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Issue Number One

$4 Gas Silver Lining; Economy of Divorce; Beer Prices Go Up; Presidential Candidates Lay Out Economic Plans; Americans Define Tough Times as Recession

Aired July 07, 2008 - 12:00   ET


ALI VELSHI, CO-HOST: Obama and McCain, two candidates laying out two very different plans for the economy.
New indications that the majority of Americans believe we are in a recession.

We'll show you how to have a smart 401(k).

And get red for another big-time celebrity divorce. We'll get into the economy of a divorce.

Issue #1 is the economy. ISSUE #1 starts right now.

Hello, and welcome to ISSUE #1. I'm Ali Velshi.

It's a big day on the campaign trail. Senators John McCain and Barack Obama both focusing on their plans to fix the economy.

The California wildfires continue to burn. There's some relief in sight.

We're live in the center of that fight.

And chances are $4-plus a gallon for gas has been a tough adjustment for you. But we have found a silver lining.

And get ready for war. The wife of Yankees superstar Alex Rodriguez filing for divorce this morning. We're going to take a closer look at the very dirty economics of divorce.

From the ISSUE #1 headquarters to the newsroom, we're all over the stories that matter to you.

And Gerri, the big story today has got to be John McCain and Barack Obama focusing solely on the future of the U.S. economy.

GERRI WILLIS, CO-HOST: That's right, Ali. They both have plans on how to handle our economic problems, and they'll both be talking about it today.

Let's go to CNN's Paul Steinhauser in Washington.

Paul, let's start with McCain. What can we expect to hear from him today in Denver? PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: You got it. Denver, Colorado. He's got a new campaign chief, he's got a new political director.

Here's his message today. It's going to be about jobs and balancing the budget.

First, on jobs, he's going to kind of unveil his Jobs First program which he says touts new jobs. Here are some excerpts of what he's going to say.

"So how are we going to create good jobs? Let's start with small businesses, which create the majority of all jobs."

"A recent report says small businesses have created 233,000 jobs so far this year, while other sectors are losing jobs. Small businesses are the job engine of America, and I will make it easier for them to grow and create more jobs."

How is he going to do that? He says lower taxes. He's also going to help them when it comes to health care.

Another thing he's talking about today, Gerri, is going to be balancing the budget. He's talked about this in the past.

He's talked about balancing the budget. He said he's going to do it by the end of his first term. And he says we must get the government's fiscal house in order.

"American workers and families pay their bills and balance their budgets, and I will demand the same of the government. A government that spends wisely and balances its budget is a catalyst for economic growth and the creation of good jobs and secure jobs."

Gerri, how is he going to do that? He's talking about getting rid of earmarks. You know he doesn't accept earmarks. He's going to be talking about being much more fiscal, much more of a fiscal conservative, and get rid of discretionary spending.

So he really wants to be a real fiscal conservative. That may be tough in tough economic times, though.

WILLIS: Yes, no kidding, Paul.

Well, let's talk about Obama for just a second. Senator Obama also planning to speak today. What will he be saying?

STEINHAUSER: Yes, and it's interesting where he's speaking as well, North Carolina. It's a state that's voted for Republicans.

He'd like to turn a red state blue, but he's going to be talking about a bunch of things that he's been laying out in the past. And first of all, he's going to be talking about a second stimulus package. That's one of his big things he's been pushing.

And here is what he's going to say. We have some excerpts as well of his speech.

"We need to do what I called for months ago and pass a second stimulus package that provides energy rebate checks for working families, a fund to help families avoid foreclosure, and increased assistance for States that have been hard-hit by the economic downturn."

So that's one of the things he's going to be pushing again. It's not new. He's been talking about this in the past, but he's going to be pushing it.

And he wants to give help to working class families and middle class families as well. So here's another thing he's going to be talking about.

"When I'm president," he says, "I will shut down the corporate loopholes and tax havens and I'll use the money to help pay for middle class tax cuts that will provide $1,000 of relief to 95 percent of workers and their families."

So there you go again. Once again looking out for working class families, middle class families. And it's interesting as well, Gerri, both candidates are going to be criticizing each other today. They will be touting their own plans, and they're going to be saying the other candidate's recipes for the economy are a recipe for disaster -- Gerri.

WILLIS: Well, Paul, lots of choices, and clearly very big differences between the two candidates.

Paul Steinhauser, thank you for that.


VELSHI: Well, the economy is issue #1. We know that. And some new poll numbers today show just what you think of our financial situation.

Bill Schneider joins us from Washington.

Bill, what are the new polls saying about Americans and recession?

WILLIAM SCHNEIDER, CNN SR. POLITICAL ANALYST: Well, the debate is certainly just about over. Three to one, Americans say the economy certainly is in a recession.

The current figure, 75 percent, say the economy is in recession. Just 25 percent say it is not in a recession.

And by the way, the easiest way to look at that 25 percent who don't believe there's a recession is politics. A majority of them are Republicans or Independents who lean to the Republican Party. They're the holdouts who refuse to believe the idea that the United States is in a recession. That number had been growing pretty rapidly over the last nine months, but it seems to have hit a ceiling. It's actually a few points lower than it was in April, when 79 percent said the economy was in a recession. It appears to have stabilized at around, as we see here, 75 percent.

But it's a very, very strong consensus. Whatever the economists say, the people believe recession is here.

VELSHI: Well, it does seem that at least in the beginning of this campaign, John McCain was sort of talking down his concern or his involvement with the economy. The fact that we are bringing -- we're coming down from that number of 79 percent to 75 percent, how does that fare for the candidates, and which one of them sort of has the edge in terms of the economy?

SCHNEIDER: Well, every poll shows that Barack Obama is the leading candidate on the economy simply because, among other things, he's a Democrat. And the Republicans are in charge and have been for the last eight years.

Americans have a view that the president is commander in chief of the economy. You know, I know, most economists know he's not. The president doesn't control the economy. Nobody controls the economy, but Americans always respond as if the president should do more if the economy is in trouble.

The president's a Republican. And that means when Americans are asked who do you think would do a better job handling the economy, they say Barack Obama, even if they're not entirely clear what all his economic ideas are.

VELSHI: Well, we're going to try and let people know exactly what those ideas are as we proceed through this campaign.

Bill Schneider, our senior political analyst, and part of the best political team on television.

Thank you, Bill.


WILLIS: Wow, I wish we could control the economy. That would be a great thing. But this show, it's all about you, so it's time for you to get involved and weigh in on our "Quick Vote."

Here is today's question. We want to know how much money you spend on gas every week -- more than 50 bucks, 100 bucks, more than $250, or are you leaving your car in the garage?

Log on to and cast your vote. We'll bring you the results a little later in the show -- Ali.

VELSHI: Thanks, Gerri.

New developments in the massive California wildfires. We are live on the fire line.

Plus, record gas prices are forcing folks out there to find all sorts of ways to cut back with hypermiling. Well, why it could be dangerous, even if it saves you some money.

And in volatile times, we'll show you how to have a smart 401(k) that will get you to retirement faster.

We are all over issue #1 right here on CNN.


WILLIS: What if you could boost your gas mileage significantly just by changing the way you drive? Well, you can. It's called hypermiling, but not everybody thinks it's such a good idea.

Stephanie Elam joins me now with today's "Energy Fix."

Hi there, Stephanie.


I mean, before we get to that, let's actually add in a little bit of good news for you today. Oil prices are falling sharply as the dollar strengthens, now down now about -- below $140 a barrel. So off about $6 almost today.

But with gas at a record $4.11 a gallon, no surprise people are looking at things like hypermiling. But from AAA to law enforcement, comes bold warnings that some of those hypermiling techniques, well, they're dangerous. Some are illegal, we know that. And simply just not worth it.

So, after all, if you take a look at it, you're saving a few pennies or even a few dollars, but it won't do you much good if you get an expensive ticket from the cops. Or worse, if you don't live to tell about it.

So let's just take a moment to think about this, starting off with some of the hypermiling techniques.

For one, rolling through stop signs, that's a big no-no. It's dangerous. It's also illegal, and you know all the rest, and other things that come along with that.

AAA also says you shouldn't say -- you shouldn't turn off your engine or shift into neutral to coast down hills. That's also very dangerous.

And you don't want to over-inflate your tires. And particularly unsafe, according to AAA, drafting behind large vehicles. It hurts visibility and risks your life, as well as the lives of drivers behind you.

And Gerri, we all know, if you can't see the mirror, the guy in the truck can't see you either.

WILLIS: Right. That's great advice.

OK. But Stephanie, you would not be here unless you had something for us. What is your energy fix?

ELAM: Well, the "Energy Fix" here, there are some aspects to hypermiling that are good, and they do save money. So there are true fixes here.

First, keep those tires properly inflated, avoiding accelerating and then breaking sharply back and forth. First of all, that'' a real drag on gas mileage. It doesn't help you out anyway.

The other one that people don't like to hear so much, slow down. Because if you're driving too fast, it can also affect your gas mileage there as well. So keep it close to 55 on the highway.

Instead of turning off your engine on the downhill, just take your foot off the accelerator. That works lovely as well.

And remove unnecessary weight. So clean out your trunk, get everything out of the clutters of your seats that you don't need. A good hypermiler doesn't carry anything extra in their cars.

Now, with all of that said, carmakers are also coming up with some solutions as well. Today there's a report Toyota will add solar panels to some of their Prius models.

And for anything else that you need to know related to this, you can always check out In fact, today there's a very cool story about eight new plug-in vehicles, something that could be a real energy fix for all of us -- Gerri.

WILLIS: Well, Stephanie, great information. We appreciate that. I'm just trying to imagine solar panels on a Prius. Very interesting stuff.

ELAM: More green for you.

WILLIS: Exactly.

Ali, over to you.

VELSHI: Thanks, Gerri.

Thousands of homes are still in jeopardy on the California coast. Wildfires resulting in the evacuation orders today for seven counties in and around Santa Barbara. There is some relief though by way of cooler temperatures. Firefighters are doing what they can to slow the burn.

Joining us now is CNN's Kara Finnstrom.

Kara, what's the situation? KARA FINNSTROM, CNN CORRESPONDENT: Well, Ali, if you look around me here, you can see that this wildfire has just torched everything in its path. And this has really been a crazy month for California wildfires, because they've been battling here more than 1,000 fires. So these firefighters, stretched extremely thin.

We want to give you an idea here of the cost involved in fighting these types of fires. California, as you know, a state that's already been hit unusually hard by the mortgage crisis. Now to fight these fires, for instance, here in the Goleta area, $7.6 million so far on the cost for just fighting the fire. And up at Big Sur, the other big fire burning right now, $22.8 million. These fires are both still burning, but as you mentioned, firefighters feel they are getting some control.

The governor came through this area over the weekend, and he did speak a little bit about the fact that the fire season has seemed to have extended. It used to be that we would only see these huge fires during the summer months. Now he says we're seeing them nearly year- round. So that's a huge stress on resources and a big concern for the state.

But the good news is we had a marine layer in here this morning. Temperatures have cooled off somewhat. They have been able to make some headway. They're hoping that will help them as the temperatures start to rise again later on this week, that that groundwork that they've laid early on over the weekend will help them maintain some control over these blazes.

VELSHI: Kara, the area around Santa Barbara County and those counties around there, they're big tourist destinations, even this time of year. What does it mean -- what do these fires mean for the businesses in the coastal communities that cater to those tourists and those that are around just for the locals?

FINNSTROM: Yes, no official estimates yet on what the impact has been on businesses, but that was the big Fourth of July weekend. This is when people come to the coast, take their vacations. And a lot of these areas, especially up in Big Sur, there just weren't tourists. There were firefighters.

So a lot of those businesses simply shut down. Those that did stay open didn't see as much -- as much business coming through. So a lot of those business owners have been saying this will be a big hit for them.

VELSHI: Kara Finnstrom, live for us in the fire-ravaged region.

Thanks very much, Kara.

WILLIS: Well, more cuts could be coming to a major U.S. automaker. We'll fill you in.

Plus, grab a pen and paper. We're going to show you how to have a smart 401(k) that will get you to retirement faster. And what you may want to do, everything in your power, to avoid divorce. As another celebrity divorce is about to explode, we're talking the economics of divorce.

You're watching ISSUE #1.


VELSHI: What do you think of GM without the Chevy? The only thing the auto giant is saying it may sell or scrap some brands as it struggles to counter plummeting sales here in the United States.

General Motors has already said it's considered putting a "for sale" sign on it's Hummer sport utility line. "The Wall Street Journal" today reports that GM may also get rid of some other brand. It has eight of them right now.

GM is reportedly considering other cost-cutting moves as well, including eliminating thousands more salaried jobs. GM's domestic sales are down more than 16 percent this year.

WILLIS: Well, it's more important than ever to secure your own retirement. Right now a lot of people are counting on their 401(k)s, but our next guest says you could be losing valuable dollars from your 401(k) and you may not even know it.

Daniel Solin is the author of "The Smartest 401(k) Book You'll Ever Read." And I've read it, and it is a smart book.

Interesting thesis though that you start with. Everybody likes to talk about how the 401(k) is the perfect investment tool. You say not true. You say fees are a very big problem.

DAN SOLIN, FINANCIAL COLUMNIST, HUFFINGTON POST: Fees are a terrible problem. Actually, the 401(k) is a perfect storm for disaster. It has a lot of very expensive underperforming funds.

It has a dizzying array of funds so that people are confused. They don't know which ones to pick.

But worst of all, the fees for 401(k) plans are way out of whack. They're terribly expensive. There's no need for them to be that expensive, and there are far less expensive options that are available and should be in 401(k) plans.

WILLIS: All right. You say that those fees can eat up 20 percent, 20 percent of your 401(k) assets. That's a scary thing.

All right. Let's talk about some of the other problems.

You say there are kickbacks out there, that the people who are providing the mutual funds are actually getting kickbacks from the fund managers. How is that possible, Dan?

SOLIN: Well, revenue sharing is technically legal, but it really should be illegal. The industry calls this revenue sharing and I call it kickbacks.

What happens is consultants to these plans are supposed to be picking the best funds for the hard-working Americans who are participants in these plans. Instead, these consultants get revenue- sharing payments from funds in exchange for offering them to plan participants. To me it just looks like an illegal bribe. It's not disclosed.

WILLIS: All right. Now we're going to come up with some solutions, how to navigate this very treacherous arena.

First off, you say pick index funds. What do you mean by that, and what are the three types you really want to zero in on?

SOLIN: Well, for 401(k) participants to squeeze the most they can out of their plan, they really have to first, I would say, look at -- to see whether they have target retirement funds. For most people, target retirement funds which have underlying funds in them, they're all pre-allocated, one fund fits all, because there are different dates for different retirement periods.

But if they don't have target retirement funds, then they should look for index funds, a broad domestic index fund, a broad international index fund, and a broad domestic bond fun. So look for the word "index." And if you don't have index funds in your plan, ask your plan administrator, "Why don't I have index funds?"

WILLIS: Some of those target funds that you mentioned before are a little controversial. Are they too expensive? Why are they getting such heated debate right now?

SOLIN: Well, target funds aren't right for everyone. There are two kinds of target funds.

Vanguard has great target funds because the underlying funds are all index funds in the Vanguard funds. So you have very low cost and expenses.

Other fund providers have actively managed funds in the target retirement funds. They can be two or three times more expensive, and as you pointed out, expenses really hurt returns.

WILLIS: Let's talk expense ratios for just a second, because people want to know, well, how do I measure these fees? How do I know if my fund is expensive?

You say it's the expense ratio.

SOLIN: Expense ratio is a fancy way to say, how much is the fund charging for the privilege of having me invest in that fund? If the expense ratio is more than a half a percent, in a trade known as 50 basis points, it's too expensive. There's no need for funds to have these high rates of expenses.

WILLIS: All right. So there you see it, 0.50 percent, half a percentage point, is what you're looking for. Let's talk a little bit about how much to save, because people are always asking that. What will I need in retirement? And you have some surprising statistics about how much money to put away. It's much more than people think.

SOLIN: It is, and it's actually very depressing, because the magic number, according to most financial planners, is you should be saving 15 percent of your income. That does count the employer match. So if the employer is matching 6 percent, then you should be saving 9 percent.

But here is the real problem. You have to do that for 40 years. You can't take out loans from that plan and deplete those assets.

And the real kicker is you have to achieve market returns. The reason I like target funds and index funds is investors in those funds will achieve market returns.

The average investor in 401(k) plans is only achieving one-third of market returns. That's why we have what I call a retirement tsunami coming in the next 20 or 30 years, when all the boomers are going to be retiring. They're not going to have enough assets.

WILLIS: Dan Solin, thanks for your help today. And we will solve this problem with your very good advice -- Ali.

VELSHI: Thanks, Gerri.

Food prices are rising. We know that. Find out what we might be able to learn from one South American country. Dr. Sanjay Gupta is on that case.

And yes, there is a silver lining to $4-a-gallon gas. We're going to check it out next.

You're watching ISSUE #1 right here on CNN.


WILLIS: The world food crisis continues to grow, with the poorest countries, of course, being hit hardest. Some people believe the potato may be the answer.

CNN's chief medical correspondent, Dr. Sanjay Gupta, has this story from Lima, Peru.


DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT (voice-over): It's 2:00 a.m. in Lima, Peru. Soldiers cloaked by darkness. They strategize, unload gear, a covert military operation with a surprising objective.

(on camera): What you're witnessing here is the Peruvian government's answer to the food crisis. It's literally a fly-by-night operation. This is done in the middle of the night to avoid chaos, to avoid rioting. They've actually enlisted the help of the army, who have secretly put together these bags of food and are now going to knock on doors, one by one, and distribute them.

Now keep in mind, people in this area, about half of them, live near the poverty line. So they can't afford the food in these bags. They're going to get some rice, they're going to get some beans, oil, six cans of anchovies. 10,000 of these bags will be distributed tonight.

(voice-over): But door to door handouts simply aren't enough in this mountainous country. In some region, over 40 percent of children under age five are malnourished.

(on camera): When you're trying to get a sense of the food crisis problem, Vilma is a good example. First of all, she takes about 500 calories a day. That's way less than the 1500 she should get at a minimum. She comes from some of the most remote areas of Peru. And get this, she's pregnant.

So, she's trying to carry a baby, 500 calories a day, and take care of her four children at home with very little food as well. Food prices have gone up all over the world really. Are there solutions literally right underneath our feet?

PAMELA ANDERSON, INTERNATIONAL POTATO CENTER: We think potato is an overlooked opportunity.

GUPTA: In fact, Peru has more than 5,000 different types, all different shapes, colors, names. They grow everywhere. It turns out they're very easy to grow. They require less water than the other staple foods like corn or rice.

Now, potatoes get a bad wrap in many parts of the world. In fact, they've been linked to the obesity epidemic. But a medium sized potato like this one over here, it's about 100 calories, great source of Vitamin C, fibers and minerals. And it doesn't have any cholesterol or fat.

ANDERSON: They need to start looking at potatoes, sweet potatoes as opportunities for securing their food.

GUPTA: Today, scientists are working to help farmers increase output and market the Peruvian spuds locally and abroad. Eight thousand years after they were first cultivated, it may be a new beginning for the Peruvian potato.

Dr. Sanjay Gupta, CNN, Lima, Peru.


VELSHI: All right. Coming up next, believe it or not, there's a silver lining to $4 a gallon for gas. We'll tell you what it is.

But first, let's check in with Kyra Phillips for the latest headlines.

Kyra, they tell me you're -- I saw you this morning. You're in the same building. Why are you not...

KYRA PHILLIPS, CNN ANCHOR: Wait a minute. Aren't you just right down there? Aren't you one floor below me right now?

VELSHI: I'm one floor above you right now.

PHILLIPS: OK. I knew it was one or the other.

Hello, Ali. Hey, hold tight, because I want to talk to you about Ringo Starr.

VELSHI: All right.

PHILLIPS: But first I want to talk about Democratic presidential candidate Barack Obama.

He's on an unscheduled trip to St. Louis. His plane is making an emergency landing actually after developing mechanical problems. It was a bit of a scare, and right now he's on his way to a hotel while the plane undergoes repairs.

Not sure if he's going to stick with that plane or not. He is expected to make comments about his experiences. So stick with us. We'll carry that live.

Also, returning home in southern California. Cooler temperatures helping firefighters gain ground on a fire in Santa Barbara County, but that break may not last very long, we're told. Temperatures are expected to creep back up during the week.

And in northern California, the cooler temperatures have both helped and hindered. The fog is slowing the firefighters' flights and efforts right now.

And let's check in with weather to see what's happening on that side of things. As a matter of fact, who -- it is -- OK, it's Chad.


PHILLIPS: I wasn't sure if it was you or Jacqui or Reynolds. All of you guys have been working around the clock.

MYERS: I'm like Santa Claus. You ask me for things and I give them to you.

San Jose all the way down to Big Sur. That's where the big fires are. But there are many more. I know we focus on where we have video, but you just look at the map. There are fires in almost all of the western states and we will try to get more. If you want to get your fire on TV, the best way to do it is That's the way to actually get it there.

Here is Bertha. A storm way out in the middle of the Atlantic. Should not make any approach to the U.S. at all. Should not make any approach. Should, though, get very close to Bermuda. We will watch this high pressure move away and then this will rotate right up and around the way they always do. We call it recurving. I don't know why we just don't call it curving. I don't know. Whatever. It just curves right back on up and into the middle of the north Atlantic.

The only problem is there is that little island nation of Bermuda. It's a category one hurricane by Saturday. We'll keep watching that for you -- Kyra.

PHILLIPS: Sounds good. See you in about half an hour, Chad.


PHILLIPS: Well, a string of blasts in Pakistan. At least one person has been killed. Thirty others have been wounded. The bombings happened in several neighborhoods in Karachi. So far no one has claimed responsibility for that.

And a former Beatle has a big birthday wish. What does he want? What else would he want, world peace. Ringo Star is going to join me live next hour to talk about how you can help him celebrate his birthday right here in the CNN "Newsroom."

Ali Velshi, are you a Beatles fan?

VELSHI: I totally am. You're talking to Ringo Star?

PHILLIPS: Yes. Anything you want me to ask him?

VELSHI: I'm going to work on some questions.

PHILLIPS: OK. Now you have to -- peace sign -- going to do the peace sign all day.

VELSHI: I'm going to walk down and give them to you in person.

I'll do that.

PHILLIPS: You would be a bad hippy, though. You don't have enough hair.

VELSHI: That's true. That's true. I don't know what they did with guys like me back then.

Kyra, we're going to look forward to that. I will see you in half an hour. I'm going to see you in person. I'm going to walk down.

PHILLIPS: All right. See you in a little bit. Sounds great. OK, Ali.

VELSHI: All right.

Well, listen, we've all been talking about $4 gas. It's got you down probably. It's got me down. Well, we're here to give you some reasons, though, why $4 gas might actually be a good thing. Amanda Ripley is with "TIME" and she joins me now.

Amanda, you really had to have dug deep to find good things about these high prices. In fact, one of the ones that you talk about is the fact that jobs that the U.S. has lost might start to come home. Draw this line for me. I don't understand that.

AMANDA RIPLEY, SENIOR WRITER, "TIME": Well, it is isolated to certain industries. But certain heavy industries are finding that it's actually cheaper to produce what they make in the states as opposed to shipping it around the world. So, for example, we talked to an upscale furniture company here in the D.C. area that's moved one of its chair productions back from Ho Chi Minh City to Hickory, North Carolina.

VELSHI: Steel is another good example. As oil prices go up, it may be more economical to build your steel in the Midwest than ship it around from China. One of the other things that we've heard about is that this might sort of stop urban sprawl.

RIPLEY: Right. We're already seeing that houses that are located near public transit closer to cities are not falling in value as fast as houses that are farther away and harder to get to with transit.

VELSHI: There will be more pressure, I guess, for people to live in the cities. This one is, I guess, one that we can all understand, and that is less pollution. But there's some real numbers behind this.

RIPLEY: Yes, it sounds very nice, but also very vague. And then we got a health economist to do an estimate for us. And he showed us that about 2,220 people have already been saved because they have not died from particle pollution over the past year. So it's surprising.

VELSHI: Very real stuff. All right. I think I've heard Gerri talk about this one. That if you are driving less, which a lot of people are, you should talk to your insurance company about switching to becoming a pleasure driver as opposed to somebody who pays rates because they drive all the time.

RIPLEY: Yes, it's not going to make up for what you're spending on gas, obviously, but if you have changed your driving habits -- so, for example, if you've stopped driving to work or school every day, then you're in a new classification. You should tell your insurer. You could save, on average, about $100 bucks a year on that.

VELSHI: This is great, Amanda, you're making us feel good about all these things that we've been feeling bad about for so long. What is this about there being more cops on the beat?

RIPLEY: Well, you know, cities are under the same crunch that the rest of us are under. They didn't budget for this and they need to balance their budgets, in most cases. So they're telling their police officers to get out of those patrol cars, you know, that they're always idling in and actually talk to people and go into businesses and turn the car off. VELSHI: We've seen more about police walking, on bicycles, on those segways, on golf carts. So, all right, Amanda, you're the life of the party here. We talk about gas prices and how it's a crunch on everyone and you're talking about how it could be good.

Amanda Ripley, thanks very much for that.

RIPLEY: Thank you.

WILLIS: The energy hunt is about to begin as CNN worldwide search for the future of your energy. We'll take you to the starting line.

And it's over for A-Rod. The wife of Yankees superstar files for divorce. We'll get into the economy of divorce next. ISSUE #1 rolls on next.


WILLIS: Most teenagers are busy hanging out with their friends, playing video games or shopping at the mall, but not one Georgia girl who's found a way to turn her family's fortune into a whole lot of good. CNN's Rusty Dornin explains.


RUSTY DORNIN, CNN CORRESPONDENT, (voice-over): When 15-year-old Hannah Salwen (ph) brought friends to her home in Atlanta, they'd often be stunned.

HANNAH SALWEN, HANNAH'S LUNCH BOX: They would walk into the house and say, wow, you live here?

DORNIN: For nine years the Salwen family lived in this 1912 mansion. Five bedrooms, eight fireplaces, a kitchen to die for, and even an elevator in her bedroom. But then one day the teen saw a Mercedes stopped on the street next to a homeless man.

H. SALWEN: And I said to my dad, well, if that guy didn't have such a nice car, then that guy over there could have a meal.

DORNIN: And so began the amazing tale of what the family calls Hannah's Lunch Box.

KEVIN SALWEN, HANNAH'S LUNCH BOX: We stopped and paused and thought about what are the things that could really make a difference in the world.

DORNIN: Her brother, Joseph, explains their dream on a YouTube video he made for a contest.

JOSEPH SALWEN, HANNAH'S LUNCH BOX: We dream of selling this house and moving into one half its size and donating one-half of the sales price to the needy people of Africa.

DORNIN: And move they did, into a house less than half the size of their 6,500 square foot mansion, which is still for sale. Next, they had to decide who would get half the proceeds from the house sale -- $800,000.

H. SALWEN: We kind of decided as a group that we were most interested in hunger.

DORNIN: After nearly a year of research, they decided to pick The Hunger Project. Charity officials say the money will be used to help these villagers in Ghana grow food, build schools and clinics, touching the lives of nearly 20,000 people. While this house was a dream of a lifetime for Joan Salwen.

Hard to give up?


DORNIN: It was her idea to sell.

JOAN SALWEN: It was just kind of a challenge. It was a test almost to see how committed are we? You know, how serious are these kids about what we should do. And they all nodded. And there we were.

DORNIN: It's a tough market to sell any house, let alone a nearly $1.8 million one. It's been on the market for more than a year.

UNIDENTIFIED MALE: Roughly six or seven hours a day in the villages.

H. SALWEN: That's it?

DORNIN: This week the Salwen's will leave for Ghana, a family of four ready to give away half their American dream to help transform the lives of tens of thousands of others.

Rusty Dornin, CNN, Atlanta.


VELSHI: All right. This next story has been making headlines in New York for the past week. Rumors of Alex Rodriguez and Madonna, A- Rod's wife and Lenny Kravitz. This morning the wife of the baseball star is filing for divorce. Now divorce can be messy on all fronts, especially when it comes to money. Greg Daugherty is with "Consumer Reports" in Yonkers, New York.

Hey, Greg. Welcome.

Let's talk a little about the economics of divorce. We think about divorce mainly because of the emotional aspects of it, because of what it does to your life. But what do our viewers need to know?

GREG DAUGHERTY, EXECUTIVE EDITOR, "CONSUMER REPORTS": Well, it can be as awful financially as it is emotionally. I mean the best thing, from a financial standpoint, is not to get divorced. But if you're going to anyhow, the best thing is to try to keep emotion out of it to the extent you can. That's easier said than done. obviously. But the more emotional it gets, you know, the more lawyers are brought into it and all that kind of stuff, the more the bill goes up.

VELSHI: I don't think anybody who goes to get divorced thinks it's going to be a drawn out, several-year episode. But for so many people, it turns out to be exactly that. Can you even give anybody any advice that's relatively general, because it's a very personal thing when it happens.

DAUGHERTY: Well, from a financial standpoint, the first thing we would suggest people do is get copies of financial statements so you know what you've got and what your spouse has. So bank statements, insurance, all the rest of it. Even pensions. You know, you may be years from collecting a pension, but that can figure into it also. So figure out -- so find out what kind of pension your spouse may be entitled to down the road.

VELSHI: That's right. And no matter how long it takes or what happens, there's going to have to be full disclosure of everybody's finances. So you might as well get out in front of that one if you see this coming.

DAUGHERTY: Right. Well, some people do try to hide it. But try to get copies of stuff. And if you really don't trust your spouse, you know, keep the copies some safe place where you can get at them.

VELSHI: What's sort of the best outcome when you're trying to work out finances? We already know that finances are a great stress on marriages and relationships. What's the best strategy that you've seen that ends up giving the best result for the parties involved in a divorce?

DAUGHERTY: Well, if you can manage to do it through mediation rather than, you know, a big blown-out courtroom battle, you can save about three-quarters of the cost of the divorce itself.

VELSHI: Is that easy to do? Is that something that's common? Because it definitely doesn't roll off the tongue of most people who are about to get a divorce. It's not their first thought.

DAUGHERTY: No. I think you're right. I mean, it's tough to keep your emotions in check. But there's a, you know, a big reward for you if you can, for both of you.

VELSHI: Let's talk a little about health care. A lot of couples have, you know, one of the bread winners has health care and the other spouse gets that benefit. What happens when you're going through a divorce with that?

DAUGHERTY: Well, legally, you can stay on your spouse's plan for 36 months. But you do have to pay the premiums yourself, and that can be pretty expensive. So if you're reasonably young and in reasonably good health, it might be cheaper just to go out and try to buy a health insurance policy separately. But do know that you're entitled to stay on your spouse's plan if you have to. VELSHI: All right. These are all good pieces of advice.

Greg, we appreciate them. Hopefully when people are facing divorce, most people aren't on the cover of most newspapers, they can take some of that into account and maybe make the ride a little bit easier.

Greg Daugherty, thanks very much.

DAUGHERTY: Thank you.

WILLIS: Coming up, the energy hunt is about to begin. Find out where CNN is beginning the search. Here's a hunt -- Ali's from Canada.

And we'll open the Help Desk. Answers to your e-mail questions. The address, We're all over ISSUE #1 right here on CNN.


VELSHI: All right, this just in to CNN. Senator Barack Obama has canceled his event in Charlotte, North Carolina. This after Obama's plane made what's being called a precautionary landing in St. Louis. The plane was on its way from Chicago to Charlotte when possible mechanical problems forced the landing. Although so far no problems have been confirmed. He had been slated to speak on the economy in Charlotte. Senator Obama's been taken to a St. Louis area hotel. Our press colleagues have been well taken care of we hear. Pizza has been delivered to the plane.

Well, tomorrow marks a very special day at CNN. We're starting our energy hunt. A worldwide search for the future of your energy. Well, to start the search, I left New York City and headed northwest.


VELSHI: All right. This is it. This is what we came here for. This is oil sand. It's sand that's encased in water and oil. In fact, this is about 10 percent real crude oil.

UNIDENTIFIED MALE: Taking advantage of this (INAUDIBLE).

UNIDENTIFIED MALE: We're going to lose certain things, you know. Our traditional lifestyle will erode.

UNIDENTIFIED MALE: I come here and every teacher that ever told me, you don't do well in school, you're never going to make it, I'm making triple what they make.


VELSHI: All right, we're getting about 2 million barrels a day of oil from the oil sands of northern Alberta. We'll be showing you what we learned up there all this week. You won't want to miss this. "Energy Hunt" begins tomorrow right here on CNN -- Gerri. WILLIS: Can't wait for that, Ali.

Well, it is time now, though, for the Help Desk. All the issues you e-mail us about, we try to help you get the answers. OK. Let's get right down to it.

Bob O'Brien is with Barron's, Stephanie Elam is a CNN business correspondent and Gary Schatsky is the president of

Welcome all. Good to see you.

All right. Let's go to that first e-mail. Jerry in Oklahoma asks -- no relation just because we have the same name -- "With rising emergency prices, rising food prices and the decreasing value of the dollar, do we need to be worried about massive inflation?"

Gary, I want to start with you. Inflation is a real problem for average families.

GARY SCHATSKY, PRESIDENT, OBJECTIVEADVICE.COM: You know, and clearly with a question like that, you must worry about inflation. We are -- most people expect it to continue. And that is, in fact, the definition, if you have rising prices across the board. You've got to be concerned about it when you're spending your money. You've got to be concerned about it when your investing your money. And for a lot of people, you're going to want to make sure your portfolio can protect you from inflation, will grow during that sort of an environment. And if you're living kind of tight, you might want to cut back on spending somewhat.

WILLIS: Well, Gary, you know, we talk about your portfolio. Bob, what can you do when you're investing for retirement? Maybe you're just trying to have some extra money set aside. What do you need to be aware of? What should you be doing to protect yourself?

BOB O'BRIEN, STOCKS EDITOR, BARRON'S: Well, one of the things that, you know, unfortunately, is probably helping to protect you is the very fact that there's been such wealth destruction in your portfolio. Chances are you're not sitting on the same asset base you were sitting on 12 months ago.

WILLIS: So wealth destruction means you lost some money.

O'BRIEN: You lost some money. And so that's not inflationary. So at least you're getting this ancillary benefit of seeing some of your portfolio come out. That's helping to keep kind of a lid on some of the inflationary pressures. The destruction that's happened to your housing value, that's also anti-inflationary.

So there are some side benefits to all of this, although it's very hard to see how sitting on a house that's worth less than it was a year ago is somehow or another a net positive. I think, overall, rising prices are probably a bigger threat to growth in the economy than they are to increasing inflation pressures right now. WILLIS: All right. Stephanie, the value of my house is down. The value of my portfolio is down. And yet when I go to the grocery store, prices are higher. What do you suggest people do? I mean what kinds of things, as a practical matter, should you be thinking about in an economy like this?

ELAM: Yes, it's a true fact. In fact, someone was just mentioning to me today that their grocery bill is $50 more now because also they're trying to buy healthier food at the same time that prices are going up. And so it's really affecting them. So now it's coming down to choices, actually paying attention to sales. Seeing what -- if you can get this kind of apple versus this kind of apple right now and really just doing a little bit more comparative shopping than you did before to help beat that down.

SCHATSKY: In any of these crises that we go through, there are opportunities. And if it's going to cause people to kind of take an inventory and decide what are needs and what are wants and you have to fulfill your needs, but you can cut back on your wants. I mean, for some people, if they start shopping for sales, the benefit won't only be today or tomorrow or this year, but it's going to be for the rest of their life if they get in the habit of making these sorts of decision.

WILLIS: It is about habits. I think that's absolutely right, Gary.

Let's take the next e-mail. It's from Bill in Oklahoma who asks, "Why is it necessary to have good credit?"

Stephanie, why does it matter?

ELAM: Well, first of all, would you go to a job interview without a resume? No, you wouldn't do that. And the same thing comes down to companies. They want to know who they're getting into business with. And the way they can do that is by taking a look at your credit report, seeing what kind of track record you have for paying your bills on time, how much credit you use. So it's all a way for business owners and big companies to have a better idea of who they're doing business with.

WILLIS: They want to know your score, even your insurance. Not to mention if you're borrowing money.

Anything else, Gary, with (ph) the credit score?

SCHATSKY: Yes, it actually impacts, in many cases, your car insurance rates, and in many other facets of your world if you have a good credit score. Now it doesn't mean you should be borrowing for the sake of borrowing, but you've got to go through all the steps to make sure your credit is good.

WILLIS: All right. Let's get Don's question in from Missouri. He asks, "my savings are currently in money markets and CDs. Where can I invest some of the money that will get a return that will keep up with inflation and be protected in the future?" Sounds like a high hurdle, Bob.

O'BRIEN: Yes, it does sound like a high hurdle. And actually he's probably not in a bad position, at least over the short term. I think this is a good environment in which to start amassing some cash, putting some powder together so he can take advantage of opportunities that are going to come up in the market down the road. I mean, if I were absolutely gun to my head, I've got to start taking some of the money out, I'd think about things like international bond funds rather than just making some straight equity plays right now. I think there's going to be better opportunities in the U.S. equity markets a little down the road. So having some cash right now probably isn't the worst idea.


SCHATSKY: Probably the key thing is to not have all your money in one place. It sounds like he has literally has everything in cash and CDs. So kind of tipping -- putting a little bit of your assets to work while, as Bob mentions, the opportunities will be better later probably makes some sense.

WILLIS: You'd be losing money in money market funds right now. The returns are so low.

Doyle asks, "is this a good time to buy bank shares?"

Bob, I'm going to turn to you again because I know you love stocks, don't you?

O'BRIEN: I do. I do love stocks, although not as much today as I did a year ago. I think a lot of people feel that way.

WILLIS: OK. Fair enough.

O'BRIEN: Bank stocks at this juncture, I suspect there's a couple of problems with them. Look, historically, bank stocks have been good investments when their book value has actually come -- or when they're trading at below their book value. In at least 20 banks out there that I'm aware of, that's the circumstance. The difficulty is identifying exactly which 20 those are and not picking the other 100 or so that aren't trading at below book values.

There's still a lot of exposure to the real estate markets. These banks have that. And there's still a lot of exposure to credit quality out there. Plus, some of these names aren't at trough valuation. This is another one I'd wait a couple months.

WILLIS: You know, it's a tough environment out there, but, you know, you guys provide the solutions and we really appreciate that.

Gary Schatsky, Stephanie Elam and Bob O'Brien, thank you for that.

Ali, over to you.

VELSHI: Thanks, Gerri.

And while we've watched gas prices go up, we've watched food prices go up, but now it's beer. Say it ain't so.

And be sure to vote in our Quick Vote. Log on to right now. You are watching ISSUE #1. Chime in and we'll be back with that in a minute.


VELSHI: What is your weekly gas budget? That's today's Quick Vote question. And here's how you voted. Forty-eight percent of you say that you spend more than $50 on gas every week. Thirty-five percent of you spend more than $100. Five percent of you spend more than $250. And 12 percent of you say you leave your car in your garage -- Gerri.

WILLIS: Well, Ali, from the sky high price of gas, to the sky high price of food, our focus today, barley malt hops and yeast. No, that's right, rising food prices now taking a toll on the price of beer.

Kelsey Starks of our Louisville, Kentucky, affiliate, WHAS, has the story.


DINA STRECKFUS, WINEMAKERS AND BEERMAKERS SUPPLY: Made me nervous, you know. When this is happened, I say, my goodness, this business -- I need hops in this business. This is my business.

KELSEY STARKS, WHAS CORRESPONDENT, (voice-over): Dina Streckfus has owned the Winemakers and Beermakers Supply shop for 37 years. She says she has never seen her drawers of hops this empty.

STRECKFUS: I cannot -- try not to believe. You know what I mean? You just kind of think that it's not going to happen. But it did.

STARKS: In the last year alone, she's gone from having 40 to 50 types of hops in her store, to only four or five now. And her supplier says it's only going to get worse next year. Now what used to sell for $1.29 an ounce has tripled in cost.

JESSE WILLIAMS, NEW ALBANIAN BREWING COMPANY: Our recipes definitely had to change some.

STARKS: Jesse Williams, in the New Albanian Brewing Company in New Albany is making some changes to keep up with those rising costs.

WILLIAMS: It affects tiny breweries a little bit more than bigger breweries. Bigger breweries can afford to go with longer hop contracts. If you don't contract all your hops, which we don't, it's been very difficult to find what you need.

STARKS: And the trickle-down effect is hitting your wallet. He says in two years the cost of a pint has gone up 50 cents.

WILLIAMS: It's just about a cost kind of margin there. We have to charge a little bit more because we have to pay so much more to make it.

STARKS: To make it in the business, brewers are fudging their recipes, trying some new ways of brewing. And for folks like Dina Streckfus, she's experimenting, too, looking for some new recipes to offer her customers. But there's no replacement for hops. Just different ways of using the hops that are available until the shortage ends.

Kelsey Starks, WHAS, 11 News.


WILLIS: Love that story.

VELSHI: The interesting thing about it, though, is that even if you want to do it yourself, for instance, you know, people who make their own beer, the raw material is still the thing that's expensive. That's what you're going to have to pay for. So I don't know if you get much advantage out of that.

WILLIS: I'm tell you, this is a serious crimp on the CNN political economy budget.

VELSHI: I know. We're going to have to do something about that.


VELSHI: Hey, listen, oil prices are down, by the way. A little bit of good news for you. Oil prices down almost $5 this morning. Down to a bargain of about $140.

WILLIS: Still tough. Still tough to swallow.


WILLIS: All right. Well, the economy is issue #1 and we here at CNN are committed to covering it for you. ISSUE #1 will be back here tomorrow, same time, 12:00 p.m. Eastern, right here on CNN.

VELSHI: Time now to get you up to speed on other stories making headlines. Let's send it down to Kyra Phillips.

"CNN NEWSROOM" starts right now.