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Your Money

Explaining High Gas Prices; Higher Consumer Prices; Candidates on the Economy

Aired June 15, 2008 - 15:00   ET

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


(NEWSBREAK)
ALI VELSHI, CNN HOST, YOUR MONEY: Welcome to YOUR MONEY, where we look at how the news of the week affects your money. I'm Ali Velshi coming to you today from the financial capital of the world, New York City. We have a lot to cover this hour.

Well, consumer prices climbed higher in May according to new government numbers that were out this week and that is no surprise to you I'm sure. You are paying 17 percent more for energy then you were a year ago, 5.1 percent more for food.

And later in the show, we are going to talk about what these rising prices are doing to your ability to get by and for that matter act rationationally.

Also, this week, the two presumptive candidates for the White House talk tough on the economy. Senators Obama and McCain share barbs over their plans and we are going to dig a little deeper to find out which one makes the most financial sense to you.

And another new record in gas prices as oil hovers around highs of its own. We are going to break down what this means to your life style with author Steven Leeb and our own Greg Hunter a little later in the show.

Well, the economy remains issue number one on the campaign trail this week. I am joined now by global economist John Rutledge of Rutledge Capital in Irvine, California and here in our news room in New York Justin Fox, editor at large at "Time" Magazine. Gents welcome to both of you, thank you for being with us.

John I am going to start with you, because people have been telling me you know for so long we were all talking the economy down and it was in the doldrums and then it looked like things might be turning around, we didn't see negative economic growth and then we got hit by these higher unemployment rates and more jobs lost and higher oil prices and a market that went into a spiral for a day last week. Where are we right now and what is the biggest threat to recovering from this economy?

JEFF RUTLEDGE, RUTHLEDGE CAPITAL: Well, first thing we have to remember is that it is a big country and it takes a lot of killing. So this is not the end of the world. Regarding recent news, the growth numbers have actually not been so bad. It is the recent job number that surprised people. But it is the job number that came out right at the end of the school year, and it is basically all young people out looking for work, so, something is screwy in the government's seasonal adjustment procedures.

I think that the people have gotten it wrong. This is being viewed as a recession where people forget to spend enough money to keep the place going, this is not a recession, and this is a capital market event with a bond market that stopped last year with the mortgage crises. When the bond market comes back alive again, the economy will show itself as growing maybe 2 percent a year, not great, but not the end of the world.

VELSHI: What do you think, Justin?

JUSTIN FOX, EDITOR AT LARGE, "TIME:" I buy that halfway. I mean, my concern is when you look at, it is not just a -- it is a capital market event, but the capital market affects people's pocketbooks and basically Americans especially for the past five or six years were on an incredible debt tear and most of it related to houses, but some of it on credit cards and other things as well, and I just don't see how people can borrow money like they have borrowed for the past few years and I don't see how they will spend a lot. That being said, when John says 2 percent growth maybe that is it.

VELSHI: And clearly smart people can agree or disagree about what it is. But John what is the next president do? Is the next president in a position to turn the ship around whatever is wrong with it? Can they actually do something to turn us right or is it as some people say, the way things are, the way things are, we have to get through this and we will emerge one way or another on the other side in a better forum?

RUTLEDGE: Well, the next president has one silver bullet that he is going to have which is the mortgage crises is something that is going to solve itself rather than Washington solving it through stimulus packages. Mortgage crises is really a blackout of the mortgage securities market just like when the electricity goes out. Black outs always surprise us, they are always sudden, they make us scared, but they always end. They are always temporary.

The next president will be in office after that blackout comes back alive again. So that part is going to be OK. The biggest risk for the next guy is obviously oil markets, oil prices, but also there is the whiff of tax increases in the air. There's protectionism in the air. So I think it is a tricky time with the new president to get tax policy right so we don't screw up the stock market further.

VELSHI: What do we do? What do you think, Justin?

FOX: The problem that I have with that analysis is that regardless of what has happened over the past year or so, you just look at how most Americans have done over the last decade, and it has not been that great. I mean, median family income is down from 2001, so I do think there are longer term structural issues that I don't think you fix.

VELSHI: What are those? Because we know that the candidates have positions on health care, we know the definitions on taxes that are different and we will come back to talk about that afterwards, but what are the structural issues that they are going to have problems with?

FOX: I mean, first of all, this dramatic increase in income and equality in the U.S. There have been good sides to that and probably it is because people are getting wealthier and not because on the whole people are getting poorer, but it just raises a lot of issues in terms of when most economic growth is going to the top 1 or 2 percent of earners and the rest of the people want something, too. And the related issue is that I think that people feel a lot of the middle- class people feel vastly insecure than they used to mainly because of health care.

VELSHI: OK. We are going to talk a little bit more about the thing that might equalize or might hurt people more or less and we will talk about taxes, because both John McCain and Barack Obama have very different views on how you should be taxed. We will talk about that with these two gentlemen when we come back with John Rutledge and Justin Fox.

Stay with us. We are taking a quick break here and we will have that conversation on the other side. You are watching YOUR MONEY on CNN.

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(BEGIN VIDEO CLIP)

JOHN MCCAIN, (R) PRESIDENTIAL CANDIDATE: Under Senator Obama's tax plan, Americans of every background would see their taxes rise. Seniors, parents, small business owners and just about everyone who has even a modest investment in the market.

SENATOR BARACK OBAMA, (D) PRESIDENTIAL CANDIDATE: I have said that John McCain is running to serve out a third Bush term. But the truth is when it comes to taxes that are not being fair to George Bush.

(END VIDEO CLIP)

VELSHI: All right. Tough talk from both candidates on the economy this week and specifically on taxes. I am rejoined by economist John Rutledge and "Time" Magazine editor at large Justin Fox. A poll shows that Senator Barack Obama has an edge on John McCain 50 percent of the respondents say that he would handle the economy better and 44 percent think that John McCain would do this. Justin, you heard Barack Obama saying that electing John McCain, his plan would be like a third term for President Bush. Agree or disagree?

FOX: On taxes, I agree completely. It is very much a continuation of Bush's tax policy.

VELSHI: Bush's tax policy involved tax cuts back in 2001 and 2003. John Rutledge that is something you think that is good for the economy. What do you think?

RUTHLEDGE: Well, Justin is right that there is a class war out there in America, and it has to do with the differing fortunes of the people who own capital and the people who use capital. That is what is driving a lot of the rhetoric about tax policy.

VELSHI: What is the solution to that?

FOX: I guess that the issue here is for most Americans don't have this capital. I mean, John is absolutely right. The question is, at some level while trying to remain competitive globally, do you try the do a little more redistribution, and we already do a lot of redistribution with the tax code, but do more? Basically Obama's tax plan wants to cut taxes on 95 percent of taxpayers and raise them on people at the top. I am sure that John will say that there are a lot of problems with that raising at the top. But I am --

VELSHI: Why is that John, explain that. What is wrong with cutting taxes on the lower middle classes and raising them on the higher income earners so that we even out what you both acknowledge is an imbalance, what everybody in America know is an imbalance.

RUTHLEDGE: Well there is a difference in the fortunes of different groups of people, that is exactly true and that is because capital has become a lot more mobile in the last 10 or 20 years than it was before that and a lot of it has moved to Asia where the returns are very high. This is not -- but the issue on the economics is not about who pays the tax, it is about what is the impact. If you move the captain gains rate from 15 --

FOX: But it is about who pays the tax, too.

RUTHLEDGE: Politically, it is about who pays the tax, economically it is about the impact of that on capital base, on productivity on incomes, on paychecks, on stock prices, on returns on capital, and the problem is that the class war fight is pushing the rates from 15 to 28 percent on capital gains, and from 15 to 39 percent on dividend income, that is a huge impact on the return on capital.

VELSHI: Justin, what is a president supposed to do when faced with this reality -- we have inequality and we have all accepted that. What has to happen?

FOX: Well, I mean, I guess my problem is with that term class war. That is what I was trying to say before; it is not class war to just acknowledge that people's fortunes are very different and that there is some role for government in doing something about it. That is the issue, you know, in terms of the details of the Obama tax plan that there are things that are to like and things not to like, but the issue is that Obama represents something of a turn from that that, yes, it is the role of the government to do more about that.

McCain definitely in terms of job retraining and all and he talks about that some as well, but it is not and he is a continuation. I guess that the one question is sort of that, you know, is insanity doing the same thing again and again and expecting different results. Things are not going very well right now, and should we change direction?

VELSHI: John Rutledge thank you for joining us, a real pleasure to have you here. Justin Fox from "Time" Magazine always a pleasure. We will continue this discussion.

Coming up after the break, another major U.S. airline is going to charge you to check just one bag, your first one. We will tell you which one.

Also ahead, how flooding in the Midwest will affect the prices that you pay for foods. Stay with us we are coming right back.

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VELSHI: Jennifer Westhoven joins us now with -- gosh, so many stories going on right now, but one of them gets everybody's attention is the number of changes to airlines and what you pay for flying somewhere.

JENNIFER WESTHOVEN, CNN CORRESPONDENT: Yeah, I think that if you check a flight right now compared to something you did last year or a few months ago, you will find a marked difference, so watch your wallet, because the airlines are trying to slip their hands right into your pockets. A new fare hike this week from the major airline, they added an extra $20 to that fuel surcharge. This is the 13th fare hike this year that stuck. About two out of three air hikes are sticking these days and two more airlines say they will charge you to check even one bag and we are not used to that. So United and U.S. Airways will charge you $15 one way, $30 round trip and American Airlines started this new fee about a month ago and I get why, because they have to cover the jet fuel prices, but --

VELSHI: It starts to get a little silly. At some point what is the fare and what are you charging me to go there and one of the implications of a fuel surcharge is that it will come off when those fuel prices go down, and we will have to see.

WESTHOVEN: Now corn prices shot to record highs this week, and this is because of all of the headlines we have been seeing and the terrible pictures of the flooding in the Midwest. These are drowning the corn crops in fields all over the corn belt in Iowa and Nebraska and the fields are flooded and that is going to mean not just higher prices for cereals, but also for meat and milk, so many of the livestock animals eat corn feed, it is about seven pounds of feed for every one pound of beef.

VELSHI: Wow. People who have gotten off of beef over the years have been making the case that it takes a lot of energy to, you know, to grow a cow to maturity. But now, it really starts to hit home.

WESTHOVEN: And for ethanol, too, because they use so much corn as well. The USDA says that the corn harvest is going to be about 10 percent lower than last year.

VELSHI: One of the stories that we always report on if you are mad about gas prices don't get to mad at the gas station owner because the market is very low at the gas station, it turns out that Exxon Mobil the worlds biggest publicly-traded company agrees with us.

WESTHOVEN: Arguable the smartest company when it comes to selling oil says we are getting out of this business you can't make any money here when it comes to running gas stations. So Exxon Mobil who has made record breaking profits with gas says even with gas at $4 is not worth it and it is selling more than 2,000 gas stations that are owned and operated by Exxon. Most of the stations that you actually see, about 12,000 of them, are run by families or independent operators they use the Exxon Mobil name and you will not see any difference at that gas station, it is an ownership change, but they will have the sign and they will still sell their gasoline.

VELSHI: It is funny, because in the entire oil to gasoline to in your car operation, the gas station owner tends to -- the only two people who take it on the chin are the gas station owner and you. Everybody else in the process has made money except for right at the end. So --

WESTHOVEN: And the owners are saying that now people are so upset about the gas prices they are not coming to buy candy bars and this is how they make their money.

VELSHI: Yes, they said they make more money when they sell a bottle of water or cup of coffee, but it used to be that you did your car work there but now these service stations tend to be just gas stations.

Jennifer stay with us, because this conversation gets bigger. Gas prices have become something of a national obsession to us. Are we rational in the way we think about the cost of fuel? Not very according to one behavioral economist Dan Ariely and he should know because he is the author of a book called "Predictably Irrational" the hidden forces that shape our decision. And he joins us now about our behavior. Are we rational when it comes to money matters in general?

DAN ARIELY, AUTHOR, "PREDICTABLY IRRATIONAL:" No. So actually money is very interesting and it turns out it is very hard to think about money rationally, because we are not designed to live in a world that money is what we use to trade. As a consequence we make a lot of mistakes with money. It is one of the things that trip us the most in part of the decision making.

VELSHI: There was a point you made, Jennifer, this one is interesting, that there is one way to be rational and there are many, many ways to be irrational when it comes to your money. I wanted to ask you, the situation that Jennifer and I have talked about often is that I have an SUV and it is about three years old exactly and not masterful in terms of fuel economy, a lot of people have been talking and we have done stories about people selling their SUVs and trading it in for a smaller and more fuel-efficient car and is that rational?

ARIELY: Well, it is a question of when will it be rational? At some point it is good to move into a fuel-efficient car because the prices will go up continually; this is not the last end we have seen of it. But there is a time in which you want to change. Even now is not the right time and the reason is that once we passed the $4 mark, people got so excited about oil prices and people are getting excited about it as a consequence, the value of the SUV is going to be very low. If you wait a couple of months, people will get used to the new level of $4 per gallon and less excited and the prices of your used car will go up and that may be the right time to change it. WESTHOVEN: All right. You were talking about $4 a gallon, so, in our quiz is this rational or irrational -- in California drivers are paying about $4.50 a gallon and a lot of them are driving over the border into Mexico to fill up for $20 and sounds rational to me.

ARIELY: Well, I have friends in southern California who have been doing it so you are putting me on the spot by asking me whether or not they are rational or irrational. But it is irrational and I will give you why. For most people this is a 25-mile drive each way. So we are talking about at least one gallon each way and also not to mention the cost of their time.

But, still, the real cost of transportation is not gasoline; it is wear and tear on the car. So when you are driving these extra 40 or 50 miles to save $20, you pay attention to the $20 you are saving, you are not looking at all of the money you are wasting slowly, slowly by wear and tear on your car. That is one of the things that we do is is we pay a lot of attention to what is observable.

VELSHI: Yeah, because those gas prices are pretty big, they are pretty clear. Everybody can tell you the price of gas and not everybody can tell you the price of a pound of beef or a pound of chicken or a gallon of milk unless you have kids.

ARIELY: That is right and there are two reasons for that. It is the only product that we stand next it to and watch the price. When was the last time you stood next to a pile of bread and looked at the prices? At the gas pump, you have to do that and stand there three or four minutes watching that price, what else do you have you got to do?

VELSHI: All right. I am going to ask you about this one. Chrysler announced some time ago last month that they are on certain car models give you a certain amount of gas, guarantee a price and lock it into $2.99 for three years and that was suppose to fall off and they decided to extend the promotion, because clearly people are making a decision to buy a car from Chrysler to get this $2.99 price guarantee. Now that it is $4 a gallon, it sounds like a rational decision.

ARIELY: If you look at the financial savings that you will get from it, it is $1,000 over three years and might not justify the reduction of the price. But there is something that we call the pain of paying. When you stand there by the gas pump and you are pushing this thing and you see the little wheel spinning and it spins more and more and it hurts and it is really unpleasant to see these additional costs every second.

While those people might be irrational in the sense that they are going to spend too much by the car and in a car that is not gas efficient, they will get the increase in the pain over the next three years and maybe the psychological benefit will be worth it.

VELSHI: Maybe.

WESTHOVEN: Dan, what do you think about this idea where we ran a poll where something like 60 percent of Americans think that when they see those gas prices going up and up, they suspect that there is something nefarious going on with oil executives and just from a behavioral economist standpoint, what do you think about that?

ARIELY: Well, one thing is that we have a lot of runs in the stock market that we as consumers feel very helpless about. We see it happening again and again. The subprime stock market crashes and just one example for this. I think that there is a basically a general mistrust of the stock market, so it is a very, looks similar. The other thing as you just reported a few minutes ago, the prices of gasoline are going up, and consumers are paying a lot of money and gas companies are making a ton of money out of this. So it does feel very much like a place where any conspiracy theorist would have an easy time thinking that something bad is going on.

VELSHI: Very, very interesting way to put it. Any conspiracy theorists would have a good time talking about it. Dan good to talk to you. Dan Ariely is a behavioral economist telling us about whether these things that we do when it comes to money are rational and he is also the author of a book called "Predictably Irrational."

WESTHOVEN: It is fertile ground to start thinking.

VELSHI: Well, you don't know we wanted, we want to understand supply and demand, we want to understand how the economy works and when something like this where gas and oil prices have gone up so far beyond what we can explain, you start to look for the supernatural.

WESTHOVEN: And it thinks he is really right about when you are standing there watching the gas. It is amazing and it is very insightful, even though it is so obvious.

VELSHI: Well good to see you Jennifer. Thank you for that. Coming up what goes up must come down, unless you are talking about oil prices, but if that is true, are you going to get a break from these prices? Find out next on YOUR MONEY," stay with us.

(COMMERCIAL BREAK)

(NEWSBREAK)

VELSHI: All right. A simple question, why did you pay so much when you went to fill up your car this week? It is a simple answer, soaring gas prices. Now are these sky high crude oil prices here to stay or is oil a bubble that is about to burst? We are joined by our Gregory Hunter and author Steven Leeb to talk about it.

Greg, let's start with you, tell us about oil.

GREG HUNTER, CNN CORRESPONDENT: OK. Listen, is oil in a bubble? The answer is both yes and no. Yes, in the short term, but long term, no way. Let's talk about the short-term. Yes, oil traders are running up the price, some experts say as much as $20 to $30 a barrel because of speculation.

Gasoline demand in the U.S. is down this year over last year. People are driving less. Finally, there are geopolitical risks right now, whether it is flashpoints such as Iran and Israel, Pakistan, Nigeria, or Hugo Chavez making threats from Venezuela, people are concerned the supply could be disrupted at any moment, even though it is not.

Now that has put the fear factor going into some of the current price spikes. So in the near term, oil could be a little overpriced right now, but long-term is a different story. First, take a look at the weak dollar. Back in January of '02, the dollar was about 120 on the U.S. dollar index, that is a dollar measuring against a basket of other currencies. Regular gas, listen to this, was $1.10 a gallon. Now the dollar is all the way down to about 73 and regular gas is more than $4 a gallon. The weak dollar has a lot to do with high prices.

Next, supply and demand. The world supply is a little more than 86 million barrels a day, the demand is about 85 million barrels a day, so at this moment, the supply/demand ratio is pretty tight. And according to Congress, that demand will jump to 97 million barrels a day in about seven years and there is no telling where the increased supply will come from.

One of the places oil companies are looking for new supply, deep water wells. For example, Chevron spent $3.6 billion to build a platform in the Gulf of Mexico that could drill for oil, listen to this, more than five miles below the surface of the ocean.

So we are really not running out of oil, but we are certainly running out of the cheap stuff.

VELSHI: Right. And that is an argument that a lot of the people make. That at $135 a barrel or $150 a barrel or $200 a barrel, we will keep finding oil, but you are going to have to look for it in harder and harder places to get it out.

Stephen, this is a -- you have been talking about this for years, that it might be time that we sit here and say, let's not keep on looking for it in the hardest places in world, let's change the demand on oil.

STEPHEN LEEB, PRES., LEEB CAPITAL MANAGEMENT: Right. Well, you have got to change the demand to buy yourself time, Ali. But it is not a long-term solution. The long-term solution is a comprehensive energy policy that develops alternative energies.

There are a lot of technologies out there and I think if we put our heads together, we can probably come up with something. The number that I have heard most recently, which has stunned me, just totally stunned me, is the amount of money we spend on energy research in this country, $3.6 billion. Take out all of the cab fare, all of the bureaucratic stuff that goes into that, you are spending nearly nothing.

I mean, to put it in perspective, every 40 days we spend that much in Iraq. If we don't solve this energy problem, I fear for our way of life. I mean...

VELSHI: Well, let's talk about that, because we have -- our polling indicates that people's lifestyles are changing. Let's take a look at this. We asked if the price of gas has made people cut back on household spending, 55 percent of our respondents said yes, 45 said no. Then we asked if the price of gas has made people cut back on their driving. We know that driving has been cut back, 66 percent of Americans said yes, 33 percent said no.

We are seeing this across the board. We have seen the truck sales fall off. We have seen, you know, some people getting into hybrid cars. Greg, you tend to take a very long view whenever you look at things. What has to happen? Stephen said a comprehensive plan. What do we need?

HUNTER: Well, Dr. Leeb is absolutely right. We just spent 100-- this is one of my pet peeves about this. Incentive program, $160 billion, we spent $3.6 billion a year on energy research. That could have gone a long way for battery technology, for building nuclear power plants, for wind generation, for all kinds of things that could turbo charge the energy conservation, you know, movement and help the country move ahead and get away from foreign oil.

LEEB: Ali, I just wanted to bring up one of the things that we are facing which makes this such a crisis. I mean, first of all, BP, British Petroleum, which really has no ax to grind, I mean, they publish a lot of good statistics, reported I think it was this week, maybe yesterday or the day before that oil production last year declined, declined despite the fact that we had record prices. It is not there. I mean the laws of economics is if oil prices rise dramatically...

VELSHI: We should see more oil production...

(CROSSTALK)

LEEB: We are seeing less. Now Greg made a point about how expensive oil is. If you look at Petrobras, which is one of the best hopes for the future, a lot of people talk about this massive discovery...

VELSHI: This is in Brazil.

LEEB: In Brazil -- off Brazil, they came out with a -- they didn't come out with a statement, but it is widely believed it will cost them a quarter of a trillion of dollars to develop that. Some Wall Street analysts think they will be lucky to get a billion barrels out of there. Now you do the math and you realize their break-even point is $240 oil. Even if it is $150 oil, it is higher than we have right now.

Now, where it gets worse, and I hate to sound this pessimistic, but it is an urgent thing. If oil were to rise to $150 or $200 a barrel, guess what happens to those costs? They go up further.

VELSHI: Right.

LEEB: Because you need energy to make the copper, to make the steel, to make everything. Wind energy, for example, is on -- supposedly on this learning curve where technology is improving things, but guess what? Steel costs have gone up so much that the cost of wind turbines have actually risen.

We need somebody to sit down and commit maybe $100 billion just in research and then implement a very comprehensive energy plan or I fear it is game over.

VELSHI: You have got a theory -- you've always got a theory, Greg, about why these things that seem obvious don't get done. Why are they not being done? If there is anything that you could describe as an energy crisis, we are in it now, and we are in an election, why are we not doing this?

We are digging a lot about whether somebody is increasing the price of oil through speculation, we will find something there, we might not, but the bottom line is this problem is bigger than that.

HUNTER: It is. And you know what, there is an old saying that necessity is the mother of invention? We (INAUDIBLE) had a necessity, we could find the oil, we could find the extra production. And Dr. Leeb was saying just before we got on here -- Ali, was saying that these wells are five miles deep. We're talking about the length, the depth of Mount Everest. The depth of Mount Everest to find oil.

The cheap stuff is gone, $100 a barrel, you would be lucky if you paid $3 a gallon for gas. Incidentally, during the election year, I think they're going to drive that price down, they're going to pop the dollar up, they're going to drive the price down, they're going to work this, say, for the election.

VELSHI: Well, Stephen's biggest fear is that the price gas goes down again because people will forget this.

LEEB: They'll become complacent overnight. If oil goes down, and I can't argue with Greg when he says it could go down $20 or $30. It sure could, very easily, like that.

VELSHI: But we will all forget the priorities at that point.

LEEB: Right.

VELSHI: Stephen Leeb, Greg Hunter, always a pleasure to talk to you both. Thank you for being with us.

Coming up next on YOUR MONEY, high prices are putting a damper on your family's summer vacation plans. We're going to show you four trips that won't break the bank.

And later, cashing in on your old stuff. Find out if it makes sense to sell your old roller blades and that travel iron that you never use coming up next on YOUR MONEY.

(COMMERCIAL BREAK)

VELSHI: You are a pessimistic bunch, 58 percent of you think that gas prices are going to hit $5 a gallon by the end of this year. Gas prices already high enough. Flying is a colossal headache, and air fares have been increasing. The dollar is weak. So the best choice for a summer holiday might be a short road trip here in the United States. And we've got four ideas in different parts of the country for you. Mike Nalepa is editor of "Fodor's Essential USA," a lovely book that I've got in my hand. And it's a bit of a departure from the way you normally do things at Fyodor's, because these are 35 road trips, are they?

MIKE NALEPA, EDITOR, "FODOR'S ESSENTIAL USA": They're kind of selected regional trips. We kind of decided to -- instead of covering the entire country, break it up into more focused chunks.

VELSHI: So really well developed ideas in the first one, and they could be road trips and they could not be, you can fly to your destination. But the first one is one that I particularly love and you recommend Philadelphia as a great destination. And coming -- living here in New York, it's very interesting how many people don't think of it as a destination, because, as you mention, it is a stop on the way to Washington -- on the train.

NALEPA: It's completely overlooked. It's sandwiched between the two cities. But Philadelphia is fantastic. There are some wonderful sites there, really excellent cutting edge dining that a lot of people overlook. So there is -- you have the historical sites, Independence Mall, which includes Independence Hall and the Liberty Bell.

VELSHI: And the lovely Constitutional Center, which is really good entertainment for anybody of any age.

NALEPA: Absolutely. The Philadelphia Museum of Art, which is fantastic. And you also have Rittenhouse Row, which is a part -- a tiny corner of Parisian style in Philadelphia which is completely unexpected, usually the city is identified with grittiness, but there are some absolutely gorgeous areas there.

And then you also have Reading Terminal Market, which is just a fantastic place to come into contact with the Amish community that's near Philadelphia, if you don't have time to venture out into Lancaster County, which is something we strongly encourage people to do because that is just a chunk of America that's very different for most people.

VELSHI: Yes, Philly is a great place if you're a history buff as well. But another place for history buffs, which is -- and this is one I haven't done yet, but I'd like to make it out there, is to go out to Mount Rushmore, that area in South Dakota, the Black Hills.

NALEPA: The Black Hills are fantastic. You have so many things within a small area. You have, of course, Mount Rushmore, Crazy Horse Memorial, which is...

(CROSSTALK)

VELSHI: Which is going to be -- I think it's going to take another 50 years for them to do that, but you can be part of it as it's happening.

NALEPA: Exactly, you can go and watch them blasting the mountain away. And some -- during the summer they have a couple of night blasts which especially incredible. You also have Deadwood, which is a restored historic town, they pumped in $200 million into restoring this town over the past 10 or 15 years. That's another wonderful place.

VELSHI: And if you watched that on -- the series on TV, that will be very attractive, too.

NALEPA: Exactly.

VELSHI: You recommend Kentucky bluegrass country.

NALEPA: Kentucky is an overlooked -- it's flyover country for most people, but it is gorgeous. You drive through Kentucky, there are rolling hilling. If you are a horse racing buff, you have several sites out there, including Keeneland race track, Churchill Downs, the Museum of the Horse, which is linked with the Smithsonian Institution.

You also -- if you're a bourbon fan, there is Woodford Ridge Distillery, which is out there. And Kentucky is actually getting some buzz as a wine-growing region, believe it or not.

VELSHI: Wow.

(CROSSTALK)

NALEPA: ... Vineyards is out there.

VELSHI: And another beautiful, beautiful city in this country, which, again, if you are not headed there, you're not going to get there, so you have to make a point of doing it, Seattle.

NALEPA: Seattle. Seattle is fantastic. It's a funky town, kind of like San Francisco in the fact that there are some really great neighborhoods, Ballard, Fremont, Capitol Hill, but also very close to three wonderful national parks: Mount Rainier National Park, Olympic National Park, and North Cascades, which is on the Canadian border that lots of people overlook, but just a gorgeous national park.

VELSHI: A terrific town. When you are in downtown Seattle, the number of bicyclists around the streets, a very green sort of town. If you like coffee culture, it's where it was all sort of born in the United States. These are great ideas. So you've got a full book of these things. It is "Essential USA" by Fodor's. Thanks very much for coming and sharing some of those ideas.

For those of you who -- you know, you can fly there or you can make a short drive, but some good ideas. Now if you are not even thinking about a vacation this year, because cash is a little tight, there is a lot you can do right at home, like I do, clean out my closet, all that junk that you have accumulated could turn into big bucks if you are smart about how to sell it. We recently went to a small town in New Jersey which organizes a community-wide garage twice a year to find out how the veterans do it.

Stephanie Elam reports.

(BEGIN VIDEOTAPE)

STEPHANIE ELAM, CNN CORRESPONDENT (voice-over): Spring cleaning season is in full swing, but attitudes about getting rid of household junk may be a little different this year. The Salvation Army says donations are down in many areas of the United States. That might be because more people need to turn a buck on their unwanted things.

KATHY TAGGART, SELLER: My goal is always to get it out of my house and into somebody else's hands who wants to use it.

SUSAN FLOECK, SELLER: We average anywhere from a quarter to a couple of dollars. You know, once in a while, we will have, you know, electronics or, you know, some furniture, and once in a while a couple of collectible things.

ELAM: These residents of McCutcheon, New Jersey, are trying their hand at selling their stuff. And they are in good company, last month the number of garage sales posted on craigslist, the online community featuring free classified ads, more than doubled from a year earlier.

BONNIE ANACKER, SELLER: You never know what somebody is going to want. If in doubt, put it out, and then, you know, see if somebody wants it.

UNIDENTIFIED FEMALE: Jewelry from the '70s.

UNIDENTIFIED FEMALE: Books, clothing, household items -- you know, my mom sells plants from her garden, lawn furniture, electronics, really everything.

UNIDENTIFIED FEMALE: Would you like to buy it? Whoa, nice. Brand new, brand new.

ELAM: How much a seller makes varies. Many of the folks we spoke with said they earn anywhere from $50 to $100, others who organize multi-family sales say they pull in much more.

UNIDENTIFIED FEMALE: We usually make anywhere from $700 possibly to $1,000, one year we made $1,500 because we had furniture.

ELAM: But for some, the garage sale is about more than getting some extra cash from unwanted items.

JOHN PORPORA, SELLER: Well, for us it's a lot of fun because we get to see our neighbors and talk to people, and it's the social aspects of just getting out and having fun.

ELAM: Stephanie Elam, CNN, New York.

(END VIDEOTAPE)

VELSHI: That does look like fun.

Coming up next on YOUR MONEY, summer heat and your office dress code. We'll tell you how to stay cool and dress appropriately for work at the same time. Stay with us, you're watching YOUR MONEY on CNN.

(COMMERCIAL BREAK) VELSHI: Well, as temperatures rise all across the country, which they really did this past week here in the Northeast, you might be inclined to dress more casualty at the office or perhaps to wear less clothing. Ines Ferre is here to make sure your summer work attire is appropriate for your work environment, a good topic to hit. It's a little early in the year to have been seeing people deciding to shed half of their clothing, but this probably comes up every year.

INES FERRE, CNN CORRESPONDENT: Yes, especially during the summer time. Ali, dress attire depends so much on the type of industry you are in. Some jobs are known for being more casual or creative, others are much more formal. Experts say companies are very concerned about talking to an employee about how they dress for fear of sounding discriminating or offensive, because essentially, you are commenting on someone's personal choice.

Here's why one career consultant says dressing appropriately for your work environment is so important.

(BEGIN VIDEO CLIP)

ANDREA EISENBERG, PARTNERS IN HUMAN RESOURCES INTL.: Dressing appropriately and nicely makes a very big difference in many ways that are not even stated. Not just about promotion, but just how someone may speak to you in the workplace, how someone may avoid or not avoid you, how you might be included or not. And I think it has a -- I have seen that it has a very large impact on just someone's general acceptance.

(END VIDEO CLIP)

FERRE: So I went to the streets of New York to ask some of New Yorkers, have you ever seen folks push the envelope at your office?

Listen to this.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Sometimes when I see people, I'm like, did you really just wear that to your office?

UNIDENTIFIED FEMALE: Like showing too much cleavage, too much leg. Guys put their shirts all the way buttoned down with hair hanging out (INAUDIBLE).

FERRE: You have actually seen people wear slippers to work?

UNIDENTIFIED MALE: Yes, I have. Absolutely.

FERRE: Like the kind you wear at bedtime?

UNIDENTIFIED MALE: Exactly like the stuff that you wear at bedtime.

(END VIDEO CLIP)

FERRE: Even slippers at work. Now that gentleman worked at a hospital. But really, I mean, people have either seen it at their work or perhaps they've dressed in...

VELSHI: Right. They've done it themselves.

FERRE: Yes.

VELSHI: All right. So you could always check, you could always ask, if it is about time, you can go in and say, look, this is crazy, i can't be wearing this vest everyday. But if you are not inclined to ask for sort of an across the board office environment, what are some of the things that people should think about?

FERRE: OK. Well, you know, here we are talking about jobs which you're your common office job, right? You might be talking about banking, legal, et cetera. So collared shirts are some of to dos, covered shoulders, covered knees in some places, clothes that really actually fit you and that they look like they fit you.

(LAUGHTER)

FERRE: Right? Those are for you. They are pressed, they're clean, and also some places require enclosed shoes.

VELSHI: And there are some other tips, I mean, somebody there mentioned that they have seen some women who were not dressed what she would say, appropriately. These are problems, because you are commenting on someone's taste or someone's clothes. So what are some basic bottom line rules if you don't know the answer?

FERRE: OK. Well, basic things are, for example, in some places, no tank tops, no spaghetti straps, things that show a lot. If it is distracting, then it might be an issue. Also, short shorts, short skirts, low-rise pants, flip-flops, that is something that a lot of people say is just a no-no.

But again, it depends on the industry, it depends where.

VELSHI: Yes, I guess you could take a cue from those people around you and see how it goes.

FERRE: Yes, you could ask -- you can even have a mentor. You can have -- you can get familiar with your company policy or you can also ask somebody in your company, you know, can you kind of give me guidance. Look at your management to see how they dress.

VELSHI: Smart idea for...

(CROSSTALK)

FERRE: Yes, we should look at you to see how you dress, because...

(CROSSTALK)

FERRE: You are always clean, man, you're always good.

VELSHI: My boss always says that, hey said, just don't be distracting. He says sometimes too many stripes do that. Ines, good to have you, thank you so much.

All right. Still to come, your chance to sound off, viewer e-mail coming up next, but first, this week's "Right on YOUR MONEY."

(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN CORRESPONDENT (voice-over): If saving the environment is your passion, or if you simply want your money to match your morals, MONEY magazine's Jason Zweig says look into socially responsible investing, or SRI fund.

JASON ZWEIG, SENIOR WRITER, MONEY: An SRI fund invests according to ethical principles, not just trying to do well, but also trying to do good. And the objective is not purely to earn the highest return on your money, but also to return on your morals as well.

ROMANS: But investing with a clear conscience does not necessarily mean taking a big hit to your bottom line.

ZWEIG: If you compare SRI funds to conventional mutual funds or the market as a whole, you will find that they perform just slightly under the average.

ROMANS: Historically, SRI funds have been associated more with Silicon Valley than traditional big money stocks like oil and energy. But Zweig says regardless of your political or social beliefs, there are some SRI options for you, just remember to do your homework.

ZWEIG: There is a great Web site called socialinvest.org where you'll be able to learn about all of the funds that are available.

ROMANS: Christine Romans, CNN, New York.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

VELSHI: Well, our inbox got pretty full this week, most of it related to oil and gas prices. Frank in Kettle Falls, Washington, writes: "The government needs to regulate big oil by having them invest a percentage of the record profits into hydrogen infrastructure. Then the car companies can mass produce fuel cell cars they've already developed, the oil companies will still profit from the hydrogen, and the environment gets a break.

"It's a win-win situation except for the Middle East, and sorry Saudi Arabia, Iraq, Iran, but we need to get off of the petroleum ride and start our own. Now if we could just get our representatives in Washington to listen." Very thoughtful. Thank you for that.

Michael in Vancouver writes: "Hey, guys, you think your gas prices are bad, regular fuel in Vancouver, Canada, costs us $5.25 per U.S. gallon."

And Bob in Boulder, Colorado, says: "I would love to pay lower gas prices and have a plethora of low-cost flight options, but quite frankly, I'm willing to pay the price if it encourages Americans to conserve and industry to invest in alternative forms of energy.

"One of the worst things that could happen is for the price of oil to drop to $70 a barrel, deceiving everyone into believing that that the old American way of life is preserved." That is what one of our guests, Stephen Leeb, said earlier. He said his biggest fear is that gas and oil prices go down again and everyone forgets how painful it is.

We want to hear what else is on your mind, about gas, jobs, the rising price of food, anything you want, or you want something done and explained on this show, drop us a line, our address is yourmoney@cnn.com. Thank you again for joining us again for this edition of YOUR MONEY. We'll see you back here next week, Saturday at 1:00, and Sunday at 3:00. See you then.