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Issue Number One
Rough Ride; Texas Tornado; Foreclosure Intervention; Coping with Foreclosure; The Cost of Flying; Answering Your Questions: Quick Vote Results
Aired July 24, 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: Two hot topics on Capitol Hill: A fight over the country's oil reserves and a countdown to an historic housing bill vote.
There's a new minimum wage, but it doesn't come without controversy.
The CNN "Energy Hunt" takes you to the Arctic National Wildlife Refuge.
And we'll tell you what is causing rodeo cowboys to hang up their hats and call it quits.
Issue #1 is your economy. ISSUE #1 starts right now.
From the ISSUE #1 headquarters to the CNNMoney.com news room, we are all over the stories that matter to you.
Hello, everybody. I'm Gerri Willis. Ali Velshi has the day off.
As gas prices head south, there are some on Capitol Hill who want to take drastic steps to lower them even more.
We'll take a closer look at those sky-high airfares and if lower oil and gas prices will mean even lower ticket prices.
And we have some troubling news from the job market. We'll tell you all about it and what it could mean to you if you're trying to find a job right now.
Miles O'Brien, that top story today, oil and gas.
MILES O'BRIEN, CNN ANCHOR: That's right, Gerri.
On Capitol Hill, lawmakers are debating whether to tap into the country's piggy bank filled with oil. It's the Strategic Petroleum Reserve, which amounts to more than 700 million barrels of oil stored underground near the Gulf of Mexico.
Kate Bolduan is following the debate for us, which, not surprisingly, is splitting mainly along party lines. She's live now in Washington with the latest -- Kate.
KATE BOLDUAN, CNN CORRESPONDENT: Hi there, Miles. Well, this is the latest of energy proposals being debated on Capitol Hill right now. House Democrats are set to vote today on a measure that would release some 70 million barrels of crude oil over six months from the Strategic Petroleum Reserve.
This reserve has been in the news quite a bit recently. It's the nation's emergency oil stockpile set up in the 1970s, and Congress voted back in May to halt shipments to the reserve amid rising energy costs.
House Speaker Nancy Pelosi is now calling to release the oil to increase supply, and she says that will lower gas prices.
(BEGIN VIDEO CLIP)
REP. NANCY PELOSI (D-CA), HOUSE SPEAKER: This will reduce the price at the pump. The president is sitting on 700 million barrels of oil.
We're saying, Mr. President, free our oil. It's our oil, it belongs to the American taxpayers because this is oil that we have purchased.
(END VIDEO CLIP)
BOLDUAN: But Republicans argue the reserve should only be tapped for national security purposes. And they also dismiss the proposal as simply ineffective.
(BEGIN VIDEO CLIP)
REP. JOHN BOEHNER (R), MINORITY LEADER: This is not an energy bill. This is not going to produce anymore American-made energy. It's not going to bring down the prices. It's just another excuse to avoid having a real vote on the House floor.
(BEGIN VIDEO CLIP)
BOLDUAN: Republicans are pushing other proposals such as looking into oil shale and also opening up new areas for offshore drilling -- Miles.
O'BRIEN: Well, so, Kate, what are you hearing about the votes? Is it likely to pass?
BOLDUAN: Yes. Well, it looks like they're going to be taking up the vote today, Miles, about 2:00. But like other energy bills we've seen in past weeks, the petroleum reserve bill is unlikely to pass because, in general, I know we keep talking about it, but it's true, Democrats and Republicans remain divided over how to reduce prices at the pump. In particular, of course, whether to allow for more domestic drilling -- Miles.
O'BRIEN: Kate Bolduan in Washington.
Thank you very much. A quick note about the reserve. It is an emergency supply that was first created after the oil shocks of the '70s. It holds about 700 million barrels of oil, underground caverns. It is enough to last us a little more than a month.
It is considered an emergency supply to counter severe interruptions. The last time we tapped into the reserve was after Hurricane Katrina and those other storms devastated production and distribution capability in the Gulf -- Gerri.
WILLIS: Well, Miles, the housing bill we've been talking so much about is now heading towards the Senate, where it's expected to be passed and then signed into law by the president. Now, this legislation will offer up to $300 billion in assistance to troubled homeowners and for the government's work (ph) behind the mortgage finance giants Fannie Mae and Freddie Mac. It will also create a first-time home buyer credit and increase the limits on conforming loans.
Now, while policymakers and analysts don't see this bill as the silver bullet for the troubled housing market, many believe it's a vital step in boosting confidence and adding stability to the economy.
Another big story today, the national minimum wage goes up 70 cents to $6.55 an hour. How much of an impact will that have on American workers and businesses?
CNN Senior Correspondent Allan Chernoff, he's joining us now with the answers.
Hi, Allan.
ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Gerri, there has been so much fuss, so much fighting over this one issue, the minimum wage. And would you believe that only about 400,000 Americans, according to the Department of Labor, actually earn the minimum wage?
They did a study a couple of years ago -- 400,000 Americans, that is not a lot. The total number earning the minimum or below, and this is according to what the government could calculate, was about 1.7 million. That's only about two percent of the workforce that's paid on an hourly basis.
So right now we are back up to $6.55 an hour, a significant increase, right? Up 70 cents. It will go up again a year from now. It will go up to $7.25.
But really, it's just astounding when you think about it. Not all that much really impacting the country when there's been so much debate, so much argument about this.
And this is actually the number where we are now. It's not even one-third of the average hourly earnings.
Gerri, the average hourly earnings last month, $18.01 an hour.
WILLIS: Wow.
CHERNOFF: That's in the private sector. People pay it on an hourly basis.
WILLIS: And so that really gives you some great context.
OK. How many states will this impact?
CHERNOFF: Well, again, not a tremendous number. It is going to affect 24 states, OK?
These are states that either have no minimum wage law or the minimum is equal to the federal. A few states, actually, had been at $6.50: New Hampshire, Wisconsin, New Mexico. So they go up by five cents today.
But have a look at the next map. No affect in 26 states. These states all have minimums significantly higher than the federal minimum, even at this higher number. And that really tells us a lot. It says that a lot of states are saying, hey, you know, the minimum wage, that's basically poverty wages, and we have to have a minimum that's even higher than that -- Gerri.
WILLIS: There's been so much competition for workers out there, it's really driven up the price of workers. I think a lot of people out there, when they argue against the minimum wage, they're saying nobody's going to get hired anymore. Is that true?
CHERNOFF: You know, that's the argument that's been made for a very long time. The fact is, it probably doesn't have all that much impact on hiring levels, because as we've pointed out here, not all that many people are actually earning the minimum wage.
Somebody's going to be paid a very low wage, you know, they're at the minimum. That is not, it seems, going to be a big barrier to hiring. Much more important is how the economy's doing, are sales growing, et cetera, et cetera. And obviously we do have problems there.
WILLIS: And probably very little impact on the general economy about this wage increase.
CHERNOFF: That's right.
WILLIS: Allan Chernoff, thank you for that.
O'BRIEN: That leads us to today's "Quick Vote" on the minimum wage.
For that, we bring in CNNMoney.com's Poppy Harlow.
Hello, Poppy.
POPPY HARLOW, CNNMONEY.COM: Hey, there, Miles.
Well, yes, we're following up on what Allan just described, the government boosting minimum wage by 70 cents. But our question for you, is it really enough? We want to know what you think. Here's our question today.
"I believe the national minimum wage of $6.55 an hour is too high, too low, or just right?"
Let us know on CNNMoney.com. We'll bring you the answers later.
And they're showing, you know, the federal government is going to increase that again a year from now to $7.25. So this is the second of three planned moves.
O'BRIEN: It still has a long way to catch up to the market, doesn't it?
HARLOW: Oh yes. Big time.
O'BRIEN: All right -- Gerri.
WILLIS: Well, Dolly might not be a hurricane anymore, but she's still a threat to south Texas. And what about those oil rigs in the Gulf?
(WEATHER REPORT)
O'BRIEN: Gas prices head south once again. Could we be spending less than $4 a gallon before too long? And can you believe that sounds good?
And we're back on the "Energy Hunt," and the hunting grounds that are the focus of so much debate. Ali Velshi takes us to the pristine Alaska wilderness, ground zero in the fight over where and how to drill for more oil.
You're watching ISSUE #1, right here on CNN.
(COMMERCIAL BREAK)
WILLIS: Well, another day, another decline in gas prices. I love to say that.
CNNMoney's Poppy Harlow is here with your "Energy Fix."
Hi there, Poppy.
HARLOW: Hi there, Gerri.
Well, the reason we're seeing gas prices falling, it is because oil prices are off by more than $20 from the peak we saw just a few weeks ago. And the surge for new oil, well, it is on.
There has been a lot of talk about the Arctic National Wildlife Refuge, or ANWR. It can easily be confusing, but what we're talking about today is the entire arctic, not just ANWR, which is U.S. property. What we know now is that the Arctic contains even more potential energy resources than previously thought. There's an estimated 90 billion barrels of oil, or 13 percent of the world's undiscovered oil, and there's even more potential for natural gas. The U.S. Geological Survey estimates about 30 percent of the world's undiscovered natural gas is in the Arctic.
And most of those resources, Gerri, are offshore, which obviously presents some major problems.
WILLIS: Well, it's not easy to get at, right?
HARLOW: It's not easy to get at, at all. That's for sure. Plus, most of it is not really in U.S. territory, but in areas off the shores of Canada, Russia, Greenland and Denmark.
And as you can imagine, there's plenty of dispute over who really owns what's up there. There's quite a bit of oil though in U.S. territory. The darker part of green on the map that you can see right here, that's an area right off of Alaska, a U.S. territory. So that's a potential for a lot of oil for us here in America.
Most of the natural gas though, Gerri, is off of Russia.
WILLIS: OK. Well, when you say Alaska, though, so much controversy. People really up in arms about that.
What does this mean for this whole conversation about these new alleged findings?
HARLOW: It's a question of whether we can really get to it, right, and if it's ours or not. There's a lot of dispute beyond the territorial issues.
Ironically, one of the reasons there is more access to this oil now is because the ice shelves have been melting, something that we can blame, Gerri, on global warming. So it really all comes full circle here. But it's an interesting report that just came out last night.
WILLIS: Poppy Harlow, thank you for that.
HARLOW: You're welcome.
O'BRIEN: Time now for the "Energy Hunt." CNN is traveling around the world in search of the future of your future energy.
Today, we take you to the North Slope of Alaska, a town called Kaktovik. You probably haven't heard of that place, but you've likely heard of the debate over drilling in that area, otherwise known as the Arctic National Wildlife Refuge, or ANWR.
Here's Ali Velshi.
(BEGIN VIDEOTAPE) ALI VELSHI, CO-HOST: I'm in Kaktovik, Alaska. It's a town of about 300 people. It's the only human settlement in ANWR, in the Arctic National Wildlife Refuge.
Now, some people say this poor place could do well economically if they bring oil drilling to ANWR. But opinion in this town is split down the middle.
(voice over): Kaktovik is a busy place for the Arctic, but most folks here still lead a traditional life. They hunt caribou and other game, and the village is allowed to catch three whales a year. Some of the locals worry that if the oil drills and pipelines come, the wildlife could go.
But long time resident Myrtle Soplu thinks oil drilling in the Arctic National Wildlife Refuge, ANWR, for short, will bring jobs to this part of Alaska.
MYRTLE SOPLU, RESIDENT: Me, I've got three jobs right now to take care of myself. So, if I think if ANWR opens, we can stick to one job for a long time.
VELSHI: She's seen those jobs. They have been drilling for oil in other parts of Alaska for 30 years. Nearby, but never actually in ANWR itself.
(on-camera): This is all part of the North Slope oil field where 700,000 barrels a day are pumped out of here, shipped by pipeline to Valdez, Alaska, where it is then sent to the rest of the United States.
(voice over): But production here has been declining for 20 years. There is more oil in ANWR, no one knows exactly how much, and it's off limits. And these days talk of drilling in ANWR is growing, along with worldwide demand for oil.
Supporters of the idea point out the Arctic tundra is flat, treeless land. Not the forest and wilderness that many may picture.
No one is advocating opening up all of ANWR. The potential drilling area is about the size of the state of Delaware. The amount left untouched? About the size of South Carolina.
But drilling opponents say that's not the point. ANWR was set aside as a refuge for animals in 1960, and they say it should stay that way.
So the question is, how much oil is there in ANWR and what impact would it have on prices? The Department of Energy says the U.S. imports more than 60 percent of the oil it uses.
MICHAEL SCHAAL, ENERGY DEPARTMENT: An increase of production from ANWR would reduce that somewhat, perhaps by two percent, out to 2030. And that really is not enough to significantly alter world oil prices. VELSHI: While residents' opinion is split, the Kaktovik local government is officially in favor of drilling. Resident Mike Gallagher figures the animals will be OK, but he's not sure that opening ANWR to drilling will give him much of a break at the pump.
MIKE GALLAGHER, RESIDENT: You can open today and you're not going to feel nothing for five to 10 years down the road. How is that going to change that?
VELSHI (on camera): So there are a couple of questions. What effect will drilling for oil in ANWR have on the wildlife, on the culture up here, and ultimately on the price of a barrel of oil or the price of gasoline? Even the Department of Energy's best-case estimates right now suggest that it may not bring prices down all that much.
Ali Velshi, CNN, in the Arctic National Wildlife Refuge.
(END VIDEOTAPE)
O'BRIEN: Now, CNN is committed to the "Energy Hunt," and the bosses here have assigned Ali and I to lead expeditions to the frontiers of new technology that will help solve the energy crisis. Look for our stories in the coming months.
And if you have an idea, we invite them. Send us an e-mail to issue1@cnn.com -- Gerri.
WILLIS: Well, we are all looking forward to that.
Well, it's been a rough ride for rodeo cowboys, of all people. We'll tell you what ISSUE #1 topic is causing some of them to simply give up and hang up their hat.
And we're talking "Black in America." Remember that Will Smith movie "The Pursuit of Happyness?" We'll talk to the man behind the story next.
You're watching ISSUE #1.
(COMMERCIAL BREAK)
O'BRIEN: Welcome back.
Troubling news for job seekers. The number of people filing for unemployment benefits broke through the 400,000 mark last week. The Labor Department says applications for new benefits rose by 34,000. We haven't seen weekly jobless claims this high since the Gulf Coast hurricane struck back in 2005.
(BEGIN VIDEO CLIP)
WILL SMITH, ACTOR, "THE PURSUIT OF HAPPYNESS": Don't ever let somebody tell you you can't do something. Not even me. All right?
UNIDENTIFIED MALE: All right. (END VIDEO CLIP)
WILLIS: I love that movie.
All right, that was Will Smith in the 2006 movie "The Pursuit of Happyness," based on the best-selling autobiography by Chris Gardner.
CNN's "Black in America" series this week focuses on the stories of success and struggle, pain and pride, in the black community. And Chris Gardner's story, well, it's just that. His rise from the streets to the boardroom is inspiring, but is the entrepreneurial spirit still alive within the black community?
He's joining us now from Chicago.
Chris, great to have you here. Really a pleasure.
I want to start by having you talk a little bit about your own experiences of homelessness and your rise. Has it changed you?
CHRIS GARDNER, AUTHOR, "THE PURSUIT OF HAPPYNESS": Well, no. It has not changed me. Certainly I'm living in a nicer place now.
(LAUGHTER)
WILLIS: I'm sure that's true. I'm sure that's true.
GARDNER: It changed my address. But it's also made me very, very appreciative of exactly what can be done here in America.
WILLIS: Well, it was completely inspirational. But when you look out at the black community in America, is the entrepreneurial spirit as alive? And is it being rewarded in our country?
GARDNER: I would have to say absolutely yes. I'm very excited about what -- not just what I'm doing, but others are doing.
But the key thing for us all I think is that we're doing things we honestly feel passionate about, and we're doing things that we, honest to God, believe are reflecting our values. And I think that's more important. There's a new definition of success.
WILLIS: And what is that?
GARDNER: Do things that are important to you, do things that you care about, and don't just work for money.
WILLIS: Well, it's interesting, because you say that your story isn't so much about inspiration as empowerment. What message would you have to folks out there who want to start their own business, who are looking for that kind of passion, who believe that they can make it work?
GARDNER: Well, you answered the question right there, passion. You've got to find that one thing that the sun cannot come up soon enough in the morning because you want to go and do your thing. And then you've got to be bold enough to go and do it.
WILLIS: Well, you know, passion, and also love. The movie itself, you seemed also inspired by having your son there and having him as a responsibility, but also someone who is very close to you.
I want to talk to you a little bit about a broader issue though. You know, we see Oprah, we see our own Dick Parsons, from Time Warner, Russell Simmons, lots of inspirational figures in the business world from the black community. But do kids in the black community see them as leaders, or do they see people, rappers, people who are entertainers, as the more important role models for them?
GARDNER: Well, I would say that I think that young people see the folks that you mentioned truly as leaders. But I'll also say that these images that you mention of the rappers and the athletes, honestly, those are selected images.
What is shown on this television, people like you and your bosses make decisions on what images are shown. So, but I would have to say to you, honestly, I think the people that you mentioned, the Dick Parsons of the world and the Russell Simmons of the world, and Will Smiths of the world, as business people are probably more powerful than any rappers you could name.
WILLIS: Right. Right. Well, interesting.
I have to ask you one more question, though. What did it take from you to make the transition, the transformation that you make? What is it about you that allowed you to do that?
GARDNER: I believed I could do it because my mother told me so when I was 16 years old. She once told me, "If you want to, you can make $1 million." And I didn't believe it until my mom said it.
WILLIS: Well, and moms are always right.
GARDNER: Always right.
WILLIS: Chris Gardner, thank you for that. We appreciate your time today. Thank you so much.
GARDNER: Thank you so much. God bless.
WILLIS: Part two of "Black in America," hosted by Soledad O'Brien, airs tonight at 9:00 p.m. Eastern, right here on CNN. And for much more on "Black in America," log right now to CNN.com and find out more.
O'BRIEN: The mortgage meltdown has hurt a lot of families, but in one city they're taking foreclosures and turning them into opportunities for people to buy back into the American dream. We'll take you to Boston and tell you about it.
And a bucking bronco ride for rodeos. It takes a lot of gas to keep the cowboys on the circuit. We'll tell you why some are hanging up their hats. You're watching ISSUE #1: THE ECONOMY, on CNN.
(COMMERCIAL BREAK)
O'BRIEN: The rodeo is part of American history, and very much alive in the Old West. But right now, real-life cowboys will tell you they're getting a stiff kick from high gas prices.
CNN's Thelma Gutierrez saddled up and moseyed over to the rodeo in Salinas, California.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: Steer wrestler out right now.
THELMA GUTIERREZ, CNN CORRESPONDENT, (voice over): They are modern day cowboys on the rodeo circuit. Charles Harris from Salinas, California, Darrell Petry, Beaumont, Texas, Matt Reeves, Tampa (ph), Texas. They travel the country to earn a living, and rodeo to make a name.
UNIDENTIFIED MALE: Steer wrestlers getting ready.
GUTIERREZ: It's a sport where the athletes pay to play.
MATT REEVES, RODEO CIRCUIT COWBOY: This isn't like football where the best of the best get to go to college, it's all an even playing field and somebody else supplies all the equipment. We have to supply our own.
GUTIERREZ: It takes big money to stay on the circuit. Entry fees, animal costs, and now killer fuel prices.
So how difficult has this gas crunch been on you guys?
CHARLES HARRIS, RODEO CIRCUIT COWBOY: Well, very, very.
GUTIERREZ: Charles has been a professional cowboy for more than a decade. He says some of his friends are dropping out because they can't afford to go from rodeo to rodeo.
HARRIS: Like this truck right here, it's got a 75 gallon tank in the back and a 30 gallon tank for a manufacturer. Back in '99, it would cost you maybe $150 compared to now if I was to drive down to the Pilot in town it costs me $525.
GUTIERREZ: Consider this, these rides (ph) get 10 miles a gallon. Darrell and Matt will drive about 70,000 miles this year to compete in at least 70 rodeos, just to qualify for the national finals.
CRAIG ANDRUS, CALIFORNIA SALINAS RODEO: Last year fuel was $3. Now it's $5 for diesel. I mean that's almost double the expense going down the road because that's their biggest expense is fuel. So, you know, if you think you were going to make some money this year, it just got ate up in the fuel price. GUTIERREZ: So far this year, Darrell has won $18,000.
How much have you guys spent in the last month?
DARRELL PETRY, RODEO CIRCUIT COWBOY: Probably $3,500.
GUTIERREZ: $3,500 in one month?
PETRY: Yes, ma'am.
GUTIERREZ: Just on fuel?
PETRY: Just on fuel.
GUTIERREZ: It really cuts into your bottom line.
PETRY: Yes, ma'am. There's almost not a bottom line. We just -- like I said, I mean, it all breaks down to, we do it because we love it, you know, not because we're going to make a ton of money and get rich at it. We do it because we love it.
UNIDENTIFIED MALE: You get to do what you want to do and you get to live your dreams.
(END VIDEOTAPE)
GUTIERREZ: The cowboys you just met have second jobs to be able to afford to do what they love. Charles is a farmer, Matt was a schoolteacher and Darrell manages a Salvation Army warehouse when they're not on the road. They say they'd never trade their cowboy lifestyle for a permanent 9-5 job unless they're forced to because of what's happening in the economy.
Miles.
O'BRIEN: All right. Thank you very much, Thelma.
Breaking news now. A possible tornado touchdown in Texas. CNN meteorologist Rob Marciano live in the severe weather center with that.
Hello, Rob.
ROB MARCIANO, CNN METEOROLOGIST: Hi, Miles.
Yes, we've had a number of tornado warnings dropping throughout the morning. Believe it or not, this is all associated with what's left of Tropical Storm Dolly. And there's still a tornado watch out that's in effect for much of central Texas.
There you're seeing some live pictures coming in from our San Antonio affiliate there, KSAT, with some of the damage from this possible tornado. Still trying to get confirmed reports of somebody actually seeing it on the ground. Likely somebody did. That damage certainly looks like it did not come from the hurricane itself because San Antonio very far from the center of this thing. But the outer band certainly swirling that far north to the extent where those tornado warnings that were posted earlier certainly could have swept through that south side of San Antonio there.
Yes, as far as what I'm reading here, downed power lines, as we've seen. And it's on a 900 block of Steves (ph) Avenue, and that's near Roosevelt, is where much of this damage is and that's on the south part of town.
What you're seeing behind me on that red box, that is a tornado watch that's in effect for the rest of this afternoon. And we still have a number of warnings. A couple of warnings just came out in that vicinity. Lavaca County, you're under a tornado warning until noon. That is a radar-indicated tornado. Also southwest Gonzalez and Guadalupe Counties. Those are two of the counties about an hour ago that had a tornado warning out.
So same counties getting another tornado warning and that may very well have been the cell that split into southern parts of San Antonio. All of these cells are moving northwesterly at about 30 miles an hour. So they're moving quite quickly.
So that's the breaking news from the weather department, Miles. Dolly, even though she's weakening, continues to reek havoc in the way of flooding and now a threat for tornadoes which will exist throughout the afternoon.
O'BRIEN: All right. We invite folks in that part of the world to pay close attention. Rob will be tracking it for us and we'll keep you all posted.
There is more sobering news about the housing market. Not that we really need any more of that. This time it's from the National Association of Realtors. The industry group says sales of existing homes fell even more than expected in June to an annual pace of about 4.8 million homes. That's down more than 2.5 percent from May and it's down more than 15 percent from June of last year.
Gerri.
WILLIS: Ouch.
Well, there are a lot of big cities dealing with foreclosure. Cleveland, Las Vegas, Sacramento, they all come to mind. But in Boston, there's talk about solving the problem with a solution that starts with the mayor. CNN's Dan Lothian has that story.
(BEGIN VIDEOTAPE)
DAN LOTHIAN, CNN CORRESPONDENT, (voice over): Take a drive down Hendry (ph) Street in Boston's Dorchester neighborhood and you'll come face to face with the foreclosure crisis. Mayor Tom Menino says this doesn't compare to other big cities, like Cleveland, but it's not pretty.
MAYOR TOM MENINO, BOSTON: This is one street that's really been devastated by the foreclosure. LOTHIAN: But he's not wringing his hands over a problem that he says was caused by predatory lenders who scammed unsophisticated homeowners. He's formed a foreclosure intervention team. And on this street, where crime has been a problem, the goal is to pull down plywood, give people new homes, and this community a new life.
PAT CANAVAN, BOSTON HOUSING ADVISER: It's taking something bad, the mortgage foreclosure process (ph), and using it to provide an opportunity for people.
LOTHIAN: Here's their solution. On this side of the street, the city bought four abandoned, three family homes at a discount from lenders. Boston Housing Chief Evelyn Friedman says one of several interested developers will get a good deal on the properties.
EVELYN FRIEDMAN, BOSTON HOUSING CHIEF: And that developer will produce -- will rehab them and then sell them to homeowners.
LOTHIAN: The only restriction, new owners will have to live in their buildings for at least five years. A good hedge against the pearls of an absentee landlord. And now something else is happening here.
The city's work on this street is also encouraging private individuals to take a chance. Buy a house, renovate it, sell it, or rent it out.
That's what contractor Luis Rodriguez is doing with this foreclosed property that he bought directly from a lender for what he says was a very good price. Rodriguez has faith in this boarded up street.
LUIS RODRIGUEZ, HOMEOWNER: They are going to be way, way, way, lot better than it is, I know.
LOTHIAN: Using city funds, Boston has also bought other abandoned homes on this street, which will eventually be rehabbed and resold.
MENINO: You have ownership, you have stability in the neighborhood. And that's what we're looking for.
LOTHIAN: Dan Lothian, CNN, Boston.
(END VIDEOTAPE)
WILLIS: Well, one community making a turn around.
Of course, dealing with foreclosure is not easy for so many folks in other parts of the country. But now, because of a massive amounts of foreclosure, we're seeing foreclosure support groups. And as CNN's Ted Rowlands reports, they're doing a whole lot of good for a whole lot of people.
(BEGIN VIDEOTAPE)
TED ROWLANDS, CNN CORRESPONDENT, (voice over): Mike and Kristin Bertrand lost this southern California home to foreclosure.
MIKE BERTRAND, FOUNDER, "MOVING FORWARD": It was the feeling of total hopelessness and impending doom where you don't know exactly what the doom is.
KRISTIN BERTRAND, FOUNDER, "MOVING FORWARD": Rock bottom for me was, wow, thoughts of suicide.
ROWLANDS: Mike and Kristin say during the foreclosure process, they felt alone, even though thousands of others were also going through it. Some in their own neighborhood.
M. BERTRAND: We thought it'd be a good idea to form a group where people going through the same thing can get together, support one another to help get through the human effects of foreclosure.
UNIDENTIFIED FEMALE: Hi, my name is Wendy, and this is my husband, Randall Richman, and we're here -- we're just starting the process of going through foreclosure.
ROWLANDS: Now, thanks to Mike and Kristin, twice a month people in different stages of the foreclosure process get together for emotional support, answers, and advice. They call the group "Moving Forward." Each meeting there are guest speakers, from financial experts . . .
UNIDENTIFIED MALE: The minute you crawl out of the bankruptcy swamp, you're going to have some credit offers.
ROWLANDS: To family therapists.
JACK DOMAN, FAMILY THERAPIST: I think that losing a house is almost like losing a loved one because of all of the stress that's involved.
ROWLANDS: Randall and Wendy Richman say they know all about the stress.
WENDY RICHMAN, "MOVING FORWARD" PARTICIPANT: Well, let's see, how many nights have I cried myself to sleep? Or on the way home from work? I mean it's just -- it's so unnerving. I mean, when you're -- I mean, this is our home.
ROWLANDS: They're still in their home, but because their adjustable rate mortgage has almost doubled, they can't afford it. They recently stopped making payments and are waiting to get kicked out. They say the "Moving Forward" meetings are helping.
RANDALL RICHMAN, "MOVING FORWARD" PARTICIPANT: Everyone else that we've talked to is trying to sell us something or get us to sign something or do something to benefit them. And this group really is, no one's selling you anything.
W. RICHMAN: Seeing other people in the same boat that we're in, it's comforting because you go, OK, I'm not alone, I'm not a loser. ROWLANDS: Mike and Kristin are now renting a house, but plan to continue with "Moving Forward," because more and more people, because of foreclosure, are being forced to move out.
Ted Rowlands, CNN, Los Angeles.
(END VIDEOTAPE)
O'BRIEN: You generally don't think about giving blood and paying for gas in the same thought. Well, we'll tell you why a pint or two of one can get you some gallons of the other.
Plus, gas prices are down, but does that mean the airlines are going to give us a break? I think we all know the answer to that. We'll have the details. ISSUE #1 reaches cruising altitude next.
(COMMERCIAL BREAK)
WILLIS: Well, it's something to do on that layover. A chance to save money on gas and it's good for your community. Anybody passing through Atlanta's Hartsfield Airport today, and, let's face it, that's a whole lot of people, they are invited to stop by the airport atrium and donate blood to the Red Cross. Prizes are being given away every half hour, including a free gas card. That's a great deal. Save a little cash and help save a life.
O'BRIEN: It's no secret, Gerri, that we're bleeding when we buy those tickets to fly through Hartsfield and other places. Oil and gas prices, though, are going down. Now does that mean the airlines are going to give us a break and lower fares in the coming months? You know the answer, don't you? Rick Seaney is the CEO of farecompare.com. Here's here to walk us through this.
Rick, good to have you with us.
RICK SEANEY, CEO, FARECOMPARE.COM: Great to be here.
O'BRIEN: This latest report came out from DOT, the Department of Transportation. It says that airfares rose 4.4 percent first quarter of 2008. That's April through June. First of all, 4.4 percent. That seems kind of low to me given what has happened to fuel prices.
SEANEY: Yes. A lot of these tickets actually were purchased back in December of last year before -- we've had 21 attempted airfare hikes in the first half of this year. Doesn't reflect all that. It also doesn't reflect all the fees people are starting to pay. So really, because the data's about six months old, this kind of data's not really good about what's happening today. The bottom line is, ticket prices are up and substantially for a lot of people.
O'BRIEN: So the quarter we're in now is the one to really look at. This is kind of lagging data.
SEANEY: It is lagging data.
O'BRIEN: All right. Let's talk about some of the areas that are more hard hit than others. Something that surprised me. One of the worst places to be, to live in, is Cincinnati. Now that's a big Delta hub. And maybe that's the problem, there's not as much competition there?
SEANEY: That's exactly right. Parentally, Cincinnati's sort of been the most expensive city if you took out Anchorage and Honolulu. And the bottom line is, is that there's no competition there. Competition drives down prices in the U.S. And if we don't have competition, basically what's going to happen is prices are going to get even higher.
O'BRIEN: All right. And I think those fares were by one digit too high. It's $535 average in Cincinnati. They had it up . . .
SEANEY: And that's one way, actually.
O'BRIEN: Yes. That's a lot of money there. Now some of these places like, for example, Atlantic City, is a bargain. This is one of those deals where, is it the casinos that are kind of subsidizing the airlines somehow?
SEANEY: Actually if you look at the data, that particular data, there's only one airline that pretty much flies in there. That's Spirit Airlines out of Florida. So you look at the data in Atlantic City, although it's getting the $9 fares on Spirit Airlines, really, that's not reflective of the true thing that's going on out there. They're just basically a small city that has one airline going and they just happen to be a low amount.
All right. So we've had fuel surcharges, we have fees for bags now, we have fees to walk on the plane, walk off the plane, fees to go to the restroom while you're in flight. I'm kidding a little bit, but it is -- we're getting nickeled and dimed to death up there. Are we going to just see more of this?
SEANEY: I'm not positive there's anything else they can charge us for, except for weighing us when we get to the airport.
O'BRIEN: It could be coming.
SEANEY: Well, cargo is done that way and, really, if oil gets to $200, it's not implausible. But I think what you're going to see, it's not so much new fees. I think they've gone through every possible process. You're going to see additional tacked on. So instead of $15, it goes up to $20, $25. Instead of $25, it goes up to $50. And I think you'll continue to see new fees for new services, like wi-fi, on the airplanes. So they're going to actually try to entice you to get on the Internet on the airplanes for a hefty fee.
O'BRIEN: Oh, boy, that's all we need is people on the Internet the whole time and -- anyway, that's another story entirely.
One thing you say to do is try to travel or book, at least, before November 1st. What happens then? We all turn into a pumpkin November 1st? SEANEY: What's happening is, corresponding with the big cutbacks, in the U.S., we're going to lose 10 years of growth in the flights. So we're going to lose 10 years of this growth. And that's going to start occurring the first of November. So if you actually buy your tickets before October 31st, you'll get probably about $100 break on your tickets. After that day, it's -- so sneak your trip in if you can.
O'BRIEN: Because it's going to be a rude awakening after that day, right?
SEANEY: Well, it's corresponding with these big -- yes, no, it's going to be a rude awakening. And I think a lot of people, if you procrastinate right now, we're likely to see another 10 airfare hikes this year. So, really, the bottom line is, you can't wait.
O'BRIEN: You're talking to me, Rick. I've got to start getting on it. Thank you very much.
SEANEY: Sure.
O'BRIEN: Rick Seaney, who is the CEO of farecompare.com. Always appreciate your insight.
SEANEY: Oh, thanks.
O'BRIEN: Gerri.
WILLIS: Great conversation, although terrible information, right?
OK. Well, coming up, big news from a major U.S. automaker. Find out what's in store and what it can mean for the type of car you buy down the road.
And we're going to open up the Help Desk. They're right there. Answers to your e-mail questions on your money issues. The address, issue1@cnn.com.
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O'BRIEN: Big losses now and big changes ahead for Ford Motor Company. Ford said today it lost nearly $9 billion from April through June of this year. $9 billion. $8.7 to be exact. But the company says it's taking action to cut the red ink. It plans to bring six smaller car models it sells in Europe primarily to the North American market and three of its truck and SUV plants in Michigan and Kentucky and Mexico will be modified to match -- manufacture smaller, more fuel efficient cars. Ford is also going to increase production of its smaller SUVs, like the Mariner and Escape, including hybrid versions of those models.
Gerri.
WILLIS: Well, Miles, it is time now for the Help Desk. Answers to your money questions from our CNN Money team. Let's get right down to it. Jack Otter is the deputy editor of "Best Life," Stephanie Elam is our very own CNN business correspondent, and Allan Chernoff is a CNN senior correspondent.
All right, guys, let's get started. The work is ahead of us.
Steve in Pennsylvania asks, "has the FDIC insurance level been adjusted for inflation? Should people with more than $100,000 in savings distribute it across multiple banks to ensure that FDIC insurance will cover their entire savings?"
Allan, I've never had that question posed to me. I think it's an interesting one about inflation. What do you say?
CHERNOFF: It is. The number has increased. The amount that is insured hasn't been rising with inflation. Initially it was $10,000 when the FDIC was established during The Depression. So they've got it up to $100,000.
The point is, the important point here is that you just need to distribute it among different accounts. You can even do it within the same bank. One account for you, one account for your wife, whatever. I mean different permeations (ph). It's just by account. You don't even have to go to different banks. But $100,000.
WILLIS: It's called titling. You've got to put the right names on the accounts.
CHERNOFF: Exactly.
STEVE OTTER, DEPUTY EDITOR, "BEST LIFE": And the one thing I'm going to (INAUDIBLE) for Steve to think about is, how many hundred thousand dollars does he have making 2 percent, which means he's losing money to inflation? I hammer on this a lot, but he's got to think about his asset allocation. Stocks are cheap. Consider what your long-term plans are and how you want to allocate your money.
WILLIS: Inflation's at 5 percent. That's an ugly world if you're just in a savings account.
Ed in Colorado asks, "our entire savings is in a credit union that says it's insured by the NCUA. Is the NCUA the same as an FDIC?" This is like an alphabet soup question. "Are our savings safe?"
Short answer, Steph.
STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Yes, they're safe. And it's basically the credit union that oversees the credit unions, where as the other one oversees the banks. It has a full faith and support from the government. So, yes, you're safe. You don't need to move. You're good.
WILLIS: Same limits too, which is important.
ELAM: Yes, same limits.
WILLIS: $100,000, $200,000 for joint accounts, $250,000 if it's a retirement account. So some good news there.
Amy in Connecticut has a question. "What is the best strategy to build my credit score?"
We get this question every 20 minutes. So just pile in here. What's the best way? I want to know the best way to build my credit score.
ELAM: Pay your bills on time. Let's start there. That's always a good way to do it. If you have bills, pay them on time if you're looking to build up your credit. If you have a gas card, that's a good way to start if that's where you're looking to start. It's really simple. It's an easy way to see that you're paying bills.
WILLIS: For young folks.
OTTER: That's how I started, actually.
ELAM: Yes, the gas card.
CHERNOFF: I think the most important thing of what you're saying is, just don't get in trouble. You know, people who are really obsessed with their credit scores are the people who have generally gotten into some trouble, their credit score isn't that good, they have to build it up. If you start off at the beginning, if you're young, whatever, and you're just paying your bills on time, you're doing what you're supposed to do, you won't have to ever worry about your credit score.
ELAM: And you understand that it's going to follow you your whole life.
OTTER: And don't try to get to tricky. You hear people say, oh, I cut up all my credit cards. Well, that actually isn't the way to go. You want to have some available credit and just don't tap it and that's smart budgeting as well.
WILLIS: I think you have to think differently about spending, right? I mean shopping in a mall with a credit card, recipe for disaster for a lot of people.
ELAM: Just because you have it does not mean you need to use it. Just like they make certain clothes in your size doesn't mean you need to buy it. It's the same theory. The same way you need to look at it.
WILLIS: All right. Any other thoughts, Jack? Building your credit score in the short-term. Are there any tricks out there?
OTTER: That's the problem, there aren't. The FICO score is a long-term thing. If you do something wrong, it's there for seven years. So you just have to do the right thing and keep on doing it. And, of course, it will improve over time. If you made a mistake a couple of years ago, every month that's getting better because you're paying your bills on time. WILLIS: Everybody's trying to pay their bills on time but it's harder and harder right now, Allan. A lot of folks with a lot of debt out there. What's your advice to them?
CHERNOFF: Well, try to work on that debt. As Stephanie pointed out, try not to be spending on things that you don't absolutely need and then just hammer away, keep digging away at that debt and gradually bring it down. I mean that's the critical thing here. I mean pay attention to that. People often also e-mail us, oh, should I put money into the stock market or should I pay off my credit card debt? Get rid of that debt.
WILLIS: It's expensive. It's 15 percent.
All right, guys, you did that fabulous job today. Thanks for your time. Jack Otter, Stephanie Elam and Allan Chernoff, thanks so much.
Miles.
O'BRIEN: Thank you, Gerri.
Listen up worldly travelers, a list of the costliest cities is coming your way. Find out if your favorite city is on the list.
And we'll have the results of today's Quick Vote. Your thoughts on the minimum wage. Make sure you are heard. Log on to CNNMoney.com right now to get your vote in.
ISSUE #1 continues in a moment.
(COMMERCIAL BREAK)
O'BRIEN: It's time now to get results of today's Quick Vote. More than 31,000 of you weighed in. We thank you for that. Poppy Harlow has the results.
Poppy.
HARLOW: Yes, a majority of people, 74 percent, say it is too low. Eleven percent say the minimum wage at $6.55 is too high. I don't know about that. Fourteen percent say it is just right. But you know what? The Economic Policy Institute guy says that if you're a family of three and you're living on minimum wage, you are below the poverty line.
O'BRIEN: OK.
HARLOW: That's not great news.
O'BRIEN: That's sub-minimum, I guess you could call it.
HARLOW: Sub-minimum. Yes.
O'BRIEN: Yes. Thank you, Poppy.
WILLIS: All right. Well, the most expensive city in America is still right where I'm standing, New York.
O'BRIEN: No surprise there.
WILLIS: Yes, no. But the declining dollar is making the big apple look a whole lot cheaper compared so some places overseas.
O'BRIEN: The annual Mercer Survey finds that Moscow is the world's most expensive city for the third year running, Tokyo is number two, London fell a notch to number three.
WILLIS: Now all the big U.S. cities on the list fell with L.A. dropping from 42 to 55, Washington, D.C. seems downright cheap after falling 22 spots to number 107 in the world.
O'BRIEN: European cities are generally the most expensive. A $3.75 latte in New York sells for $6.75 in Paris.
WILLIS: You just cannot travel. Do you know what I mean? You have to stay home if you're American.
O'BRIEN: Bonjour as they say over there. All right.
WILLIS: All right. Well, are you going to go anywhere on your vacation? Or maybe you're going to go find some oil somewhere exciting?
O'BRIEN: Yes, I would like to find a little oil. That would be good. Black gold, Texas tea, all that stuff.
WILLIS: All right. Well, the economy is issue number one and we here at CNN, we are committed to covering it for you. ISSUE #1 will be back here tomorrow, same time, 12:00 p.m. Eastern, right here on CNN.
O'BRIEN: Time now to get you up to speed on other stories making headlines. CNN "Newsroom" with Kyra Phillips starts right now.
