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YOUR MONEY

With a New President-Elect, is Washington Closer to Solving the Financial Crisis?; How to Find and Land a Job in This Dismal Job Market

Aired November 15, 2008 - 13:00   ET

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


CHRISTINE ROMANS, CNN HOST: Welcome to YOUR MONEY, I'm Christine Romans.
ALI VELSHI, CNN HOST: And I'm Ali Velshi.

For most Americans, money crises are simple. If you have a job, you can probably handle this severe economic downturn. If you have lost your job, you're in a recession and it starts at home.

ROMANS: This next hour is about you. With severe job losses likely in the months ahead, we're going to tell you how to find and land a job in one thriving sector in an otherwise dismal job markets. Lost a job, looking for a job, just about to enter the work force, you can't afford to miss this hour.

VELSHI: But first with a new president elect is Washington any closer to solving the financial crises that we are in? From financial institutions to the automakers, everyone is looking for your tax dollars to save them. But can anything be done before Barack Obama takes off in the New Year?

ROMANS: We're joined by Karen Tumulty national political correspondent and "Time." Jim Ellis is assistant managing editor at "Business week." And Stephen Leeb, president of Leeb Capital Management.

First, Karen, I want to go to you, the president-elect is not going to be there this weekend for this big global economic summit at the White House. Does he have anything to gain by putting himself into the financial crisis right now? Or should he just stay back until he's inaugurated?

KAREN TUMULTY, NATL. POLITICAL CORRESPONDENT, "TIME:" I think that the president-elect, as he keeps pointing out over and over again, wants to keep reminding people that this country only has one president at a time. And I think he understands that for him to essentially make himself part of this conversation would just sort of confuse everybody.

On top of this, I think that he is following a model set by FDR who took office under also very turbulent economic times. FDR decided not to get involved with economic policy making until his own inauguration. Barack Obama wants this inauguration to be a fresh start. He wants to essentially not entangle himself in George W. Bush's legacy and I think this is both a smart move on policy grounds and a smart move on political grounds.

VELSHI: All right. Jim Ellis, this situation has gone from confusing with the credit crises, to now very worrisome, very fearful, these layoffs I think are frightening people much more than the credit crises, which they didn't really understand fully in the first place. Everybody understands a layoff and a job loss. You're saying maybe we're in the worst of it right now in this recession?

JIM ELLIS, ASSISTANT MANAGING EDITOR, "BUSINESSWEEK:" We're definitely moving into it. What happened in the beginning was that because businesses have been able to manage their inventory so well, we didn't get that usual sort of knee jerk reaction. We manage things much better now; we actually kept employment down during the expansion so we didn't feel it at first. People kept saying we're moving into a recession, but nobody saw it.

All of a sudden it is hitting us now we're seeing large numbers of layoffs. On Friday we saw some micro systems go below 6,000 now another 10,000, Citi Bank I mean all of a sudden it's a traditional sort of recession pattern and probably for about the next three, five months we're really going to be in the thick of this. And the big question is how deep does it go and how long does it go? It's probably going to go longer than a lot of us expect.

ROMANS: We're trying to decide now if this is going to be the worst environment for people in 30 years or 60 years. That's the kind of thinking that there is out there, there's a real lack of confidence, isn't there, Stephen?

STEPHEN LEEB, PRESIDENT, LEEB CAPITAL MANAGEMENT: There's a much more lack of confidence, if that makes sense, than there was a month ago. I mean a month ago, the president's approval rating was 24 percent. Now we have a new president that's going to take office in January. Over 70 percent of the economy thinks that he can cure the situation. That has to mean a lot of confidence.

We have also had a massive tax cut which incidentally I don't think is going to last. But that's in the form of lower gasoline prices. That's almost a quarter of a billion dollars, each penny or dime, I can't remember, I did the backup calculations, a quarter of a billion dollars in people's pockets in the context of a new president.

You also have what the Federal Reserve has done. They -- I mean I like to use the analogy, they have grown monetary base, which is the foundation of money, by an amount that just blows out anything that we have ever seen in the history of this republic. The only time that we came close to these kinds of numbers were when we were preparing for World War II in the late '30 and early '40s. The way I look at it is there's a tremendous dam holding back all this liquidity, and the dam is made out of fear but you're chipping away with the Obama popularity and things like China, this is a half -- more than half a trillion dollar budget.

VELSHI: What an optimist you are. I want to ask Karen; Stephen says maybe the confidence issue is weakening. We had a sentiment index on Friday, which is inching a little better. We know that people are buying some of these homes in California and in Florida because rates are still low and those home prices have come down. There are a couple of things happening around the fringes that might be positive.

But the reaction and the reality here Karen is that the American public might feel a little more confident. But they can't get the credit to do anything about it. The automakers crunch right now, even if they did make the cars that people wanted to buy, people can't get the loans for those cars. So isn't the reality is what is going to crush the consumer more than the fear?

TUMULTY: Yes and I think the expect as the result of the public mood sort of turning as more people now think that the country is on the right track, the numbers of people, 2/3 of the public say that they really do believe change is coming to Washington. The expectations are going to be absolutely enormous for Barack Obama. And so the question becomes, what happens to this budding confidence, this budding optimism if in fact he can't produce real results in a relatively short time.

ROMANS: Karen, Stephen, Jim, everybody stick around. We have a list of good jobs that need to be filled right now.

Plus what you should absolutely, positively avoid buying as a gift this holiday season.

(COMMERCIAL BREAK)

ROMANS: We're joined again by Jim Ellis of "Business week" and Stephen Leeb of Leeb Capital Management, Karen Tumulty a national political correspondent at "Time." We were just in the break talking a little bit Stephen about how it's a little bit frightening, I think it is frightening for the consumers to hear all the time comparisons to the 1930s. But it's different?

LEEB: It's so different, Christine, that I can assure you. I don't know how this is going to turn out. I am very optimistic and maybe I am very foolish, but one thing I can say for sure is that there's no comparison to the '30s. FDR did not take office until the depression was almost over. Well in the thick of it, 1933.

VELSHI: We didn't have the entire stimulus that was going on. We had banks that were failing, we didn't have an FDIC. And Jim Ellis made a very important point. Now please I'm going to ask him reiterate, do not change your channel when we start talking about this, but if it doesn't sound interesting, when people say why won't we have another depression, one of those reasons is this control over inventory. Just tell us in plain terms for our audience why does that matter?

ELLIS: I mean often in a traditional recession, what happens is the demand drops.

VELSHI: So the Gap gets stuck with a whole lot of red sweaters.

ELLIS: So they do, we're going to stop buying those sweaters and we're going to lay off all those people who are making those sweaters. And then all of a sudden I'm not going to hire anybody, hiring stops, people lose their jobs, they can't spend as much, and so they can't spend as much money at the Gap and then you have even more recession and it's a spiral. We now have computer systems that manage that very well, so we don't really build up inventory like we traditionally do. And more importantly people have done a lot less with fewer employees, I should say a lot more with less employees.

VELSHI: We can control the ebbs and flows in demand better now so you don't have stockpiles of stuff that nobody's buying.

ELLIS: And we probably don't have to go down as much, we don't have to let as many people go. Unfortunately, this is all happening at the same time that the rest of the world now is starting to slip into their recession. And, you know, that's disturbing.

Britain's going into a recession, Western Europe's going into a recession, but more importantly, China's starting to slow down. It's hard to imagine that somebody moving from 11 percent to 8 percent is slow growth. But 8 percent is the minimum growth they need to just make new jobs for the millions of new workers that come on every year.

VELSHI: Just like we need to create 150,000 jobs every month.

ROMANS: And we're not, we're losing.

We know that hundreds of thousands of jobs are being lost. We know that we have more people getting continuing jobless claims than at any time since 1983. We know the jobless claims last week were the most last week since 2001 and the four-week average has been the most since 1991, 2001, 1981, none of these times has been good times for America.

TUMULTY: That is right. So what we are looking at here and this coming in a transition moment, there is a strong sense that there's a need for a quick stimulus. But because we're in a political transition, it's really hard for that to come into play. You've got to wonder if by the time Barack Obama is inaugurated, if it waits that long, is a stimulus going to have to be that much bigger? And if it is, is it going to be crowding out some of the other things?

VELSHI: We have already agreed we're not worried at the moment about the national debt. An issue that didn't come up in this national election. Nobody cares; we will care at some point in the future. But you made the point, Stephen, that there really is a lot of stimulus, you have never added this much medicine. We have never treated a patient with this much medicine.

LEEB: No we never have and if that dam that's holding back the money, if this dam breaks you're going to flood the markets with liquidity. It's going to turn very, very quickly, that's my feeling, very quickly.

ROMANS: I'm a little concerned about all this money.

VELSHI: No liquidity, too much liquidity. LEEB: I'm very optimistic, but I don't think tomorrow's going to bring great times. But over the next few months, we could see a very quick turn. But after that, we are going to see a repeat. We're going to continue to flirt with deflation and inflation, and I don't see a happy ending until we solve more of these problems.

ROMANS: Jim Ellis gives a happy ending to this.

ELLIS: The happy ending isn't that happy, in the sense that we are flooding the system with a lot of liquidity. Which is needed right now, the danger is all that liquidity we're adding has to be sucked out of the economy later and fairly quickly or else a new bubble comes up and that's what got us into trouble in the first place.

VELSHI: Everybody starts buying houses and then credit card balances creep up.

LEEB: This is where I disagree. I don't think it will be a bubble this time. I mean the bubble right now, we do have a bubble, and it's called money market funds. We have $4.5 trillion by some estimates parked in money market funds. Never that much in actually money or as a percentage of the S&P. But the real crisis is going to come in the sense that we don't have the resources to support real economic growth. We don't have the real stuff.

VELSHI: Carry on at another time. We always enjoy having you folks here.

ROMANS: Stephen Leeb, Karen Tumulty, and Jim Ellis thanks everybody.

VELSHI: All right two careers where you might be able to find a job right now, coming up.

ROMANS: Yours and mine.

(COMMERCIAL BREAK)

VELSHI: President-elect Obama says his administration will help create jobs, but the Obama administration alone will actually create a bunch of new jobs in Washington.

ROMANS: That is right; Brian Todd looks at the latest edition of what's called the Plum Book.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT (voice over): No pressure here, Mr. President-elect. But along with all those other things on your plate, you've got thousands of jobs to fill. Many of them are found here, entitled policy and supporting positions, it's also called the Plum Book. Nearly 8,000 of the top jobs in government are listed here; most of them politically appointed and many of the salaries are also listed. Defense Secretary Robert Gates, more than $191,000 a year.

WILLIAM COHEN: It looks like a pay raise, but frankly, I would have served at that job whatever it paid.

TODD: William Cohen, defense secretary under Bill Clinton says he couldn't put a price tag on the honor of serving. Cohen, Gates, Donald Rumsfeld, others in that job has made a lot more money in the private sector. But for perspective the lowest salaries in the Plum Book are for administrative assistant jobs paying between $32,000 to $39,000 a year. There are millions of government jobs overall, many pay in the teens and 20s.

JEREMY MATER: The median family income in America is right around $60,000. That means that half of all American families make a lot less than most of these positions listed. From the average Americans perspective these look like good numbers.

TODD: Some salaries are at the administration's discretion, like the White House press secretary and chief of staff, but they can't make more than the president's $400,000. The deputy's public printer makes more than $158,000. A board member of the Vietnam Education Foundation, $139,600. Those jobs could go to political supporters of the incoming president. But Cohen says many of these positions could be more valuable later.

COHEN: They gain expertise on how to manage budgets, people and that's of very high value to the private sector when they leave.

TODD: But experts say an important thing to remember is that this book is just a snap shot of the top positions in government right now. Come January 21, President Obama will come in with a different set of priorities. Some of the agencies may be scaled back and some may be eliminated.

Brian Todd, CNN, Washington.

(END VIDEOTAPE)

ROMANS: All right. More job cuts announced this week; Sun Microsystems said Friday it plans to slash up to 6,000 jobs and according to the "Wall Street Journal" Citigroup plans to lay off another 10,000 workers. They have been in the midst of job cutting for some time around.

VELSHI: It's a pretty bleak picture, but we have found a bright spot in the jobs market. In the health care sector, there are jobs in health care that are really useful. Dennis Damp joins us right now with the details. He's author of "Healthcare Job Explosion." Excellent book, because it says exactly what you are talking about.

Let's get right to it. There are jobs you can get; these are good salaries, generally speaking. They're transferable meaning they are useable all over the country, perhaps all over the world. And you can get them with a limited amount of training?

DENNIS DAMP, AUTHOR, "HEALTHCARE JOB EXPLOSION:" Absolutely. The training levels are anywhere from a high school diploma to one year basically with a community college or vocational school. And then you can also go up to a B.S. degree and higher. But there are many entry level positions with just some on-the-job training when you go to work for that employer.

ROMANS: Dennis earlier this week Ali and I on his radio show talked to a young who's a single mother, who works in call service. She's traveling across state lines to try to get a job because her job has been outsourced.

VELSHI: She went from Tennessee to Georgia to get a job.

ROMANS: We told her look listen to our guest on this program because we're going to tell you what your choices are in health care, something close to you. At the bottom of this ladder of health care jobs is home health aid. This is the lowest pay on our list. But if you're trying to get a foot in and begin when you're training for other things, this might be good for you. Tell us about it.

DAMP: It's a good entry level position; you work as a home health care aid with literally a number of facilities nationwide. They're hiring about 90,000 -- actually 200,000 of the home health care aides a year that includes new hires and replacements. It's basically you assist individuals who are disabled, ill, recovering from various diseases to have some semblance of independence either in a home or institutional environment.

And they do the basically services for them. They help them to feed themselves, they basically help them groom. They'll take them to the doctors and do basic chores to get them through that day and it's much more cost advantages to have them stay at home.

VELSHI: It's not great pay. It averages $20,000 a year, so if you have between jobs or trying to make your way into something, it could be starting point, a starting point that's a little higher than that, about 27,000 on average is a medical assistant, tell us about that.

DAMP: Medical assistants have diversity to them. You can be front office or back office or both. My daughter was a medical assistant for many years and she worked both. And in the front office you do administrative work, you do primarily patient registrations; you schedule the exams and the visits.

You go and do the administrative work, you file, copy, all of that. In the back office, you -- basically you do medical procedures, not procedures as such, but you set up the exams rooms, you order medical supplies, you assist the doctors with procedures. You administer shots, you prepare them, and you take ekgs and the vital signs.

ROMANS: Dennis, I know, all of this is at health care jobs.org, and so if people are following along and want to go back and check, that's healthcarejobs.org. I want to go through some other ones, a pharmacy technician, this requires a high school and maybe vocational school training right and this is about $26,000 a year, tell us about this one.

DAMP: It's a great entry level job. And many times you can start this with basically just high school and then you go on to on-the-job training. They do encourage, though, additional training at vocational schools or vocational settings, community colleges and it helps them get a higher grade or entrance level to get in.

But essentially what they do is assist the pharmacist to prepare all of the prescriptions, they take the prescriptions, they verify the data with the prescribing doctor, they fill the prescription, count the medication, select the container it's going to be put in, the labels, all of that. And it's a good entry level job with some upward mobility as well.

VELSHI: I want to talk about the next two together because the training is similar for them, respiratory therapists or radiological technologists, they both pay much well than what we have been talking about, close to $50,000 a year. You do have to do some more studying for these but they can be very lucrative. Tell us about those both quickly.

DAMP: Those jobs are pretty much, they take almost an associates degree. There are some one-year programs that you can get into as well. And what you do is you go in, you get the training, they put you into an internship environment, you learn the skill sets that are required. In X ray you know that they do cts and x-ray and the respiratory therapists they monitor the patients through that process. There are certifications required and you have to have continuing education units to stay certified which you and I both want in today's medical environment.

ROMANS: Lets talk about registered nurses, because I keep hearing how there's a shortage of nurses out there and there actually are hospital programs where a hospital can help you get trained for this job and this job is about $58,000 a year.

DAMP: Yes, and there's many ways to enter, they have certificate programs through hospitals that are typically two to three years, you have many entrance paths and the register nurse is a valuable asset to the health care industry and the thing here, Ali and Christine is they have considerable employment opportunities. Over 200,000 are going to be employed every year between now and 2016. For not only new hires but for back fill for those who leave. Many opportunities.

ROMANS: Dennis Damp author "Healthcare Jobs Explosion." Again, I want to give you the Website, healthcarejob.org. Anything that touches a piece of medical equipment in a hospital, it's a good job that pays pretty decent money and you can climb up the ladder with those. So there are a lot of health care jobs out there. Twenty percent of all new jobs until 2016 will be in the health care.

VELSHI: A friend of mine became a radiological technologist; he said there's upward mobility in all of these professions. I think we should do this more often. Specific industries.

ROMANS: All right. One argument why the U.S. government should not, I repeat not bail out the U.S. auto industry next.

(COMMERCIAL BREAK)

FREDRICKA WHITFIELD, CNN ANCHOR: Hello I'm Fredricka Whitfield in Atlanta.

Now in the news homes north of Los Angeles going up in flames. A wild fire, this one in a city of Sylmar, by near hurricane force winds and destroyed dozens of homes. You're looking at live pictures in some parts and in others you are seeing new images that we are just now getting in. Five thousand people have been evacuated the fire is spreading and threatening to cut the power supply to Los Angeles.

And at least two deaths were reported after a series of thunder storms and tornadoes in central North Carolina earlier today. The storm damaged and destroyed homes and other buildings. It also downed trees and power lines.

And in Washington, D.C., nearly two dozen world leaders are meeting behind closed doors there talking about the world financial crisis. President Bush says there has been some progress, they're expected to announce a plan later on today and CNN will be covering that live for you throughout day.

Now back to more of YOUR MONEY.

ROMANS: Republican Senator Richard Shelby doesn't hide his feelings on the troubled auto industry. Shelby's quote, "The financial situation facing the big three is not a national problem, it's their problem."

VELSHI: Many top Democrats disagree including president-elect Barack Obama. There's a call for an accelerated bailout as fears of possible bankruptcy. Does the auto industry in the U.S. deserve a bailout? Does it deserve help? And can the big three survive without it?

Peter Valdes-Dapena covers the auto industry for CNNMONEY.com. James Gattuso is a senior economist with The Heritage Foundation. Thanks to both of you for being here. Peter and I interviewed Carlos Ghosn, the CEO of Nissan and Renault. And I asked him about the auto industry in general. Here's what he told me.

(BEGIN VIDEO CLIP)

CARLOS GHOSN, CEO, RENAULT & NISSAN: In the short-term, everybody is facing a very challenging market on the short-term. But I'm optimistic after we cross this period, which can be, you know, one or two years in front of us, at least for those who are going to be able to make it and still maintain some kind of long-term strategy, I would be optimistic.

(END VIDEO CLIP)

VELSHI: That's the rub of it, Peter, maintain, keep their eye on the ball and maintain some type of ongoing strategy. With the American automakers, there's been a fundamental problem in having a long-term strategy.

PETER VALDES-DAPENA, WRITER, CNNMONEY.COM: Granted there's been somewhat of a lack of vision and foresight. The fact that these companies relied on sales of S.U.V.'s. Cap a rules were requiring people to make more fuel efficient cars. To make smaller cars, but not requiring consumers to buy them. And also in the smaller car market, they're going to head to head against Nissan, against Toyota, against Honda, companies that have much lower fixed costs for manufacturing even here in the U.S.

They work in john labor union states. So they were facing a big challenge there, what did they do? They created passenger vehicles out of big trucks. People bought them in droves, they made tons of profit. You can understand how they got addicted to big trucks and SUVs to their ultimate detriment. But they didn't realize, while we're doing this, we also have to maintain competitiveness in small cars and mid size cars, even though it's not a big money maker for us, we have got to be in there, so they weren't able to make that change quickly enough when gas prices rose. But that has been a problem.

VELSHI: A real challenge on their hands.

ROMANS: James let me ask you. They have a challenge on their hands, and it's become my challenge as an American that I have to shell out taxpayer money for it. I can see the case for bailing out the industry, and that is up to 3 million jobs depend on this industry, its part of potentially the industrial defense base of this country, you give me the case against it.

JAMES GATTUSO, SR. ECONOMIST, THE HERITAGE FOUNDATION: It's not even that the taxpayers don't have the responsibility, which they don't, but the biggest point is that the bailout won't help solve the basic problems they face in the industry. Everyone agrees the industry needs change, it needs restructuring, and it needs to be totally talked about change in the way that operates.

Federal money coming into the system won't do that; most likely it would slow a downturn. The way to get change ultimately is through the bankruptcy process or the prospect of bankruptcy. And if it comes to that, that will allow -- provide the legal means to reduce the debts, to reduce the obligations and get these companies back started again.

VELSHI: An interesting point. A lot of people compare it to the airlines, bankruptcy allowed them to restructure, get out of their leases, get of out some of their contracts. But Peter CNNMONEY.com, you guys have been writing that Chapter 11 could become Chapter 7 for some of these auto companies. If they go bankrupt --

VALDES-DAPENA: Ironically you need credit to go bankrupt. You need debtor in possession financing. There's no credit right now, and GMs a huge company, that's a lot of money, that's a lot of credit they would need to do that. And also there is the challenge that if GM goes bankrupt, they can't possibly pay -- maybe not all of their suppliers are getting paid.

And those suppliers you rely on to produce your products. Chrysler and Ford, roughly 70 percent of their supplier base. Ford and Chrysler has got problems as a result of that, it hurts the entire industry. Bankruptcy for GM is not a desirable thing under any circumstances. It's a suicidal thing under the current circumstances.

ROMANS: What do we do? And does something get done in the near term? Can they wait until the next administration? Should they be allowed to just fail? What.

GATTUSO: I agree that bankruptcy is not a desirable outcome for any management if you don't want to go into bankruptcy. But when you're facing problems of this scale and there's no other way out, it's the legal means that's provided to reduce to they can get started. It's possible that won't work. It's possible these are not viable companies in which case you do go to Chapter 7 and again, liquidation means that the plans and assets and other things owned by the companies go into productive use by someone else. Liquidation is not vaporization.

VELSHI: Hold on to that thought for a second. Because one of the things that when Peter and I were with Carlos Ghosn, I asked him this specifically. I said is this a Gm or a Ford specific bad planning problem or is the car market and the world wide credit market so serious that GM can go bankrupt. Here's what he told me.

(BEGIN VIDEO CLIP)

GHOSN: These days, any company can go bankrupt. I'm not singling out one company, I'm saying in these conditions, if you don't pay attention to what's taking place, any company can get into trouble.

(END VIDEO CLIP)

VELSHI: So James I want to put that to you. If it's true that this is a cross the board auto industry problem, we're going to sell 11 million cars versus 16 million, this is very serious, if it's not GM and Ford's fault, would you support a bailout?

Another words, if it is a worldwide auto industry problem and they need help to stay afloat would you still object to the idea that there would be a bail out?

GATTUSO: If it was a world wide problem but not every company is at the stage GM, Ford and Chrysler are. And he's being a little bit modest there or maybe smart that, sure, anyone can go bankrupt and you have to be aware of that. Without that prospect of bankruptcy, competition doesn't work.

But the fact that Nissan is not in the state that GM is, Toyota is not in the state that GM is and that's due to business decisions, due to new strategies that have been voluntarily adopted by GM. They need to change, they know they need to change and I think a federal bailout will just put off that day of reckoning.

ROMANS: $25 billion.

VALDES-DAPENA: If GM and Ford hadn't made a lot of changes Jim. They're talking about the Chevy Volt, at least their cars big SUV's and trucks, their cars are every bit as good in reliability as Toyota and Honda. VELSHI: It is a really world class car.

VALDES-DAPENA: So these have gotten across. The heart breaker to me is like watching somebody who's dying of thirst crawling to a river and they're like 50 yards away and they just can't get that last mile. If they could get this help, I think we could see a changed U.S. automotive industry here.

VELSHI: If they ship their focus to perhaps alternative energy or more fuel efficient. Peter thank you for that. James Gattuso senior economist at Heritage Foundation. Thank you also to you.

ROMANS: All right, alternative energy might be a hot topic, but we will tell you one reason why you might want to think twice before investing your hard-earned green into mutual funds.

(COMMERCIAL BREAK)

VELSHI: We have heard president-elect Obama pushing alternative energy throughout his campaign. Naturally we wanted to know if alternative energy could be the next hot sector for you to invest your money.

ROMANS: Not so fast. Our next guest says never invest your money on campaign promises. Michael Herbst mutual fund analyst with Morningstar joins us now. So we're going to have maybe some big energy programs, new energy programs, a new president, but don't put your money behind it just yet?

MICHAEL HERBST, MUTUAL FUND ANALYST, MORNINGSTAR: Well I could tell you that over the last year, it seems like Barack Obama is taking a very reasonable approach to the private sector around alternative energy. I would strongly discourage investors from jumping to the conclusion that that will instantly work, every over the long term translates into investment returns. For two reasons, one, what he is actually able to implement remains to be seen and of his policies, which will prove to be successful is even more difficult to handicap.

VELSHI: Michael, I really like Morningstar, I think what you folks do is really helpful to us and to people who subscribe or go to your site because you really, you rank mutual funds based on performance. But you do use performance as a metric, wouldn't it be part of the risk idea of investing to say there's a president in office who says we want to go forward on these things, isn't now a good time to get in, even though the mutual funds in that industry are not going to show the performance that suggest that it's a good-time to get in. In other words shouldn't I be ahead of this trend?

HERBST: That's a very interesting idea. Both of our alternative energy funds and traditional energy funds are off between 50 and 70 percent for the year.

ROMANS: Ouch.

HERBST: Which typically would have us looking to see if that's a good opportunity. There are a couple of reasons why, again, I would be very hesitant to dig into these areas right now. One, the general economy is very rough on both the smaller growth companies as some of the capital intensive companies that are involved in the alternative energy and traditional energy.

VELSHI: And it's because it is rough for capital sensitive companies because of this credit crisis, it's hard to for people to come up with a lot of money to invest?

HERBST: Exactly.

VELSHI: Let's talk about something else, when you're choosing a mutual fund, what are you looking for? Should our viewer be looking at buying a mutual fund that's down a lot? Because like a stock, it might go up? Or are we looking for mutual fund managers who are able to keep their performance higher?

HERBST: It's actually a little bit of both. Typically what we look at for mutual funds of any stripe really, it really boils down to a couple of key characteristics, one the management. For example one energy fund I like is the Vanguard Energy Fund. It's run by an ace team from Wellington and it's proving its ability to ride up and down market cycles.

ROMANS: Very good point. We got those names on our list of things you do like in terms of energy mutual funds. But it is a dangerous territory in energy these days. I mean who would have thought we would be talking about sub $60 a barrel oil. What would have thought that suddenly T. Boon Pickens and his wind plan would put some of it on hold because of how quickly natural gas has declined?

It's very volatile out there and for the novice investor, they should be very, very careful?

HERBST: Indeed. What you're seeing is a very big break between the short-term and the long-term expectations for both traditional and alternative energy. Again the conventional energy sector right now looks very attractive. But the other shoe that could drop is that some of the investors are going to have to unload traditional energy stocks over the next couple of months to meet redemptions and raise case for other needs.

On the alternative side, it's equally tough to tell what's going to happen over the next six to nine months, again, Obama could come into office and that could spark some investor enthusiasm. But again, I would be very skeptical in thinking that his policies are immediately or even over the long-term going to override the economy.

VELSHI: Take health care from the first Clinton administration is a good example of that.

Michael thanks very much for joining us. Michael Herbst is a mutual plan analyst at Morningstar which is an excellent resource for those of you who are trying to understand your mutual fund investments.

ROMANS: All right. Holiday season is coming up fast, why you might want to avoid buying gift cards at all costs.

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ROMANS: Gift cards are the most popular gift item for Christmas. But you know what in this economy they can be a little bit risky.

VELSHI: That is why I decided what I am getting you for Christmas.

ROMANS: What are you getting me?

VELSHI: A hug.

ROMANS: Oh.

VELSHI: But if you did get something less useful then a hug should you be spending that card before it is too late.

(BEGIN VIDEOTAPE)

ROMANS: Still holding on to that gift card from the Sharper Image or Bombay Company. To late out of business. How about Linens & Things? Better move fast it is closing shop and liquidating. Consumers will loose $100 million dollars this year on worthless gift cards. The restaurants and stores that have gone belly up.

It is tough out there for retailers, Mervins is going out of business for good, CompUSA is closed most of its stores. Starbucks is shutting down about 600 stores. Circuit City has filed for bankruptcy. Todd Marks writes a blog for "Consumer Reports" called Tightwad Tod.

TOD MARKS, "CONSUMER REPORTS:" I would suggest people do if they have a gift card from a Circuit City or another store that happens to be in Chapter 11 right now. I would say run don't walk to that store and buy something quickly. Because you just don't know when the plug may be pulled.

ROMANS: Now your Circuit City gift card is safe. A judge Monday said the retailer could continue to accept them and even issue more cards while it reorganizes. And the big retail trade lobby says have no fear.

ELLEN DAVIS, NATIONAL RETAIL FEDERATION: Most gift cards in this country regardless of the retailer has declared bankruptcy are perfectly safe can be redeemed.

ROMANS: In many cases the bankruptcy court allows retailers to accept gift cards even though the company is in chapter 11.

(END VIDEOTAPE)

ROMANS: Here is what I didn't know about gift cards. "Consumer Reports" says that a quarter of all gift cards are never redeemed in the first place. That is billions of dollars of gift cards never redeemed so it is just another reason why you got to spend them.

VELSHI: Spend them soon. Do something with them.

ROMANS: But think about it before you buy them for Christmas too, because if you are going to buy them for a chain that is going to go out of business, or you think is going to go out of business.

VELSHI: Remember these tough times are not letting up. Retailers saw another plunge in sales in October. Our CNNMONEY team joins us now. "CNN Headline" news correspondent Jennifer Westhoven, Poppy Harlow from CNNMONEY.com and CNN business correspondent Stephanie Elam who joins us now from the New York Stock Exchange.

Hello, ladies.

STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT: Hello there.

ROMANS: You're outnumbered.

VELSHI: I am. Leave it to you. What do you want to talk about?

ROMANS: I want to talk about retail sales quickly. Want to talk about this environment is really tough, and the retail sales number from Friday, four months in a row, Poppy of declining retail sales. You don't see that in this economy. We spend no matter what as Americans.

POPPY HARLOW, CNNMONEY: We do. What we're spending on is interesting. The decline you thought would be clothing. The big drop- off was 5.5 percent in car sales, auto sales, and gas sales and electronics, and then you see Circuit City filing for bankruptcy.

VELSHI: Remember cars, the guy has a comment, cars and electronics are two areas that have been driven a lot by people being able to get credit.

HARLOW: Loans.

VELSHI: Right. So it is harder if you don't actually have the cash to buy it, you're not going to buy these things.

JENNIFER WESTHOVEN, "CNN HEADLINE NEWS:" This ties in so closely with the job story. For so long you know all these stories about people who lost their job and they went to Home Depot, but they found some way to work. Now this whole safety net of at least being able to get a job, even though maybe it was lower paying than your original job, really unraveling, and it's great that we're all not spending, but it's having such an impact on jobs.

HARLOW: And gas prices have gone down significantly. People aren't spending that extra money shopping at all.

ELAM: But it's not just that. If you take a look, we also heard from a major mall operator. They're saying they may go bankrupt. So it's spiraling out beyond just the stores here. I know when I go to the malls around here, they still seem to be very busy, seem to be a lot of parking places that are full, but I think a lot of it has to do with people still want to go out there, they want to go and look, but they're not necessarily purchasing at this point and you can see that with what's going on with these numbers.

ROMANS: I think we're going to see some major discounts over the holidays, and I think Circuit City even said we are open for business, and we want your business for the holidays, and we are stocking for the holidays. You can assume we are discounting to get your business.

HARLOW: The "Consumer Reports" expert that you interviewed in the piece said to me last week, listen Black Friday is here. The sales are here. They're cutting prices left and right. Maybe now is the time to go out if you have to buy those gifts at least the discounts are there now.

VELSHI: At the high end, we have seen a lot of high end stores, the Nordstrom's and Saks and Kneeman's with discounts already.

ROMANS: It's not cool to be a conspicuous consumer anymore. It really isn't. Everyone knows there's a recession or could be a recession.

ELAM: And on top of that, that's why you're hearing the resurrection of terms we haven't heard in decades like layaway. And people are not having access to credit like before, but they still want to get things. Layaway is coming back, something that little children have no idea what it is.

ROMANS: I have a theory about layaway though. I think it's going to kill our instant gratification. Credit cards allowed us to buy whatever we wanted.

VELSHI: Layaway you actually have to think about it. Jennifer made a good point, and that's folks are worried about their jobs. That is what is affecting the spending. We want to give you some good advice. We're going to share some of the advice that our money team has had about jobs. First, here is this week's "Right on Your Money."

(BEGIN VIDEOTAPE)

MELISSA MORGAN, ATLANTA REAL ESTATE AGENT: Let's check out this unit downstairs here.

ROMANS (voice over): Atlanta Real Estate agent Melissa Morgan is helping Clare Brown navigate a market that is overcrowded with properties but not so many buyers.

MORGAN: I think buyers are just overwhelmed with the number of inventory that we see on the market today.

ROMANS: Clare wants a home with a rental unit that could provide extra income. She has decided to act now while prices are lower.

CLARE BROWN, PROSPECTIVE HOME BUYER: I'm more motivated by what's happening in the stock market, what's happening with the weakness of the U.S. dollar.

ROMANS: Personal finance author Eric Tyson says long-term investment properties can pay off, but in today's economy would-be landlords need to realize they won't always have ten en.

ERIC TYSON, CO-AUTHOR: You can't assume that the property is going to be rented 100 percent of the time; you are going to have a certain vacancy rate.

ROMANS: If you're prepared for those hassles, he says there are deals to be had.

TYSON: We've gone through a pretty significant correction, the likes of which we really haven't seen since the early 1990s. There really are some terrific buying opportunities right now if you do your homework and you're careful about what you buy.

ROMANS: And that's this week's "Right on Your Money."

(END VIDEOTAPE)

(COMMERCIAL BREAK)

VELSHI: OK we're back with the CNN money team. "CNN Headline News" correspondent Jennifer Westhoven. Poppy Harlow from CNNMONEY.com and CNN business correspondent Stephanie Elam over at the New York Stock Exchange and my long-time colleague Christine Romans because the best advice I've ever had is keep working with Christine.

ROMANS: That's so sweet. What's the best job advice you ever got. Jennifer, the best job advice you ever got?

WESTHOVEN: Check in with your boss and your co-workers regularly for anything that's missing so nothing catches you by surprise.

ROMANS: Poppy.

HARLOW: Time is key. Don't ask your boss or your colleague to do something you could do yourself.

VELSHI: Good advice. Stephanie.

ELAM: Be nice. Not just to the people who are above you on the tier, but also below you because if you lose your job, you never know who may be the boss that's hiring later on.

ROMANS: I was going to say don't get drunk at the Christmas party.

VELSHI: Good advice, too.

HARLOW: Just not too drunk.

ROMANS: There you go.

VELSHI: We don't need blanket statements. Everybody is different.

ROMANS: What's the best advice you ever got?

VELSHI: Speak less, which is a bit of a problem given what I do for a living. Maybe speak less when you are off TV.

ROMANS: You have two ears and one mouth; you can listen twice and speak once. That probably helps. Thanks for joining us.

VELSHI: We will be back next weekend if we are not fired. E-mail us your thoughts, questions and concerns about your job at issue1@cnn.com. We are going to take your questions and get them answered for you by work place experts.

ROMANS: OK. We are going to see you back here next weekend Saturday at 1:00 and Sunday at 3:00 we will see you then.

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