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CNN IN THE MONEY

Will National I.D. Cards Make America Safer? David Goodstein: Oil Demand Soon To Outstrip Oil Production

Aired April 18, 2004 - 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 capitol, this is IN THE MONEY.
JACK CAFFERTY, HOST: Welcome to IN THE MONEY, coming up on today's program:

Onboard security: if we all carried an actual I.D. card, some people say America would be safer. Find out whether one little document could change the fight against terrorism.

Plus, good to the last gallon or barrel: we'll hear from an author who says oil is running out and fast.

And, making grades: Some kids are pushing themselves to the limit for a place in a top college. Find out why the same schools that set the standards want to try to turn down the pressure.

Joining me today as always, as couple of the IN THE MONEY veterans, CNN correspondent Susan Lisovicz, "Fortune" magazine editor- at-large Andy Serwer.

There ought to be a law. We have Murphy's law, there should be a government law. The law being this: When government gets in trouble, the knee-jerk response is to create more government. The 9/11 Commission is getting close to wrapping up its work, it's going to have a report out this summer, and apparently in response, and ahead of that, the White House is thinking about creating another agency to deal with national security. We sonly have 15 in this country, now.

ANDY SERWER, "FORTUNE" MAGAZINE: Well, that's the thing, you were saying. I mean, when in trouble, create another bureaucracy. I think what a lot of American's are finding distressing though, is that the 9/11 commission the hearings that dissipated into a political debate, I think everyone was all for it, but when it became partisan, the democrats attacking this way, the republicans attacking that way, I think it loses a lot of credibility.

SUSAN LISOVICZ, CNN CORRESPONDENT: And, no matter where you stand, whether you're democrat, republican, or not sure, the fact is that they just didn't cooperate well with each other.

SERWER: The agencies, yeah.

LISOVICZ: That's right, you know, I mean, I think when I last looked, I think president Bush belonged to the Republican Party. Wasn't that for less government. CAFFERTY: Yes, smaller government, tighter government spending.

LISOVICZ: Right, right.

CAFFERTY: The commission, as you suggest, said it's a bipartisan operation in the beginning, Tom Kean is widely, he's a republican, but a moderate on both sides of the aisle. A lot of information is coming out of this though. This stuff we knew on September 12.

SERWER: Right.

CAFFERTY: The day after the Trade Centers and the Pentagon were hit, the lack of sharing of information, the computer technology that's not up to snuff, the inability to properly screen people coming in and out of the country. So now all this hand wringing is going on, when we hear this stuff two and a half years later a lot of it isn't anything new. The question is why hasn't anything been done about these things? We've known about them.

SERWER: Well and also what are we able to draw from this? I mean, the point of the commission is prevent further 9/11s, preventing them from happening again and I'm not really sure what we're learning that's going to help us do that. But, you know, it's interesting to see and I hope it's providing some kind of closure.

LISOVICZ: And it's not necessarily reassuring when you hear top White House officials saying that they're afraid every day that it's going to happen and that it may very likely happen.

CAFFERTY: Well, that's comforting. Thank you. We'll follow the story.

On to other things, one proposed measure to keep Americans safer, is so small it would fit if your wallet. It's a national I.D. card. But, there are questions about whether the system would really stop terrorists and whether it would leave Uncle Sam looking over all of our shoulders. For more on that we're joined from Minneapolis, by Bruce Schneier, he is the author of "Beyond Fear: Thinking Sensibly in an Uncertain World."

National I.D. card, good idea, bad idea? Sounds like a simple solution, maybe it works, maybe it doesn't, where do you come down on this?

BRUCE SCHNEIER, SECURITY EXPERT: Well, it's a simple solution to a problem, I really can't figure out what it is. My problem with I.D. cards is I don't think it will actually help. I approach this as a security consumer what am I getting versus what am I giving up? We don't have an identity problems. You talked about 9/11, it's a great example. All the terrorists had I.D. cards. Knowing who they were wouldn't help. You know, there's this sort of myth that we can somehow pick the bad guys out of the crowds if we knew their names, but it just isn't true.

CAFFERTY: Well, there's also this whole thing about people that come into the United states as immigrants, if you will, particularly from countries like South America, I was watching a program, I think it was the "Lou Dobbs Show," where people from Brazil, for example, who come into the country illegally and are caught, are picked up, given a desk appearance ticket or a summons to show up at some future date down the road at some immigration court for a hearing and they simply melt into the population, they don't show up, nobody knows where they go, who they are, what they're doing and in many cases they're never heard from again, they go ahead and make their lives here in the United States.

SCHNEIER: Which is true. And it's something an I.D. card won't help with. If they're here legally they're going to have green cards. If they're here illegally they probably have passports, I mean, they have I.D. cards, the problem is finding them, the problem is picking them up, the problem is not knowing their names.

LISOVICZ: OK, so Bruce, so you don't think that's a good idea, these national I.D. cards. What do you think is a good idea, what should be done?

SCHNEIER: You know, I tend to like security account measures that involve people and there are two ways I think we should spending money. Spending money to make terrorists change their tactics doesn't make sense, right? If we secured the airlines and terrorists moved to shopping malls it's a waste of money. I like spending money at the beginning, intelligence, investigation, interdicting funding, rolling up networks, things that disrupt terrorists' plans regardless what they are. And I like spending money on the back end, emergency response. Whatever happens will be better able to deal with it. I mean, you pointed out the White House is saying there will be something else. And that's true, we're never going to make terrorism stop. We need to be able to deal with it. So spending money on police, on fire, on emergency medical, whatever's going to happen we want to best be able to respond to minimize a disaster. So spending money at the front end and the back end. Spending money in the middle, I think, just modifies terrorists' tactics and is largely a waste.

SERWER: Bruce, getting back to the national I.D. card debate, though. As you probably know, Larry Ellison of Oracle is a proponent of that, some say because his company would benefit, however. But, he has a very good point. And he says the failure of I.D. cards now, these government I.D. cards is because they're government I.D.s. In other words, if you look at the private sector, credit cards, lot more secure system, you lose a card, bingo, the person's shut off within a couple of hours. Isn't the problem really that the fact that I.D. cards that we think of now are government I.D.s?

SCHNEIER: Well, no. I mean the credit card's a bad and analogy because there are financial decisions being made. The problem is there's money lost, so banks will do things or not do things depending on the value. I mean, there's amount of fraud in the system, there are fake credit cards, there are billions of dollars of losses, but it's within the budget of a bank so they can deal with it. When you think about, especially a national I.D. card and terrorists, you can't look at the average, how the average citizen would deal with it, you have to look at how the worst, how the person intent on cheating, the person intent on losing his life in the process will subvert the system. And every document, including credit cards, including driver's license, they've been forged, people have gotten legal documents illegally. Some of the 9/11 terrorists had legal Virginia driver's licenses, they bought from a crooked DMV clerk. Regularly we see blank credit cards, valid credit cards stole in any transit and then they're used, they're forged and then used. So even the credit card system, regardless of whether it's public or private, there is some level of fraud and the question is to ask is, can we make that rare enough to make the system valuable, to make it worth it, to make it worth the expense? The answer really is no.

CAFFERTY: I was going to say, how do you do that and you just said, you can't. So what are you suggesting, that we're just helpless victims here and there's nothing we can do to protect ourselves?

SCHNEIER: We're not helpless victims, but certain solutions that involve surveilling the masses looking for the bad guys tend not to work, so things like a national I.D. card or caps to airline screening.

CAFFERTY: So, what do we do, what does work?

SCHNEIER: What does work is what I said, investigation and intelligence. What are the terrorists planning and who are they? That's the FBI, that's the NSA, that's the CIA. Spending money on smart people figuring out what's going on will make us much safer than spending money on technology and infrastructure.

CAFFERTY: And as we were talking at the beginning of this program we have 15 government agencies devoted to that so we ought to be pretty safe, right? Wrong.

SCHNEIER: Well, you know, we're actually not as bad as most people think. I mean, 9/11 was a failure. And if you listen to the hearings and you were right it was things we knew the day after, there were failures in communication, there were failures in information- moving. But largely, we are a successful nation dealing with terrorism. Terrorism is very rare.

CAFFERTY: Here it is two and a half years later and they're talking about still not having upgraded the computer technology that the private sector's had since 1990. You know, talking about people -- bureaus like the FBI are using 13-year-old main frame computers and software that, in the private sector, they haven't used for 10 or 15 years. That stuff still hasn't been addressed and we're two and a half years after September 11.

SCHNEIER: Right, and that's an embarrassment. And as a security consumer I'd rather take the tens of billions of dollars a national I.D. card would cost and spending it on that, on upgrading communications, upgrading computer systems. That's going to make us safer. I mean it's not as visible to honestly, the voter as a card in your wallet which is, I think, designed to make people feel better.

CAFFERTY: Yeah. SCHNEIER: It's spending money on, you know, giving FBI agents Arabic translators, giving them up dated computers and communication systems giving local police updated computers and communication systems, those will make us safer, because whatever the terrorist are planning, that'll make us safer. And we're really good at protecting from what the terrorists did last year. I want to get good at what they're going to do next year.

CAFFERTY: You're much too practical for a government job, Bruce.

SCHNEIER: Yeah, I know. I tried.

CAFFERTY: Thank you for joining us. It's a pleasure talking with you.

SCHNEIER: Thanks for having me.

CAFFERTY: Appreciate it. Bruce Schneier is the author of "Beyond Fear: Thinking Sensibly about Security in an Uncertain World."

Coming up on IN THE MONEY: Drip, drip, drip, we'll talk with an author who says the price of gas might not be the biggest problem ahead, it's the disappearing oil that we distill to get gasoline and keep the cars rolling.

Plus how to order videos without walking away from the TV: NetFlix is working on that, we'll tell you all about it.

And the thigh mistress: See why -- I love that, the thigh mistress -- see why former sitcom star Suzanne Somers has people across America pulling out the plastic for stuff like the Thigh Master.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ANNOUNCER: Gannett keeps America informed with its stack of 94 daily newspapers, including the nation's largest selling paper, "USA Today." Also in its portfolio, nearly 500 non-daily U.S. publications, as well as more than 300 newspapers in the United Kingdom. And while its print business generates at least 80 percent of Gannett sales, the company also owns 22 TV stations and more than 100 publishing websites, however the absence of Olympic and political ad spending meant lower revenues for Gannett's TV stations in 2003, but stronger demands for newspaper ads have helped to offset those losses and bring in higher forth quarter profits.

(END VIDEOTAPE)

LISOVICZ: Gas prices continue to hover near record levels, but if you think you're paying too much at the pump that may be the least of your worries. According to our next guest, global oil reserves are set to run dry in less than two decades and that of course could create some serious problems. Joining us from Los Angeles, David Goodstein, the author of "Out of Gas, An End to the Age of Oil," he's also a professor at the California Institute of Technology.

Welcome.

DAVID GOODSTEIN, CALIFORNIA INT. OF TECH.: Thank you.

LISOVICZ: If we're almost out of oil I hope you're working at a solution there at university to find something else. And that's actually my question. Hasn't it been acknowledged for some time that with the emerging huge nations like China and its population demands, India, that in fact we would have to depend on something else than oil and are we close to it?

GOODSTEIN: Well, we're not very close to it at all. We haven't done a thing to prepare ourselves for it. Secondly, I don't think we're going to run out of oil. I think that we're going to peak in oil. That is to say we're going to reach the maximum rate at which we can pump oil out of the ground and then the rate will decline forever after that even though the demand will continue to increase, especially in places, as you say, like India and China.

CAFFERTY: What happens when we peak out? How much time is left from the time we peak out until available gasoline simply begins to dry up or becomes prohibitively expensive?

GOODSTEIN: Well, we had a dry run for this 1973, and many people remembers it.

CAFFERTY: Yep, I remember it well.

GOODSTEIN: That was a little more sudden than what's going to happen this time, because some people sitting in a room just decided to close the pump, but we had panic and despair for the future way of life, mile-long lines at gas stations and that was quite a crisis and that was temporary and artificial. What's going to happen to us in the next decade or two will not be temporary and it will not be artificial.

SERWER: Well David, how much faith do you have in our ability to create alternative energy sources that can generate continued growth in our economy? I mean, Detroit's working on fuel cells, hybrid car, I talked to Bob Lust (PH) at G.M., he says that effort is really moving along nicely, what do you think?

GOODSTEIN: I think we're in deep trouble. I think that we're not moving nearly quickly enough. We haven't begun to think about the problem. It's the sheer magnitude of the problem that's overwhelming. If we continue to -- if we substitute fossil fuels for the missing oil which I'm almost sure we will do, we can do that, it will be much more expensive, there will be steep inflation, there will be deep problems, and we will continue to do untold, un -- misunderstood damage to the environment. The only alternatives to fossil fuels are nuclear and solar energy. What we really should be doing is challenging ourselves to kick fossil fuels altogether, so that we're not dependant on unstable regimes in the middle east, but nobody's asking us to do that. LISOVICZ: Professor, I don't think I need to point out to you that this is an election year, and that Americans seem to think that it's a god given right to have cheap gas. What is something that can help? Is conservation, in the meantime, something that could help? For instance, a tax on SUVs, vehicles like Hummers?

GOODSTEIN: Well, it's a -- conservation certainly will help. We use oil profligately; we should certainly be able to do very much better. Without any sacrifice of comfort or ease, we could switch to hybrid cars that burn half the fuel that we're burning now and certainly that will help, that will not solve the problem, but it will soften the blow and it will help.

CAFFERTY: What about the politics behind what we're talking about here? To what degree has the political muscle of big oil prohibited the country from beginning to address the finite nature of the resource and look for alternatives to traditional gasoline?

GOODSTEIN: I think the big companies are aware of the problem and in their own ways they are looking into possible solutions to it, they don't want to be left behind when the crisis comes. Nevertheless, as far as the American political situation is concerned, you have, right now, one side accusing the other side of having the temerity to suggest a 50-cent tax on gasoline. Out here in California we're paying it two-forty a dollars a gallon for gasoline. When you think about it, that's 60 cents a liter, that's less than half than what we pay for bottled drinking water. Gasoline is just about the cheapest liquid you can buy in the United States.

LISOVICZ: Yeah, just talk to the Europeans; they certainly have been living with it for a long time. David Goodstein, author of "Out of Gas, An End to Age of Oil" and professor at Cal Tech. Thanks so much for joining us.

GOODSTEIN: Thank you.

Up ahead on IN THE MONEY:

How to plant a couch potato: NetFlix is working on a ways to order movies that barely makes you lift a finger. See if Wall Street's happy about that.

Plus, old school -- old school schools with new school standards: Find out why some top colleges are telling students not to work so hard.

And spam that tells you it's spam: See how new rules could change those e-mails you get about making parts of your body bigger.

(COMMERCIAL BREAK)

LISOVICZ: Now let's look at the week's top stories in our "Money Minute." The hefty tax refunds many were predicting this year didn't exactly come true for millions of Americans. Experts thought the Bush tax cuts would boost refunds and average 25 percent compared to last year, but so far the average refund is up just five percent. Former New York stock exchange chairman Dick Grasso may have to fight to keep from having to pay back about $140 million in salary. Published reports say New York state attorney general Elliot Spitzer has suspended many of the former NYSE directors who signed off on that hefty pay package. The controversy over Grasso's pay, of course, led to his ouster late last year.

And hold the pepperoni and give me extra equity: The Domino's pizza chain is looking to go public with an IPO later this year. The company is hoping to raise about $300 million from the stock offering.

SERWER: The video through the mail company, NetFlix, is coming off a great year on the NASDAQ, but yesterday it announced a quarterly loss much bigger than last year at this time. Now, the company is getting ready to fast forward to the realm of video on demand. NetFlix is our stock of the week and instead of the three of us just talking about the company this time we brought in the CEO of NexFlix himself. Reed Hastings joins us now from California.

Reed, welcome to the program. In the interest of full disclosure, I got to tell you that Reed and I went to college together, but we didn't hang out much, I was in the library the entire time, right Reed?

REED HASTINGS, NETFLIX CEO (LAUGHING): Right.

CAFFERTY: Yeah but, Reed, you've aged better than he has.

SERWER: Yeah. Anyway, Reed, good to see you. A lot of Americans are familiar with your company and we've been hearing how Amazon and Wal-Mart, especially Blockbuster are going to be coming in and eating your lunch, so far that hasn't happened. What has led to your success so far?

HASTINGS: Wel,l we focused on building the world's best movie service, great customer satisfaction. As you mentioned success breeds competition and Wal-Mart entered two years ago, Blockbuster entered two years ago when we were about 600,000 subscribers and despite their entering we've just continued to grow. Now we're nearly two million subscribers, it's really been phenomenal.

SERWER: Let's talk about some specifics, Reed. The stock -- your stock getting a pounding on Friday, down about 15 percent on word of wider quarterly losses, raising the subscription fees which could in fact, of course, raise the -- help the bottom line, but in fact may increase the churn rate -- subscribers dropping out. Can you address that?

HASTINGS: Sure. Actually we think it will drop the churn rate. What we're doing is investing more and more in new release content and that's why we're changing the price from 20 to $22. So, we're growing again at a terrific rate, about 80 percent on a year-over-year basis. And the one thing we've heard from subscribers is get us more new releases, so we're doing that, we're charging a little more, spending a little more and you know it's our first price increase in over four years and it's only 10 percent, so I think it will be fine. CAFFERTY: How does your relationship with the content suppliers work, Reed, and at what point will your subscriber base get big enough that you can leverage a bigger price for your company from the suppliers.

HASTINGS: Well we're only about 100th the size of Wal-Mart, so I think got a long way to go...

CAFFERTY: ...ways to go...

HASTINGS: ...until we get something in that line. But, the studios have been wonderful with us, partially because we've been so good at promoting hard to market films, "Whale Ride" is an example, small little film, 26 million dollar film, but we've been able to make it grow and perform for the studios, like it was a 100 million dollar film.

CAFFERTY: Wow.

SERWER: Hey Reed, the big question going forward though, has got to be video on demand for you guys. I mean, already here in New York City, Time/Warner is rolling that out and it's pretty successful. How's that going to impact your company?

HASTINGS: Well, Manhattan's a great example, it got video on demand about two years ago, and our subscriber count in Manhattan has continued to grow independently. And we have over 18,000 movie titles. It's $22 a month for unlimited rentals. It's really quite a value, great selection, so I think we hold our own against cable video on demand very well. And then of course in the long-term we plan to offer electronic delivery to our consumers, so a consumer can choice, do they want the DVD by mail or do they want to get it downloaded to them?

LISOVICZ: Reed, but we want to go back to Wal-Mart. We've seen where Wal-Mart's gotten into the toy business, it's really hurt established players like Toys 'R' Us, FAO Schwarz, it's gone into the food business, it's really hurt established players there. Do you see that becoming more of a player as you go along?

HASTINGS: Well, they could hardly be less of a player, so I suppose they'll be more of a player in our space. They did enter two years ago, again, we were at 600,000 subscribers then, we've grown to two million. And Wal-Mart's a tremendous company, especially when you're talking about stores and store operations. But online, they have not yet distinguished themself, so we keep a careful eye on them for all the reasons you referred to, but really they have not been a factor online.

SERWER: All right, we're going to have to leave it at that. Reed Hasting, CEO of NetFlix. Thanks very much for coming on. We'll be watching you.

HASTINGS: Thank you.

SERWER: OK. Coming up: Overworked and underplayed: Too many students are so busy polishing they're college resume they're forgetting how to really learn anything or how to relax. We'll talk about why.

Plus, she sells a lot more than thigh masters these days, oh, yes. We'll look at the surprising marketing appeal of former "Three's Company" star Suzanne Somers.

(COMMERCIAL BREAK)

CAFFERTY: High school seniors all over the country checking the mail these days with a lot of anticipation and sometimes more than a little dread. College acceptance letters going out to millions of kids all over the country this week. Some top schools, though, are finding that when their applicants try to look perfect on paper, they can burn out aiming for the bull's eye. Denise Pope joins us to talk about that. She's a lecturer at the Stanford University School of Education. She's also the author of "Doing School: How We're Creating a Generation of Stressed Out, Materialistic, & Miseducated Students."

Denise, nice to have you with us.

DENISE POPE, AUTHOR, "DOING SCHOOL": Thanks for having me.

CAFFERTY: I can tell you from personal experience, it's traumatic, it's stress-provoking, not just for the kids, but for the parents. You've got to put out all of these letters and resumes, make all of these applications. You bite your nails sitting around. The kids blow-up and have these break-downs if they don't get into the school they want. How is the situation different today than it was 10, 15, 20 years ago?

POPE: Well, it's definitely more intense today. There are more students than ever applying to colleges. And the admissions people will tell you that the standards have gone up. It's harder to get into the top colleges than ever before.

CAFFERTY: How much does that have to do with -- the standards may have gone up, but everything you read about public education indicates the test scores have gone down. We're not educating kids coming out of high school. Half of them have to take remedial classes in math and English when they get to be freshmen in college. How much of it is maybe not the standards of the universities going up so much as the kids not being as well prepared as they maybe could be or should be going in there?

POPE: Well, I think part of the problem is that the students are not learning and retaining the material. There's so much pressure to get the grades by hook or by crook, there's a lot of cheating going on, and they really aren't learning the material and being prepared when they enter the colleges.

SERWER: Denise, my children's school just got rid of AP classes. It was a very controversial move. But I think what they were saying is that they've created a culture where everyone was just learning for the sake of getting into college. Can you talk about that a bit? How much of the high school is culpable? POPE: I think the schools are very culpable. I think part of the problem is the end goal seems to get in rather instead of to learn the material. Students will say to me, they'll do anything they can, by all means possible, just to get the grades and the test scores they need to get into the colleges.

LISOVICZ: You know, Denise, here in New York we've had several tragedies at New York universities, several suicides, remember at Harvard University, same situation a few years ago. Is there not enough emphasis for parents for just a well-balanced kid? Isn't that what employers and what parents and what society ultimately want, a healthy society?

POPE: I think we all want healthy kids. I think we all want well-balanced kids, and I don't think that message comes through now in middle schools, high schools, or even in order to get into colleges. I think what they think, in order to get into colleges, you have to be perfect at everything. You have to do as many AP classes and honors classes as possible. And you have to letter in your sport and take seven different extracurricular activities. That does not lead to a well-balanced kid.

CAFFERTY: What do you tell your students when you're lecturing about the fact that the prospects for good-paying jobs have declined precipitously for college graduates in the last four or five years in this country? I mean, I can name a bunch of my -- one of my daughter's friends, who are all graduated from college, all B students or better, they can't find a job.

POPE: Yes, I think that's part of the problem too is the colleges want to send this message of balance and health, and the reality is a lot of these students have to do the same games that they did in high school in college, just to get into graduate schools these days because they know the economic situation out there.

SERWER: Well, Denise, I'll tell you, it does trickle all the way down. My 10-year-old last night was just telling me -- I was congratulating her for doing well on a Spanish test, and she goes, well, that's good for me to get into college, right, dad? Jeez, don't worry about it. My goodness, you're 10 years old. But isn't there a contradiction here? We're telling kids now -- or you're telling people to relax, on the other hand, we're also hearing that we're falling behind on the sciences and the things like that. So which one is it?

POPE: It's actually both. The problem is the students are doing everything they can to get these grades and test scores up, but they're not learning how to think critically. They're not learning the material in depth the way we want them to. It's a real problem we're working on here at Stanford. In fact, we've got a whole conference on May 7 around this very issue.

CAFFERTY: Denise Pope, Stanford University, "Doing School: How We're Creating a Generation of Stressed Out, Materialistic & Miseducated Students." Thanks for being with us.

POPE: Thanks for having me.

CAFFERTY: Appreciate it.

Just ahead, we're not sure what she got on her SATs, but Suzanne Somers has taken a short sitcom career and -- I have some idea, however, and turned herself into a marketing icon. We're going to find out how that happened.

And will a new federal rule for spammers keep pornographic material from your computer? Don't bet on it. Back after this.

(COMMERCIAL BREAK)

SERWER: "Three's Company" and one's a brand. Suzanne Somers was a pop culture icon, thanks to her appearances on the "Three's Company" sitcom. But after they fired her in 1981, Somers bounced back by creating a business. It's part public image, part private life, and it's all about being accessible. And today it's thriving. Salon.com writer Rebecca Traister, got the lowdown, and she's here in New York with the details.

Welcome, Rebecca.

REBECCA TRAISTER, SALON.COM: Hi.

SERWER: Hi, so what makes this woman so popular?

TRAISTER: Well, I think it's a mix of things. She has a very high visibility factor, is the thing that she says, because so many people watched her on "Three's Company," and she's been around for so long. She's a very familiar face. She's also incredibly accessible. She's always on television. She's on the Home Shopping Network. You know, she talks to audiences about her life. And I think that people really enjoy feeling like they know her.

LISOVICZ: Rebecca, I have to confess that when I'm channel- surfing and I get past -- when I'm on Home Shopping Network and when she was there, I just stop and I stare hypnotically into the screen. She sells everything from food to cosmetics to jewelry to clothes, and she is an excellent saleswoman. But something that we know in business is that, when somebody dilutes the brand, they're no longer effective. She's spread pretty thin, but yet she is still so successful. Why is that?

TRAISTER: Well, I'm not sure what it is -- I do agree with you that she seems to be spreading herself very thin, but every one of her product lines seems to be popular. She sells jewelry on the Home Shopping Network. She sold a million of her Trilliant bracelets, which are her self-designed bracelets. She sold 10 million ThighMasters over the years. Her books -- she's written 11 books, memoirs and diet books. Every one of them has been a best seller. So she seems to be successful in all of the areas that she chooses to pursue. I think that part of it is, as you said, she hypnotizes you. Her presence is incredibly compelling. Talking on the phone with here, I found myself almost in a trance. She has a soothing voice. You trust her. She's very hypnotic. And I think that that's part of what hooked people, when they're channel-surfing, when they see her face on a product or on a book.

CAFFERTY: Rebecca, Jack Cafferty. Who's the architect of this second career? She put this together herself? And I ask that in the context of, here is a woman who took arguably one of the most successful sitcom careers in the history of television and committed professional suicide with it, thanks to taking advice from some guy she was married to and overplaying her hand the network and a bunch of other stuff. Is she the current brainchild of her current success, or is somebody else pulling the strings on this one?

TRAISTER: Well, she is still working very closely with her husband, that same man that you referred to, Alan Hamel, who is her longtime manager. And he is a co-owner of all their companies. And she credits him with a lot of the business decisions. Now, I think that much of her work does spring from her own interests and certainly from her own life. I mean, she has capitalized on every one of her personal experiences, whether it's having had an alcoholic father or going through menopause, to create something to sell, a book or a product. Now, whether the business machinations of that were the invention of her husband, Alan Hamel, I don't know. They work very closely together. Everything they do is a partnership.

SERWER: Rebecca, quick last question. Do you think that it helped that her she actually went through these travails and maybe actually that will help Martha Stewart if she ever comes clean and admits that she has some foibles? What do you think about that?

TRAISTER: I think that Suzanne's sort of personal tragedies or difficulties are -- have been very important to her success. One of the differences that she pointed out, between her business and Martha Stewart's business, is that Martha, up until now, has been very quiet about whatever her personal tragedies have been, whatever her personal traumas have been. Whereas Suzanne, as I said, has written and talked about alcoholism, about a botched abortion, about gender discrimination, getting fired, menopause, sexual difficulty, and been very open with her fans and that's part of what has drawn them to her, and encourages them to buy her products and trust her advice, whatever it's on.

CAFFERTY: I just like watching her do the ThighMaster thing. I'm pretty simple.

(LAUGHTER)

SERWER: Nice.

CAFFERTY: Rebecca Traister, staff writer at Salon.com. Thank you for visiting with us.

TRAISTER: Thank you.

CAFFERTY: Coming up on the program, as we continue, here comes the federal government with another plan to save us from spam. We'll find out if this government plan will work.

And we promise never to treat your e-mail like spam. We actually read it all, respond to it too. You will get a personal response if you write to our program. The address is inthemoney@cnn.com.

First, Andy has this week's edition of "Money & Family."

SERWER: Are you and your family looking for a new financial planner? Well, here are a few tips to help you find the right person to manage your money. The first step is to figure out what you want from a financial adviser. Are you interested in specialized tax advice, help with your overall financial plan, or guidance with investment picks?

The next step is to interview financial planners. You want to make sure to check his or her credentials, find out which organizations issued the credentials and if he or she is in good standing. Remember certified financial planners typically study for two to three years, so stay away from people who say they simply passed an exam.

It's also a good idea to ask financial planners if you could talk with a couple of their former clients. They can tell you specifics about the kind of service they received and if the planner understood their goals and values. If a planner is unwilling to pass along references, take that as a red flag.

And once you've chosen a financial planner, clarify your agreement, how he will be paid with a set fee or by commission.

I'm Andy Serwer for "Money & Family."

(COMMERCIAL BREAK)

CAFFERTY: The federal government's about to impose a new rule that is guaranteed to help you avoid sexually explicit spam e-mails. Right. Joining us now to take the shine off that silver bullet is Web master Allen Wastler.

Can they really do that?

ALLEN WASTLER, MONEY.COM: Well, it's a nice idea. OK? What it is, it's part of the new Can Spam Act, you know, catchy name, right? And they say you've got to figure out a way to stop the porn e-mail. So the FCC put their thinking cap on and got some people to write in.

This is what they've come up with. The subject line will have the words "sexually explicit" in there, required by law. If you don't do it, you're violating Can Spam, prison and fines. All right?

Also, you know how you get a little preview pain (ph) sometimes header information depending on your e-mail program? You can't have any naughty stuff in there. They're calling that the "plain brown wrapper." OK? It just says "sexually explicit."

So the idea is, in your fancy little program, you can set your filter to say anything that says "sexually explicit," don't give it to me, so it gets hung up in the filter.

SERWER: So what if Jack sends an e-mail that's a little racy to me?

LISOVICZ: Oh, he would never do that.

CAFFERTY: I would never do that, so I mean, hypothetically speaking.

SERWER: I have a friend who sends me racy e-mails.

WASTLER: It shouldn't catch that up. Just the "sexually explicit" should trigger the filter. So It's a great idea.

CAFFERTY: Are we going to have this great debate now about what constitutes "sexually explicit," what constitutes...

SERWER: I know it when I see it, Jack.

(CROSSTALK)

WASTLER: One commenter did raise that in the rule-making process. I called them and asked them if they're planning on challenging, and at this point, they're giving no indication that they do. But going forward with that, you've got -- spammers, they aren't the most wholesome bunch in the world. So are they going to - OK, we're not going to do that. And then, you know, then there's misspellings and, oops, we didn't do this. And also, they might just bounce it overseas and get it to you anyway.

LISOVICZ: They misspell a lot now, because they don't know how to spell probably. Let's go to "Fun Site."

WASTLER: OK. You were talking about Suzanne Somers before? And we all remember, ,I've got a site for you where you can hear the music, Jack, to "Three's Company." Let's take a listen.

(MUSIC PLAYING)

CAFFERTY: Is that the theme from "Three's Company"?

WASTLER: Yes, that's the theme. Now next, here's another favorite old one. Maybe you'll recognize it.

(MUSIC PLAYING)

WASTLER: Recognize it? "Barney Miller."

SERWER: Oh, "Barney Miller."

WASTLER: The final one, Jack...

CAFFERTY: Why can't you do like "Bonanza" or something.

WASTLER: Jack, whenever I'm here with you, talking, remembering the old days. I remember when you and I used to be together, and you used to regale us with stories from your childhood.

CAFFERTY: You should phrase that, we used to do a television show together.

(LAUGHTER)

CAFFERTY: You know what I'm saying? I mean, just for purposes of clarity and accuracy in media here. I'm sorry. Go ahead.

WASTLER: That's OK. You used to regale us with tales of your childhood.

(MUSIC PLAYING)

(LAUGHTER)

WASTLER: Tell us about the old days, Uncle Jack.

CAFFERTY: Allen and I did a program on CNNfn, which is the witness protection network run out of Atlanta, Georgia. And once in a while, I'd get off on these little tangents about things I did from my youth, and they'd start playing this "Waltons" music behind me as a way to irritate the host of the program.

WASTLER: And it still works, apparently.

CAFFERTY: Yes, and it still works. Thank you very much. Allen Wastler.

Moving right along here on IN THE MONEY, coming up next we'll read some of your e-mails. You can get in on the act too by sending us a line at inthemoney@cnn.com. Do that, won't you? We're dying to hear from you.

(COMMERCIAL BREAK)

CAFFERTY: Time now to hear what some of you think is America's next best move in Iraq. Richard wrote this: "We should get out while the getting is good. We won the war to liberate the Iraqi people from Saddam Hussein, now let the Iraqis select their own government. If the terrorists take over then at least we'll know who and where they are. Who cares if they choose democracy."

Ron in Virginia wrote: "We should immediately set up a fund that gives each Iraqi citizen a cut of the nation's oil sales, like citizens in Alaska receive, that way the Iraqis will see they have a stake in a stable country and it will eliminate the silly notion that the United States just wants to steal Iraq's oil."

SERWER: Interesting idea.

CAFFERTY: Yes. Cathy in Canada wrote this: "I would use all of Saddam's stolen money to set up a special fund to pay all of the Iraqi police, firefighters, ambulance drivers, et cetera. How can we expect the Iraqis to risk their lives against the terrorists if they're not comensated properly."

Time now for our email question for this week, which is as follows: "would a national I.D. card be an effective weapon against terrorism?" Send us your thoughts on that to inthemoney@cnn.com.

And check out the show page at money.com/inthemoney, for show information and the fun site of the week address where you can hear you all those cool old TV theme songs.

That'll about do it. Thank you for joining us for this edition of IN THE MONEY. My thanks to the gang, CNN financial correspondent Susan Lisovicz, "Fortune" magazine editor at large, Andy Serwer and money.com managing editor, Allen Wastler.

Join us next week, Saturday 1:00 Eastern, Sunday at 3:00. Or you can watch Andy and me all week long on "AMERICAN MORNING" starting at 7:00 AM Eastern time bright and early on Monday.

Thank you for watching this. And have yourselves a good week.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com


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