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ISSUE NUMBER ONE
Florida's Plans for Solar; Senator John McCain holds Town Hall Meeting; Midwest Farmers Look to Recover From Flood Devastation
Aired June 26, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
GERRI WILLIS, CNN ANCHOR: Minutes from now Senator John McCain will take the stage with some very strong words about his opponent, Senator Barack Obama.
New signs the U.S. economy might actually be doing better than we first thought.
Big trouble with the corn crop could mean higher food prices and why the state of Florida is finding their energy future in the sky.
Issue #1 is your economy. ISSUE #1 starts right now.
Hello, everyone, and welcome to ISSUE #1. I'm Gerri Willis. Ali Velshi will be back tomorrow.
The race for the White House is heating up today, we're standing by for a town hall meeting with John McCain starting just minutes from now in Cincinnati, Ohio. You see the location there.
There's a new report out today that shows the U.S. economy, well, it's a bit stronger than we expected. We'll tell you what it means and whether you can expect your own personal economy to get better any time soon.
The Midwest floods aren't the only threat to corn, why the crop is facing big troubles ahead and what that could mean to your grocery bills.
From the ISSUE #1 headquarters to the CNNMoney.com newsroom, we are all over the stories that matter to you. The big story today, mixed news about Issue #1. The U.S. economy not as bad as one might think, but still by no means a financial juggernaut. Today's release of the gross domestic product, that's the broadest gauge of economic health. It showed a one percent growth rate in the first three months of this year. Now, that beats the government's original estimate of 0.9 percent. And it's better than the 0.6 percent growth we saw in the last quarter of 2007.
To add prospective, analysts say a healthy economy expands at the rate of 2.5 percent to three percent. Now, this coupled with the news yesterday that the Federal Reserve will hold interest rates steady at two percent and the fact that the stock market is suffering through a rough day probably has you wondering about the state of the U.S. economy.
Greg McBride is here. He's with bankrate.com. Let's start with some of those stock market numbers. We saw the Dow tumbling more than 200 points today. It's very close to a two-year low. We're going to see some live pictures right now. The Dow down 212 points. I know people out there are thinking, ouch, you know, that's my retirement fund. That's my 401k that's going down right now. what do you tell folks to do on days like this.
GREG MCBRIDE, SENIOR FINANCIAL ANALYST: It's important to maintain a perspective. You're in this for the long haul, particularly if you're saving for retirement. And the fact is, we're going to have volatility like this for months to come because of the uncertainty regarding the economy, the ailing U.S. housing market, and the general level of the U.S. dollar. Until we get some resolution to that uncertainty, we're going to have more volatile days, we're going to more days like this.
WILLIS: And we certainly had several of them already this year. We see days where the Dow is down 300 points and more. So, we'll keep an eye on that for folks out there. But I need to get you to some other news today, it's a very busy news day today. We have some big numbers on the housing market, new home sales down 2.5 percent. We saw existing home sales rise. But just a little bit, is there any hope at all for this housing market?
MCBRIDE: Well, it's hard to say. Because the villain right now is falling home prices. I mean, home prices inched lower over the past two years. At the beginning of 2008, it's been a much steeper decline. And that's the real problem. You have foreclosures that are begetting more foreclosures. They're dragging down the comparable values of everybody's house on the street. Makes it tougher for people to sell a house even if they want to move up to something else.
WILLIS: All right. You know, obviously big problems for everyone. With those foreclosures, they continue to mount. Any quick advice for folks who have a foreclosure in their neighborhood?
MCBRIDE: Well, if you are home shopping, the biggest impediment very often is selling your own home. There are a lot of bargains out there. There are a lot of bargain hunters. You have to price realistically, and keep in mind, home prices may fall further. So be aggressive on that price now and delay the -don't delay the inevitable, you may end up having to mark down that price later anyway. Go ahead and just do it now and get it sold.
WILLIS: You know, other big news, yesterday from the Federal Reserve, interest rates - the Federal Reserve stood pat at two percent on the Fed funds rate. And you know, a lot of people saying this doesn't matter much to me. But you say that's not true.
MCBRIDE: Yes. I think this is a good thing. I mean, the fact is that the Fed has done plenty already. A lot of what we've seen in terms of oil prices going up, the dollar depreciating, a lot of that can be traced back to when the Feds started aggressively cut interest rates. The fact that they're on the sidelines is a good thing from that perspective but it also indicates the shift. They've now made it clear that inflation is public enemy number one, the likelihood is that rates are going to go up. So, as consumers, we have to position ourselves for when those rates move higher.
WILLIS: Greg McBride, great advice. He is from bankrate.com.
We're going to go live now though to Cincinnati, Ohio where presumptive Republican nominee John McCain is speaking about housing.
Let's listen in.
(JOINED IN PROGRESS)
SEN. JOHN MCCAIN (R), PRESIDENTIAL CANDIDATE: ...the FHA- guaranteed loan at the present value, which is unfortunately reduced of their homes so that they can make their mortgage payments, which gives them a relief from the terrible increases they continue to see sometimes as a result of a very bad mortgage that they signed, which they didn't understand and could have been eligible for one that was less cost to them to make their monthly payments.
Look, the American dream is many things. Educate our children, have a better life, there's many things that are associated with the American dream. Live in a safer world, but one of the fundamentals is the ability of Americans to own their own home. We see that continuously eroded. So we're going to have to act and act effectively. And I think that that should be in the hands of the homeowner. And we have legislation that's now winning its way through Congress. It's not exactly the proposal certainly that I had. I have some problems with it. But I'd certainly vote for it and support it because it's time that Congress started acting for you.
And I promise you as president of the United States, I will always, always put my country first above party and above every other consideration. I've had the honor of doing that since I was 17 years old and entered the United States Naval Academy. I had a choice to make many years ago. When I was allowed the opportunity, given the opportunity to return home early from prison camp. I decided against that because I knew the effect that it would have on my fellow prisoners. I put my country first. I will put my country first now and always. You can count on it.
WILLIS: All right. You've been listening to Senator John McCain in a town hall meeting in Ohio, talking about housing. Interestingly, he said he would support legislation pending in Congress. On the issue of housing, it's been fairly controversial, particularly with Republicans, he said he would do it to put his country first and the problems of the housing market first. Some interesting comments there.
But high gas prices, one of the many cost Americans struggles with in this economy. And that brings us to today's "Quick Vote" where you get to weigh in. CNNMoney's Poppy Harlow is here with us today.
What do you got, Poppy?
POPPY HARLOW, CNNMONEY.COM: Well you know, gas prices have been easing slightly over this past week or so, but well above $4 in a lot of states. So that's tough for you. It may actually be changing the way that you live. We want to hear from you.
Here's our CNNMoney.com "Quick Vote" question today: High gas prices could force me to move closer to work, car pool to work, take more public transportation, or telecommute?
Weigh in on CNNMoney.com. We'll bring you those numbers a little later in the show -- Gerri.
WILLIS: I like that. Telecommute, maybe we could do a little -
HARLOW: It would be fun. Is that okay, boss?
WILLIS: Maybe we can get a go ahead on that, maybe not. All right, Poppy. We'll see you a little later in the show.
Why location, location, location is the key to saving money after you buy the house? Why the corn crop in the Midwest might be in even bigger trouble and what that could mean to the price you pay at the grocery store. And we'll talk with the mayor of Philadelphia, Michael Nutter, about his city's attack on foreclosure. We're all over Issue #1 right here on CNN.
WILLIS: All right. You are looking at live pictures of the big board there. You can see the Dow industrial's down 236 points. The cause, Goldman Sachs downgraded two very important stocks in the Dow Jones industrial average, GM and Citibank. Susan Lisovicz is going to be following this all day for us. We'll be covering this. Your bottom line is our bread and butter and we will be catching up on that every hour.
Well, it's been about a week since the historic Midwest floods were at their worst. And among the hardest hit, farmers who lost a good deal of their crop. And for the past few days, farmers have been trying to recover by planting corn and soybean. But now they're facing a new set of problems. CNN's senior correspondent Allan Chernoff is with us.
ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT: Gerri, I was just on the phone with the director of research for the Iowa Farm Bureau. While we were talking, kaboom-kaboom, thunderstorms all over the place in Iowa right now. In fact, yesterday, some parts of Iowa got more than two inches of rain. It is coming down more right now. Obviously that is not helpful at all. The farmers have been trying to replant. They have done a good amount over the past week about 800,000 acres, mostly soybean, remember, soybean grows a little faster than corn, it's a little easier to grow. But the damage is still severe. The latest estimate in Iowa alone, corn and soybean losses of 2.2 million acres, that amounts to about $3.5 billion.
Going forward, the weather may not cooperate, as well. The forecast is for colder than normal weather next week, at night, getting down into the 50s in farm country. That's not going to help the crops grow.
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DALE MOHLER, METEOROLOGIST, ACCUWEATHER.COM; Crop got into the fields a little bit late and they need ideal warm weather to get them back on track and get them back ahead of normal. The problem we have is that if these crops grow slower, they might mature into the part of the season we could get our first frost. And the crops are going to be more vulnerable this year.
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CHERNOFF: As if that's not enough trouble, the flood waters are still causing a very tough situation along the Mississippi. By tomorrow the army corps of engineers is hoping to reopen locks on the Mississippi down to Keokuk, Iowa. That's the green portion over there from Davenport down onto Keokuk. But below there, south to St. Louis remains shut. It will remain shut even after tomorrow. That means grain from last year's harvest still cannot get to ships waiting in New Orleans for export.
WILLIS: Well, Allan, boy, those farmers, they cannot catch a break. If it's not one thing, it's another. How are they going to survive this financial squeeze?
CHERNOFF: Yes, this is a real problem here. Because a lot of the farmers depend on exporting last year's harvest. They need the money now to pay for all of the corn, soybean that they've planted, to pay for all of the fertilizer, and to pay, Gerri, for their new farm equipment. We met a farmer just last week who bought this massive tractor, expecting to have a record harvest this year. The tractor cost him $120,000.
WILLIS: And you think your Prius is expensive.
All right. Allan, thank you for that report. And thank you so much for your reporting from the field. That was outstanding. Thank you.
CHERNOFF: Thank you.
WILLIS: We talked a lot about the impact of housing in the flood zone. And of course, farming, but one of the industries suffering right now, railroads.
CNN's Susan Roesgen live right now in Waterloo, Iowa with more. Hi there, Susan.
SUSAN ROESGEN, CNN CORRESPONDENT (voice-over): The Iowa Northern Railway moves 65 million bushels of grain each year down these tracks. But very little is going anywhere this week. These rail cars are filled with corn that can't be moved.
There's nothing wrong with this train, but this is where it's stuck. This Iowa Northern Railway train has been here for two weeks now because it can't go anywhere. The tracks are washed out in both directions. What kind of force does that?
UNIDENTIFIED MALE: Lots of force. Lots of force.
ROESGEN: This is the Iowa Northern Railway, it's 165 miles long. That's not a huge distance, but when the flood destroyed two key bridges and water lapped over the tracks, millions of dollars in freight stopped moving. Dan Sabin's family owns the company.
DANIEL SABIN, PRES. IOWA NORTHERN RAILWAY: Josh came running into my office. And he was visibly upset. And he didn't have to tell me what happened. I knew exactly what he was going to say that the bridge is gone. And you know, you work so hard to try to bring in your $50 or $60,000 a day in revenue and then to realize it's going to cost you millions of dollars just to recover kind of your baseline. It's a hard emotion to get through.
ROESGEN: The railway has lost 80 percent of its business. That also hurts all the companies that rely on this railway to ship their products. And ultimately, it could cost us more when we buy them. According to the Association of American Railroads, more than 40 percent of all freights shipped in this country goes by rail. And the floods this month have wiped out parts of several railways in five states. Insurance, nope, no flood insurance. Federal help? Maybe, but not yet.
SABIN: If we don't see some sort of opportunity, get at least some low-interest loans from the Federal Railroad Administration or something through Congress, it'll probably kill the company.
ROESGEN: The company is trying to repair the tracks as quickly as possible, but it may not be back in full operation for another six months. A long and costly delay.
ROESGEN: And we are here today in Waterloo, Iowa with the Waterloo, Iowa Bridge still out behind me. Nothing the railway company can do about that. But in trying to get around the bridge that's out in Cedar Rapids, Gerri, they are now making a 200-mile detour.
WILLIS: Wow, Susan, tough times out there. You know, besides the corn stuck on the track there, what other things have been held up?
ROESGEN: Well, John Deere tractors, for one thing. Gerri, this company is the number one shipper for the John Deere tractors that have the headquarters not far from here. Those tractors are sent to places all around the world. Also soybean, some of that, some oats for the Quaker Oats factory. But also Tyson frozen pork. When this flood happened and these bridges were wiped out, yes, tons of Tyson frozen pork bound for Japan. The company had to try to keep that pork from thawing so they could get it there.
WILLIS: Tough times. Susan, thank you for that.
Folks in Florida are looking up to the sky to solve the future of energy in that state. We'll explain, plus we'll take you to the city of brotherly love, taking an aggressive approach to solving the mortgage meltdown. And for the latest issue #1 news anytime, make sure you log on to CNNMoney.com. Logon, right now. Check it out.
WILLIS: Welcome back. The rise and fall of America's housing market, prices are down. But with the decline comes a slight up tick in existing home sales. The National Association of Realtors reports sales of single family homes and condos rose by two percent in May. It's only the second time in 10 months that's happened. But don't read too much into it, economists they say home prices will continue a downward trend before the housing segment as a whole improves.
Now with the foreclosure crisis affecting nearly every state, many city leaders are taking matters into their own hands.
Earlier this week, I talked with Philadelphia Mayor Michael Nutter.
WILLIS: You put in some really aggressive approaches in your city. But I want to show folks, first, some numbers, one in almost 1,200 homes in your city in foreclosure. What are you doing there to ease this problem?
MAYOR MICHAEL NUTTER, PHILADELPHIA: Well, we've taken a number of steps. As you mentioned somewhat aggressive, 6,200 mortgage foreclosures in 2007. That was an 18 percent increase over 2006. We're looking at possibly 8,500 in this current year. So we came up with the Philadelphia Mortgage Foreclosure Protection Plan. It's a bit of a mouthful. But it has a number of components to it.
A hot line for people to call to get help, more funding to support housing counseling services as well as reconciliation meetings with lawyers that each homeowner would have a lawyer. We're putting teams out in the street, literally going door to door to talk to folks about these issues. We've stopped sheriff sales back in March. They won't start back up until July.
WILLIS: Let's drill it down in some of these because I think they're so interesting. You have actually got your sheriff signed on board to help out with this. Now, this is really unusual. How did you make that happen?
WILLIS: And what is the sheriff doing?
NUTTER: Well, that came as a result of conversations both with city council and myself to talk with the sheriff about the challenging situation. Look, the sheriff's of Philadelphia, as well. And he certainly understands that just throwing people out in the street doesn't do any of us any good.
WILLIS: What is the impact in the neighborhoods on the street where foreclosures have gone through the roof? What happened?
NUTTER: Well, what happens, the neighborhoods become destabilized, we see increases in our social service costs, people literally end up either in our homeless population or in our shelter systems. The property values of the adjoining properties, they start to decline. It is a downward spiral ripple effect all throughout the community. So what we said is we have to come in, stop it, stabilize it, and then revitalize these communities. Our goal is to keep people in their homes with the ability to pay a mortgage payment that they can actually afford.
WILLIS: Well, I think that's everybody's goal across the country. But you had that complication, a previous mayor John Street, actually put in place a program, which frankly, hasn't been helping you - an effort to try to get those delinquent real estate taxes. Tell me how that's impeded your efforts? And what you're doing about it?
NUTTER: Everyone recognizes that, look, let's have a heart and recognize that keeping families in their home, working out payment arrangements, treating people in a decent fashion and getting ahead of the problem, this is really about prevention. More than just waiting until someone shows up at the door. So it's been a tremendously cooperative process. We're very proud of it.
WILLIS: Since I've got you here, I want you to grade the federal efforts to solve this issue we've had hope now, we've had any number of programs out of the federal government, the FHA, HUD, you name it, is it working?
NUTTER: I think they've been less than adequate. They're probably in the C minus, maybe even a D category. The federal government on so many issues, unfortunately, has left cities and citizens literally holding a bag. And they could replicate, if not exponentially take forward the kind of program that we've put forward here just in Philadelphia. And I'm sure other cities are trying to come up with programs. Once again, the federal government is almost nowhere to be found. It really needs to be our partner in this.
WILLIS: That was Philadelphia Mayor Michael Nutter.
Coming up, the quest to become less energy dependent. Some folks in Florida think they have it all figured out. We'll tell you how they're doing.
Plus, location, location, location, important when you buy a home. And it could save you money in the long run. We'll explain coming up next.
You're watching the home of ISSUE #1 the economy, CNN.
WILLIS: This just in to CNN, the AFL-CIL has voted to endorse Senator Barack Obama for president. No big surprise here, but the union endorsement is always helpful given their 13 million members. More coming up on that in the CNN NEWSROOM.
We're not the only ones looking for solutions to increase our own oil supply, China, the world's second biggest oil consumer, is desperate for oil. Looking to Latin America as a possible supplier, but that could have an effect on consumers right here in the United States. CNN's John Vause explains.
JOHN VAUSE, CNN CORRESPONDENT: This is one reason why China is desperate for oil. Long lines of trucks waiting for hours to fill up with diesel. It's been like this since April, this driver told me, and sometimes it's rationed. Just enough for 45 miles. The cost of diesel and regular gas is capped here by the government. But with the cost of crude sky high, state-owned oil companies have been taking huge losses and in turn, have reduced supply. The government raised the cost of gasoline by almost 20 percent, but China, the world's second biggest consumer of oil needs more. A lot more, and it's looking everywhere, including America's backyard.
To Venezuela's president, Hugo Chavez, China is a way out of an unhappy relationship with the U.S.. Despite all of his anti-American rant, Chavez is still dependent on the U.S. which buys more than half his country's oil.
TOM WALLIN, ENERGY INTELLIGENCE GROUP: The U.S. has the most sophisticated refining system in the world and Venezuela has relatively heavy, difficult to refine crude and so the natural market for Venezuelan crude is the United States.
VAUSE: But last month Venezuela and China agreed to build a refinery in southern China to specifically process Venezuela's heavy oil, part of the plan to dramatically increase oil exports to China from 80,000 barrels per day to 1 million barrels per day within three years. Amount the same amount of crude sold to the U.S. Chinese state-owned oil companies are striking deals across Latin America. In Brazil, Chile, Peru and Argentina.
UNIDENTIFIED MALE: For American oil companies and for other western oil companies, the Chinese are turning out to be a significant competitor.
VAUSE: And analysts say that's not necessarily a bad thing. China is investing heavily in exploration and that might ultimately increase supply.
John Vause, CNN, Beijing.
WILLIS: Next, creating your own energy. Some folks in Florida are doing just that. We'll tell you how and how much money they're saving.
But first, let's get you up to speed on the latest headlines. Don Lemon is in the "CNN NEWSROOM."
Hi there, Don.
DON LEMON, CNN ANCHOR: Hi, Gerri. Good to see you.
I want to talk about a landmark ruling from the Supreme Court today regarding your right to own a gun. The high court struck down a sweeping handgun ban in the nation's capital in a sharply divided five to four ruling. The court said the D.C. handgun ban violates America's constitutional right to keep and bear arms. The ban was one of the strictest gun control laws in the country. Well, today's ruling settles a decade-long debate over whether gun ownership is an individual right.
North Korea. Has a nuclear stalemate been diffused? Well just hours ago, the communist nation announced that it has handed over long awaited details of its nuclear program. That's a critical step toward dismantling it. President Bush says he'll call for the lifting of sanctions against the nation he once called part of the axis of evil. He will also move to take it off the U.S. terror list. But, he adds, North Korea will have to end its nuclear activities in a verifiable way.
Firefighters are facing another grueling day in the western U.S. Hundreds of wildfires are still burning across tens of thousands of acres in Arizona, New Mexico, and also California. One wildfire is closing in on Big Surve (ph). Firefighters across the region are hoping for cooler temperatures and higher humidity. Wow, let's hope they get it.
More of those stories at the top of the hour right here in the CNN "Newsroom." Plus we'll have this for you. A music star muscles to the rescue of a fan. We'll show you the video of an incident at the country superstar Tim McGraw's concert. It's really unbelievable stuff.
I'm Don Lemon. I'm going to see you at the top of the hour. I'm going to throw it back to New York and Gerri Willis.
Gerri, it was great seeing you down here yesterday and hanging out with you right next to me in the desk sitting next to me.
WILLIS: Well, it was great visiting with you too. I always enjoy being in Atlanta.
Thank you, Don Lemon.
LEMON: All right, Gerri.
WILLIS: With gas prices rising, a growing number of Americans are parking their cars permanently. And that's where car sharing programs can come in. CNNMoney.com's Poppy Harlow has our "Energy Fix." Hey there, Poppy.
HARLOW: Hey there, Gerri.
Well, folks, it's an energy fix for a lot of people who are already using car sharing. It allows you to rent a vehicle by the hour and, get this, gas is usually included. It's becoming a more attractive option and new companies are popping up all over the country when the price of gas tops $4 in 30 states across America.
Now there are non-profit car sharing programs in Philadelphia, Chicago, Minneapolis and San Francisco. And then there's Zipcar, that's a national for-profit chain. Now those companies say it's not just gas that you're saving on. There's also insurance and repair costs. Ithica (ph) Car Share in New York, that's another non-profit, says it costs an average of $650 a month to own a car. So I spoke with the CEO of Zipcar and he says his company is also helping get some of those cars off the road.
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SCOTT GRIFFITH, CHAIRMAN AND CEO, ZIPCAR: What we find is about 40 percent of the people that join either don't buy a car or they sell a car because of Zipcar. So for every car we put on, that translates into 15 personal cars going away.
(END VIDEO CLIP)
HARLOW: Now saving money and helping the environment is good. But make no mistake, these companies are growing right along with the price of fuel. In fact, Gerri, you know, Zipcar contributes about 15 percent of its growth to the rising fuel costs.
WILLIS: Well, interesting story. You know, you see the Zipcars here in Manhattan all the time. But if Zipcar is paying for the gas, doesn't it mean it's hurting their bottom line?
HARLOW: Yes, of course, high gas prices are kind of a double- edged sword here, folks, for those car sharing companies. On the one hand, it's stoking (ph) demand. On the other hand, the companies are paying the same high gas price that we are all. So Zipcar is finding some ways to cope. Take a listen.
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GRIFFITH: We had to put a price increase in earlier this year, about a 5 percent or 6 percent price increase. That's covered us for now. If we see another big spike above where we are today, you know, we'll have to do that.
(END VIDEO CLIP)
HARLOW: You'll have to do the calculation, of course, for yourself to see if this is really an energy fix for you. And remember, car-sharing programs, folks, are not in every community. But we have a closer look at some people, Gerri, who are ditching their cars, literally. It's on our Web site, CNNMoney.com.
WILLIS: I definitely want to see that.
Poppy, thank you for that.
Well, near-record gas prices have so many of us trying to figure out how to save money. More and more folks in the state of Florida are tapping into one natural resource that's more abundant than probably anything else, and that's sunshine.
CNN's Susan Candiotti explains.
SUSAN CANDIOTTI, CNN CORRESPONDENT, (voice over): No wonder Florida's called the sunshine state. But there are more practical uses for Florida sunshine. Jessie Prado plastered his roof with two dozen solar panels and his electric bill has nose dived.
JESSE PRADO, HOMEOWNER: My bill last month was $6.86.
PRADO: And 86 cents.
CANDIOTTI: Prado is one of a rare but growing number of Floridians tapping into solar power. Now the state's largest utility, Florida Power and Light, is laying out an ambitious plan to harness Florida's sun. It predicts in the next 30 years . . .
ERIC SILAGY, FPL VP DEVELOPMENT: The amount of CO2 that it will offset is over 3.5 million tons. So it's a tremendous -- which is the equivalent of 25,000 cars a year being taken off the road.
CANDIOTTI: Despite Florida's abundant sunshine, it cannot compete with California's Mojave Desert, where the sun is much stronger. FPL has a huge solar plant there too. Blame it on Florida's humidity.
ROBERT REEDY, UNIVERSITY OF CENTRAL FLORIDA: That moisture in the air causes the light to scatter, so that when it reaches your collector, it's not as easy to focus.
CANDIOTTI: And unlike homeowner Jesse Prado, who uses batteries at night to store solar energy, power companies cannot.
SILAGY: The only way to really efficiently store power on a small scale is through batteries, large batteries. But to do so on a large scale, it's just not technically feasible and very, very expensive.
CANDIOTTI: So panels can only work during the day. At night, this Florida power plant will still have to use old-fashioned and expensive fossil fuels. Jessie Prado plans one day to be energy independent. PRADO: That it will pay itself off probably seven years. Seven to 12 years depending on how much you've invested into it. But then after that, you don't have to pay for power anymore.
CANDIOTTI: A house this size, about 1,600 square feet, can cost about $40,000 to convert to solar power, including all those panels on the roof. But with state and federal rebates, the out of pocket costs can be cut in half.
Susan Candiotti, CNN, Boca Raton, Florida.
STEPHANOPOULOS: All right. Well the price of your home isn't the only cost you should take into account when buying it. Why location, location, location could make all the difference to your bottom line.
And we're going to talk about some of the issues that are most important to you. E-mail the Help Desk, email@example.com. They want your questions.
WILLIS: You're looking at live pictures of the big board. You can see the Dow Industrial's down, ouch, 252 points right now. Been falling all morning long ever since Goldman Sachs downgraded two major Dow components. One Citigroup. The other, GM And, of course, we will continue to follow this story for you all day long. Susan Lisovicz is watching this intently a making work (ph) just about every half hour, 30 minutes, and she will follow that for us.
Also, the high cost of gas is exploding family budgets across the country. And our next guest says where you live could make a big difference in how much it's impacting you.
John Norquist is the president of the Congress for New Urbanism. He's joining us now from Chicago.
John, great to see you.
JOHN NORQUIST, PRESIDENT, CONGRESS FOR THE NEW URBANISM: Hi, Gerri. Great to be with you.
WILLIS: Now I know everybody considers, location, location, location when they buy a house. But you say you need to think about it in a different way. How so?
NORQUIST: Well, the whole real estate market is repricing itself based on location efficiency. With gas at about $4.50 a gallon, people are noticing that the longer commutes are now degrading the value of places where there's long commutes. And where it's more convenient, there's that premium.
And it's been true for sometime. About two or three years ago this trend started to show up where the preference for either cities or older suburbs where the location is more efficient.
WILLIS: All right. Well, I want to show our viewers an example of what's going on here. We're going to tell you a tale of two suburbs, really. Two suburbs of Atlanta, Decatur and Dacula. One is about six miles from Atlanta. The other is about 38 miles from Atlanta. You can see on the map here where they're all located. Obviously, Decatur much closer in.
What did you find here, John? What's the story here? Take a look at these numbers. Miles traveled, very different here. Transportation costs for a month, whoa, a very big difference, right?
NORQUIST: Right. And it's even gotten bigger since this calculation was done because the gas prices continue to go up. You save a lot of money on transportation if you live in Decatur as opposed to Dacula. And the housing market's now repricing itself to reflect that. There's a consumer preference to live where you can save money on transportation.
So for investors, for the big real estate investors, they're starting to look at sprawl as the number one risk factor for the average person. There's no reason why they shouldn't have this information too. If you want to look at location efficiency, you want to look at the commute you're going to have and the money you're going to spend on gas and calculate that in to the house price that you pay.
WILLIS: I think that makes all the sense in the world. You actually have a tool to help folks do that. It's called the Housing and Transportation Affordability Index, htaindex.com. We wanted to show our viewers an example of this. We're going to use Raleigh Durham Chapel Hill. The research triangle in North Carolina, as an example here, just to give people an idea of what all this looks like.
If you look at housing costs, for example, they should be about 30 percent of your costs. And if you look at this map, you'll see the yellow equals the affordable areas when you talk about housing costs. Now, let's layer on transportation costs on top of that. You'll see things become a whole lot less affordable and we're assuming that transportation costs should be 48 percent of your monthly budget or less.
Now, John, talk to me a little bit about the trend here. You can see the inner city, obviously, the most affordable. But, boy, you start getting outside that inner ring and, whoo, the prices jump.
NORQUIST: Yes. I mean you might get a lower price on a house, but then you have to factor in what it's going to cost you to drive. And your viewers can go to cnu.org/locationefficiency and make their own calculation for wherever they live. And ask themselves this question. You know, what is the real value of the place I'm about to invest. For most people, the house is the biggest investment they make. And so you want to do that carefully and you want to look at this. And with gas prices going way up, it's more important to do it than ever.
WILLIS: Well, John, we appreciate your help today. Thanks for your time.
NORQUIST: My pleasure.
WILLIS: Coming up next, it's time to get some answers. The CNN Help Desk is standing by to get you solutions to your money questions.
And could high gas prices force big changes in your life? It's not too late to weigh in. Log on to CNNMoney.com and cast your vote.
You're watching ISSUE #1.
WILLIS: We are at ISSUE #1. We want to help you with your money problem, get you out of debt, save you some real cash. It's time for the Help Desk. Let's get right down to it.
Gary Schatsky is the president of objectiveadvice.com. Greg McBride is with bankrate.com. Allan Chernoff is a CNN correspondent.
All right. Let's get that first e-mail in. Lennox asks: "As a long-term investment, which is better: U.S. savings bonds, money markets, or CDs?"
I have to spread the wealth around on this one. Greg, why don't you start because you're so interested in these kinds of investments.
MCBRIDE: Well, as a long-term investment, none of the three are particularly attractive because you have to stay ahead of inflation. But the best of the lot, high yielding CDs. If you're seeking out the best return on CDs, that's going to keep you ahead of inflation. And you can tailor it to your time horizon. Another possibility, TIPS, Treasury Inflation Protected Securities. They're designed to give you a constant buffer against inflation.
GARY SCHATSKY, PRESIDENT, OBJECTIVEADVICE.COM: The key thing with the CDs is, you want to make sure you're not going out too far because if inflation picks up, you might find yourself locked into a rate you'll be sidedly (ph) unhappy with a year or two down the road.
WILLIS: You've got to invest in stocks bottom line if you're looking at the long term, right, guys?
MCBRIDE (ph): Has to be part of the portfolio.
CHERNOFF: It should be, but this viewer is looking at days, like today, the Dow off 250 points and saying, I want security. So if you want security, go to the Treasury. That's the safest thing you can possibly buy.
WILLIS: Except . . .
CHERNOFF: Buy a 10-year note.
WILLIS: Your return gets killed by inflation, Allan, right? I mean come on, guys?
MCBRIDE: Over the long-term, inflation is going to do more damage to your portfolio than market volatility. Over the long-term.
CHERNOFF: Oh, yes, I totally agree. Stocks definitely -- that is the place for most people longer term, but some people just can't handle it. If you can't handle it . . .
SCHATSKY: You have the credit risk tolerance. If people can't sleep at night, it doesn't mean you follow them completely, but you have to credit it when you're allocating a portfolio. If you're not going to sleep at night, you should have a more conservative portfolio.
WILLIS: People never know what their risk tolerance is. Great discussion. OK. Well let's move on.
Jim asks: "is there an IRA/401(k) type vehicle that lets you buy a house as an investment and then move in later? I want to buy retirement property in Hawaii and move there in 10 years."
CHERNOFF: You can borrow $10,000 out of your IRA to buy a home for the first time. Or if you hadn't had a home for two years, you can go ahead and do that. However, you're going to be taxed on that $10,000. It's really not the ideal way to do it.
WILLIS: Yes, I would rather take it out of some kind of other savings somewhere.
SCHATSKY: But you can't have a -- there can be a trustee buying real estate but people are not moving into that very same property. And most real estate, if you're buying it as an investment, you want the depreciation, you want to be able to take advantage of some of the tax advantages, which you couldn't do in a retirement account in any event.
WILLIS: OK. All right. Good advice.
Jason from Texas says: "Why are homeowners associations allowed to foreclose on a homeowner even when they are current on the mortgage and taxes? Do homeowners have any rights in this situation?"
This is like a trick question, I think -- Greg.
MCBRIDE: Well, I mean, the first thing is, the homeowner's association is actually putting a lien against the property and they're going to be in line behind the other mortgage holders. So they would have to pay off those other mortgage holders before they get any of that money back, unless you have a ton of equity in the property. They can put a lien on it, doesn't mean they're going to foreclose. I think that's pretty unlikely in a lot of markets where people don't have equity or they're upside down.
WILLIS: But don't you sign some documents when you get into a homeowners association? They have powers that you need to understand before you sign on that bottom line, right?
SCHATSKY: They absolutely have the ability to do it. And the question is whether or not they'll exercise it. Depending, as he points out, depending on what the market conditions are. You know, do they have -- you have rights. You have the right to live up to your obligations and he gave them a lien.
WILLIS: Right. Exactly. OK.
Jamie in Florida asks: "The bank has started foreclosure proceedings on my investment property. The tenant is aware of it and is refusing to pay rent. Do I still have the right to collect rent?"
SCHATSKY: Absolutely. I mean you have the right to collect rent as long as you own the property. People are trying to play fast and loose saying, oh, you're going to lose the property, maybe you won't chase me for the money. You can certainly sue them for the rent. You can sue them for the rent even after they leave. And --
WILLIS: Hope you get it back, right?
SCHATSKY: Yes, hope you do.
WILLIS: That's a tough situation.
Kishore in Florida asks: "I am about to graduate from college and have a good amount of capital built up. Should I drop the cash into a masters program now or take a few years to invest in real estate or start a small business?"
Lots of options on the table here.
CHERNOFF: You know what she needs to do? Kishore needs to decide what she wants to do with her life.
CHERNOFF: That's really the thing to do.
WILLIS: Right. Exactly. Guys?
MCBRIDE: Well, sinking the money into a business, not a short- term venture, you have to have a longer term view. And if she's looking at a quick turnaround, that's not the way to go.
WILLIS: All right. Well, guys, great conversation. Love to hear the debate.
Gary Schatsky, Greg McBride, Allan Chernoff, thanks to all of you.
You will definitely want to join us tomorrow on ISSUE #1. We're going to open up the CNN phone lines to you, taking your calls live on the program. So get your questions ready. We want to hear from you.
Why an addition to the Brooklyn Bridge is a cash cow for New York City.
Plus, it's not too late to vote. After all, it is your right. What could high gas prices force you to do. Log on to CNNMoney.com and be heard.
We're all over issue number one right here on CNN.
WILLIS: Welcome back to ISSUE #1.
Americans, well, we love our cars. But apparently a little less these days. For the first time in five years, drivers of new vehicles say they're less satisfied with their ride. The annual J.D. Powers Automotive Performance Survey, it was released today, shows owner satisfaction declined by 2 percent from last year.
What changed? Well you know what changed, gas prices. According to J.D. Power, fuel economy stayed unchanged with an industry average of 21 mile per gallon. Foreign cars led the way with Porsche in front of the pack. But American made cars made some inroads. The eight most improved name plates all were U.S. brands.
Well, what could high gas prices force you to do? That's today's Quick Vote question. For how you voted, let's go back to Poppy Harlow.
HARLOW: Hey, Gerri.
Well, people out there are certainly changing their habits in terms of getting to work. A majority of you said you would telecommute. Thirty-two percent there. Twenty-eight percent say they'd take more public transportation, like a lot of us do here in New York. And 20 percent said they'll move closer to work or car pool to work. And I think Gerri and I might start a petition to telecommute.
WILLIS: I know. We need the heartsdale (ph) . . .
HARLOW: From our home.
WILLIS: Yes, that heartsdale bureau. Nobody goes for that.
All right. Well, thank you, Poppy, for that.
WILLIS: Lots of buzz in New York today about this summer's monumental public art project. The New York City waterfalls. Four, man-made water falls are flowing right now in New York City, each towering nearly 12 stories. Now one of those waterfalls is underneath the Brooklyn Bridge and that's where we find our Rob Marciano.
ROB MARCIANO, CNN CORRESPONDENT: Earlier this morning, on the shores of the lower east side of Manhattan, a public display of art unveiled. And it's quite unique. Check it out. It's just over my left shoulder. This, the Brooklyn Bridge, which is 125 years old this year, but I don't think the designers had this in mind.
That is a waterfall cascading water that's drawn from the East River, pumped up on top of that scaffolding there. It's one of four that align both shores of the river down here in the lower east side. Some as high as 120 feet high. So one of these is actually higher than the Statue of Liberty.
It's another example of where a public display of art is actually being used to help draw some tourism into New York City. They spent about $15 million, privately donated funds, to build these waterfalls. And the mayor says he's hoping to get about $50 million to $55 million back from tourism.
And you walk down the streets of Manhattan, don't have to tell you this, you can't walk a block without hearing some foreign language spoken. With the weak dollar, tourism dollars from overseas are pouring into Manhattan. This was one way they expect to recoup some of that.
Environmental concerns,. Fishy are OK. They use some filters to protect them. And they're offsetting some of the costs from the energy that they're using by buying wind credits in order to make this as green friendly a project as possible. And on top of that, it could be pretty romantic, even in the rain. It'll be open until October 13th. May want to come down and check it out.
Gerri, back to you.
WILLIS: Well, interesting stuff. I wonder how much energy we're expending to make all of that work. Well, it is pretty anyway.
For more ideas, strategies and tips to save you money and protect your house, watch "Open House," Saturday, 9:30 a.m. Eastern, right here on CNN. And for more on how the news of the week affects your wallet, tune into "Your Money," Saturdays at 1:00 p.m. Eastern and Sundays at 3:00, right here on CNN.
The economy is issue number one and we here at CNN, we're committed to covering it for you. ISSUE #1 will be back here tomorrow, same time, 12:00 p.m. Eastern, right here on CNN.
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