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YOUR MONEY

One of the First Economists to Call the Recession Now Says It's About to End; Chrysler Filed for Bankruptcy; Swine Flu Crippling Tourism in Mexico, But What is Taking Down the Rest Travel Industry?

Aired May 2, 2009 - 13:00   ET

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


ALI VELSHI, CNN HOST: The end of the recession is in clear sight. One of the first economists to call the recession now says it's about to end.

I'm Ali Velshi. Welcome to YOUR MONEY.

CHRISTINE ROMANS, CNN HOST: I'm Christine Romans.

Chrysler filed for bankruptcy, the president says a deal with Fiat will save thousands of jobs and what does it mean for Chrysler workers, for your car warranty for GM and Ford? We're covering every angle of Chrysler's Chapter 11.

VELSHI: And there are strangely a lot of angles to cover on this one.

Swine flu is crippling tourism to Mexico but is it an infodemick that is taking down the rest of the travel industry? We'll discuss that as well.

ROMANS: Then it's the boomerang factor. Think of this, one-third of 18 to 34-year-olds live at home with mom and dad. One-third of you will have critical rules to follow so junior doesn't overstay his or her welcome.

VELSHI: But first, let's bring in, economist Peter Morici from the University of Maryland of School of Business as well as political contributor and interim host of CNN "No Bias No Bull," Roland Martin and Lakshman Achuthan, he is the managing editor of the Economic Cycle Research Institute.

ROMANS: All right. Lakshman, more than a year ago with the Dow 50 percent higher than it is today you shared this dire warning with our viewers.

(BEGIN VIDEO CLIP)

VELSHI (voice over): Now you say that you have an answer. You know where we are?

LAKSHMAN ACHUTHAN, MANAGING EDITOR, ECONOMIC CYCLE RESEARCH INSTITUTE: Yes, a recession is unavoidable at this point. So that's it. We're going into recession a year or so from now when the dust settles we'll get the exact date of a when it occurred but that's irrelevant. (END VIDEO CLIP)

VELSHI: Wow, and it was in fact many months later that the group that the group that actually officially calls recessions, The National Bureau of Economic Research, MBER. Said that a recession had started in December of 2007. Now Lakshman, we have talked many times between now and then. You are now here to tell us that the end of the recession is in sight.

ACHUTHAN: Yes. It's in sight and clear sight, using the same leading indicators, the same approach that we've always used to forecast the starts of recessions and the starts of recoveries. We are seeing a very clear pattern telling us this recession that the days of this recession are numbered. It's going to end this year, very probably, this summer. OK. So that's a big deal and much sooner than people thinks.

VELSHI: What is this we are looking at? This is the compilation of data that you look at that helps you determine this.

ACHUTHAN: Yes, now we're zooming in on what's been going on in the last few months. The bottom line is the economy, that blue line, that's why everything feels so bad. It's gone all of the way down to a minus 10 percent growth rate. It's much more comprehensive than GDP; it includes jobs, sales and income. The minus 10 percent growth rate is the worst growth rate we have seen since World War II.

So, indeed, it's not a forecast, it's a fact and this is the worst recession since World War II. The other indicators on top are leading indicators and they've turned up. They lead the economy and they've turned up in sequence, long leading indicators turning up before shorter leading indicators, that sequence has presaged every business cycle recovery. So for the foreseeable future, which is limited, OK, it's a few quarters, maybe a year, we are in a sustained, cyclical recovery beginning later this year and that's very, very welcome news.

ROMANS: So you're putting an expiration date then on this recession. In the meantime, another half a million, another million, another 2 million jobs could be lost, right? The jobs market will lag and the economy will turn and the recession will be over but we will continue to lose jobs, is that right?

ACHUTHAN: Absolutely. Let's say somewhere in the third quarter the recession ends between now and then we could be losing hundreds of thousands and easily a million or more jobs than we've already lost so we'll be down say 6 million or 7 million jobs in this recession. Just because the recovery begins it doesn't mean you'll get the jobs back. It could take a couple of years to gain the jobs back.

VELSHI: That's an issue. Don't buy the party supplies just yet. Let's go to Peter Morici, he is an economist with the University of Maryland and also a good friend of ours. Peter what do you make of what Lakshman just said?

PETER MORICI, ECONOMIST, UNIVERSITY OF MARYLAND SCHOOL OF BUSINESS: Well most economist are predicting some kind of recovery by year end. Although there still a lot of dangers out there that those indicators won't pick up because this is a very special recession. It's got real structural issues. One is that we're going to be getting a lot of commercial real estate defaults this summer. The second is that the banks put a moratorium, more or less on foreclosing on homes the first couple of months of this year and now that logjam is opening up.

So we're going to have more difficulties at the banks before this is over. Consumer spending which was strong in the first quarter tailed off the last two months, we need that to lead the recovery, but my bottom line is we'll get some kind recovery by the end of the year and it will be tepid, not enough and we'll not recoup all of the jobs we lost before the economy turns down yet again. I think we're in a long-term cycle that's rather Darrow looking.

ACHUTHAN: I appreciate that, but Peter, the first comment you said was most economists are seeing some kind of recovery. Most economists did not see this recession coming and most economists never see a turning point coming. That is the lay of the land, the economists magazine, the IMF they do huge studies where basically economists stink at seeing a turning point. So you look at these objective indicators, they're non-emotional, and they're not bullish, bearish, they don't have assumptions, they don't have hopes and fears and they're turning up and that's worth watching.

ROMANS: OK. Let's talk to Roland who is not emotional either.

ROLAND MARTIN, CNN HOST, "NO BIAS NO BULL:" I just have an Ouija board.

ROMANS: Let me ask you. We looked at the 100 days of this president this week and we're looking at now calls that there will be a recovery. We know there will be.

VELSHI: Or what it looks like.

ROMANS: How are we doing here in terms of confidence from the political angle of this? Has the president been able to turn the page on the crisis part of it and now we're looking toward recovery?

MARTIN: You know a lot of folks in D.C. kept saying the president is overexposed. He should stop having these news conferences and talking. The reality is the fact that he is so out front I think is what's keeping the confidence there. People hear him as he lays this whole thing out. They believe him and they have lots of confidence that he is going to lead us in the right direction.

Now, you talk about his approval ratings. You also look in terms of how they feel about his policies a low number when it comes to policies, people are still confident that this president has the right antidote when it comes to this economy. One of the things that people must deal with is, look, industries are changing in the media and we have to start figuring out, frankly, from a political standpoint as well, what jobs are you moving folks to and what industries are you moving them to because some industries are simply getting smaller and they're not going to rebound.

VELSHI: Roland during the coverage of the first hundred days you and I were sitting together on the set and you made a reference to something that President Obama had said, something that he had said. Let's just play that and let's listen to the president.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Even as we clear away the wreckage of this recession I've also said that we can't go back to a economy that's built on a pile of sand, on inflated home prices and maxed out credit cards on overleveraged banks and outdated regulations that allow recklessness of the few to threaten the prosperity of all.

(END VIDEO CLIP)

VELSHI: That's important because if we're coming to the end of this recession, we need to think about that we may not recover the jobs that we've lost before the next recession. What if we get into the bad habit that helped push us deeper into this one?

MARTIN: Look, I have said time and time again that this economy frankly is like us going through rehab. If you are going through rehab and you have a crack addiction and alcohol addiction and you get out of rehab and you're feeling great and wonderful and if you go right back into that crack house guess what?

You'll be back on that stuff again. If we sit here and it comes to gas and keep driving while gas prices are low and we keep depending upon oil, guess what? It will go back up to $4 a gallon. The same thing when it comes to credit cards. At some point we have to change our behavior. That's what Americans have to do.

ROMANS: Peter, let me let you have the last word here. You talked about the structural problems that aren't being addressed and I guess that goes with his analogy, doesn't it?

MORICI: Absolutely, the president wants to have a clunker subsidy, to get people to trade in their low mileage vehicles for higher mileage vehicles good idea. Alternative energy projects, great idea. Drill for more domestic oil and gas, good. But we also have to be looking to the industries of the future. Advanced manufacturing, a lot of this high-tech stuff that will integrate the digital world more effectively, we have to start building in those areas. If we're going to create new jobs we're going to have to resurrect some of the industries that we've lost but we're also going to have to start educating people for what's new.

ROMANS: All right. We're going to clear away the wreckage of this recession and we have hard work to do to build the foundation going forward. The president says so and I think you three agree on this. Peter Morici, University of Maryland, Roland Martin, CNN contributor. Lakshman Achutan, Economic Cycle Research Institute. Lakshman who called the recession is now calling a recovery by the end of the year. VELSHI: Let's hope he's right.

All right. Your trip is booked and your bags are packed, but should you go?

(COMMERCIAL BREAK)

ROMANS: All right. Now the government says you shouldn't travel to Mexico unless it's absolutely necessary. What should you do if you have a trip planned?

VELSHI: Many airlines are offering passengers some flexibility. US Airways for instance waiving the standard change fee for customers who want to reschedule their tickets within 14 days of their current reservation. American, Continental also waiving the fee for switching travel days. If you switch destinations though you have to pay for any change in fare. I spoke to Marriott Hotels. They said for the company- run hotels they'll change anything you need. They're encouraging franchisees to do the same.

ROMANS: Several cruise lines have suspended stops at Mexican ports over the Swine flu outbreak that is including Carnival, Royal Caribbean and Norwegian. Roger Dow is the presidency of the U.S. Travel Association and Nariman Behravesh is the chief economist of IHS Global Insight. They join us now. We want to first though play a little bit of sound from the vice president that caught a lot of flack where he said I think what some people have been saying privately and this is what the vice president said publicly.

(BEGIN VIDEO CLIP)

JOE BIDEN, VICE PRESIDENT OF THE UNITED STATES: I would tell members of my family, and I have, I wouldn't go anywhere in confined places now. It's not that it's going to Mexico. It's that you're in a confined aircraft where one person sneezes and it goes all of the way through the aircraft. That's me. If you are out in the middle of a field and someone sneezes, that's one thing. If you're in a closed aircraft or closed container, a closed car or closed classroom, that's a different thing.

(END VIDEO CLIP)

ROMANS: Now later the White House backtracked. The president's press secretary said what he meant to say was if you're sick don't do any of these things. But Roger Dow let me ask you from the point of view of the travel industry this cannot be helpful for keeping confidence in light of what has so far been a mild illness in the United States.

ROGER DOW, PRES & CEO, U.S. TRAVEL ASSOCIATION: You're right on, Christine. When I heard that the other day my phone lit up like a Christmas tree and I wondered what it was about when Biden, Biden, Biden, and it's not healthy, and I just said oh, my god because it's been so measured of what CDC and everyone is saying. Because you're exactly right. It is not a very widespread here and we really have to put it in perspective and a comment like this could be very, very harmful.

VELSHI: Let's be fair. There's a whole range of what people have been saying, Roger. The World Health Organization issued a statement the other day to say all of humanity is at risk. By that measure the vice president wasn't all that extreme. Nariman let's ask you, what effect do these types of things likely have on the tourism industry?

NARIMAN BEHRAVESH, CHIEF ECONOMIST, IHS GLOBAL INSIGHT: Well, they clearly hurt it and certainly tourism in and out of Mexico is being affected very badly. More broadly, I mean we know, for example, tens of thousands of restaurants have closed down in Mexico City. A lot of businesses are shuttered and this will have a huge impact on the Mexican economy. They were already in a deep recession. This is going to be a lot worse.

Fortunately, so far it's just confined to Mexico, but it could spread, and I think that's where some of these precautions are necessary. We've got to be careful. We have to be sure that a lot of government policies are in place to deal with this so that it doesn't spread, it doesn't become worse.

VELSHI: Interesting, so, Roger, doesn't it make more sense than that we are a little over cautious right now and hope this thing is contained and hope its short lived and then everybody re-books their flights or everybody re-books their trips? Why wouldn't we take the extra caution now then worry about the damage it is going to do to the industry if this thing really does spread?

DOW: I think you should take those cautions in going to Mexico and reschedule, but when you talk about the U.S., this is a huge part of our jobs and 13,000 people died of the common flu this year and so we have to keep it in perspective and it is so important both the CDC and airline -- the vice president's comment about planes, actually planes have the air pulled out through the sides row by row and go through hepa filters like hospitals and the air in a plane is actually clearer than my office building.

VELSHI: You know they don't clean those planes as often as they used to so I'm more worried about putting my hand in the seat pocket or between armrests. They don't clean them between flights.

DOW: They're working on it and its high priority.

ROMANS: I will say the last American flight that I was on, I handed my cup back to the woman to get some more water and she said, no, no, no, you throw that cup away. We don't pass things back and forth.

VELSHI: The other thing is a lot of the flights I take these days are commuter jets and they don't have the filtration system that you're talking about, Roger.

DOW: Right. The most important thing is -- the balance here is because -- my mother-in-law is 84-years-old and she's flying all over the place. My daughter's getting on a plane next week as is my son. If I thought there was any danger I certainly wouldn't ask them to go. ROMANS: But Roger you call it an infodemmic, not necessarily an epidemic, infodemmic do you think that we've made too much of it in the media, even though we're reacting to what we are hearing from public health officials.

DOW: I think the media has to have a measured response and by an infodemic I do think that it has the potential to happen. When Sars happened the southeastern Asian economy lost some $30 billion and their travel was down 20 to 70 percent which would be devastating to what we have as an ill economy right here in the U.S.

VELSHI: Nariman we just talked to some economists who sort of say this recession could end this year, maybe as early as summer and we could start on an up turn. If this thing were to become more serious other than tourism, what kind of impact maybe we've learned from Sars or the avian flu scare, what kind of impact does it have on the economy in general?

BEHRAVESH: Well, you just have to ask the following question regarding the conversation you are having. Which is the bigger risk, a temporary disruption as we had in the case of Sars and the governments got right on top of it and dealt with it and limited it, or do you kind of take a complacent attitude and let this thing get out of control and if it comes far worse we get a deeper recession so I think we have to be very careful at which is the bigger risk here. To me, I think clearly the bigger risk is this bigger pandemic.

ROMANS: I think we can all agree that this comes at a really rotten time for everyone. All of the things that we've been through in the economy and then you throw on something like this, John Roberts, the anchor of "AMERICAN MORNING" this week; he said what's next, Christine, snakes?

VELSHI: The tourism industry has been hit by those things, by the economy, by the fact that there's been a real turndown in those companies that have been holding conventions because they feel that has been difficult. So it has been a rough year.

Well we wish everybody the best. Roger Dow, thank you for being with us, he's the president and CEO of the U.S. Travel Association and Nariman Behravesh the chief economist of IHS Global Insight.

ROMANS: All right. Chrysler has filed for Chapter 11. What happens if you own a car made by a bankrupt automaker?

(COMMERCIAL BREAK)

VELSHI: Chrysler filed for Chapter 11 bankruptcy protection on Thursday after some lenders refused to reduce the automaker's debt.

ROMANS: If you own a Chrysler car or if you're in the market to buy one you're probably wondering what this entire means for what's parked in your garage or in your driveway.

VELSHI: And our good friend Peter Valdes-Depena, thankfully, covers the auto industry for CNNMONEY.com. He joins us right now. Peter this has been one of the more complicated roads to bankruptcy that we've seen generally in business coverage. Tell me what this means for Chrysler and what does it mean for car owners and car buyers?

PETER VALDES-DAPENA, CNNMONEY.COM: OK. Well the first thing it does not mean is it does not mean that Chrysler is out of business. It does not mean Chrysler is going out of business. It solves problems for Chrysler in terms of debt, but it doesn't solve other problems. It doesn't give them new or better cars to sell right now which is something that I think they can use. They still have longer term issues, but they're still in business for now. Your warranty is still covered for now by Chrysler as it always has been and there's not that much of an immediate change on the consumer level right away.

ROMANS: You can still go to your dealer and say I need the tune- up, but they're not making cars right now, they shut down the factories.

VELSHI: the factories are shut down.

VALDES-DAPENA: That is correct. At the moment they have shut down the factories and some of them -- they were going to shut down Monday and some of them shut down early because parts manufacturers don't like to ship parts to a bankrupt company until they've had time to work things out ahead of time to say yes, we're still on the list of people that you're going to pay, but they have shut down their factories for the duration of the bankruptcy unless there's still a possibility if inventories get real low, they could open some back up.

VELSHI: Explain to me how Fiat saves Chrysler. We don't know much about Fiat cars here in the United States. They haven't been sold here in a while. Many people who remember them in the '80s don't have the greatest ...

ROMANS: They didn't have a great reputation.

VELSHI: So what does that mean? How is Fiat going to save Chrysler in America?

VALDES-DAPENA: OK. Well what Chrysler needs badly right now is help in the area of small cars. Chrysler has very good technology for SUVs and larger cars and trucks; they don't have good stuff for small cars. That's a specialty of Fiat. In Italy, actually Fiat's reputation for quality is certainly better than it has been in the past in Europe where they now sell. The problem with Fiat cars right now is going to be more one of timing.

If you just look at it it would seem that it would take three years or so to get a product here although Chrysler says they've been already talking to Fiat about this for quite a long time. So Chrysler says they can start getting cars here in as little as 18 months, but still, I'd think I'd like to see something sooner than that.

ROMANS: OK. The White House is confidence that this would be a company that emerges through the bankruptcy process stronger and that they have here saved jobs and many dealers and for the 30,000 plus who worked at Chrysler. Let's listen to what the president said in announcing this bankruptcy.

(BEGIN VIDEO CLIP)

OBAMA: I am pleased to announce that Chrysler and Fiat have formed a partnership that has a strong chance of success. It's a partnership that will save more than 30,000 jobs at Chrysler and tens of thousands of jobs at suppliers, dealers and other businesses that rely on this company.

(END VIDEO CLIP)

VELSHI: Now let's take a look at what some of these jobs that could be at risk are. Obviously the jobs that are involved in manufacturing cars, there are about 40,000 people involved in that, but what a lot of people don't realize, Peter, is that there are more people selling cars in the U.S. than building cars in the U.S. so 140,000 people at dealerships, 104,000 people at the suppliers that supply Chrysler and many of those suppliers supply other automakers as well. Let's talk about that. What do you think happens? We know some dealerships will shut down.

VALDES-DAPENA: Chrysler has already said, they know they have too many dealerships and too many overlapping dealerships and they are going to be closing some of those dealerships and you'll see some jobs go away there. The good news is the market right now for dealership jobs for example, auto technicians. I went to a dealership recently that was closing and all of the techs had jobs at other dealerships and there aren't that many people that can do that.

So there will be some job loss there with that than there would be anyway, and at suppliers, that's probably even an understatement because as you mentioned, suppliers supply suppliers so you have a chain reaction effect from that. So if anything, the numbers you're looking at would be an understatement of what might actually be involved.

ROMANS: And you know just talking about when you cover this industry, the first car I ever remember was a Dodge 400, one of those little k cars and beyond that the first car I ever got was a Pontiac and that's going away. When you look, Peter, at just the dramatic changes in the landscape of the American auto industry, what's this going to look like for Chrysler five years down the road? Is it going to be a niche player of small cars that it designs and builds with Fiat ...

VELSHI: Or will it have a full line?

ROMANS: Is it ever going to be the Chrysler -- popularized the minivan. Even as the president said this week it really made an imprint on the 20th century leadership of this country.

VALDES-DAPENA: This has been an important company. Chrysler was decades ago, the number two-selling car company in America. So the hope here is that Chrysler can come back with Fiat's help as a full- line player in the auto industry to be the number one auto making company in America as it once was not too long ago, but right now, I think the focus is just on what does this company need to do it survive for the longer term?

I think it will get through this bankruptcy. I don't have a lot of question about that, I think it will get through the bankruptcy, but I think that there are other issues beyond that that Chrysler needs to get through to be a long-term success.

VELSHI: Peter often invites me along when he gets to try out a car and he tries everything out there. I don't think you have tried out a lot of Fiats. Are you excited about what the product might be?

VALDES-DAPENA: You know I have not tried a lot of Fiats, no. I've heard some good things about the newer models and smaller cars. If you've seen pictures of these cars, these are nice-looking cars.

VELSHI: They have style in them.

ROMANS: Just quickly, for both of you because you covered this a lot, too. Do you think this is averting a bankruptcy, good or bad for Ford and GM, Peter? That Chrysler averted bankruptcy?

VALDES-DAPENA: Chrysler ...

ROMANS: Chrysler averting liquidation is now going through bankruptcy.

VALDES-DAPENA: Yes I think Chrysler averting liquidation is a net gain. Because when they go out of business, you just saw all of those supplier jobs, those are supplier companies and those same suppliers also work for GM and Ford. If I work for GM and I work for Ford and I am looking at this, I have my fingers crossed that these guys stay in the game. I don't want more damage in the industry.

VELSHI: I think this collapse of Chrysler would have impaired Ford and GM at this point in time. Maybe they'll regret it five years from now, but right now a good idea.

Peter, always a pleasure. Thank you, sir.

ROMANS: All right. Is a college degree the only path to success in this economy? Not according to our next guest who says he's blue collar and proud of it.

(COMMERCIAL BREAK)

ROMANS: All right, Ali, we've said it again and again, the national unemployment rate, 8.5 percent.

VELSHI: And we've said again and again, for most people the national unemployment rate is not the principal concern.

ROMANS: That's right. We want to show you where it is where you live. Unfortunately, if you are looking for a job that national rate is not relevant. What's relevant is the rate in your hometown where you're trying to get a job and that's the problem. In 18 cities across this country, the jobless rate today is above 15 percent, that's almost double the national average. We're not going to name all of the cities on this list, but we want you to look interestingly at California, 12 out of 18 cities have jobless rates above 15 percent.

If you're job hunting that means California is now the place to be. Other states with cities on this list include Oregon, Arizona, Yuma, Arizona, Indiana, and Michigan. Look at New Jersey, Ocean City, New Jersey, has an unemployment rate of 15.3 percent. North Carolina also makes the list with several towns, but one town in particular with an unemployment rate of 15.4 percent and Ali, 109 cities have jobless rates above 10 percent.

Ten percent is, you know, this is a dangerous situation for a lot of people looking for a job or trying to feed their family, frankly, when you have rates that high.

VELSHI: At this point in a recession, whether it's the national housing prices or national unemployment rate, it doesn't matter as you said because you have to look at what's going on with you, there's one similarity in many of these towns that have unemployment rates above 10 percent and that means they have a lot of blue collar workers and a lot of blue collar jobs that have been lost.

So it really is about the blue collar workforce according to our next guest. Joe LaMacchia is the author of "Blue Collar and Proud of It." The one resource for finding freedom, financial success and security outside the cubicle.

ROMANS: And he actually has a great point as well in that he thinks this is where there's going to be great growth. We are showing all these towns where the blue collar workers have really been hurt. But he says that infrastructure jobs and a lot of new technology could be very, very good for those blue collar workers.

VELSHI: And he's got a blue collar on. Joe welcome to the show. Thank you for being with us my friend.

JOE LAMACCHIA, AUTHOR, "BLUE COLLAR AND PROUD OF IT:" Thanks for having me.

VELSHI: Tell me about this. We see this recession has been led by jobs lost in manufacturing, jobs lost in construction. We don't typically recommend people going to blue collar jobs at this point. You think that's bad advice and you think people should be.

LAMACCHIA: I'm not going to argue the point. We're in a trough here and there's a hell of a slowdown going on in this country and we're going to get through it. We're a nation of magivers, we're going to figure this out and we're going to keep going.

I built "Blue Collar and Proud of It".com about six years ago because I saw a disconnect, I ran an ad for truck driver or brick layer and I didn't get many calls back. There's an awful emphasis of going to college and going to college and the only way to be successful is to go to college and I kept hearing this, and I just wanted to -- there are a lot of people out there like me.

We can't do desk to blackboard. We have to hit it, bend it, smash it and that is how we learn. I want to make it clear to people that there's a lot of work out there especially with the whole green collar initiative going on right now. There are two points of interest here. The first one is that with all of the baby boomers retiring that especially with the allocation of the great spending stimulus President Obama has put together, you know, like 65 billion for roads, bridges and rails.

ROMANS: So there will be a lot of opportunities for people, the people who hit it, bend it, smash it and screw it and try to get it going and that's also what built this country. Let's be honest. It is that innovation that built this country.

LAMACCHIA: America was built after World War II. There is a lot of things falling apart. When you put the green collar sector on top of it, we're really in a renaissance here. We've kind of had the environment and the recycling thing going on for about 30 years. This is it. We're really going to transform this country.

VELSHI: Joe you're saying there are jobs that people can get into that won't get them into a great deal of debt by going to college and at the same time are not out source able jobs generally.

LAMACCHIA: I like to call them necessary jobs. When you compare $38,500 a year to go to college and maybe 5 or 7 grand to go to a technical school to learn a trade. I'm not saying don't further your education.

ROMANS: Sure.

LAMACCHIA: This isn't your -- this isn't your grandfather's factory floor. Forty years ago you could jump out of senior year and go to work as a mechanic or a plumber. Today you need training and in the back of my book there are a lot of places to get training.

ROMANS: The book is called "Blue Collar and Proud." So I'm going to give free plug right there. Let's talk about something welder. You permanently joined metal parts.

VELSHI: Hopefully ...

ROMANS: And you put things together. This is in all different kinds of construction and manufacturing and there are training programs available.

LAMACCHIA: Oh, yeah. Welding I mean, it's a science now. There's math involved with it. It's not just shooting an arc and trying to put two pieces of metal together. Again, we're in a slowdown, and I understand that, but with the great stimulus bill, we're going to come out of this.

VELSHI: You mentioned green collar jobs and this administration has put some emphasis on that. Two jobs that you think people should think about, solar panel builders and installers and wind turbine builders and maintenance people. Let's talk about solar panels for a second.

LAMACCHIA: Oh, yes, right now the renewable energy policy project estimates there are 93,000 jobs that will be coming online in manufacturing just to build solar panels. You know, and then you need someone to put them up and then you need someone to maintain them. That's a threefold right there.

ROMANS: Wind turbines, this is something you think is going to continue to take off. This isn't something that can be built by the way overseas and then shipped over here. They are so humongous. These are things that have to be built, maintained and looked after here right in this country.

LAMACCHIA: Right now Texas leads the way in wind power. I mean if a Texas oil man can make the transition from oil to wind power, I'm sure the rest of us can do it, too.

VELSHI: You're talking about Boone Pickens. This is a great conversation Joe. Thanks for being with us. It's definitely something we don't talk about all that much, but you've given us new perspective on it. Joe LaMacchia, is the author of "Blue Collar and Proud of It." The only one resource for finding freedom, financial success and security outside the cubicle, designed for people who bend it, smack it, whatever he said it was good.

ROMANS: It was very good. I think you nail a hammer.

VELSHI: Good to have you.

ROMANS: Thanks so much, Joe.

Think your bank is too big to fail? It's not. We're going straight to the chairman of the FDIC to find out just how safe your money is.

(COMMERCIAL BREAK)

ROMANS: All right. Do you know who Sheila Bair is? Forbes called her the second most powerful woman in the world. The chairman of the FDIC, if your bank goes under, this is the person that steps in to make sure your ATM card works the next day and your money is safe.

VELSHI: She is self described life long Republican, you might think that Bair is anti-regulation, but surprises she's seen as one of the most successful regulators in this economic crises.

(BEGIN VIDEOTAPE)

SHEILA BAIR, CHAIRMAN, FDIC: I think there's a difference between free markets and free for all markets and I think we just got a little carried away with everyone needs basic rules and markets need some basic rules and we became too lax and having rules in place and enforcing those rules. So there was a big boon period where it was very easy to make money and especially with the mortgage crisis, for a time everyone was winning out of that, right?

Because the borrowers could refinance and pull cash out from the equity in their house and the mortgage brokers were making money and the lenders and investors were buying the mortgages for making money. So it was hard for regulators to step in and put the brakes on. We should have. We didn't, but I think going forward it's a hard lesson learned and relearned.

VELSHI: There are some people who are fearful.

BAIR: I know. I know.

VELSHI: Should my money be in the bank? I've taken my money out of the bank. What's safe? Should they feel safe if they're in an insured -- an FDIC-insured deposit account?

BAIR: Yes, they are. The base limit right now is $250,000. It will go down to $100,000 at the end of year unless Congress changes that. Congress might make that $250,000 permanent, but they haven't yet. Most people don't have nearly that much money in the bank, but if they have a question they should go to my FDIC insurance.gov and we have a user-friendly website that will help them walk through the rules that apply to insurer deposit limits, but if they're under $250,000 for institution, then they should be fine.

And they should feel safe. It's safer than putting it in a mattress where you can lose it, it could be stolen or a fire. Who knows? You don't want to do that with your money. The bank can lend that out to help people buy houses and they're responsible to buy a car or start a business. So it is very important to the health of the economy.

VELSHI: You know banks are in trouble and you know you keep track of those banks that are in trouble but that's not information you share with the public.

BAIR: Right.

VELSHI: Why not?

BAIR: First of all, I'd like to point out there are 8300 banks in this country, and 25 have failed last year and 25 have failed so far this year, the numbers are going up and it's still a small minority of banks and the chance that your bank will close is very remote. We have something called the troubled bank list and there are about a little over 250 banks on the troubled bank list right now. Those are banks that we've identified or the primary regulator of that institution have identified as having some significant challenges that need especially closed supervised retention.

Most of the banks that go on the troubled bank list do not ultimately fail. We don't make that list available because we're afraid that would precipitate a bank run, a bank that other wise is going to make it could not make it because people would rush to the bank and pull out all their money and they would have to close it because they're losing the deposits and there's a good reason that we don't make that list public.

VELSHI: Let's talk about a bank that's been closed and then reopened. I'm one of those guys that think after the health department has closed a restaurant and then weeks after it opens it's probably a good place to eat there because it's really clean. Should we think about banks that way?

BAIR: Well, yeah. Generally when we sell a bank off to another bank we want to make sure the bank acquiring it is in pretty good shape. I think you can have confidence in the acquiring bank, yes. Everyone is FDIC insured so we wouldn't sell deposits to any entity that wasn't FDIC insured and certainly we analyze the bank to make sure they can deal with that situation.

VELSHI: Banks have the sticker on the door that says they are FDIC insured. Are there banks that people bank at that are not?

BAIR: If you don't see that, you should ask. Depository Institutions some of the takes, the traditional bank takes deposits and puts them in bank accounts and they have to be FDIC insured. If there's a question, ask, or go to our Website, FDIC.gov and we have a list of insured institutions. If they don't have the sign in the lobby they probably aren't because we legally require them to put the sign on the lobby and at the tellers' windows.

(END VIDEOTAPE)

ROMANS: I want to ask you about Citigroup and Bank of America and some of the big banks. There's speculation and talk that they're too big that the FDIC would never be able to take them over. Did she talk at all about these really big banks?

VELSHI: She did. Until now Indy Mac Bank has been the biggest one we've seen and frankly most people ...

ROMANS: It went very well, right?

VELSHI: Very smooth.

What she said is if a big bank were to fail it would be the same system because they would set up sort of a holding an umbrella bank to take over the assets of that. But they would follow the same process. One of the big arguments she's been making with other regulators is give the FDIC more power because the FDIC has actually run itself pretty well through this thing. They closed some 50 banks since the beginning of this recession. Every one of them closed on a Friday night and you can get your money all weekend and by Monday morning you can go to the bank ask it's operating as a new company.

ROMANS: All right. You've heard of teens, tweens 20-somethings and that's Ali and now you have boomerangs and a new demographic group that has been created by the recent economic downturn and we are going to tell you what a boomerang is and we'll kind of lay down some rules with the boomerangs.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The boy is 35-years-old.

UNIDENTIFIED FEMALE: It's just not fair. UNIDENTIFIED MALE: 35 years!

UNIDENTIFIED FEMALE: We were good parents and now we're supposed to be done.

UNIDENTIFIED MALE: Hey, I don't blame my kid for staying. Our place is much nicer than anything he can afford.

(END VIDEO CLIP)

VELSHI: That's from the movie "Failure to Launch." it was a fun movie. You grow up, you get a job and you make some money and you move out and get your own place and then you lose your job, you lose your money and you lose your place and you move right back in with your parents not exactly how it is supposed to work for the kid or the parents, but apparently this is happening a lot.

ROMANS: It really is. According to 2008 census figures, 20 million people who are aged 18 to 34 live at home with their parents. That's 30 percent of that age group, 30 percent. So mom and dad, you're not alone. You've got a lot of people to commiserate with. So what do you do as a parent when your 30-year-old child asks to move back in.

VELSHI: You ask our old and good friend Valerie Coleman Morris what do. Valerie is a financial literacy specialist, a former colleague of ours at CNN; she joins us now from Tucson, Arizona. Valerie so great to see you.

VALERIE COLEMAN MORRIS, FINANCIAL LITERACY SPECIALIST: It's good to see you. Thank you so much, and even though you said old -- you meant, long time.

VELSHI: Long time is what I meant.

ROMANS: From sharing an apartment.

VELSHI: Valerie has been doing this and has known this for so long and it's very fashionable right now to bring out all these personal finance people but you've been doing this forever, Valerie and you're dealing with this particular issue, you've come to talk to us about this particular issue of the boomerang generation. They left and they came back.

MORRIS: It's true. The name was actually created by us. The media created boomerang and it is what they suggest. They live and come back. The reality though is that in the past, think about this, in 1950, only 11 percent of these 18 to 34-year-olds actually moved away from home. In 2005, 41 percent of young adults left home, lived away from home. So what happened? Well, in addition to this recession, the reality of it is young people are having a hard time. They had to boomerang back home. What we want to make sure is there is a plan when they come home to do that.

ROMANS: Let's talk about that plan. Because you say they have to be house rules and these people have to contribute. And you have to be very clearly lay it out. Lay it out for parents out there what they need to expect from their adult children who move back home.

MORRIS: I think first it's very important that we understand that there are three rules. Number one, before the child comes back home, he or she may be coming back into their childhood room. But they're now 25 or 30-years-old. What are the house rules? You don't need to be up until 2:00 waiting for them to come in. You need to be able to explain what's expected. Now, a lot of people will say, this is uncomfortable. I have my own lifestyle. Guess what? If you're a kid returning out of necessity, everybody has to adjust their lifestyles and their trends.

One, what are the ground rules? Number two, what will be the monthly amount of money contributed to the household? Critically important, I'm a parent and a grandparent. My heart says let them come back. My wallet and my mentality, if you're 55 years or older says you can't afford to loan money. You can't afford to increase your ongoing expenses. There needs to be a monthly contribution, what is it? When is it due? That's critical. Lastly, when are they going to leave?

ROMANS: Exactly.

MORRIS: You have to have an expiration date.

VELSHI: That movie "Failure to Launch" we showed a clip from that was all about the parents who couldn't get rid of their kids, they were trying to set him up, to get them married off, so that he would leave the house.

MORRIS: You know what I really think, Ali, I think that we have to practice what is called, if nothing else, a cooperative kind of economics. Everybody has to contribute. Everybody needs to know what are the peak hours for utilities to keep the bills down. If they had to go and trade in their phone, the family plan is fine. You can't go over the minutes. It has to be realistic.

VELSHI: What you are basically saying, if you move back home, if you're a boomerang, you're not a guest. You're now a participant in that house. I think you brought up one very interesting point there that is parents want to help their kids out. You may be helping your kids out a great deal by having their contribution may be less but don't borrow from your retirement to help your younger kid who has the life that they can work and pay off their debts.

MORRIS: Because they have time on their side. There's a demographic from Stanford University. And he wrote a book that's called the "Age of Independence." It really ticked me off. He basically said this whole baby boomer generation is just saying that this is really a problem. It's simply a little blip on the sociological pendulum. I'm a boomer. Those of us born between 1946 and 1964. This is real.

It's about the money. It is about this recession, and you have to remember, 1973, highest earning peak for young people, those were -- that's us. Therefore, we have those same expectations of our children. So we've got to figure this out. It's not just a blip, and it's not just boomer parents saying, I really want my adult kids to still depend on me. Not at all. The nest is getting crowded again.

ROMANS: The nest is getting crowded. Valerie Coleman Morris, financial literacy specialist. You can check her out at Moneyval.net. Thank you, Valerie.

VELSHI: A longtime friend of ours.

ROMANS: We love you, Val.

VELSHI: Much better.

All right. Survival of the fittest when it comes to running your own business. We are going to reveal the creative way that one entrepreneur is squeezing every last drop of money out of his company.

(COMMERCIAL BREAK)

ROMANS: It takes hard work and creativity for small businesses to survive, especially now. Allan Chernoff reports on one Boston area entrepreneur who has discovered an innovative way to literally squeeze out savings.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN SENIOR CORRESPONDENT (voice over): Orders were slowing for custom-printed t-shirts. But when the UPS delivery man commented on the drop off, Peter Rinnig knew he would have to tighten expenses.

PETER RINNIG, OWNER, QRST'S: Uh-oh, I need to be proactive and be very cautious.

CHERNOFF: Peter had already laid off a part-time employee and reduced his inventory of t-shirts. He also cut hours for his six- person staff.

RINNIG: It's very scary. Never mind it's my business. I'm also responsible for six other guys there.

CHERNOFF: To save even more money, Peter got really creative.

Each of these ink cartridges cost $200. Peter was saving them for recycling, and then he realized there's still plenty of ink left over, even though the printer here was saying they were empty. So he decided somehow to make use of this left-over ink. So staffer Tyler Jones is using medical syringes to suck out the ink our of used cartridges.

TYLER JONES, EMPLOYEE: It's a great idea.

CHERNOFF: Tyler has extracted ink out of dozens and dozens of supposedly empty cartridges to Peter's delight.

I have seen this expression on your face and it's like, I'm beating city hall.

RINNIG: Absolutely. I'm getting around the system a little bit. And it makes me feel good that I can save a few dollars.

CHERNOFF: $4,000 so far. The cost of 20 new cartridges and Tyler has plenty more cartridges to suck dry. This ink-saving technique Peter hopes will leave red ink on his t-shirts not his financial ledger, and keep his business account in the black.

Allan Chernoff, CNN, Somerville, Massachusetts.

(END VIDEO CLIP)

ROMANS: All right. Allan Chernoff, thank you very much. That was a great piece.

VELSHI: It was excellent. And thank you for joining us. Listen I have to tell you about something. It was a bit of a throw down in twitter town. Bit of Ashton Kutcher versus CNN all over again. This time, it's on twitter. First of all, you're looking at our Facebook page. Join Christine Romans or Ali Velshi on Facebook. But join us on twitter too at Christine Romans. I'm at Ali Velshi.

ROMANS: The smack down is Ed Henry.

VELSHI: I need to have more followers then Ed Henry does. Ed Henry is Ed Henry @ CNN. Why did I just advertise that? It's a smack down.

ROMANS: You're erasing Ed Henry to see who could have the most Twitter friends.

VELSHI: Forget what I just said about his Twitter friends. At Ali Velshi.

ROMANS: And at Ed Henry but we're not advocating at Ed Henry. Just at Ali Velshi. All right make sure you join us every week for YOUR MONEY, Saturdays at 1:00 p.m. Eastern and Sundays. And Bono's on my Facebook page.

VELSHI: I just noticed that.

ROMANS: I thought it was Robin Williams.

VELSHI: I remember the day he was here.

You can also logon 24/7 to CNNMONEY.com. Have yourselves a great weekend.

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