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Jobless figures hit historical low; Obama to announce national security team; More information out regarding Madoff; Israel-Gaza conflict continues
Aired January 09, 2009 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
HEIDI COLLINS, CNN ANCHOR: New jolt to the shaky economy. Jobless figures hit historical low mark. Live this hour. The markets react.
And get your tickets. Bleacher seats on sale today for the inaugural parade. We've got the details.
It's Friday, January 9th. Hi, everybody. I'm Heidi Collins. You are in the CNN NEWSROOM.
Just a few minutes ago, new evidence the recession is getting worse. Jobless claims for December grim. The new rate, 7.2 percent. 524,000 jobs were lost last month.
And here's where it gets even scarier. Last year, 2.6 million jobs were lost. That's the largest number in a single year since 1945.
CNN's money team is here now to break it all down for you. Personal finance editor, Gerri Willis, is in New York, along with chief business correspondent, Ali Velshi.
Let's go ahead and begin with Ali.
Wow, certainly not what anybody wants to hear...
ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Right.
COLLINS: ... on a Friday morning, no less.
VELSHI: Yes. The only thing that was expected is that we were going to get a bad jobs report today. 11.1 million people are now listed as unemployed in the United States and that doesn't count people who are underemployed, have part-time jobs when they need full- time jobs, have jobs that don't pay benefits, or who've dropped out of a system, they're not even looking anymore because they're so disenchanted.
That is very serious. That's the highest number of people unemployed since 1983 on record. And as you said this makes 2008 the worst year -- the second worst year and the worst year since 1945.
Do you know why 1945 was so bad? Because the war was over and all of those factories...
COLLINS: Yes.
VELSHI: ... that were -- had been making things were shutting down. Making things for the war. So it's a pretty bad year when you think about it.
Now, what does that mean? Well, you may see extensive layoffs again in January because -- what may have happened is a lot of companies trying to end their year with a -- with a tighter company, may have laid people off in December.
January may be the same thing. If they don't think it's good for the year, they want to take their losses early. After that, though, if there's some confidence in the economy recovering, Heidi, you might, you might, see the January -- December/January might be the bottom of this thing, and it might start to go up.
But that depends on whether or not there is confidence that the economy is going to get better and that people are going to buy things and only then will businesses stop laying people off -- Heidi.
COLLINS: Yes, because this really -- even though we talk about a lot of times the economy and the economics of it can be so complicated. This is really not that complicated.
VELSHI: No.
COLLINS: You don't have a job, you're not out there spending money and pumping money...
VELSHI: Correct.
COLLINS: ... into the economy.
VELSHI: You're, in fact, taking money out of the economy. You're -- you've got the government paying you and if you're not spending money, businesses are not making money so they're laying people off which means there are more people who aren't spending money, which is why this comes down to confidence.
It's not science, it's confidence. And yesterday's speech by Barack Obama was, in part, meant to convince Congress to take action but it's to let the public know how serious this matter is so that it can gain public support in the idea that things are recovering.
If the public thinks things might get better they might invest more, they might spend more, they might start to buy those houses that have come down in price using those low-interest rates.
So, you're absolutely right on that, Heidi. For people looking at these numbers this isn't high-level economics. This is confidence and trust in the economy.
COLLINS: Yes, no question.
All right, Ali, sure do appreciate that. I want to take a moment now to tell you a little bit about millions of unemployed Americans, how they are reeling from this 1-2 punch. First, they lose their paycheck and then they enter a very crowded job market where no one seems to be hiring, as we were jug talking about. But you should know there is help.
CNN's personal finance editor Gerri Willis has that part of the story for you us, because, obviously, Gerri, everybody just kind of sitting around and feeling hopeless, he's not going to change the situation.
You actually had a chance to spend the day at a job center in New Jersey?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: A job fair in New Jersey at Rutgers University. And let me tell you, this is 3,000 kids looking for their first job, in many cases.
They're worried, they are concerned and they were all about putting that best foot forward.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: This is where it will tell you what the profession is all about.
WILLIS (voice over): At this New Jersey job fair, an opportunity to meet, greet, and pass resume.
UNIDENTIFIED FEMALE: Do you have a resume? Take a look at your background.
WILLIS: For the college students and grads at this Rutgers University career day, it was time to stand out from thousands of other job seekers.
UNIDENTIFIED MALE: I assumed that everybody would be wearing black so at least if somebody is wearing a pin-striped gray suit will that be a little bit different.
UNIDENTIFIED FEMALE: I have (INAUDIBLE), the world actually, that's really exciting.
WILLIS (on camera): What would make you stand out to these employers today?
UNIDENTIFIED MALE: I don't know. I'll be honest.
(LAUGHTER)
UNIDENTIFIED MALE: At this point, there's so many people looking, I don't know if there is anything.
WILLIS (voice over): Expert advice for these job hunters? Keeping an open mind. RICHARD WHITE, DIRECTOR, CAREER SERVICES: It's important in these times to be more flexible, more creative. Not to be really narrow in terms of where you're looking for work.
WILLIS: (INAUDIBLE) came ready to sell herself to potential employers with writing samples and a sharp resume.
WILLIS (on camera): You have copies of each of these.
UNIDENTIFIED FEMALE: Yes, I do.
WILLIS: And you hand them out, right?
UNIDENTIFIED FEMALE: Yes.
WILLIS: Good luck.
UNIDENTIFIED FEMALE: Thank you.
WILLIS (voice over): After the reality seems daunting.
UNIDENTIFIED FEMALE: There's a lot of people here and it's like we're all competing for this one same common goal. We all want a job.
WILLIS: But the head of the university's career services office says jobs are out there.
WHITE: Health care, education, pharmacy, a lot of these are, you know, still out there hiring.
UNIDENTIFIED FEMALE: What you should do is check our Web site.
UNIDENTIFIED FEMALE: Actually, we're looking to hire analyst type people, data analysts, but we also look for customer service reps.
UNIDENTIFIED MALE: Anything that gets me a real job with a real salary.
WILLIS: Justin (INAUDIBLE) economics degree hasn't landed him a job. Now he's thinking of greener pastures.
UNIDENTIFIED MALE: One of my full-time jobs was work at a golf course and actually turf management might be one of my new the things that I do.
(END VIDEOTAPE)
WILLIS: So finding that first job for the college graduates is tougher than ever before but as we've heard, it's not impossible. There are jobs out there.
Look, to put your best foot forward, don't turn down an internship. You may think you're past interning when you're right out of college but in this market, it's a good move. Look, even an unpaid internship or volunteer work can help you fill in the gaps on your resume. Don't depend on the web alone to sell your talents. Those big job aggregator Web sites like Monster, Hot Jobs, they're only a first step in getting a job.
Top jobs are attracting hundreds of resumes so you've got to yours and make the final cut and to do that, you'll need someone inside the business to push your interest. So develop your network.
Finally, stand out the right way. Make sure your Facebook page doesn't have pictures of your partying as a college student. You know those recruiters, Heidi, they check out everything...
COLLINS: Sure.
WILLIS: ... about you before making that decision. So you have to know what it is they might see that you don't want them to.
COLLINS: Yikes. All right. The whole new age in that form...
WILLIS: That's right.
COLLINS: ... of the job search.
All right , Gerri, some excellent information. I sure do appreciate it.
Gerri Willis, our personal finance editor.
WILLIS: My pleasure.
COLLINS: Thank you.
It's happening here, but it's playing out everywhere. Concerns over the U.S. jobless rates weighing down the Asian markets as well. Japan's Nikkei lost a half a percentage point. Benchmarks in South Korea, India, Taiwan and Singapore also sank.
Trading has also been down in Europe. At last check, markets in Britain, France and Germany were also less than one percentage point in negative territory.
So where is Wall Street headed? The opening bell is live at the bottom of the hour. We, of course, are going to go there live to the New York Stock Exchange.
And he calls himself Atlanta's biggest cheapskate. Now this consumer guru has the newest show on our sister network.
Picking his intelligence team, President-elect Barack Obama ready to make the official announcement in about 90 minutes or so,
And CNN's Jessica Yellin is joining us now from Washington to talk more about this.
Hi there, Jessica. JESSICA YELLIN, CNN CONGRESSIONAL CORRESPONDENT: Hi, Heidi.
Well, they haven't been announced yet but already Obama's national security team, his intelligence team has stirred some controversy. This morning, he'll formally name Leon Panetta, the former chief of staff to former President Bill Clinton as his pick to run the CIA, retired Admiral Dennis Blair to become -- director of national intelligence, and John Brennan to become White House adviser on counterterrorism.
As you recalled, Panetta's pick was leaked to the press earlier and it surprised the chair of the Senate Intelligence Committee Dianne Feinstein who had been pushing for someone else and had not been forewarned of the picks. She's now on board.
Blair is expected to get some tough questioning during his confirmation hearings because of efforts he supported when he was in charge of the U.S. specific command that indirectly led to the death of some in East Timor.
And Brennan was considered in danger of not passing Senate confirmation because of past statements he made supporting some interrogation techniques. Now he will not have to face Senate confirmation in the role Obama has chosen for him.
So all have been in the press considerably lately...
COLLINS: Yes.
YELLIN: But all three well respected by intelligence professionals.
COLLINS: Yes, some of them, some people were saying kind of odd or atypical choices for these positions.
(CROSSTALK)
COLLINS: We're watching that closely.
Another thing we'll be watching today, apparently, there is word that the president-elect and his transition team are considering overhauling the Wall Street bailout?
YELLIN: That's right. You'll recall when Congress approved $700 billion to go to that financial rescue for Wall Street they only gave half of it. So half of the money...
COLLINS: Right.
YELLIN: ... is still sitting back in D.C. and Obama's team is expected to say look, in order to get that -- this money, we will agree to some new conditions including getting more of the money away from Wall Street and into -- to help homeowners and small businesses and also creating an oversight board inside the Treasury Department to help manage and direct that money better. So those are some of the ideas on the table. Congress, as you know, has been resistant to releasing the rest of that money until they get better promises on better results in the future.
COLLINS: Yes. And we're talking about $350 billion here.
YELLIN: A lot of money.
COLLINS: So, yes, definitely. All right, CNN's Jessica Yellin, sure do appreciate that.
Jessica, thank you.
And, of course, you can see the president-elect's announcement live here on CNN. Talking about those intelligence announcements coming your way 10:30 Eastern Time.
The Inauguration, hottest ticket in town. Now more tickets are actually set to go on sale. The inaugural committee announcing the release of 5,000 bleacher tickets for the inaugural parade.
Those tickets, 25 bucks each, buy you can buy only four of them when they go on sale today at 1:00 p.m. Or you can line up along the parade route for free. You just have to pay if you want a reserved seat for the event, of course.
Another option is just parking yourself in front of a TV, hey, there's an idea, and watching the whole entire thing right here on CNN.
To the Middle East now, no letting up. Smoke rises over Gaza. Israel vowing to continue its attacks, despite a United Nations call to stop.
We'll go live to the Israeli-Gaza border.
(COMMERCIAL BREAK)
COLLINS: It seems like no relief right now for the Pacific Northwest. Look at those pictures. Major flooding going on right now in Washington state.
A 20-mile stretch of Interstate 5, the state's major north/south freeway was shut down with one section under three feet of water.
Rivers have spilled over into neighborhoods, forcing tens of thousands of people from their homes. Emergency management officials say this is the worst flooding they have seen in years.
CNN's meteorologist Rob Marciano is standing by now to talk a little bit more about this. Obviously, everybody wants to know when are they going to get some relief?
(WEATHER REPORT)
COLLINS: Absolutely, yes. Yes, last time -- last couple of times you guys -- you and I were talking about this, we were hearing from people about some of these swift water rescues so I'm not quite sure, but we're getting more information on it right now...
MARCIANO: Sure.
COLLINS: ...from our affiliate there. Thanks so much, Rob.
MARCIANO: You bet.
COLLINS: Southern California shaken by a bit of a small earthquake. The 4.5 magnitude quake last night was centered in San Bernardino, which is east of Los Angeles. A smaller magnitude, 3.3 aftershock, hit about an hour later. There were no immediate reports of damage or injuries.
The U.S. Geological Survey said people reported feeling the earthquake as far away as San Diego.
Israel vowing to press on with its offensive in Gaza, despite a U.N. call for a cease-fire. Israeli aircraft attacked more than 50 targets in Gaza, including a house where media reports say six people were killed.
The latest barrage comes as the Security Council passed a resolution calling for an immediate end to the fighting. Fourteen of the 15 council members voted in favor of the resolution. The U.S. abstained citing Egyptian mediated peace talks in Cairo involving Israeli and Palestinian leaders.
(BEGIN VIDEO CLIP)
CONDOLEEZZA RICE, SECRETARY OF STATE: Well, our goal must be the stabilization and normalization of Gaza through the implementation of a durable and fully respected cease-fire and an end to all terrorist activities.
I think that this resolution shows that the council and the United Nations (INAUDIBLE) seize of the matter. This resolution is a step toward our goals. It reflects the international community's concern about the circumstances in Gaza and its desire for a sustainable peace in Gaza.
(END VIDEO CLIP)
COLLINS: An estimated 778 Palestinians and 13 Israelis, including 10 soldiers, have been killed in the air and ground assault. Palestinian medical sources say more than 3100 Palestinians have been wounded.
And Israel is still barring media coverage inside Gaza. Our Paula Hancocks is following developments, though, along the Israeli- Gaza border. She is joining us live from there this morning.
So, a lot of people talking about the cease-fire. You just have to wonder if it's getting all the way down to the ground. PAULA HANCOCKS, CNN CORRESPONDENT: In a word, no, it's definitely not, Heidi. It's making absolutely no difference to the facts on the ground. You can see fresh plumes of smoke behind me on the Gaza horizon. Further air strikes, further heavy machine gunfire we're hearing as well. And much of this has been during the three- hour lull.
And this is a lull that Israel itself called to try and allow humanitarian aid into the Gaza Strip and allow it to be distributed. We understand they were hoping to get some 60 trucks of food, water and fuel in there.
But the fact is, the fighting continued so it was nothing like a cease-fire that I've seen before. We saw thick black smoke at one point, and we're also hearing from the United Nations Office for Humanitarian Affairs, OCHA as it's known over here, saying that back on Sunday, they have a report that they -- that about a hundred people were moved from one house to another by the Israeli military and then on Monday, the Israeli military shelled that house and at least 30 people were killed.
Now OCHA at this point is asking the Israeli Ministry to look into this urgently to find out what exactly happened. The Red Cross also said it was struggling for a few days to be able to get ambulances into this particular area, (INAUDIBLE) southeast suburb of Gaza City.
The Israeli forces, for their side, at least the security sources we have, say that they don't have any information about moving people in the first place. But just another occurrence over the past few days. We have heard many occurrences like this.
The Israeli military say they are checking into all these reports but this just adds to the international pressure for an immediate cease-fire -- Heidi?
COLLINS: All right. We continue to follow that story and developments regarding that cease-fire.
Sure do appreciate it. CNN's Paula Hancocks, along the Israeli- Gaza border for us today.
A victim of the financial crisis. He was still one of the 100 richest people in the world.
(COMMERCIAL BREAK)
COLLINS: History could be made in Illinois today. The statehouse meets to begin the process of voting on whether to impeach Governor Rod Blagojevich.
A legislative committee recommended impeachment yesterday after looking into Blagojevich's action on a number of issues including federal allegations he tried to sell Barack Obama's Senate seat.
The committee said it found the complaint against him credible enough to demonstrate an abuse of office. Blagojevich, who was arrested last month, denies wrongdoing.
The man eventually appointed by Blagojevich to fill Obama's Senate seat testified before that legislative committee yesterday.
Former Illinois attorney general, Roland Burris, deny any quid pro quo, telling the committee there was no legal, personal or political exchange for his seat.
Top Senate Democrats have resisted seating Burris but now it looks like they are ready to let him take the job.
It's Capitol Hill. Home sweet home to one congressman who's turned his office into a living space and may be is turning around the minds of his colleagues.
Jim Acosta has the story.
(BEGIN VIDEOTAPE)
REP. JASON CHAFFETZ (R), UTAH: Hey, how are you? Jason Chaffetz. Nice to see you.
JIM ACOSTA, CNN CORRESPONDENT (voice over): When the staffer House Republican, Jason Chaffetz, says the congressman is in...
UNIDENTIFIED FEMALE: Congressman Jason Chaffetz's office.
ACOSTA: ... they really mean it.
CHAFFETZ: Pardon me.
ACOSTA (on camera): I better get out of the way.
CHAFFETZ: It's a little, little tight.
ACOSTA (voice over): The Lincoln bedroom, it's not. It's the closet inside Chaffetz's House office on Capitol Hill.
(On camera): Help you out with the other corner here.
CHAFFETZ: Yes, that would be great.
ACOSTA (voice over): The gentleman from Utah showed us he is bunking down every night.
CHAFFETZ: You work late into the night, you know? I was up until 12:45.
ACOSTA (on camera): Doing the people's business?
CHAFFETZ: Working hard, talking to constituents, e-mailing them, writing them letters.
ACOSTA (voice over): The office comes with a half bathroom and what Chaffetz calls his breakfast nook.
CHAFFETZ: Big Newtons for breakfast. These are usually for lunch and this is kind of the dinner snack right there.
ACOSTA: By not renting an apartment in D.C., Chaffetz says there's more money to send home.
CHAFFETZ: I will save about $1500 a month for our family by doing this. And I -- you know, I got a wife, I got three kids.
ACOSTA: There's just one problem. Things that go bump in the night.
CHAFFETZ: The biggest challenge is what goes on in the hall way at night because there's this cleaning machine that comes down and it's got that obnoxious, you know, beep, beep, beep.
I will call -- I will definitely, I will call you back.
ACOSTA: Although he's an unknown freshman in the House, word of his sleeping arrangements is spreading.
REP. JUDY BIGGERT (R), ILLINOIS: I'm really glad that we have a neighbor here that's going to make sure that somebody is here to make sure that the neighborhood is safe at night when we're not here, so, I mean...
(LAUGHTER)
ACOSTA (on camera): Sort of a neighborhood watch, is that it?
BIGGERT: That's right.
ACOSTA (voice over): Chaffetz's next door neighbor doesn't mind.
ACOSTA (on camera): It's kind of not a bad image to project, I suppose?
BIGGERT: Fiscal conservative, you're right.
ACOSTA (voice over): Congressman Chaffetz says it's about putting the nation's fiscal House in order.
REP. NANCY PELOSI (D), HOUSE SPEAKER: The house will be in order.
CHAFFETZ: We are now $10 trillion in debt. $10 trillion. Those are, those are expenses that have to be paid at some point.
ACOSTA: If he can tighten his belt on these tough economic times, he says, so can Congress.
(On camera): It's only a two-year gig.
CHAFFETZ: Yes, there's no job security here.
ACOSTA (voice over): A job he says he's willing to put in the long hours to keep. (On camera): In case you were wondering, the congressman showers at the House gym. With amenities like those, it's no surprise Chaffetz says he'll be staying for a while.
Jim Acosta, CNN, Washington.
(END VIDEOTAPE)
COLLINS: Looking at labor. Another of Obama's cabinet choices on Capitol Hill right now. The second confirmation hearing for the incoming administration about to get under way.
(COMMERCIAL BREAK)
ANNOUNCER: Live in the CNN NEWSROOM, Heidi Collins.
COLLINS: On Wall Street today is the day investors have been waiting all week for and not just because it's Friday. More importantly, the government's latest jobs report is out and it isn't pretty.
Susan Lisovicz is at the New York Stock Exchange now with a look at how Wall Street is reacting or will react, I should say.
Hi there, Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: It's an interesting disconnect, Heidi, and there is the opening bell after a -- the closely scrutinized jobs report for the month of December.
The numbers are horrible. 524,000 positions were cut last month, hitting virtually every sector of the U.S. economy. The unemployment rate, meanwhile, jumped to 7.2 percent. That is the highest rate in 15 years.
Believe it or not, the futures turned slightly higher in free market trading immediately following the report. That's because Wall Street was fearing the December job losses could be even worse. Remember that survey, Wednesday, that said the private sector lost nearly 700,000 jobs during the month? Also some analysts say today's numbers reinforce the urgency of a big stimulus package.
And what we're seeing in the first few seconds of trading, in any case, is a mixed session. The Dow is actually higher, as is the S&P 500. The U.S. economy lost 2.6 million jobs in 2008. The vast majority of them coming in the final few months of the year, as the credit crisis really kicked in.
But, Heidi, here is your silver lining. Those who believe that the January effect, which says the first five trading days dictate how stocks will finish the year, there is good news. The S&P 500 shows a gain of nearly one percent for the past five trading days.
COLLINS: Woohoo!
LISOVICZ: Woohoo! is right. Many of those who pay attention to this market, they prefer to track the whole month of January, not just the first five days. So we have longer to wait for that. And the corporate front, KB Homes said it lost $300 million over the last three months. The builder's CEO says housing market conditions this year could get even worse.
And finally, Heidi, just want to say we're going to have a lot of Fridays like this. We're in the fox hole, deep in the trenches right now with the recession. So the expectation is that we're going to have at least a few more months of these really big losses.
COLLINS: Yes. No question about that. All right. Everybody is trying to prepare. I know they are. Thank you, Susan. Sure do appreciate it.
LISOVICZ: You're welcome.
COLLINS: In fact, live pictures from Capitol Hill now. This is the Senate Health, Education, Labor and Pensions Committee getting ready to hear from President-elect Barack Obama's choice for Labor secretary. California representative Hilda Solis is that person. CNN congressional correspondent Brianna Keilar is our person, who is live on Capitol Hill to cover it all.
Hi, there, Brianna?
BRIANNA KEILAR, CNN GENERAL ASSIGNMENT CORRESPONDENT: Hi, there, Heidi. This is not expected to be a really tough confirmation process for Hilda Solis. But let's face it; this is going to be a really tough job that she is facing as the designate to be the secretary of Labor.
She is facing some tough numbers as we know that just came out this morning through December for 2008. National unemployment rate of 7.2 percent. She is facing that. 524,000 jobs lost in December. And then overall in 2008, 2.6 million jobs lost. That, of course, the worst one-year job drop since 1945.
But just to tell you a little bit about Hilda Solis. She is a four-term congresswoman in the House of Representatives, Democrat, of course, from California when she was announced that week before Christmas as Barack Obama's pick for Labor secretary. This was an announcement that was hailed by unions very quickly. They were very excited to see that she was the pick.
She is seen as someone who will really be an advocate for American workers. She, herself, is the daughter of two immigrant workers who are also union members. And she has been, in the past, very critical of the Bush administration labor policies. Barack Obama is someone who, as a senator, supported making it easier for workers to unionize so you see where he is with his priorities there. Hilda Solis is seen as someone who can move forward with his priorities when it comes to unions. But union is very excited about this, Heidi.
COLLINS: Is it possible -- obviously, it's pretty early to tell, but I'm just curious because I know they are going to be questioning about it, or at least questions are likely about this formation of unions. Is it something that she could potentially make happen, more unions across this country?
KEILAR: You know, I'm not sure, and that's what's great about this hearing is we're going to -- she's obviously going to be asked about that, and where she stands on this. But we're going to be getting a lot of good details. Of course, Tom Daschle, one of his confirmation hearings yesterday for health and human services secretary, and we heard a lot about his different plans for overhauling health care reform. We're going to be hearing the same thing today. Details about what she wants to do at the Department of Labor. It should be really interesting, and we should get a lot of those questions answered.
Heidi?
COLLINS: All right. And we will be watching. Sure do appreciate that. Brianna Keilar, thank you.
And while the Senate talks about choice for Labor secretary, President-elect Barack Obama is getting ready to announce a couple of more choices, these for the top Intelligence posts. You can see that announcement coming up about an hour from now. CNN, of course, will have live coverage of the news conference coming your way, 10:30 a.m. Eastern, so make sure you stick around for that.
COLLINS: The flooding in the Pacific Northwest is making it really tricky for people to drive. Our iReporter Jay Immelt took this picture in Arlington, Washington. The flooding so bad, Jay says he was cut off from the Interstate. And iReporter Steve Kyllo sent us this picture from Ellensburg, Washington. Farms there are under water now, and many people have to be evacuated.
When you see news happening, make sure you send us your iReports at ireport.com. We can get some pictures on the air like that so you can see what's really happening. Rob Marciano, though, is watching all of this.
And it is a pretty nasty situation up there.
(WEATHER REPORT)
COLLINS: All right. We're watching it all. Thank You, Rob.
Tough times. We've got some help for you on the economy from a consumer guru. Don't miss it.
(COMMERCIAL BREAK)
UNIDENTIFIED ANNOUNCER: Covering the angles, uncovering the details. See for yourself in the CNN NEWSROOM.
COLLINS: Disgraced financier Bernard Madoff possibly heading to jail now. A judge could decide as early as today whether to revoke Madoff's bail. Prosecutors say he violated his bail agreement after he allegedly tried to transfer up to $300 million worth of assets so they wouldn't be seized. This weekend, CNN is airing a fascinating hour-long documentary called "Madoff: Secrets of a Scandal." It's going to be hosted by Andy Serwer from "Fortune" magazine and CNN's Christine Romans.
Christine is joining us now live from New York. And as I have been watching this story, Christine, it seems like every day it gets more and more bizarre, and now we're talking about possibly watching him go to jail.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: That's right, Heidi. Every day, a new secret, we learn something new. We found out that when he was arrested, he had $173 million in signed checks in his desk ready to be mailed. His victims are outraged by that. They say to them it looks like he was trying to give their money away before he turned himself in eventually. This whole thing started to unravel in the beginning of December.
And, you know, the secret really kept on the 17th floor of the lipstick building on the east side of Manhattan. That's where he had his private offices where he ran his hedge fund. Not many people were allowed up there. Not a lot of fancy signage. One door simply said Madoff deliveries. This is where he managed this $50 billion, as he said it was, right down the hall, a veteran, respected Wall Street titan herself, Muriel Siebert, the first woman to ever have a seat on the New York Stock Exchange. She knew him for 30 years, had an office right next to that and had no idea what was happening.
(BEGIN VIDEO CLIP)
MURIEL SIEBERT, PRESIDENT, SIEBERT & CO.: You had him running that amount of money and it was all done on faith and trust.
ROMANS: Right next door to you?
SIEBERT: Right next door to me. Down the hall. For a while, I couldn't go to the ladies room. I was tripping over FBI people!
(END VIDEO CLIP)
ROMANS: FBI people on the 17th floor. Clients in the lobby waiting to get in, wanting to talk to him, wanting to find out where their money was. It's been a chaotic few weeks for all of those investors. Muriel Siebert says she's had trusted friends. People she's known for years, coming to her with their statement saying help me understand, where is my money? She said she is very, very move and sickened. She said by friends of hers who are 80 years old who have no way of making any more money, and all of the money is gone.
Now, this, if true -- if true, would be the biggest Ponzi scheme in history. A Ponzi scheme, of course, where you take new investors to pay off the old investors, basically, taking money from one pocket to pay the other, not investing at all. Eventually, the whole thing comes crumbling down when people ask for their money back. Where, Heidi, was the S.E.C.? Where were regulators? That's also part of the secret. Mitchell Zuckoff wrote the book on Ponzi.
(BEGIN VIDEO CLIP)
PROF. MITCHELL ZUCKOFF, AUTHOR, "PONZI SCHEME": We're not talking about red flags pointing. We're talking about flaming arrows. That everyone was saying there's something wrong here. This is not mathematically possible. You cannot return money this way. And certainly not the way he claims to be doing it. And the S.E.C., again, looked and kept brushing it off and saying, nothing there.
(END VIDEO CLIP)
ROMANS: And we'll have more of that, of course, in the special. We'll very clearly detail all the warnings that the S.E.C. had, that the government had that were, obviously, ignored. Why did all of these people continue to take the 10 percent to 12 percent nobody ever knew something was up? And how could all of this be run out of the 17th floor of the lipstick building from a little door that says Madoff deliveries? A $50 billion Ponzi scheme. That's what the criminal complaint alleges.
Heidi?
COLLINS: Boy, it is truly incredible. I'm really, really looking forward to this.
ROMANS: Sure.
COLLINS: Christine, thanks so much. And just a reminder for you at home, "Madoff: Secrets of a Scandal," a CNN Fortune Magazine special investigation. It airs Saturday and Sunday night, 8:00 p.m. Eastern. Make sure you don't miss that.
Say you had to get by on a few hundred million. Sounds pretty sweet, right? Well, not for the super wealthy. For some, huge financial losses are causing depression and despair. Here now, CNN's Tom Foreman.
(BEGIN VIDEOTAPE)
TOM FOREMAN, CNN CORRESPONDENT (voice-over): A German billionaire leaps in front of a train. A Chicago real estate mogul apparently shoots himself. A French investor takes his own life, too. The crashing economy, even for the uber-wealthy, is taking a terrible toll. Each of the victims was still worth a fortune when he died.
But James Gottfurcht, who studies the psychology of money, says our wealth often defines who we are.
DR. JAMES GOTTFURCHT, PRESIDENT, PSYCHOLOGY OF MONEY CONSULTANTS: So, if you're used to having $1 billion, and you have your charities, and you have your lifestyle and your retirement and your foundation built on a billion, and then, suddenly, in a few months, it goes to $500 million, psychologically, the amount of loss is huge, even though 99 percent of us-plus would be very happy with what's left.
FOREMAN: Police in Chicago don't know if monetary losses led to Steven Good's apparent suicide. He was one of the city's most successful realtors, before he drove his Jaguar into a wildlife reserve, where police believe he shot himself.
But, recently, he was talking about the awful economy, and he's not alone. The hot lines at CrisisLink in Virginia are ringing constantly with people under financial stress, including, they say, plenty of millionaires. Potential suicide calls have risen 124 percent, according to Marshall Ellis.
(on camera): Are you hearing mainly from people who are -- who are very poor and struggling, or mainly from middle-class people? Are you hearing from rich people? Who?
MARSHALL ELLIS, CRISISLINK: It's affecting people across spectrums and income ranges.
FOREMAN (voice-over): Across continents, too. Though he was still worth a fortune himself, that French investment manager took his life after he steered more than $1 billion into the alleged fraud scheme of Bernie Madoff. An associate told a French paper the man could not bear the scandal.
Sometimes, that's just the way it is for the very rich, says Gottfurcht.
GOTTFURCHT: And their self-esteem or identity would be more wrapped into being highly wealthy.
FOREMAN (on camera): Being hopeful is hard, but both psychologists and economists say everyone must try. After all, that German billionaire who jumped into the train, despite his billions in losses, he was still one of the hundred richest men on the planet, still worth billions.
And there is this. Two days later, banks bailed out his failing companies.
Tom Foreman, CNN, Washington.
(END VIDEOTAPE)
COLLINS: He calls himself Atlanta's biggest cheapskate, and during these tough economic times, he can probably help you out.
(COMMERCIAL BREAK)
COLLINS: Hundreds of AT&T workers marched on the Connecticut state capital last night. The workers are among 12,000 being laid off by AT&T because of the bad economy. These Connecticut workers are expected to lose their jobs at the end of the month.
Quickly, we want to take a look at the big board for you right now. Down triple digits. Trading day has been open just about 20 minutes or so. Dow Jones Industrial Averages down about 103 and also as you probably heard moments ago, the Labor Department says 524,000 jobs were lost in December. 2.6 million jobs lost in 2008 as a whole. And the national unemployment rate now reporting at 7.2 percent. Boy, oh, boy. So many people are out of work, and it's only expected to get worse. So how do you cope? How do you make ends meet in the middle of all of this? Here with some advice is consumer advocate, and HLN, formerly known as Headline News, money expert, Clark Howard. He is joining us now.
So, hi, there, Clark.
CLARK HOWARD, HLN MONEY EXPERT: Good morning.
COLLINS: We're excited about the show.
HOWARD: Thank you.
COLLINS: But not so excited about the news that we continue to get.
HOWARD: Right.
COLLINS: I mean, these jobless numbers we got today are just unbelievable.
HOWARD: And you know we're in early chapters of this, because the unemployment rate may go to levels that most Americans have never seen. Maybe 10 percent or so, because you think about most people who come of age, we have had really good financial times since 1982.
COLLINS: Right.
HOWARD: So for the last 20 -- what is that, 27 years --
COLLINS: Yes, just a little bit more (INAUDIBLE)
HOWARD: So you've got a lot of people who have never experienced serious layoffs, because even if they have been laid off, they found a job a short while later.
COLLINS: Sure.
HOWARD: So we have got some things we have to be prepared for. And there's things people should do before they might get laid off, things you should do after you're laid off.
COLLINS: All right. Well, let's break that down a little bit. What is the very first thing you should do after you find out, OK, you're going to lose your job? Sometimes you're lucky enough to have two weeks, a week or a month or something. And during that time, you should do what?
HOWARD: Well, if your immediate supervisor or manager is the one who is the one who has to inform you of your layoff, at that time, if he or she has a heart, they're feeling pretty rotten to have to give you the news. That's your best time to negotiate. You want to negotiate what severance you can get, what health coverage you'll have, and also, here's something that's hard to get now. You want that immediate supervisor to give you a letter of reference. Because after you're gone, all human resources will do is say, yes, this person worked here.
COLLINS: Sure, because that's a law.
HOWARD: Right. But you want somebody to give you a real letter saying, hey, this person worked for me for this period of time, they're a great employee. And that's important.
COLLINS: That's a good point. A really good one.
HOWARD: Another thing, never, ever, ever be embarrassed about applying for unemployment insurance. A lot of Americans who have never faced a layoff think that's for other people, like welfare.
COLLINS: Yes.
HOWARD: It's not. It's insurance. And you're entitled to it as an American worker. And so, you should file for unemployment insurance right away. Don't delay. And that's a key thing.
You know, in some states, if you get a severance package that pays out over time, you delay when you can apply for unemployment. While you're negotiating with your employer, what they're going to pay you a severance, check with your state unemployment office and find out what their rules are on when you can start receiving unemployment.
COLLINS: Absolutely. Because, clearly, it's different everywhere. And a lot of people haven't ever, as you said in the very beginning, dealt with this before.
HOWARD: Exactly.
COLLINS: They are not familiar with what exactly they're entitled to, and what they should be doing very, very quickly. In fact, because, the times are so tough out there, you know, so many people are dealing with this, they need help now in managing their money, protecting themselves, because really, a lot of us have no idea what could happen next with the job market. What is some of your advice?
HOWARD: Well, number one thing. Most of us are still employed. I mean, 7.2. That means 92.8 percent of us still have jobs. So if you're still in a job, clean up your own financial act. You need to pay down debts you have in your life. You need to pull back your spending. Look at your monthlies. See what you can do to reduce your cell phone bill, your cable or satellite. Just make sure you keep CNN and HLN of your package.
COLLINS: Of course, because you know all of this that you're giving us, it sounds like such a great idea for a TV show.
HOWARD: Doesn't it?
COLLINS: Yes.
HOWARD: How about that?
COLLINS: Yes! As a matter of fact, Clark --
HOWARD: I got one.
COLLINS: Tell us more about it.
HOWARD: "The Clark Howard Show," every Saturday and Sunday, three hours on Saturday, three hours on Sunday on HLN. And I help you pack a punch in your wallet. Take control of your life, financially. So that you can be in charge instead of your credit cards or anything else being in charge.
COLLINS: In fact, do you have a little bit of a sample from the show, is that right?
HOWARD: Sure! Well, we do a thing called Money Coach, where I work with an individual or a couple or a family, and we work on their wallets, longer-term. We actually do something that we're not so good at in TV. We follow up as much as a year later.
COLLINS: Great. Excellent. Let's listen to that.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: It's been a recurring cycle with me. You know, I've paid down my debt before, had savings, had to use it, and then the same thing over again.
UNIDENTIFIED FEMALE: I don't think we're going to have enough to support ourselves when we actually get to the point where we can retire.
UNIDENTIFIED FEMALE: We're looking towards whether or not we need to put more money towards our son's college fund or start putting money toward our son's college fund.
(END VIDEO CLIP)
COLLINS: Excellent. It sounds like it's going to be really great. There's so much out there. So many questions that people have during these tough times.
HOWARD: And I want people to know, this is not the end of the world.
COLLINS: Right.
HOWARD: But we do have to do things in our own lives to move forward without as much fear, and you reduce that fear by getting your own financial act together.
COLLINS: Yes. Certainly people have gotten through recessions before, you just have to know how to do it and how to be smart about it.
HOWARD: Exactly. COLLINS: And one of those things is to watch your show. In fact, you can get much more advice from Clark Howard every week as we just said. "The Clark Howard Show" air Saturdays at noon on HLN. In this struggling economy, Clark is going to help you save more, spend less, and avoid getting ripped off. Thank you, Clark. Nice to see you.
HOWARD: Thank you. Thanks for having me.
