CNN.com International
The Web    CNN.com      Powered by
 
 
 
 
 
 
 
 
 
 
 
 
 
ON TV
 
 
 
 
 
 
 
TRANSCRIPTS


 

Return to Transcripts main page

CNN IN THE MONEY

Goldman Sachs Purchases Largest Manufacturer Of Wind Power; Interview with Susan Jacoby; Congress Worried al Qaeda May Enter U.S. Through Mexico

Aired March 26, 2005 - 13:00   ET

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


JACK CAFFERTY: Welcome to the program. I'm Jack Cafferty.
Coming up on today's edition of IN THE MONEY, where church and state meet, and we're not talking streets. From President Bush on down, politics and religion go hand in hand in the Terri Schiavo battle. We'll look at how the politicians picked up the language of faith.

Also ahead today, southern exposure: Washington's worried about terror groups like al-Qaeda entering the United States from Mexico. Find out why Congress only started getting jittery about it recently.

Plus, green greenbacks: A big Wall Street firm is betting on alternative energy. See why that's about more than what you're paying at the gas pump.

Joining me today on the program, money.com managing editor Allen Wastler, and "Fortune" magazine senior writer Shawn Tully.

So, the latest CNN/Gallup/USA Today poll came out the end of last week and it showed that President Bush's approval ratings have declined to their lowest level of his presidency, from 52 percent saying he's doing a good job down to 45, which a big drop for one week. Some political analysts suggest it may have been the decision by the White House and the Congress to get involved in the Terri Schiavo mater. What happen do you think?

ALLEN WASTLER, MONEY.COM: No doubt that that's probably into it. I mean, it's one of those situations where, you know, nobody's going to come out a winner out of this debate. It's a bad subject to get into, and their involvement, it's sort of gone down -- now, other stuff has been going on, too, he's been spinning wheels on Social Security, and inflation is beginning to raise its head a little bit, so those might have entered in there, too, but the headline piece is probably Schiavo case.

SHAWN TULLY, FORTUNE MAGAZINE: It's unusual to see a politician take on an issue that's this unpopular with the public in general, and you wonder if Bush is painting himself into a corner by essentially shoring up his base and taking an unpopular position, which is the same thing he's really doing with Social Security which also has not gone over well.

CAFFERTY: Now, what do you think about that Social Security thing? It looks to me like it's going absolutely nowhere. The polls on that subject also are indicating most people don't want it tampered with.

WASTLER: That seems to be, you know, the big lesson that they're taking here. Part of it is, the program is very complicated to understand to begin with. Nobody agrees on the numbers, and then the proposal being put out there, nobody agrees with the theory, and nobody agrees on the number on that either, so, what are you going to do?

TULLY: It's remarkable that he hasn't gotten more support from people in their 50s, who will not have any change to their future benefits and yet, they're not really jumping in to support him. And then you have -- the additional problem, the young people really haven't warmed up to the accounts, even though, rationally, in the long term, they'd be better off with the accounts.

CAFFERTY: And the other part about the story, which we don't have time to go into now, is that Medicare is in a lot more trouble than Social Security is in, and will go broke with a bigger deficit a lot sooner and so far, we're not even talking about that. To be continued.

Meantime, the battle over Terri Schiavo may have been fought in the courts but the real noise was on the sidelines. Some Republicans picked up an issue galvanizing the Christian right and ran with it all the way to the federal courts. But how good an idea was that? Like gay marriage and the conflict over abortion, the Schiavo case has some politicians taking a fundamentalist position and making it their own.

For one take on what's happening in all of this, we're joined by Susan Jacoby, who's the director for the Center for Inquiry here in New York City, a nonprofit secularist group that supports the separation of church and state.

Susan, welcome. Nice to have you on the program.

SUSAN JACOBY, CENTER FOR INQUIRY: I'm happy to be here.

What's your take on the decision by the Congress and the President of the United States in a frantic weekend, late-night bit of scrambling, to dive right squarely into the middle of the Terri Schiavo debate?

JACOBY: Well, first of all, as you said earlier, what they are doing is they are shoring up their base. I think, by the way, they didn't know how unpopular this was going to be. It's not only the president. This resolution required unanimous consent of the -- of the Senate, and not one single Democratic senator spoke out against it. What I think -- I'm the author of a book titled "Free Thinkers: A History of American Secularism," and what I think this shows is, when people talk about the values issue -- the press is always talking about the values issue -- what they mean are right wing religious values.

I think the fact that the public doesn't approve of this shows that there are a lot of values in this country, some of them are secular values, many of them are religious values, those 82 percent of the people who don't approve of what Congress did, most of them are religious. They're just not the religious right, and I think that one of the things that has happened in last some years is, is that the religious right has not only demonized the word secular but it's hijacked the word religious.

CAFFERTY: Susan, do you think that this provides an opening for the Democrats given that the Republicans may have made a mistake here in going so far out on a limb to protect their base?

JACOBY: You know, I think it does. But I feel very discouraged about it. I think -- I'm truly shocked that not a single Democratic senator had the courage to stand up, and, in fact, speak the language of values and say, my values, my religion, my beliefs, don't allow us to intervene in this kind of family affair. I think there is an opening, but I think we have a situation in which Democrats have been absolutely terrified by this idea that George Bush won because he owned the, quote, "values issue."

WASTLER: Susan, one thing that interested me about the whole episode this week was that the GOP is usually the party of small government, you know, get government out of your life, and yet this move seemed to go against that party philosophy. What are your thoughts on it? Are we seeing a change in where the Republican party is?

JACOBY: Well, I think we've actually seen this for some time now. That, in fact, in fact, the Republicans are in favor of states' rights when states' rights coincides with their views, and they're against it when it doesn't. They didn't like what the state courts did in Florida, and they thought, clearly they thought -- particularly because the 11th circuit court of appeals in Atlanta is one of the most conservative courts in the country -- they thought that by pushing this issue into the federal courts, they could get what they wanted. Now, they're quite furious that even conservative judges didn't like this approach. And I think we're going to see a lot more of the judiciary being made an issue. I believe that the religious right core of the Republican party doesn't want an independent judiciary at all, which is hard to get.

CAFFERTY: The right wing of the Republican party will never vote for a Democrat either, ever, ever, ever, ever. From where I sit, it seems to me the Democrats are missing a golden opportunity here.

If you were advising the Democratic party on this whole issue -- the discussion of the intrusion of religion into government, et cetera, et cetera -- what would you be telling them to do here?

JACOBY: Well, of course the DNC hasn't called and asked me to be an adviser.

CAFFERTY: No, they probably won't.

JACOBY: I'm sitting by the phone, but they never call.

CAFFERTY: But what would you tell them? Is there an opportunity here? JACOBY: I would tell them, one, is exactly what you said, that you are never going to get people who believe that the world was created in seven days, literally, to vote for you. You're never going to get the far religious right to vote for you. What your appeal should be, where your golden opportunity is, is to say, look, America was not this government -- this government was not founded on religion, as George Bush says it is. We are a people of many religions and many religious beliefs, and there are lots of ways to express your religious as well as secular values.

In other words, if I were the Democrats, I would be pointing out that the values of the religious right aren't the only religious values in this country. Moreover, I would be pointing out that it's quite possible to believe in separation of church and state and to be religious, as most of the founders of our country were. It's just -- what I would be pointing out to them is that religious doesn't have to mean religious right.

TULLY: Is this going to cause a backlash with older Americans who are afraid that this is going to impinge on their freedom of action later on when they perhaps are in the same situation?

JACOBY: I -- I think -- I think it will. I think -- obviously people are writing living wills all over the country right now. But there was an interesting column today in the "Daily News," by the very conservative columnist Charles Krauthammer, who proposed, they're always looking for new ways to get what they want. He says now the states should pass laws saying, if there's any family dispute, the presumption should be, not in favor of the spouse, which is tradition until common law as well as statutory law, but it should be in favor of the family member who wants to support life. In other words, if the family member -- if they want to keep you attached to a feeding tube and respirator for 40 years, that's who should have custody of the thing.

This is really a horrifying thought, given the fact that we know that there are all kinds of parents who don't like the people their children chose to marry.

CAFFERTY: Sure.

JACOBY: Can you imagine opening the door to that kind of a fight every time there's a dispute like this?

CAFFERTY: Some have suggested that's one of the reasons the courts chose not to take this case. They want it to just go away for the very reasons you're touching on there.

Susan, we've got to leave it at that point. Thank you for being with us on IN THE MONEY. I appreciate it. Susan Jacoby's the director of the Center for Inquiry here in New York City.

When we come back, America's soft and very wide underbelly. Find out why Congress is getting nervous about terrorists crossing into the United States over the border with Mexico. Hey, don't you think it's about time they get nervous? Plus, sirloin or tube steak? We'll have some tips on retirement, doing it without having to pinch pennies.

And the game machine that can double as a movie theater. We'll tell you about the new Sony PSP. Stick around.

(COMMERCIAL BREAK)

CAFFERTY: Concern is growing in Congress that it may be a little too easy for terrorists to sneak into the United States. Hey, let's hear it for Congress, nothing gets by those guys.

Not by faking out immigration officers with false passports, but by crossing the board illegally from Mexico, as thousands of people do every week. And that's assuming that they haven't done it already and they're already here and they're already planning to do bad things to us.

For a look at how big the threat is, and it's large, and what's being done about it, which isn't nearly enough at this point, we're joined from Washington by Faye Bowers who's been covering the story for the "Christian Science Monitor."

Faye, welcome to IN THE MONEY. This is an issue that absolutely sets my teeth on edge. Tell me about OTMs, how they're treated, what they are, and how many might be walking around right now, while you and I are sitting here talking?

FAYE BOWERS, CHRISTIAN SCIENCE MONITOR: OK. OTMs is another government acronym. It means, "other than Mexicans," and these are people who cross our southern border, the benign underbelly, as you call it, of the United States each year. And some of them, you know -- the numbers that I have are the ones that have been released by the government, those are the ones that they've released on their own recognizance in the United States, and they're treated different than -- than migrants coming from Mexico, who are absolutely turned around at the border when they come.

These people are allowed in the United States pending an immigration hearing and their released on their own recognizance and expected to show up at a hearing sometime in the near future.

CAFFERTY: How many of them are running around here, do you think, according to the governments own numbers, which is -- these numbers are probably -- don't represent the actual number but...

JACOBY: According to the government's numbers, 44,000 were released on their own recognizance in 2004.

CAFFERTY: That's great.

TULLY: And that's up from something like 7,000 the year before.

JACOBY: Yes. And you know, it's tripled, at least tripled, over the past three years, the numbers that they've collected. You know, like illegal immigrants, those numbers may be rising because, you know, there are more border patrol agents catching them and releasing them into the United States. I'm not sure if that reflects an accurate increase.

TULLY: Now, do we know which countries these OTMs are coming from? Are they mainly other Latin American countries, or do we have evidence that there are Pakistanis coming in, and others, from countries that might be associated with terrorism?

JACOBY: Yes, there are numbers from other countries although not nearly as many as from Latin American countries. I think the highest numbers from Latin American countries come from El Salvador and Honduras where, you know, they have gang members and that's the worry, you know, that terrorists might pay these gang members to smuggle them into the United States.

But they come from other countries, too, like Brazil, which has a very lenient policy in terms of visas. If a person comes from the Middle East to Brazil, and wants to travel to Mexico, they don't need a visa to fly there. So, that's another major concern. And then, you know, the numbers, as you mentioned from like Algeria, Jordan, Pakistan, are up, but they're not hugely significant. They're, you know, in the double digits mainly.

WASTLER: Faye, reading the report, and some of the other reports on this problem, it strikes me that the Mexican government, for all of their statements to the contrary, is actually complicit in this, they actually are actively helping people get across the border. What's your take on it? Am I misreading things?

JACOBY: No, you know, I think you voice the same opinion that many security experts have voiced on this issue and that is, you know, last year the Mexican government produced a pamphlet to help people cross the border. I mean, I guess its main intent wasn't to help people cross the border, but said, you're going to cross any cross anyway, here's how to do it safely. But in there they actually, I think, toward the end, according to experts I've talked to, discussed ways to avoid being caught by the border patrol.

CAFFERTY: We're approaching the fourth anniversary of the attack on the World Trade Center and the Pentagon and the deaths of 3,000 Americans, and according to your article, "Congress is beginning to show some concern about the fact that nobody is protecting this border that we have with Mexico." Pray tell, what are our elected representatives doing to help us all here?

JACOBY: Well, you know, they're asking for more money from Appropriations...

CAFFERTY: Of course.

JACOBY: ...to increase the number of border patrol agents. The kinds of sensors that they bury, I guess, along the borders where agents aren't available, and to increase the numbers of helicopters that fly over the border. Those kinds of things. As well, I think there are a few Republican Congressmen, and some especially from the border states, that are pushing that guest-worker program that the president's talked about. But that hasn't gotten a lot of support.

TULLY: The big question, really, is, are these laws really enforceable? I know that going back to 2001, early in 2001, President Bush and President Fox were trying to work out a plan in which illegal immigrants to the U.S. would get driver's license if they had bona fide jobs and residences -- that was moving along, and then the attack hit and it was put on the back burner. Is there any chance that that's going to be revived?

JACOBY: Right. There's still some -- there's some movement in Congress on the driver's license issue. That's a movement to prevent illegal immigrants from getting driver's licenses in the U.S., you know, like the 9/11 attackers, many of them had illegal driver's licenses. So, I think, that would address that issue.

WASTLER: Faye, reading your articles -- wonderful piece -- I'm interested -- did you get any sort of reaction from people in that area about your article and about the whole problem in general?

JACOBY: Yes. Thank you for that. Yes, I've gotten probably more reaction to this -- it's the first border-piece related article I've written, and I've had more reaction to this than almost any other story I've written in the past couple of years.

I've had border patrol agents calling me, or e-mailing me, to give me their contact numbers and telling me they want to tell me their stories about numbers they've -- they've produced for the government and that the government wants them to kind of keep quiet about because they're much higher than -- than what is being told to us.

I've had others -- I had a lady from Germany, who used to live on the Arizona/Mexico border, who told me anecdotes about finding diaries written in Arabic in barns near the border, and about people being apprehended that nobody ever discussed publicly.

WASTLER: Faye Bowers, national security correspondent for the Christian Science Monitor, thank you so much for coming and talking to us.

And remember, stay tuned to CNN day and night for the most reliable news about your security.

Coming up after the break -- Delta's doing everything but flapping its wings. See what the airline's up to as it fights to stay above bankruptcy.

Also ahead -- power that's easy on the planet. Gas prices are rising, but that's not the only reason to invest alternative energy. Find out why a big Wall Street firm just did it.

And those other U.S. currencies. Check them out on our fun site of the week.

(COMMERCIAL BREAK)

WASTLER: Now, let's take a look at the week's top stories in our "Money Minute."

Alan Greenspan and the Federal Reserve jacked up rates another quart point. The Fed's official statement said the central bank will continue to raise rates at a, quote, "measured pace," unquote. But Greenspan and company also said they're growing more concerned about inflation, which could mean more rate hikes in the future.

February new home sales jumped more than 9 percent, despite rising mortgage rates and a slowdown in sales in January. But some analysts say last month may have been unusually busy because buyers were just trying to close deals before mortgage rates rose any higher.

And the French are saying, "au revoir" to their 35-hour work week. The law was abolished seven years after the old Socialist government approved it. The French had hoped reducing hours would force employers to high more people. But, with the national unemployment rate at 10 percent, politicians admit the plan failed.

A big story this week was Delta Airlines' continued fight to avoid bankruptcy. Delta CEO Gerald Grinstein said he expects the company to avoid Chapter 11, but with rising fuel costs, not everyone's convinced. Delta shares have lost more than half their value over the past 12 months, and, like all other major U.S. airlines, Delta's stock price is way down from where it was five years ago.

Delta airlines, gentlemen, is our "Stock of the Week," and with every airline, it always comes to down fuel costs. If the fuel costs are going to be high, a big portion of their costs are going to stay up there, and it's hard to make revenue that you need to offset the rise.

TULLY: Well, they have about $1 billion in additional fuel costs with this big run-up in oil prices. But the problem is, they have also very, very difficult union contracts. They've been able to get a couple billion in savings, but they are at such a cost disadvantage to AirTran, which is now a big player in their market -- they're just going to continue to decline. This is not a new thing, and it's a permanent thing.

CAFFERTY: Why would you buy the stock in any of these major airlines right now? They're all suffering from some version of the same kind of problem. Jet fuel is not going get any cheaper, probably, at this point. Only two airlines, as I understand it, that have ever gone into bankruptcy have managed to emerge from bankruptcy. The rest of them have disappeared.

TULLY: 140, to be exact.

CAFFERTY: Yes. WASTLER: I don't see any reason, really, to buy the stock unless you're looking for an asset sale breakup, or you think you're getting it at a bargain price, and when they bust it up you're going to get money just from the asset sales.

TULLY: Right. It's interesting that these airline stocks, though, in certain periods -- now, never over the long term, but in certain short-term periods -- have these amazing run-ups. For example, when American avoided bankruptcy, the stock leapt from like two to 10, in a month. So, there's certain -- if you think you're shrewd enough to time it right, there's enormous gains, but they never last very long.

WASTLER: A quick, short-cycle pop is what you're betting on.

CAFFERTY: A bigger question, is there going to come a time when they look at re-regulating the airline industry?

TULLY: I don't think so. I know that the Bush administration's position, especially on these loans to airlines, was essentially negative. There was some aide given to U.S. Airways, but it was not enormous, and a lot of airlines were rejected, United, for example. So, it's a free market administration.

They want -- the strategy is to have the local cost airlines come in and take more and more market share, simply because their costs are so much lower, and that's what we're seeing. So, hopefully, we're going to see a market solution here, without reregulating and going back to the bad old days.

WASTLER: I don't think there's a case for reregulation. I mean, bankruptcy's a sign of a healthy market. Things live, things die. So, why reregulate? Consumers, they got cheaper prices right now. You can fly cheaper than you used to, so there's no case for reregulation.

CAFFERTY: All right. I withdraw the question.

WASTLER: But the one thing that is a little bit worrisome is that all of the major carriers seem to be in the death spiral, where they have to sell assets like their smaller airlines to make the revenue to keep paying the bills, but they need more revenue, that those assets would give, them to pay the bills and....

TULLY: Yes, when you talk to insiders in the industry, they'll tell you that they think two of the big five will be gone within five years. So, you'll be -- we'll be down to three, and the slack will be picked up by the low-cost airlines.

WASTLER: That's good for the consumer. So, OK.

Coming up -- off the grid, or on the money. See if alternative energy is going mainstream, with a big investment from Wall Street.

Also -- staying out of the rough when you're on the back nine. We'll have some tips on retiring in comfort. And the big rush for the small screen. We'll take a look at Sony's new Play Station Portable.

(COMMERCIAL BREAK)

GERRI WILLIS: Hello, I'm Gerri Willis in the CNN Center with a look at what's now in the news.

Eight days after Terri Schiavo's feeding tube was removed, her parents have lost another attempt to have it reinserted. A state judge in Florida turned down the Schindler's appeal just over an hour ago. Schiavo's father, Bob Schindler, says his daughter is fighting to stay alive, and he's again calling on the nation's leaders to intervene.

(BEGIN VIDEO CLIP)

BOB SCHINDLER, SR., TERRI SCHIAVO'S FATHER: We're just in to see Terri, and she's doing remarkably well, under the circumstances. As a matter of fact, I was surprised. So, she's putting up a tremendous battle to live, and it's quite obvious she's not thrown the towel in. She doesn't want to die. And she is starting -- she's showing signs of -- over a week now of starvation and lack of hydration. But I can tell you, and assure you, she is fighting like hell to stay alive, and I want the powers that be know that. It's not too late to save her. So, anyone that has the authority to come in and to save Terri, they can do it, it's not too late. So, she's fighting and we're asking you to fight with her and help her. And I thank you very much.

(END VIDEO CLIP)

WILLIS: Meanwhile, the lawyer for Terri Schiavo's husband, Michael, plans a news conference today at 3:00 Eastern. CNN will carry it live. I'll have all of the day's news at the top of the hour.

Now, back to IN THE MONEY at CNN.

WASTLER: Has the high price of oil got you dreaming of solar panels, wind farms and fuel cells? Well, you're not alone. Even Wall Street is thinking green. Just this week, Goldman Sachs purchased one of the nation's largest developers of wind energy, and our next guest says a lot of other companies are making the move as well.

Ron Pernick is co-founder of Clean Edge. That's a company that helps businesses and investers profit from clean energy innovations.

Ron, welcome.

RON PERNICK, DIRECTOR, CLEAN EDGE: Well, thank you for having me on the show.

WASTLER: Ron, now, it seems like every time the price of oil goes up, spikes up, everybody gets worried. Ah, alternative energy, that's what we'll do, we'll invest in alternative energy. And the moment the price of oil comes smack right back down again -- uh, alternative energy, never mind, that's for the future.

PERNICK: Sure.

WASTLER: Are we going to see the same thing here?

PERNICK: Well, I think it's really important, when you look at what happened this week, we're really talking about electricity prices which had -- which really are more related to natural gas prices and other disruptions in electricity prices. So, it's somewhat different from fossil fuel for gasoline. But we are seeing a major shift right now towards clean energy investments by a range of different players.

WASTLER: Now, Ron, we see also politicians jumping on the bandwagon here, specifically, Arnold Schwarzenegger and George Pataki in California and New York, respectively -- they're looking go to as much as 20 percent or 25 percent, even in, I think, in the case of New York, in renewable energy. What impact is that going to have? And is it going to be -- is it doable? Is it popular enough to push anything that could potentially be that costly through?

PERNICK: Well, it is possible, and it's happening. An example -- you mentioned California -- California has a renewable portfolio standard of 20 percent by 2017. (INAUBIBLE) 10. So, we're seeing it, not only in California and New York, but more than a dozen other states now have renewable portfolio standards. Colorado just had a ballot initiative passed in November where the voters said we want renewable portfolio standards.

So, this is happening throughout the United States, and it's also happening globally. China now has an RPS, japan has an RPS. Denmark, on a high wind day, is getting 15 percent of their electricity from wind power.

CAFFETY: What's the -- tell me about the symbolism of Goldman Sachs buying into one of the biggest wind energy producing companies in the world. Wind farms, for want of a better way to describe them.

PERNICK: Sure.

CAFFERTY: That's a white-shoes firm, the whitest of the white shoes on Wall Street. What's the message?

PERNICK: I think the message is that this is becoming increasingly mainstream. We're reaching a tipping point where these technologies -- wind, solar PV and certainly, especially wind -- are really reaching cost parity with regular fossil fuel prices, and they're providing a price hedge. They're becoming very competitive, in that they lock in pricing and they're not, you know, dependent upon disruptive pricing and fossil fuels.

So, while wind energy and solar PV prices are going to decline over time, fossil fuel prices are increasing. I just will give you a quick example: not only is it the likes of Zilca (ph) being acquired, but if you look at GE, they acquired Enron Wind for over $300 million. They've turned it to a $1.3 billion a year in revenue business in just two years.

CAFFERTY: Wow.

PERNICK: The FPL Energy is another example. They've got 40 percent of their energy development now is in wind power. So, this is happening across the board with a lot of different companies.

WASTLER: So, Ron, you got your wind power. You got your solar power. And you got your fuel cell technology. If I'm an investor, looking at these three, which one is the more bankable thing? Which one should I throw my money at?

PERNICK: Yes, well, we -- at Clean Edge, we don't really make recommendations on particular stocks, but in terms of general trends, I think, from a technology perspective, solar PV is gaining a lot of attention from the venture capital community. We work with a lot of different venture capitalists, and right now, we're seeing companies like Conarca (ph), Mia Soleil (ph), and a range of others getting a lot of traction. Q-cells (ph) out of Germany, which has gone from, literally, no production five years ago to this year, 2005, being the leading manufacturer of the photovoltaic modules or cells in Germany, which will probably go public this year, all offer opportunities. Wind power is becoming much more of a production or a development play. So, we're seeing financiers coming in who like debt equity.

TULLY: Ron, in terms of wind power, we're looking at tapes of wind farms with tons of these big wind mills out there and they are, frankly, not aesthetically too placing to suburbanites who favor environmental rules to limit development in their towns. Is there going to be a backlash against these wind farms?

PERNICK: You know in Europe and in Asia, there hasn't been much of a backlash. There's been some NIMBYism -- "not in my backyard" -- in the United States, although in general, these tend to be in high wind areas where there aren't a lot of people living, and when you drive through a lace like Altima Pass, which had the first wind turbines in the country, a lot of people are in awe when they go by and they think it's quite beautiful.

The other development is that a lot of the large wind turbines are now going offshore, and there have been some issues with the Cape Cod development, but if you really look at it, they're pretty far out and they're not very visible. These are massive machines. They're high industrial machines that, that put about 3 megawatts of power out each and they have the span of about a football feel.

CAFFERTY: Start paying $3 a gallon for gasoline and they take on a certain beauty all their own, don't they? What a beautiful thing, those wind mills. All right, thanks, Ron. We got to leave it there.

Ron Pernick, co-founder of a company called Clean Edge which advises other companies on the uses of alternative energy.

Lots more to come here on IN THE MONEY. Up next, retirement can get the better of you unless you get the better of it. We'll have some tips on making your golden years live up to their name. And funny money, some of this stuff could get you thrown out of a store, but it won't bother you at all here. Allen's got it on the fun site of the week. Stick around.

(COMMERCIAL BREAK)

WASTLER: The road to a rich retirement may seem like a long and winding one, but our next guest has some possible shortcuts for you. Retiring happy is the focus of this month's "SmartMoney" magazine, and the editor, Jack Otter, is joining us now. Jack, welcome.

JACK OTTER, SMARTMONEY MAGAZINE: Nice to be here.

WASTLER: OK. So, I got the 401K, I got an I.R.A. and the government's going to provide me with some sort of Social Security plan, I guess. Am I all set? Am I taken care of? I don't have to worry about this?

OTTER: You do have to worry. But, you know, let's throw into your I.R.A. and 401K -- if you're married, your wife's a got 401k, then she's got that old 401K from her previous job, then she's got her I.R.A., so one of the things we tried to do with this article was to remind people not to think of this as six or seven different accounts in some cases, think of it as one big pot of money. That really makes it simpler and a lot more efficient when trying to allocate your stocks, your bonds and so forth.

WASTLER: Now, Jack, how would you recommend allocating money in this overall group of accounts that you have? And you really should look at it as one group of accounts, right?

OTTER: Exactly.

WASTLER: Overall portfolio allocation. One thing people have been doing a lot of, which I wanted to ask you about...

OTTER: Sure.

WASTLER: ...is the housing portion of it. People have a lot of money in their house. Sometimes they're shifting more money into their house, as a percentage of their assets. Is that a mistake, and how does that fit in with the allocation oftheir other assets and stocks and bonds?

OTTER: Sure. Well, I mean, as we all know, real estate has been on an incredible tear, certainly since the end of the bull market. It's the only thing that's worked, so I think people have a little too much faith in it. They're chasing winners essentially. Of course, you live in your house, you want your house to be great. I'm not saying skimp there, but I don't think you should think, well, my house has been going up every year for 20 years, so it's going to keep on going up in value. I mean, you should think of your 401Ks and all those other plans an an opportunity to diversify into other asset classes.

The simple rule of thumb is, you take your age, that should be the amount of your 401K, percentage of your 401K in bonds. If you're 40, 40 percent in bonds. The rest is split between equities and maybe a few other alternative investments.

CAFFERTY: What about reverse mortgages, given the dramatic run- up in real estate prices? Is that something that ought to figure into retirement planning or not?

OTTER: Well, I really see that as a last-ditch problem if you -- I should say repair job -- if you haven't saved enough in the other accounts. Sure, you've got a lot of equity in the house, so a reverse mortgage is a nice way to tap into it, but wouldn't be nicer to know you could just leave the property to heirs while you tap into your stocks and bonds?

CAFFERTY: Well, the other way to look at it, of course, is spend equity on yourself and let heirs worry about their own situation.

OTTER: That is another way to look at it.

CAFFERTY: It's cold, I'll grant you. There are folks that might do that.

What's the biggest mistake people make when trying to plan for retirement? Where are the errors?

OTTER: Well, let me just throw one more point in, when we're talking about the allocation amongst your various accounts -- I think people don't realize that they have a great opportunity there to take advantage of the best opportunities in each of those separate plans.

In my particular case, my wife's company has a great bond fund in her 401K offering, so we're putting all of our bond allocation into her plan. I've got a nice international fund in one of my old 401Ks, so all of our international stocks are in that one. Another rule, of course, with your bonds, you want to keep those in tax-diverted accounts as much as possible. That does highlight a mistake. People think, well, bonds are safe, I'll keep that in the taxable account, but if you're in the 28 percent tax bracket, that's what you're paying on all dividends and gains, whereas with stocks on the taxable accounts, even the best of us occasionally pick a loser, so when you lose money, of course, you can play that against your capital gains.

And also stocks now are only being taxed at 20 percent on capital gains, 15 percent on dividends. So, there's a lot of good reasons to keep bonds away from the government.

WASTLER: Jack, a lot of talk about inflation these days. It's the big, scary thing out there. Should people be making moves to sort of protect themselves against that, maybe go into treasury inflation protected securities?

OTTER: I think you have to. Unfortunately, because tips have been on a tear, they don't offer a lot of bang for your bucks right now. But, the alternative, of course, is watch your money waste away as inflation picks up. So, yes, tips are a good idea. Another play, and this is something else that has gone -- skyrocketed in value -- are commodities. So, it's a little scary to be buying into that winner right now, but it's not a bad idea to apportion a small amount of your, say it's an I.R.A., self-directed, look at the Pimco commodity fund, maybe that's five percent. Now, if inflation goes up, you're going to have a winner right there.

CAFFERTY: Jack Otter, the article's editor at "SmartMoney" magazine. The issue that's currently on your newsstands is how to retire happy.

Jack, thanks for being with us.

OTTER: Pleasure.

CAFFERTY: Appreciate it.

Stock around -- more on IN THE MONEY, coming up. Up next, looking sharp. The screen is one of the big attractions of Sony's new PlayStation Portable. Allen Wastler of money.com has seen it, played with it, and will give us his report.

And, whether you want to comment on the Sony PSP, or just vent about the week's news, you can drop us a note. The email address is Inthemoney@CNN.com.

SUSAN LISOVICZ, "MONEY AND FAMILY": Last year's bathing suits are about to make a reappearance, but don't panic. We've got tips on how to find the best gym deal around.

Join at right time. Usually the best gym deals are offered after the new year in January, right before the beach season in March and just before school starts in September.

Be patient. Waiting until the end of the month may save you some cash. Clubs may offer better deals depending on sales quotas.

Always ask about special packages. Gyms often offer family memberships and special rates for those over 50 years old.

Take advantage of free guest passes. It's the best way to comparison shop.

Finally, know your rights. Read the membership waiver and the fine print. Make sure you know about all of the fees. Good luck. I'm Susan Lisovicz for "Money and Family."

(COMMERCIAL BREAK)

CAFFERTY: All right.

First, it was the cell phones, everybody walking around talking on their cell phones. Then we got iPods. Now people walk around got the cell phone in one hand, got the little the ear phones on, listen to their musi. Allen Wastler has a story now of yet another gadget that probably will annoy me, and will make the manufacturers an absolute fortune. He also has the fun site of the week.

This is what a little what, a mini game player?

WASTLER: It's called the PSP; it's from Sony. Sony is -- for Sony the company, this gadget's going to be their big moneymaker. They've shipped out three million of them. They went on sale this week. People stood in line as much as 40 hours for the thing.

CAFFERTY: Really?

WASTLER: For the midnight sales, going, come on, get your PSP, get your PSP.

Now, I played with one, and this is a really slick, Jack. I mean, it's really nice. When playing the games, like I know you do, it's very clear. The graphics are bright, and you can play movies on it, and you can play music on it, too.

CAFFERTY: And you can drive your car while you're fooling with this and kill a few people, probably, at the same time, right?

WASTLER: It's a very slick machine. Looks very good. Now, there are drawbacks. Number one, the price. $250 bucks.

CAFFERTY: Oh.

WASTLER: Whew, that's an awful lot. And to play the movie on it, well, you can't throw your regular DVD in there. No, you gotta buy the special Sony DVD thing-a-ma-bobby to put in there, you know, $20, $30 a pop.

TULLY: And how much choice of DVDs are there out there now?

WASTLER: Right now, you get about six movies on it.

TULLY: So...

WASTLER: Hope you like "Spiderman 2," that's the one they're shipping with it. And they've got about 19 games that can go in it. But they're expecting demand to really rev up, because it is a beautiful piece of technology. The graphics are crystal clear, and you can actually play a good little game tonight and have a lot of fun.

CAFFERTY: And you can walk around doing that and not watching where you're going and bump into things.

What about the fun site of the the week?

WASTLER: All right. Well, we were talking about immigration, illegal immigration, right? People coming to the country, not being familiar with things here, so, we have a foreigner's guide to the USA.

Look, it includes pictures like this showing you kind of things you can expect.

CAFFERTY: Starbucks coffee.

WASTLER: The grand vistas. See, there you go. Always the Starbucks coffee, though, you gotta remember that, right?

CAFFERTY: Yes.

WASTLER: Also, it gets into the various kind of things you can expect in day-to-day life, like the different kinds of money we have here. OK? You've got your regular dollar bill, you also got the gold coin that you can only get the post office. But we also have our coupons, the show world token, things like that. So, for you people visiting the United States, our fun site will help you figure it out all.

CAFFERTY: All right. Thanks, Allen.

WASTLER: Sure thing, Jack.

CAFFERTY: Coming up next on IN THE MONEY, it's time to hear from you as we read some of your e-mails in the past week. And you can send us an e-mail if you're so inclined. We're at inthemoney@CNN.com.

(COMMERCIAL BREAK)

CAFFERTY: It's time now to read your answers to our question of the week which is this: do you check or even care where the things you buy are made?

Karen wrote this, "I make it a point to a made in the USA product. And I've often just not bought an item if I couldn't find one made in America. Needless to say, that makes just about every shopping trip a major challenge."

Jim in Las Vegas writes, "Of course I care where the products I by are made, but if I can only afford a $20 shirt, the only tag I look at is the price tag. Pay me a better wage, I'll buy a better shirt."

And Dave wrote, "Is this a trick question or what? With the exception of crooked CEO's, lousy sitcoms and bad television reporters, nothing is made in America anymore so why even bother to check?"

What do you mean about bad television reporters? What's that all about.

Now, for next week's question of the week. It's this, "when the line separating church and state in America are starting to blur, what does it hurt more the government or the religion?" Send your answers to inthemoney@CNN.com.

And you should visit our show page at money.com/inthemoney. Which is where you'll find the address of our Fun Site of the Week. If you have some illegal aliens coming to you house over the next week or so, you may want to pick up some of the items that Allen was talking about and them available on the coffee table for when they arrive.

Thank you for joining us for this edition of our program. Thanks to money.com managing editor Allen Wasler and "Fortune" magazine senior writer Shawn Tully. Enjoy the rest of your weekend. We'll catch up with you next time.

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


CNN US
On CNN TV E-mail Services CNN Mobile CNN AvantGo CNNtext Ad info Preferences
SEARCH
   The Web    CNN.com     
Powered by
© 2005 Cable News Network LP, LLLP.
A Time Warner Company. All Rights Reserved.
Terms under which this service is provided to you.
Read our privacy guidelines. Contact us.
external link
All external sites will open in a new browser.
CNN.com does not endorse external sites.
 Premium content icon Denotes premium content.