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Issue Number One
Best Cities for Business; Folks Fight Foreclosure; Gas Prices Steadily Decrease; Biofuel Becomes Popular Possibility
Aired July 28, 2008 - 12:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
GERRI WILLIS, CO-HOST: Gas prices are dropping big-time, and so is the time you're spending behind the wheel.
Help for struggling homeowners is almost here.
The federal deficit at record levels. Why you should care?
And how some folks are fighting foreclosure and winning.
Issue #1 is your economy. ISSUE #1 starts right now.
From the ISSUE #1 headquarters to the CNNMoney.com newsroom, we are all over the stories that matter to you.
Hello, everyone. I'm Gerri Willis. Ali Velshi is off today.
It's all about Washington, the housing bill, the energy debate, and now a record deficit. Plus, what the record deficit means to the incoming president and how the candidates say they'll handle it.
And a positive story on this morning. Gas prices are falling again. We'll tell you why and what to expect.
But first, Rick Sanchez, we're going to Washington.
RICK SANCHEZ, CO-HOST: Yes. And what we're going to talk about is what the government is or is not doing for the American people.
Let's face it, Americans are angry. They want to know -- listen, we've got a problem -- how is this going to get fixed?
In one week Congress goes on vacation. So we're going to be talking about what they have done or have failed to do.
Housing, energy. And now, you know what we just heard before we got ready to go on the air tonight? A record deficit.
Those are words that sound kind of wonkish though, right? I mean, when you talk about it in technical terms.
So what we want to do right now is break this down for you and tell you specifically what this means.
Let's go to the White House. CNN's Brianna Keilar is standing by.
Brianna, let's start with the housing bill.
Look, a lot of Americans are looking at this housing bill, and what they're thinking is, why do fat cats like Fannie Mae and Freddie Mac get bailed out? When I make a stupid decision for my family or business, when I make a bad investment, nobody is bailing me out. So, politically, this is not like the most popular thing in the world.
We expect though, and this is the question to you, the president will sign this bill, right?
BRIANNA KEILAR, CNN CORRESPONDENT: Yes, that's what we're expecting. He is expected to be getting this bill as early as today.
We understand from White House spokesman Tony Fratto they're still waiting on getting that bill. But he's expected to sign it behind closed doors. And this bill does a couple of things.
As well as that sort of provision that would provide a temporary rescue plan for Freddie Mac and Fannie Mae, it would also offer affordable government loans to people who are in danger of losing their homes. But I've got to tell you, the White House did actually pull out a veto threat that they'd put in place. They pulled this away last week because they really did want those provisions that would back up Freddie Mac and Fannie Mae -- Rick.
SANCHEZ: Let's talk about the energy bill now, if we can now, because we know they have to come up with something, or they should, one would think, given what we're going through right now as a nation. I was just reading a little while ago before going on the air. I went back to 1977, and I read Jimmy Carter's energy policy, and I'm just thinking, if something like that could be used almost as a model, obviously not exactly, but as you read through it, you see stuff that still would fit today.
If we could come up with something back then, Brianna, that works, many would ask, why is it taking so long to get something out now? Is this thing going to get done by the end of the week?
KEILAR: The expectation at this point, Rick, is that, no, it is not. Democrats and Republicans really loggerheads on this issue.
Republicans say they need to open up currently protected lands for drilling. Democrats saying that that's not the answer, that oil companies have leases that they're not exploring, and those need to be explored before they look for other places to drill.
And there doesn't appear to be any sign that this will let up. And as you know, after this week, that's basically it in terms of August recess. Congress doesn't come back until about September, so if they don't come to agreement this week, which is what it looks like, it's going to be a little while -- Rick.
SANCHEZ: I have a feeling Americans are not going to want to hear that message. But we'll be following it throughout the week.
Here is one more thing. Just before we went on the air, we hear this. We're getting word now that the federal deficit for next year is going to be $490 billion, $490 billion. Again, that's just a number. Let's put this in perspective for folks who are watching us now.
What that means is, this could be the highest ever, the biggest number in a dollar amount, in the history of the United States. Again, let's put this in human terms.
What is the federal deficit? It's about making sure that you don't spend more than you take in. That's what it would work like if you were talking about your household income, right?
How is the administration going to explain this number to the American people?
KEILAR: Well, we've heard from one senior administration official speaking anonymously ahead of an official briefing that we're going to be getting here in a couple of hours saying that it really has to do with the struggling economy in terms of not a lot of tax revenue coming in right now, and also that $170 billion economic stimulus package that was put into place earlier this year. We also heard from White House Press Secretary Dana Perino saying that was really the expectation when that went into effect earlier this year, that there would be some fallout in terms of the budget.
But at the same time, you have Democrats who are really hammering the White House on this, Rick. Kent Conrad, who is chairman of the Senate Budget Committee, saying that President Bush will be remembered as the most fiscally irresponsible president in our nation's history, but that senior administration official that I spoke with said that these budgetary problems stem from issues that were in place before President Bush came into the White House, that it stems from what this person said was inadequate defense intelligence and homeland security resources that were inherited from President Clinton.
So quite a blame game -- Rick.
SANCHEZ: Yes. Yes.
Look, your economy, your government, and this is the intersection of both that we're talking about.
Brianna Keilar basically able to put it together for us as well as anybody.
Brianna, thanks so much. We appreciate it.
WILLIS: So let's look forward for a second. So what does this budget deficit mean for the next president?
CNN Senior Political Analyst Bill Schneider joining us now from Washington.
Bill, the next president will have quite a burden to deal with, right? WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: He certainly will. There will be pressure to hold down spending, to limit tax cuts, but you know what? It will be a new president, and a new president wants to show he can do things, which means spending money and maybe cutting taxes. The experience we've seen on the deficit is people want a president to take the deficit seriously, but not too seriously.
When Bill Clinton became president, he thought Ross Perot prepared the political ground for serious deficit reduction, so he and the Democratic Congress raised some taxes, and they lost control of Congress for the next decade.
George -- the first President George Bush raised taxes, broke his pledge. He got his head handed to him.
When Newt Gingrich and the Republican Congress came in, they tried to limit spending. They ended up shutting down the government. Political catastrophe.
So people wanted to take it seriously, but not too seriously.
WILLIS: Well, do we know what those candidates propose to do about the deficit?
SCHNEIDER: They have not spoken a lot about the deficit. McCain has said he wants to cut wasteful spending and earmarks, but that's likely to be a drop in the bucket. He does want to extend and make permanent President Bush's tax cuts. He wants some new tax cuts for business.
Barack Obama says he wants to pull troops out of Iraq, but he wants to send them to Afghanistan, so there's not likely to be a big savings there. He wants to end the tax cuts, but only for the wealthiest taxpayers, and he wants more spending on health care and on education and on energy.
So it doesn't look like either candidate has a very serious deficit-reduction plan, but you know what? Economists are saying, well, half a trillion dollars sounds like a lot of money, but it's only three percent of the total wealth of this country. And by historical standards, that's not a very high deficit for economists.
WILLIS: And great context.
Bill Schneider, part of the best political team in television.
Thank you for that.
SANCHEZ: Let's talk about something now that many Americans love to talk about, or hate to talk about, depending on which way the curve is going. Let's talk about gas prices.
Poppy Harlow, let's bring you into this.
Do you know what's interesting about this? You almost, like, want to take -- what do they -- on New Year's Eve they bring out those balloons and, you know, they make those noises.
POPPY HARLOW, CNNMONEY.COM: Hallelujah.
SANCHEZ: Hallelujah.
Believe it or not, folks, we've got some news here for you. Gas has just gone below $4 a gallon.
$3.99 is nothing to celebrate about, right?
HARLOW: You know, I think we're at $3.96 now. Maybe that's something that's great, right?
SANCHEZ: OK, there you go. But think about where we would have been two years ago if somebody would have told us that that was going to be the price of gas.
HARLOW: We are up 37 percent, folks, from just a year ago. The price of gas though now below $4. Something to breathe a sigh of relief about.
So we want to know, if gas prices continue to fall, how are you going to change the way that you live? Here is our question today.
"If gas prices continue to go down, I will either go back to old driving habits, drive the same way as I do now, or still find new ways to save gas."
Please let us know on CNNMoney.com. We'll bring you the results later in the show.
You know, Rick, a lot of people are talking about the fact that if gas prices do go back down to what we saw a year ago, it will be bad in terms of the environmental effort to -- you know, people driving less, et cetera.
SANCHEZ: Well, we just -- I just mentioned this a little while ago. During the Jimmy Carter administration -- and I just read it -- was it April 18, 1977? There was an energy plan for the United States of America.
HARLOW: What happened?
SANCHEZ: As soon as the gas prices went back down, forget the energy plan, let's go back to living the way we used to live.
HARLOW: Well, and people also said in the '70s they wouldn't drive those big Caddies anymore, those big cars. But now SUVs were, until a few months ago, all the rage. So we'll see.
SANCHEZ: All right. You're going to follow that for us.
HARLOW: Yes.
SANCHEZ: Thanks so much, Poppy.
HARLOW: Sure.
SANCHEZ: Gerri, over to you.
WILLIS: All right. A new breed of door-to-door salesmen. They don't want to you buy anything. In fact, they want to pay you. But there's a catch, of course.
And fighting off foreclosure. We'll tell you how far some people will go to stay in their homes.
This, and a whole lot more, coming your way on ISSUE #1, right here on CNN.
(COMMERCIAL BREAK)
SANCHEZ: Let's talk about this a little bit, the whole gas prices thing. Feel like we should be probably, what did we say, popping champagne, blowing up balloons, screaming from rooftops, "Gas is down!"?
I'm not sure a lot of people want to celebrate yet, and Poppy, you're going to explain to us why.
HARLOW: Yes, there's a few factors weighing in here, but gas is below $4 a gallon. It looks like Americans are really out parking their cars and trucks in the garage, not driving as much at all.
The latest numbers, folks, from the government show that drivers cut out more than 40 billion miles so far compared to fast year. How far is that? It's like traveling around the equator more than a million and a half times. Yes, you heard that correctly.
Nearly 10 billion of those miles cut came just in May. That's the most recent month reported. That's a nearly four percent drop, and it's more than double what we saw in April.
Big change of habits here in America, certainly.
SANCHEZ: Is that why prices are going down? Is it consumer- driven in any way?
HARLOW: It's part of that. That weighs in here. There's some other reasons, too.
AAA, as we have told you on this program, the national average for gas, $3.96 a gallon. It could be a real energy fix for drivers if they can keep it up, but there's bad news.
People are driving less, and that means the government is not getting as much revenue from gas taxes and tolls on roads and bridges. That means less money for the government to fix deteriorating roads and bridges, much less build new roads, build new bridges, build more public transportation. And the Bush administration is actually expected to address this today, expected to announce a $3 billion to $5 billion budget deficit for the Highway Trust Fund, Rick. That is not welcome news for people across the country. SANCHEZ: Yes. It's that big word we all learned in civics when we were in high school and when we were in college, "infrastructure."
HARLOW: Right.
SANCHEZ: We take it for granted in this country. We don't think in terms of how that needs to be maintained. But we've learned with bridges, what, last year, that it does, doesn't it? You need money for it.
HARLOW: You need a lot of money for it, billions and billions of dollars.
This Friday, that will mark the one-year anniversary of the bridge collapse in Minnesota in which 13 people died. And on Saturday, just this past weekend, a 1,200-pound chunk of concrete tore off the underpass of an overpass in St. Paul, Minnesota, raining down on motorists. No one was injured. Still, though, very scary for people really rattled by events of last year.
The good news, though, less driving could lead to less wear and tear on some of these bridges and overpasses, along with lower gas prices. But you know what? It's still pretty shocking.
I'm from Minnesota, and people drive on these all the time. They rely on their cars to get around, so, you know, not welcome news.
SANCHEZ: And I bet you when you drive on them now, most people, they think about it, as opposed to -- they're thinking, oh, my goodness.
HARLOW: Yes, they're cautious.
SANCHEZ: Key word there, metal fatigue.
Poppy, good stuff. Thanks so much.
HARLOW: Sure. You're welcome.
SANCHEZ: Gerri, back over to you.
WILLIS: When you think of folks going door to door, maybe you think of Girl Scouts selling cookies, census takers, those earnest folks from the watchtower. But there's a new breed of door-to-door salesmen, and they don't want you to buy anything. In fact, they want to pay you.
There's a catch, of course.
CNN's Carrie Lee explains.
(BEGIN VIDEOTAPE)
CARRIE LEE, CNN CORRESPONDENT (voice-over): Demand for oil and natural gas is soaring, pushing prices to record highs. That's prompting companies like Chesapeake Energy to go door to door, searching for untapped natural gas.
Kurt Santayana lives in northeast Pennsylvania.
KURT SANTAYANA, NORTHEAST PENNSYLVANIA RESIDENT: They gave us a lease agreement for $1,500 an acre for a five-year period to explore for gas, and so this was a nice little windfall for us that we never expected, and it's helped us out tremendously.
LEE: Chesapeake and Range Resources are searching what used to be farmlands in Pennsylvania. Their drills can probe more than a mile underground into dense rock, and much of the state sits on a huge reserve.
SCOTT ROBERTS, DEPT. OF ENVIRONMENTAL PROTECTION: On a year-by- year basis here, in the past three or four, have been setting records for the numbers of new wells being drilled of about 7,000 to 8,000 per year. We would anticipate perhaps a doubling of that number because of the Marcellus Shale.
LEE: The Marcellus Shale could hold up to 50 trillion cubic feet of natural gas, more than two years' worth of supply. Pennsylvania's Department of Environmental Protection held a summit last month to talk about exploration. One hundred fifty oil and gas representatives showed up.
There's plenty of natural gas to produce.
JEFF SCHRADE, NATURAL GAS SUPPLY ASSOC.: We have about right now, with current supplies, about 60 years of natural gas supply available. Clearly, we're finding more all the time.
LEE: Eighty-four percent of the natural gas the U.S. consumes comes from domestic sources, while 70 percent of the oil consumed is imported.
Carrie Lee, CNN, New York.
(END VIDEOTAPE)
LEE: Now, another advantage to natural gas, it burns a lot cleaner than coal, Gerri. It emits about half the greenhouse emissions of coal.
Also, we have plenty of natural gas right here in the U.S. Currently available, about 60 years' worth, and the Natural Gas Supply Association says if we had access to all federal lands onshore and offshore, we would be able to heat 60 million homes for 160 years.
So a lot of upside.
WILLIS: A lot of upside. I wouldn't want that big piece of infrastructure in my back yard though, I don't think.
LEE: If they paid you enough, you might do it.
WILLIS: More than move away, maybe. Carrie, thank you for that.
LEE: Sure.
SANCHEZ: Just call it modern art.
As we found out recently, foreclosures are not going down. In fact, they're going up. Now, some people have the right idea when it comes to beating foreclosure, how to fight it, and how to win. This is important information you need to know.
Also, we're going to be talking about one-real life solution to high gas prices. And folks, it's really not even that complicated.
Come here. Do you know why this is important? Because this one could work.
You're watching ISSUE #1.
(COMMERCIAL BREAK)
SANCHEZ: And welcome back to ISSUE #1. I'm Rick Sanchez.
You know, as this housing market stumbles, a lot of Americans are at risk of losing their homes. You know that, right? Well, there are some homeowners now who are trying to find a way to fight back. They're hiring lawyers to try and hold onto their homes.
What can the lawyers do though?
Here is CNN senior correspondent Allan Chernoff with this story.
(BEGIN VIDEOTAPE)
ALLAN CHERNOFF, CNN SR. CORRESPONDENT (voice-over): Gesille James hasn't paid her mortgage in a year. She received a foreclosure notice in November, but she's fighting to stay in the two-family home.
Gesille, a librarian, was earning $50,000 a year when she bought this house two and a half years ago. So she took out two mortgages to finance the entire purchase price of $560,000.
(on camera): Did you think you could afford this house?
GESILLE JAMES, HOMEOWNER FIGHTING FORECLOSURE: No. No.
CHERNOFF: You never thought you could afford it?
JAMES: Well, the price that was quoted -- and I kept getting back, "Don't worry about it. They'll work with what you have. There's the financing."
CHERNOFF: Who said that?
JAMES: Anthony.
CHERNOFF: Your broker?
JAMES: There's the financing.
CHERNOFF: He said don't worry about the price?
JAMES: Don't worry about the price.
CHERNOFF (voice-over): That broker is Anthony Brown, who has his own real estate company nearby.
(on camera): Obviously she couldn't afford it.
ANTHONY BROWN, A PLACE FOR EVERYONE REALTY: Yes, that's true. But...
CHERNOFF: So why did you sell the home?
BROWN: No, I don't control her mortgage, you understand? I control the actual sales between her and the developer.
CHERNOFF (voice-over): Brown claims the developer, Home Master Development Group, arranged Gesille's financing with Alliance Mortgage, which is no longer in business. Home Master says Mr. Brown arranged the financing. Gesille says the same.
(on camera): Did he say you could afford it?
JAMES: He did. He did.
CHERNOFF: He did?
JAMES: He did.
CHERNOFF (voice-over): Gesille rented one of the two apartments in the house, but even with the income, she still couldn't cover the mortgage payments.
(on camera): You see how much she earns. How could you sell her a home that was so way out of her price range?
BROWN: That's what she -- that's from her choice, that was her choice.
CHERNOFF: Well, it was your choice to sell it, no?
BROWN: I don't control what a person chooses to do. If they want to get the home they get a home.
CHERNOFF (voice-over): Alliance Mortgage quickly sold Gesille's loan to Morgan Stanley, who told us they have no comment since the loan has since been sold off to other investors buying mortgage securities.
Gesille's lawyer argues she was misled, and therefore has a right to fight foreclosure. JEFFREY BENJAMIN, ATTORNEY FOR GESILLE JAMES: The goal is to keep the consumer in her home, where she should belong. But at a reasonable monthly burden.
CHERNOFF: Gesille admits she bears much of the responsibility, but says she can't imagine what she'll do if she has to leave her home.
JAMES: But I'm fighting it, because I need somewhere to live. I -- you know, I have to live somewhere. I can't live in the car.
CHERNOFF (on camera): Attorney Jeff Benjamin says he's hopeful of renegotiating Gesille's loan on this home, especially now that banks are being more flexible since so many of their mortgages have gone bad.
Allan Chernoff, CNN, The Bronx, New York.
(END VIDEOTAPE)
WILLIS: Selling your home in this market is not an easy task. And as a result, many home sellers become landlords instead.
So, what do you do if you find yourself in this situation?
Dani Babb is the author of "The Accidental Landlord."
Dani, good to see you.
DANI BABB, AUTHOR, "THE ACCIDENTAL LANDLORD": You too.
WILLIS: All right. You know, the big question here I think for anybody who wants to rent out their house, how do I avoid renting to a deadbeat?
BABB: Yes, that's a really big problem, particularly in this market right now. First of all, you need to do your homework.
There's a checklist. I use LPA.com. It's the Landlord Protection Agency.
There's a checklist out there, it's got about 30 items on it on things that you need to run through. The big items on there are doing a background check, running a credit check, and making sure that the addresses that are in the credit application -- they're in the application -- actually match that that are in the credit report, and call those references, call those landlord references.
WILLIS: And make sure you get the answer you want.
You say it's a big red flag if people want to pay their deposit in cash.
BABB: Yes. There's a really -- we're seeing a correlation between people paying in cash and then having their checks bounce later on. So if you get a check for a deposit up front a couple weeks before they're going to move in, cash it. Make sure it actually clears the bank. There's a better indication that perhaps there might be something going forward.
And another thing is that people are starting to use family members as references, as previous landlords. So make sure that they're not family members.
WILLIS: Oh, good point.
BABB: Which you can check on your credit report.
WILLIS: How do you I figure out rent?
BABB: Well, rental comps. Just like we have home comps, we have rent comps. I use rentometer.com. You can also check Craigslist, see what other people are paying. You can also ask a realtor in the area and find out what the rents are going for.
WILLIS: You know, people always want to say, OK, here is what my monthly net is that I have to make on this. And I want to add in a couple of other things. Maybe I'm renting the furniture I have in the house.
Is that a good way to come up with a number?
BABB: No, it is absolutely not. There's a really good chance if you do that, you're not going to get a renter, or that you will have a long wait period before you can rent out the home.
What you really need to focus on is what the value of the rent is in that area. There's a chance you're going to be upside down each month. A lot of us are in that situation month over month...
WILLIS: Right.
BABB: ... but long term, you know, if you can hold the home and make good appreciation, it might be worth it.
WILLIS: All right. You know, a lot of things happen to houses that are rented out. As we know, you can have lots of problems -- things break, things get broken. Who pays for that?
BABB: Yes. The landlord does. If you own the home, it's your responsibility to make sure it's in good living condition. Now, if the tenant wants something that would be considered an upgrade, that's really your call. But any repairs, maintenance people...
WILLIS: OK. I wish you had better news than that.
All right. Let's talk about Web sites, because this is an area that people can really benefit from using the Web.
BABB: It is, absolutely. They can use, for example, hud.gov. If you go there, you can get the tenants laws. And by understanding what the tenants' rights are, you'll know what your rights are not. And that's very important, because, for example, in some states you can't enter your own home without giving, you know, 72-hour, 48-hour notice. Those are all things that you need to be aware of.
WILLIS: What about thelpa.com?
BABB: That's the LPA, the Landlord Protection Agency, and they have excellent resources. It's state by state.
Every state law is drastically different. It goes by the state your home is in, not the state you live in. The law that you need to abide by.
Rental contracts are different. The amount of deposits you can charge are different. Everything varies by state.
WILLIS: All right. Well, Dani Babb, thank you for that. Fascinating stuff.
BABB: Thank you. Yes, it's good stuff. Thank you.
SANCHEZ: You know why a lot of people love to watch this show, ISSUE #1? Because it's about stuff you really can do. It's the micro as opposed to the macro.
For example, let me ask you a question. If I could give you something that you could put in your car that would be cheaper than gas, it would be better for the economy, it would make you feel good, and it would be easy and it would be good for the country and good for our foreign policy, wouldn't you say, "Hey, Sanchez, give it to me," right?
Here it is. Do you see this right here? We got it from a secret location.
I'm going to tell you what it is, where I got it, and what it can do for you when we come back.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
JIMMY CARTER, FORMER PRESIDENT OF THE UNITED STATES: We simply must balance our demand for energy with our rapid and shrinking resources. By acting now, we can control our future instead of letting the future control us.
(END VIDEO CLIP)
SANCHEZ: Oh-oh, what happened? Looks like the future's controlling us instead. We went into our archives. That's 1977. That's Jimmy Carter explaining what we needed to do as a nation to be able to come up with an energy policy that really works.
Well, this year's budget-busting gas prices are already forcing a lot of people to try and change their lives in some way. You know, vacation plans, canceling trips all together. So let's talk about one of the things that was first introduced back in the 1970s, forgotten about, and now people are excited and are talking about it once again.
The word is biofuel. In some cases it's biodiesel. We've been looking into it as well. As a matter of fact, as a nation, we probably could adopt something like this and create a more efficient fuel product.
Let's do this. Let's talk to one person who has not only looked into it, but is actually going all over the country making sure this happens. This is CNN.com's Cody McCloy.
Cody, you've been going around the country in a car that is able to use this fuel. I want you to explain to the folks exactly what you're doing, and then I want to bring you back and I want you to be able to tell them what it is that we've been able to get here in our own building as well.
All right, tell us about the vehicle you're in. What's it do?
CODY MCCLOY, CNN.COM: Well, this is a 1978 Diesel Scout. And really we've done no modifications to it to run biodiesel. Biodiesel can run in most diesel vehicle with little to no modifications. In some older vehicles, you might need to change some fuel lines but there's a good chance that you would need to change those anyway.
SANCHEZ: Let me stop you. Let me just stop you . . .
MCCLOY: This is a 30 year old . . .
SANCHEZ: Cody, I'm going to stop you right there just because you're using a term that there are people who are watching this who are thinking, OK, what the heck is this guy talking about? What is biodiesel? What is biofuel, to begin with?
All right. We've got it for you. We went to a place within our own building, a cafeteria, hint, hint, and we got this. And we're told this could be used in cars as fuel.
Cody, tell the viewers at home what we're talking about. What is in here.
MCCLOY: OK. Well, you're probably talking about waste vegetable oil. Waste vegetable oil can also be used in diesel vehicles, but it does require some modifications. You usually have to have a separate tank, a heater, a switch, and all of that. Now, if you do a little bit of refinement to that, which some people are doing at home and other people are doing on larger scales, you can use that in a diesel vehicle with basically no modification. So biodiesel is basically either waste vegetable oil or vegetable oil, like corn, soy, or palm even, that you then refine with like methanol and some other chemical to make it burn a little better in a diesel engine. With waste vegetable oil you basically have to heat the oil before you can burn it.
SANCHEZ: Cody, Cody, I got to bring you back, man. You're getting a little too explanatory for us. Don't turn this into a science lesson.
Basically you're going around in a car all over the United States getting things in your car other than gas and propelling your car and making it work, right? That's what you're doing.
MCCLOY: Yes. Yes, that's basically it. Biodiesel is available in various places all over the country. Biodiesel.org has a great locator if you have a diesel vehicle and you would like to try some biodiesel yourself. You can find it in blends. You'll usually see a blend, it will be like B25. That means it's 25 percent biodiesel and 75 percent petro diesel. And you'll see blends all the way from B99 down to like B5.
SANCHEZ: This is great.
MCCLOY: Yes, we are planning to use this . . .
SANCHEZ: The idea that you could go around the country . . .
MCCLOY: We plan to use as much . . .
SANCHEZ: I'm sorry, we got a satellite issue here. The idea that you can go around the country and get something in your car as simple as the oil used -- the grease used in some cafeteria to put into your vehicle, obviously as you mentioned as its refined, is fascinating. More people want to know about this. So what we're going to do is, all week long we're going to follow you around. And as you stop, we'll stop with you and explain to viewers how it's going.
Cody, you're a great guy. I can't wait to see how this is going to work out. And if anybody wants more information, all they got to do is go to CNN.com where this is running as a series throughout the week as well.
Cody, thanks, man. I appreciate it. We'll talk to you soon.
MCCLOY: All right. Thank you, Rick.
SANCHEZ: All right. Let's do this now. The best and the worst city for doing businesses in your own hometown. On the list, find out next.
But first, we understand we've got some serious news coming in. Don Lemon's checking on things for us. He's in the "NEWSROOM."
Don, what you got?
DON LEMON, CNN ANCHOR: Hello, Rick. Good to see you.
I have some sad news to tell you about. It's about a deadly attack. The scene, a unitarian church in Knoxville, Tennessee. Families were gathered around as children performed the play "Annie." Then what sounded like firecrackers church goers soon discovered, to their horror of course, it was gunshots. Two people were killed, seven others were wounded. And as the gunmen stopped to reload, church members grabbed him. Fifty-eight-year-old Jim Adkisson is in custody right now. He is charged with murder. And police say a letter found in his car described his frustration over failing to find a job and hated for what he called the liberal movement. He hated the liberal movement.
Right now we turn to weather and some extreme heat happening in parts of our country. Let's turn now to Chad Myers in the severe weather center.
Where are we talking about, Chad?
CHAD MYERS, CNN METEOROLOGIST: Well, no, we usually talk about Vegas and Phoenix at 100 and something. But how about Dallas at 105? Down to Waco as well. A little bit cooler in Houston simply because there will be an afternoon cloud cover and showers possible there.
But Nashville at 75. Atlanta, 93. Seventy-five this morning, 95 in the afternoon. This hazy, hot and humid air. This is typical of summertime, but now we're getting to almost that dangerous, don't go outside too much if you're kind of frail, if you're a little bit week and you don't like the hot weather, stay inside someplace or maybe find a mall or a movie to go to this afternoon. Showers on the east coast.
And one more thing I'll tell you about on the 1:00 hour, we have fires in California. And Yosemite, really a lot of smoke there. We will get to that because it's going to be a very windy day out west as well -- Don.
LEON: Ah, that was people's belongings, right, there just burning on the ground.
MYERS: Yes, absolutely.
LEMON: OK. Chad Myers will update us on that at 1:00.
Also at 1:00, private prayer on the public record. Should a newspaper have published this prayer Senator Barack Obama left on Jerusalem's wailing wall. We'll talk about it and we'll have some of your e-mails straight ahead, right here in the "CNN NEWSROOM."
I'm back in the "NEWSROOM" at the top of the hour. Now let's throw it back to New York and ISSUE #1. I think Gerri Willis.
Hi, Gerri.
WILLIS: That's right, Don. Hi. Thank you.
We talked about the housing bill at the top of the show. President Bush could sign it as early as today. Let's dig a little deeper now and take a look at what that could mean for you.
CNN's Kate Bolduan takes a look.
(BEGIN VIDEOTAPE)
KATE BOLDUAN, CNN CORRESPONDENT, (voice-over): Patricia Ephraim was desperate.
PATRICIA EPHRAIM, HOMEOWNER: I had to start working two jobs to keep the place afloat.
BOLDUAN: She says she could only manage her mortgage payment while all the other bills piled up.
BRUCE MARKS, NACA CEO: What you can afford.
BOLDUAN: So she, like thousands of other struggling homeowners seeking rescue, says she found it with the Neighborhood Assistance Corporation of America, known as NACA.
MARKS: I wanted to answer all these people now.
BOLDUAN: The group's leader say 20,000 people showed up over five days at this event in D.C., many facing foreclosure. NACA negotiates for homeowners directly with their lenders. They say the key is keeping people in their homes, restructuring expensive, adjustable loans into fixed rates, and keeping the mortgage with the same bank. NACA's CEO, Bruce Marks, says they do all the hard work for the servicers.
MARKS: We determine a budget and we submit that solution to the servicer. They only have to do one thing -- approve it.
BOLDUAN: Marks calls himself a bank terrorist and is known for his radical tactics, like swamping financial firms with protesters and also personal attacks on big bank CEOs.
MARKS: We go to where they live and we always want them to have in the back of their mind, is that NACA homeowner, is NACA going to be there disrupting my country club, my social event, going to my kids' school, because it's personal.
BOLDUAN: It may be working. Following the D.C. event, Marks says they sent 10,000 restructured loan requests out. One thousand requests have already been approved. And experts say any help is good for the housing market.
JOHN MCCLAIN, GEORGE MASON UNIV. CENTER FOR REGIONAL ANALYSIS: We're going to see this foreclosure problem continue. We're not at the -- we may be at the peak, but the peak's probably going to last through the end of 2008.
BOLDUAN: Patricia Ephraim was one of the lucky ones. She anticipates her monthly mortgage payment will drop by $600.
EPHRAIM: Just knowing that I have, you know, that kind of savings coming in, is just a stress relief.
BOLDUAN: NACA says because of the success of the D.C. event and the fact that there are so many more homeowners in need, the nonprofit is taking its program on the road with an eight-city tour this fall.
Kate Bolduan, CNN, Washington. (END VIDEOTAPE)
WILLIS: The best and worst cities to do business in this country. Is your city on the list? Find out next.
And we're taking you on tour to show you why rock and roll bands are having a tough time on the road.
ISSUE #1 rolls on next.
(COMMERCIAL BREAK)
WILLIS: How would you like to take your next vacation to outer space? If British billionaire Sir Richard Branson has his way, you'll be able to do it. Branson and American aerospace designer Burt Rutan rolled out their mother ship today. And if all goes according to plan, the white knight ii will ferry a commercial spaceship into suborbital flights. Branson hopes the first joyrides will be off the ground by the end of the decade. Cost, $200,000.
SANCHEZ: You know, Gerri, there are places in the United States where the environment for doing business is good. And there are places in the United States where the environment for doing business is not so good. So how do you cater to people in different cities and what are the best cities? Rod Kurtz is joining us now. He's from "Inc.com" magazine. He's here with some of the answers.
First of all, what was your methodology? How did you separate one from another?
ROD KURTZ, SENIOR EDITOR, "INC.": It's all about jobs. I mean, that's what people want to know, right? So what we do is we look at short-term and long-term job growth. These are the hotspots. I mean when it comes down to it, if a city -- if the companies in a city are adding jobs, chances are the economy's pretty good.
SANCHEZ: I'm surprised the best city in the United States for business right now . . .
KURTZ: Drum roll please.
SANCHEZ: Midland, Texas.
KURTZ: Midland, Texas. The hometown of both President Bush and First Lady Laura Bush. I think, you know, if you look at this year . . .
SANCHEZ: You know, some people would look at that and go, hmm, what a coincidence.
KURTZ: Very suspicious. Yes, no, I assure you, it's nothing nefarious.
SANCHEZ: But it's oil. It's oil.
KURTZ: It's all about oil. And I think if you're looking at this year's list, one them becomes extremely apparent, don't mess with Texas. They have, of the large cities, five of the top 12 all in Texas. And, of course, as you point out, Midland number one over all of all the cities. So it's all about oil. It's all about gas. You know, there are people out there in this country, I hate to say it, that are happy about $4 a gallon. And they all live in Midland.
SANCHEZ: Yes, you know, I was just going to say that. You know, the elephant in the room is, most of the folks watching this show right now are thinking to themselves, so I'm paying more than I ever have just to get gas. Meanwhile, there are people in Texas who are making more than they ever have as a result of my paying morel.
KURTZ: But the flip side of that is, when gas prices were cheap and oil was, you know, $10 a barrel, it almost looks like a recession in places like Midland. So it does go up and down. It's just sort of counterintuitive to what you'd thing. You'd think high gas prices, economy not doing so great. But in Midland and other places . . .
SANCHEZ: That's a fair point. That's a fair point. And I'm glad you made it.
Let's talk about Raleigh, North Carolina. In fact, the whole North Carolina area.
KURTZ: The Carolinas are booming.
SANCHEZ: Not hit with -- you know, Gerri's always talking about problems in housing and real estate. That's an area that really hasn't been affected by this.
KURTZ: You know, it's interesting. You're seeing a lot of young families, people in their 20s and 30s going down there. And when you have a young and talented labor pool, the area does quite well.
We're also seeing, you know, technology has always been a strong point for the Carolinas. They have that whole research triangle. But the interesting thing is it's become a financial hub, too. Almost as an alternative to here in New York.
SANCHEZ: That's amazing because so many other people are living in cities right now and they wish that their economies were like the Carolina . . .
KURTZ: And people are looking for quality of life. And that's why they go to places like Raleigh and in the south. The weather is certainly nice. These New York winters, you know, it's much nicer to be down there.
SANCHEZ: What's the bad? What are the cities that are not doing so well?
KURTZ: Typically the larger cities have a tough time, in part because of expensive housing and expensive commercial real estate. So New York, always a challenge. We're actually seeing some of the bigger cities mount a little bit of a comeback. And that's been the strength of the financial sector. The problem is, now things are starting to take a tumble and we could see these cities back down.
SANCHEZ: But Detroit, Cleveland, Providence.
KURTZ: Detroit, Philadelphia, you see it there.
SANCHEZ: Philadelphia?
KURTZ: Yes. This hurts me. I went to college in Philadelphia. And I think that sort of underscores one of the problems with Philly is that they tend to lose a lot of college students. That they go there for four years, they have a great experience and they don't stick around. So you're seeing cities like Philly try to retain them. Detroit, I think, speaks for itself. You know, if you're making cars and gas is $4 a gallon, you're industry is not doing to well.
SANCHEZ: We could never get into all of this. So give us your web site once again.
KURTZ: It's inc.com. We've got, I think, it's something like 335 cities. So you can take a look.
SANCHEZ: We'll look for it there then.
KURTZ: Absolutely. Good to see you, Rick.
SANCHEZ: Good stuff. Appreciate it. That's really good information.
Gerri, over to you.
WILLIS: North Carolina, always heading those lists. It's good to see.
Life on the road. It could be a thing of the past for some musicians. We'll tell you why.
And send us your money questions. The Help Desk is standing by to get you answers. That address is issue1@cnn.com. Your questions, real solutions, right here on CNN.
(COMMERCIAL BREAK)
SANCHEZ: You want news we can use. We got news that you can use. OK. For those of you at home who are tired of using Google, you want an alternate to Google? Something else? It's out there. It's called Cuil. C-U-I-L, spelled a little different. Cuil.com.
Let's try it. Let's see if it works as well as Google. Jen (ph), you've got it up? There it is. That's what the web site looks like. Let's try Rick Sanchez. Put Rick Sanchez on there. Rick Sanchez. Good. Search. Let's see what comes up. Let's see, oh, no!
Well, is it me or is it the -- try George Washington. Try -- you spelled it wrong. George Washington. The first president. Obviously he'll have something. No results for George. Cuil not doing so Cuil. Try Gerri Willis. No. Well, I wonder if Google started off this way. Maybe it's just gotten so much publicity, too many people are going to it at once. We'll keep checking during the week to see if they get it back together.
Gerri, over to you.
WILLIS: Amazing stuff. All right.
Well, it's time to get you answers to your money questions from the Help Desk. Here is join us, Ryan Mack is the president of Optimum Capital Management, Steve Hargreaves and Paul La Monica both for CNNMoney.com.
Let's get right down to it. The first question is from Bill in Florida. "Why have we not heard of anyone tapping the oil reserves we have in oil shale?"
Steve, what do you say to in that?
STEVE HARGREAVES, WRITER, CNNMONEY.COM: People are doing it in North Dakota and other places, but it's expensive to tap these resources. It requires a lot of water. It requires some energy to do it. And basically people want to make sure these oil prices are going to stay high, you know, before they make what's ultimately going to be a 10 or 20-year investment.
WILLIS: We've seen some of those prices come down already, obviously. So, you know, some of these things aren't economic anymore.
All right. Let's go to Carl's question. "My wife and I have a household income of $130,000, have three homes, two tenants, and are in debt. We planned on selling a rental property, but we also are having a hard time saving for retirement. Is it wise to take out a loan right now" --Ryan?
RYAN MACK, PRESIDENT, OPTIMUM CAPITAL MANAGEMENT: I'll tell you, being over leveraged is a very common problem, especially as it comes to purchasing real estate. One thing you can look at is your debt-to- income ratio. Over 30 percent -- if your mortgage payments are over 30 percent of your income monthly payments or your total debt payments are over 40 percent of your monthly payments, it's possible that you may be over leveraged.
It really worries me that they're saying that they don't have the money to put into retirement. So that's another indication that they're possibly over leveraged. But back in 2000 and 2003, the equity markets had a really rough time, so a lot of individuals bailed out of the equity markets, put money into commodities and into the real estate market.
So it's understandably so, but equity still needs to be a component of your portfolio. Asset allocation is still a very important component. So we need to start putting money into the equity markets. And, yes, it may require for you to sell a home and start putting the monthly payments that would have gone to mortgage into a good equity portfolio. WILLIS: You want money in a lot of different pots, right?
MACK: Exactly. Yes.
WILLIS: OK. Well, let's get the next question. Terry in Ohio asks, "what happens when banks combine or are taken over? If I have money in both of these banks and am now over the max coverage limits, am grandfathered in and still covered under the FDIC rules?"
Paul, there's a lot of detail here, right?
PAUL LA MONICA, EDITOR AT LARGE, CNNMONEY.COM: Yes. And this is a very interesting question. A lot of people are, obviously, concerned about banks in these troubled times.
According to the FDIC, there's a six-month grace period where if you do have two banks that merge, and if you have the max in both of those banks, you do have six months where both of those deposits independently are insured. What you probably should do during that time, if you have this situation, is then look for another bank to put the remaining $100,000 into so that you can then have them in two separate institutions again. But you do have six months where they are insured, both deposits.
WILLIS: And you really want to pay attention to this. A great web site to go to, fdic.gov. They have great information. You can figure out exactly what you're covered for.
Jeffrey has a question. "What effect would require all trucking and other diesel use companies, to use biodiesel as soon as possible?"
Biodiesel, a big topic right now. We talked about it a little earlier in the show. Steve, what do you say?
HARGREAVES: Right. Well, I mean, you want to be careful. You know, there isn't -- it depends what biodiesel is made with. You know, if you use a restaurant oil, you know, that's great, but there's just not enough of it for everyone to use. And, of course, you know, if you use a food crop, you want to be careful about, you know, causing the price of food going up.
WILLIS: All right. Well, great answers. Go ahead.
MACK: Well, I think as well, we can all start doing -- not only trucking companies -- but everybody else can start contributing a little bit more. Maybe they're giving tax credits for buying tax -- alternative fuel using cars. And so we all need to start driving slower, being more cautious, doing all the things and making sure our gas bill goes down as well.
WILLIS: All right. Great answers to hard questions. Ryan, Paul, Steve, thank you so much.
SANCHEZ: Gas, gas, gas. Coming up, if you think that you're feeling the pain at the pump? Well, imagine having to fill up an entire tour bus. That's right, rock band hitting a sour note, next. Did I tell you you're watching ISSUE #1? You are. We'll be right back.
(COMMERCIAL BREAK)
WILLIS: So if gas prices continue to go down, will you go back to your old habits? That's today's Quick Vote question. For how you voted, let's check back in with Poppy Harlow from CNNMoney.com.
Poppy, what did people say?
HARLOW: It looks like we have a big shift in people's mindsets. Only 7 percent of you said you'll go back to your old driving habits. Sixty-six percent said you'll still find new ways to save gas. Twenty-seven percent said they'll drive the same way as they do right now.
Gerri, so people are certainly changing, even if gas prices go down. Better for the environment.
WILLIS: Well, good intentions. Good intentions. I think we'd have to follow up and see if it really happened.
HARLOW: Yes, the proof is in the pudding, right?
WILLIS: That's right. Thank you, Poppy.
HARLOW: Sure.
SANCHEZ: What about rockers? What are they going to do in a situation like this? Old rockers, young rockers, struggling musicians are common in an industry where only few make it big. But these days they face an added hurdle. Imagine gas prices. And it's keeping some from hitting the road in those big, giant vehicles.
Here is CNN's Kareen Wynter.
(BEGIN VIDEOTAPE)
LUCY WALSH, MUSICIAN: My gas tank is almost on empty for the third time this week.
KAREEN WYNTER, CNN CORRESPONDENT (voice-over): Lucy Walsh is used to life in the fast lane.
Se's the daughter of famous Eagle's guitarist Joe Walsh. But this traveling musician, who's financing her own career after being dropped by her label, says life on the road as an aspiring artist isn't what it used to be with rising gas prices.
WALSH: Now I'm just booking flights because it kind of evens out to the same price.
WYNTER: Walsh says she used to spend $35 filling up her tank. Now it costs her $65.
For a young musician, every penny counts when your income hinges on tours and business meetings.
WALSH: You cannot cut back on driving. I have no choice. I have to be going to these meetings. I have to be going to play these shows. So you just suck it up and you spend the money.
WYNTER: Even more established acts are feeling the pinch. Earlier this year, 3 Doors Down downside from seven buses and six trucks to three buses and one truck for a stripped-down tour.
UNIDENTIFIED MALE: It costs about the same in fuel as it did then. It's pretty strange.
GARY BONGIOVANI, EDITOR-IN-CHIEF, "POLLSTAR" MAGAZINE: Most artists are finding that their real source of income is coming from live touring, and they don't want to waste it all on overhead expenses.
WYNTER: Adam Levine from Maroon 5 admits gas prices would severely put a crimp in their career if they were just starting out.
ADAM LEVINE, MAROON 5: The saddest thing is, you know, if we had been touring in a van, which we did for a year and a half, we wouldn't even be able to tour at this point.
WYNTER: So while her dad tours the world in private jets and limousines, up and coming artists, like Lucy Walsh, stay closer to home and build their following on the Internet instead of on the interstate.
Walsh is spending her time wisely at home. Just this week, she laid down a recording of "Heart of the Matter," by her old family friend Don Henley.
Kareen Wynter, CNN, Hollywood.
(END VIDEOTAPE)
WILLIS: Well, the economy is issue #1. And we here at CNN, we're committed to covering it for you.
ISSUE #1 will be back here all this week, same time, 12:00 p.m. Eastern, right here on CNN.
SANCHEZ: Now let's go to the latest headlines with Don Lemon and Kyra Phillips back in Atlanta. "CNN NEWSROOM" starts right now.
