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CNN IN THE MONEY

What Will Be Outcome of Iraqi Election?; New Film Focuses on Enron Collapse

Aired February 5, 2005 - 13:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


CHRISTINE ROMANS, CNN CORRESPONDENT: ... Poland and Turkey. Rice is thanking both countries for their support in the U.S.-led war in Iraq.
In Washington, President Bush is getting ready to submit his budget for the next fiscal year to Congress. In his weekly radio address, Mr. Bush says strengthening the U.S. economy is the central goal of his $2 1/2 trillion budget plan.

(BEGIN AUDIO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: On Monday, my administration will submit a budget that holds the growth of discretionary spending below inflation, makes tax relief permanent and stays on track to cut the deficit in half by 2009. In the long run, the best way to reduce the deficit is to grow the economy and we will take steps to make the American economy stronger, more innovative and more competitive.

(END AUDIO CLIP)

ROMANS: The search is over for a Florida couple accused of torturing and starving five of their seven children. John and Linda Dollar were captured last night in Utah after police tracked their cell phone signals. Among other things, the Dollars are accused of chaining the children and shocking them with a cattle prod or stun gun.

An Alabama woman faces capital murder charges in the deaths of her three children. The bodies were found late yesterday in the family's apartment in Huntsville. Police are not saying when the children were killed or how they died. I'm Christine Romans at CNN center in Atlanta. More news at the bottom of the hour. IN THE MONEY begins right now.

JACK CAFFERTY, CNN ANCHOR, IN THE MONEY: Welcome to the program. I'm Jack Cafferty. Coming up on today's edition of IN THE MONEY, the Baghdad bounce. Last week's vote in Iraq went off a lot better than a lot of people in a lot of places in the world expected it would. We'll see if that's going to give the United States a smoother ride overseas.

Plus, where's the fire? President Bush out to save Social Security. We're going to look at whether a rescue is really what's called for. And run for the money. Find out who stands to win the big bucks in the Super Bowl, financially speaking. Joining me today a couple of IN THE MONEY veterans, my pal, CNN correspondent Susan Lisovicz, "Fortune" magazine editor at large Andy Serwer. First jobs reported 2005, out on Friday, kind of a Goldilocks situation. Didn't come in as strong as the Street expected, but that was sort of good news for the bond market and sort of validates Alan Greenspan's and the Fed's little gradual quarter point increases in interest rates. What did you think?

ANDREW SERWER, "FORTUNE" MAGAZINE: Well, the bad news was we were expecting 200,000 jobs. We got 146. They also revised down the month's previous. The bad news is the unemployment rate dropped from 5.4 to 5.2. That's the lowest rate, 5.2 percent, since before the recession, since September of '01. The other thing that's intriguing about it is, when you add the 146,000 jobs in, that erases all the job loss in W.'s first term. So, you know, that's a lot of things to cheer about. No question, the economy's picked up a little bit. And if he had lost the election to John Kerry, wouldn't it have been just like his father, the economy picked up right as he left but it didn't happen that way.

SUSAN LISOVICZ, CNN CORRESPONDENT: OK, just one big asterisk about that 5.2 percent. It's not because -- it's not a good thing. It's a bad thing.

SERWER: Killjoy.

LISOVICZ: because there are many more people who just have simply dropped out of the search for jobs. That is -- it's one of those things that looks great --

CAFFERTY: In other words, the creation of 146,000 new jobs, is not a big enough number to force the unemployment rate down 2/10 of a percent.

LISOVICZ: That kept pace with the population.

CAFFERTY: Well, that's true. That is true.

LISOVICZ: But the most bullish thing was that '04, it was revise upward. I think you referred to that.

SERWER?: Right.

LISOVICZ: So there were more jobs. It's great, yes, that we're now equal to -- roughly equal to where we were before the 2001 recession. It's taken a long time to get back there, but when you think about it, we had the dotcom bust. We had 9/11. We had scandals galore.

CAFFERTY: We've come a long way.

LISOVICZ: And we had war.

CAFFERTY: We've come a long way back. All right. So President Bush starts on level ground for the start of his second term in terms of jobs.

SERWER: Yeah, I think you have to say that.

CAFFERTY: Flat. OK. Bush administration promising to ramp up the diplomacy in his second term. Condoleezza Rice, our new secretary of state, is out there trying to make that happen. She took off Thursday on her first visit abroad since being sworn in. Among the stops, some key European countries, plus visits to Jerusalem and the west bank. Her trip comes right after the better than expected election in Iraq. We're wondering whether that's going to make America's foreign agenda a little easier to sell and pray tell whether or not we might also be able to get some help with this rebuilding of the nation from some of our so-called friends in western Europe.

To help us take a look at all that is Michael Hirsh, who's a senior editor of "Newsweek" magazine. Mike, nice to have you with us. Thanks for joining us.

MICHAEL HIRSH, NEWSWEEK: Thanks for having me.

CAFFERTY: Granted, expectations were low going into these elections. The insurgents telling the population, you'll be killed if you vote. everybody expecting much more violence than actually happened. So the results exceeded expectations. Is this perhaps a turning point in terms of the perception of America overseas? Maybe we were right about what we're doing there.

HIRSH: I think it will only be a turning point in the sense you describe, Jack, if it's a turning point in the minds of the Iraqis. Namely, the biggest problem we've had is that the insurgency has had a Sunni see to swim in because the Sunni population has either been sympathetic or has turned its face from the insurgency. It hasn't turned them in. It hasn't, you know, hasn't been there to basically put up Abu Musab al Zarqawi for arrest in the way that we would like. So that's really the key question and what's going to happen now is, is there's going to be some very delicate mechanics going forward. If they can select a prime minister who can reach out to the Sunnis, make them feel included, because after all, the Sunnis did not take part to a great extent in the election. Then you could have the turning point you're talking about. You'll get Europeans, others signing back on, nongovernmental organizations, the U.N., coming back into the country. But we really have to see how it plays out over the next few weeks.

LISOVICZ: Michael, how real is the possibility that a democratically elected government in Iraq could actually be anti-U.S.?

HIRSH: Well, I think that's a distinct possibility. I mean the early returns are showing -- and this is really no more than, say, 20 percent of the vote. So we have to be careful in how we describe it -- indicate that the united Iraqi alliance of Ayatollah Ali Sistani, the cleric, who is the most revered figure in the country, are posting a dramatic victory of 70 percent or better which means that they will get to select whoever they want the prime minister to be.

They've indicated in some recent comments over the last day that it is not likely to be the current interim Prime Minister Ayad Allawi who of course was friendly with the CIA, seen as very pro western. So you may have a figure in there who mainly to play to Iraqi politics, which after all have become anti-American, will not act in accord with what Washington wants. And we're just going to have to stomach that. I think it's going to be one of the unpleasant shocks that may come our way as the euphoria of the election wears off.

SERWER: Michael, is there any way for us to generalize about the hearts and minds of Iraqi people? We see news reports week after week. They want to kill us. They're shooting at our soldiers. Not only the Sunnis, but we've obviously had problems with the Shia as well. Then we have this election where we see people dancing in the street with the purple finger. So what is it? Or is it both?

HIRSH: Well, you know, it really is the question of the hour. I know that when I went over there, compared to when I went a decade before in '91, it was dramatically different. You couldn't go out. You couldn't say that you were an American, which obviously for Americans, knowing that we're giving hundreds of billions of dollars to this country to resurrect it, was a little difficult to stomach. It's difficult to say. Again, I think this is really a turning point or could be a turning point, if the election mean that the Iraqis are actually taking ownership of their own country, which will be the first time. You've got to remember. Everyone else that has been there, including Allawi, has been installed by the U.S. Then you may get a more benign view of the United States going forward. But up until now, the occupation has not been seen as successful by most Iraqis, which explains the sentiments you're describing.

CAFFERTY: Let's talk about the Sunnis in the context that you just mentioned, the willingness of the Iraqis to take control of their own country. Aren't the Sunnis kind of in a situation where the pressure's on for them to go along in order to get along, at least a little bit, or are we looking at a situation like with the Palestinians where the Sunnis will be saying, well, we can't control the terrorist elements within the Sunni organization and there's nothing we can do about it? If the rest of the country, if 80 percent of the country says, you know what, it's the dawn of a new day and we've got a chance to do some stuff here, don't the Sunnis have to feel some pressure to get in the game?

HIRSH: That's exactly why the choice of the prime minister, which is going to be finally made by March 1 I understand is so important. Jack, you really have to get someone who can reach out to large segments of the Sunni population, say, look, here's the deal. This is what the government's going to be, it's going to be Iraqi. The election results are important. The formation of the new constitution is going to be important. And you've got to take part. And the hope is that you win away enough Sunnis so that the support for this insurgency, which has been largely Sunni-fueled is sapped away. And, you know, I think a couple of benchmarks to look for, the potential arrest of Zarqawi, the Jordanian terrorist who has been joined up with the Sunni insurgency. Will he get turned in by elements of the Sunni population who decided that he has outlived his purpose? These are things to look for and I think it's going to be a very, very delicate set of negotiations going forward in the next few months. LISOVICZ: Michael, you talk about delicate negotiations. The election comes right before the new Secretary of State Condoleezza Rice goes overseas on the first of what can only be assumed many trips overseas. What kind of hurtles does she have to jump to mend some fences?

HIRSH: Well, you have the complicating issues of Iran, negotiations going on between three major European countries and Iran, Condi Rice came in with some very tough rhetoric. But at the same time, she took the military option against Iran off the table, which I think relieved a lot of Iranians. And so that could help to redress some of these revisions in the transatlantic alliance and of course what the U.S. is hoping for is not just help on Iran, but on the Middle East. Now I'm told that the thing to really look for is the speech that she's going to give in Paris in the next few days. It's going to be a very important speech. It's going to lay out U.S. policy on the Middle East and on Iran and on transatlantic relations in a way that hasn't really been done up until now and I think the idea will be to get the Europeans on board. Then, you know, I think they're -- clearly, you'll get more help in Iraq than you've had. Up until now, it's been really a pittance. It's been just a small NATO training mission, the extent of most of the European assistance.

CAFFERTY: Yeah, they haven't gone out of their way to help out. Interesting times in which we live and the story in Iraq -- it's a breath-taking story, however it turns out. It really is interesting stuff and your magazine is to be commended for the fine job you're doing covering it. I thank you for being with us, Michael Hirsh, senior editor of "Newsweek."

HIRSH: Thank you.

CAFFERTY: All right. When we come back, the big fix. President Bush wants to straighten out Social Security, but not everybody thinks it needs straightening. We'll get the hands off take on that straight ahead.

Plus the human side of the Enron collapse. Find out about the personalities behind the disaster that cost the investors billions and some of the principals and key architects of the collapse are out, walking around free as a bird.

And the digital version of singing in the shower. Listen in, but cover your eyes. This is our fun site of the week. Stay with us.

(COMMERCIAL BREAK)

CAFFERTY: Well, in case you fell asleep during the state of the union address and let's be honest, some people probably did, here's the executive summary. Social Security reform is at the top of the president's to-do list. For the first time, he gave some specifics on his plan, including a couple of key detail of the proposed personal retirement accounts. Joining us now, "New York Times" op-ed columnist Paul Krugman, who is convinced, as are a number of people, that these private accounts for Social Security are not a very good idea. Paul, thanks for coming back on the program. It's nice to see you again. PAUL KRUGMAN, "NEW YORK TIMES": Good to see you.

CAFFERTY: Help me out here. To me these things, at least on the surface, seem similar to an IRA or a 401k. It's voluntary. You put a small percentage if you want to into these things. You invest in broadly diversified instruments. For example, the S&P 500 index fund and then if you leave the money in there, history suggests you're going to get a return of 7 or 8 percent over the lifetime of the investment. So somebody who is 25, 30 years old, leaves the money in there they're going to be fine. What's the problem with these?

KRUGMAN: OK. Everybody will tell you you should invest in a mix of stocks and bonds for your retirement. What these plans do, actually boil it down, it turns out that it's going to be asking you to borrow, to mortgage your Social Security benefits in order to buy stocks and hope that it turns out all right.

CAFFERTY: How do you mean, borrow?

KRUGMAN: This has been dance of the seven veils. They've been revealing details bit by bit. But in the background briefing that went with the state of the union, a senior administration official said -- and I'm making this clearer than he did -- that what you'll do is if you put your money -- if you had put your money in bonds, government bonds, you would get about a 3 percent rate of return after inflation. And at the end, you'd be able to buy yourself an annuity that would pay about $5,000 a year.

So what we're going to do is if you choose private account, we're going to reduce your Social Security benefits by $5,000 a year. So if you just buy bonds, you end up exactly where you started, no net benefit and he said that, no net benefit if you get a 3 percent rate of return. So it's really a loan. It's not letting you invest your money. It's borrowing against your Social Security benefits to invest. So if you get more than 3 percent, if you buy stocks, so you're borrowing to buy stocks and stocks do well, then you end up ahead. This is speculating on margin. And if the stocks do badly, if you end up with your private investment account only yielding you enough to get a $2,000 a year annuity, they're still going to dock your benefits by $5,000 so you're going to be worse off. You're taking on a lot of risk.

The other thing we learned from all of this is, from a senior official again is that nothing -- this has no impact on the solvency of Social Security. Now I argue, I actually say it's negative. But this has nothing to do -- all of the crisis that's been talking about the private accounts, by the administration's own admission do nothing to deal with that crisis. So this is just an add-on to whatever they're actually going to do about the finances of Social Security.

SERWER: Paul, I know what the problem is. You just have to figure out which stocks are going to go up 50 a year for the next 25 years, you'll do just fine. You mention the word crisis and you talked about that. There's a lot of sort of semantic difficulties here. The president has backed off the use of the word privatization, backed of the word crisis, which is very interesting to me. But can you talk about the problem because there's no doubt that over the coming decades, this system will run into problems in terms of funding. But how much of a problem is it and how would you define it?

KRUGMAN: Well, I believe we should think, you know, a reasonably long time ahead, but not into the science fiction era. So on a 75- year ahead basis, the Congressional Budget Office, which I think is probably the best estimates out there, say that we have a funding shortfall of Social Security, about 4 percent of GDP. Which is, you know, you should do something about that. It's not especially urgent because that's not a huge number. It's about one-fifth the size of the Bush tax cuts, which are about 2 percent of GDP and if they're made permanent, that's forever. So this is a -- you know, you probably would want to study it, because this is -- we want to be very careful. You don't want to react to a completely nonexistent crisis.

SERWER: So why is the president feel compelled to address it in your mind?

KRUGMAN: Oh, because this is not about the solvency of the system or anything like that. This is about ideology. This is about demolishing -- Steven Moore of the Cato Institute and the Club for Growth who is franker than the administration, said Social Security is the soft underbelly of the welfare state and we want to jab a spear through it. This is not -- this has nothing to do -- Franklin Roosevelt's family is understandably, extremely upset because this is actually an attempt to demolish FDR's legacy.

LISOVICZ: But Paul, wouldn't you agree that something has to be done because the numbers are undeniable. In the future, there are going to be fewer workers supporting many more retirees and it would require big increases in taxes. I'm seeing, perhaps, a 50 percent increase.

KRUGMAN: No, that's --

LISOVICZ: ... in Social Security taxes -- OK, well, then what would you do? If you had control of Social Security, what would you do?

KRUGMAN: I would look for a little bit more revenue to bolster the system. I'd look for some -- you can do that in various ways and I think we need to talk about how we should do that. And I would look for some ways to reduce the benefit costs in ways that make sense. There is an issue about too many people taking early retirement, for example, which is a relatively manageable thing, does not strike at the fundamentals. But look, on the scale of these things, we are talking about 15 years from now, Social Security will -- because of the aging population -- benefits will be something like 1 percent to GDP higher than they are now. Right now, we have a deficit in the general fund, the -- you know, the deficit outside the Social Security of the U.S. government of 5 percent of GDP. Now, the crisis now is -- has to do with tax cuts, has to do with cutting taxes while we're fighting a war, and here we are saying, oh, but let's worry about the demographics, you know, it doesn't really have full impact until about 2030. I'm all for thinking ahead, but this is a diversionary tactic. CAFFERTY: We're almost out of time. But let me just ask you one other -- what did you think of that election over there in Iraq? We talked about the war and the whole thing going on over there. What did you think?

KRUGMAN: Look, I think we've been given another chance. You know, three times by my count so far the Bush administration has passed up the chance to really try to hand over power to a domestic group in Iraq. Essentially, we're going to end up handing the keys to Sistani. We know that. The question is are we going to do it gracefully? We passed up many chances to do it gracefully and we may have another chance now.

SERWER: All right. Never short of opinions, Paul Krugman, op-ed columnist for "New York Times" and a professor of economics at Princeton University. Thanks for coming on.

KRUGMAN: Thank you.

SERWER: Coming up after the break, the parent trap. SBC is buying its former corporate big momma. Find out how Wall Street is liking the deal for AT&T.

Also ahead, big game hunters from the glitz to the gridiron. We'll look at who's winning cash wise in this year's Super Bowl.

And you've got to spend it to make it baby. EBay is changing its fees for sellers. We'll tell you why some people don't like that.

(COMMERCIAL BREAK)

LISOVICZ: Now let's take a look at the week's top stories in our money minute. The Fed's interest rate hike parade keeps marching on. Alan Greenspan and company boosted short-term rates another quarter point and the post-decision statement from the Fed reads just like the last one, pointing to more rate hikes in the future.

Under worked and over paid, that's what a newly released report says about former New York Stock Exchange chief Dick Grasso. The NYSEv study concludes Grasso set his own unimpressive performance targets and made about $144 million he didn't deserve. But Grasso wasn't grabbing it all for himself. The report says he made sure his secretary got a $240,000 annual salary and his two drivers, well they made $130,000 a year.

And Martha Stewart continues to do better in jail than most of us do as free citizens. NBC announced that Stewart will star in her own version of "The Apprentice" next month. That's even though she'll still be under house arrest. Donald Trump will be one of the executive producers of the show.

SERWER: Every parent dreams of the day when one of their children will grow up and buy them out? Well, maybe that's not every parent's dream. But that's what happened a few days ago when baby Bell SBC and Ma Bell, AT&T, agreed on a $16 billion buyout deal. The first big impact will be job cuts as both companies announced they'll be eliminating about 13,000 positions.

But what does the deal mean for investors? SBC shares are trading at about midway between their one-year highs and lows right now. SBC Communications is our stock of the week and -- I don't know about this deal. I mean, one person on Wall Street called it a monumentally dumb deal for SBC. Who wants to be biggest no-growth company in the United States? That's because, you know, of course AT&T's business is shrinking. SBC seems intent on becoming the biggest phone company in the world. Congratulations, you know? It's a very tough business. They bought Ameritech. They're putting together AT&T Wireless.

LISOVICZ: It used to be the smallest of the baby Bells.

SERWER: It's just a tough one.

CAFFERTY: There's all kinds of phone companies out there. You got Internet phone companies now and you got AT&T, which is all-cable phone company.

LISOVICZ: And it's got business customers, that are desirable.

CAFFERTY: And they also have those wires that go into everybody's house in the country just like the television, the cable TV companies do. Somebody said if they can figure out how to do something besides run phone conversations over those lines that company would probably be worth a lot more than it is.

SERWER: Yeah, they haven't been able to figure that out. I mean the cable companies have gotten ahead of them. Maybe SBC will. Ed Whitacre (ph) wants to put all these companies together and I just don't see it. It's going to be an $58 billion company in 2006, which is just huge. They got in trouble when he was putting Ameritech together. They laid off so many people that the service decline and regulators started slapping them on the wrists.

LISOVICZ: The layoffs have already started.

SERWER: They're talking about laying off 13,000 people. They better make sure their service stays up to snuff otherwise the regulators are going to come at them again. Meanwhile, Jack, as you're alluding to, Internet telephony, people making phone calls over the Internet, it's practically free, that's not quite true, but it's very, cheap.

CAFFERTY: It's a lot cheaper than the traditional way though.

SERWER: It sure is.

LISOVICZ: A lot of complaints about the service just yet. The technology hasn't developed to the point where it can really rival in terms of quality. But you're already seeing the fallout from SBC and AT&T because now you have that MCI and Qwest are reportedly in talks and Verizon may come in again with another offer for MCI. So you are seeing the consolidation now.

CAFFERTY: Twenty five years after they broke up the phone company because it was a monolith, it was too big and they made all these little tiny phone companies, now the tiny phone companies are starting to get together and make these great big phone companies.

SERWER: Right and there will be one company left. It will be SBC, which is going to be the descendant of the company that they broke up and somewhere some regulator is rolling over in his grave. I mean it's just, it's ludicrous.

LISOVICZ: In some ways it's so ironic because AT&T was exactly the kind of company that SBC was. Apparently it was -- you know, it was on a buying binge. It was very tough on its rivals and eventually, eventually, many years later, it was ordered break up. And then what happens?

SERWER: Meanwhile, everyone's making phone calls on their cell phones and on the Internet.

CAFFERTY: There you go.

SERWER: Anyway, come up on IN THE MONEY, one of the biggest bankruptcies in history and how it got that way. A new documentary film about the Enron collapse was a hit at this year's Sundance film festival. We'll talk with the co-writer of the story that inspired it.

Also ahead, scoring points -- if you're talking money, the action in this year's Super Bowl only starts on the field. See who stand to win.

And one good reason to stick with singing in the shower -- we'll show you our fun site of the week. Oh my goodness.

CAFFERTY: Turn that off.

(COMMERCIAL BREAK)

ROMANS: I'm Christine Romans at the CNN center in Atlanta. Here's what's happening now in the news. The wreckage of an Afghan passenger jet which disappeared from radar in a snowstorm Thursday has been found. The crash site is on a mountain 20 miles outside of Kabul. So far, there is no indication of survivors.

The pope is feeling better. The 84-year-old pontiff continues to improve in the wake of a respiratory infection that hospitalized him Tuesday. A spokesman said Pope John Paul II will deliver the traditional blessing Sunday from his hospital. But an aide would read his address.

It's still early in the vote count, but the coalition of Shia parties of Iraq's top Shiite cleric Ali al Sistani is leading the secular party of interim Prime Minister Ayad Allawi in the country's Diala (ph) province. Sistani's coalition is also leading Allawi's party in the south. Final results from the election are expected next week.

President Bush says strengthening the economy is the central goal of his 2006 budget. In his weekly radio address, Bush said the budget, which he'll submit to Congress on Monday, will make tax relief permanent and help cut the deficit in half by 2009.

And Jacksonville is in the final countdown for hosting the Super Bowl, which includes a super security effort. Some 50 law enforcement agencies are involved. It's Super Bowl safety.

I'll have all the day's news at the top of the hour. Now back to IN THE MONEY at CNN.

LISOVICZ: Fact challenged fiction at this year's Sundance film festival with documentaries generating some of the biggest buzz. Among them was a film called "The Smartest Guys in the Room" based on the book of the same name, co-authored by Bethany McLean. She's a "Fortune" magazine reporter who first raised questions about Enron accounting practices to executives in early 2001.

(BEGIN VIDEO CLIP)

REP. HENRY WAXMAN (D) CALIF: It appears as if you were trying to bully someone who was asking very basic questions about Enron.

JEFFREY SKILLING, FMR ENRON EXEC: I said to her, I have got six minutes left before I have to be in a meeting and I can't get into the details and I'm not an accountant. And she said, well, that's fine, we're going to do the article anyway. And I said if you do that, I personally think that's unethical. And the next day --

WAXMAN: Let me interrupt you --

SKILLING-- our chief financial officer and our chief accounting officer flew to New York at Enron's expense to sit down, not with the editors, but to sit down with the reporter on that story and help her understand the questions she was asking.

(END VIDEO CLIP)

LISOVICZ: And the author of the book, Bethany McLean, joins us now. Congratulation on the book, on the article and on this movie. It won't be released, I think, widely, for a few more months. But are we going to get all fired up once again about the excess of Enron?

BETHANY McLEAN, "THE SMARTEST GUYS IN THE ROOM": We certainly hope so. The film really captures the characters who drove this story. I think people on the outside tend to think of Enron as the story about numbers. And it really isn't. It's a story about people and the way the film describes it, it's a story anybody can understand.

SERWER: Bethany, I want to make it clear, maybe for the viewers who just saw that, that was Jeffrey Skilling referring to you, the reporter. What did that make you feel when he was disparaging you basically in front of a congressional committee and then you ended up being vindicated of course?

McLEAN: I was really lucky because I stepped out of the room for that period of the hearing. And I'm really glad I wasn't there because it would have been kind of hard to take. I think it's particularly amusing when he says that they had to tell me what questions to ask, or explain my question to me. So --

CAFFERTY: What did you make of the reception of the film at the Sundance festival? I mean the story of the rise and fall of some corporation in Houston, Texas that dealt in energy futures doesn't exactly have Hollywood blockbuster written all over it, at least at first glance. And yet this thing became one of the darlings of the festival.

McLEAN: Right. It was amazing and I think it's a real testament to the film maker's ability, Al Skivney (ph), who directed this film, because he really managed to capture the characters behind the story so that when you see it, you see it as a human tragedy and as a grand failure on the scale that it was instead of some story about incomprehensible financial stuff.

CAFFERTY: You mentioned It's a story about people. It's a story about weasels, Skilling and Ken Lay being two of the biggest weasles. What do you make of the fact that they're still out there, living their lives and the sun comes up every morning and they go and play a little golf and do whatever. Nothing's happened to these guys yet?

McLEAN: Well, they have been indicted and the trial is scheduled probably to happen sometime in 2005. And it really is. It shows you how complicated what happened at Enron was. Because it's taken years just to indict these guys. Enron's bankruptcy was over three years ago.

LISOVICZ: Bethany, on a larger scale, the defense is something that we're seeing more and more often. For instance, I interviewed Kenneth Lay in the year 2000 --

CAFFERTY?: Kenny boy.

LISOVICZ: To some of us. He certainly took credit for the great success of Enron. But now is saying, well, you know there were other people who were really involved. We're seeing that play out at Tyco, at HealthSouth. We saw the release of the web report with Dick Grasso's pay, very smart people involved. Some of them had to know. What's your take on this about moral responsibility?

McLEAN: Well, the epilogue for our book was titled "Isn't Anybody Sorry?" because we were stunned by the number of people involved, the board, the lawyers, the accountants, the bankers, all of whom said, "it's not my fault, somebody else's fault." And to me, if a CEO says, I didn't know, fine, give back your salary.

LISOVICZ: You're negligent. You should know.

McLEAN: Exactly. Why did Ken Lay then get paid some $300 million in the last couple of years of Enron's life if he had no clue what was going on in his company?

LISOVICZ: And he was known for taking a lot of control -- SERWER: Because they can, as they say about that. One thing I want to ask you Bethany, when you were writing this, and as you really dug in deeper and deeper and discovered all these shenanigans, did you ever think, man this would make a great movie?

McLEAN: Honestly, everything at Enron was so overwhelming in the time in which it happened that I was never think one step ahead. When I wrote my first story, I did it and was relieved to be done with it. And when Peter and I worked on the book, it was such an overwhelming process, because there was so much to figure out and so much to get your arms around, that I think we were just thinking, let us get through this.

SERWER: I remember seeing your office which was just filled with crates of paper and you were going down to Houston and bringing back all these documents and you really were able to wade through that stuff. It's pretty amazing.

CAFFERTY: At the end of the day, is anything going to change? We got the Enron story. We got Bernie Ebbers on trial at WorldCom. You got Scrushy at HealthSouth, you got Kozlowski at Tyco. I mean just a huge number of scandalous stories that came out of the Wall Street of the late 1990s, much hand-wringing. The prosecutors, the criminal justice system, we've got to address all this. Greedy people do shortcuts in order to be greedy people. Is any - are we going to have any kind of a better corporate climate in this country as a result of any of this stuff, do you think?

McLEAN: I don't know. A lot of new rules have been put in place but when you look at the Enron story, the key thing to is these were guys that specialized in using the existing rules and using the framework and following the letter of the law while totally violating the spirit. So you ask, how can new rules prevent that kind of behavior? They can't. But what can is fear. And I think right now, no corporate executive wants to be Ken Lay or Jeff Skilling and the only really effective counterbalance to the greed that prevails in corporate America is fear. So that's why I think it's good that we're seeing this aggressive prosecution.

SERWER: (INAUDIBLE) scared.

LISOVICZ: Will Jeff Skilling or Ken Lay go to jail?

McLEAN: It's going to be a really difficult trial. It's going to put a lot of issues that we've been talking about like the extent to which a CEO's responsible for what happens on his watch. It's going to test a lot of those issues because Ken Lay and Jeff Skilling are both going to say "we didn't know. It was our underlings who did this."

LISOVICZ: Even though they were the smartest guys in the room, the name of your book and the movie that we look forward to seeing this spring. Bethany McLean, congratulations, thanks for joining us.

McLEAN: Thank you. LISOVICZ: There's more to come here on IN THE MONEY. Find out who's on track to win big in this year's Super Bowl when it comes time to count the cash that is.

And (INAUDIBLE) into an auction house, eBay can do it, see why some of its online sellers are mad at its Web site.

(COMMERCIAL BREAK)

SERWER: Whether you're an Eagles' fan, a Patriots' fan, or just a fan of placing a couple bets at the annual office pool, there's a lot at stake this Super Bowl. And that goes for corporate sponsors, the host city and teams in the NFL, too. Andrew Zimbalist is a sports consultant and an economics professor at Smith College in Northampton, Massachusetts. He joins us now with a look at who really wins at the Super Bowl. Andrew, welcome.

ANDREW ZIMBALIST, SPORTS ECONOMIST: Thank you for having me, a pleasure.

SERWER: Let me ask you about football in the NFL. Why is this America's games now? Is it because it's something people really like or is it because the NFL is so well run?

ZIMBALIST: I think both of those things are going on. It's a perfect television game. It's really been the hottest television item since the Super Bowl began in the 1960s. The ratings almost every single year are over 40. This year, that means that there will be somewhere in the neighborhood of 45 million households. That does not include the bars and saloons around the country. It does not include all the extra people who are watching at Super Bowl parties. So you probably in the United States alone will have 120 million people watching the game. Worldwide they estimate something like 800 million people. Now other than CNN's IN THE MONEY, this is the most watched show in the United States.

SERWER: Thank you, Andrew. Let's have him back.

LISOVICZ: We're glad you're among our fans in addition to our closest family members. Andrew, why can't the NHL or major league baseball borrow a page from the NFL? I mean, why do they have problems and the NFL is always just stacked with cash?

ZIMBALIST: The NFL, when it began back in 1920, shared gate revenue 60/40, 60 percent to the home team, 40 percent to the visiting team. Then back in 1961, under the inspiration of Pete Roselle, then the commissioner of the National Football League, they got Congress to grant an exemption to the league so that the league could package one television package for all of the teams and then share the money equally. So they have had embedded in their history tremendous amount of revenue sharing.

Right now in the NFL, probably each team gets around $100 million from the central fund each year. And then on top of that, they maybe average another $30 or $40 million in local revenue. So you have somewhere in the neighborhood of 65 or 70 percent of all the revenue in the league equally shared and that's why you could have a team in Green Bay compete with teams in New York.

Neither baseball nor basketball and certainly not hockey, have had that history of revenue sharing, that has made the owners not only more competitive with each other and more equally balanced, but also more cohesive as a business force, better able to take forward-looking visions, decision for the sport.

CAFFERTY: Why hasn't major league baseball made more of an issue of this with the Congress? Obviously, the playing field is tilted in favor of the NFL, given the situation you just described. Is it because of resistance to change on the part of teams perhaps like the Yankees and the Mets who enjoy the lion's share of the revenue in baseball?

ZIMBALIST: Baseball has exactly the same privileges and in fact more legislatively and judicially than football has. It however, doesn't have the history of sharing amongst the owners. Yes, traditionally, the big city owners like George Steinbrenner, like Fred Wilhahn (ph) have resisted a great deal of revenue sharing. But baseball has been moving in that direction since 1996 under the leadership of Bud Selig. There's tremendously more revenue sharing right now in baseball than there ever was before. So that around 30 percent of all baseball revenue are shared, but it's not probably as much as it ought to be.

SERWER: Andrew, those Super Bowl commercials really work. I mean what is it with this whole thing where companies spend $2.3,4 million for a minute? I don't think people -- they look at it but then they never remember whose advertising what. It's just sort of part of our culture now, isn't it?

ZIMBALIST: Let's be a little bit more accurate because it's $2.4 million, not for a minute but for 30 seconds.

SERWER: Excuse me. Thank you for the correction.

ZIMBALIST: And also it probably costs on average about a million dollars to make each commercial.

SERWER: Right.

ZIMBALIST: And then there's also some promotional time that they dedicate. So you're looking at, on average more than $3.5 million for a 30-second spot. What's good about advertising on the Super Bowl? Well, you know, a recent survey said that 34 million people who will watch the Super Bowl watch it primarily for ads. This is -- this, for the ad industry, is kind of like what the academy awards are for the movie industry. This is where they show their goods. This is where everybody struts. And so a lot of people, because they know there's such an amount -- large amount of money and attention put into making the ads, the ads are a form of art. They're the most creative thing that happens at the Super Bowl. People watch the ads as opposed to a typical television show where either people are Tivoing it or they're going to the refrigerator or they're going to the bathroom or what have you. So there's a much better chance that you're going to get a focused audience paying attention to your message and that's the real glory of Super Bowl advertising.

LISOVICZ: OK. So we've established that the teams, the NFL is flush with cash. That doesn't mean the fans still get squeezed. Now -- shut your ears, Andy.

SERWER: OK.

LISOVICZ: Because this is about the Redskins. The Redskins forcing all of its season subscribers who pay by credit card to use their own card, or to charge their -- charge their fans money to watch -- watch their summer scrimmages, or the Jets to charge...

SERWER: This is important stuff. It's the Redskins.

LISOVICZ: ... to charge people who are on waiting list. I mean that is a little excessive, isn't it?

ZIMBALIST: I didn't know about the Redskins requiring them to use the Redskins' credit card. That sounds like tying (ph) an antitrust violation to me and I encourage some Washington fans to look into that. But look, the NFL has a tremendous amount of leverage. Clearly this is the spectator sport in the United States. It is the most prominent cultural ritual in the United States. I mean, think about what it does in our country, not only are there going to be 120 million plus people watching it, but it unites every sector of our society. There are old white men and young white men and there are old women, white woman and young white women, African-Americans and Hispanics, everybody watches Super Bowl. What other cultural event does that?

LISOVICZ: Right. So don't take advantage of the fans because they can turn on you.

ZIMBALIST: They're in a position to do it, and like good business people, they take advantage of what they can.

LISOVICZ: OK. Who's going to win, real quick?

ZIMBALIST: I don't know, but I'm rooting for the Patriots.

SERWER: Yeah. He's from Massachusetts.

LISOVICZ: OK, duh. Andrew Zimbalist, economist, Smith College in Massachusetts. Thanks for join us.

ZIMBALIST: My pleasure.

LISOVICZ: There's a lot more still to come on IN THE MONEY, just ahead, find out why some eBay sellers don't like the online auctioneer's new price arrangement.

And if you've got a beef or just an opinion you want to get across, drop us a line. The address is inthemoney@cnn.com.

(COMMERCIAL BREAK) CAFFERTY: Lest you think that eBay is just a place for a bunch of mutants to auction off space on their forehead foreheads for tattoos, nay, nay. It's actually one of the few Internet companies that weathered the dotcom storm and just keeps getting stronger. But now it's doing something that is making its clients angry. Allen Wastler joins us now with that and a great fun site of the week. How you doing big guy?

ALLEN WASTLER, MONEY.COM: Doing fine, but the people on eBay, ooh, a little consternation going on there. Because eBay, you may have noticed, couple weeks back, they came out with their earnings. For the first time, in many, many quarters, they said, we missed your estimates, Wall Street, sorry.

And Wall Street of course went, you nasty, nasty -- and slapped 'em around. So now eBay is the big kahuna in the web spate for auctioning off things and when you're the big kahuna, what can you do when the revenues start going? You raise your prices? So they're jacking up prices, in some case on a percentage basis, it's a pretty hefty hike. Now for most people using eBay, you're going on to sell grandma's old armoire, you know, the price is not that big a difference. But there are some people who have made quite a living off of moving a high volume of very low margin goods on eBay.

CAFFERTY: Junk.

WASTLER: Junk.

CAFFERTY: Lawn ornaments, used, high margin, low margin

WASTLER: Used lawn ornaments.

LISOVICZ: You need those ping flamingos.

WASTLER: So if you raise, if you raise how many you're paying in costs on each one of the things, you're taking a pretty good chunk out of that low margin that they're doing lots of. So they're outraged and there's an online petition going on. They've got over 21,000 signatures on this, oh, we hate this and we're going to go somewhere else.

CAFFERTY: They're not going to go anywhere else --

(CROSSTALK)

WASTLER: The fact of the matter is, I talked to a couple of the sellers about this. He said, you know, the buyers on eBay, because of branding, the buyers go to eBay and if you're a seller, you got to go where the buyers are.

CAFFERTY: There's a Wall Street expression for that, it's called tough noogies. EBay's the only game in town.

WASTLER: (INAUDIBLE) That tough jargon again.

CAFFERTY: Harvard business school. What's the fun site of the week?

WASTLER: The Internet is a place where people have personal expression, sometimes inadvertent personal expression.

CAFFERTY: Sometimes terrible.

WASTLER: This poor guy, well, let's see his inadvertent expression. Oh, my favorite part was about to come out, but anyway.

LISOVICZ: The eyebrow raise.

SERWER: The eyebrow.

WASTLER: It's unclear where it's coming from. Most people think it's originating from Holland. It's a Romanian pop song. It's kind of catchy. He liked it.

CAFFERTY: He liked it a lot. It's one of those webcams that he forgot was on.

WASTLER: Someone he got uploaded.

CAFFERTY: Right next to his mirror. Thanks, Allen.

Come up next on IN THE MONEY, time to read from you as we read some of your e-mails from the past week. They can preempt this program but they can't stop us from reading your e-mails. And they better stop preempting us, too, or I'm going to quit doing this thing and you can send us an e-mail right now. We're at inthemoney@cnn.com. Back after this.

(COMMERCIAL BREAK)

CAFFERTY: Time now to read your answers to our e-mail question from last week, which was as follows, what's the dumbest thing you've ever done on the job? Barbara from Florida wrote this. The dumbest thing I ever did was call my boss an unflattering name while I was talking to a coworker in the bathroom. Little did I know the boss was in one of the stalls. I was fired the next day.

Dennis in Lakewood, Colorado writes, during a driving rainstorm I used one of my company's marketing props to cover myself. My $200 suit came through fine, but the $1500 marketing prop did not. Luckily my bosses had a sense of humor about it.

And David wrote, while I was working at a construction site, one of my company's vice presidents arrived wearing an orange hard hat. I realize now I shouldn't have told him he looked like a popsicle. That's not bad actually.

For next week's e-mail question of the week is this -- what kind of retirement plan do you have other than Social Security? Send your answers to inthemoney@cnn.com. You should also visit our show page at money.com/inthemoney which is where you'll find the address of our fun site of the week. You got to check it out. It's one of the best in a long time. Thank you for joining us for this edition of the program. My thanks to CNN correspondent Susan Lisovicz, "Fortune" magazine editor at large Andy Serwer and money.com managing editor Allen Wastler. Join us tomorrow 3:00 Eastern before the big game. You can watch IN THE MONEY first. Then we'll excuse you to go look at the football thing. We'll look at the growing number of Russian spies operating here in the United States, try to find out what's behind that trend. That's tomorrow at 3:00 Eastern. Hope to see you then.

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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