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Effects of the Economic Downturn; Gas Prices Way Down; More Bank Failures
Aired November 22, 2008 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(BEGIN VIDEO CLIP)
(UNIDENTIFED FEMALE): Three waitresses at lunch. Now we have one bartender and the waitresses.
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FREDRICKA WHITFIELD: Next in the NEWSROOM, belt-tightening, penny- pinching and plain old going without. We'll take you to one small town that suffers right along with the auto industry.
Plus, say bye-bye to the family pet? Some people are forced to choose between paying the bills and feeding the dog.
Also, Nebraska fills a very big hole in a law allowing parents to drop off children they can't care for anymore.
Good afternoon and welcome to the NEWSROOM. I'm Fredricka Whitfield. We begin this hour with America's sputtering economic engine, the auto industry. As the big three tried to stay afloat, some dealerships are finding themselves simply dead in the water. One of Minnesota's largest car dealers announced he's closing six dealerships and selling three others. That means pink slips for 400 employees of the Denny Hekker Auto Group.
And they're not alone. One of San Diego's longtime dealerships is merging with a competitor to stay in the game. Pearson Ford dates back to the 1950s. In Alabama, a longtime family business goes kaput. Montgomery's Miguel Motors pulled the plug on an operation that dates back to 1919.
Terribly hard times and some believe we are witnessing a slow death of the U.S. automotive industry. Those who live in the so-called company towns are already hearing the death nail. CNN's Gary Tuchman takes us to one town that is bracing for the inedible.
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GARY TUCHMAN, CNN CORRESPONDENT (voice over): When a decision is made in a skyscraper in Detroit, it could change life and towns far away, very badly and very quickly. In the small town of Moraine, Ohio, near Dayton, it's hard to figure out what industry is the lifeblood here. That's even before you see this place, the GM plant, the town's dominant employer, where more than 4,000 people worked in its heyday and 1,000 now. But a decision has come from Detroit. This factory is closing forever, two days before Christmas. What does that mean for the rest of this town? Cane Goodwin is a local union leader.
CANE GOODWIN: It's very bad.
TUCHMAN: At a different the factory not owned by GM, they store and transfer car parts to the GM facility. Certainly they can ship parts to other GM plants or other car companies, right?
TONY MURPHY: What am I going to do? That was my first reaction.
TUCHMAN: Wrong. Tony Murphy works here as a fork lift driver. When that GM factory shuts its doors on December 23, the plant where he works will also close forever. Where he will have to find new jobs in a region where there are fewer and fewer. Have you started looking for a job already?
MURPHY: Oh, yes. I have been to the energy department before.
TUCHMAN: How did they go?
MURPHY: They haven't called me back so I guess it didn't go too well.
TUCHMAN: The labor contract at the small supply plant has no provision for any severance and the cheap medical plan disappears the day they walk out of the factory for the last time.
MINCHELLE WASHINGTON, GM SUPPLIERS EMPLOYEE: I might end up losing my car. I don't want to lose my house. But I know I might end up losing my car.
TUCHMAN: Minchelle Washington is a single mother.
WASHINGTON: Drawings, Jada made a drawing at school.
TUCHMAN: A scared single mother. What happens if you get sick or your daughter gets sick?
WASHINGTON: That's the bad part because if I get sick, it's downhill because I have a baby and I got enough medicine probably for an extra month after my insurance is gone.
TUCHMAN: Even for businesses that have nothing to do with cars, the future is frightening. The Upper Deck Restaurant and Bar, right next to the GM plant, used to be jammed every day at lunch. Now you can almost hear crickets.
(UNIDENTIFED FEMALE): I used to have a bar tender plus three waitresses at lunch. Now we have one bartender and she waitresses.
TUCHMAN: Back at the parts factory, the employees seem to understand why this man, the owner, is pulling the plug.
(UNIDENTIFIED MALE): We have no other choice but to go down because there's nowhere to send the material.
TUCHMAN: How does that make you feel, sir, for your employees?
(UNIDENTIFIED MALE): It hurts like hell.
TUCHMAN: What the employees don't seem to understand -- who are you angry at?
(UNIDENTIFIED MALE): The executives at GM.
TUCHMAN: Are the decisions made in this skyscraper. Gary Tuchman, CNN, Moraine, Ohio.
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WHITFIELD: No quick fixes and this is the painful reality. President- elect Barack Obama says, however, he plans to try to help create 2.5 million new jobs in the next two years. He made the announcement during the Democratic address today. Obama said American workers will rebuild the nation's aging roads and bridges, modernize schools and create more sources of alternative energy but, he says, he needs help from both sides of the aisle.
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SENATOR BARACK OBAMA, (D) PRESIDENT ELECT: I know that passing this plan won't be easy. I will need and seek report from Republicans and Democrats, and I will be welcomed to ideas and suggestions from both sides of the aisle. But what is not negotiable is the need for immediate action. Right now there are millions of mothers and fathers who are lying awake at night wondering if next week's paycheck will cover next month's bills. There are Americans showing up to work in the morning, only to have cleared out their desks by the afternoon. Retirees are watching their life savings disappear and students are seeing their college dreams deferred. These Americans need help, and they need it now.
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WHITFIELD: Fifty nine days and counting until Inauguration Day. President-elect Barack Obama is putting his team together. We're getting word that some of his cabinet announcements could come as soon as Monday. CNN White House correspondent Ed Henry is live from Chicago with more. Ed.
ED HENRY, CNN WHITE HOUSE CORRESPONDENT: Well, good afternoon, Fred. That's right, what's expected on Monday is the key one in terms of economic team and that's Timothy Geithner. He is the New York Fed chief right now and he is expected to be the incoming treasury secretary. A job that really has taken on new significance, given the international financial crises. And we're told there will be other key economic advisers rolled out in the early part of the week as well.
And then after Thanksgiving, Barack Obama will turn to his national security team at the top of that list, of course. We are hearing on track to be secretary of state is Senator Hillary Clinton. That will be announced after Thanksgiving. There are others also taking shape in there. And it's interesting because there are a lot of prominent players and a lot of people are wondering how they will all fit in together. (BEGIN VIDEO CLIP)
HENRY (voice over): A power player on the world stage, a retired four-star general, and maybe President Bush's defense secretary, too. Even a former aide to Donald Rumsfeld is impressed with the national security team that president-elect Barack Obama seems to be putting together.
RAY DUBOIS, CTR. FOR STRATEGIC AND INTL. STUDIES: You would have to conclude these are as credible and competent a set of individuals you will get.
HENRY: Three transition aides tell CNN Senator Hillary Clinton, who supported the war in Iraq, is in line to be nominated as secretary of state. Two sources close to the transition reveal retired marine General Jim Jones, who also backed the war, is the leading choice to be national security adviser. Picking a military man could have the fingerprints of Brent Scowcroft, a retired general himself, who was national security adviser in a Republican White House and is now providing counsel to Obama. Scowcroft is close to current defense secretary Robert Gates, fueling speculation that the man implementing President Bush's Iraq policy may stay on board. The talk of so many hawks in senior roles is alarming anti-war Democrats.
TOM ANDREWS, WIN WITHOUT WAR COALITION: He's a very skilled guy, and I think he will make the right decision. But for us, again, the bottom line is putting in people in place that are going to actually fulfill the mission, step one, get us out of Iraq with in six weeks.
HENRY: There's also the question of whether a so-called team of rivals can be combustible. Remember the first years of the Bush administration?
DUBOIS: These individuals not lacking an ego. It will be important that president Obama be able to manage those egos in a way that not only does the policy that he espouses get appropriately formulated and articulated, but most importantly, implemented.
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HENRY: Senior aides say that the president-elect is confident he can keep everyone on the same page; otherwise he wouldn't be picking them for these key posts. As for his stance on the war in Iraq, liberals' concerns about that, a senior aide insists the president-elect stands on the war in terms of bringing hope troops, has not changed and will not change. Fred.
WHITFIELD: Ed, I understand you just have gotten word of maybe new additions to the communications staff?
HERNY: That's right, key White House staff; we are just learning some Democratic insiders getting those posts in terms of press jobs, communications jobs. Ellen Moran will be the director of communications at the White House. The deputy director will be Dan Pfeiffer. Familiar face out on the campaign trail with Barack Obama. Finally, Robert Gibbs, longtime press secretary and adviser to Barack Obama is going to be the press secretary at the White House. We have been expecting that. They finally just made it official in the last couple of moments. What is interesting is Robert Gibbs will be the public face of the administration, the person briefing the press just as we see Dana Perino right now, Fred.
WHITFIELD: All right. Ed Henry in Chicago, thank you very much with the Election Express behind you there.
A little bit more now on the possible money man, Timothy Geithner. Possibly the next treasury secretary. He's not exactly a household name but he certainly is well known on Wall Street. Here now is CNN's Allan Chernoff.
ALLAN CHERNOFF, CNN CORRESPONDENT: Tim Geithner is president of the New York Federal Reserve. He is the Central Bank's point person for dealing with the financial market, the banking system as well as Wall Street. So he's been intimately involved in addressing the financial crises. He knows Wall Street, Wall Street knows him but he's not a product of Wall Street as the current treasury secretary, Henry Paulson, the former CEO of Goldman Sachs, has been criticized for favoring financial firms in the bailout.
Geithner, on the other hand, has vast experience within government. He joined the Treasury Department back in 1988. He has worked under five different treasury secretaries within three administrations. He himself was the former undersecretary for international affairs. And he has lots of international experience as well. He's worked at the International Monetary Fund. He has lived overseas, studied Japanese and Chinese, lived in Japan and China and really an incredibly well rounded resume, well-liked on Wall Street; you saw the reaction Friday afternoon as soon as word leaked out that he was the likely choice. The Dow Jones Industrial average jumped 500 points.
Allan Chernoff, CNN, New York.
WHITFIELD: And later on this hour, we take an in depth look at how Americans are dealing with the cold, hard reality of a spiraling economy. That's coming up just roughly about 20 minutes from now.
Well today is the first day of Nebraska's revamped Safe Haven Law. Prompted by a number of parents who had simply unloaded their children because they got to be too much of a handful.
JACQUI JERAS, CNN METEOROLOGIST: I'm CNN meteorologist Jacqui Jeras. How many of you woke up this morning and said I'm freezing? Probably all of you raised your hands. It was even worse than that in a few spots. We will talk about the cold snap and your holiday travel. That's coming up.
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WHITFIELD: Well, today is the first day of Nebraska's revamped Safe Haven Law. Prompted by an unexpected rash of older children being abandoned. Lawmakers admit their task is a work in progress. Andrew Ozaki from CNN affiliate KETZ explains.
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ANDREW OZAKI, KETZ: With that, Nebraska would no longer offer a Safe Haven for all kids, limiting newborns up to 30 days.
(UNIDENTIFIED MALE): Lb1e passes with an emergency clause attached. We hopefully will stop the fact that the people will continue to drop these children off.
OZAKI: But the sponsor of the original bill makes no apologies for expressing what he calls a lot of families not giving the services with troubled kids. Five preteens were dropped off at hospitals during the four months the old Safe Haven Law was in effect. Five was in other states.
(UNIDENTIFIED MALE): It made health and human services hustle a little more than what they are used to but it was working to help people.
OZAKI: Senator Dwight Peterson, from Elkhorn, believes these families were not looking to abandon kids, just looking for help. He joined four other lawmakers voting against changing the law.
(UNIDENTIFED FEMALE): I just couldn't in good conscious vote to support this bill knowing that it was going to close the door on services for these older children.
OZAKI: The governor privately signed the bill into law Friday afternoon. He says Safe Haven Laws are intended to provide young mothers with a safe way to surrender a newborn.
(UNIDENTIFIED MALE): But it's clear we're going to continue to discuss how do we help families that are in difficult and challenging situations.
OZAKI: Lawmakers say they won't forget about older children. They've already formed a task force to come up with solutions before they meet in regular session.
(UNIDENTIFED FEMALE): I think it's high time that people recognize the problem that's out there and that this is not something that can be delayed. These families are in crisis.
OZAKI: With more complete coverage, Andrew Ozaki, KETV.
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WHITFIELD: After that report was filed, we learned a 36th child was abandoned just before the updated law took effect. A 14-year-old California boy was dropped off by his mother in southwest Nebraska. And he has been put into foster care.
Now to other news across America, Connecticut police are looking for vandals who spray painted racist graffiti about president-elect Obama on a billboard. They painted the "n" word on an ad where someone else had already spray painted a picture with Obama with the words "yes, we did."
And police say both sets of vandals will face criminal mischief charges but those behind the racist comment could face hate crime charges.
And more than 100 people rallied convenience hate crimes in Portland, Maine, after another Obama-related incident. A sign at a stand in a Maine store, that is, had asked customers to bet on a date when the president-elect will be assassinated. The rally was organized by civil rights groups; Maine's governor told the gathering that Maine stands united against intolerance in any form.
Elvis fans can move to Graceland to brighten up their holidays. Graceland's Nashville home officially began the holiday season last night with the annual lighting of the mansion and other decorations. The rock and roll icon lived in Graceland from 1957 until his death 20 years later. Actually, I said Nashville, didn't I? No, Memphis.
All right, Jacqui Jeras in the Weather Center. Have you ever been there, to Graceland?
JERAS: I have not. I would like to go, though.
WHITFIELD: You have to do it at least once.
JERAS: It's one of those things, isn't it?
WHITFIELD: Yeah, and it's cold there, too, like its cold everywhere.
JERAS: It is, did you raise your hand when I asked?
WHITFIELD: I did. You didn't see me? I was like, yes!
JERAS: The whole newsroom shot up, I know. I'm telling you. It's cold out there. You have -- it's OK to complain because it is unusual. Even for this time of the year, this is colder than you should be, and we have lots of records that fell down this morning. I put just a few notable ones. We are talking Muscle Shoals, Alabama, down to 17 degrees, yeah. Augusta, Georgia, 18. Chattanooga, not quite Graceland, but its Tennessee, 19 degrees and Gainesville, Florida, 25, 50 is your average low in Gainesville. So put that in perspective. You should be twice what you were this morning.
Temperatures are still nippy out there. We have a good breeze to go along with it, particularly in the northeastern quarter. Boston, 28 right now but it feels like 16 when you add in those brisk winds. New York, 33, 46 in Atlanta at this hour. Even 66 in Orlando, getting out the turtlenecks in Florida today. That doesn't happen too often.
Temperatures tonight are going to be remaining cold but this morning really was kind of the bottom drop. This is as bad as it is going to get. We will see some reinforcing shots of cold air here across the northeast into the Great Lakes and the Midwest. That will be kind of periodic over the next couple of days but we don't thing the strong cold fronts will make its way all the way down to the Gulf coast into Florida like they did last night and this morning, 39 tomorrow in Minneapolis, 59 in Kansas City. Not even hitting 70 degrees in Dallas. 39 in New York City and 72 in Tampa. Starting to warm up just a smidge there.
Overall weather wise in terms of rain and snow, it's minimal with the exception of the Great Lakes. We still have heavy lake-effect snows coming in off Lake Erie and Ontario. Most of the snow warnings will expire by tomorrow morning when the winds will be calmer. We will see pop-up thundershowers down here into Texas. A lot of kids off school for the week.
A lot of people trying to get a jump-start on the holiday travel. We want to update you on the airports and what's going on here. Low clouds and fog in San Francisco and the delays well over an hour here. Actually over two hours now. We also have some delays at Newark and also I believe its JFK, yeah, looking at those delays 45 to 20 minutes. My computer doesn't like the cold either, Fredricka.
WHITFIELD: I know, nobody does. Just looking at the map behind you, the majority of the country is quite chilly. Which means everybody is kicking in their heaters.
JERAS: Absolutely.
WHITFIELD: Or they are spending more on fuel to heat their homes. And I wonder if the weather is indeed going to make a huge impact on everybody economically. Seems like everything else in.
JERAS: The weather affects everything you do for the most part. Whether you stay inside and crank up that heat. It impacts maybe you will go outside and run errands. Maybe it's too cold and you don't feel like going out today.
WHITFIELD: I know you and I will talk about that a little more in the next hour. Folks need to stick around for that.
All right. Meantime, lots of tough choices being made and tough times. So I wonder, how about for you, are you going to be a scrooge this Christmas? Scrooge by necessity, really. We have been getting a lot of e-mails saying you are modifying your spending this holiday season. We will read some of those e-mails coming up next.
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STAFF SGT. CARLOS PADILLA: I'm Carlos Padilla in Iraq. This is for my wife in Texas. Happy Thanksgiving. Love you, babe. Sweet kisses for you. Love you.
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WHITFIELD: Cutting back, it's a mantra for many during these economic crises. Will the financial meltdown affect your spending plans for the holiday season? Well, we asked you to e-mail us with some answers, and you did. Josh Levs has been going through all of it. We had a plethora, didn't we? JOSH LEVS, CNN CORRESPONDENT: Variable plethora. The minute you started asking for e-mails, we got a lot of them. You will see them pop up on the board throughout the show. Let's zoom in now.
Since I'm self employed, I plan to give either homemade food gifts or gift cards of small amounts.
Let's scoot down a little bit. I want you to see a whole list of ideas. My extended family has agreed on a spending limit for every person and I decided to do away with credit card purchases. If I don't have cash for it, I'm not buying it. That's from AC.
Look at this; instead of going to the mall, we are going shopping at used book stores, church bazaars and antique stores for little nostalgic things. We're not stuffing stockings. When a dime-sized yo- yo is $5, it's not worth it. We have all quit buying new books. We are pot lucking dinner, too. A moveable feast at my sister's house this year. Jackie Jernigan in Norris, Tennessee. We hope you enjoy that.
A couple more. We plan to not spend anything on that will not sustain us during this hard time. We focusing on building up our survival kits, Fred. I want to know what's in that kit, too.
WHITFIELD: Shawna, write us back.
LEVS: And this is the last one. I spent $0 last year and this year I'm doubling it to $00. Debra Bender from Cape Coral, Florida. We will be back with a few minutes for more.
WHITFIELD: I like that, too. Plus it's giving us advice, going to used book stores, antique gift shops. I heard great tips in there, a lot of people sharing.
LEVS: And taking them home.
WHITFIELD: Me too. I like it. We welcome many more. We want to hear from more of you. The questions -- the question we are asking -- are you going to change the way you spend money for the holidays? We want to hear your answers. Just e-mail us at weekends@cnn.com. Josh will be back in 15 minutes. Get your laptops and computers and write those suggestions. We will get them on the air.
And this is a story that will simply tug at your heart strings. Money is so tight that some people actually feel forced to abandon the family pet.
TED ROLLINS: I'm Ted Rollins live at the L.A. Auto Show. Given the dismal state of the auto industry, is there anything to get excited about? Well, kind of. We will explain coming up after this break.
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FREDRICKA WHITFIELD, CNN ANCHOR: Hi. Welcome back to the NEWSROOM. I'm Fredricka Whitfield. And here's what's happening right now.
President Bush giving a word of warning to world leaders at an economic summit in Peru. He urged APEC members to continue to push for free trade or risk an even steeper financial downturn.
And former president Jimmy Carter is postponing a humanitarian trip too Zimbabwe. Carter was planning to visit this weekend with former U.N. chief Kofi Annan and a human rights activist to highlight that country's growing food crisis. But the group has delayed the trip, saying Zimbabwe's government is refusing to cooperate.
And an earthquake rattles the Indonesian island of Sumatra. The 6.3 quake hit the southern coast today and so far no reports of injuries or damage.
All right. For the next few minutes, let's focus on "ISSUE #1," the economy. There's a whole lot to talk about. The Los Angeles auto show is hoping to rev up car buyers. Gas prices are plummeting. Holiday shoppers are scrimping and pet owners -- they are leaving their furry friends behind because they are unable to afford their care.
So first let's talk about pumping without pain. When you paid more than $4 a gallon on summer vacation, did you ever in your wildest dreams think that gas would be half that for the Thanksgiving travel season?
Well, AAA says the average price nationwide for a gallon of regular, unleaded is now $1.95. Gas has fallen for 66 days in a row -- for the 66th day in a row, that is, on collapsed oil prices.
And so now Mike Campbell with affiliate WHIO gives us his perspective from his backyard.
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VAL LEE, FILLED UP FOR $14: This is a great deal today. I'm able to step it up to a plus. Normally, I can only buy regular but today this is a deal.
MIKE CAMPBELL, WHIO REPORTER (voice over): A lot of people thought they might have stepped into a time machine, bringing back prices from years' past. Looking at the board, just under $1.47 a gallon, below $1.40 with the company rebate.
(On camera): How much did it cost you to fill up?
LEE: $14.
CAMPBELL: How long has it been since you...
LEE: Man, I can count, OK? Normally when you pull up, you better have $40. OK? All right? So today was a great deal.
UNIDENTIFIED FEMALE: I really haven't been full.
CAMPBELL (voice over): Everyone here thought the sun was shining on them, lining up four, five and six vehicles deep for their turn at the pump. And even though there was a wait, most people kept their cool.
UNIDENTIFIED MALE: Very happy. Very happy. Everybody should be that way.
CAMPBELL: But there were those that took this shiny moment just a little too seriously and gave in to a moment or two of price panic. One woman saw it happen.
CHRISTIE POLAND, FISTFIGHT WITNESS: Yes, there's a fistfight down the road down there at the new car station.
CAMPBELL (on camera): Just pulling up to the pump?
POLAND: Yes, just pulling up to the pump. It was pretty chaotic.
CAMPBELL (voice over): We checked out that Clark station just down the road. They were selling gas just a penny higher at $1.479 a gallon. These two stations, in a small price war where it was the customers who collected all the benefits from the battle.
POLAND: I didn't even plan on getting gas until I have seen this price. That's the first time I've seen it this low. So it's very exciting.
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WHITFIELD: All right, everyone hitting the road.
All right. Meantime speaking of hitting the road, all roads leading to the Los Angeles auto show this weekend, even if have you no money to buy a gas guzzler or fuel-efficient ride.
So what is the attraction there anyway? Let's go to the Los Angeles Convention Center, where we find CNN's Ted Rowlands and so it looks like the convention center is filling up. Are people ready to buy or are they just looking?
TED ROWLANDS, CNN CORRESPONDENT: Well, I had a look and, Fredricka, to be honest, but there's some good stuff to look at. The Porsches, Lamborghinis, the Ferraris, obviously getting a lot of attention. The muscle cars, still very popular with a lot of people, more so to look rather than buy, especially those Lamborghinis, 400 Gs.
A lot of lookers. Not a lot of buyers, I don't think.
Bottom line, this is the very strange auto show. It's a first of the series of the big ones. And usually it's sort of a celebration, a party. The car companies come out, they throw big bashes. Not so much this year.
GM, very -- significant presence but not a lot of glitz. Ford, it kind of went all out as usual. And -- and I asked them why, they said because we realize the consumers are down right now but when they do come back, we want to still showcase our products. That's their mentality.
Every merchandiser has got a little different strategy with these auto shows. It costs hundreds of thousands of dollars to put these on. People do come in but the consumers aren't taking these cars from the shows to their garages, at least right now. They're trying to still get some excitement.
Some cars are generating excitement. We've seen a lot of people besides the high-end cars looking at the Ford Fusion. The Chevy Volt, which is not available until 2010, is getting a lot of attention. Chevy banking a lot of its future on that car, the all electric car, battery operated car.
And the Mini Cooper is getting a lot of attention as well. That car is all electric as well.
Gene Norman is a participant, if you will, here at the auto show from Oxnard, drove down.
Gene, if you had a message to the big three automakers or any automaker, what kind of car do you think most people are looking for, especially in these economic times?
GENE NORMAN, CAR SHOW ATTENDEE: Well, probably a car that gets pretty good mileage, one that will last for a while. Yes, I think an economical car, like this truck here. This is probably a special purpose truck and it's going to be raced in had the Baja 1000. So...
ROWLANDS: Different ball game there.
NORMAN: Yes. Yes.
ROWLANDS: Fun to look at, though.
NORMAN: Yes. Yes, it is.
ROWLANDS: Are you in the market for a car right now?
NORMAN: Not right now. We just bought a Ford Escape. So we're not looking for a new one.
ROWLANDS: But looking. And the idea, Fredricka, is that people like Gene are going to go from looking here and down the line when they do need a car, they'll go into the show rooms and purchase them.
Anything that really turned your crank?
NORMAN: You bet. That's right.
ROWLANDS: Anything turn your crank specifically?
NORMAN: Well, this truck does. Of course, I couldn't race it and I'm not in that sort of thing. But I understand they're going to race this in the Baja 1000.
ROWLANDS: All right. We'll watch for that. All right. Thanks, Gene.
NORMAN: Thank you.
ROWLANDS: All right. A lot of different -- a lot of different things are turning different people's cranks, as always. The key is when are they come and actually purchase these cars. Automakers hoping it's sooner than later.
One thing we should notice. Not just the big three having trouble.
WHITFIELD: Yes.
ROWLANDS: All of the manufacturers are having trouble. Evidence of that here in Long Beach, there are rows and rows of brand new Mercedes and other imports that are being stockpiled there because the dealers are saying don't bring them to us. We don't want them right now.
WHITFIELD: Oh my gosh.
ROWLANDS: We're stuck. Please just keep them there. So you're seeing they're negotiating deals with the Long Beach -- with the Long Beach to hold these cars indefinitely there and -- until something changes, there's a huge backlog.
WHITFIELD: Oh my gosh.
ROWLANDS: Evidence that it's not just the big three. It's everybody.
WHITFIELD: Wow. So I wonder if at some point there are going to be deep discounts to try and move those cars once people are able to get loans again or, you know, people have money to buy a car.
What are you going to do with all of that merchandise?
ROWLANDS: Well, they are going to sell them eventually. And I guess there's going to be some bargain bargains out there potentially.
WHITFIELD: Yes.
ROWLANDS: But boy, the short term, everybody you talk to, '08 was a horrible year.
WHITFIELD: Yes.
ROWLANDS: They think '09, at least the beginning, is going to be even worse.
WHITFIELD: Wow. All right, Ted Rowlands, thanks so much. I'm looking forward to finding out whether the planners are going to take a real big hit this year on that car show, even though you said it would cost something like a few hundred thousand dollars to put on?
Something tells me it's not going to be as popular as it usually is. But I'll check back with you. You'll get that information before I do.
Ted Rowlands, thanks so much, from Los Angeles.
Well, as sad as it sounds, this sour economy means people are actually looking for one less mouth to feed. So many are actually giving up their pets.
Here now is Todd Dunn with Nashville affiliate WKRN. (BEGIN VIDEOTAPE)
TODD DUNN, WKRN REPORTER (voice over): Metro Animal Control officer Billy Biggs stays busy capturing stray dogs. As the economy worsens, Biggs says he's seen an increase in the number of dogs being dropped off at the pound.
BILLY BIGGS, ANIMAL CONTROL OFFICER: These were turned in because the owner could not afford to keep them, you know? Could not afford to care for them.
DUNN: When times get tough, often pets are the ones who suffer the consequences.
BIGGS: I know one, I know one personally, the guy got foreclosed on and he left all five of his animals there and one had, like, 11 puppies.
DUNN: In the adoption area of Metro Animal Control, there were a number of dogs which were turned in by owners who could no longer afford to care for them.
BIGGS: These were turned in because they're moving to an apartments where there's no pets allowed.
DUNN: And when the kennels are full, it means bad news for the animals.
BIGGS: It means, you know, more euthanasia. We have to make room for the other ones that come in.
DUNN: The good news, according to Billy Biggs, is that people are still coming in and adopting animals.
BIGGS: Our adoption rates have been pretty steady, but, still there's not enough homes for all of them.
DUNN: There are plenty of animals just waiting for new homes this holiday season.
In Nashville, Todd Dunn, News 2.
(END VIDEOTAPE)
WHITFIELD: In the meantime, the complete flip side to that, Versace, Gucci, Tiffany's are luxury brands simply out of style this holiday season.
Well, not quite. Russell Pearlman is senior markets editor for "SmartMoney" magazine. He's joining me now from New York.
Good to see you.
RUSSELL PEARLMAN, SMARTMONEY MAGAZINE: Hi, Fredricka.
WHITFIELD: Ha, well, you would think that all these really high-price items would take a huge hit this holiday season. And you say not really?
PEARLMAN: Well, it -- initially people thought these were -- these items, Versaces and Guccis of the world, they're going to be incredibly recession resistant. We've been hearing all they way up through August that we're fine, we're fine, we're fine.
And then suddenly, oh, wait the economy is really hurting us. You're seeing sales drop at Saks and Neiman-Marcus and Nordstrom and across board, all at least down -- their sales down at least 10 percent year over year.
So these things aren't actually recession resistant, except smaller things. I think you're seeing people instead of spending $10,000 or $12,000 on gifts, going down to accessories like watches and sunglasses that are cheaper but still give the giver or the receiver some sense of style and having some luxury.
WHITFIELD: So do we mean -- are we saying that perhaps people are going for less trendy, and instead if they're going to spend a lot of money, those who can afford it, they're going to go for more classic type of pieces?
PEARLMAN: Well, that -- that's the goal here. Usually the people who can -- aren't really going to be that impacted by this recession are still going to be able to -- they have money. They already have money. They're not losing everything here. And those folks most of the time tend -- excuse me, tend to go more towards the classier things versus kind of a flashier thing. So...
WHITFIELD: Interesting. So if -- some folks are spending money on, you know, these classier things even though they're very pricey, that means that perhaps there's still some lure to those luxury destinations for a lot of folks who have money, or are they also taking a hit?
Because sometimes, you know, you hear about those kinds of great luxury packages that are offered as holiday gift-giving ideas.
PEARLMAN: That's right. Again, I think it's -- more the names are still popular, the marquee names are still there. It's people are buying, perhaps, a smaller amount of those marquee names or different types of products that are at lower price points than you would traditionally see.
But the good news is, if you have even a little bit of money and you want to just kind of splurge this year, there's going to be a huge amount of sales both online and offline to move these luxury goods, because a lot of these retailers had purchased these products months and months ago.
And they don't want to get stuck with inventory this holiday season. So you're going to see a lot of sales in stores and a lot of kind of online sample sales to move these luxury gifts.
WHITFIELD: That's interesting, because it seems like even for those who have money, if they have the cash, people are holding onto it, you know, and this is going to be a thin holiday season because you just don't know what's around the corner.
So I wonder if some of these labels that you're talking about, the luxury items, if they are offering 10 percent now after the holidays, those sales are going to be huge.
PEARLMAN: Well, I think...
WHITFIELD: Because they're going to have that huge, you know, stock, that huge inventory.
PEARLMAN: I suspect that we're not going to have to wait until after the holiday season to see major sales. I think you're probably going to see a lot of these sales happen before the holiday season because, still, the majority of actual sales happen before Christmas. So...
WHITFIELD: Yes.
PEARLMAN: And the stores don't want to take a chance that they end up with...
WHITFIELD: Interesting.
PEARLMAN: ... a lot more inventory at the end.
WHITFIELD: Interesting. All right, Russell Pearlman, "SmartMoney" magazine, thanks so much. Appreciate it and happy holidays.
PEARLMAN: Thanks. You, too.
WHITFIELD: All right. In the meantime we are still encouraging you to send us you e-mails. Maybe you have some ideas about how you're pinching pennies this holiday season or maybe you're not spending any money at all.
Josh Levs has been taking in a lot of your e-mails. And he's got more and we want more. What are people saying now?
JOSH LEVS, CNN CORRESPONDENT: We're getting great advice. Yes, the viewers.
WHITFIELD: Yes.
LEVS: And, you know, we're actually starting off with something you just said. Some people giving us the advice, don't feel the need to spend.
Let's zoom right in here. We're just getting them and throw them on the board. Check it out. "I don't plan to spend a single dollar. I must absolutely must. The uncertainty of having a job and income next year is too severe to warrant celebrating the holidays with non- essential travel or gifts.
Just having a roof over your heard, a hot meal, and the company of family and friends is more than enough blessing this year."
That's from Charles. Look at this one. This is interesting. "The last couple of years we have been getting savings bonds for all of the grandchildren for Christmas and birthdays. The kids love this cool way of saving money. Now if all the parents and grandparents did it, it might be too boring for the kids, but with just me and wife doing it, it's novel to them."
So maybe someone out there, no one else in your family doing that.
WHITFIELD: That's clever.
LEVS: Yes, yes, grab onto that idea.
A couple of more here.
WHITFIELD: I mean I like -- the kids are actually excited about that, too, because...
LEVS: I know.
WHITFIELD: ... usually kids are like what, what is this?
LEVS: Well, I remember getting -- I remember it was kind of cool getting them when you were little. But yes, you don't want them from everybody.
WHITFIELD: Yes.
LEVS: Let's end with this one. I like this. "Our family has agreed to exchange books as holiday gifts. To encourage imagination, these books can be new or used, homemade magazines, on tape or CD, photo albums, notebooks, diaries, et cetera."
WHITFIELD: Nice. Nice.
LEVS: That's from Carol. Really great ideas we're getting today. Seriously, this stuff -- I got to make a list and put it up on dotcom somewhere.
WHITFIELD: Hey, I'm taking my notes.
LEVS: Yes.
WHITFIELD: I think this is going to be the holiday season, while, yes, it's, you know, tough times hitting everybody. This might be the holiday season where people really come back to, what is the meaning behind the holiday season? Being together, being with loved ones and...
LEVS: That's true.
WHITFIELD: ... don't try to spend money and go broke doing it.
LEVS: Well, they say tough times bring families together, you know? It's happening to this holiday season.
WHITFIELD: Yes. Yes. OK, thanks, Josh. LEVS: Thanks.
WHITFIELD: Well, of course, we want more e-mails. We love getting this response from you. The question again -- are you going to change the way you spend money for the holidays? E-mail us at weekends@CNN.com.
Josh will be back in about 30 minutes to get through all of those e- mails that you're spending in and get them on the air.
All right. Well, he used to be known as one of the bad boys of tennis for his fiery outbursts on the court. I know you already know who I'm talking about. Well, now that he's older, some wonder, has anything changed?
(COMMERCIAL BREAK)
WHITFIELD: All right, other news we're following for you right now.
He's free now but last night he was in jail. Eight-time grand slam champion, Jimmy Connors, arrested outside an area where you see Santa Barbara and North Carolina were playing basketball.
Well, campus police say the tennis star refused to comply with their order to leave the campus after a confrontation. Connors was booked in jail and then released. No word yet on the nature of the confrontation.
Madonna and husband Guy Ritchie are one step closer to divorce. Yesterday England's high court granted the couple a preliminary decree of divorce to end their eight-year marriage. The divorce between the pop star and the film director should be final in about six weeks.
British newspapers have reported that Ritchie has agreed to take almost nothing of the singer's fortune, which is estimated to be around $ 500 million.
A sad passing for a young fighter who inspired and helped so many people.
(COMMERCIAL BREAK)
WHITFIELD: You've gotten to know him pretty well in a short amount of time. A young cancer patient has lost his battle to live, but not before getting his dying wish to help the homeless.
Elisa Jaffe from our Seattle affiliate, KOMO, remembers this incredible little boy.
(BEGIN VIDEOTAPE)
BRENDEN FOSTER, CANCER PATIENT: I want them to be able to survive and own their place.
ELISA JAFFE, KOMO REPORTER (voice over): Brenden Foster's dying wish, help the homeless. Feed the hungry. B. FOSTER: They're probably starving. So give them a chance.
WENDY FOSTER, MOTHER: These are the last days of his life and this is what he's thinking about.
JAFFE: In his final days leukemia destroys this energy, but not his dreams. This 11-year-old has left a legacy. From California to Ohio, his message motivated people to hold food drives from school children to special agents, collecting food in Brenden's honor.
(On camera): What do you think you've done by sharing your stories with everyone?
B. FOSTER: Save people's lives and inspired a lot of people.
JAFFE: You can feel good about that.
B. FOSTER: Mm-hmm.
JAFFE (voice over): And Knowing Northwest neighbors are helping problem solvers stuff the truck for food lifeline in Northwest Harvest on Brenden's behalf gives his family peace.
W. FOSTER: To have that in his name and see that wish relived over and over and over, that's everything he hoped for. It means everything to us.
JAFFE: A young boy's dying message gives reason to pause, dream and most importantly give.
B. FOSTER: This the season to give.
(END VIDEOTAPE)
WHITFIELD: Well, Brenden Foster was just 11 years old.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
2ND LT. JANEENE YARBER, U.S. ARMY: Hello. I'm Lieutenant Janeene Yarber currently in Camp Liberty, Iraq. Just want to stay hello to my friends and family back in Dallas, Ft. Worth.
Just thank you so much for keeping in contact, for your letter, support, your care packages are absolutely wonderful. Thank you Myself and my soldiers appreciate it so much. Love you, miss you. Hope y'all have a wonderful Thanksgiving, and I'll see you soon.
(END VIDEO CLIP)
WHITFIELD: Well, for all of you fans of the Tom Hanks flick "The Terminal," well, allow us to introduce you to Hiroshi Nohara of Tokyo. Here's making the most of Mexico City's hospitality.
Here's CNN's Rosemary Church. (BEGIN VIDEOTAPE)
ROSEMARY CHURCH, CNN CORRESPONDENT (voice over): Hiroshi Nohara is on an extended layover. It's been about three months. Surviving on handouts at Mexico City International Airport, Nohara inexplicably won't leave. The Japanese flew in with a return ticket but for the time being has decided to stay.
The peculiar airport tenant has set up residence at Terminal 1 since early September. Whether it's fast-food dining or greeting curious tourists, airport workers say Nohara is calm and mostly just sits and eats all day.
The Tokyo native has now become a bit of a local celebrity. His status perhaps stoked by the 2000 film "The Terminal" starring actor Tom Hanks who plays an Eastern European stuck in an airport in New York.
(BEGIN VIDEO CLIP, "THE TERMINAL")
KATHERINE ZETA-JONES, ACTRESS: You're headed for home?
TOM HANKS, ACTOR: No. I am delayed long time.
(END VIDEO CLIP)
CHURCH: Some travelers have complained about the grungy traveler who simply won't leave, but like the movie, frustrated airport and embassy officials can do little more than wait. The man who's overstayed his welcome actually hasn't. His tourist visa allowed him to stay until March.
Rosemary Church, CNN, Atlanta.
(END VIDEOTAPE)
WHITFIELD: And the next hour of the NEWSROOM starts right now.
Hello again. I'm Fredricka Whitfield and you're in the CNN NEWSROOM.
And today the economy is "ISSUE #1" and we're spending the next hour looking at it from all angles, from slumping car sales to jittery consumers to another round of troubled banks.
We begin with two more California banks shut down by federal regulators. The failure of Downey Savings and Loan in Newport Beach is being blamed on California's housing crash. The same is true for PFF Bank of Pomona. The U.S. Bank of Minneapolis will take over deposits of both.
