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CNN IN THE MONEY
Economy Sending Mixed Signals; Soft Drink Manufacturers Trying to Make Their Products More Healthy; Senate Adds Pork to Spending Bill.
Aired May 6, 2006 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: In Iraq, a British military helicopter crashed in Basra today. Killing an known number of people on board. At least four Iraqis were killed in clashes with British troops trying to secure the crash site.
All ten American soldiers aboard a helicopter were killed when it crashed in Afghanistan overnight. The military says the chopper went down during combat, but not as a result of enemy action.
More bad weather is expected in Texas today after severe storms battered Waco and other parts of the state. High winds caused damage in Waco, hail stones caused havoc elsewhere.
President Bush today touted free trade and competition and warned against protectionism. He was speaking at Oklahoma State University's commencement ceremony.
More news as it happens. Now, time for IN THE MONEY.
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 fill her up, past the tissues America's broken up over the high price of gasoline. Find out why we're so down when the economy looks pretty good on paper and the stock market is roaring.
Plus rush hour with friends, you'd think with gas prices where they are America would be more serious about mass transit. We're going to see if more people are ditching their cars for those buses, trains and subways.
And sugar babies, soft drink companies are caving, cutting out some of the sugary drink in public schools, as in sodas. We'll look at other places where the sweet stuff may be lurking.
Joining me today a couple of IN THE MONEY veterans "Headline News" correspondent Jennifer Westhoven and "Fortune" Magazine editor at large Andy Serwer.
So we had all these pro amnesty illegal alien demonstrations earlier this week. I wonder if they did themselves any good or not.
ANDY SEWER, MANAGING EDITOR, "FORTUNE" MAGAZINE: It wasn't really pro amnesty. Come on they were just out there showing support, solidarity.
CAFFERTY: It was pro-amnesty. They want all these illegal aliens to be given citizenship.
SERWER: Some people don't call amnesty though. I focus on the short attention span. To me, it almost seems like it's over. It's just striking that out of all that, nothing happened. I mean, where did it all go?
JENNIFER WESTHOVEN, CNN HEADLINE NEWS CORRESPONDENT: They also say this is about immigration, but apparently if you go to any of these rallies this is not every kind of immigrant. This is mostly people who are Latinos. If you looked at New York, where we have one of the broadest swafts of immigrants from all over the world we had one of the smallest turnouts.
SERWER: That's interesting.
CAFFERTY: Well that is interesting. The other thing that is interesting is that Congress was presumably close to trying to come up with some kind of a compromise of the house version of the legislation, which calls for creating felony status for all these folks who are here illegally, versus the Senate version which would create guest worker program. I wonder if the politicians have been stopped or stalled. These demonstrations made a lot of people angry in this country. They are viewed as marching through our streets demanding rights to which a lot of people think they're not entitled.
SERWER: But you know a lot of big companies may be lobbying behind the scenes to quench this kind of legislation because they benefit from these workers so much. So we don't really know what goes on beneath the tip of the iceberg here on Capital Hill, but I suspect there's a fair amount of that kind of stuff going on.
CAFFERTY: All right. Well we keep an eye on it. The Dow hit numbers this week we haven't seen since people have job titles like chief evangelist for joy. The index racked up a six year high bringing back members of the dotcom boom of the late '90s. A new set of numbers show most of the economy is doing pretty well at least on paper. But America isn't celebrating, not all of it not by a long shot.
Instead, it's all worked up about paying more for gasoline and all worked up about high-paying jobs being sent overseas and all worked up about interest rates going higher and some other issues as well. Diane Swonk is going to help us figure out what is going on here. She is the chief economist at Mesirow Financial in Chicago. Diane nice to see you again. Welcome.
DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: Good to see you too.
CAFFERTY: We have gold headed towards $700 an ounce, $70 oil, $3 gasoline and the stock market on an absolute tear. Sort this out for us a little bit.
SWONK: First, in terms of the consumer side, we have got sort of a bifurcation of the economy. If you rely only on wages and don't get a share of these record profits that we have been seeing out there, either be bonuses or dividends your situation is not so great, although there's more of you in the economy today than there was just a year ago because we're creating jobs. Your situation has not improved.
In fact, the CEO of Papa John's commented recently that their business goes up the minute gasoline prices go up and they have not had to pass that increased price on to consumers because more consumers have to opt to stay at home and eat at home and not go out to full-service restaurants. You see a large swath of the population, the overwhelming majority who wage earners are somewhat discontents that although they're still employed, and they're not feeling as good about the economy as they were just a year ago.
They have to make tough choices and tradeoffs in their budgets as more of their budgets go to energy costs. On the other side of that, we've got not only the rich getting richer, but more of them. In fact a whole newly rich generation is going into the U.S. economy. In fact recent income study you have about an equal chance of either moving up to be very rich or moving down to be very poor if you're in the middle class these days.
WESTHOVEN: Will you talk about that a little bit you have talked about it as sort of the Nordstrom versus Wal-Mart split. We see a lot of people who if you're in the middle class, pensions are vanishing. It's a lot harder now to have any kind of security as you head into retirement, even if you really saved hard and you lived fairly modestly because of health care costs, all kinds of cost out there. What do you think about that in terms of a long-term issue here? Is that healthy for our economy to have this hollowing out in the middle class?
SWONK: It certainly isn't politically healthy. We see satisfaction with Congress and even below satisfaction with the administration because of the economy, 22 percent satisfaction with Congress today. That is kind of recession lows, and you've really hit the nail on the head. It's people feeling a lack of a safety net. The overwhelming majority of households who are depended on wages are also the ones that are not only most sensitive to energy prices, but as you mentioned, paying more, shouldering more of the burden of the healthcare costs.
Even those households who didn't save as much because they thought they had a very generous pension, the risk is that may be taken away or have upon their retirement. From their prospective they're getting the short end of the stick.
SERWER: Diane I hear what you are saying about energy costs, however I am of the belief right now that what we're seeing is that $3 gasoline or nearly $3 gasoline is not derailing this economy, which is interesting to me. I wanted to ask you about interest rates and where you stood on this. There's a lot of confusion right now about what the Fed's going to do. We saw the markets responding pretty wildly to some comments attributed to Bernanke. What do you think the Fed is up to right now?
SWONK: Well, the Fed has really laid its whole decision rule out very clearly. They're in real time (INAUDIBLE) that means they are reacting to the data as it comes out. They're data driven. We will easily get to 5percent next week on the Fed funds rate. The question is whether it will go much higher than that.
I think we will see the Fed take a pause some time over the summer. I wouldn't be surprised to see 5 1/4 or 5 1/2 percent of the Fed funds rate before the end of the year. But that's frankly splitting hairs for the overall economy. And as you mentioned, the economy adds up to do well. Because remember, even though individual workers are upset, there are still more of them out there, more people spending. The aggregate numbers sort of mask the sort of trees through the forest. Right now if you want to look at individual trees, some of them are a little bit ill when the overall forest looks healthy.
CAFFERTY: What about the structural problems that exist in this economy? We have Medicare and Social Security in the last week; we're told is going to go belly up earlier than we though. We have deficits big enough to choke a horse. They put through an emergency appropriations bill in the Congress last week that they attached $20 billion in port spending to. The Republicans are spending money like they have their own printing press in the basement of the White House. The short term is fine. But longer term, we've got some problems that, from my point of view, aren't being addressed at all.
SWONK: You're absolutely right about that. This is one of the things, the reason why economists don't get elected, at least if they stay honest economists. We elect people, we pretend like Santa Claus exists in this country and we elect people who keep delivering the presents under the tree and deferring the bills for those payments out into the future. The problem is eventually those payments will come due.
CAFFERTY: Well, they're just awful. You call them one thing. They're the worst Congress in my life. I'm 63. This is the bunch of no-talent clowns.
SWONK: Apparently the America public agrees.
CAFFERTY: We have a chance to vote them all out of office in a few months. Diane nice to see you. Thanks for being with us.
SWONK: Nice to see you too.
CAFFERTY: Diane Swonk, chief economist at Mesirow Financial.
Coming up next on track, the so-called train to nowhere, speaking of idiotic and useless congressional representatives, train to nowhere, one target in a near vital congressional ports. See why pet projects like that might be in for a rougher ride.
Plus critical mask, higher gas prices make better public transportation a no brainer. We'll find out why it's going to take America a while to wise up.
Scoring big without leaving your seat we will look at the growing business of online sports betting. Back after this.
WESTHOVEN: Back before the break we were talking about higher gas prices in the economy. And if you think you're worried about how much you pay for gas, get this, your congressman is probably more scared than you are because folks on Capitol Hill worried about getting punished, thrown out in the mid term elections. That might explain the growing distaste on Capital Hill for pork. Those pet projects that joy ride on big appropriations bills. Ronald Utt will tell us about the sudden aversion to pork. He's the Herbert and Joyce Morgan senior research fellow at the Heritage Foundation. Thank you for joining us.
The president just said I want a $92 billion bill. By the time they got through the Senate, they couldn't help themselves. It was more than $100 billion. Can they ever just help themselves and let something pass without tacking these things on?
RONALD UTT, THE HERITAGE FOUNDATION: Not now, it seems. We have a runaway Senate that is just larding this thing up with every kind of pork barrel project for influential constituents back home. The farmers are getting an extra $4 billion on top of the $25 billion they are already getting this year from the agriculture department. We've got another $500 million in highway spending around the country. None of this has anything to do with Katrina relief; hurricane relief or defensive handsmets, which this bill was, suppose to be all about.
SERWER: Ronald, give us some historical context on this larding, as you so aptly call it. How much of an anomaly is this? Is this any different than what's gone on for decades? It seems to be the same kind of stuff we saw going all the way back to the Teapot Dome.
UTT: Well it's not so much the act of your marking that's different; it's the magnitude of your marking. Just to give you an example, the highway bill in 1982 had ten earmarks in it. The highway bill that was in acted and signed into law last year has about 8,000. So you're talking about an escalating increase in this sort of spending that's really beginning to cut into muscle. This is not in addition to something. This is cut out of something else.
CAFFERTY: Is it my imagination, before the break I described this current Congress, as the worse that I can remember in my entire adult life, is that perception haywire? Why is it they seem so sleazy this group?
UTT: Well they seem to have lost any sense of anchor or any sense of fiscal responsibility and they're just sort of pandering to influential constituents. And nobody can say no. No matter how cockamamie the scheme or idea is, if a constituent comes to you with it and you say why not? It's not my money. We'll put it on the taxpayers. In this case you have the train to nowhere to put that into perspective, is going to cost three times more than the infamous bridge to nowhere that was such a sandal last year.
WESTHOVEN: Well we shamed them out of the bridge to no where. I mean is that going to work this time? What happened to shame?
UTT: We thought it worked. The Heritage foundation has been working very hard to raise the level of ridicule on this to the degree that we did with the bridge and had some success, but I think Trent Lott and Thad the two Senators from Mississippi are determined to show that they can bring home the bacon. And they are intent to do it, notwithstanding anything that has been said by Denny Hastert over in the House or by the president in the White House.
SERWER: Maybe we can make this the Congress to nowhere at some point in November. I want to ask you about Senator Tom Coburn, who is sort of appearing now as the latest version of William Proxmier (ph) kind of some sensibility in the halls of Congress. Is he going to do anything? He's pointing out how ludicrous a lot of this stuff is.
UTT: Yes, he is, and I think he's going to have considerable effect, particularly as we approach the election. Polls indicate that Americans consider this kind of earmarking one of their greatest concerns. There was just something in "The Wall Street Journal," I believe, a couple days ago, indicating that the highest degree of concern in public policy right now on the part of the average person around the country is the extent to which Congress is wasting their money and spending their time and energy on things they don't care about.
This idea of bringing home the bacon is not for the ordinary people. It's for the shopping center developer, the casino operator. The ordinary people don't benefit from these things, these are for privileged influential constituents that have access to members of Congress and access to the lobbyists and can afford to pay the retainers.
CAFFERTY: History suggests incumbents get re-elected. Almost without regard to how the maglient they are, is there any reason to believe that this time it might be different?
UTT: I think it could be different, and I don't know that they're going to punish any particular party. I think that challengers will have a field day running against incumbents, and the mood in the country might be to throw the rascals out.
CAFFERTY: All right. From your mouth to God's ears. Ronald thank you, nice to have you with us.
UTT: It is good to be here. Thank you very much.
CAFFERTY: Ronald Utt is with the Hertiage Foundation.
Time now for our "Look Ahead". The winners of the 10th annual Webby Awards will be announced on Tuesday. What a silly name. They Webby Awards honor Internet Websites and their creators. Bank of America, Google among the nominees for the Webby Awards.
As we mentioned earlier, the Fed meets Wednesday. Fed chairman Bernake will let us know if he going to raise interest rates another quarter point. Here's a hint, he will. On Thursday, April retail sales numbers will be released; we'll find out how high gas prices have impacted the retail business, if in fact they have.
Coming up after the break, bringing home the bling, silver looking more and more like the new gold. Remember the Hunt brothers and $50 an ounce silver? Well I don't think we're headed there, but silver is making a comeback. We'll see what this means for shares of one Canadian mining company.
Plus, finding the sweet spot. Sugars in all kinds of things that we eat, not just the obvious stuff. We will look at where it pops up. And at the huge business behind it.
And the all mighty dollar minus a penny, Apple is hanging tight with its 99-cent price for iTunes. Find out whether that will play well for music buyers as IN THE MONEY continues.
SERWER: We talked a lot in recent months about investing in gold, but the best play in precious metals these days may be in silver. One company riding the trend is Silver Wheaton out of British Columbia. Its stock started trading on the American Stock Exchange in July at around $3 a share. It's now close to $11 a share.
Let's take a look at Silver Wheaton in our stock segment of the week. A lot of these metals are running. Silver Wheaton is one company, there's a lot of small companies, there is Apex and they all sort of move up in tandem. Silver does move with gold, but it's different from gold because it also does have besides jewelry uses, industrial uses like solar cells and photography, of course, and medicine.
CAFFERTY: I think I've got some in my teeth.
SERWER: In your teeth as well.
CAFFERTY: Not silver, fillings, right?
SERWER: These things all sort of do move up. And Jack as you mentioned sometimes you can get burned if you get in these commodities at the wrong time.
WESTHOVEN: These things are -- I think they're pretty scary and I also think that when you look at these companies you've got to do a moral due diligence sweep because sometimes there are crazy things happening in these mines not just to workers but to the environment.
CAFFERTY: To people hungry for a quick buck on Wall Street, morals are down on list of priorities. What about I mean Copper has gone up, gold has gone up, all of these commodity prices have been rising, $3 stock to $11, has that train left station?
SERWER: You know I'm not quite sure that it has. Because if you look at the historical trends silver was a lot higher previously. The supply and demand balance is not completely out of whack. So, you know, also the stocks aren't that expensive. People still have this technology hangover. They're thinking about Intel, Sisco and stocks like that, so they are still not use to these.
They will be soon, but I think there is still --
WESTHOVEN: Yes but these developing countries are buying anything in the ground like it's going out of style. Because they don't want all their money in U.S. dollars and only in gold. This is a great, you know, other place to put it.
SERWER: Interestingly, silver right now selling for 1/45 the price of gold and 70 times copper. They all move around together. It's interesting stuff. But you're right, be careful. Especially with these Canadian companies that have had histories of problems. I should also mention quickly, there is one of those exchange traded funds we've talked about a new one in silver and the ticker is SLV, so if you want to be diversified.
CAFFERTY: Good idea.
SERWER: OK, coming up on IN THE MONEY, heaven on wheels with gas prices rising, mass transit is looking better than ever. See what it would take to get America on board.
Also ahead, "On The Line" Las Vegas is a big draw for sports betting, but it can be tough to get there. Find out where the bets are being placed outside of Sin City.
And later, Halloween cookies check out how a little editing can turn a Sesame Street movie into a trailer of a horror flick.
WHITFIELD: Hello, I'm Fredricka Whitfield. Here is a look at our top stories right now in the news.
Three workers are dead in Florida. One is missing at a construction site in Bal Harbor just north of Miami. Authorities say the men were working on the 26th floor of a building when a wooden frame they were standing on collapsed. They fell into a thick layer of drying concrete.
Blood shed in Basra, a British helicopter crashed in the Iraqi city today killing an known number of personnel on board. The downing caused a mob scene. Cheering crowds that fire to a British military vehicle responding to the crash. Hospital officials say at least four Iraqis were killed.
Porter Goss refuses to tell why he quit the nation's top spy job. CNN exclusive this morning Goss says his resignation of CIA director is just one of those mysteries. We're told President Bush has picked air force general Michael Hayden to replace Goss. The announcement is expected Monday.
More severe weather slams Texas. This is the scene in Waco after powerful storms rumbled across the area earlier this morning. More bad weather is expected to hammer parts of Texas later today.
Rising gas prices are the driving force behind some lifestyle changes for many Americans. In a new poll, 66 percent of the respondents say they've cut back on their driving and their use of air conditioning and heat. More than a third say they are considering buying a more fuel-efficient vehicle. The other half says they changed their vacation plans. It's Derby day at Kentucky's Churchill Downs, 20 thoroughbreds are entered in this run for the roses. It's considered a wide-open affair. The purse has jumped to $2 million this year.
Coming up at the top of the hour, we'll take you to Churchill Downs live for a preview of today's race. Now back to more of IN THE MONEY.
CAFFERTY: High gas prices can make people do crazy things you know like walk. That may work in places like New York, Washington and Chicago, but what about the rest of the country where there are many fewer options as in mass transit?
Robert Cervero is the chair of Department of City and Regional Planning. Out there at the University of California in Berkeley joins us now to talk a little about this. Is the cause and effect time line a little short for us to expect that America is going to suddenly wake up and embrace mass transit here?
ROBERT CERVERO, UNIVERSITY OF CALIFORNIA, BERKELEY: We're not going to see instantaneous surges in transit rider ship where the buses and trains are filled all hours of the day, but indeed, we're seeing order of magnitudes of 5 to 10 to 12 percent increases in rider ship over what the levels were a year ago, and that's a very positive sign.
But we would have to have really in my judgment sustained higher gasoline prices at real dollar terms of the $3 to $4 per gallon range over three to four to five years, I think, to really create enough rider ship to introduce the kinds of improvements in the quality of public transit services, I think, to really start attracting folks who own cars, who have options of driving but now are finding transit just much more convenient and much more preferable, both in terms of time savings, as well as savings in the pocketbook.
WESTHOVEN: I'm someone who takes mass transit all the time. I don't own a car. In New York City it's great, but I notice when I try to get around the eastern seaboard, not so easy. I can't imagine for people who live in other areas of the country. But I know you are talking about gas at these levels for a long time. Is there any kind of move in some areas of the country for some improvement here? Because when you got to wait an hour in between connections it becomes worthless, and then you're just stranded and then of course, because really you only have -- we talk about this lower income people traveling, it also can change the tenor of the bus stations and make people uncomfortable. Is there any real hope here?
CERVERO: Buses that come by every 30 minutes and on average record a 15-minute wait is not an acceptable alternative to most Americans where 90 to 95 percent of American households have cars. Until we can start having buses and trains coming by instead of every 30 minutes, coming every five to eight minutes and waits are only a few minutes, I don't think we're going to see dramatic increases in rider ship outside of a handful of metro areas like New York, Chicago, San Francisco, which do have fairly respectable market shares and trips by public transit.
What really is necessary in my judgment is the higher gasoline prices, increasing rider ship where the bucks increase in income can allow more frequent services, higher-quality services and various technological improvements. And sort of get into this virtual cycle where rider ship increases fair bucks gives enough money to buy more buses, hire more drivers and begin to make public transit somewhat competitive time wise and convenience wise with the private car.
SERWER: Let me jump in here Robert, I'm sorry and ask you about the financial health of mass transit systems across the country. You hear a lot about these entities losing millions and millions of dollars. Are any of them healthy? Can they make their budgets? Where do those stand?
CERVERO: Yes, well unfortunately, most public transit systems are only covering on the order of 20 to 30 percent of full cost through the fair bucks and they depend on huge amounts of government subsidies, both from the federal and the state level. Simply public transit can't compete with the car. In part, some people would argue that we under price the car in the form of free parking and we don't charge the true externalities that as air pollution, in house gas emissions and public transit simply can't compete. Frankly, public transit has largely been designed somewhat to serve lower income households at cheap fares. We've kind of chased away the middle class consumers.
CAFFERTY: Professor, it's good to have you with us. I thank you for your time here this morning on IN THE MONEY. I guess this afternoon. Robert Cervero is with the University of California at Berkeley, joining us from the left coast.
More to come here on IN THE MONEY as we continue.
The fat of the land, soft drink makers are pulling their sugary soda out of public schools. See if that is just more than a nice start to fixing America's obesity problem.
And of mice and millions, Internet sports gambling are hot, but the U.S. laws about it are complex. We are going to sort it out for you. One of the many services we offer here on IN THE MONEY. In our upcoming "Brainstorm" segments.
SERWER: Childhood obesity has been rising at an alarming rate over the last 20 years this week the nations largest drink companies have agreed to stop selling sugar-filled sodas in public schools. Is it enough to buck the trend? Lisa Young is the author, "Portion Teller, Smart Size your Way to Permanent Weight Lose." Dr. Young has been counseling adults and children for more than 15 years, and she joins us now. Welcome back Lisa to the program.
LISA YOUNG, AUTHOR, "PORTION TELLER:" Oh, it's great to be here. Thank you.
SERWER: So was this really a step that counts? Is there anything to this? YOUNG: You know, I think that we've got to start someplace, and it's definitely a step in the right direction for several reasons. Soda is one of the major contributors of sugar in our diets. We're currently consuming nearly 30 teaspoons of sugar, which is about 500 calories extra a day. So starting someplace, which is with the soda, is a way to start.
WESTHOVEN: One of the things we were teasing about you is that sugar is in all kinds of foods and not just the obvious ones like M & M's. So where is it hiding?
YOUNG: Sugar is hiding in whole grain cereals or all cereals, but we know that it is found in Fruit Loops, but it is in whole grain cereals, breads, ketchup one tablespoon of ketchup contains a teaspoon of sugar. Veggie burgers, processed foods, sports drinks and even these vitamin-enhanced waters are loaded with sugar.
CAFFERTY: These companies that manufacture and sell soda to children also sell the sports drinks and in some cases fruit juices, apple juice is loaded with sugar. What's going to replace the sodas in the school? Are we just trading one bad thing for another? You mention cereals, I meant the kids get to school loaded up on sugar, they have had a doughnut and bowl of Fruit Loops and out the door, at lunch time they are out to get -- I mean the stuff is everywhere. Are we really fighting a loosing battle here?
YOUNG: Yes, the stuff is everywhere, and I think that one of the steps in the right direction is they are going to moderate the portions and bigger portions contain more sugar. So in those elementary schools are only going to allow the eight-ounce servings of the juice which is a good thing. What I think is problematic is having vending machines at all. The other thing is why do we need sports drinks for high school students? Sports drinks are just another way of calling it soda, with electrolytes.
SERWER: You know Lisa my kids are going through this changeover right now, and they don't like this. My younger daughter was telling me they used to have dessert every day at school, you remember the little cakes? Gone. Skim milk. It's really amazing. I don't know if you know the answer to this question, the relationship between the food companies and the soda companies and the school districts. I mean this is kind of a poisonous relationship. I'm wondering if you understand how much influence these companies have over these municipalities?
YOUNG: Oh these companies definitely have an influence, which is probably the reason why the vending machines are not disappearing. For example, instead of having soda, they're going to sell bottled water. But tap water in New York is fine. So what do we need the bottled water for? It's really trading one thing for another, and you can see the nature of the relationship as long as vending machines are still going to be there and other things are going to be sold.
WESTHOVEN: How hard was it to get these companies to make this kind of a change? Was this really in their heart? It took Bill Clinton and the American Heart Association. Plus I'm under the impression there was the threat of some lawsuits in the background. YOUNG: Yes, I think the threat of the lawsuits in the background was certainly at the forefront. There have been lots and lots of research that also has found that kids who drink soda, adults who drink soda consume more calories, and that leads to obesity. I think that the threats of the lawsuits, the research and the consumer advocates talking about was probably what had really stimulated them to comply.
CAFFERTY: Do we have a chance of winning this thing? I can remember back -- and everybody will do the same, when I was a kid, there were no vending machines in the school and there weren't. I mean we didn't drink sodas with our meals at home and we didn't. Meals were probably healthier, I don't know but it seems like there are so many ways to get the calories and the sugar into our systems, regardless of whether you're in school or the workplace or wherever you are. Do we have a chance of beating this weight thing? It seems like an uphill struggle to me.
YOUNG: You know it is an uphill struggle, but we need to start somewhere. Two things, one is the size of the jumbo portions. So making them smaller will certainly help. I mean we are consuming gallons, a half-gallon of soda at 7-11, is nearly 48 teaspoons of sugar, that's five days' worth of sugar. That is one thing and limiting processed foods. Eating more fresh fruits, fresh vegetables and eating at home. That is really what we need to do.
SERWER: Right, all right. We're going to have to leave it there. Lisa I hope we have you back when we have some more news on this front. Lisa Young, the author of "Portion Teller, Smart Size your Way to Permanent Weight Loss." She's a nutrition consultant and adjunct assistant professor at New York University. Thank you.
YOUNG: Thank you.
SERWER: It's never been easier to make a bet on your favorite sporting events. The online sports gambling business is booming. But is it legal? Joining us now is Professor Nelson Rose of Witter Law School in California, one of the leading experts in the field of gambling law. Professor Rose, I guess my first question is, is online gambling legal?
PROFESSOR NELSON ROSE, CO-AUTHOR, "INTERNET GAMBLING LAW:" Well, the shortest answer I can give to that is that the federal law doesn't care about the better, and the federal law does care about organized crime, but these are old statutes and have been construed as only covering sports betting and betting on races. The states on the other hand have always been the protectors of morality. Every state has laws against being in the gambling business with obvious exceptions. Half the states actually have ancient laws still on the books that make it a crime to make a bet. But of course, nobody ever gets arrested.
SERWER: So overall, it's a situation where it is illegal, basically, but it's not being enforced? Is that probably the best way to characterize it?
ROSE: I think it makes a difference whether you're talking about taking the bet or making the bet. If all you're doing is betting online, if you're a player, then you're not violating any federal law. In half the states, you're not violating any state law. If you're in the business of gambling and your accepting bets, you're probably violating every state law, although there are legal questions about reaching outside the borders, and you may be violating federal law, depending on what form of gambling it is.
SERWER: Interesting state of affairs. How big is this business, and how much is it growing?
ROSE: It's certainly growing very fast. It's probably the fastest- growing business in the world, partly because it's starting from a base of near zero. So on percentage terms, it's tremendous growth and in real dollars we're dealing with many billions. There's no way to get an accurate number, partly because a lot of it's illegal. Partly because a lot of it is not even reported, so these are people who may not even be licensed or they're private owners. It's at least in the $10 billion range the wagers themselves could be in maybe as much as $50 billion or even more. And the profit margin is very high because there are very little expenses other than getting new patrons.
SERWER: Do you ever see the government actually taking a stand here and legalizing the business or coming out and saying we're going to go after this entire business and make it illegal?
ROSE: The United States is getting itself isolated in the world. The rest of the world is in the process of legalizing. Many of the state lotteries in Europe, in fact, make a significant amount of their money from online betting. The United States is going the opposite. There are no serious proposals anywhere to legalize Internet gambling, and there are bills in Congress to outlaw it.
The one exception is Nevada, which did pass laws allowing their licensed operators to operate online casinos, casinos on the Internet. But the Federal Department of Justice said, probably incorrectly, that that violated federal law and the process of creating regulations was shut down.
SERWER: OK, it's a very interesting topic. We're going to have to leave it at that. Professor I. Nelson Rose, from the Witter (ph) Law School thank you for coming on the program.
ROSE: Great being here. Thank you.
SERWER: Coming up, where a hit costs as much as a miss. Apple nails down it's 99 cent charge for iTunes. See if that is healthy for the music business.
And put our producers to the test with your e-mail insights. Drop us a line the address is INTHEMONEY@CNN.com.
CAFFERTY: At last you look at the cost of downloading music. Web master Allen Wastler is here now with more on how Apple showed the music companies exactly who is the boss. He also has the "Fun Site of the Week." This is an interesting story. ALLEN WASTLER, MONEY.COM: This is very interesting because the record labels are so used to having their way on everything. You've got Apple and their iTunes business and it has been a big success for Apple and part of that success has been able to say all songs, 99 cents apiece.
WESTHOVEN: So simple.
WASTLER: No biggy, everybody goes there. Now the record companies, they went up to Apple and said, you know, we'd like to charge more for the big chart busters that are going on and maybe less for the old libraries. They've been going back and forth with Apple. This week it was announced that they had renewed their contracts with Apple at 99 cents a song.
Apple, it's a very important part of their business. It's more than 10 percent of their revenues it keeps growing, and keeps growing. But if you go behind those figures and look at who's responsible foremost of the music downloads on the Internet, 80 percent is Apple, all right? Apple controls that business. If that were a seller, you'd say monopoly. But there is a buyer from the record company. Therefore, we have the word monopsony.
Where you see Apple in a position where because they are the big cahoona buyer all of the sellers, the record labels have to come up and say would you --
WESTHOVEN: Like Wal-Mart and its suppliers.
WASTLER: So you get the monopsony situation. Will the record companies ever get together and run to the justice department and --
WESTHOVEN: Oh, they already tried.
WASTLER: Also look at this; Apple is like the golden goose for them.
CAFFERTY: The record companies ought to be grateful that there's somebody that is capable of selling their product because they weren't doing so well before Apple came around with this Ipod, were they?
WASTLER: No. They should just sit back and say thank you very much, 99 cents.
CAFFERTY: What is the "Fun Site of the Week?"
WASTLER: You were talking about obesity. Hmm, should you fear the cookie? Let's take a look.
UNIDENTIFIED MALE: People should not be afraid of cookie. Cookie should be afraid of people.
UNIDENTIFIED MALE: You must tell the whereabouts of code name C. You have one last chance. Do you understand?
UNIDENTIFIED MALE: Yes. UNIDENTIFIED MALE: Are you ready to cooperate?
UNIDENTIFIED MALE: Elmo says no.
UNIDENTIFIED MALE: Elmo?
UNIDENTIFIED MALE: Two, two last chances.
WASTLER: Kids appreciate the "Sesame Street" stuff.
CAFFERTY: All right thanks Allen.
WESTHOVEN: In this week's "Life after Work" segment, life among tree people. Yep, tree people. It's an environmental group that has a simple goal to encourage urban planting in the L.A. area. For the last seven years 71-year-old retiree Joe Vargas has been helping the cause.
UNIDENTIFIED MALE: People need trees. Yay!
WESTHOVEN (voice over): Behind more than 1,000 trees like this one is Joe Vargas. The 71-year-old volunteers with Tree People, based in Los Angeles. For seven years Joe has spent hours every week making the world cleaner and greener. On this day, the aerospace retiree is out planting trees and teaching students in Burbank, California.
JOE VARGAS, TREEPEOPLE VOLUNTEER: I was researching the trees that we're planting and what the characteristics are so hopefully I can answer questions. It keeps me going, and the kids seem to enjoy it. It just invigorates me. I look forward to it every week now. About three days ahead of time, I plot on how I'm going to get it there. I kind of do a dress rehearsal in my mind, getting ready. By the time I get home this afternoon, I'll soak in the tub for a while, relieve my aches and pains and get ready for tomorrow. Do you know what this is?
UNIDENTIFIED MALE: Yes, soil.
VARGAS: No, this is vitamins.
I had friends who became inactive after they retired and they complain about illnesses and sickness. I don't want to be in that position. I want to go out strong.
WESTHOVEN: Thanks to some 500 trained volunteers like Joe Vargas Treepeople has planted more than two million trees in southern California.
Coming up next week on "Life after Work," we'll introduce you to two former financial planners who are spending their retirement digging in the desert for fossils. IN THE MONEY will be right back.
CAFFERTY: Time now to read your answers to our question of the week about whether you think America is ready for films about the 9/11attacks.
David wrote this, "These movies need to be made because people in the U.S. are forgetting why we're in Afghanistan and Iraq. In both of those countries we are now fighting al Qaeda and that's who planned and carried out the 9/11 attacks."
Joe wrote, "These movies are pure propaganda and are mostly being made for profit like any other action film. They're also hurting the chances that we'll ever get a real investigation of what really happened that day."
Elka wrote, "I think it's too soon for these films. I don't need to relive something so horrible that I can't forget."
Now for next weeks email question of the week it is as follows "Are gas prices making you consider using mass transit? And is there even any mass transit is your area?" Send your answers to INTHEMONEY@CNN.com. You should also visit our show page at CNN.com/inthemoney, which is where you will find the address of our "Fun Site of the Week."
I thank you for joining us for this week's edition of the program. My thanks to "Headline News" correspondent Jennifer Westhoven, "Fortune" Magazine managing editor at large Andy Sewer and Money.com managing editor Allen Wastler. Hope to see you back here next week Saturday at 1:00, Sunday at 3:00 Eastern daylight time. Until the next time enjoy the rest of your weekend.
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