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NTSB Schedules Briefing on Air Crash; Is the Worst Over for the Economy?
Aired August 09, 2009 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: We're awaiting new information about yesterday's midair collision above the Hudson River between New York City and Hoboken, New Jersey. The National Transportation Safety Board is scheduled to start a news briefing at any moment now. We'll be monitoring it and bringing you excerpts as it happens.
Meantime, I'm Fredrick Whitfield, hello again. An hour-long focus right now, moving in the right direction, a hopeful economic forecast from President Barack Obama with the nation's unemployment rate dipping ever so slightly from 9.5 percent to 9.4 percent. Are you on board with his rosy view?
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: this morning, we received additional signs that the worst may be behind us. Though we lost 247,000 jobs in July, that was nearly 200,000 fewer jobs lost than in June.
(END VIDEO CLIP)
WHITFIELD: He says the worst is behind us. Is it? The jobs report capped a week of mixed economic messages including revving car sales and the sinking value of your home.
(BEGIN VIDEOTAPE)
UNIDENTIFIED REPORTER (voice-over): The upbeat jobs report is little comfort to Greg Thompson who just feels fortunate the unemployment benefits he collects at the one stop career center in Washington, D.C. were recently extended.
GREG THOMPSON: For me, I'm just glad they did. But there's no job.
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Almost half of U.S. homeowners, that's 25 million homes, will be under water by 2011. Home prices, according to this report, will fall another 14 percent.
UNIDENTIFIED REPORTER: Major automakers reporting a boost in sales, thanks to the government's Cash for Clunkers program. Consumers giving thanks, too.
(END VIDEOTAPE)
WHITFIELD: All right. Those messages all week long. This hour we compare your thoughts about the nation's economy. How does it match up with the latest indicators of the housing, auto and job markets? And what about the White House's message? We have been hearing from you all weekend long and for the most part, we have been asking for questions and comments, you've been giving us a lot of comments and Josh Levs has been trying to manage through all of it. Give me a little bit of what people are saying.
JOSH LEVS, CNN CORRESPONDENT: Fred, I'm camped out here for the hour with you. We're going to be giving you all the questions we possibly can. By the way, take a look at the picture I got up behind me from CNN Money. Part of the Cash for Clunkers effort the other day. (INAUDIBLE) first part of the show. We're going to be getting your stories, your questions and so much (INAUDIBLE) very quickly, let me show you this.
WHITFIELD: Well, that looks like a clunker to me.
LEVS: That is, I think, the quintessential clunker. Maybe you could even call it a symbol, a metaphor for where the economy has been. I got a matter of seconds. Let's go to straight to this graphic. I want everyone to see where you can send your questions right now, you got cnn.com/fredricka. You cannot mess that up. It's Fredricka with an A.
WHITFIELD: Or just start with Fred.
LEVS: And Ricka. That's even better. And she's on Facebook and on my page here, it's Facebook and Twitter/joshlevscnn or CNN.com/John - we're right here getting your questions. And Fred, the first questions are going to be getting answers to are about the car market these days.
WHITFIELD: Perfect. All right. We're going to delve into that. Thanks so much, Josh. Appreciate that. All right. The White House says it has rescued our economy from catastrophe. Those were the president's words and the White House economic adviser Jared Bernstein relayed the same message in answering some of your questions. Just listen.
(BEGIN VIDEOTAPE)
WHITFIELD: How much did this dip in the unemployment rate become the catalyst for the president saying the worst may be behind us?
JARED BERNSTEIN, WHITE HOUSE ECONOMIC ADVISER: Well, probably less than the dip in the unemployment rate because that was driven not by adding jobs, but by folks leaving the labor force, no longer looking for jobs. Remember, you only get counted as unemployed if you're actively seeking work. I think what the president was reflecting on there are a couple of very important data points showing what we would characterize as less bad news. Not good news. Because you lose 247,000 jobs, that's not what we call good news.
But when you compare the rate of job loss, which is about half now of what it was a few months ago, when you compare the rate at which the overall economy is contracting, which is about one percent in the second quarter, compared to six percent in the first quarter, you really see the fingerprints of our program taking hold, hoping to stabilize the economy. But stabilization is not recovery. You said the number one issue is the economy, you're right. Number one a, jobs and incomes for working families and we're not there yet.
WHITFIELD: Now we have been hearing from people in so many different forms, via e-mail from Brian. He said in all the discussions on the results of the stimulus bill, the White House has pointed out cases where jobs have been saved due to the bill. However, can the White House point out evidence of the job growth, not lack of loss, that was promised in the run-up to the bill?
BERNSTEIN: Sure. I mean, I think it gets back to the same point I was making earlier. If you look over the prior, say, three months, let's smooth out some of the bumps in these data, we're talking about job loss of around 330,000 per month. Far too much job loss. But if you compare that to the prior six months, at that point we were losing somewhere between 657,000 jobs per month. We lost over two million jobs in the first quarter of this year.
Now, independent economic analysts, not us, not anyone here, folks out there in the economic community evaluating this stuff, tell us that the recovery act has added two to three percentage points to GDP and has added maybe something like 500,000 jobs that would have been otherwise lost in the second quarter of this year. So, what we can tell you is that the folks out there fixing roads, fixing bridges, the teachers, the cops, the firefighters that now have a job because of our state fiscal relief, helping burdened states, these activities are absolutely helping to save jobs as the writer mentioned.
WHITFIELD: All right. And this from Twitter. And it pertains to the cash for clunkers program. Isn't cash for clunkers another form of tax cut? Is it a tax credit? Why not give tax cuts and allow Americans to stimulate all facets of the economy?
BERNSTEIN: It's a fair question. And by the way, we cut 95 percent of working families' taxes with our working made tax cut through the Recovery Act. Remember, about a third of that bill, or $290 billion as tax cuts, but cash for clunkers has targeted something very specific, which is the very deep and significant contraction in auto demand and production for vehicles in this country. And so what you get there is kind of a two-fer. You're talking about a program that takes some polluting vehicles off the road. Creates an incentive to do so and help stimulate auto production at the same time. So that's much more targeted than the more broad kind of tax cut you see with maybe making work pay.
(END VIDEOTAPE)
WHITFIELD: All right. That was my conversation with economic adviser Jared Bernstein after the president made his optimistic view of the economy from the Rose Garden. That was on Friday. So in the meantime, the administration is boasting that it - its Cash for Clunkers program is pretty successful. It is encouraging a lot of people to buy. Is it fueling you to head to the dealership? Josh Levs has been hearing from folks in so many different. What kinds of questions and comments can we look forward to on that?
LEVS: Yes, Fred. I'm going to show you an example right now. One thing that a lot of people have been writing us is this idea of American-made cars. Let's zoom right in. This is an example from George says, one of many people saying this. He says when the Cash for Clunkers program be more beneficial for the American economy if it were only available for American cars? We'll have an answer to that coming up.
(COMMERCIAL BREAK)
WHITFIELD: All right. Welcome back. This hour we're focusing on, is the worst over? President Obama said Friday that, yes, there are good signs in the overall U.S. economy. So the Cash for Clunkers program got another injection of $2 billion because the U.S. senate said so in the week. Ford motors saying it's been hugely popular and every good for them. let's find out from Josh Levs, what are people buying? How are they taking advantage of this cash for clunkers program?
LEVS: Yes, interesting you talk about Ford there. In fact we have a list for you. Let's go straight to and I want everyone to see some of the best-selling cars that came out of this whole deal. I think we have (INAUDIBLE) take a look at right here. The folks at CNN Money have been doing a good job breaking this down for us, and you know what, if you don't have it there, I'll just show it to you right here. You can take a look on this page behind me. CNNMoney.com, one of our main stories. I'm going to zoom down here. And this right here is the list. This shows you some of the top five situations in here but you got the Ford Escape, and a Ford Focus all the way at the top, Fred.
Also the G Patriot, Dodge Caliber and another Ford car. So, we are seeing Ford really take the lead in here. But what I found more interesting is over here, some of the individual deals people got that we show you at CNN Money. Thanks to our i-reporters. Take a look at this. This one Caroline traded in her 2000 Isuzu Trooper for a 2008 Jed(ph). And if we scroll down a little bit, you can see the trade she made.
Let's quickly show you a couple more. This one was a 1990 Chevy for a 2009 PT Cruiser. We got one more interesting one over there. I really like this. It kind of reminds me of that cool car hunter back in the day, 1990 Lincoln Town car from Dodge. And this one I showed you earlier, well they couldn't trade it in. It was beyond clunkerdom.
WHITFIELD: Really.
LEVS: They couldn't clunker it, Fred.
WHITFIELD: IT can be too much of a clunker and then you're stuck with it.
LEVS: They have to be able to at least (INAUDIBLE) parts to de- clunker your car. WHITFIELD: Oh, I see. That's a drag.
All right. Well, let's find out how do you get the most out of this program? We know that that car doesn't qualify, but others might. So we caught up with a Toyota dealer out of Florida, Earl Stewart and we also met up with our personal finance editor, Gerri Willis.
(BEGIN VIDEOTAPE)
WHITFIELD: People are ready to buy. They lined up as early as this morning, not necessarily just to look, but they're qualifying, they have the cash or money in hand to actually get a new vehicle?
EARL STEWART, CAR DEALER: Yes, Fredricka, one of the most surprising things about this program to me was so many people with the clunkers were the older low priced cars that have good credit. There are a lot of cash buyers too. So we're having almost every clunker prospect, people that come in, qualify to buy either pay cash or be able to get the financing.
WHITFIELD: Now, initially you were a bit skeptical about this program, weren't you?
STEWART: That's exactly the reason why. You know, a person driving a 1,000 or $600 car, you wonder how good their credit is, why are they driving their cars? It turns out these are second or third cars, sometimes cars that are given to grandchildren and children, which are still in their name. Now they can take the car back from the grandchild and trade it in for a brand new car for the grandchild.
(END VIDEOTAPE)
WHITFIELD: So should everyone take advantage of this program right now? Just because you have $4,500 for your clunker, personal finance editor Gerri Willis says this.
(BEGIN VIDEOTAPE)
WILLIS: Cash for Clunkers can give you a nice boost if you're looking to get a more efficient car. But no matter what the incentive is, you really have to make sure you can afford that new car in the first place. Let me just show you a little example here. If you buy a car, average price tag on the car about $26,000, let's say you get the most you can from the government, $4,500, that reduces your cost to $21,500. If you finance it throughout four years, you pay seven percent interest, your monthly nut is $514, just for the car. And so you got to be able to make sure you can afford it. That it's something you can really take advantage of.
Remember, you know, cars aren't like houses, they don't increase in value over time. They get into accidents, you don't know for sure if it will be around for another 20 years, unlikely that it would. The product is constantly losing value.
(END VIDEOTAPE)
WHITFIELD: All right. So we want to examine this even further. Is the Cash for Clunkers program for you? Ken and Daria Dolan are joining us from West Palm Beach, Florida. You know their faces, this dynamic duo. Good to see you, sir and ma'am.
All right. We're talking - these are financial analysts. You know their books. They've authored six of them. They're going to point us in the right direction. So Ken and Daria, is this program for everyone? If you got a clunker, should you be going to the dealership? Ken?
K. DOLAN, PERSONAL FINANCE EXPERT: Yes, it is a perfect time to get a new car, a clunker. And get the credit. It's great. America is up to its eyeballs in debt, the average credit card balance is $9,000. But here is a great idea. Let's do this. It is like TGI Fridays running a promotion for Burger King. Let's do this. Let's do a promotion. Let's get more people who are already over their heads in debt in more debt by buying a new car and let's do this promotion better.
D. DOLAN, PERSONAL FINANCE EXPERT: No, no, no. In fairness, as we just saw...
K. DOLAN: It has to be fair.
D. DOLAN: Someone who is down the road from us right now, Earl Stewart, the fact of the matter is the people who are going in to get - take advantage of cash for clunkers were people who, and you can verify this through edmunds.com which knows more about cars than either of us do.
WHITFIELD: Yes.
D. DOLAN: They were people who have just put off doing the new car purchase and decided, hey, somebody else is going to pay for a huge chunk of it, so now I'll go take advantage of it.
WHITFIELD: And so we heard from Earl Stewart. He said, you know, he's excited about that fact.
K. DOLAN: He's a Toyota dealer, Fredricka!
WHITFIELD: Well yes. But he says, you know what, he cast doubt on a lot of folks who came in, thinking they got a $1,000 value car, $600 value in their car and they don't have any money and...
K. DOLAN: Fredricka.
D. DOLAN: Exactly. I mean for a government that is really trying to help the downtrodden more than anybody else, it didn't work then. So just based on anecdotal material coming from him.
WHITFIELD: So, Ken, if we see a lot of consumers ARE driving off with a brand new car, that's more fuel efficient because that's part of the criteria and you see auto dealers who have been suffering, particularly in the last year, and now they're celebrating, what could be wrong about this program?
K. DOLAN: Well, one of the things that is wrong is that six out of the 10 cars that are sold are not American. Yes and Josh made a good point, some good cars that are being sold. They are the minority. And I had a burger watching the Red Sox and Yankees game, at some hamburger dive on Friday night who is sitting next to me but an auto dealer, and he said - he knows of a dealership owed $800,000 by the government and he says it's like Burger King throwing a party for McDonald's. It is not doing a great deal for the American auto industry.
WHITFIELD: Oh.
K. DOLAN: Period.
WHITFIELD: OK.
D. DOLAN: And you know, there are more ramifications to all of this because if you look at people taking on new car loans rather than that old clunker that was sitting in the yard that may have already been paid off by now, then that is money that is going to have to be committed to a car loan payment, that is then going to turn around and bite the retailers further, bite the restaurant business further.
WHITFIELD: OK.
D. DOLAN: So, it is going to have long reaching ramifications.
WHITFIELD: All right. Hold that thought. Because Ken and Daria, we're going to hear from you again. In fact, we got a whole lot of questions and comments...
K. DOLAN: We're ready.
WHITFIELD: ... from folks that Josh has and ready to dole them out to you right after this.
(COMMERCIAL BREAK)
WHITFIELD: All right. We're asking the question. Is the worst over? This off the words of President Obama who said the worst is over as it pertains to the economy. So we're delving in right now on the Cash for Clunkers program, $4,500 credit for you to turn in your clunker and drive away with a more fuel efficient car. So our Josh Levs is here. We got Ken and Daria Dolan also with us to answer questions that you've been sending to us all day long about why I should take advantage of this program and who is really benefiting. So Josh, what do you have first?
LEVS: Yes. I'm going to pick up right where we were. In fact, let's zoom back and I want Ken and Daria to see this question. And Ken, I think you mentioned that this came to us in a blog. It's from George. Wouldn't the program be much more beneficial for the American economy if it were only available for American cars? I tell you guys, both, we're getting a lot like this, but some people are already responding with the other side and saying, wait a second, why shouldn't you help people buy whatever car they want? Why should they only get the deal if they're going to buy American? So Ken and Daria, talk to us about this ultimately, wasn't this just fair to make it available in a broader way?
K. DOLAN: Thank you, Josh.
D. DOLAN: Well, I don't even think it is an issue of fairness. Because if you think about it, we're members of a global economy and what would the rest of the globe think if we said, OK, we're just going to buy our own. We would set off all sorts of ramifications around the world, we can't afford to do that as members of the World Trade Organization.
K. DOLAN: And, Josh, I agree with George, the e-mail that it should have been limited, in my opinion, to American cars. We got nothing against new cars. All we're saying is some people are very much tempted to go into a debt for a new car when they weren't going to buy one in the first place.
D. DOLAN: Also, remember this too that a lot of those foreign cars, the Toyotas and what have you that are going off the lot, are cars that were manufactured right here in the southern part of the United States. So American makers made them.
WHITFIELD: The Toyota Corollas are the number one selling car under this plan and then up next is the Ford Focus and Ford already boasted this week that they saw greater sales in the month of July as a result of this program than they have seen in two years.
K. DOLAN: That's right.
WHITFIELD: Josh, what questions do you have?
LEVS: Yes, you know what...
WHITFIELD: Ken is like, I'm still not sold on...
LEVS: Let me actually tell you another thing we got, just came to me in twitter, somebody suggesting maybe there should be an environmentally organized one of these where you can trade in for a better environmental car. Do you guys think that would be a good idea financially to help the economy?
K. DOLAN: Well, Josh, that's almost a moral question. Would it be nice to get great a great car...
LEVS: I'm talking about money. Would it be good for the economy if we do that?
D. DOLAN: No, because if we keep bailing out one small segment, Josh, such as the auto, what happens to the television manufacturers and what happens to the restaurants and the retail sector and all the other sectors? They're going to be lined up next.
K. DOLAN: Cash for burgers.
LEVS: So you guys aren't taking advantage of this yourselves, are you?
K. DOLAN: No, we're not.
D. DOLAN: No, didn't have a clunker.
K. DOLAN: We don't have a clunker.
WHITFIELD: All right. You know what, Cody has written on my blog, Josh, yes, the recession is slowing, however, it is not due to the stimulus. Americans have gotten used to saving money, buying the essentials and not financing everything, you know, which really kind of is in sync with what we heard from Earl Stewart earlier. They have been saving their money and so a lot of folks actually have to these dealerships with cash.
(CROSSTALK)
D. DOLAN: But the people coming to the dealerships with the cash are the people that probably weren't in debt up to their eyeballs to begin with since they had great credit ratings and were able to make hay with this.
K. DOLAN: We are unconvinced.
WHITFIELD: All right. Ken and Daria, hold on tight. And Josh as well.
K. DOLAN: I miss that already.
WHITFIELD: We have got more of this - I'm so glad we have you all back. So you have driven off with a brand new car. What about your home? Are you worried about it? Well, one in two Americans just might be very concerned about whether their home is worth less than they actually owe on it. Some of your questions on that topic coming up. Also, we have not forgotten the top headlines of the day, we're going to take you to New York, the Hudson River. They're removing debris there as well as wreckage from that crash yesterday, an update right after this.
(COMMERCIAL BREAK)
WHITFIELD: All right. Much more to tell you about as it pertains to is the worst over, our focus this hour.
In the meantime, let's focus on some of the top stories. The National Transportation Safety Board is just starting a briefing on yesterday's midair collision over the Hudson River. A small plane collided with a New York sightseeing helicopter, nine people were presumed dead. Five bodies have already been recovered and so far some wreckage has been pulled up. You see the press conference taking place right now. We're continuing to monitor it as it happens.
And overseas, after claiming at least two lives in Taiwan, a powerful typhoon is blamed for at least one death in eastern China. Reports say winds were clocked at 73 miles an hour. And after a short break, we're going to resume our conversation, is the worst over as it pertains to the American economy? The president says yes. We're going to focus now on mortgage, your home. And whether your home is worth as much as it was just a few months ago. Josh Levs has been fielding a lot of questions and comments on this as well.
LEVS: Fred, there is one spot on cnnmoney.com that I want you to see right now that summarizes what dozens of people have been writing us, this question, is the foreclosure rescue plan ultimately working? We're going to get some answers.
(COMMERCIAL BREAK)
WHITFIELD: Welcome back. Is the worst behind us? The White House is boasting the economy is moving in the right direction and that includes, they say, the housing industry.
(BEGIN VIDEOTAPE)
OBAMA: We have enabled families to reduce the payments on their mortgages, making their homes more affordable and reducing the number of foreclosures.
WHITFIELD: Is the White House being prematurely confident about the economy?
BERNSTEIN: If you listen to the president today, I think what you hear is a very, very balanced view and nothing that I would call confidence or over confidence. I mean, confidence in the sense that our programs are taking hold, and starting to stabilize the economy. Now, to not observe that would actually be, I think, an economic as well as policy mistake. You have to track your policies and make sure they're doing what you want them to do. They are helping to stabilize the housing sector, they're helping to stabilize credit markets, and now we see that we are losing fewer jobs per month than we were significantly fewer than we were a few months ago.
What the president made very clear is that we are nowhere near out of the woods on any of these dimensions until we're creating robust monthly job growth that really gives the lift to the living standards of working families. We're not there yet, but we're moving in the right direction. Free fall appears solidly behind us. I think that's what the president was trying to say today.
(END VIDEOTAPE)
WHITFIELD: Economic adviser Jared Bernstein, my conversation with him on Friday. So are you confident about your home, keeping it and keeping the value of your home? We're delving into that topic right now in this segment.
Josh Levs has been hearing from you and so have I on Facebook and on blogs. Lots of questions about the value of our homes.
LEVS: Yes and whether it's working and whether things are getting even better and some people are weighing in on a lot. We're going to have a chance to present these questions to the Dolans. And Fred, one thing people are asking, you can see it again right here, the whole spread of people who have been writing to CNN telling us their stories and wanting to know, overall, is the foreclosure rescue plan really working. We heard the side there. We heard the government's take. But we definitely want to hear that from the Dolans.
WHITFIELD: That's right. The government says, at least the White House says its very confident. All right, Ken and Daria Dolan, you're back with us, right? West Palm Beach?
K. DOLAN: Hey there.
WHITFIELD: There you are. Ken, you are not confident that they're moving in the right direction.
K. DOLAN: What country is he talking about?
D. DOLAN: On Friday, the president made reference to a light at the end of the tunnel. When we look at housing, I respectfully submit, Mr. President, beware, it could be an oncoming train.
K. DOLAN: Hello, Jared? No, the United States housing market. Yes, the U.S. market.
WHITFIELD: OK well listen to this though. Perhaps the White House is saying what they like is existing home sales got quite the injection, particularly because of the first time buyers program that the government instituted, $8,000 credit toward buying a home if you're a first time home buyer. Did that not help?
K. DOLAN: Fredricka...
D. DOLAN: Fred, Fred.
K. DOLAN: Freddie, we love you, but listen to us.
D. DOLAN: Stop for a minute. It is the same thing with the first time home buyers tax credit as it is with the Cash for Clunkers. We are building a new society in which the only way we motivate people to do anything is to pay them first or to incent them through dollars. The fact of the matter was it was the number of foreclosures. And if you look at the fact that we still have further to go on the downside in the value of houses, and the fact that even the "Kiplinger Washington Letter" is now predicting that by the end of next year, 2010, one in every six mortgages will be in foreclosure, we have a big problem here because --
WHITFIELD: That is -- sorry.
D. DOLAN: As the house value falls, the people who are making those payments who can even afford to make it even after a modification say I'm paying more than it is going to be worth.
K. DOLAN: One tidbit, Fredricka, 15 million homes -- 15 million mortgages in America are higher than the value of the home. But everything is OK.
WHITFIELD: OK, well we got another question, right, Josh?
LEVS: Right, yes. One thing that people really do when it comes to housing more than other parts of their daily lives is they really drill down on their numbers, especially interest rates. Let's zoom in here to Facebook for a second. Padideh wrote us, hearing our latest report and said, uh oh, "interest rates on mortgages will be going up" now.
Talk to us about interest rates, where they stand now, what you to see in the near future, what impact do you see for people out there considering refi or considering buying?
WHITFIELD: Daria?
D. DOLAN: I'll tell you, if you're in a position where you could refinance or if you're in a position where you've found -- you've done your comparables and you've found a house that had the worst of it beaten out of it now and have a sufficient downpayment, there is no time like the present.
Because at the rate we are printing money, and creating stimulus, if that were the way to make a successful country, then Argentina should be the number one economy in the world. So we're going to get higher interest rates and they could be substantially higher because it is the only way the rest of the world will buy the paper on this money we're printing.
WHITFIELD: OK. We are going to talk more about this topic because there is a lot to delve into as it pertains to the housing industry. We're going to take a short break. More questions for you, Ken and Daria, and namely if we're talking about a quarter of American homes right now are underwater, meaning you owe more than they're actually worth, Deutsche Bank says by 2011, it could be that one in two homes, Josh, which is not very encouraging, one in two homes could be underwater.
LEVS: Yes, I mean look, there are plenty of dire numbers to keep you really busy and really depressed. Let me tell everyone quickly, we're hearing a whole bunch of Web sites mentioned throughout this hour.
I want everyone to know this. At the end of the hour, I'm going to walk over to a computer, OK, I'm going to take all the relevant Web sites you should know about that have come up on this entire hour, I'm going to post them all on the blog and Facebook and Twitter so you'll be able to empower yourself with information and if you want, lots of depressing statistics coming up after this break.
WHITFIELD: No, we don't want to tease it that way. Uplifting, answers.
LEVS: Answers, no, I was going to make the switch. See coming up is the positives, we've got some more of your questions.
WHITFIELD: OK, good.
(COMMERCIAL BREAK)
WHITFIELD: All right, we're asking this hour, is the worst behind us? The president said just Friday, yes. But as it pertains to the housing industry, Deutsche Bank said by 2011, one half of American homes will be underwater, meaning they owe more than they're actually worth. Josh Levs has been fielding a lot of questions from you. We have those questions to pose to our Ken and Daria Dolan, financial experts and authors at least six books. So Josh, what do you have?
LEVS: Yes, right now, I'm going to point to some factoids for you. I want everyone to see a few of the things you can get at CNNMoney.com. Let's zoom right in. We were just talking about interest rates before the break and I want to show you the -- you can actually track these on CNNMoney.com. Here's one of our latest stories.
Just go to that main page and you can click on any story about foreclosures or mortgages and we can give you -- see that, mortgage rates right there. And it is updated very frequently. You can see where these things stand. Also, check this out. Where to shop for a mortgage. I really like this. We compare three different major Web sites that people have been using, zillow.com is one of them. And it points out what is good for it. And also the catch, if you choose to go in that direction, why it might not be the ideal one for you. Which I see through two more right there.
Now, before we go, this is just a little bit fun. Most people don't have this kind of money. But you can see the homes, worth more than a million bucks what they look like, how long people have been trying to sell them. And, you know, if you are in that market, you can actually find some really good deals right there. And Fred, we also got some questions for the Dolans which we'll be getting to in just a minute.
WHITFIELD: OK, very good, we will indeed.
All right so, Ken and Daria, let's begin with some of the comments that I'm seeing already right now on my blog. "When I visit South Carolina, I notice the place that we -- that had weeds growing everywhere, so we drove in and I saw these three model homes that was empty and seemed to be broken into, so then I looked around and there were people living inside the model home. I went up to one of the people and said that the person who built this place filed for bankruptcy."
So the discovery here being made is that there are some homes that are foreclosed, people are living in them, either illegally or inappropriately, so when you hear the administration saying there are incentives under way and the mortgage industry is getting better, everywhere you look, there are foreclosure signs. How do we determine that?
K. DOLAN: And it's going to get worse, Fredricka, because we estimate that it's going to be -- closing prices on balance across the country in the next four or five years are going to go down another five to eight percent and that places like California, Arizona, and Florida may take 15 to 20 years to recover. That means there is some good bargains there. But we see further erosion in the home prices.
WHITFIELD: Who should take advantage of those bargains?
D. DOLAN: Well, first off, people that have a good safety net of cash on the side, who can put down 20 percent.
K. DOLAN: At least.
D. DOLAN: And nowadays I think it is darn near impossible not to get a mortgage without a 20 percent down payment and who don't overpay, who don't buy with their hearts instead of their heads. Everybody needs a place to live and the fact of the matter is, as long as you're planning on staying put, even in the rest of the country for 7 to 12 years, which is how long it is going to take even the areas that weren't as hard hit as Florida and California and Nevada and Arizona to recover, then you've got yourself a good property.
K. DOLAN: It's a good deal, especially in Florida.
WHITFIELD: What other questions and comments do we have from viewers on mortgages, the values of their home or losing value of their homes?
LEVS: They are and as you were saying, we're getting a lot on this. Ken and Daria, I'll tell you something. Let me ask you this, are we looking at this all wrong? Let's zoom in for a second. I want you to see a little bit of what Larry wrote to us on our blog, CNN.com.
What he's saying here is people have been paying way too much for housing in the first place, right? And you don't have to read the whole thing, but that's the basic idea. And he's saying, you know what, it's going to be like this for a long time. Are we thinking about this fundamentally wrong, when we think recovery? Because if everything was inflated before, then we really don't want to go back to what it was before, right? So are we thinking about it wrong, are we not anywhere near recovery in that sense?
K. DOLAN: Well Josh, that's a great, great point. The housing market bubble really expanded to the highest around 2006 in most parts of America. Again in most parts of America, housing prices are down 40 percent. They should never have gone so high, but that doesn't mean there aren't wonderful bargains and more to come. In Palm Beach County, where we live, there are 80,000 condos for sale.
LEVS: Let me toss one more at you, because let's say the right way to think is not we're going to go back what we were. Instead, people take losses for now, but they buy other people's losses, right and steadily works its way up. That is it's own type of recovery. Here is a question from Tammy. Actually, a comment. She says, "I don't believe we have reached the bottom yet." Guys, if I were there with you right now and I laid out a calendar, and I said put a big red X right on the month when you can declare a recovery, things are turning around, look ahead, give me a time frame.
K. DOLAN: Months? How about a year.
LEVS: Pick a month of any year.
K. DOLAN: You didn't say year, Josh. I'll hold you to the question.
D. DOLAN: I will give you a month and I will give you a year, but there are caveats with it. We could expect the bottom to be hit, I'd say roughly about June of 2012 with the caveat that we don't end up with a whole round of new taxes with a health care bill, that we don't have all sorts of other employment issues because businesses will not be hiring if we get a full blown new health care plan.
LEVS: OK, you're on record with your caveat, even though we're going to call you up in 2012. Ken, are you on board with that?
K. DOLAN: Yes, I am.
D. DOLAN: If I'm alive.
WHITFIELD: OK, well maybe that's in sync with 2011, you know, half the homes will be underwater and then we've heard from other analysts that by next year, 2010, the fall, that's when you're going to see a significant turnaround in the unemployment numbers. So speaking of which, we're going to now talk about unemployment right after this break and after headlines as well. There has been a slight dip in the unemployment rate, 9.4 percent now. So you got your car, brand new car, you're seeing the value of your home dipping, where are the jobs? Ken and Daria, right after this.
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WHITFIELD: All right, more on your financial future and answering the question, is the worst behind us? Straight ahead, but first a look at the top stories we're following. The National Transportation and Safety Board is holding a briefing on yesterday's midair collision over the Hudson River. A small plane collided with a New York sight-seeing helicopter. Nine people are presumed dead. Five bodies have been recovered so far, along with some wreckage.
(BEGIN VIDEO CLIP)
DEBBIE HERSMAN, CHAIRMAN, NTSB: During the recovery efforts today, they were able to recover most of the helicopter. The helicopter was removed from the water and has been taken to a pier for further examination. That helicopter was in water that was about 30 feet deep. The divers had extremely challenging conditions with current and visibility. At times, the visibility was no more than one foot in front of them.
(END VIDEO CLIP)
WHITFIELD: We'll continue to update you on that tragedy on the Hudson River. Meantime after the short break, back now to our hour- long focus now, is the worst behind us? Let's talk about the unemployment rate, dipping slightly from 9.5 percent to 9.4 percent. Josh Levs fielding your questions, is their relief?
LEVS: Yes Fred, I'll give you an example of them right now. First of all, CNN.com/jobs is packed with a lot of information here. But here is a question we're going to get an answer to. Will this be a lopsided recovery? Pam is writing us. "You know what, there are no jobs out there for middle-aged people." Are we going to see as jobs recover, only certain people being able to get jobs? We'll get answers, coming right up.
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WHITFIELD: All right, well welcome back. So is the worst behind us? It's a question we're asking after the president said just Friday the worst is behind us as it pertains to the economy, celebrating the unemployment rate across the country dropping just slightly from 9.5 percent to 9.4 percent. But still, we're talking about 14 million Americans who are looking for work.
So we have got our Ken and Daria Dolan who are with us out of West Palm Beach, Florida. They're going to be answering some of your questions and inquiries about unemployment. Let's talk about whether this news is good news, particularly if you are out of work. Is this encouraging?
Calvin Ratchford is here with me in Atlanta. He's been looking for work since December. You're a civil engineer. But now a little ray of hope for you because you're benefiting from a program, a federal program, you tell me, right, that helped pay for your education to increase your marketability so now you kind of extended your marketability by way of this program.
How did it work?
CALVIN RATCHFORD, UNEMPLOYED: The way it works is the WIA program helps fund your education based off certain eligibility requirements, income and your level of education. So I was able to qualify for $5,000 based off the time I get to go to school for a year or less of education. So with all that, the school, Georgia School of Construction, helped kick in the rest of the funds. The school cost me 6,500 bucks, but now I don't have to pay anything.
WHITFIELD: It works because you're a civil engineer, but you thought I'm going to broaden my resume by taking this course that really offers you more -- a greater skill set in this industry and that's how the program works. However, you're still looking for work. And when you hear these unemployment numbers and you hear the White House celebrating it, this is very encouraging, is it encouraging to you? We're talking 9.5 percent down to 9.4 percent and you still haven't found work.
RATCHFORD: No, that's still a small number. It's good but it's still not good enough. So I think we still have a long way to go. So in all that, I just think it is important for people to pick job skills, get some networking, do whatever you have to do to find a job and maybe those numbers will go down.
WHITFIELD: While you haven't landed the job yet, you feel like you're kind of able to convey to folks here, there is something that perhaps you can do in this time when you're not working and there are programs available to perhaps help you because clearly when you're unemployed, that means funds are tight, too, so not everyone can afford to go back to school, but there are resources available.
RATCHFORD: Yes, there are resources available. Just go out on the Internet, network, that's how I found --
WHITFIELD: And you learned of this through the job fair, right?
RATCHFORD: Through the job fair, exactly.
WHITFIELD: Same job fair where we actually met you many months ago, we profiled you and about 10 other people we met at the job fair and we're following the progress in the job hunt. And so far, it is very tough. Only about four out of 10 people have actually landed employment.
So Ken and Daria, back with us again, the Dolans now in West Palm Beach, Florida, this has got to be pretty encouraging to hear how Calvin is maximizing his time while looking for work, but at the same time, we would love it if we could bring you good news that he actually just found an opportunity. How encouraged are you about the new unemployment rate?
D. DOLAN: Well, let me say this, because I don't want it to look like I'm totally negative on the entire world here. The good news is that the unemployment numbers for the month of July were the best we have seen all year. So that's the good news. Don't tell that to the half million individuals who were pink slipped in the month of July. But the disturbing side of that is the better unemployment number of 9.3 percent came on the backs of 700,000 discouraged workers who have just said that's it, I can't find work. That's the bad side.
WHITFIELD: And what you mean by that is some have simply dropped out of the labor force and/or it means they have seeked part-time employment and --
D. DOLAN: Exactly, they're either unemployed or underemployed.
K. DOLAN: I would just say one thing, Fredricka, sort of a Dolans schema here. Is if you have a job, learn more about it, do stuff that nobody wants to do. One thing we did on our Web site is things not to do in recession. Don't take your job for granted. If you can't find work, get retrained in health care, in the environment, get retrained and go where you have to go to work. Get off your butt and get going.
WHITFIELD: That's particularly important too. We're not really sure if the million and a half people who are going to be losing their unemployment benefits at the end of the year, whether indeed they might be able to get an extension. Many folks are kind of counting on that, that Congress will extend those benefits. But what if they don't?
D. DOLAN: Well and therein lies the rub. There are just people -- people are going to have to start doing things that we haven't seen in, you know, 60 years, maybe bartering some services. If you need something and you don't have any money to pay for it, but you have some sort of ability to or some job skills, barter those skills to get what you need instead of cash.
WHITFIELD: Real quick, Calvin, might you have a question for Ken and Daria about how you maximize this time while looking for work and finishing up the three-week course you're now in the middle of?
K. DOLAN: Hey, Calvin.
RATCHFORD: Yes, how are you?
K. DOLAN: Good.
RATCHFORD: My question is how do you go about networking and maximizing your skills for that person who just lost their job, what suggestions do you have?
K. DOLAN: Here's what I want you to do, Calvin. I want you to go to the library, and I want you to look and it is very expensive to buy, it is the Gale's Handbook of Associations. Unbelievable source of information, every association by every specialty.
If you're a civil engineer or you're retraining to something else, start with the associations. Because many of the large associations have networking rights built into it. Go to your state's Department of Labor, two very, very good sources. Every person you ever knew, Calvin, that you're looking for work and don't be ashamed of it.
K. DOLAN: Calvin, are you a Twitterer or are you on Facebook or any of the social networking sites?
RATCHFORD: Yes, I'm on Facebook and LinkedIn.
K. DOLAN: Do you have your curriculum vitae on those sites?
RATCHFORD: Yes.
K. DOLAN: And have you set out e-mail blasts or Twitter blasts to executives in your field of expertise?
RATCHFORD: Yes, that's how I developed all my contacts.
D. DOLAN: Good for you.
K. DOLAN: All right, Calvin, last thing. Last thing, Calvin. Pick three or four companies in your area you would like to work for, and if you're not working anyway, then go say I'm going to come to this company, all three of them or two of them, I'm going to work for 60 or 90 days, I'm going to do everything nobody else will do and I guarantee you'll hire me. WHITFIELD: So audition. All right Josh, real quick, you probably have one more question that we can squeeze in.
LEVS: I do. I actually mentioned before the break, I want to get this to Ken and Daria, this is a great example. I can't tell you how many people have said they're in their mid-50s and they're facing retirement and they just do not feel there are steps being taken that are going to get them jobs. There is an example here from Pam who says, "There are no jobs out there right now for middle aged people."
Look, I know the two of you are only 39. But give us a sense ...
K. DOLAN: I'm 40.
LEVS: Oh, happy birthday. They're telling me we have less than a minute and I really want to get this. So just tell me, when you look at the job picture, do you see optimism for various age groups?
D. DOLAN: Well you know, it used to be we were told that 2010 there would be more jobs for older Americans because there weren't as many young people out there to take the job. Now everybody's fighting for Burger King jobs. But if you're 50 or older and think you can't get a job, I guarantee you won't get one.
LEVS: OK, so think positive.
K. DOLAN: Stay positive.
WHITFIELD: All right, Ken and Daria, thanks so much, sorry, we're out of time. Josh Levs, appreciate it. Thanks for your help. Everyone who has sent your questions and your comments, Calvin Ratchford as well, thanks so much and we wish the best for you on your continued search.
Also, if you would like to send us some ideas of some topics you think we should focus on for an hour, please go to my Facebook or blog, throw us some suggestions. You'll see us handle what you can do. So thanks for being with us.
I'm Fredricka Whitfield. See you again next weekend.
Don Lemon up next after Fareed Zakaria.
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