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Job Concerns; Saving Versus Spending
Aired July 3, 2010 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN ANCHOR: Welcome to "Your Money." I'm Christine Romans. Ali Velshi is off this week. It's the engine of your personal economy. It is your job. Here is the latest.
The economy shed jobs for the first time this year losing 125,000 of them in June. Companies created new positions 83,000 new jobs, but that wasn't enough to offset the loss of 225,000 census workers. The unemployment rate fell to 9.5 percent but not because people found a bunch of jobs, but more than 600.000 people simply gave up looking for work and dropped out of the labor market.
An alarming 45.5 percent of the out of work have been jobless now for six months or longer. Lakshman Achuthan, Managing Director of Economic Cycle Research Institute, Chrystia Freeland Global editor at Reuters and Bill Rodgers, former chief economist U.S. Department of Labor and professor and chief economist at university joining me now to talk about what this means for you getting a job and keeping a job and moving up at work.
Kristina Romer at the White House the economist there says the report shows a continuation of gradual labor market repair. Is this labor market repair or is this a pause in the labor market repair bill?
WILLIAM RODGERS, FORMER CHIEF ECONOMIST, U.S. DEPARTMENT OF LABOR: I hope part of any what kind of repair job is there can be a pause there, but this is a part of what I've been calling the two-step economy. You take two steps forward like we did over the last few months and you go take one step back periodically.
ROMANS: And this is a step back, do you think this is a step back?
LAKSHMAN ACHUTHAN, MANAGING DIRECTOR, ECONOMIC CYCLE RESEARCH INSTITUTE: Well, no, it is still a step forward. You got private sector jobs growth that was better than last month. Last month, people go a little spook so I would agree with Bill that we are having a recovery, this is a sustained recovery.
The problem is, when you step back and look at it, we lost over 8 million jobs. If you're lucky depending on the numbers, we might have gained a million back. So you're down seven and that's why it doesn't feel anywhere near as good as you hope it would be when you save it there was jobs growth.
Big problem is that looking forward, forward looking indicators suggest this may be as good as it gets. It's going to ease off of you. CHRYSTIA FREELAND, GLOBAL EDITOR AT LARGE, REUTERS: I don't want to be a really doomster here, but I think obviously it's good that you have the private sector adding jobs, but I'm really worried now about the demand side. And those people who were doing census jobs, yes, those were jobs funded by the government, but they had money and were able to go out and spend.
And what I think is really a source of concern is where is that demand going to come from? Particularly because at the state level right now, we are going to see a lot of jobs being shed and we have to look at what is going to happen with the unemployment benefit. I think given the weakness of the economy, one of the most astonishing political decisions of the past few weeks has been the failure to extend that unemployment benefit.
ROMANS: And that's going to mean a lot of people, 2.1 million people by the time the Senate and Congress reconvenes who are going to lose their benefits, which means they are not going to have $335 in their pocket every week to spend in the broader economy.
RODGERS: That's right, correct. And the reason why - I said took a step back this month is that the unemployment rate looks like it ticked down to 9.5 percent, but as you said, the reason why, it ticked down was because people left the labor force and it was very alarming in terms of who left the labor force.
It seems to be primarily teens and young people, which really is sending a horrible message for their job prospects for the summer and again, going with unemployment insurance extensions and the Congress and the administration needs to be much more aggressive about providing --
FREELAND: But there is this whole debate about whether the issue now is stimulus versus deficit reduction. I think now that is the core economic question right now.
RODGERS: We do summer jobs every year and they extended and extended last year, they need to do it even much, much more now.
ROMANS: But here is my question about where we are at this stage of the recovery. I mean, if the economy started to recover last summer or fall, shouldn't we be doing better in terms of job creation now actually?
ACHUTHAN: Well, look, you actually are compared to the last two recoveries. We forget very quickly that it took 15 months after the 1991 recovery began before the unemployment rate started to go down. It took 19 months after the 2001 -
ROMANS: Was the unemployment rate much lower.
FREELAND: The drop was less, steep. I mean the thing that is remarkable right now is there was a really, really sharp fall and the bounce back has been really soft.
ACHUTHAN: Yes, see that's - I think this is -- when we look we do the post mortem of the past recession, and it did end and we are in a recovery. OK, this is I do. It really happened, doesn't feel that way, but when you do the post mortem.
The last recession was really bad in terms of post World War II recessions. But GDP growth, OK, is already going to hit its previous peak this quarter. Jobs we are not going to recover and get to the previous peak for eight years if we don't have an intervening recession and we will.
ROMANS: So you could have another recession before you even make up the jobs you've already lost. I mean, I want to look at some of the other things that are happening in the economy, the other factors there.
You know, there is a big debate now, is this a slowing recovery and a risk of a double dip? You look at the Dow down from April to June 10 percent. Stock investors are pricing in something that is a very slow recovery if not worse. Consumer confidence fell dramatically. Pending home sales after the expiration of first time home buyer tax credit.
I mean, it's not just the jobs picture, Chrystia, you look out across the things that is we touch and feel as consumers and all of them started to deteriorate over the past quarter.
FREELAND: Yes, I think that's absolutely right and the other thing that has happened in the past quarter is we have to remember America is a part of a global economy. The big new thing that has happened is we've seen some real anxiety in Europe.
We've seen the European sovereign debt concerns. We see European governments responding with extreme austerity measures. I think that is part of the reason that you see the stock market anxiety.
ROMANS: American companies sell products to Europe. A lot of the products in -
FREELAND: Well, exactly right.
ROMANS: You are not adding a lot of jobs if you think your biggest customer is not going to be doing well next year.
RODGERS: And what's been fascinating about the sovereign debt conversation that you've had there is -- I was in a meeting with speaker of the house and some of her chairs of her committees a couple of months ago, and they were focused on the jobs deficit.
We have to address the 10 million jobs that we have lost since December of 2007, but they were now being forced and pushed to acknowledge that we are now back to the deficit conversation.
We now have the budget deficit and a large part about what is pushing them to play both games is the sovereign debt conversation.
FREELAND: Right and (inaudible) of Europe and you see, you know, how Greece got (pummeled), but America isn't Greece. RODGERS: But what's fascinating I don't think that has been registering on as an issue on Main Street, but it's much more of a political issue right now.
ACHUTHAN: I think the business cycle trumps all of this. It's important as --
ACHUTHAN: Well look, go to the videotape. Go back to early 2010. January, February 2010. I'm talking about long leading indicators of the economy pointing to a slowing in growth starting by midyear. I agree that the markets are interested on what's happening in the debt markets in Europe. I think that's very important. I think they care more about the phase of the economic growth because ultimately that's where profits growth splits and if economic growth starts to ease off and the stock market cannot ignore that.
ROMANS: All right, everyone stays, we are going to talk about some other things. We're also going to talk about the White House calling this recovery summer. Calling this recovery summer. Could that mean more stimulus is on the way, should it?
ROMANS: Fourteen and a half million Americans out of work. Almost half of them have been out of job longer than six months. For President Obama this kind of numbers hold back his economic recovery.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES OF AMERICA: Make no mistake. We are headed in the right direction. But as I was reminded on a trip to Wisconsin earlier this week, we are not headed their fast enough for a lot of Americans.
(END VIDEO CLIP)
ROMANS: Republican Congressman Kevin Brady says, business does not need help from Washington to start hiring again. Quite the opposite.
(BEGIN VIDEO CLIP)
REPRESENTATIVE KEVIN BRADY, (R) TEXAS: Instead of providing encouragement, President Obama and this Congress have given entrepreneurs reason to worry. Businesses aren't reluctant to hire because they are waiting to see what Washington will do for them. They're reluctant to hire because they're afraid of what Washington will do to them.
(END VIDEO CLIP)
ROMANS: I smell and hear a midterm election theme don't you? Let me ask you first, the number of people who are long-term unemployed. This is a real problem for the administration at the same time they're trying to say, our stimulus is working and this is recovery summer. We have more projects ever going than ever before. How do they make this balance?
ACHUTHAN: It is a real tight rope, because as you say, the unemployed, half of them are long-term unemployed, a lot of them were in high paying jobs, construction and manufacturing that will not come back no matter what you do.
OK, so you can sit there and promise a lot of stuff. They will still be unemployed at the end of the day. The other half are getting jobs their back and hopefully they will feel good about that.
The president is at the mercy of the ebb and flow of the business cycle. Washington is at the mercy of that and there is a false hope that we have. Do something, fix it.
FREELAND: If I dare say something on the business cycle point, it is not just about the business cycle right now. As Lakshman said, part of what is going on is a deep long-term structural shift in the kind of jobs that are out there.
And this recession has speed it up that shift and that is a problem for people who are caught on the wrong side of history. For the people who have the skills that you no longer need in America, who are doing the kind of jobs that either machines will do for them or done by people in cheaper economy.
ROMANS: So part of the stimulus was - for example, broadband (inaudible) the president was pushing on Friday saving 5,000 jobs will be created. We're going to extend broadband to all these different places --
FREELAND: That is lovely but 5,000 jobs you are talking about 14 million unemployed.
ROMANS: But building the base for knowledge-based - you know, knowledged-based literates --
ACUTHAN: These are good long-term ideas and they do nothing to change the fact that you are in the hole 8 million. You have 1 million so back.
ROMANS: So what do we do -- until now, we have been giving jobless benefits to try to help people on the wrong side of history. So are we going to do that forever? Are we going to do other things? Are we going to have you mentioned you thought we need to spend $100 billion a year to figure out how to help the long-term unemployed right?
RODGERS: Possibly. It might have been someone else, but I'll share that. Just throw it out there. But I think, within that, what we have to do is one, I think we are still in that stage. We got to provide the unemployment insurance benefits through the rest of the year.
When we get - in my mind up to the $150,000 and exceeding that consistently, then I think you can start to say, OK, emergency wise, we need to pull back on unemployment insurance benefits. They're now - the labor demand issues as Chrystia says the jobs are out there and research shows that people take longer if they get more UI benefits and --
FREELAND: That is true. But only in a context where there are no jobs you can get then --
RODGERS: Number two, it was a big theme that came out of our conversation with the speaker was this notion of what is going on in state, and local governments.
Even though this month, we didn't see a continued fall there. We still need -- that is emergency money that needs to go to state and local governments for police officers, teachers, guidance counselors and those are social or human priority investments that not only have short-term gains in terms of stimulating economy, but also have longer term gains.
And the third piece which is they can't create jobs, but they are trying to do a good job and certain members of Congress are trying to provide the incentives for our market based economy to grow.
ROMANS: Let me ask you about the stimulus because there's a great big bang is over. Now we are moving into this next phase, is the stimulus over, Chrystia and do we need more spending as others say, we need another big huge push right now, think about fiscal discipline later.
FREELAND: Well, it's certainly true that the stimulus is starting to run out. We saw that even with the census jobs starting to run out. The issue though in terms of a second stimulus is the politics. The fact that the unemployment benefit wasn't extended, which is a small part of that really tells you something about where the politics are.
There's a really paradoxical situation in America right now, which is on the one hand Americans are incredibly concerned about jobs, incredibly concerned about the economy. They are very suspicious of government.
They're suspicious of big government spending. They're suspicious of taxes. I think people are worried about their own situation and when they think about the government stepping in, they don't think the government is going to help me. They think that money is going to go to the guy to my right and the guy to my left and I'm going to have to pay higher taxes.
RODGERS: But it's not even that they're nervous about government. I think they are nervous about anything that is large, whether institutions, whether it's corporation. I mean, the latest example what is going on in the gulf. It is further exacerbates that and what were might the big fear isn't so much of double dip, which folks are talking about. It is really we are moving ourselves into a new era.
ACHUTHAN: You got to back up a second. What we care about, is what is going on in the economy. The economy is not about government, it's about the private sector. That is what is driving the economy around and we are getting buffeted up and down and booms and bust. Because of it, we're looking - the government is not -- FREELAND: It doesn't mean it had influence on the private by tax and by spending.
ACHUTHAN: I share the concern. The false premise is that the government is going to get ahead of the business cycle. We are sitting here debating another stimulus, look, news flash, the business cycle was guaranteed to start turning down by the middle of this and we are debating it now?
ROMANS: Too late.
ACHUTHAN: That has been the story. If you look over the last few years, it's been the story repeated all --
FREELAND: I actually -- I disagree with your fundamental premise that in this extreme situation. I think we have already seen the difference. If you compare how the world governments and world economy responded to the crisis of 2008 with the great depression. The initial concerted unified world response was stimulus, I think absolutely helped the world recovery and the question is, are we going to have a wabble now.
ACHUTHAN: I don't think that the recovery was because of the stimulus.
ROMANS: There you go. But I want to reiterate right here on this program you say another recession is guaranteed and we will not make up our jobs before then?
ACHUTHAN: Yes, virtually guaranteed. You will not going to get to the previous peak in jobs before the next recession for a whole host of reasons and we'll have high unemployment for most of this decade.
ROMANS: And this will be a tough decade.
RODGERS: But I don't think we'll have a recession before that. I think we'll just have a very slow recovery/recovery which again, because of the fiscal constraints that are being played out politically, it's going to create a problem for us.
FREELAND: Final point, people at the top who are playing in the global economy will feel great and people who bill is worried about at the bottom --
RODGERS: And middle. That has been unique about this recession too. It has moved up.
FREELAND: Following out in middle class.
ROMANS: All right, Bill Rodgers, Chrystia Freeland and Lakshman Achuthan. Thank you to all of you.
Older and out of work, why experience doesn't necessary mean you'll have a job these days and tips on how to find that ever elusive job if you are 55 and older next.
ROMANS: Since December 2007, the jobless rate younger workers have more than doubled. For workers over the age of 55, that figure increased even more over the same period. If you are an older worker you need an edge in the job market. Ellen Gordon Reeves is the author of "Can I Wear my Nose Ring to the Interview?" Obviously that book, the title is meant for younger workers because there aren't a lot of people over 55, I'm sure, who are trying to go to the interview --
ELLEN GORDON REEVES, AUTHOR, "CAN I WEAR MY NOSE RING TO THE INTERVIEW": I think the sequel is going to be as my editor said yesterday, can I wear my (inaudible) to the interview.
ROMANS: Yes, wear them. It shows experience and it show that you are a grownup in the work place. Why is it that older workers are having a harder time in this job market?
REEVES: Really, one of the things is about self-esteem. They're worried. They're fearful. They're desperate a little bit and the hiring managers (inaudible). It is kind of a collision of fear because younger managers or other managers may fear the wealth of experience that a mature worker brings to the table. They think you're more expensive. They think you may be more rigid and not tax heavy that you actually maybe.
ROMANS: Let's talk about some of your advice to people. When -- don't be a slave to chronology. Don't sit there and list 35 years of your experience. Put down what's pertinent, right?
REEVES: To the job and the thing is right, you are not writing your auto biography. You are creating a sell sheet for the experience, for the professional services you have to offer. So minimize the dates, use a format where you're using small fonts for the dates, italics for emphasis. Things that will hide the dates and focus on the categories that are relevant to the job so sales experience, marketing experience that kind of thing.
ROMANS: Someone once told me that she said that one she started getting interviews when she started dropping out the 1974-1978 that didn't exist anymore.
REEVES: General categories and let's say you want you want a job at CNN and you were an intern here 30 years ago, I still want to see it CNN on your resume because that's going to catch my eye and say, you cared about my company, but no dates. Just other media experience.
ROMANS: You can list them in bullets. Your appearance really matters. Tell me the dos and don'ts once you do get the interview.
REEVES: Here is the thing. You are not just as young as you feel. You are as young as you look in this ages culture and you have to look and feel your best. You have to look up-to-date, professional best, trendy without looking like a teenie bopper and so what if you're not going to drop 25 pounds overnight. But your hair, posture, your professional demeanor and a new outfit and let's face it you may have to die your hair or do your teeth. Anything you can do to look up to the minute, fit and confident.
ROMANS: I talked to a woman recently who said she finally realized that she needed to go in and tell the 34-year-old hiring managers, look, I'm a grownup and I'm so excited to be at this stage of my work life because I don't have to run away to get my sick kid and I don't have to -- in a way, sort of spinning her age as an advantage. I'm a grownup, I will be here 9:00 to 5:00 and you have my undivided attention.
REEVES: It's all spin and you do have to present yourself that way and you have to show though your flexibility and that you can be a team player. Tell stores that show you can take direction even you've been the boss.
ROMANS: Interesting. All right, Ellen Gordon Reeves "Can I Wear My Nose Ring to the Interview," her new book coming out. So we'll keep you posted on that one. Thanks, Ellen. Age is no barrier for one Canadian mayor. Ali has this story.
UNIDENTIFIED FEMALE: All in favor?
ALI VELSHI (voice-over): From early morning council meetings and photo ops.
UNIDENTIFIED FEMALE: On your shoulders rests a great responsibility.
VELSHI: To an 8th grade graduation ceremony where she is mobbed by constituents, young and old. It's not easy keeping with Hazel (McCallion) the tireless 89-year-old mayor of Mississauga leading Canada's sixth largest city. She is not too big to pick up garbage or run with the Olympic torch. She's been the mayor since 1978. The city she governs has grown from a sleepy bedroom community next to Toronto into a thriving metropolis home to 61 Fortune 500 companies.
MAYOR HAZEL MCCALLION, MISSISSAUGA, ONTARIO: People from Toronto came out to pick strawberries and apples.
VELSHI: McCallion still drives herself around and has won re-election ten times by huge margins except when she ran uncontested. Regardless she says, she never campaigns, just works under some simple rules.
MCCALLION: Working hard and being out with your people. And not making promises that you can't keep.
VELSHI: McCallion is a widow, plays hockey, fishes and loves to get out on her bike. But she's no small town mayor anymore. The recession didn't hit Canada as hard it hit the U.S. but famously debt free Mississauga may soon run out of its surplus. It's made McCallion focused on keeping business in Mississauga even sharper.
MCCALLION: We are not allowed to give tax breaks to industry or commerce in the province of Ontario, it is illegal. We are conscious of the needs of the community. Taxes is not the only thing a company looks at. They want to attract the type of personnel that they need to operate.
VELSHI: McCallion has nurtured relationships with developers.
GERRY TIMBERS, THE MISSISSAUGA NEWS: You are going to build a subdivision, you're going to build a community center, you're going to build a hockey arena. You're going to fix up the park. She made the developers pave the way and kept taxes down.
VELSHI: McCallion points to Mississauga's diversity as one of its greatest strengths.
MCCALLION: A lot of them settled in Toronto when they first came over here and then assembled their nest egg and then they wanted to move out of Toronto to buy a house of their own.
VELSHI: And she probably points out that nine of her 12 city councilors are women. She plans on holding onto her office running without campaigning.
ROMANS: Great piece, Ali. Is the question to spend or to save? Why the ultimate means so much to the future of the global economy.
ROMANS: In the future, like in three years, deficits are supposed to be cut in half. At least that's the pledge of world leaders including President Obama hwen they made just over a week ago when they left G- 20 in Toronto.
Noble prize winner, Paul (Krobin) wrote in the "New York Times" that the tough cuts - or a recipe for a third depression. This is what he wrote. In this third depression, we're going to be primarily a failure of policy. Around the world most recently at last weekend's deeply discouraging G-20 meeting, governments are obsessing about inflation when the real threat is deflation.
The preaching for the need for belt tightening when the real problem is inadequate spending. We're joined by cnnmoney.com senior writer, Jeanne Sahadi and CNNI's Richard Quest, host of "Quest Means Business."
Richard, this whole notion of a third depression has been bouncing around here. I mean that's column editor vibrated around the world for than a week now. Is it possible that all of this talk about belt tightening is too soon, Richard?
RICHARD QUEST, HOST, CNNI'S QUEST MEANS BUSINESS: No, the debate is quite clearly cut between those who believe that there has to be austerity because the bond market vigilantes have attacked countries like Greece. They're looking at Spain and even countries like the U.K. could be at risk. Those who say now is not the time you have got to keep spending. Christine, that is the debate on the one hand and on the other hand. The fact is that the two do not see eye to eye in any shape or form and there is no consensus on what the right answer is, which is why the G-20 fudged, ignored, did everything they possibly could to actually come down one side or the other.
ROMANS: It is not comforting when we don't know what the answer is, Jean, and it's Harry Truman I think who one said, give me a three- handed economist because on the one hand, on the other hand, on the other hand, all behind you --
So tell me what we need to do. We are talking about cutting federal deficits, but at the same time, we do need to keep spending many people say because you have a chronic unemployment problem still in this country and an economy that is still fragile.
JEANNE SAHADI, SENIOR WRITER, CNNMONEY.COM: Richard is right, that is the debate. But I think what gets lost is that there is no good answer. What I'm hearing from some economists is when are we going to pull the band aid off?
It is going to hurt whenever we do it. The risk of doing it - waiting too long to do it means it hurts even more. The risk of doing it too soon means it makes it much harder to bring the economy back.
I want to give a shout out to Steve Pearlstein at the "Washington Post," who I think did it perfectly. He said, you know, politicians are facing sort of the worst of all political and economic choices.
Do we weaken the economy and the short ones make it better in the long run? The concern being if we weaken in the short term, it will make it much harder to repair it in the long run. So, there is no good answer, it is a hard choice. And people on both sides of the debate have a great explanation for it. I think that they're absolutely right. We will lose more jobs if we don't help states.
ROMANS: You know, Richard, some people say we are sort of like sowing the seeds for the next crisis by all the spending - a debt crisis by all the spending to get us out of the last crisis and this is the way policy-makers operate. You bounce from one bad choice to the next and hope that you've somehow minimized the pain for your citizens.
QUEST: Yes, I mean, that is true. The problem being of course, everybody said there had to be an exit strategy from the huge fiscal spend that was underway. But everybody heading for the exit at the same time. That is the risk.
Do countries like the U.K and certainly like Germany, maybe the U.S., do they need to be wearing their hair shirts and beating their chests quite so much about cutting back on spending?
President Obama did summit up perfectly I think when he said that the G-20, the real issues is that the rest of the world cannot look to grow themselves by exporting their goods to the United States. Now, if he is right and I think he probably is right, then you are talking about a fundamental see change in the way the global economy work --
ROMANS: But Richard he can say that. And look people have talked about balanced global trade for years and trade deficits have continued to just spiral out-of-control. How do you actually make that happen and what policies would he have to do to make that happen that would clearly not be popular with our friends?
QUEST: No, but, of course, Americans don't have the where with all the debt, the consumer credit to buy those luxury items from Germany, Austria and the U.K. and the far east.
So the idea -- what he is sounding is a strong warning bell. That is not a beg of thy neighbor policy when it comes to currencies in the case of China, when it comes to protectionism in the case of Europe. Let's have a more of a level playing field.
You're right, it is not easy. But until you can spend more, then the rest of the world would not going to grow that fast is the warning.
ROMANS: OK, 15 seconds, Jeanne wrap it up for us, there is no easy answer.
SAHADI: Some say we need to come up with a plan now to reduce the deficit. We don't need to implement it just yet that would be too harmful, but we want to signal to the markets that we are serious about this and we are going to address it.
This cutting our deficit in half by 2013 was really frankly no big deal because that was already in the president's budget. So that was kind of a head fake at the G-20 for the U.S. It is really what goes past - you know, what happens in the next 10 years.
ROMANS: How difficult it is for the president to ask for more domestic spending at the same time he's saying, I'm cutting things longer term. This is a tricky line to watch.
OK, Jeanne Sahadi, thank you so much and Richard Quest, "Quest Means Business." Stick around. Talk about power steering, why electric cars and affordable cars could mean no more gas stations for you.
ROMANS: Electric carmaker Tesla went public this week on the Nasdaq investors (inaudible) raising $266 million on its first day of trading. It is the first IPO from an American automaker since Ford in 1956.
But a leap of faith for many investors since the seven year old company hasn't yet made a profit. Tesla is about to have some competition with Nissan and Chevy rolling out models this fall.
So our consumers and our power grids ready for an electric future. CNN's Alison's Kosik investigates.
UNIDENTIFIED MALE: It is running. That's it. No vibration.
ALISON KOSIK (voice-over): Silent on start-up. They are soon to be at a dealer near you. Electric cars. Add executive, Mark Fabel, couldn't resist.
(on camera): This is the Tesla (inaudible), what you possessed you to buy it?
MARK FABLE, TESLA OWNER: It's a 100 percent electric. There's no gas. There's no emissions and what a lot of people don't know is it's incredibly fun to drive. It is extremely fast. The fastest car I've ever driven.
KOSIK (voice-over): With a list price of over $100,000, the Tesla is beyond reach for most. But there will be other options and if more drivers go from the pump to the plug, will power grids withstand the energy drain?
MALCOLM WOOLF, DIRECTOR, MARYLAND ENERY ADMINISTRATION: They say that charging an electric vehicle is roughly equivalent to half a house. So if you buy an electric vehicle and your neighbors on both sides of you buy an electric vehicle, you could blow that transformer if all three of you decide to charge it in peak hours when you're running your air conditioners.
KOSIK: And that's a real challenge. Listen to the chairman of one major utility at a recent electric car conference.
PETER DARBEE, CHAIRMAN, PACIFIC GAS AND ELECTRIC: If three to five of electric vehicles show up in one neighborhood, you're going to overwhelm the electric circuits and that will lead to blackouts and other problems.
KOSIK: Now, PG&E does emphasize that it supports the electric car industry and sees it as an opportunity so how to address the overload issue?
TED CRAVER, EDISON INTERNATIONAL: We do believe that customers are going to primarily charge late at night and early in the morning, this is the best time to charge and we will incent them to do that with lower rates.
KOSIK: But there's another speed bumper drivers.
(on camera): So let's say I'm not driving a gas-powered vehicle, but instead I'm driving an electric vehicle and I'm running out of power? What am I to do? I'm going to have to find somewhere to charge it. So let's try to find one follow me.
Hi, I'm with CNN. I'm doing a story about electric vehicles and just curious, do you have somewhere I can charge an electric vehicle?
UNIDENTIFIED MALE: No. No, charging station?
KOSIK (voice-over): It is called range anxiety and in a recent carscars.com poll, 54 percent of consumers are afraid of running out of power on the road. According to the Department of Energy web site, 27 states currently don't have any charging stations and 22 have 10 or less. And Fabel admits road trips require a little extra planning.
FABEL: The big difference is I'm not going to be able to anywhere I am refuel. I can't pull into a gas station. I need to have an electrical outlet or a high voltage charger in my garage. So when I start a day, I want to know that I have enough battery power to comfortably meet that range.
KOSIK: Enough battery power, the only cure for range anxiety. Alison Kosik, CNN, New Jersey.
ROMANS: My next guest says, wow, that is not a car for everyone. That car right there is about $100,000 and while it is fast, it's goes from 160 in just 3.9 seconds, you are saying you are not quite ready for primetime.
MIKE QUINCY, AUTOMOTIVE SPECIALIST, CONSUMER REPORTS: It's not quite ready for primetime for a lot of the reasons that were talked about. For example, how are you going to find a place to charge this stuff? While electric cars make a lot of sense in the city because you're doing stop and go driving, a lot of cars are sitting, idling at stoplights so you don't have any tailpipe emissions, but if you live in the city where are you going to be able to plug your car?
ROMANS: What about affordable electric cars are they coming?
QUINCY: They are coming, but affordable - I think you need to use (inaudible) for that.
QUINCY: Affordable in this case might be a $25,000 Nissan Leap, which is about how much it will cost you after incentives from the government. The Chevy Volt is coming up. It should be available late this fall. That's going to be about $30,000 after government tax rebates.
So, I mean, look at the size of the car, how much it's going to cost you plus you have to spend a little bit extra to get a home charging system. You have to look at how much the price gasoline is at the time in order to crunch the numbers, to get the economic realities of an electric versus a readily gas car.
ROMANS: What about this concern that you are going to zap the neighborhood power grid or something, I mean, yes, you want to plug in at night and the like, but is that a serious sort of infrastructure concern on this?
QUINCY: I think it is because even just a few -- summers ago here in New York City they had electric problems and just from people running air conditioners because it was hot.
So if you add onto that the amount of juice it takes to charge an electric car, even during nighttime hours, still it's going to stress the system. I'm not sure that the American electronics grid is ready for 3, 4, 5, 10 million people plugging in their cars every night.
ROMANS: Well, this guy, you know, who obviously could afford $100,000 car. I mean, it sounds as though he is also saying that you know, look, I'm not burning any gas. People might think that this is in fossil fuels, but fossil fuels do power electricity, it is coal.
QUINCY: Sure, I mean, the car has been footprint for an electric car is certainly is debatable. If you live in a state where you are getting relatively clean energy, whether it is from wind or from hydropower or from nuclear power that is one thing. In the northeast, most of the electricity is coming from coal-fired plants. So that is not necessarily a good carbon footprint. They say, OK, you don't have exhaust tailpipe. Your tailpipe is just a lot bigger. It's coming out of smoke stack.
ROMANS: And that is -- that can be an ugly tailpipe too sometimes. Is there enough infrastructures in place - for the range 45 to 125 miles I think. We have a lot of things to get over before you see a leap or a volt parked next to you all over the city or in your suburb?
QUINCY: Well, I think it would probably help if some companies that, you know, have employees. They want to give employees incentive to be green employees. They spend the money and build the infrastructure where you work so you can park your car at work.
You can plug in, but, of course, you're plugging in during the daytime, which is when peak electricity is, but I think that would help. I think there's some study that says that most people's commute is within 40 miles, which is probably what General Motors was thinking about with the Volt.
Because that will give you -- they are estimating at least 40 mile electric only range, but with the Volt, you at least have a gas engine onboard, which will kick on when you run low on battery power and will then power up the generator to give you more electricity.
ROMANS: What kind of car driver should be considering one of these cars right now?
QUINCY: I think people who are especially green-minded. These are going to be early adapters. These are going to be people that want to be first in the neighborhood. I don't think it will make economic sense really - probably until gasoline goes up to maybe $5 a gallon, which isn't happening right away.
But I think there will definitely be people initially that will get really excited about this. I know when Consumer Reports finally buys one or tests one, and I bring it home to my neighborhood. I bet you a lot of moms and dads are going to come out of their houses being pretty curious.
ROMANS: Excellent. All right, Mike Quincy, Consumer Reports. Thanks so much.
ROMANS: Outrage over AIG nearly a year and a half after its massive bail out. Next, see why the former AIG exec at the heart of AIG's collapse has no remorse.
ROMANS: Back with us, our friend, Richard Quest of CCNI's "Quest Means Business. Richard, I want to ask you about this fascinating appearance before the Financial Crisis Inquiry Commission this week of the former head of AIG's now infamous financial products division.
This guy named Joseph Cassano speaking publicly for the first time since 2008. You know, his tone, Richard, pretty unapologetic about his tenure with AIG. Listen.
(BEGIN VIDEO CLIP)
JOSEPH J. CASSANO, FORMER AIG EXECUTIVE: And we've gone through obviously one of the worst financial crises in anybody's lifetime. And as we move through this and we come through the financial crisis, the only thing I can do is look at the existing portfolio and say that it is performing through this crisis and it is meeting the standards that we set. And I think our reviews were rigorous. I think the portfolios are withstanding the test of time.
(END VIDEO CLIP)
ROMANS: What about that $182 billion series of bailouts from taxpayers to keep the company afloat and the net loss to taxpayers -- the Treasury expense will be $36 billion?
QUEST: It wasn't up to me. I was alright at that time, all looking good on my side of this pond. No, nothing to do with me, if I've been left in control, none of this would have happened. I mean, the self- justifying that we have heard from him and others about the relationships, for example, between AIG and Goldman Sachs that managed to be made good with U.S. taxpayer money.
The rationale, the justification -- what I heard and what I didn't hear was the simple "sorry." and frankly, you and I would not be sitting on this program debating austerity versus fiscal growth if half of those people hadn't done their jobs so badly in the first place.
ROMANS: It is interesting because Senator Ted Kaufman at a hearing earlier this year before the committee that Karl Levin was running. When he had Lloyd Blankfein and all these mortgage people from Goldman Sachs, there was a similar kind of feeling like and I think Ted Kaufman was the one who said, you guys are all pretending like you got caught in the middle of a hurricane.
This isn't mother nature, this is manmade and you get this feeling that people are talking about it as if it's a natural disaster and not a manmade disaster. QUEST: There is a lot of blame to go around. That is to be true from Greenspan and Bernanke at the fed with their unrealistically low interest rates for far too long, to the greed of home lenders who could see subprime to the greed of home buyers who took on unrealistic debt.
There is plenty of blame. But there were some people involved who could see what was happening and even if they couldn't, they should have and they didn't and now they're trying to say, it's not their fault. Frankly, it makes me want to wash my hands with strong disinfectant.
ROMANS: Thank you, Richard. Richard Quest, CNNI's "Quest Means Business."
Next, the Lebron watch. Even if you couldn't care less about the NBA, you don't watch basketball, we've got millions of reasons for you that you want him to pick your town.
But first, how to take your product from a handful of stores to thousands of them all over the world in this week's "Turnaround."
ROMANS (voice-over): (Ido Leffler) is in the business of saying yes. Yes to carrots, yes to tomatoes and yes to cucumbers.
UNIDENTIFIED MALE: We really see ourselves as being a relentlessly optimistic brand.
ROMANS: (Leffler) and his business partner (Lance Kalish) took over "Yes To" in 2006 and moved this tiny natural beauty brand from Israel to the U.S. The big break came in 2007 when Walgreens decided to plant the veggie-inspired line in its stores across the country.
UNIDENTIFIED MALE: We really saw this is a dream come true. When they first placed their first order, the quantities in itself when you go from 16 stores to 5,800 stores that was our first pressure.
ROMANS: But in the $8 billion natural beauty business, it's getting off store shelves and into shopping carts that really matters.
IDO LEFFLER, CO-FOUNDER, YES TO: Walgreens, like most retailers here in the country have a simple philosophy. If it doesn't sell, they can return that stock back to you. At stake is really the entire company.
ROMANS: (Leffler and Kalish) bet the cash crap on print. Spending almost all of their marketing budget on a national magazine campaign, but the spike in sales never came.
LEFFLER: We had committed the vast majority of our cash into this promotional campaign and it wasn't moving. It nearly got to a stage where we didn't even have money to pay our salaries.
ROMANS: So "Yes To" got their hands dirty with an interactive marketing campaign. They launched a social media contest to be the face of the brand, attracting 150,000 fans, started a forum for consumer feedback and handed out a million samples and the seeds began to sprout.
LEFFLER: Using that small little funds that we had left paid significant dividends. It was phenomenal.
ROMANS: Sales doubled in six months and "Yes To" has seen explosive growth since then. The owners that wouldn't say no report they've seen their products reach 25,000 stores in 29 countries.
ROMANS: Lebron James will likely earn more $20 million a year in his next contract that may not mean much to you, but it will mean million to the city that Lebron ultimately chooses. Here's why the New York Knicks want him so badly to sign him and so many prominent New Yorkers including Mayor Michael Bloomberg are sounding the rallying cry.
With Lebron, each Knicks or Net play-off game would bring about $3.5 million to the city and NBA title could mean some $60 million to the area that's according to the New York City Economic Development Corporation. The value of the New York Knicks alone would shoot up a $150 million.
On the other side, if Cleveland losses Lebron, the value of the Cavaliers franchise is expected to drop by $100 million. A lot of money for your neighborhood.
That wraps it up for this show, but you can join our running conversation on Facebook and Twitter at aliveshi and at Christineromans and make sure to join us for "Your Money" every weekend, Saturdays at 1:00 p.m. Eastern, Sundays at 3:00.
You can also log on 24/7 to cnnmoney.com. Have a great weekend.