankruptcy? But right now that really doesn't make a lot of sense because of the change in the bankruptcy laws. You're going to have to go through debt counseling anyway, whether you file for bankruptcy or not. The first thing you should do no matter how big your debt load is to get with a debt counseling agency to talk about what your options are.

A lot of times when you have a bill that's this big, a lot of the bills are going to be penalties, late charges, a lot of fees that were added on. Those things can be knocked out if you get a good negotiator in there to work with you to get through this.

WILLIS: Debt counselors are a great idea.

KHALFANI COX: I think so, too, bankruptcy, absolute last resort. It stays on your credit report for 10 years. You just don't want that to follow you. We don't know the person's income and other obligations, but do like Terri said, seek out some alternative sources of help whether that's credit education and otherwise. Maybe there can be a fix there.

WILLIS: Terri, Ryan, Lynnette, thanks for joining us today. We appreciate your help and I know that our viewers do. Ali.

VELSHI: All right, Gerri, thanks very much. Coming up next, the results of today's quick vote. You still have time to chime in at money.com. We'll be right back. Stay with us. You're watching ISSUE #1 on CNN.

(COMMERCIAL BREAK)

VELSHI: Time now to get the results of today's quick vote. For how you voted, let's check in with Poppy Harlow, dot com from CNN (INAUDIBLE)

HARLOW: CNNMoney.com.

Ali, we asked people how far they plan to travel this summer. Thirty nine percent said they are going to stay on their couch. Only 8 percent of people said they were going to travel outside the country. Those overseas flights cost a lot. One of our producers who flew to London said the fuel surcharge was much more than the price of the ticket.

VELSHI: And the fact that the dollar is weak. The staycation is winning 39 percent, stay with me people Thank you so much for that.

Poppy Harlow for CNNMoney.com -- Gerri.

WILLIS: On our radar today, hot grease and we do mean hot. Ben Healy owns a bio-diesel company in Kansas which converts cooking oil into fuel. Thieves have been cutting into his business lately by stealing the used grease from restaurants. Healy says that hurts his bottom line and the environment.

(BEGIN VIDEO CLIP)

BEN HEALY, BIODIESEL COMPANY OWNER: These people are making messes at the restaurants, damaging equipment, spilling oil everywhere. The restaurants are getting upset.

(END VIDEO CLIP)

WILLIS: Healy estimates his company converts 90 percent of that grease into fuel. The resulting bio-diesel sells about 75 cents less than regular diesel and we still want to know though, how are those grease thieves cashing in on their take? You can't go to a pawn shop.

VELSHI: Are they just refining it themselves? That is just a weird and interesting story. They're stealing used grease. Times are tough. Give up on the stealing the used grease.

WILLIS: Grease and mermaids, what a show. I used to be a serious financial journalist.

VELSHI: We like to put it all together here on ISSUE #1 and we're going to continue to do that, working the stories that are important to you and a little bit of fun.

Time now to get you up to speed on other stories making headlines. "CNN NEWSROOM" with Don Lemon and Brianna Keilar starts right now.