CNN IN THE MONEY
Name, Money Help Schwarzenegger Win Election; Violence In Iraq Brings Trouble To Women; New Proposed Program Will Give Jobs To Prisoners Instead Of Overseas Workers
Aired October 12, 2003 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: From New York City, America's financial capital, this is IN THE MONEY.
JACK CAFFERTY, HOST: Welcome to the program. I'm Jack Cafferty. Coming up today's edition of IN THE MONEY: The Muscles and the Bucks: A famous name, a fat bank account, all helping Arnold Schwarzenegger become the new governor of the state of California. We're going to look at the political power of self-made millionaires.
Plus, Under Threat: The changes in Iraq have brought violence and oppression for many of that country's women, as opposed to the tea party they lived under when Saddam Hussein and his two sons ran that country. Find out why women are in trouble in Iraq and what can be done to help them.
Plus, forget about stamping license plates, a former U.S. attorney general wants to put prisoners to work in the private sector to stop low grade jobs from going overseas. We'll talk with Ed Meese a bit later.
Joining me as always on the broadcast, today CNN correspondent, Susan Lisovicz and "Fortune" magazine editor-at-large, Andy Serwer.
Stock market hitting new highs, the bull market is a year off the old lows in October and the outlook for earning season very, very positive.
SUSAN LISOVICZ CNN CORRESPONDENT: Well, and it really hinges on what will happen over the next few days -- I should say, over the next two weeks, when you get the bulk of the S&P 500 companies reporting. But, GE reported on Friday and its guidance fourth quarter was not so good, that stock was under pressure, But the expectations for the quarter just ended are very good, in fact, Chuck Hill, someone you've spoken to a lot,
LISOVICZ: Thompson first call says he thinks they could be as high as 20 percent year over year, which would be the best since the second quarter of 2000, at the height of the market.
ANDY SERWER, "FORTUNE" MAGAZINE: Yeah. A lot of stocks at 52- week highs. I always love that phrase. We are up the NASDAQ, 40 percent over the past 12 months. So, I want to issue a warning here.
SERWER: Be a little bit afraid. Not a huge a lot, be a little bit afraid. I was talking to a hedge fund manager the other day, he was calling this a "junk equity market" because was saying the bad stocks and the bad companies are even going up more than the blue chips. You got to wonder about that GE thing, I mean, they're such a bellwether, such a harbinger, perhaps of maybe a little bit more weakness than anticipated.
CAFFERTY: And, there've been some people saying that the fourth quarter might not be able to perform as well as the third quarter.
SERWER: I mean gone so far.
CAFFERTY: Yeah. And, we have the jobs situation still very much up in the air. If the economy starts producing jobs, then everything, I guess -- you know, will begin to get better. But, until we see stronger evidence than we have, room to be -- what'd you say? A little afraid.
SERWER: Little afraid.
CAFFERTY: Be a little afraid.
SERWER: Show me the evidence.
CAFFERTY: I'm a little afraid.
CAFFERTY: California, this week, voted in Arnold Schwarzenegger. He's unstoppable, and he was improbable going into this thing. Schwarzenegger takes the job after voters recalled Gray Davis proof that an election isn't over until it's over, and even then it's not necessarily over, if you know what I mean. I don't know what I mean.
CAFFERTY: So now, Schwarzenegger is running a state that happens to have the world's fifth largest economy -- the world's fifth largest economy, California. And it's an economy that's in a mess, and a shambles. For a look at what's next for the governor-elect, we're joined now, from Los Angeles by Charles Feldman.
Charles, thanks for being with us. A question of "be careful what you ask for, you're liable to get it," now he's got the job, now what does he do?
CHARLES FELDMAN, CNN CORRESPONDENT: Well, welcome to "Terminator 4," Arnold Schwarzenegger learns how to govern the state of California, and he's in for quite a treat.
A couple of things are going to happen right away. He promised that before he announces what cuts he's going to make, because he said, after all, "I'm not going to raise taxes," that he was going to have an audit of the books. So, he imported somebody from the state of Florida and she is going to do this audit and help him decide, he says, what to cut -- what fat to cut from the budget in California. The next big item before him is the so-called dreaded car tax, now this is the thing that got people in this state all upset about governor Gray Davis. Arnold Schwarzenegger has said that the first thing he's going to do, when he becomes governor, is get rid of that tax. Well, a couple of problems with that, Jack. It's not at all clear here, whether the governor alone has the power to do that. Some people think it's going to require the legislature to do that. Of course, the legislature is controlled by democrats -- that's the first problem.
Second problem, even if he manages to repeal it, it's projected that that alone would add $4 billion -- four billion with a "B," to the projected deficit for next year in California, which already is projected to be something in the order of $8 billion. So, that would make it balloon to 12 billion bucks. In addition to that, most of the car tax goes to local cities in the state of California to pay for things like fire and police or to help pay for them. So, if you eliminate that $4 billion, what will those cities do next year when they don't have enough money to pay for the things they normally pay for? So, that's another thing on the agenda.
And then, he also says that he's going to get rid of the bill that governor Davis signed at the end of the election, which would allow illegal immigrants to drive cars, that was a no-no with Arnold Schwarzenegger, he says he's going to get rid of that, too -- Jack.
CAFFERTY: Charles, thank you, I appreciate it.
Charles Feldman reporting on the Schwarzenegger victory from Los Angeles. One got the impression watching that election unfold, that the reason Arnold Schwarzenegger is the governor is not because voters had any particular confidence he had a -- an intense and deeply focused grasp of the solution to the state's problems they just hated Gray Davis' guts and wanted him out. We'll have to see what happens, now.
In a field of candidates that wasn't exactly average, Schwarzenegger even less average than the others, of course there are the muscles and the string of world-famous performances as a monosyllabic robot and the allegations that he behaved badly toward women, allegations that he didn't exactly deny. Things that he said he would address after the election, and then one some reporter asked him the day after the election about these allegations with women, he said, "well, that's yesterday's news." That's on the side, though.
One of the main reasons he's governor is he's got very deep pockets and they're full of money -- big bank balance. For a look at a growing role of self-made millionaires and the role they're playing in American political life, we're joined now, by Paul Ryan who's with the Center for Governmental Studies out in Los Angeles.
Paul, nice to have you with us. Is there anything particularly troubling about self-made millionaires seeking and gaining high elective office? Mike Bloomberg's the mayor of New York City, Ross Perot made a run for the White House a few years back; Jon Corzine, formerly of the Smith Barney, is now a United States senator from the state of New Jersey. I mean, there's a long history of this kind of thing in our country.
PAUL RYAN, CENTER FOR GOVERNMENTAL STUDIES: Millionaire candidates enjoy a significant advantage over the average citizen who desires to run for public office and hopes to win public office. It's very difficult if you don't have a lot of money to compete against a candidate who has unlimited funds to bankroll their own campaign. And, we've seen a trend in recent years for candidates loaning their candidacies, loaning their campaigns funds, which they hope to pay back after the election. This raises particular problems and particular concerns.
SERWER: Paul, let me ask you a question, this is just sort of following up what Jack was saying, though. Has anyone done empirical studies on how rich guys do versus people who aren't rich? For instance, Mike Bloomberg, how did he do versus say a David Dinkins? I mean, you know, it would be hard to quantify this, but what's wrong with it?
RYAN: It's incredibly difficult to quantity and in fact, there are plenty of examples of candidates bankrolling their own campaigns and not winning the election. But, nonetheless, it's problematic in that it becomes difficult for candidates to compete oftentimes without the -- without the assistance of public campaign financing programs, for example, that are available in some jurisdictions, like New York City, the city of Los Angeles, and a couple of states around the nation, like Arizona and the state of Maine.
LISOVICZ: Well Paul, I mean, let's face it, Arnold Schwarzenegger was in a league all by himself. There's not too many candidates who are invited on the Jay Leno show. Jay didn't even know he was going to announce and then of course, he was invited back right away. So, you get a lot of free publicity that, of course, candidates crave. What would you propose, then? If we have so many millionaires running for office, how do you level the playing field?
RYAN: You do it by providing public campaign financing to candidates who are able to demonstrate broad base public support, to prove they would be viable candidates if they were to receive public assistance. Such programs in Arizona, and Maine, and Los Angeles, and New York City give candidates who lack personal wealth, or access to wealthy contributors, the ability to wage competitive campaigns. This is one solution that the Center for Governmental Studies has long promoted with a fairly high degree of success, the center has written public financing laws for a number of jurisdictions around the country.
CAFFERTY: Should there be formal steps taken in your opinion to limit the ability of people of high net worth to seek elective office if they choose to finance the campaigns out of their own pocket? I mean is there anything empirically wrong with that, in your opinion?
RYAN: Well, the United States Supreme Court has ruled that it would be a violation of the first amendment of the Constitution to limit the amount of money an individual could spend out of their own personal wealth to run for office...
RYAN: So, that's not an option as far as campaign finance reform goes. But Schwarzenegger's campaign presents a particular problem, because he loaned his campaign $4.5 million. He will now likely begin fundraising after the election to repay this debt for which he's personally liable. He used a loophole in California's campaign finance laws to skirt California's $100,000 limit on the amount of money candidates can loan to their own campaign. He did so by obtaining a loan in the amount of 400 -- or $4.5 million from a commercial lending substitution, and under California law, so long as a candidate obtains this loan from a commercial institution on terms that are available to the members of the public, and the candidate's personally liable, it's perfectly legal under California law.
SERWER: But Paul, aren't you kind of...
SERWER: Excuse me. Aren't you kind of spelling out the problems here that the laws are so crazy, they change all the time, they're complicated, I mean -- let me introduce a radical thought, here. What if we got rid of all campaign finance laws? What would happen?
RYAN: I think that we would see an explosion of the pay-to-pay -- play -- pay-to-play politics that Governor Davis, former Governor Davis, was criticized so thoroughly for engaging in. California has extremely high contribution limits -- $20,000 -- or actually with a cost of living adjustment, $21,200 limits on campaign contributions. Some states around the nation have no limits on contributions whatsoever and the Supreme Court has announced and recognized in the 1970s, in the Buckley v. Vallejo decision, that large campaign contributions or unlimited campaign financing poses a significant threat of corruption or at the very least creates an appearance of corruption that undermines the public's confidence in their own elected officials.
CAFFERTY: All right, Paul, we're going to have to leave it there.
RYAN: That's the risk.
CAFFERTY: Hm? That's the risk?
We're going to have to leave it there, appreciate you joining us.
CAFFERTY: Paul Ryan is the -- with the Center for Government Studies, joining us to talk about campaign financing on the part of people of independent means. It's a message, I think, that resonates with voters. And Arnie said it early in the campaign, he said, "if I'm elected, I don't owe anybody any favors" that means the unions, the clubhouse gangs, the special interest groups." And, I think voters -- you know, are so turned off or skeptical about the debts that are incurred in order to get elected by politicians. That somebody who says -- elect me and I don't owe anybody anything, that's got a positive ring to it.
SERWER: I just thought he said, "I'll be back."
CAFFERTY: Yeah. He said it shorter than I did.
Coming up, the liberation of Iraq, it's become a contradiction in terms for women in that country. We'll explain why.
And, we're going to talk to a former U.S. attorney general in the Reagan administration who thinks that prison inmates could be the answer to some of our country's labor problems.
Plus, the baseball playoffs bringing in great ratings for a change and there's a reason. It has to do with the fact that there's terrific stories out there, like the Cubs and Red Sox. We'll talk about that and some other burning sports issues with Roy Johnson of "Sports Illustrated."
LISOVICZ: When U.S. forces liberated Afghanistan, many women threw off their burkas. But in Baghdad most Iraqi women are now willingly hiding their faces behind veils, it's a desperate attempt to protect themselves from an epidemic of kidnappings and rapes. Crimes carried out by the felons Saddam Hussein set free on the eve of the U.S. attack.
Joining us to talk more about this is journalist Lauren Sandler. She spent time in Baghdad reporting on Iraqi women for the Carr Foundation for human rights at Harvard University.
LAUREN SANDLER, JOURNALIST: Hi.
LISOVICZ: Such a really, depressing and distressing scenario that's painted right now. On the one hand, Iraqi women have freedom of expression, but on the other hand, now there's a wave of crime that they really didn't worry about so much during a dictatorship.
SANDLER: Well, they were different sorts of crimes before. There was still an epidemic of rape, but it tend to be led by the regime before. In fact, with in the regime, there was a position entitled "violator of women," when men would be sent by the regime to rape the wives of men who would go abroad in a threat and Uday, of course, Saddam's son, was a known rapist and would send people out to kidnap women at universities and high schools. But this is a very different situation.
LISOVICZ: OK. So, we fast forward to post-war Iraq. The U.S., obviously, is there in force. Is there anything the U.S. Army has done or can do to create a more stable situation, a safer situation for Iraqi women?
SANDLER: Well, the first thing the coalition needs to do is admit that there's a problem. When you walk through the halls of the palace and you start talking to people there, they seem to not think that this is a crucial issue. And yet when you talk to women throughout Iraq, this is the central issue, the thing that they're most concerned about right now is their security. And it's not -- you know, for no reason at all. Women know other women all over Baghdad and, indeed, throughout the country who have been kidnapped, who have been raped, and who are living under incredible fear, right now. And so you have a culture which is really driven by rumors that spread quite quickly, but they're rumors that are based in reality, and it's a real problem.
SERWER: Lauren, can you talk a little bit about the role of women in Iraq and how it differs, maybe from other Arab nations or other Islamic societies?
SANDLER: Well, the trajectory of women in Iraq is very interesting. If you go back to, say, the '50s '60s, even early '70s, you have women who were heading up ministries, an enormous amount of women with doctorates, women who were actually working for equal pay as men. There's a lot that American women could have learned from Iraqi women at the time. But, over the years of dictatorship, through many wars, through sanctions, through all the mourning and poverty that ensued after Saddam's takeover, things changed very much. And these changes were actually legally codified. Saddam placed several laws into action that would -- you know, for example, permit honor killings. If a husband or uncle or brother suspected a woman in the family of sexual intercourse outside marriage, he could kill her. And a rapist would not be considered a rapist if they married their victim. So, these are things that grew out of a much more progressive society, and really endangered women. And now that we have -- you know, life after the general amnesty of prisoners and a life without a really effective police force, things are really bad.
CAFFERTY: Those things though, arguably are temporary conditions. There are police forces being trained and put on the job almost daily. I'm interested in how deeply culturally ingrained these attitudes are. You've alluded to a time in the not so distant past when women enjoyed an equal status with men and were entitled to the same privileges, if you will, of men. It hasn't been that many years ago and it would seem to me that this Saddam Hussein regime would have to be seen as a bit of an anomaly, even by the people in Iraq. No?
SANDLER: Well, there is that. I mean, unfortunately, there are deep tribal roots for some of these issues, and -- you know, fundamentalist Islam is not exactly pro-woman. But unfortunately, even for the best case scenario that you just identified, which is a functioning police force, what is established right now is not a police force which is effectively dealing with women. You have police sergeants who refuse to admit this is a problem, who, when you go to talk to them say, we don't want your Western questions or your Western ways. You know, even if a woman is raped and is sent to talk to a social worker at a court, she can't talk about rape. Social workers talk about keeping marriages together, rape is a completely taboo subject, there. So, existing structures and structures that the coalition is trying to build up, at the moment, are not sensitively and effectively dealing with the issue. LISOVICZ: Lauren, is one of the problems the fact that the interim police force and that the U.S. government think that a much higher priority is just establishing some sort of stability? Restoring phone service and electricity, running water -- you know, is that part of the problem? And what kind of role do you see women in post-war Iraq? How important are they?
SANDLER: Well, I think it's really difficult to establish a hierarchy of needs that does not include security for a majority of its population. That's just as important, of course, as phone service or running water. And, I think that most people there will tell you that. If you're going to make stability, you need to have security. And security can't simply be for the men of the country and if you're going to have women involved in making post-war Iraq and -- you know, helping to spread democracy, and taking some of the human rights values throughout the country, they need to be safe enough to walk down the street and feel like they can actively engage in public discourse, in decision-making -- you know, even to go out and buy bread without fearing for their lives.
SERWER: Lauren, are you satisfied with the efforts the United States is making in terms of protecting women in Iraq?
SANDLER: I'm not. I feel like it hasn't really been accepted as a key issue and I feel like -- you know, it's sort of treated as an extracurricular problem. And it isn't. This is absolutely central to what's happening, now. But, I do think that it's a complicated issue for the United States. It's not like Bremer can just write a policy paper, stamp it, hand it out, and say -- no longer should you rape women, no longer should you have the sort of cultural baggage of the past three decades. It's a situation that can only be solved if Americans are truly partnering with Iraqis in open dialogue about these issues.
SERWER: All right, Lauren, thank you for that singular look into the situation in Iraq. Lauren Sandler, a journalist with the Carr Foundation at the Kennedy school at Harvard University.
Just a head, here's one way to keep jobs from being exported -- let prison convicts do the work. We'll talk about that idea with former attorney general Ed Meese.
Plus, now that Jordan's retired and Kobe's image is taking a hit the NBA may be banking on young LeBron James to help the league rebound.
And, find out why Yahoo! shareholders have good reason to let out a rebel yell this year.
LISOVICZ: Let's look at the week's top stories in our "Money Minute." A drop in the number of people filing for unemployment benefits helped boost stocks. The number of Americans filing for new claims fell to its lowest level since February, the news easing some fears of jobless recovery.
Gas prices continue their slow, but steady decline. The Energy Department says the average price of a gallon of gas is now $1.57. But, the six-week slide may end soon as oil workers in Nigeria are threatening to strike that could reduce supplies for OPEC.
And, Martha Stewart's lawyers want the securities fraud and obstruction of justice charges against her dismissed. There's no ruling yet on that motion, but her legal team did win the right to question several of the prosecution's witnesses in the coming weeks. Stewart's trial in connection with the ImClone scandal scheduled to begin in January.
SERWER: All right, Susan, thank you. Our stock of the week is another one of those internet and tech sector bellwethers, Yahoo! Yahoo! came out with strong quarterly earnings Wednesday night, beating estimates and doubling its numbers from the same period last year. And just look at that stock chart. Wow! Over the past year, Yahoo! is up a whopping 382 percent. It could go all the way.
CAFFERTY: Oh no!
SERWER: I hate to get that excited about it. No, this stock -- this is just amazing, though. This stock was $9 last year at this time, it's now in the 40s. And, you know, people are talking about irrational exuberance, again. I mean, what do you think? Is this a done?
LISOVICZ: OK, well there's this motto in stocks -- "buy low sell high." This is a stock; its P/E Ratio, price to earnings ration, is 77. Right? For the average S&P 500, it's more like 24. OK? So, it's not only the price of the stock that you look at, it's the P/E Ratio.
LISOVICZ: This stock is high, but yet some big brokerage houses are upgrading the stock saying it has room to grow.
CAFFERTY: There has to be something about Yahoo!, though that's attracting the attention of investors over other internet stocks, 18 months, two years ago, you could -- there wasn't an internet stock anyplace that anybody would buy. What is it about a Yahoo! or an eBay, about their business model perhaps, that suggests to investors they're different from the rest?
SERWER: Well, we're really seeing -- just like you're saying, there's about three internet companies that matter: eBay, Amazon, and Yahoo!
LISOVICZ: That survive.
SERWER: I have Yahoo! Yahoo! is a fantastic company, let's face it. I use it all day. I mean, it's really amazing. Terry Semel, a respected media executive, has come in, and really running this thing. But, you're right, Susan, this company made $65 million, but it's worth $27 billion. I mean, something's got to give here. I'll tell you what, I think it was too cheap back then, I think it's too expensive right now. The answer lies somewhere in the middle.
CAFFERTY: But, you buy based on potential future earnings.
CAFFERTY: You don't buy based on what they did yesterday. What are they going to do tomorrow? Right?
SERWER: They're growing like crazy. They're growing like a weed.
LISOVICZ: It's a rich valuation according to the P/E Ratio.
SERWER: But, Jack can afford it. Jack can afford it.
CAFFERTY: No, no, no. No stock tips from this old cowboy.
Coming up, next on IN THE MONEY, as we continue, looking up -- locking up jobs. We're going to look up locking them up so they don't go overseas. Former U.S. attorney general, Ed Meese wants to farm out some of the grunt work to America's prisoners. He says there some solid economic thinking behind the idea. We'll take a look at the pros and cons.
And with hoops prodigy, LeBron James hitting the big time, find out whether he's got the chops to win back NBA fans who may go AWOL, especially in light of the troubles Kobe Bryant could cause, not only for himself, but the league.
Stay with us.
CAFFERTY: Tough, boring, repetitive jobs tend to go where the work force is hungry and the wages are low, places like China and India. But former U.S. attorney general Ed Meese, who served in the Reagan administration says there is a way for U.S. companies to keep those jobs at home.
He wants to tap the country's more than 2 million prisoners as an ultra cheap labor source. These days Ed Meese is a distinguished fellow in public policy with the Heritage Foundation, which is a conservative think tank. We are delighted to have him join us from Washington, D.C. Mr. Meese, welcome to the program.
ED MEESE, HERITAGE FOUNDATION: Good to be with you.
CAFFERTY: Besides the fact that we have what, seven, eight, nine million people trying to find a job in this country, how would this idea of yours work to benefit perhaps, I guess, the corporations, but certainly -- you've got people looking for work that can't find it. Do we need to put more people into the labor force that looking for work, or am I missing something? MEESE: The idea of having private sector jobs performed by prison inmates is a way of keeping jobs from going overseas. I don't think any of us want to take jobs away from people looking for them in the free population, but it's a fact of life that many jobs are going overseas, and if we can keep them here, we not only benefit the prisons in the sense of having prisoners being given useful work, there are a lot of advantages of that, which we can go into in a minute, but the important thing is, this created jobs in the private sector as well.
When prisons are used as the source of labor for private sector jobs, then the vendors, the support people and that sort of thing, come from the population around those prisons. So actually, it helps alleviate not only the costs and the jobs would go overseas, but also it helps alleviate unemployment in this country.
LISOVICZ: And less government's spending, right? Because what you're proposing, the plan you support, prisoners actually pay their room and board, but not their health care costs. That would be continued to be financed by the government?
MEESE: Well, it could -- they could actually pay a lot of things. Pay their room and board. They could pay restitution to the victims. They could pay child support. And there's no particular reason why they shouldn't pay for health care as well.
In other words, what's you're doing is, you're changing people from being essentially idle in prison, often thinking up mischief or building their muscles so they can be stronger and more dangerous on the outside, and putting them into constructive work that has three benefits.
Number one, the cost savings you mentioned. Secondly, the ability to manage prisons better and have less violence within the walls. And, thirdly, it's a tremendous aid for re-entry so that people will not go back and become recidivists and commit more crimes.
SERWER: Ed, though, isn't there a stigma attached to companies doing this? My understanding is, Dell was doing this for a while and reporters like me started nosing around, reporting it, and they had to pull back from that endeavor, isn't that correct? How do you get around that stigma?
MEESE: I don't think there's a stigma if the quality of the work is good. I don't know the particular situation with Dell, but I do know that many companies, many private sector companies are having very good results and they're not bothered by the fact that this has become public knowledge at all.
I think it's a matter of the quality of the work, and also particularly this idea that I mentioned earlier. That they're taking jobs that would otherwise go outside the country.
CAFFERTY: But in terms of, for example, a lot of the jobs go to a place like India. A lot of those jobs are computer and information technology jobs. My guess is, that Sing-Sing isn't full of a lot of guy whose can run computer programs?
MEESE: Sing-Sing may not be, but Allenwood certainly is and more so today. But aside from that, I think you're looking at certain selective jobs and the prisons would have to compete with overseas job placements and I think that would be a good thing. So, the system would work itself out.
CAFFERTY All right, we're going to have to leave it there, Mr. Meese. Appreciate you joining us on the program. Nice to see you again
MEESE: Thank you.
CAFFERTY: Ed Meese, former Reagan attorney general and a distinguished fellow in public policy at the Heritage Foundation. Joining us from Washington, D.C.
Still ahead on IN THE MONEY -- hey, maybe Sing-Sing has a lot of those guys. Who knows.
Baseball's back in the game. Raising the pulse, the Cubs and Red Sox in the playoffs. Who'd have thunk it? Whether the major leagues are on track for major attention.
Also coming up, dreaming of a green Christmas. Our Web site guy and an old, old buddy of mine, Allen Wastler of money.com will join us. Tell us how the season is shaping up for the stores and for the shoppers when IN THE MONEY continues.
SERWER: The preliminary hearing in the Kobe Bryant case has provided graphic details of the prosecution's case against the basketball star. No matter how the case ends, the allegations have tarnished the valuable image of the NBA brightest young star. And while the league deals with unwanted publicity, Major League Baseball is getting much needed attention with some exciting playoff matchups.
Joining us to talk about these stories and their financial implications is Roy Johnson, assistant managing editor for "Sports Illustrated" magazine. Welcome, Roy.
ROY JOHNSON, "SPORTS ILLUSTRATED": Thank you for having me.
SERWER: So where do we start? With Kobe? With baseball? Let's talk about Kobe first off and his...
JOHNSON: Let's get that out of the way. It's really a tragic thing for a lot of parties. Financially for the NBA, you know, some people have said, how bad is this? Well, certainly not good. We don't know yet exactly how bad it is. It will depend on how long the story runs. Certainly it will depend on what's in terms of the resolution, guilt or innocence. No matter what, he is tainted for a long time. We will never look at Kobe Bryant the same way. Those who are his staunchest fans may be able to get past this, if he is found not guilty, in whatever proceedings occur, but it's going to be difficult. I think we've reached a point where, for David Stern to see this every night on television, it has to be a bad way for him to end his day.
CAFFERTY: Well, indications are, too, that the criminal trial, assuming there is one, won't happen until sometime next year. Which mean we go through an entire season if he decides to go ahead play where this is going to be on the minds of every viewer at every arena he appears at around the country for a period of months.
JOHNSON: Absolutely. I suggested that if -- perhaps he should sit out. I mean, let's take -- step back from the trial. He's got to deal with family issues.
JOHNSON: Personal issues. This is really the only time he's going to get to deal with that. The feeling was that he should, perhaps, not play. Not subject his teammates and the franchise to the type of scrutiny and the negative publicity that will be surrounding every visit they make to a visiting arena and probably even in Los Angeles. It will a different type of cheering at the arena. For him and taunting. And there will be people outside protesting. It just can't be a good way to start the season.
CAFFERTY: If he stays out what kind of message does that send about whether or not he may, in fact, be guilty of this?
JOHNSON: Depends how you view it. It may send a message, hey, my family is more important to me than this. I'm staying home, try to repair my relationship at home and take care of what's more important than basketball. It could send that message, if that is what he, in fact, says. You know, people want to view it as saying, you know, maybe I'm guilty, then that's them. But I think it's up to him to say why he would do that.
LISOVICZ: How has the NBA handled what has to be an extremely perilous and delicate issue? And how have the Lakers handled it?
JOHNSON: The league has generally said all the right thing with regard to, look everyone is innocent until proven guilty. We are not going to restrict him from playing or make any other precautions or statements that will change that.
But the Lakers have to be prepared. They've hired another P.R. person to handle almost just the Kobe inquiries. Certainly the number of media following that team is up dramatically. It's something that they've had to deal with and certainly will deal with for a long time now.
SERWER: Switching over to baseball, maybe a happier topic.
JOHNSON: Absolutely. SERWER: Some really fascinating and terrific matchups we're seeing here. But everyone's looking for the Cubbies against the Red Sox, right? Wouldn't that be the dream matchup?
JOHNSON: It could be the dream matchup for two just -- just long-suffering cities who, at least one of them, would know that they would come out of it happy. I personally don't think that's going to happen. I said before, these series began, I thought the Yankees and Cubs would be in the world series. We'll see what happens.
Certainly, if both get there, we'll at least be rid of one sort of group of just miserable people.
SERWER: Yes, right. Tired of listening to belly aching.
JOHNSON: Thinking of a time back a century ago when they were last successful.
SERWER: No matter who prevails, ultimately, it's fantastic news for Fox! right? Not only do you have have had these lovable...
SERWER: For who?
JOHNSON: No, it's great for television. It's great for...
SERWER: Advertising rates have gone up. Viewership increased.
JOHNSON: Baseball did not have a great season relative to ratings and attendance and they could not have probably picked a better group of teams for this point in the season. You've got huge markets, New York, Chicago, Boston. You've got Florida with the upstarts and Dantrel Willis, who, to me, was just a face of new baseball.
So right now, they're loving it. Ratings seem to be responding. People seem to be responding, and everyone's waiting to see what's going to happen with the curse of the Bambino and these long-suffering fans in Chicago.
CAFFERTY: Great story. One of the greatest baseball stories for this late in the season in the last 20-30 years.
JOHNSON: Absolutely. It's much better than the Anaheim Angels.
SERWER: I'd forgotten about that already.
CAFFERTY: Who are you rooting for, Roy?
JOHNSON: I don't root.
SERWER: He makes calls!
JOHNSON: I wish we had two great series. I'd love to see a six or seven game series in the A.L. and the National League series.
SERWER: Talking about the Yankees an Cubbies. Whose going to win? Who are you calling to win?
JOHNSON: Let them get there, bring me back and we can talk about the winner.
CAFFERTY: Roy Johnson, assistant editor at "Sports Illustrated" magazine. We'll do it again.
Coming up, our web master Allen Wastler tells us why the big retailers may find a lump of coal in their Christmas stockings this year.
And you can tell us if we've been naughty or nice by e-mailing us at inthemoney@CNN.com. Stick around.
CAFFERTY: Well, believe it or not, the most crucial time of the year has begun for the national retailers as they try to reel you and me in for the Christmas season.
Joining us for now for some thoughts on how strong or weak this season might be for the big chains, an old friend of mine, Allen Wastler whose also the managing editor of money.com the Web site of this here organization. Nice to you see you.
ALLEN WASTLER, MONEY.COM: Nice to see you again, Jack.
CAFFERTY: So, what do you think? Lump of coal or...
WASTLER: I've got several reasons why I think Christmas is really going to really stink. No. 1, the people who make the forecasts, they never get it right. If you look at their numbers, okay? 2001 they said, oh, Christmas is going to be terrible. Actually, it was pretty good!
WASTLER: The next year, hey, Christmas should be okay. And, you know what? It stunk. This year they're saying, 5.7 percent growth. It's going to be pretty good! So...mmmmmmm!
CAFFERTY: How's it possible to tell? I mean, one, the shoppers aren't shopping yet. Two, we don't know what items there's usually half a dozen that catch the public's's buying fancy; I've got to the have that or I got to have this. We don't know what the economy's going to do...
WASTLER: There's a bigger wild card now, too, the Internet. With the Internet a few days before Christmas, oh, yes. Christmas. Amazon, here I come and start, bang, bang, bang.
LISOVICZ: You know, Allen, the second best season for retailers is back-to-school. And back-to-school looks terrific. Gap up 13 percent. Wal-mart up 6 percent.
SERWER: She's extrapolating again WASTLER: So you got numbers for you, Susan. If you look at what people have been doing with their credit cards, okay? They've been wacking the credit card. If you look over the years, bang, bang, bang, up and up and up. The last 12 months, right after last Christmas, they said ooh, we charged up a little too much. Better back down a little bit. But now, with your back-to-school season, bang, bang, bang, they're doing it up.
LISOVICZ: They spent.
WASTLER: And if you look what's happening in the car market, even with lower interest rates in the car market, they haven't been wise, you know, typical American consumer. Gosh, you want me to be smart? No. With cheap money did they say, oh, I'll buy the Ford Focus at a lower price. I will save. No, they went you mean I can get more car? Cool! I'm buying the Expedition, baby, let's go!
CAFFERTY: The Tahoe.
LISOVICZ: That's the American way.
WASTLER: It's the American way, but what's going to happen, you watch. End of November, early December, they're going to turn around, they're going to have the credit card bill, car payment bill. Ooh, dudes, I'm tapped. On top of it, you wrote an interesting article in "Fortune."
CAFFERTY: That's a switch.
WASTLER: Where you got retail space piling on the consumer. The average consumer, when you think about how many stores are trying to just grip their consumers...
LISOVICZ: It's like 83 square foot per retail per person.
WASTLER: It's huge.
CAFFERTY: One of the things you and I used to do a long time ago, in another life, on another planet, where we did a morning show on CNNfn, is you would go around the Web and find some goofy little Web site that people can have fun with.
WASTLER: I brought you one. I brought you one buddy.
CAFFERTY: See, that was your price of admission.
WASTLER: November 1, folks, I hope you're living out there, okay? There's going to be a beard and mustache competition in Carson City, Nevada. First time. The world -- it's the world's --
SERWER: That's awesome.
WASTLER: Look at that!
SERWER: That's a bunch of bikers, Allen!
WASTLER: This is the first time it will be held in the United States. And people, they're still taking entries for contestants.
SERWER: That's a biker.
WASTLER: It's worldbeardchampionship.com.
LISOVICZ: Gillette is not a sponsor.
SERWER: Very good.
WASTLER: You go there. First time in America. The German team has always dominated this event. So it's time that we come back.
CAFFERTY: Good to see you. See you next week. Be here with us.
Time to check the e-mails from the past week. We had a big response to the e-mail question, which was this, "will President George Bush be re-elected in 2004?" Herb wrote this, "with $200 million dollars to spend it's unlikely Bush will have a difficult time. And with another $87 billion to dole out to his corporate cronies, he'll have plenty of support from board rooms across the country." Hannah said, "I don't believe George W. Bush will be re-elected. He's the worst thing for the economy and our standing with other nations."
And Joshua from Long Island weighed in with this, "President Bush will be re-elected. The tax cuts are starting to push the economy. And we will soon find the WMD." That would be weapons of mass destruction, in case you have forgot. And it's entirely possible you have.
The overall sentiment in our unscientific poll ran strongly against President Bush. Just over 70 percent you you who responded don't think President Bush will get a second term in office, which would make his career it's a nation's chief executive exactly like his daddy's.
Time now for our e-mail question of this week. It's based on our discussion with former attorney general Ed Meese earlier on the program. "What jobs would you send convicts out to do in your community?"
SERWER: Oh, don't get me started on that one.
LISOVICZ: I'm writing my list right now.
CAFFERTY: Send you answers at firstname.lastname@example.org
And that brings us to this, thank you for joining us for this edition of IN THE MONEY. Thanks for our regular gang, CNN financial correspondent Susan Lisovicz, "Fortune" magazine editor-at-large, Andy Serwer and Allen Wastler, managing editor of money.com.
We're back at 3:00 tomorrow afternoon Eastern time where we'll talk about a growing trend of millionaire candidates. Guy's like Arnold Schwarzenegger using their own money for an end run around campaign finance laws. That's tomorrow on IN THE MONEY, and we will expect you to be on time. See you then.
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