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Unemployment Surges in November; A Job Hunter's Guide; Big 3 Back on the Hill
Aired December 5, 2008 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
TONY HARRIS, CNN ANCHOR: The economy just keeps piling on. The unemployment rate shot up to 6.7 percent last month. Five hundred thirty-three thousand Americans joined the jobless rolls in November. Your friends, maybe family members.
That is the largest monthly job loss in 34 years. Almost two million jobs lost this year, two-thirds of them coming in the last three months.
This week we found out what most of us suspected, the U.S. is indeed in an official recession, has been since last December. Our CNN/Opinion Research pollsters asked people to describe the recession. Forty-two percent say serious, 34 percent say moderate. Almost a quarter called the recession mild or nonexistent.
Well, let's talk about all this.
Ali Velshi is CNN's chief business correspondent. Christine Romans, co-host of "YOUR $$$$$" on CNN.
Guys, good to see you. A couple of questions here, and then I want you to sort of hash it out and I'll just sort of manage the clock here.
Any short-term fixes for these job losses, number one? Number two, is a stimulus package that will rely heavily on putting shovels in the ground a smart investment, and what everyone seems to be suggesting is an information technology service and green economy? Third, is the jobs market correcting in the same way the housing market is correcting and the credit market is correcting?
It's all yours.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: OK. Let me start first with what people need to know about this number.
What this means is that you could lose your job and you didn't do anything wrong. You're part of a contracting labor market right now, and a lot of people are losing their jobs, 1.2 million jobs lost in just three months. That's an incredibly large number. We haven't seen three months of job losses like that since back in 1974.
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: And this -- and we saw 533,000 jobs lost in November. That's the biggest number we've seen. But that brings us to almost two million jobs this year alone. So when you talk about a short-term fix, there are a lot of people who say there isn't even a long-term fix for some of these kinds of jobs we're losing because so many of them are manufacturing jobs.
ROMANS: The president-elect says that he wants to save or create 2.5 million jobs over the next couple of years. And there are a lot of economists, Tony, who are telling me -- and I'm sure they're telling you, Ali -- that's not enough.
You need maybe 1.5 million jobs, maybe something more than that, every year just to keep up with the growth in the working age population and people who are entering the workforce. So we need to save or create a whole lot more than just 2.5 million jobs if we're going to see this kind of a labor market. And a lot of economists are saying we're going to, well into next year.
VELSHI: Now let's talk about that green or alternative energy economy that you were asking about.
In order to do that, there's an infrastructure bill that's necessary. So let's say you want to talk about solar energy or wind energy. Well, that still needs a grid, it still needs a way to get to the grid, it still needs the building of windmills or facilities. So there is some short-term work available if there were that sort of a program for manufacturing workers.
But otherwise, there isn't really any obvious natural place for manufacturing workers to go. And that's the problem. When you have so many manufacturing workers losing their jobs, there's no obvious place that they're going to be, let's say, in a year or even two years. So without an infrastructure program, we're going to have to find something entirely different for those workers to do.
ROMANS: And we need an awful lot of retraining. And any kind of stimulus that we have, a of the experts are telling me, has to have a retraining program that works on a very large scale and that actually works.
VELSHI: Which we haven't really seen happen in the past.
ROMANS: That actually works, which we have not seen in the past. I mean, whole scale retraining of workers.
A little note to tell you. And I haven't looked at these numbers, but in the last month's numbers, the unemployment rate for people with a college degree was something like 3.1 percent. That's about half of what it is for the general population.
So one of the things that you hear employment experts say is you've got to have a college education. At the same time, college affordability is getting worse and worse, and people are graduating with $20,000-plus in student loans. That is a policy issue for the next president, for this Congress to try to tackle. If we're telling people that they need to retrain and have more education, but it's so expensive to do that, how does anybody get ahead?
HARRIS: Go ahead, Ali. And then I've got one more quick one for you.
VELSHI: Go ahead. You tell me what you want to talk about.
HARRIS: Well, I'm curious, as I'm looking at the Dow here, I'm wondering -- earlier in the week I thought this jobs report had been cooked into the markets already. But it's worse than expected. What kind of a day do you think we're looking at here?
VELSHI: Well, we had expected 320,000 jobs to be lost, not 533,000. And by the way, in addition to that 533,000, you add -- the last few months have been revised. So it is substantially worse.
And with every job lost, as opposed to a job gained, you are that much further away from a recovery, because it's one more person who's not going to be a net contributor to the economy and maybe a recipient of government benefits. It then complicates the auto loan bailout discussion that's going on in D.C.
HARRIS: Sure. Sure.
VELSHI: So, you know -- and there are many views on this, Tony. It's worth telling you, in fact, we're getting ready for our weekend show, "YOUR $$$$$," where we've got a panel of experts who don't necessarily agree on what the solution is.
So, rounding back to your first question, what's the short-term fix? There are some who say there isn't a short-term fix to this.
VELSHI: And that's what is going to drive that stock market. If they think that there's a recovery that's possible sometime in the next year, you'll start to see stocks moving up at some point. If it doesn't look like that, we could be in it for a while.
ROMANS: Tony, I think it's so important for people to understand. And gosh, Ali and I were talking about this. This is a really tough situation in the labor market. And there are going to be more jobs lost. And people, while it's very grim news, people have to control what they can control because this is about keeping your job.
HARRIS: What you can control is your spending. That's the one thing you can control.
VELSHI: Your spending, your ability to get a job, your ability to train. There are a lot of kids who are in college right now who are thinking, hey, maybe I'll get that extra degree or I'll train somewhere else. You know, not a good job market. It might be a good time to do that. These are the things you can control.
HARRIS: Great conversation, Ali and Christine. We know we have to let you go to record your show. Thank you so much for your time this morning.
VELSHI: Always a pleasure.
HARRIS: And we'll try to get you back on again as soon as we can. VELSHI: Sure.
HARRIS: All right. One minute you're a red-hot employee, the next a pink-slipped has-been short on green. Where do you look for your next job?
Personal Finance Editor Gerri Willis is in Yonkers, New York, this morning. She is at a Labor Department career counseling center.
Gerri, you know, we get into a down cycle like this, and you wonder, is anyone hiring? Is there a good job to be had anywhere? And what do I need to do to make myself competitive for that job?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, that's what people here at this job center are learning today, how to be competitive, what to do. And I wanted to introduce you to a couple of them, two fellows who are looking for jobs right now.
We've got Anthony and Gregory here. We talked to them about what they've been doing.
Anthony, tell me what kind of job you had, how long you've been unemployed, and what you're doing to find a new one.
TONY SANTIAGO, FMR. TRUCK DRIVER: Well, I was a delivery driver for an ice cream company. And I've been looking all over the place and doing my best on the Internet, posting a resume. And nonstop I've just been trying.
WILLIS: And how lucky have you been?
SANTIAGO: Very unlucky, unfortunately.
WILLIS: All right.
Gregory, I want to hear your story. You were an office manager. How long have you been jobless? What are you doing to find a new job?
GREGORY CLARKE, FMR. OFFICE MANAGER: Well, basically since the beginning of October, due to workforce reduction. But on top of that, basically just been sending out my resumes, been on a couple interviews. And the same as Anthony, been very unsuccessful, but I'm staying positive about it.
WILLIS: And that's what you hear, Tony. These folks, they're staying positive about what's going on, they're trying to learn new resume skills, they're getting new ways of contacting potential employers and, of course, looking as hard as they can -- Tony.
HARRIS: OK. Gerri, appreciate it. Thank you.
President-elect Barack Obama reacting to the dismal November jobs report. He says it is a reflection of the growing economic crisis facing the country and evidence of the need for action.
In a statement, Obama says, quoting now, "Our economy has already lost nearly two million jobs during this recession, which is why we need an economic recovery plan that will save or create at least 2.5 million more jobs over two years while we act decisively to maintain the flows of credit on which so many American families and American businesses depend."
We are expecting a statement from President Bush on the economy sometime in this hour. We will bring that to you as it happens right here in the CNN NEWSROOM.
(BEGIN VIDEO CLIP)
REP. BARNEY FRANK (D), FINANCIAL SERVICES CHAIRMAN: The auto companies made mistakes, unions made mistakes, politicians made mistakes. The media hasn't always distinguished itself, although you're not supposed to say that.
The consequence of all those mistakes is that the country is to some extent held hostage. We need to free the country.
(END VIDEO CLIP)
HARRIS: Free the country? Freeing the big three. General Motors, Chrysler and Ford back on Capitol Hill this hour, asking for $34 billion in loans. GM and Chrysler say they are desperately in need of the money.
A quick look at each carmaker's wish list.
General Motors wants a $12 billion loan and a $6 billion line of credit. Chrysler says it needs an immediate $7 billion loan to stay afloat past December. And Ford wants a $9 billion line of credit. Ford says it doesn't need it right now, but just in case.
The committee meeting now 90 minutes, about 90 minutes old. Our Dana Bash is on Capitol Hill.
And Dana, a lot of skepticism greeted the CEOs yesterday at the Senate Banking Committee hearing. How were they received this morning?
DANA BASH, CNN CONGRESSIONAL CORRESPONDENT: Pretty much the same, Tony, still a lot of skepticism. You saw some members of Congress look at the CEOs across the room and say point blank, we appreciate the fact that you have sent us these plans, but it's not enough. And you have others who are still saying that they don't understand why the United States government, taxpayers should choose the auto industry when there are so many industries and businesses out in the country who are hurting right now.
Listen to what Congressman Gresham Barrett, a Republican, said about that.
(BEGIN VIDEO CLIP)
REP. J. GRESHAM BARRETT (R), SOUTH CAROLINA: We're sitting here trying to evaluate the business plan of corporations. But trust me, Congress has no authority to tell people how to spend money efficiently and effectively. And we certainly can't predict the direction of a marketplace. I'm concerned that businesses are rightly going to start thinking they can just come to Uncle Sam and we'll bail them out. And we're broke, flat broke.
(END VIDEO CLIP)
BASH: Flat broke. That is certainly probably an understatement in terms of the feeling up here. There is definitely bailout fatigue, there's no question about that. We feel it here every day in talking to members of Congress, Tony.
But you put up the numbers that the auto industry is asking for. It totals about $34 billion, at least that's what they say they want, in terms of direct loans for their companies. But one thing that we are hearing this morning that is somewhat new from Democrats and Republicans is an idea to perhaps do something short term.
The idea is that there simply isn't necessarily the political will to have a broad restructuring right now, so perhaps to do something short term.
Listen to the ranking Republican on this committee.
(BEGIN VIDEO CLIP)
REP. SPENCER BACHUS (R), ALABAMA: Personally, the only course I could possibly endorse would be limited transitional assistance to allow the American domestic automobile industry to return to solvency and profitability, but then only if there's a reasonable expectation of success.
(END VIDEO CLIP)
BASH: So there you heard one idea for short-term infusion of cash, just to make sure that at least in the next couple of weeks, as GM has warned, they don't go belly-up. But there are so many ideas going around here, Tony.
BASH: And the unanswered question still is whether or not anything can gel over the next couple of days. Members of Congress, at least in the Senate, they say they're going to at least be on the phone working on this all through out the weekend. They hope to have something perhaps to talk about on the Senate floor next week, but it's really unclear.
HARRIS: Well, Dana, let's leave it there for now right now. I've got a bunch of questions, as you know, for you, but I want to give folks watching just a bit of the flavor of the hearing that's going on right now. Chairman Nardelli from Chrysler is answering a question from Paul Hodes. He is a Democrat from New York.
(JOINED IN PROGRESS) ROBERT NARDELLI, CEO, CHRYSLER: ... Today, at a 700 to 750 FICA score, at least our consumers, the hard-working men and women of America that buy our products, just aren't qualifying.
REP. PAUL HODES (D), NEW YORK: So is Chrysler's answer $4 billion to $5 billion on the credit side?
NARDELLI: That's the current request that is in today.
HODES: And do you think that's sufficient under the current circumstances?
NARDELLI: Along with getting ILC, that will allow us then to sell paper to increase the capacity, and we'll be able to get that flow going back through Chrysler Financial, supporting our dealers, supporting the consumers.
HODES: GM, Ford?
RICHARD WAGONER, CEO, GENERAL MOTORS: Yes. Our situation is a little different. Our finance company, which we only own 49 percent of, is applying for bank holding company status. And if they achieve that, they would then be eligible over time to access funds that have already been appropriated under the TARP.
I can't give you that exact amount now. I can check and try to get that back to you. But it is critical. And it's a three-leg stool to get...
FRANK: Mr. Nardelli, if you can go very quickly.
ALAN MULALLY, CEO, FORD: You bet. As you know, we're in a very different situation because we have our own finance company. And the relationship that you're talking about is very important. We support 77 percent of all the wholesale...
FRANK: Quickly, Mr. Mulally.
MULALLY: And so what we have in for the short-term asset-backed commercial paper with the Federal Reserve is $16 billion, and we've accessed $4 billion of that to support the customers.
FRANK: Twelve (ph) more.
The gentleman from California, Mr. Royce.
REP. EDWARD ROYCE (R), CALIFORNIA: Thank you, Mr. Chairman.
I would like to ask a question of Mr. Wagoner and also Mr. Mulally. And it goes more to the long-term question of Ford and GM, because over the last few years, Ford and GM, internationally, have performed very, very well. And one of the questions I have is, what is it about the business environment or the tax structure or the operating costs, as you go down the reasons for the success for Ford and GM in past years and looking forward over the long haul, why they're projected to do well overseas in international competition, and why it's a greater burden here?
I'd like a discussion from each of you in terms of what some of those determinants are.
WAGONER: I'll be glad to start. When we go into new or newer markets, frankly, we don't take some of the burdens of the past that we might have for being in business in the U.S. a hundred years, so we get to use all of our accumulated knowledge of the industry. But then as we go into new markets, we go in on an unencumbered basis.
Frankly, not so different than some of the transplants that have come to the U.S. later. They come using the latest knowledge, the latest thinking about dealership structures and things of that sort. And so sometime, ironically, coming a little later can be an advantage.
So the reason we've been successful in these growth markets is we really use our global capabilities and we build up with the latest best practices, whether it's lean manufacturing or whether it's the right product technologists, whether it's the right distribution strategy. So I think that that's a plus. And by the way, those overseas businesses over the last several years almost uniformly have been quite profitable, and they have in almost every case been able to send dividends back to help us address funding issues in the U.S.
I think the other thing that we have struggled mightily with here in the U.S. is the fact that we have had huge pension and post-retiree health care obligations. And our report indicates that we spent about $103 billion over the last 15 years to fund pensions and post-retiree health care obligations. And those were responsibilities that we had from our past, and so we felt it was appropriate to try to fund those, but in all candor, that's a use of cash that in a newer market we wouldn't have to allocate funding for.
And obviously, if we had the $103 billion and could use it for other things, it would enable us to be, you know, even farther ahead on technology or newer equipment in our plants, or whatever. So I think that's maybe two of the points that I would cite there.
But I do want to highlight that a lot of that is behind us now thanks to the funding we've put in and the work we've done with Mr. Gettelfinger and his union. And so we do think we have got a lot of those issues behind us now in the U.S. since we're looking forward to our next 100 years here with a cleaner slate, if you will.
ROYCE: And let me ask Mr. Mulally the same question.
MULALLY: You bet. As you all know, Ford has grown up as a global company, very regionally operated, though. But because of that, we had just an absolute laser focus on the Ford brand. And in the United States we -- you know, over time, especially with our cost structure in the United States and fuel prices being relatively low and low interest rates, we were focusing on the larger vehicles, the SUVs and the trucks.
Well, around the world, the majority of our vehicles are much smaller. And we all know how neat they are because the fuel prices are relatively higher. So going forward, especially because of the work we've done with the UAW, where we can now make smaller vehicles in the United States profitably, we are bringing and leveraging all those fabulous vehicles from around the world in the United States.
So we'll have a balanced portfolio now of small, medium and large cars, utilities and trucks. And I think we're going to be able to profitably grow now in the United States using those lessons learned from around the world.
HARRIS: OK. We just wanted to give you a sense of what's going on now as the hearing continues before the House Financial Services Committee. We will check back in.
Actually, we'll monitor this situation and we will bring you bits of this, some of the more interesting moments, maybe newsworthy moments in the question-and-answer session that's going on right now.
We're also interested in what the feeling is among workers on assembly lines. Our Brooke Baldwin is at a GM plant in Lansing, Michigan. She has spent a lot of time there recently.
Brooke, where are you and what's -- oh, I see. Can you see us?
BROOKE BALDWIN, CNN CORRESPONDENT: We're getting in everyone's way. I apologize.
BALDWIN: Let's talk -- if you want the feel, Tony, of what the auto workers here have to say when it comes to the big three, the CEOs and Gettelfinger on the Hill, you know, they say, yes, their leadership is representing them the best they can. I think what I'm hearing most from these workers is the fact that they're frustrated. I hear "double standard" over and over.
They're saying that, you know what? The financial institutions, the insurance companies did not have to jump through as many hoops as the CEOs are having to, and they're frustrated about that. They say that's not fair.
I know Mike Martin would agree with me. He's been at this plant for, what, 12 years?
MIKE MARTIN, GM WORKER: Twelve years, yes.
BALDWIN: Works in the body plant.
And you're a third generation employee. My question to you is, this is your opportunity to deconstruct any stereotype or misconception may Americans have about auto workers.
MARTIN: You know, one of the biggest misconceptions is that we build a poor quality car. You know, the cars that are going by us right now are some of the highest quality cars that General Motors has ever put out. These are great looking cars, high quality cars. You'll see the line down here stop every once in a while. It's not because we're shipping bad cars, we're stopping to catch any defect in station here so the customer gets a great quality car. The conception that we don't build good cars is a real fallacy. And that's one thing that really bothers us, you know, and it gets to us.
BALDWIN: You're worried about being laid off. What do you do, just go to work every day and cross your fingers?
MARTIN: No. You go to work and you hope for the best you can. You can't worry a lot about what you don't have control over. But, in the same token, it's in the back of your mind all the time, that, hey, you know, tomorrow I might not be able to come to work. You know, what are you going to do with your family and how are you going to feed your family after that?
BALDWIN: How do you pay your mortgage? All of those questions, I'm sure A lot of people I know have talked to me about it in my multiple trips out here to the Detroit area.
So Tony, I'd say just in a couple words, they're frustrated by what's happening on the Hill. They're hopeful they get the money. They can't imagine not coming back to work.
HARRIS: Right. Hey Brooke, a quick question for Mike, if you would, please.
I'm curious as to whether he thinks, as he takes a step back and looks at the big picture of his industry, is he working in a dying industry? I mean, has he even considered options beyond being an auto worker?
BALDWIN: It's a question I've been asking a couple of these workers.
The question to you, sir, do you have a plan B? Looking at the big picture here, if this job goes away for you, what's next?
MARTIN: What's next is you go out and look for another job. The unfortunate part of that is, it used to be that the Home Depot, the Meyers (ph) and the local places would buy (ph) that. But those jobs are drying up, too.
As we lose our jobs and the economy dries up, so does the trickle-down effect, too. So those jobs aren't there for everybody. So, I mean, that's one of the down things.
You know, maybe I could go get a job for $10 an hour at Lowe's. Maybe I can't because that job is already taken. Where do you go from there?
You know, unemployment is great. It's a great benefit. But when that runs out, how do we supply our families?
BALDWIN: Ten dollars an hour compared to -- am I putting you on the spot? How much do you make per hour? MARTIN: We make around $28 an hour here.
So, Tony, there's your answer.
HARRIS: Yes. OK, Brooke. Appreciate it.
Mike, appreciate it.
Thank you both.
All right. Once again, let's throw up a couple of live pictures here.
And Roger (ph), let's talk about what's going on right now with the House hearing on the auto rescue plans.
The big three executives before the House Financial Services Committee. And we're watching this testimony, obviously, and we'll bring you some of the better newsworthy exchanges throughout the morning.
Also, do we have a shot of the White House right now? Because I just want to remind everyone again that we are expecting President Bush to make a statement -- Roger (ph), appreciate it -- on the economy and the November jobs report. It's scheduled to happen in this hour. We will, of course, bring that to you as well when it happens.
And every day here in the NEWSROOM, it is your job, your home, your money. It is issue #1, and we are covering all the angles for you right here in the CNN NEWSROOM.
HARRIS: The United Auto Workers Union joining the car company CEOs in asking for government help. In our conversation with two union workers yesterday, they discussed the situation facing the big three as part of the overall financial meltdown.
(BEGIN VIDEO CLIP)
HAROLD FOSTER, LANSING AUTOMAKERS FED. CREDIT UNION: We woke up one morning and the whole world is in this mess. The auto industry did not bring down the economy. We're caught up in it. We all woke up, and we're all in the same boat. And we're just trying to figure out a way to survive this.
(END VIDEO CLIP)
HARRIS: Wow. The union says it is willing to make concessions to help the companies survive.
So we've got the auto company CEOs back again today trying to make their case for a $34 billion loan. And now out comes an unemployment report that was much worse than expected, 533,000 jobs lost in November.
Here to help us sort through both of these stories, economist Peter Morici, professor of international business at the University of Maryland.
Peter, good to see you. Thanks for your time this morning.
PETER MORICI, UNIVERSITY OF MARYLAND: Nice to be with you.
HARRIS: So let's talk about the jobs report first. You say that this jobs report, which is much worse than expected, represents wholesale capitulation. What do you mean by that?
MORICI: We have endemic structural problems in the U.S. economy. Our banks are not in a funk, they're broken in New York.
We have a huge trade deficit with China that's getting bigger and bigger, even as the U.S. economy contracts. And we have our continuing dependence on oil.
All of those things are sapping demand for American-made goods and services. A stimulus package will help, but it won't get us out of the funk.
What we're in danger of is some kind of depression, not as deep as 1929, but one that just doesn't go away, the find of malaise that afflicted Japan in the 1990s. They had one stimulus package after another, but it didn't work. President Obama is going to have to fix the banks, the oil import situation, and the trade deficit with China, or this economy is not going to recover.
HARRIS: Whoa, whoa, whoa. Let's take a big step back, or half a step back.
You know, there are some people here, some smart people at CNN among our players in our money team, who suggest that your thinking is out of the mainstream on this. What makes you think you're correct in this assessment and others who don't agree are not as accurate or not as informed as you are on this?
MORICI: Well, we've already had a lot of conventional thinking. We had a stimulus package in May. We've done all the conventional monetary policy remedies. And we're not getting out of this.
Giving the banks liquidity doesn't fix it because the banks now have business which are driven by their compensation schemes as opposed to the reverse. So the large New York banks aren't doing their customary things now that we've given money, and that is helping the smaller regional banks make loans by buying their loans and selling them to fixed income investors.
What we call the securitization link is broken. Ben Bernanke has talked about that a lot. He's given the banks cash to fix that. But instead, what do they use the money for? To go into merger and acquisition activity, to buy smaller banks. That's a broken situation. The trade deficit with China, demand for U.S. goods is falling. Look at the auto workers.
MORICI: You have the trade deficit with China. Imports from China are rising. That situation is broken. The exchange rate mechanism doesn't work.
Bernanke has talked about China subsidizing its exports, but Treasury doesn't do anything about it. We finally have to address these problems.
President-elect Obama through the campaign talked about our oil import dependence. But let me tell you something, windmills isn't going to fix that. And the kind of PC energy policies the Sierra Society wants isn't going the fix it.
HARRIS: Got you.
MORICI: We're going to have to have an assertive program to fix the automobile industry and get those guys who are very capable cranking out small cars.
HARRIS: You made the pivot for me, Peter. All right, to the auto industry here.
You know, it is a question I get at least once a day, and I'll ask you, do you believe first the industry, first, needs a bailout, a bridge loan to survive?
MORICI: It needs a bridge loan to survive, but I don't know that a bridge loan will ensure its survivability. There's two sets of issues here.
MORICI: Are they technically capable? They are absolutely technically capable of making the best cars in the world. I have no doubt that Ford and General Motors have the best engineers on earth, or engineers as good as anyone else's. However, their labor costs still remain high despite the very considerable concessions the UAW has made.
Did you know that Honda is opening up a plant in Indiana this year that in 2009 is going to pay $18.41 for labor?
HARRIS: I did not know that.
MORICI: How are they going to compete with that? That's the new standard? It isn't that I want to tell these guys to drive down their wages. I'm just running the math. They can't compete with that.
HARRIS: Well, what do we do here? What's the fix here? Do we force a merger, can we force a merger between Chrysler and GM? What's the fix here, Peter? MORICI: Well, the fix isn't a merger. You're just taking two over-cost enterprises and putting them into one over-cost enterprise.
HARRIS: What do you want, Chapter 11?
MORICI: Well, what Chapter 11 would give us is a new labor contract.
HARRIS: Are you advocating for Chapter 11?
MORICI: If it's necessary, yes.
HARRIS: Is it necessary?
MORICI: If it's necessary, then let's do it. My feeling is Chapter 11 is not only feasible, it's inevitable. If we just give these guys cash...
HARRIS: You believe it's inevitable?
MORICI: It's inevitable unless the Congress is willing to make a line item in the budget right above HUD for Ford and General Motors. If it does that, it will be giving them cash forever, just like the British government was doing with British steel, British coal, and the automotive holdings it had.
They will not impose concessions on the UAW because that process would be too politicized. An oversight board isn't going to get the UAW to make concessions that really mean something, that will make the difference, because after all, the Democratic majority is beholden to the labor movement for its jobs.
HARRIS: No one is going to buy a car from a company in bankruptcy. You heard that argument.
HARRIS: And very quickly -- you know what, Peter? Hold your thoughts on that.
HARRIS: The president is about to make a statement here. We promised this to you from the south lawn of the White House. President Bush to make a statement on the economy and the November jobs report.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Today's job data reflects the fact that our economy is in a recession. This is in large part because of severe problems in our housing, credit and financial markets which have resulted in significant job losses.
I'm concerned about our workers who have lost jobs during this downturn. As we work to address the problems of this economy, we've extended unemployment insurance benefits to those who have lost their jobs during this downturn. We're focusing on the root causes of the economic downturn in order to return our economy to health.
The most urgent issue facing the economy is the problem in the credit markets. Businesses and consumers need access to credit at affordable rates to spend and invest. And so we're working to stabilize the markets and make credit more affordable and available. We're working with the Federal Reserve and FDIC. And credit is beginning to move. A market that was frozen is thawing. There's still more work to do. But there are some encouraging signs.
The root cause of the slowdown is housing. So we continue to take actions that will avoid preventable foreclosures and speed a return to a healthy housing market. Interest rates help the housing market recover. Interest rates, mortgage rates are going down. And plus, there's a number of programs in place to help Americans stay in their homes, to limit the preventable foreclosures.
I am concerned about the viability of the automobile companies. I'm concerned about those who work for the automobile companies and their families. And likewise, I am concerned about taxpayer money being provided to those companies that may not survive.
I put out a detailed plan recently that uses money that Congress appropriated last fall for the auto industry, money that can be used so long as the companies make hard choices on all aspects of their business to prove that they cannot only survive, but thrive. It is important that Congress act next week on this plan. And it's important to make sure that taxpayer money be paid back if any is given to the companies.
It's going to take time for all the actions we've taken to have their full impact. But I'm confident that the steps we're taking will help fix the problems in our economy and return it to strength. My administration is committed to ensuring that our economy succeeds. And I know the incoming administration shares the same commitment.
Thank you very much.
HARRIS: President Bush on the South Lawn right now just wrapping up a statement about the jobs report for November, and also seeming to suggest that he still is not in favor of using any of the T.A.R.P. money to bail out the Big Three.
Let's bring in Peter Morici once again from the University of Maryland.
And Peter, do I summarize that accurately in your assessment? What else did you hear there?
MORICI: Well I think that the president is very concerned if that we put any money into the automobile companies, that we can get it back.
MORICI: And my feeling right now is, if we do, we won't. We'll end up -- it'll be like AIG or Citigroup, we'll keep putting money in and putting money in and putting money -- these guys aren't as efficient as AIG. They know how to get $165 billion out of the United States right away. Citigroup, twice that much in a weekend.
But my feeling is that if we don't fix the labor cost problems definitively now, they'll continue to operate at a loss. They won't have enough money for new product development. One of the problems they have is a lot of the cars out there, they're not incompetent, but that they're old. They tend to leave -- the Impala, for example, they left that there seven years before they redesigned it. They simply didn't have the money after paying all the wages.
HARRIS: Yes, OK, Peter, appreciate it. Thank you very much. Thanks for your time this morning.
Let's bring in our Susan Lisovicz from the New York Stock Exchange.
And Susan, the president also said that at the root of the jobs problem here is the credit crisis.
SUSAN LISOVICZ, CNN CORRESPONDENT: Yes, and that's an excellent point, Tony, because what we saw in the jobs report today was that September and October were --
HARRIS: Boy. I think we just -- Susan, I think we just lost your mic. I'm going to try to give you just a moment here to see if we can fix it, because I guess my next question is whether or not we're just seeing the kind of correction in the jobs market that we've watched now in the credit markets and also in the housing markets --
LISOVICZ: Yes, I'm here.
HARRIS: All right. Great.
Susan, go ahead --
LISOVICZ: Yay --
HARRIS: -- continue the point you were making.
LISOVICZ: Tony, you talked about the credit market. The president said the most urgent problem is credit -- cheaper credit and availability of credit. And what we saw in the jobs report today is that the job losses are accelerating. They started accelerating in a big way in September. One money manager I talked to today said September 15th was really the demarcation point in the economy.
The economy was slowing. It was slowing, but it was handling it pretty well, despite the worst housing crisis since the Great Depression. It was handling record-high gas prices. But when credit seized up, that's when you saw consumer spending fall off a cliff. And this economy is -- the growth of this economy is driven by consumer spending. So what we saw in September, October, November, 1.2 million jobs lost. And that's why the president said the most urgent problem facing the economy is availability of credit. And that's why one of the reports this week, which immediately lowered mortgage rates, is that the Treasury -- U.S. Treasury -- may buy mortgage-backed securities from Fannie Mae and Freddie Mac.
Yes, this problem all began in the housing market. And, yes, we need to focus on, yes, keeping people in their homes and making sure that people have jobs in order to buy homes.
HARRIS: All right, Susan. Appreciate it. Thank you. We'll be talking to you throughout the morning here.
And once again, in these difficult economic times, it is difficult to put on a happy face. But a new study shows, if you're happy, and hang out with happy people, you'll have a better life. One reason to be happy when we come back.
HARRIS: All right. So Christmas is coming. With New Year's close behind, that means it's time to make some resolutions. Let's think about it, let's talk about it. Let's take a trip to CNN.com's i-Report desk check in with one of the guys helping run things down there at our i-Report operation, Tyson's Corner we like to call it -- Tyson Wheately. There he is.
You know, Tyson, when we talk about these resolutions, they usually fall into a couple of different categories, health, wealth and love. Can you cover a couple of those bases with i-Reports today for us?
TYSON WHEATLEY, CNN.COM: Yes. Why not?
Let's tackle health actually. I want to tell you something that we're doing for the New Year. And we think it's really cool, we're really excited about it. We call it "Journey to Change." And basically, it's -- we want to hear from people who are planning to make healthy lifestyle changes in 2009. And so perhaps you'd like to lose weight, maybe eat healthier or stop smoking, reduce stress. Whatever it is, we're inviting our viewers to share their healthy resolutions on ireport.com.
And, Tony, we're already getting some really great responses. I just want to share one with you today, it's from Barbara Rademacher, and she is a math teacher from northwest Arkansas. And she's actually planning to make several changes in '09.
Let's listen to what she has to say.
(BEGIN VIDEO CLIP)
BARBARA RADEMACHER, IREPORTER: This is Barbara in northwest Arkansas, and I plan to make some big health changes in 2009. For instance, I plan to drink less coffee, and I plan to start working out again every other day. And I also plan to make some really good i- Reports in 2009 because I'm going to have a new camcorder. And finally, I plan to go back to college and get my doctorate. That makes me have a stomach ache.
(END VIDEO CLIP)
HARRIS: That's so good.
WHEATLEY: Yes, it's so great, right? You've got to love the hat. And I love how she says she's going to do better i-Reports.
So, Tony, we're looking for our New Year's resolutions, so if you one, you can go and you can share it with us at ireport.com/journey. And we're actually hoping to follow some i-Reporters through the first part of next year.
HARRIS: That'd be great.
Yes, we love Barbara's -- what was that -- multiple locations, multiple shooting locations on that i-Report, right? You wonder if she's using a budget. Don't tax the budget. These are difficult economic times, Barbara.
And that is terrific. So you plan to follow some folks through the year. That's great.
WHEATLEY: Yes, absolutely.
HARRIS: All right, Tyson, appreciate it. Have a great weekend, sir.
WHEATLEY: Hey, you, too, Tony.
HARRIS: And, Barbara, you too as well.
Let's check in with Reynolds Wolf in the weather center.
Good to see you.
REYNOLDS WOLF, AMS METEOROLOGIST: Tony, what did she say? She said ohh?
HARRIS: Yes, when she talked about getting more education. That sounded like it was going to be the toughest of all. It can be.
WOLF: She's enthused, she's motivated, and that's half the battle.
HARRIS: And we're going to follow her, hopefully.
WOLF: Absolutely. Got to like that.
WOLF: There you go. I like it. I --
HARRIS: I do, too. I do, too.
All right, Reynolds, appreciate it. Thank you, sir.
Round 2 for the Big Three. The CEOs of General Motors, Ford and Chrysler back on Capitol Hill today. They are pressing their case for a $34 billion loan, your tax dollars. And live pictures now of the House hearing. We're staying on top of it for you. We will take you there for important testimony. We'll monitor the hearing.
Many of you don't like the idea of the government bailing out big business. We hear you. And we are trying to get you some answers. Here's our Wolf Blitzer putting a CNN i-Reporters question directly to Chrysler CEO, Robert Nardelli.
(BEGIN VIDEO CLIP)
WOLF BLITZER, CNN ANCHOR: There's a lot of the anger out there. The complaint -- and I want to give you a chance to respond -- the American automakers are not making cars that are really all that good.
Listen to this i-Report from David White, of Washington, D.C.
(BEGIN VIDEO CLIP)
DAVID WHITE, IREPORTER: Many Americans are sick and tired of investing their money on vehicles that end up with a Flintstone transmission. You know what a Flintstone transmission is, don't you? It's this. We don't like walking when we're paying for a vehicle.
(END VIDEO CLIP)
BLITZER: All right. So what do you say about the argument that the Japanese, the Germans, the Koreans, they make better cars than the Americans?
ROBERT NARDELLI, CHRYSLER CEO: Wolf, here's what we've done, you know, since August, when we became independent. We've spent about half a billion dollars in the first several months. Our warranty costs are down 29 percent.
It's an interesting comparison because in the hearing today, going around the panel, the majority of the senators said -- citing specific vehicles that they own, that they've got 60, 70, 80,000 miles.
The comment was, hey, you guys are making them too good and therefore, we're not buying vehicles and we're contributing to your problem. That was from the senators on the committee today, on the panel today, Wolf.
(END VIDEO CLIP)
HARRIS: Well, that answer from Robert Nardelli didn't wash with our i-Reporter. David White came back with this response.
(BEGIN VIDEO CLIP) WHITE: My mom's Chrysler is sitting -- her Chrysler -- her Jeep Cherokee is sitting in the shop with several problems wrong with it. And they make cars that last so long? That's how they're losing money?
Who in the world do you all think you're playing with?
Based on that note, I wouldn't give you a dime. How in the world can you sit here and tell me that these cars are built so well that you're losing money on them? Well if you're losing money because people -- here is my thing -- if the American people had that much confidence in the quality of your construction, you shouldn't be losing money. You should be oozing money.
(END VIDEO CLIP)
HARRIS: OK. All right, David. Pump the brakes there just a bit, brother.
Back to live pictures of the auto rescue loan hearing on Capitol Hill. We're watching it for you right here in the CNN NEWSROOM.
HARRIS: Coldplay. Called to court. Guitarist Joe Satarini accused the British Rockers of stealing from his 2004 album. He claims portions of Coldplay's hit "Viva la Vida," were lifted from his track, "If I Could Fly." Satarini wants profits related to the alleged plagiarism. "Viva la Vida." Boy, what a song that is. Earning Coldplay seven Grammy nominations this week, including Song of the Year and Record of the Year.
And how about this? A warning for users of a popular social networking site, Facebook. The new variation of worm has been making its rounds online. Unfortunately, it's attacked one of our very own here in the CNN NEWSROOM. Veronica De La Cruz joins us now with details.
Veronica, what's the name of the worm?
VERONICA DE LA CRUZ, CNN CORRESPONDENT: It's called the cube face worm. It's called the cube face --
HARRIS: The cube face worm.
DE LA CRUZ: Yes. And unfortunately, you're right. It's attacked one of our very own. Our executive producer Kelly Frank. You know, she says she received messages from a couple friends which read, I can't believe you're in this video. And then, Tony, she says once she clicked, she downloaded a worm this -- cube face worm. It wiped out her entire computer. All other files.
We're looking at computer security firm McAfee's web site. They're also following the story. They say other messages like this one. Wow, you looked awesome in this new movie, have been appearing. Similar story of Kelley's. When she clicked, it asked you to download Flash. Instead, of Flash, you've downloaded this cube faced worm. And we spoke to Facebook and as spokesman Barry Schmidt says that this really has only affected a very small percentage of users. And they are updating their security systems to minimize further impact.
In the meantime, they are asking you to logon to their web site, check out their security page. That's at facebook.com/security. That's going to give you a couple more tips on how you can protect yourself from this cube faced worm.
DE LA CRUZ: OK. Another story to tell you about. This is from "The New York Times" blog. There's a new Internet domain out there. It is called dot tel. Tony Harris.tel. It's coming soon.
HARRIS: I'm not going to let you drag me into this world here! I've got cube faced worms now to worry about. Come on!
DE LA CRUZ: Well, check this out. The "Times" is saying that dot-tel has the potential of becoming a phone book for the Internet. Right now, Tony, it's only available to organizations and companies. But eventually it will be available to everyone. Tony Harris.tel. You better go secure that. Dot tel is going to store all your personal info, from your phone number, to your e-mail, even your MySpace, Facebook, Twitter accounts.
Because I know that you have all of those, right?
HARRIS: Yes. Now folks are squatting on Tony dot whatever that is.
DE LA CRUZ: I'm sure. All right, Tony, from blingbling.net now. A really interesting story. Check this out. Lightning GPS will be lending out GPS devices for nonprofits for the holidays.
So, Tony, if your church, for example, displays a nativity scene, lightning will gladly lend your church a GPS, which they're going to hide inside the baby Jesus. So, that way if someone decides to run off with it -- this happens every year, right? They do this all the time. Then they can track it down and the baby Jesus will be back in the manger, right in time for Christmas day.
HARRIS: So, a lowjack on your nativity scene.
DE LA CRUZ: Yes. There you go.
DE LA CRUZ: I know you love it. I know you love it.
And if you have anymore suggestions, tips for us, a good text story, make sure you logon to Facebook. Search Veronica De La Cruz in the CNN NEWSROOM with Tony Harris. You can also follow me on Twitter, at Veronicadlcruz.
HARRIS: All right. See you next hour, Veronica. Thank you.
DE LA CRUZ: All right.
HARRIS: Second trip, second pitch. The automakers, the rescue loan. Will Congress give them a life saver?
(BEGIN VIDEO CLIP)
SEN. CHRISTOPHER DODD (D), BANKING COMMITTEE CHMN.: The Secretary Treasurer's in China now. It's time to come home. We got a serious problem on our hands. And I realize he's got a meeting over there. But we need them here and I need the Federal Reserve to step up, as well.
(END VIDEO CLIP)
HARRIS: Well, that's Senate Banking Committee Chairman Christopher Dodd frustrated that Treasury Secretary Henry Paulson, is in China, while lawmakers in the nation deal with the economic crisis here at home.
Our Emily Chang looks at what Paulson is doing in Beijing.
EMILY CHANG, CNN CORRESPONDENT (voice-over): U.S. Treasury Secretary Henry Paulson and other cabinet members meet top Chinese officials in Beijing. In the midst of a financial crisis that has infected the economies of both countries. Paulson characterized the conversation as --
HENRY PAULSON, TREASURY SECRETARY: A robust discussion of the current global financial market turmoil and economic downturn.
CHANG: The fifth round of the strategic economic dialogue comes as the U.S. is in a recession. U.S. demand for Chinese exports is dropping, And China's export-driven economy is slowing.
The reality of how much the U.S. and China rely on one another evermore exposed. China's Vice Premier said the two sides made clear the need to make full allowances for each other's concerns and have closer cooperation. The big announcement, that the U.S. and China have pledged $20 billion in trade finance to developing countries to keep trade flowing. But China made clear, focusing on its domestic economy is the priority.
JIN QI, PEOPLE'S BANK OF CHINA (through translator): We've always believed that if China can manage its own affairs well, maintain relatively fast and stable development of the domestic economy, that's the biggest contribution we can make to the international economy.
CHANG: Just this week China's central bank let the yen fall to its lowest point against the dollar in months. Prompting old criticism from Washington, that China devalues its currency to keep its exports cheap. Paulson didn't mention the yen's recent drop, but said he continued to press the Chinese on currency reform.
PAULSON: We make the point that progress, continued progress and flexibility is important. And the Chinese side agrees.
CHANG (on camera): The question remains, what these talks were really accomplish. Paulson is an outgoing Treasury secretary. There are no representatives from President-elect Obama's team here. Obama has yet to the say whether he'll even continue the strategic economic dialogue with China, when he's in office.
Emily Chang, CNN, Beijing.