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Corporate America More Responsible Post-Enron?; Insurance Companies Mark Start of Hurricane Season; Keeping up with the Joneses
Aired May 27, 2006 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: And "Now in the News," word of an administration showdown over the FBI search of Congressman William Jefferson's office. Sources tell CNN that after Congress raised objections, some administration officials wanted the FBI to give up the records it obtained. But they say Attorney General Alberto Gonzales and FBI Director Robert Mueller threatened to quit rather than give up such evidence.
In Indonesia, an earthquake killed about 3,000 people and injures thousands more. The magnitude 6.3 quake was centered near Yogyakarta, a popular tourist destination about 250 miles east of Jakarta.
At West Point today, President Bush declared that America will fight terrorists on every battle front and he promised not to rest until the threat ends. The president delivered the commencement address at the U.S. Military Academy at West Point.
The fleet's in town, in New York City, that is. Annual Fleet Week festivities are in full sail on this Memorial Day weekend. With thousands of sailors on shore, there is plenty to do. Today's schedule includes service at the United War Services Memorial.
A veterans group marked Memorial Day weekend by laying a wreath at the Tomb of the Unknowns. The Rolling Thunder Organization was formed to focus attention on prisoners of war and Americans missing in action. Its members arrived in the nation's capital after a 10-day motorcycle journey across the country.
And we will update the top stories in 30 minutes, you are watching CNN, the most trusted name in news. IN THE MONEY begins right now.
ANNOUNCER: From New York City, America's financial capital, this is IN THE MONEY.
JACK CAFFERTY, CNN ANCHOR: Welcome to the program. I'm Jack Cafferty. Coming up on today' edition of IN THE MONEY, fat cats and watchdogs. In today's world of corporate fraud cases, Enron was the mother of all corporate collapses. We'll take a look and see why corporate America is still doing the wrong thing in many cases.
Plus, storm-proofing your home insurance. This week marks the start of hurricane season, see what that means for your insurance policy, wherever you might live.
And burning ambition. People have been trying for ages to run their cars on things that aren't gasoline. Stick around for a history of alternative fuels. And don't forget the matches.
Joining me today, a couple of IN THE MONEY veterans: HEADLINE NEWS correspondent Jennifer Westhoven; Fortune magazine editor-at- large Andy Serwer.
So it took the government a while but they got 'em. We're talking Skilling and Lay, those two worms that were at the top of the Enron debacle. I suppose some vindication in order for the people who lost their jobs, their pensions, their hope for the future and everything else, because of the malfeasance of these two clowns.
But the thing that bothers me is they walked out of that courtroom on Thursday, they're free men pending appeal, pending sentencing, pending, pending, pending. I mean, why didn't they put them in those funny looking little orange jump suits, slap some chains on them, and throw them in Leavenworth and say, you know, if you win this on appeal, we'll let you out.
ANDY SERWER, CNN ANCHOR: Yes, at some point, I guess, they are going to do some hard time, Jack. And they are probably going to do the rest of their lives in jail. I don't think it's very surprising, though, the verdicts. And you know, to me, it's not that complicated. These guys were in charge of this organization that just went belly up. They're responsible and that's what the jury found out.
JENNIFER WESTHOVEN, CNN ANCHOR: I just think they're going to have to pay for it, right> But in their minds, when they came out and gave these statements, they seem to still be stuck in "I was right," at least Ken Lay. You know, he thinks -- you know, he doesn't say like, I guess I didn't pay attention, or yes, I guess I told people to buy when I was selling. There's no sort of contrition there at all.
CAFFERTY: He's the worst of the worst. He has got that mousy little innocent choir boy looking face and he has got a Ph.D. in economics. You know, this guy didn't know? Give me a break. You bet he knew. He knew full well. And they can't get him into some joint where he and Skilling can compete for that Friday night prom queen thing at Leavenworth or one...
WESTHOVEN: The federal slammer is always nicer than a state slammer, right? I don't think...
CAFFERTY: Well, it depends which ones you go to. Is it Leavenworth, they have a guy in the basement, hasn't had daylight piped to him for 50 (ph) years because he took a swing at a guard or something? They can be tough.
All right. When Enron collapsed, the outrage of course, palpable. But as the years went by, and it was about four years before they finally got it all into a courtroom, a lot of the outrage faded. If you didn't work there, you probably didn't care as much as you did in the beginning. I don't think any of us did. Probably a normal reaction as the time passes. But when the verdict finally did come in against Jeff Skilling and Ken Lay, chances are, your sense of outrage was suddenly reignited.
It took the government a while, but they got their guys. These two men are now being looking at spending rest of their lives in the joint. Can't happen soon enough to please me. And it refocused public attention on a climate of corporate corruption in this country.
Some of the big names from last few years, Tyco's ex-boss Dennis Kozlowski, is doing some hard time in a state prison in New York, 25 years for bilking his company out of millions of dollars. But then there is WorldCom, another case of -- well, not quite yet.
The former CEO, Bernie Ebbers, sentenced to 25 years in prison for one of the biggest accounting frauds on record, but he's out pending appeal. And don't forget Adelphia Communications, John Rigas and his son Timothy, both convicted of conspiracy, bank fraud, securities fraud. Their sentences run 15 to 20 years respectively. And like Ebbers, the Rigases are free, pending appeal.
I don't know what kind of a message that sends, all of these cases have one thing in common, though. They're about cheating. And for a look at why that's so common in American business these days, we're joined by David Callahan, who is the author of "Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead." He is also the co-founder of the Demos think tank.
Nice to have you with us, David, welcome.
DAVID CALLAHAN, AUTHOR, CHEATING CULTURE": Great to be here.
CAFFERTY: Can Enron happen again?
CALLAHAN: You bet Enron can happen again. The interesting thing is not the last scandal, it's the next scandal. You know, regulators are always fighting the last battle, right? So now we have some tougher rules about earnings and accountings. But where's the next scandal going to be? How about those hedge funds? A trillion-and-a- half dollars under management by hedge funds which are hardly regulated at all. Or you have got a trillion dollar insurance industry that's barely regulated by the states. The real estate industry is another, I think, powder keg waiting to explode.
SERWER: David, let me ask you about maybe the nature of this country. Do you think that these patterns occur where people get greedy over certain decades and are less greedy, say, after World War II, you know, "The Greatest Generation," or during World War II, these people were less greedy? Today, we have a culture where people are more greedy? Or is it a plu (ph) sa (ph) sange (ph)? Are we always this way?
CAFFERTY: A what?
SERWER: Always this way. It's French for "it's always this way."
CAFFERTY: OK, OK.
CALLAHAN: Yes, we definitely go through these go-go phases where everybody kind of goes crazy in the business world. And the common characteristic of those phases is that big business tends to be very powerful in Washington.
And right now this is the new robber baron era we've been living through for the last decade or two. The lobbyists in Washington, D.C. have more power than we've seen in maybe 100 years. And this administration has been one of the most friendly administrations to big business.
You have the lobbyists who are calling a lot of the shots. In many cases, they're actually running the regulatory agencies, in a case of the fox guarding the hen house. And so I think until government has some more muscle and can really be a counterweight to big business, we're going to see more of what we just lived through with the Enron, WorldCom and Tyco scandals.
WESTHOVEN: And that's something you talk about. You think the SEC should be a Doberman pinscher and instead it's a Pomeranian.
CALLAHAN: Well, exactly. I mean, the SEC's enforcement division is about as big as your typical corporate law firm. The government is sorely outgunned in these battles, right? The Enron guys spent $20 million on their defense. There's a lot of the people involved in these corporate scandals who were not tried at all by government because the government just didn't have the resources to go after these guys and really nail them.
So as long as you have that kind of imbalance of power between the public and the private sector, it's going to be very hard to prevent new scandals, much less really nail the people who have been involved in the previous ones.
CAFFERTY: Isn't there a third element in that, though? That would be you and me and Andy and Jennifer and the guys on the floor here? You mentioned hedge funds. Well, I put my money in a hedge fund because I want a bigger return than I'm going to get from buying the Vanguard S&P 500 Index Fund. And I don't really care how they get that return to me as long as the check comes in the mail.
CALLAHAN: Right, there is a lot of pressure by investors to get the best return. Now that defined guaranteed pensions are going out and everybody's being pushed into these 401(k)s, whether they like it or not, they want a good return on their investment. There's a lot of insecurity driving a lot of risky behavior.
The sad thing is, though, often shareholders are still getting the short end of the stick because the CEOs still have way too much power over boards. We just heard about the CEO of Home Depot being paid $265 million over the past five years, even though the stock of that company has slid by 12 percent during the same period. So a lot of those executive compensation excesses are still going on today.
CAFFERTY: All right, well, one of the presidents back a long time ago -- one of the dead presidents, said the business of America is business. And I guess as long as that's the case and we're a capitalistic society that's fueled by profits on the bottom line and stockholder equity, it's probably not going to change appreciably. We can just hope that maybe the regulatory agencies don't become completely toothless.
CALLAHAN: You need tougher watchdogs.
CAFFERTY: Yes, well, don't hold you breath, huh?
CAFFERTY: David, thank you.
CALLAHAN: Thank you.
CAFFERTY: David Callahan wrote "Cheating Culture: Why More Americans Are Doing Wrong to Get Ahead."
A lot of our viewers weighed in on the Enron verdict by e-mail. Here are a couple. Shirley in Idaho wrote this: "These verdicts are a good start, but it won't be 'hooray time' until Lay and Skilling's assets are distributed to all the employees they cheated."
Richard in Florida: "The verdicts prove that it's nonsense to pay top executives hundreds of millions in salaries and bonuses when they either don't know what's going on or don't care enough to find out. The Enron board of directors approved Lay and Skilling's pay. How many of them have been indicted?" Good point.
Art wrote: "This is still a slap on the wrist. No way will Lay and Skilling serve more than a few years in prison. I say send them to a state prison in Texas and put them in with the general population."
When we come back, on IN THE MONEY, get it together before it all comes apart. Hurricane season is on us again. See how the insurance industry is changing in order to deal with an ever-growing threat of these big storms.
Plus, from dead trees to live wires. We'll look at how a magazine empire is learning to survive in the digital world.
And also ahead, jealousy on wheels. Making it in America is about wanting what the other guy has and getting it. We'll speak with a journalist who tried to find out what's driving us. Stay with us.
WESTHOVEN: Weather experts are warning devastating hurricanes are here to say. The National Hurricane Center and the NOAA predict four to six major storms this season. And our next guest says there could be a big one in the Northeast that could be worse than Katrina.
Are you prepared? Insurers are cutting back coverage and raising prices all along the coast. Carolyn Gorman, vice president of the Insurance Information Institute, is here to tell us why you should get some insurance no matter where you live.
Carolyn, welcome to the program. We've had so much development in general all across the country and certainly along the coast, there's a lot more people, a lot of buildings, a lot of stuff there. How are you guys able to insure all of this?
CAROLYN GORMAN, VP, INSURANCE INFORMATION INSTITUTE: Well, of course in some cases, we aren't; as evidenced by the fact that insurance companies who are beginning to assess the risk of hurricanes -- terrible hurricanes, for the next 10 years, are beginning to pull back.
In some cases, those risks have to be taken on by such entities as the federal government.
SERWER: Carolyn, I was reading up about the hurricane of 1938 that slammed into New England. And it was devastating. The biggest natural disaster to ever hit New York, Connecticut, and Rhode Island, 600 people killed, 75,000 buildings destroyed. I know some people who are still around to talk about it. And they say it was (AUDIO GAP) like that came to the Northeast today?
GORMAN: Well, I will tell you, that's the very thing that is keeping insurers up all night long, worrying about that. Because they know, they've been told by meteorologists and experts that we're overdue for a great big storm like that in the Northeast.
And as I'm sure you know, people who live in the Northeast have been very complacent because they're not used to being threatened by such a devastating catastrophe. And so -- in fact, we are going to be holding the Northeast Hurricane Summit on July 19th in New York City, hoping to get the word out to people that you need the right kind of insurance and you need enough insurance, because the big one could happen at any time.
CAFFERTY: Let me go to the -- something you said right at the start about the federal government. Why should the federal government have to pay any money to anybody who chooses of their own free will to go live where there are hurricanes? When we talk about the Northeast, not talking about the whole Northeast, we're talking about the shorelines and the coastal areas that are exposed to the brunt of these storms if and when they come. But why should I as a taxpayer have to subsidize you as a home owner who decides to go live in New Orleans behind a levee that won't hold and in the face of a Katrina? I mean, isn't that your problem?
GORMAN: Well, you know what happens in situations like that, political pressure begins to exert itself. And then lawmakers in those very, very delicate, sensitive areas begin to get very lax and they allow development in those areas. And then you have even more pressure because people are there then exposed to massive damages without any kind of coverage. And so then you have the National Flood Insurance Program.
And then, of course, then you end up with something like Citizens Property Insurance in Florida, because there are so many people who live in harm's way. But, you know, that's politics. And that's the way we live. We want to live in beautiful places and then pay the price later.
CAFFERTY: But why should I pay because you want to go live in a beautiful place and your home gets destroyed by a hurricane? That's my question. If I live in Omaha, Nebraska, why should I pay for your house that gets wiped out by a hurricane in Florida?
GORMAN: Well, you know, in most cases, you don't. But, however, with the National Flood Insurance Program they -- in fact, they would tell you that up until this year, the National Flood Insurance Program has been self-sustaining. This -- but, of course, Hurricane Katrina blew away all of their access to capital and now they're going to have to get more money from the federal government which does come out of taxpayers' pockets everywhere.
WESTHOVEN: The insurance industry, you guys, ended up losing something $58 billion last year, partially because of Hurricane Katrina. What's your view on how the federal government did? I mean, you guys got a lot of lobbyists, too. Can you get them to change their responsiveness plan?
GORMAN: Well, no. Realistically speaking, no. Insurers really have to tend to their own knitting, so to speak. They -- it was a big enough challenge for insurers last year to do their job. As we all know there was a terrible need for more adjustors. It was just a long, long process getting all of those claims filed. I -- it seems that the federal government knows it is sorely lacking in their response last year and they are attempting to do something about it.
SERWER: Carolyn, after a big disaster like Katrina, isn't it the case that insurance companies end up making a lot of money because they raise prices so it hardens the cycle, as you guys say, in your business, and isn't that the case now?
GORMAN: Well, you know, you do get a hard market, but it's a very cyclical thing and it's very difficult to pin it on any one event. You will probably know that last year Hurricane Katrina took away every profit the insurance industry ever made in Mississippi, Louisiana, and Hurricane Wilma -- excuse me, Hurricane Andrew many years ago, wiped out all of profits that the industry every made in Florida.
They can raise rates. But, as we all know, these storms are coming more frequently and more ferociously. And so raising the rates is not the answer to it. Really and truly, people have to begin to pay for their view. That's really answer to it.
CAFFERTY: There you go. Carolyn Gorman, vice president of the Insurance Information Institute, thank you. Let's hope that nobody has to pay a lot of claims for hurricanes this year.
Time now for this week's "Look Ahead." Monday is, of course, Memorial Day, it's a federal holiday. Bond and stock markets will be closed. You won't get any mail. I have to come to work, which is a whole other subject we don't have time to go into. I'm not happy about it either.
Some important economic reports out later in the week. On Tuesday, we get consumer confidence numbers for the month of May. And on Friday, the all-important jobs report out, also for the month of May. Big question marks surrounding the Fed meeting in June. So all these econ reports will weigh heavily on Mr. Bernanke's mind, and the markets watching it all closely, and you should, too.
Coming up after the break, turn the tables, here's your chance to decide if a mortgage lender is up to your standards. We'll see how shares in Fannie Mae are looking after a big fine.
Also ahead, on top of old Smokey, checking out the coal burning car, another old school alternative fuel break-throughs, that would be in our "Brainstorm" segment.
And show those people with the car magnets how to really support the troops. Stick around for Web sites that will let you take some action this Memorial Day.
SERWER: It wasn't the best week for the folks over at Fannie Mae, the mortgage giant agreed to pay a $400 million fine Tuesday. That was after a government report that blamed Fannie Mae's $11 billion accounting scandal on employees trying to trigger big performance bonuses for top executives.
Fannie Mae shares haven't been too volatile over the past year, but if you look at a two-year chart, you see the stock is down considerably from its high in the fall of 2004. This makes Fannie Mae our "Stock of the Week."
And you know, this is a very singular company. I mean, it's a quasi-government-sponsored entity, as they call it. It's complicated. It's very powerful. And it's in a lot of trouble. And it has been. And it's been fighting like crazy. But finally the chickens are coming home to roost here.
WESTHOVEN: Well, but this board is still sitting there. They're paying off all this money. And they're saying, oh, we're going to settle it, we are going to move on. But all of these guys who are asleep at the wheel who didn't do anything are still there. And they're not even saying anything like yes, we're going to try to do a better job. We're going to demand this. I mean, they're all just there. They signed off on all this stuff. They're not demanding the money back either, so far.
CAFFERTY: Well, part of the solution I read is that they're recommending a review of the management team. A review. This is an $11 billion scandal. They want a review the management team.
SERWER: You know, and it all goes back -- you remember the guy who ran this for a while, Franklin Raines, a very big rainmaker in Washington, D.C., these guys are expert lobbyists. They have connections up the yazoo (ph), all over the place. And it has taken... CAFFERTY: Is that a medical term, "up the yazoo"?
SERWER: Yes, well, in, out, all over the place. It's Washington, Jack, we're allowed to say that right? But, you know, it's a mortgage company, it buys mortgages from banks. And the other thing that is interesting here too is the party is over for this company.
They're going to have more regulation, more oversight. They're going to have these fines. And then here's something we haven't really talked about. The great interest rate party of the past 10 years is also over.
CAFFERTY: Sure, right.
SERWER: So I think the sweet spot is gone for Fannie Mae. And I still think also, there are probably other shoes to drop as well. I mean, if you're an investor here, I would perhaps look somewhere else.
WESTHOVEN: They're not showing commitment to stockholders, asking for a review.
SERWER: Another review. Maybe they'll review the review or get a committee or something like that.
Anyway, coming up on IN THE MONEY, dinosaur repellent. An old publishing empire has been teaching itself some new tricks. Find out how Hearst is adapting to the digital age.
Also ahead, thy neighbor's McMansion. Americans love the next big thing, especially if it belongs to the other guy. We'll speak to the author of "Green with Envy."
And it's about what they give, not about what you get. It you think Memorial Day weekend is your cue to find a great sale, Allen Wastler is going to set you straight.
WHITFIELD: ... bottom of the hour. I'm Fredricka Whitfield. "Now in the News," they're finding more bodies in Indonesia, mostly near a popular tourist destination. The death toll from today's 6.3 magnitude earthquake is more than 3,000 and climbing. Scientists worry the quake could rattle a nearby active volcano and trigger a massive eruption. We have reporters in the region. So stick with CNN for the latest updates.
On a four-day pilgrimage to Poland, Pope Benedict XVI visits the birthplace of his predecessor John Paul II. Taking note of the news, the Vatican says the pope is praying for victims of Indonesia's earthquake.
President Bush tells members of the West Point class of 2006 they will be the generation to win the war on terror. At this morning's commencement address, Mr. Bush compared the war on terror to President Truman's war on communism.
A veteran's group marked Memorial Day weekend by laying a wreath at the Tomb of the Unknowns. The Rolling Thunder Organization was formed to focus attention on prisoners of war and Americans missing in action. Its members arrived in the nation's capital after a 10-day motorcycle journey across the country.
The fleet is in town, in New York City, that is. And you're looking at live pictures right now. Annual Fleet Week festivities are in full swing this Memorial Day weekend. Thousands of sailors are on shore and there is plenty to do. Today's schedule includes services at the United War Services Memorial.
And in New Orleans, sharks, penguins and other marine life are settling in, and the city's aquarium is again open for business. Nearly 10,000 animals, mostly fish, died when Hurricane Katrina cut power to the facility. Only 2,000 survived.
Coming up at the top of the hour, what is a bluff? Top justice officials threaten to resign. We'll bring you the latest, including President Bush's actions. You're watching CNN, the most trusted name in news. Back, now, to more of IN THE MONEY.
SERWER: Technology has not only changed the way we live, it's changed the way we do business too. Just ask Cathleen Black, president of Hearst Magazines. She heads up some of the top names in publishing like Good Housekeeping, Cosmopolitan, Esquire, and Popular Mechanics.
But even with big time brand recognition, she's had to tweak her strategy to stay competitive.
SERWER (voice-over): Cathleen Black is equal parts competitive and common sense.
CATHLEEN BLACK, PRESIDENT, HEARST MAGAZINES: I don't need an executive assistant calling somebody else saying, Cathy would like the answer to. We don't need that kind hierarchy. I'd much rather sort of go straight to the person who can give me an answer.
SERWER: Operating in a tough industry, Black needs both attributes to attract readers. Circulation Management reports 34 consumer titles ceased publication last year. Combine this with a USC study reporting Internet use is at its highest level since the school began keeping track in 2000, and the message is clear.
BLACK: I think there's no question that our digital strategy is going to be a very exciting part of our future. We launched a Cosmo radio channel about five weeks ago on Sirius Radio. The editor of Seventeen is blogging. The editor of Popular Mechanics is blogging. Last year, we sold about 1.3 million subscriptions via a number of Web sites.
SERWER: offline, several Hearst magazines are performing well. Cosmo Girl's advertising revenue is up 21 percent this year compared to calendar year 2005. And Esquire is up almost 37 percent.
OPRAH WINFREY, TV SHOW HOST: I want to introduce you to our girl.
SERWER: Another star in the group.
BLACK: I can guarantee you that there is not a publisher in the United States of America that would not kill to have the Oprah Winfrey magazine, which we do, and has been an enormous success.
SERWER: Magazines such as O and Cosmopolitan helped Hearst achieve an 8 percent market share in terms of total circulation in 2005. Its numbers were slightly ahead of competitor Conde Nast, but behind Meredith and Time Inc.
BLACK: I should be replaced the day that we say the numbers are where we want them to be. Because you've got to begin every single day with your stomach churning about how can I make it better, how can I make it more profitable, how can we be more successful, how can we sell more copies on the newsstand, how can we sell more advertising?
SERWER: One way is to acquire titles or launch new ones. Hearst has done this with 11 magazines since 1989. There may be more over the horizon.
BLACK: Architectural Digest, Vanity Fair, Real Simple out of Time Inc. I mean, certainly, there are magazines like that that I wish we had done or that I wish our company had acquired. But there's very little that we are sort of, you know, gnashing our teeth over.
SERWER: Clearly Black wants to win. But when it comes to understanding the big picture, she also knows how to keep everything in perspective.
BLACK: I've learned a lot of things. But one is to not take yourself too seriously. At the end of the day, it is a job. And we really do only come on this Earth one time and I want to be able to enjoy it. I want to be able to travel. I want to able to put like 1,000 percent into my job, which I do. I want to put 1,000 percent into my family. And you know, that's juggling, like, lots of kinds of balls. But, you know, I feel like I've had a fabulous life.
SERWER: But for the time being, Black is pretty busy at the helm of Hearst Magazines. In addition to Hearst 20 U.S. titles, she also oversees more than 140 international editions of these publications.
There's plenty more ahead here on IN THE MONEY. Up next, dueling labels. Luxury items aren't really for you, they're for the people you want to impress. We'll look at why Americans are so hung up on what the other guy has as we speak with the author of "Green with Envy."
And give me that old-time ignition. See how many ways you can make a car go as we dig into the history of alternative fuels. (COMMERCIAL BREAK)
CAFFERTY: So how are your neighbors affording that great new swimming pool, or all those vacations, the fancy clothes? Chances are, they're not. Everybody rushes out to more stuff and we all wind up facing piles and piles of debt as a result. Joining us now is Shira Boss, she is the a author of "Green with Envy: Why Keeping Up with the Joneses Is Keeping Us in Debt."
Shira, nice to have you with us.
SHIRA BOSS, AUTHOR, "GREEN WITH ENVY": Thanks for having me.
CAFFERTY: What happened to you that resulted in this book?
BOSS: Well, basically, we went through a period of financial difficulties. A lot of people do. My husband wasn't working. We were living on one income. And I realized it wasn't -- we got really miserable. And it wasn't that we didn't have what we needed, that we didn't have a roof over our head and food and really a comfortable life, but we just started thinking that everybody around us seemed to be doing great and we seemed to be the only ones struggling, and why is that?
And it started driving us nuts. We were like, this sucks. So it really wasn't the truth. And I realize that now. But I think a lot of people go through that where they just look at people above them and think, everybody else is doing better and how come I'm the only one struggling?
WESTHOVEN: So, Shira, I'm a financial journalist. Obviously I'm OK with talking about money. You know, it's one thing to talk about corporate finances. I'll find -- you know, I turn to someone and say, you know, what's the rent on this joint? People really look at me. They get really uncomfortable about this stuff. So how did you talk to all these different people and get them to open up?
BOSS: That's the thing. I think underneath it all, we do want to talk about this. There's such a money taboo in our society but we have so much angst about it that we do want to know what's going on with other people and sort of tell other people our issues. When you write a book called "Green with Envy" and talk about your own story, you get -- you start to hear a lot things from other people about their finances.
And I feel like I have X-ray vision now a little bit. People tell me things. I see things differently. And, you know, I think if you ask people in a nice way or be bold or say why you want to know, people will tell you a lot more than you think.
SERWER: All right, Shira, one reason why we're in this predicament, if you will, is because people have become more materialistic. I think you get that from your book. What has made them get more materialistic? And why won't it just get worse? I mean, how's this going to stop? BOSS: Yes, I think what's new right now is that it used to be that keeping up with the Joneses and wanting what other people have, they were still paying good money for what they had and you had to do the same. And now with so much use of debt in the last, say, 20 years, that -- and it's just getting more and more, that what you see is not really what's going on. So appearances are not reliable anymore.
And so many people are relying on debt to support their lifestyle that you see these lifestyles around you and you're like, gosh, how are they affording this? And in fact, they're not. But you just jump on the bandwagon, and, like, well, everybody's doing it and this is how I can do it, by charging it.
And then you'll have what everybody else has. So I think the solution is to get realistic about what you see around you, what's really going on, do they really have what it looks like they have? And if they do, is it really making them happy, are they any more content with what they have? So we have to like start breaking down this mythology around us, around money and what we have, our lifestyle.
CAFFERTY: Somebody asked David Rockefeller a number of years ago, how much money is enough? And his answer was, always just a little bit more. Have you come to terms with how much money is enough? How do we do that?
BOSS: You know, I think the standard of living in the country is so relatively high for almost everyone that we really have to realize how comfortable we are. And yes, we're going to want more. I want more. Probably everybody wants more. And you do strive to get more and that's healthy. It's great for the economy. It's why our standard of living does stay so high.
But you also need to stop for a minute and have some gratitude for what you have and where you are right now and realize, you know, other people are envying you because you have it so good. So, you know, it's a mindset issue about realizing what you have, being comfortable with that, and then when you can afford to move up do so.
SERWER: All right. We're going to have to leave it there. Shira Boss, thank you very much for coming on the program. She is the author of "Green with Envy: Why Keeping Up with the Joneses Is Keeping Us in Debt." Thanks.
BOSS: Thank you.
SERWER: With gas prices dropping jaws across the country, interest is up in hybrid and alternative fuel vehicles. But as Jen Rogers report, today's fuel-efficient cars owe a thing or two to the past.
JEN ROGERS, CNN CORRESPONDENT (voice-over): From Oscars red carpet to the local dealer's lot, hybrids are the coveted cars of the moment, but they may not be as revolutionary as you think.
LESLIE KENDALL, PETERSEN AUTOMOTIVE MUSEUM: There's always been engineers tinkering with the idea that there must be something better.
ROGERS: Leslie Kendall, curator of the Alternative Power Show at the Petersen Automotive Museum in Los Angeles, says at one point gas engines had plenty of competition.
KENDALL: This white steam car represents the first ever form of power for a vehicle, because in 1769, the world's first vehicle was a steam car.
ROGERS: That's right, water helped make these wheels spin, cheaper than filling up with unleaded, but not without drawbacks.
KENDALL: The steam boiler for this car is right under the driver's seat. So you can imagine it must have been a little unsettling for some people to realize that they were sitting right on top of the boiler.
ROGERS: The first vehicle with heated seats wasn't quite as dangerous as this mockup for a nuclear vehicle could have been.
KENDALL: Nuclear engines are fairly expensive. And it would be catastrophic if anything happened to them, so that technology was quickly set aside.
ROGERS: Another fuel source left by the side of the road, coal. Popular in Europe during World War II.
KENDALL: If you look back here, instead of a gas tank, you've got a bag of coal, right here, that you can put in the burner, you light it and you can make it go.
ROGERS: A viable electric car has been the goal time and time again, including this version from 1897.
(on camera): Where's the plug?
KENDALL: The plug is in the back. The electric motor was that right there. And you can see how different that electric motor looks from those that we see today.
ROGERS (voice-over): Electric turbines, fuel cells, biodiesel? Drivers visiting the museum say they just want options.
JAMES GRAHAM, MUSEUM VISITOR: I'm wondering why we can't run a car off of water.
BOB BRANDL, MUSEUM VISITOR: Alternative source is a great idea. Just get it done. They've been talking about it for 50 years. I mean, what year is that car over there?
ROGERS (on camera): High gas prices tend to encourage automaker to experiment with alternative power, meaning new cars are on the way. Now, whether those cars end up on the road or here in a museum, well, that remains to be seen.
Jen Rogers, CNN, Los Angeles.
SERWER: The alternative fuel exhibit will run at the Petersen Automotive Museum in Los Angeles through September 10th.
Coming up on IN THE MONEY, sales versus sailors on this Memorial Day weekend. We'll talk about whether you're thinking about scoring a bargain or about the sacrifices that keep you free to shop for it.
And it's time to hear from you as we read some of your e-mails from this past week. You can send us an e-mail right now to -- we are at firstname.lastname@example.org.
CAFFERTY: It's Memorial Day weekend. It's a time to honor those who died serving this nation and to think about the hundreds of thousands of American troops in harm's way around the world right now.
But you wouldn't be reminded of any of that if you walked into a store or a mall in the United States. Allen Wastler is here now to tell us how it wasn't always that way. He also has some Web sites that will help you help the troops -- Allen.
ALLEN WASTLER, CNNMONEY.COM MANAGING EDITOR: A little tidbit from Stephen Ambrose's book on D-Day, all right? When D-Day took place, Macy's, it was the middle of the -- they were going strong. And then all of a sudden the news broke. And they closed down. They said -- they announced to the shoppers, look, now is not the time to be shopping, now is the time to be with families. You know, thinking about our soldiers. And they closed down.
Would you ever see that today?
SERWER: No, you would not.
WASTLER: Would you ever see it -- in fact, Memorial Day, the day we set aside to honor those who have fallen in battle, hey, it's a sale day.
SERWER: Buy linens or something.
WASTLER: Yes, and the most that you would see them do is -- and you're a vet, 10 percent off for you buddy. That's what you get for serving your country these days.
CAFFERTY: Pretty sad.
WASTLER: It's pretty sad commentary. And if you walk to any mall or store, you know, not all of them, but the majority, you're not going to find any sign that we are a country at war. And this is part of the erosion of just our appreciation of the military and the soldiers, to the point that Congress has to drum up legislation to get people to stop protesting at soldier's funerals.
CAFFERTY: That's the most outrageous thing I think I've ever heard of, ever.
SERWER: Yes, those people are nut jobs, there...
WASTLER: Those are what we call conservative religious groups that have been showing up and protesting at various funerals. And to me this week, that signified the just total -- how low our culture has gotten where you do that.
On the other hand, there are various motorcycle clubs that are showing up where these protesters are at and expressing their thoughts and ...
CAFFERTY: A different point of view.
WASTLER: Their different point of view. So that's the way it goes. Anyway, normally we do a little fun, wacky site for you to help you out. But we decided it would be better if we did just a few sites that maybe you can use to express your appreciation for the veteran.
CAFFERTY: Good for you.
WASTLER: First one, Cell Phones for Soldiers, OK? This was started by a couple of kids. A couple of kids, and they heard the story about a soldier who couldn't afford to pay to call home. So they started the site. What they do is they collect phones, they collect cartridges, recycle them, raise money for that. So that's one you be can help out with.
Another one is Kids Thank a Vet. This is a site that lets kids -- tells kids how they can thank veterans. And it gives out these little buttons that says "thank you for serving," that you can pass out and just go on and help the vets.
And then, finally, the uso.org. We all know what the USO is, right?
WASTLER: They have more programs than just somebody jumping around on a stage. You can go to them and find out how to either donate or contribute time. These are things you can do to show support for out soldiers.
CAFFERTY: That's good stuff, thanks, Allen -- Jennifer.
WESTHOVEN: A 55-year-old South Carolina man leaves a career in sales and marketing to pull rabbits out of hats. His magic story is this week's "Life after Work."
VANDOREN, MAGICIAN: Getting wound up here. Oh, somebody's sneaked out.
WESTHOVEN (voice-over): Who would quit a job in sales and marketing to become a magician? Brian Blankenship (ph) is bringing magic to the world. He doesn't just do tricks.
VANDOREN: Well, this is my workshop. Come on in. I do everything from electronics to woodworking because it all fits into magic in one way or the other.
WESTHOVEN: His home is now full of hats, ropes, and a box for unsuspecting ladies.
VANDOREN: The feet out that side and head out this side.
I mean, I've worked for some very large corporations. But I've always believed that the American dream is owning your own business, controlling your own destiny.
WESTHOVEN: From the tired game of politics at work, presto, he's amazing and delighting people, mesmerizing the crowd, as his alter-ego Vandoren.
VANDOREN: To see the spark of belief in magic in a child, that's quite rewarding. If you have a thought in your mind that maybe I should leave my career and take a chance, I'll suggest, you know, give it serious thought. Take that job. I don't think anybody would ever regret doing what they love.
Thank you all, very much.
WESTHOVEN: On our next "Life after Work," she's turning 73 years old and she has just started another career modeling. Her story, next week. We'll be right back with more IN THE MONEY.
CAFFERTY: Time now to read your answers to our question of the week, about whether you're worried about being forced to retire too early.
Jorge in Florida wrote this: "The real question should be whether I'm prepared to take a much lower level job when my regular job is outsourced. The only people who can feel confidant about retirement are elected officials."
Ron wrote: "Most Americans probably don't need to worry about getting laid off or outsourced as much as they need to be concerned that their health will give out first. Without decent health care, a lot of us will be forced out of work early."
And Willard wrote this: "I'm not worried. I spent 20 years in the military. I have a nice pension and almost free medical care. I got more benefits when I stayed in the Army after the Korean War. Everyone said I was crazy, but who's crazy now?" Here's next week's e-mail question of the week: Have corporations been acting more ethically since the Enron scandal? Send us your thoughts to email@example.com. You should also visit our show page at cnn.com/in the money which is where you'll find the address of our various Web sites that you can use to honor those who served this country this Memorial Day weekend.
On that note, I thank you for joining us for this edition of IN THE MONEY. My thanks to HEADLINE NEWS correspondent Jennifer Westhoven; Fortune magazine editor-at-large Andy Serwer, and cnnmoney.com managing editor Allen Wastler.
Hope to see you back here again next weekend, Saturday at 1:00, Sunday at 3:00. Until the next time, enjoy the rest of your weekend.
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