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YOUR MONEY

Employment Dominates Elections; Americans Still Worried About Housing, Jobs; A Look at Possible Quantitative Easing Policy; Getting Your News Without the Newsprint

Aired October 23, 2010 - 13:00   ET

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


CHRISTINE ROMANS, HOST: The stock market is up, but where are the jobs? That's what voters want to know just over one week before the midterm election.

Welcome to YOUR MONEY, I'm Christine Romans. Ali Velshi is off this week.

Democratic Congress, Democratic president and the economy remains issue number one. So how does the party in power sell this economy? CNN's chief national correspondent John King is the host of "JOHN KING USA" which airs every weeknight at 7:00 p.m. Eastern.

John, here's the jobs picture, 9.6 percent unemployment, 14.8 million people want a job and can't find one. Nearly 42 percent of those out of work, they've been unemployed for six months or longer.

Are Democrats going to pay the price for so many Americans still being out of work, John?

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: In a word, Christine, yes. And it gets even more painful. If you take a map of that unemployment and you overlay it where the most competitive in the battleground races are this year. Nevada has the highest unemployment in the country. If you go state by state, the Senate majority leader Harry Reid is in trouble in that race and that's one of the reasons why, high unemployment.

Look at California, a Democratic state where Republicans have a chance for governor and Senate because it too has high double-digit unemployment, way above the national average. The rust belt in the middle of the country is a place where Republicans think they can pick up huge gains when it comes to knocking off vulnerable house Democrats and picking up seats all across from Pennsylvania, Ohio, Michigan. Republicans look at the map, they see high unemployment and they equate that with vulnerable Democrats and with not much time left, just a little more than a week. Republicans are very confident.

ROMANS: Chrystia Freeland, I wanted to give you some sound here and I want to get your opinion. She is the global editor at large with Reuters. Chrystia, President Obama's chief economic adviser Austan Goolsbee he stated the administrations case to Wolf Blitzer in "THE SITUATION ROOM" this week.

Take a listen.

(BEGIN VIDEO CLIP)

AUSTAN GOOLSBEE, WHITE HOUSE ECONOMIC ADVISER: He's blaming the guy who is trying to clean up the mess for making the mess. That's my point. There's still a lot of mess and we're trying to get out of a deep hole. And the unemployment rate will go up. It's just going up much slower. And we've now had nine straight months of private sector job creation and generated 863,000 jobs in the private sector over the last nine months.

(END VIDEO CLIP)

ROMANS: Chrystia, is there enough improvement for Democrats to run on their economic record over the past couple of years?

CHRYSTIA FREELAND, GLOBAL EDITOR AT LARGE, REUTERS: Well, I think what is so hard for the Democrats right now is they have a very hard message to sell. What they're trying to argue -- and I think it's probably true is that this economic crisis is not their fault. And that their actions were actually incredibly bold in response to the financial crisis. And absent that sort of action, things would be much worse. But this is two years since the Democrats took power. And I think it's very, very hard message to sell. Selling saying, OK, things might be pretty bad, but imagine how much worse they would be had we not acted.

Even if that's true, and I think, you know, there's a lot of evidence that it is true, that is very, very hard to sell. People tend to look at what is happening to them and they say this is not great. I think the one other problem is going into the crisis, the Democrats probably, and the White House in particular probably didn't paint enough of a picture of gloom and doom. We were so terrified about the financial crisis at the time.

And remember, think back -- think back two years ago. The big fear was financial system totally falls apart, that was our anxiety. What probably the White House didn't do and it's very easy for us to sit here saying this now. So I'm not imagining that they should have been pressing it. But what they probably -- what they didn't do was say, look, you know, it wasn't a William Churchill moment -- a Winston Churchill moment where they could have said it's going to be blood, sweat, and tears, it is going to be really terrible. We're not promising quick fixes and that maybe meant that people weren't psychologically prepared for how bad it really was.

ROMANS: You know Mark Preston, the CNN senior political editor.

Mark, is President Obama a liability to Democrats on the ballot this year?

MARK PRESTON, CNN SENIOR POLITICAL EDITOR: You know, he is in the south. And we haven't seen him down there. He seems to be on this life-saving mission over this past month to certain Democratic Senators we've seen him in Wisconsin holding a couple of rallies. He's out in the west coast now. And even in, as John says, in Nevada where the unemployment rate is the highest in the nation.

They think that by having President Obama there to try to help save Senate majority leader Harry Reid that he still has some political capital there. Especially with Hispanic voters. But again, you know, you can't put him in some parts of the country. But in some parts of the country, he does play pretty well, Christine.

ROMANS: You know, John, does President Obama increase his odds of reelection in 2012 by having Republicans win Congress this November? Then they share this economy with him if you continue to have unemployment too high over the next couple of years?

KING: Funny you ask, because that's the question this week defining Washington at the moment. The president in some way personally benefit from this even if his party gets spanked pretty bad in the November 2cd elections. And the answer really is we don't know, history suggests maybe. Bill Clinton certainly looked very weak at the polls going into his first midterm election in 1994. The Republicans took control of the Congress; everyone said Bill Clinton was a one-term president. He went on to win relatively handily reelection.

Ross Perot was a factor in 1996 along with Bob Dole, but Bill Clinton won. So don't believe the polls you see now saying Obama is a one-term president. People don't think he will be reelected; he will have a chance to redefine his presidency. The question is, will Republicans work with him? Or will we have a polarized Washington and a 2012 campaign to begin with right away? And is this president can he be like Bill Clinton who loved the foil of the Republicans or will Obama be the thoughtful law professor and be more detached? We don't know the answer.

FREELAND: If I can just jump in there, John. I think the last question you asked is really so smart and so important. Because I think there's a big difference between Obama and Clinton. I think triangulation is not really the Obama mode of governance. Obama himself and his team are people who really have wanted to be transformational from the start. That's why they started with health care on day one. And I think we could find them having a really hard time operating governing in a more tactical, as you were saying, sort of more emotional environment. Don't you think?

KING: We saw him do it in the campaign when he was threatened by Hillary Clinton. Suddenly he became a better, fiercer or more of a fighter as a politician. Can he do it in government? That's the question.

ROMANS: What shocked me was when you said when we start the 2012 election campaigns right after the midterms are over. We've got -- it's always one right after the other, John. Mark, let me ask you. If the people who are walking into the voting booth cast their ballot in November, are they casting it for a candidate or against the economy?

PRESTON: No. You know who they're casting it for. Let's put it this way. They're upset at Washington, they are frustrated by the fact that the unemployment rate's 9.6 nationally. It's higher in some states. They're not casting it for Republicans, per se, because Republicans really haven't done anything here in Washington other than sit on the sidelines and let the Democrats move their policies forward.

It's really a vote cast in frustration. And it's really been driven by the grass roots such as the Tea Party activists. So in some ways, Republicans are going to be handed a victory without really having a whole lot of skin in the game come November 2nd.

ROMANS: All right. And we can debate and we will debate right after this break what they could do to change things and if anything really does change. John, Chrystia, Mark stay where you are.

CNN Election Express is on the road hearing that many Americans could be voting for change on Election Day. Next, why voters might want to be careful what they wish for.

(COMMERCIAL BREAK)

ROMANS: The recession may have ended nearly a year and a half ago now, but don't tell that to Americans who are terrified about their job and their home.

T.J. Holmes in the CNN Election Express stopped in Tampa, Florida. T.J. what's the word on the street?

T.J. HOLMES, CNN CORRESPONDENT: The word on the street, you got so many people right now who, of course, have a tough time finding a job. But now you have a whole new workforce. We're talking about the folks here on the campus of the University of South Florida. And also at the University of Florida Gainesville. Those young people are going to be entering the workforce and entering it soon. They're concerned about what's going to happen when they graduate. What's going to be there for them when they graduate? You don't have to listen to them long to know exactly what their concerns are.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I think most of the people at the university right now are worried about jobs.

UNIDENTIFIED FEMALE: I'm a little concerned about when I get out of college.

UNIDENTIFIED MALE: You start off in January and you get kind of nervous because you're immediately thinking you don't know what you're going to do soon.

UNIDENTIFIED FEMALE: And it's because we're all going to graduate and enter that job market. And if there's nothing available, suddenly that's a wake-up call.

(END VIDEO CLIP)

HOLMES: Yes, and we're here in Florida where some areas where we have been. I mean the state itself, seeing 11, 12 percent in this unemployment rate and all of these young people. Many of them, Christine, we have been hearing this for a while as well, they stay in school a little longer. They'll go to grad school, they will go to law school, and they will do whatever they have to do to try to frankly ride out a recession hoping those jobs and the picture is a little better when it's time for them to walk across the stage on graduation day.

ROMANS: And you know, T.J., what is a real killer is when you look at the 9.6 percent unemployment rate, those kids who are graduated maybe and are just entering the labor market, they're not included in that number because they're not active members yet of the labor market. So when you think about that, these kids are fighting against everyone else for a job just as they're beginning.

And we know that the first job you get is so important about where it puts you on the path for your own personal economy going forward. So we'll keep up the good work, T.J., and talking to the kids. And I know when I talk to students; sometimes they can be pretty inspiring. They want to just get out there and start innovating and fixing it, which I kind of like. I kind of like.

HOLMES: Well, that, as well, of course. And these young people got so much energy. Ready to enter the work force, ready to make their mark on the world. But they're just a little delayed in it. It is a bit of a struggle for them right now. But we're all pulling for them.

ROMANS: Generation x had it easy, I guess, generation y is still wondering how to get in there. All right, T.J. Holmes. Thanks, T.J.

Mark, the polls say that the voters are going to vote out the Democrats and vote in the Republicans. But this is -- this is not a national election. And many of these races, voters are sending a message by voting out incumbents that pull senior status in Congress and bring back money selfishly to their voters to their districts that are now going to reject them. Could angry voters actually backfire if they're so desperate for change?

PRESTON: You know, we've seen this just in the past decade or so. We saw Senate Democratic leader Tom Daschle he was voted out of office, he was from South Dakota just a few years ago. We saw Tom Foley; he was the speaker, the Democratic speaker like 10 or 15 years ago from Washington State. He was voted out of office. We've seen it in the past. But it's not just them. We're seeing chairman of very powerful committees.

Look, the budget chairman John Spratt of South Carolina could lose reelection. Ike Shelton who over sees armed services could lose reelection. We've seen Bill Clinton on the campaign trail for Barney Frank the financial services chairman in Massachusetts, why is Bill Clinton there? Well, because Barney Frank thinks that he just needs to be shored up a little bit. And Bill Clinton is going to be on the trail for John Dingell the longest serving member of the House of Representatives. So, look, those last two are probably going to win, but the fact that Bill Clinton has to go to their districts shows that they're a little concerned.

ROMANS: And, you know, John. President Clinton is doing what he can to get voters to reconsider their vote for change.

Listen.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: I don't want to see my country make a mistake. And I'm old enough to remember that when you make an important decision, never mind politics about anything, when you're really mad, there's about an 80 percent chance you're going to make a mistake. And you will get the result you don't want. And every person in this audience who is old enough has made enough decisions when you were mad that you know I am telling you the truth.

(END VIDEO CLIP)

ROMANS: We should all get that cross stitched and put in the kitchen. John, when voters are angry, they send the incumbents packing. Could a veteran member of Congress convince the voters that while the country may be suffering, voting in a rookie is not really the best thing to do?

KING: Yes, Christine, that has been the playbook for so long. I've been covering politics for 25 years, including the campaign in which Bill Clinton was the come-back kid. Well he's the comeback kid again this year, he is wanted everywhere. And you were noting earlier, that the president, there is a lot of places in the country he can't go the current president. But in the old days, people would go home, members of Congress would go home and say Washington's a mess, it is a crazy place, but not me I'm the guy who brought you that fridge, I brought you that courthouse, I brought you that grant.

We are seeing incumbents in both parties losing in the primaries for saying I'm the guy who brings home the bacon. Bob Bennett in Utah, Lisa Murkowski up in Alaska. So the playbook, throw it out. Voters are in a mood they think Washington's not making the tough decisions they've had to make around their kitchen tables the past few years. In that old pork and bringing home the bacon argument does not seem to be working at least not in the primaries. Let's see on Election Day, but the playbook that we have followed for a long time, this year, forgets about it.

ROMANS: All right. John, Mark, and Chrystia stick with us.

It's the economy, you feel it every day, and chances are you're taking those feelings to the ballot box on Election Day. But if you vote for change, what does change really mean in Washington? What changes for you in the economy? We'll check it out next.

(COMMERCIAL BREAK)

ROMANS: What realistically changes on November 3rd, on January 3rd, on May 3rd if Republicans sweep the House? Chrystia Freeland what changes in the economy? What changes in the jobless rate and foreclosures? Can two million jobs be created in six months? And health care be repealed?

FREELAND: Well, look, Christine, I think one of the things that we have seen in the past two years is even a government that controls the -- all -- both Houses and the White House doesn't have a magic lever that it can just pull and push and immediately have an impact on the economy. But I think if we see a hear Republican sweep, we're going to see two things. The first is tons and tons of fighting around health care. Realistically, I don't think that there is going to be a huge change in health care, but we'll see a lot of talking about it and lots of efforts to trim it around the edges.

The second thing we'll see is gridlock. So if Democrats, you know, let's imagine a huge surprise, we're all wrong and Democrats retain control of everything, there's a real boost for the Democrats for Obama. You could imagine a second stimulus. You could imagine the Democrats saying, OK, this is the courage of our convictions, let's go in there. That probably won't happen. And what that probably means is we're not going to see a lot of aggressive action from Washington on the economy.

But I think there is a really important ideological issue that underlies this debate that we will see played out in 2012. And that is about the size of government. And although it might sound odd, I think the most important place, the laboratory where that question is being tested right now is the UK. The British government has cut the size of government by about 20 percent this week.

ROMANS: That's right.

FREELAND: Some people are predicting apocalypse, you know, total depression. If that experiment doesn't work in Britain, I think that could have a huge impact on the U.S. and if it does work, it'll have a huge impact too.

ROMANS: You know John, it's interesting because, voters they want change, but this is a time when, wow, we really need some incredible leadership. Chrystia was just pointing out massive changes in important policies being undertaken in the UK. We're what at the third or fourth inning of whatever this thing is that we're looking at in terms of the global economy coming out of the crisis. What realistically changes if you've got new folks in there?

KING: Well, that's an interesting question, people still wanted change. In 2006 they wanted change, in 2008 they wanted similar change and they gave the Democrats power but it looks like in 2010 they still want change, but they're going to give the Republicans a bit of resurgence here. What do you get in Washington? A desire for change among the voters, but probably gridlock and polarized government in Washington.

Here is what to look for, the question is, and can they do this in the lame duck session after the election? Or will it spill over to next year? Most expect if the Republicans make big gains, there'll be huge pressure on the president to cut some deal on tax cuts. Do you extend the Bush tax cuts and fight it out in the 2012 presidential election? Many Democrats think that's a good argument for the president to make and carry it into 2012. Could he cut a deal where they extend the tax cuts and he gets some of that infrastructure spending from the Republicans that he has been talking about. That's one thing to look at.

To the health re point Chrystia you made I think is fascinating and a very important point. The Republicans, the Tea Party candidates especially want to come here and repeal Obama care. Remember, he has the veto pad. It'll be almost impossible to do. And many Senate Republicans don't want to do it. But watch the new class of Republican governors. Health care reform, insurance regulation is at the state level. Many of them will try to give the president fits in the next year or two.

ROMANS: That sounds like we could have lots of, you know, health care reform is the law of the land and we'll still be arguing about it. Mark, Republicans are ahead in the CNN poll of polls, tracking Congressional elections. Is it because voters are convinced Republicans have the solution to fix the economy? Or are they simply convinced that the Democrats are out of answers?

PRESTON: I think it's the latter, right? It is out of answers again. We haven't seen any grand proposals from Republicans to say, look, this is going to get us back on track. They've talked in bullet points. It took them until September to release their promise to America, which was their policy document in how they were going to change things. But you know when you use terminology, like a repeal and replace, you know it has a nice sing song to it, but it's very difficult to do things here in Washington and, you know, as was just stated, you're going to have a Democratic president, perhaps a Republican House, maybe a Republican Senate. It's going to be gridlock.

And even the power players are going to be assuming this were to happen, look at a block of conservative Democrats known as Blue Dogs and see if they start breaking with Republicans on some major policy issues. And if that's the case, then President Obama's going to have a fit on some issues here in Congress.

ROMANS: Mark Preston, John King from CNN, thanks to both of you. Also, Chrystia Freeland from Reuters. Fascinating conversation. Have a great weekend, guys.

What happens in the midterm elections could come down to one important four-letter word. Can you guess what that word is by now? The answer next.

(COMMERCIAL BREAK)

ROMANS: What happens in the midterm elections could come down to one important four-letter word, jobs. Top labor leader Richard Trumka on our show last week had this to say.

(BEGIN VIDEO CLIP) RICHARD TRUMKA, AFL-CIO PRESIDENT: Well, look, the crisis that we face right now is the job crisis. And unless Congress addresses that crisis, we really face a generational -- generation lost unemployment, and we threaten the recovery today.

(END VIDEO CLIP)

ROMANS: Union members have mobilized in record numbers to support Democrats this election year. The question is, will it make an impact.

Peter Morici is a professor at the University Of Maryland School Of Business. Peter how much does the AFL-CIO really matter to the midterms?

PROF. PETER MORICI, UNIVERSITY OF MARYLAND SCHOOL OF BUSINESS: Well, three of the largest spenders are unions. The service employees, the public employees, and the National Education Association. So they're having an enormous impact on ads.

ROMANS: On ads. Will it have an impact in the ballot box, do you think?

MORICI: Absolutely. Because they can put foot soldiers out in the field along the ridge line between red and blue America. Western Pennsylvania on throughout Ohio, Indiana, and down to the upland south. That's where elections are determined in the United States. And they'll have their foot soldiers out there. And that'll make a difference in how many House seats the Republicans do in the end obtain.

ROMANS: Stephen Moore, is an editorial writer for the "Wall Street Journal." Stephen welcome back to the program.

STEPHEN MOORE, EDITORAL WRITER, "WALL STREET JOURNAL:" Hi, Christine.

ROMANS: In 2009, the number of unionized government workers surpassed those in the private economy for the first time. Clearly the balance of power here has changed. What does it mean for the midterm election and their lobbying power going forward?

MOORE: Well, first of all, that's a great chart. And another statistic that is of interest is that less than 8 percent of the private sector workers now, Christine, are members of unions. So unions are now public sector unions. And when you talk to this issue about campaign spending by the unions, I don't have a problem if the teamsters or the AFL-CIO are spending money on political ads.

But I do have a big problem with public sector employee unions doing that. Because essentially what you've got here is government unions getting government money and then spending that money for political purposes. The largest government union, Christine, has put in almost $88 million into these campaigns.

ROMANS: And who is that? The largest government union putting $88 million in?

MOORE: Basically lobbying for their pensions. American Federation of State, County and Municipal --

MORICI: That's right.

MOORE: Not only that, but they're lobbying for more federal money. And that's what I have a problem with. I just think we should have a probation in every state and federal level that any federal money or any government money should not be used for political campaign purposes.

ROMANS: Peter, let me ask you what role the unions will play, if any, in bringing back jobs to the U.S. How does that factor in here? Or are they to blame for the flight of jobs out of the U.S. in the first place?

MORICI: I think they did contribute to the flight in jobs. I mean, look at what they did to the automobile industry. They essentially have made it uncompetitive, vis-a-vi the transplants and foreign competitors. I think they are partially responsible. The programs they're lobbying for simply don't work. The stimulus package did not generate the jobs expected. They're very silent right now and they really need to do something about the Chinese currency, which is really where the action is. And they're so obsessed with things like card check, which would basically take away the right to vote of individuals as to whether they would have a union or not.

MOORE: Yes, I agree with that. And I say, you know, it's interesting, Christine. If you look at the major industries in the United States that are in the most financial trouble, state and local governments, the auto industry, the postal service, the steel mills, those are all unionized. And what's really interesting is if you look at the states where job growth has not fallen nearly as much as the other states, it's the right to work states where you don't have to unionize or you don't have to join a union where businesses are forming, job creating enterprises, and they're leaving the heavily unionized states like Michigan and Ohio.

MORICI: Unionization is a leading indicator of economic decline.

ROMANS: And I'm -- I'm sure that Richard Trumka would disagree with both of you on that. I'm sure I will not speak for Richard Trumka. Given his interview last week, he would disagree with both of you for the last four minutes. Gentlemen thank you so much. It'll be interesting to see how union and the union issues will play out in November.

Peter Morici stays with us, Stephen Moore, "Wall Street Journal" editorial writer, thank you so much.

MOORE: Have a great weekend.

ROMANS: Three letters, QE2. No we are not talking about a royal cruise ship destined for South Hampton. QE2 is a term that could help the economy or hurt it. We will explain next.

But first, starting up a business in a down economy can be tough. Particularly when finding the right place to set up shop is simply so important. Two pastry chefs found that out the hard way in this week's "Turn Around."

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Want a sample? We have passion fruit.

ROMANS (voice over): Veronica Georgalis and Sari Unson want you to really enjoy your next wedding reception.

SARI UNSON, CO-FOUNDER, ROYALLY ICED CAKES: We decided we wanted to make wedding cake that looked great and tastes delicious. Because honestly, I've never been to a wedding where I'm like, oh, great the cake.

ROMANS: At this bridal expo, the pair behind the start-up Royally Iced Cakes hopes to connect with some 1,500 brides to be. But earlier this year the budding business was almost doomed when the industrial-sized kitchen they planned to move into was pulled out from under them.

UNSON: We'd worked something out with someone we thought was very generation and was letting us use it as long as we renovated it. It was honestly about the day we were about to roll the floors out that they said, oh, guess what, sorry.

ROMANS: The business came to a screeching halt in the middle of wedding season.

VERPMOCA GEORGALIS. CO-FOUNDER, ROYALLY ICED CAKES: That set us back a few months. We had to scramble and start looking. You can't take a full order unless you have a kitchen, you're not going to be working out of your home kitchen making a wedding cake it is impossible.

ROMANS: Finding another space to mix, bake, ice, and store was tough, rents were high in the area. But eventually they found a caterer on Craig list looking to share space and split the rent. Now the pair can focus on building their customer base in a tight economy.

GEORGALIS: The work is enjoyable. We love what we do. That's not the difficult part. It's getting someone in the door, getting your name out there, connecting with a customer.

ROMANS: Experts say that by attending this bridal expo, they've come to the right place.

BILL HEATON, CEO, THE GREAT BRIDAL EXPO: You know 40 percent of all the brides that are getting married these days are attending one of these shows. So it is a very big number and it enables these smaller companies to reach large numbers of people and display their products and services in a very short period of time.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

ROMANS: Welcome back to YOUR MONEY.

Peter Morici is back with us. Joining us now Carmen Wong Ulrich, personal finance expert. Thanks, both of you.

Quantitative easing. Peter, it's the move many folks expect the Federal Reserve to make to jump start the economy. It sounds complicated, it's not really. It's simply the government buying stuff, buying assets, things like bonds, T-bills, mortgages; it pumps money into the economy. It's why it's believed the Fed is going to turn to another round of quantitative easing in the next month.

Peter, the market is above 11,000 is this due to anticipation of this quantitative easing? I can't hardly say it or expectations maybe of a big Republican win in November? Or is it something else?

MORICI: Well, I think the very strong profitability American companies have enjoyed by cutting their costs and also expanding in Asia is an important factor. But the anticipation of a Republican victory, I think is having a lot to do with stocks because the business community has soured on the Obama administration rightly or wrongly they have. I don't think that quantitative easing is expected to accomplish a lot. I recently participated in a poll of forecasters over 90 percent of us, you know, anticipate qe-2 to go out of the docks, you know, on November 4th. But we're not expecting to travel very fast or accomplish very much.

ROMANS: You're expecting the SS Minnow not some big luxury --

MORICI: Why exactly, I guess, a little boat in my bathtub is going to leave.

CARMEN WONG ULRICH, PERSONAL FINANCE EXPERT: I think consumers are a little afraid of the qe-2 docking. Because what they're afraid of and what I'm hearing is inflation. We see big prices are going up, for example, McDonald's. That's not even related. We're going to see prices of things that are really essential to people's lives, when they go to the grocery store or such. Remember what happened when gas went so, so high. Consumers are really struggling right now and especially in terms of confidence. It's going to be really hard for them to feel any better when they have to stretch their dollar.

ROMANS: So glad you brought that up, because you have meat prices that are the highest, you know, certainly since I was a little girl. You've got a big, big rally in grain prices earlier this summer. The fastest pace in grain prices rising in like 40 years or something. Peter, what's going on out there really?

MORICI: Well, with food prices, there's a drought in the southern Midwest and so forth, which is driving up the cost of keeping livestock. All the growth in China is driving up commodity prices, oil. You know, every time a job leaves the U.S., Midwest for China, world oil consumption goes up because the Chinese make things so much less efficiently when it comes to energy use. And someone moves from the country in China into the city and becomes a consumer of air- conditioning.

ROMANS: You draw this real direct link between what's happening in the U.S./China relationship to what I'm paying at the grocery store. And I wonder if that's going to be a theme that will continue as we head into next year. Because certainly these commodity rallies. They certainly beg some attention, don't you think?

MORICI: Absolutely. And you know, China's set a goal of a leader of every child, they can't produce that themselves. They import it from Germany and Europe, well, they feed those cows grain. As their incomes go up, it happens.

ROMANS: I want to; Carmen Wong Ulrich is a personal finance expert and author, so I really want to get her point of view on this particular story coming up here. Changes coming to the 401(k) statement. It could help you save money. Starting in 2012, the Labor Department's going to require that 401(k) plan providers clearly, clearly state all fees and expenses deducted from a saver's retirement account. The goal is for you to know exactly what you're paying to invest your nest egg without a lot of digging. And the Labor Department says you'll be able to shop around for lower fees. Is this a good idea, Carmen?

WONG ULRICH: This is a very good idea to a point. What I'm really concerned about is, of course, we want to see all of those fees. A lot of Americans didn't even know that they were paying fees on their 401(k) s. Because they say well I checked no load so why am I paying a fee? But there are a bunch of other fees you could be charged, administrative, legal, such as that. So it is great to see them. What I'm concerned about is I constantly hear from people who are very confused period about how to choose things in their 401(k).

Now we've got to give them another set of charts and documents to get them to help choose what they need to put their money in. It's going to be very, very confusing. What I really hope is that employers take some time and effort to basically help employees through this process and explain to them -- they're supposed to be very easy to read, charts. We know some people just can't read charts. To explain how this works and how there really needs to be a triumphant when you are investing, it's got to be about taxes, fees, and returns, not just about returns.

ROMANS: Do you think it'll make the mutual fund companies more competitive in their fees if its right out there in the open where we can all see it that maybe it's going to be good for consumers?

WONG ULRICH: It should. We absolutely hope so. It really, really should. It really is going to be a shift about people where they're choosing to put their money. We know about 80 percent of folks do choose no load fees to put their money in. So a lot of folks are paying attention. If we see a big shift here, we are going to see more competitive pricing.

ROMANS: Peter, I'm a little bit of a cynic. It's going to take a whole other year and two months before any of us are going to see these changes. It always takes such a long time, Peter. We give them an awful lot of time to cope and strategize with the new rules, don't we?

MORICI: Well, sure. The Fed does move slowly. The federal agencies that deal with these things move slowly. But remember, people have a lot of money in these accounts and they can roll over all that money, not just the money they put in two years from now, but the money they have already put in.

And very often the choices that folks have from their employees are not the best of choices. And they can roll them over into very low-fee options that are available from companies like, you know, Fidelity, Vanguard and so forth, USAA is a marvelous company. They can roll them over and knowledge of these fees, economists like this kind of information. Transparency is good.

ROMANS: All right, Peter Morici thanks so much. And Carmen Wong Ulrich.

A trend in the way you get your news. Why the home delivery of your local newspaper could soon go the way of the typewriter.

(COMMERCIAL BREAK)

ROMANS: Back with us, Carmen Wong Ulrich and in L.A. James Andrews, a social media strategist and co-founder of Everywhere a communications consulting firm.

Welcome aboard.

OK. How we get our daily news changing in a major way and your morning paper could be a thing of the past very soon. This saddens me since I started in papers, of course. According to new research out this week from the lab at Harvard, by 2012, iPad sales alone will surpass home-delivered newspaper subscriptions.

Well, didn't we see this coming James?

JAMES ANDREWS, CO-FOUNDER, EVERYWHERE: Well, absolutely. And if you look at social media and the way people are getting news now in social media. Those people are our paper boards. If you're following somebody on twitter, you are following somebody on social media, you know and I'm following a friend, I'm getting news anyway from a digital source. The growth of the iPad is no stranger. That's going to be a driving force.

WONG ULRICH: And if you look at the numbers of the folks under 30, adults under 30 who subscribe to newspapers, it's in the teens if that. And this hurts me too because my husband is a writer for the "New York Times." So this is a real huge paradigm shift in how we're getting our information. The question is, are newspapers going to be able to keep up and catch up with what's going on?

ROMANS: And here's the thing, James. If you've got this iPad, that means if you are a content provider that used to be put on a newspaper page, you have to figure out how to get your content into that iPad. It may be an opportunity for the resurgence of local papers -- maybe I'm an optimist here. A resurgence for local newspapers in particular who can get their small audience, maybe around the world, a place -- an easy place to get that paper instead of the front step.

ANDREWS: Absolutely. News is becoming localized. And it is an opportunity for you to reach people right there where they are. You know, GPS locater finds out where you are and gives you news right in the location where you are. I think it's a huge opportunity.

WONG ULRICH: What about paying for it? This is my concern is, especially when it comes to local, what has killed a lot of local papers is Craig's List. Because local papers made a lot of money off these ads, local ads. What's going to happen? How are we going to pay for that news? We're very, very used to not paying for our news. What are they going to do? In getting folks to pay for, paying for the content or for local ads if you have Craig's List around?

ANDREWS: Yes, this is where brands come in. I think in advertising has always been the core of, you know, the business. And I think ads and brands are getting very savvy about delivering content to their consumers. If the newspapers don't do it, brands themselves are going to become news aggregators, they're going to give and deliver the local news, the local flavor, and the local beat. So journalists have to come in and brands have to come in and fish where the fish are swimming. And that's really critical.

ROMANS: James Andrews, Carmen Wong Ulrich, you're both sticking around.

But I want you to see this next story because this is how many times have you heard, how do I monetize social media for your business, for your brand? It is word of mouth internet style. Social media, free advertising, it's a possibility of reaching a new audience for your company or your product. But how do you harness it while not wasting your valuable time?

(BEGIN VIDEO CLIP)

ROMANS (voice over): It doesn't get more local than this. A 30- minute photo shop in Irvine, California. Same store front since 1990. But this is an international enterprise now.

MITCH GOLDSTONE, CEO, SCANMYPHOTOS.COM: When I started, customer base was about three to five miles. Today it's worldwide. People find us online, through search engine, through twitter searches as well as Facebook.

ROMANS: Mitch Goldstone has tweeted some 32,000 messages. He has 10,600 follows on twitter where he broadcasts promotions and is constantly trying to make a name for his company, scan my photos. He doesn't just self promote, he shares links and product reviews and blends into a running conversation online about all things photo.

GOLDSTONE: If you're not into social media, social networking, you will be out business. I'm going to repeat that. You will be out of business if you don't tweet, use Facebook and social media today.

ROMANS: Smart small business owners are embracing and profiting from his free tool. Just ask Ido Leffler, co-founder of Beauth brand Yes To.

IDO LEFFLER, CEO, YES TO: Today you don't need to spend any money at all to set up a Facebook fan page; you don't need a huge marketing account to set up a twitter account. You need zero.

ROMANS: When an expensive print ad campaign fell flat, Leffler launched an online contest to find the face of the brand. It attracted 150,000 fans on Facebook, sales doubled in six months. The social media social butterflies learned to use these free tools to grow their business, but it's not easy. Experts say the trick is figuring out how to turn posts and tweets into dollars and cents.

It is great if you have 10,000 followers on twitter, but how many of them are paying customers? The strategic piece small businesses overlook and the smart ones really focus on.

(END VIDEO CLIP)

ROMANS: So we've heard it a million times. How do you turn it into business? How do you monetize these free tools and not just waste your time or waste your employee's time trying to get on Facebook and twitter and spread your message? Here's what not to do. Don't be boring. Don't over share. Don't bombard your customers online with useless posts and don't just promote yourself. Instead, experts say become an important resource for your customer, for the people who follow you, who are somehow interested in your business.

Mitch Goldstone, he tests photo products, he posts helpful links to photography stories and blogs. Customers respond. Respond to free tips and won an occasional coupon, you need to also try to cultivate a consistent online persona. Think of your business as a voice in a running conversation. Respond quickly. Bottom line, you can't afford not to embrace social media, it's essential in today's business world as a phone number.

Consider a tweet, for example. A tap on the shoulder for someone who is following your company. You must use these tools. That's a way to talk to your customer and listen to them, too. Try that. Let us know how it works.

Next, trouble on Facebook, why some of the most popular Facebook apps could be leaking out your personal information.

(COMMERCIAL BREAK)

ROMANS: Facebook has taken some heat this week after claims that ten of its most popular apps have been transmitting user id's or in effect leaking users names and friends names to over two dozen advertisers in internet tracking companies. Facebook prohibits ad makers from transferring data about users to outside companies. It's unclear how long the breach was in place. But since the story surfaced several of the apps in question have become unavailable to Facebook users begging the question, what information is really safe online? James, I say if you think that your information is private when you go on a social network you're going there to share information in the first place.

ANDREWS: That's right. It's all out there, Christine. You know, it's a new world where not only is it out there, but conversations that you're having, I mean, you think are private, are actually going to Google. Facebook is actually driving more search than Google these days. So it's all out there. You must use it with a sense of responsibility, and understand that information that you're providing can and will be used.

ROMANS: Carmen, do you think that Facebook has to do more; even if it just turns over stuff to its apps does it have to do more?

WONG ULRICH: I really -- I totally agree with you Christine about the fact that this idea that you can perceive that you're on this site. Of course they need to make money, and, of course, your information is going to be tracked and used. I would expect, though -- this is where there's a little trouble, especially with the apps -- I understand if you are going to take my information that I have inputted but do not go to my friends. Do not link up to my friends.

That's where those apps got in trouble. Because I may give you permission and understand that there's no idea of privacy when I go in in terms of myself, but this does not give you access to your hundreds of friends that they can go in and get their information. We're not granting permission for that. That's where the apps really need to be careful.

ROMANS: Do you think that Facebook was chastened by this or do you think that Facebook is kind of like, look, you know this wasn't a breach, really? This was an oversight?

ANDREWS: Yes. Look, if Facebook were a country they'd be the third largest today. I don't think Facebook --

ROMANS: Wow.

ANDREWS: I don't think Facebook is hurting from this. I think there's some dents they've taken. They've been working very hard to work on this privacy issue for a while. Facebook is not going anywhere. They realize that. So they'll tweak it and they'll come back and they'll rise above this, but I don't think they've been taken back at all.

ROMANS: Quick for both of you just a 20 seconds, wrap it up, each of you. I'll start with you first, James, I mean what is your advice to people on Facebook who think that they want their privacy kept under wraps?

ANDREWS: One thing you should recognize, that Facebook is always changing their privacy settings. It's really important to spend time in the back end of your Facebook profile and monitor your Facebook privacy. They change quite often and there's information that is going out all the time especially in the apps section. Just realize that on many, many social networks, Facebook, definitely, your information will be used. And just make sure you read the fine print in those details.

ROMANS: Carmen.

WONG ULRICH: Yes, I mean look there is over half a million Facebook apps out there and so many folks using, over 70 percent of Facebook users use those apps, just really be careful, because a lot of those apps, they charge you. They take your credit card information and they do and they will track you. I think that I'm a little nervous about and be scared about is Google reading the messages and reading your messages. That's just the next frontier in terms of privacy. That's going to be very interesting too.

ROMANS: All right. Thanks so much, Carmen Wong Ulrich and James Andrews. Thank you both of you for a terrific hour.

That wraps it up for us this show. We hope you hook up with us on twitter @Christine Romans and @Ali Velshi.

Make sure you join us every week for YOUR MONEY, Saturdays at 1:00 pm Eastern and Sundays at 3:00. You can also logon 24/7 to CNNMoney.com.

Have a great weekend.