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CNN IN THE MONEY
Hunt Continues for Captured Contractors, Bush Visits Vietnam, A Look at the Current Economic Climate
Aired November 19, 2006 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN ANCHOR, IN THE MONEY: Thanksgiving travel season is on and your airfare this year is bigger than the turkey on your table.
The power shift on the hill might mean a boost for stem cell research if Washington quits trying to strangle the whole thing in the laboratory. And owning a home in America looks like it's less about the color of your cash and more about the color of your skin.
This is IN THE MONEY.
Joining me today, a couple of IN THE MONEY veterans. Jennifer Westhoven and Allen Wastler is the managing editor of MONEY.com.
Oil prices heading down. Gasoline prices going up after the election. No conspiracy theory here, but gasoline prices went down before the election. Election is over gasoline prices going up. But a big drop in oil prices.
JENNIFER WESTHOVEN, "HEADLINE NEWS" CORRESPONDENT: This is always the time of year, too, when the refineries start making a lot less gasoline right because nobody is driving around and they are making more heating oil.
CAFFERTY: Don't they have to change the formulation and put that stuff in to protect the ozone layer?
ALLEN WASTLER, MANAGING EDITOR, MONEY.COM: Part of what you are seeing is just the lag effect in production, OK? The differences in inventory are going down. Right now it's coming down, it is a warm winter.
CAFFERTY: Didn't the OPEC guys just get through announcing big production cuts? Shouldn't the oil prices be going up? In the wake of OPEC announcing production cuts, isn't that the conventional wisdom?
WESTHOVEN: As though they have any shred of power left at all. Still, though, I mean oil prices are the lowest in a year. You have to wonder coming down so hard from $77 a barrel if we're having oil crashes going on here. That could be great at a time when so many people are worried about the housing market.
CAFFERTY: Fifty-five bucks is a long way from a crash. WASTLER: And actually they say if it gets much lower into the 50s, you'll see OPEC, all of a sudden oh my goodness, we're losing my money. Then maybe they will get some --
CAFFERTY: They're already cheating.
WESTHOVEN: I got to wonder what's going on with all that demand we used to have from China.
CAFFERTY: I don't know. We'll watch it, as they say in the biz.
Let's face it. Most Thanksgiving travel is anything but a pressure trip. More like a guilt trip, right? As in give it up for the family or deal with the consequences for all of the rest of the year if you don't go to grandma's house. Grandma not happy. This year the fares are in the stratosphere if you are going to hope on an airplane. All that as U.S. Airways went public this week with its $8 billion dollar bid for Delta Airlines. For more about what all of this could mean for you, we are joined now by Darryl Jenkins. Who is the former director of the Aviation Institute of George Washington University, now serving as an aviation consultant. Darryl nice to have you with us. Thanks for joining us.
DARRYL JENKINS, AVIATION CONSULTANT: Good to be here, young man.
CAFFERTY: Young man, thank you. Darryl, give Darryl extra time for this interview. Before we talk about this bid for Delta Airlines why are the fares so high this holiday season?
JENKINS: These holiday fares are the highest fares I can remember in 30 years. They're high for two reasons. We're still at the end of a robust economy, which is always good for jacking up fares. The second reason, the airlines have pulled back so much capacity in the last five years that they don't have to charge nothing to get people on.
WASTLER: Darryl the big news this week was the Delta take-over or the attempted take-over by U.S. Airways and everybody says this is going to set off a wave of consolidation. It seems like the creditors and the regulators are the ones that are going to say whether this deal is going to go through. What do you think?
JENKINS: Well you are absolutely correct on that. The first big hurdle was the bankruptcy court. Delta right now has exclusive rights from the bankruptcy court to reorganization their airline through the middle of February. Now, at the middle of February, that all changes. I doubt that U.S. Airways has had time yet to actually talk with the creditors' committee, but we do know this week that Delta stock is selling much higher than it used to be. This is a great offer. It's going to be almost impossible for Delta to emerge from bankruptcy as they had originally planned.
WESTHOVEN: All right. Aside from all those clearances, though and what they have to get through, how do you take two of America's oldest airlines that haven't been doing that well, put them together and get something great? I mean is that really going to transform them into something that can compete with Jet Blue?
JENKINS: Well, certainly to compete with Jet Blue is an entirely different problem. Delta in the last six years, I mean ten years ago Delta was my favorite airline. Six years ago, something happened to them. They just lost sights. Right now their operations in JFK are just awful. So Delta used to be one of the world's great airlines, now they're a dog with fleas. There are a lot of problems at Delta that need to be taken care of. But Doug Parker, I would rather on any day of the week see Doug Parker and Scott Kirby at U.S. Airways running Delta than the current management.
JENKINS: They're just so much better. These guys have a very clear objective, what they want. They're all about making money. They've improved their operations. They've identified at U.S. Airways where there are still problems and they're out there out there trying to tackle them right now.
CAFFERTY: Well what do they see? You said Delta has got fleas or something to that effect. Does that go in your consulting reports, by the way?
JENKINS: Those very words.
CAFFERTY: What is -- what do the guys see in Delta that makes them salivate and say, we can make a lot of money if we do this thing?
JENKINS: They have a much larger network than U.S. Airways does. And most importantly and this is the thing here is they have a larger European network whereas U.S. Airways has no International presence what so ever. .
WASTLER: That's really the question though about getting them together. I mean, do you have so much overlap and particularly on the east coast. Aren't the U.S. regulators really going to have to bring this deal down?
JENKINS: They -- the Department of Justice will look at this very, very carefully. Here's where they're going to look the closest. They're going to look at competition especially between Atlanta and Charlotte where you have two competing hubs. There's no doubt about it what so ever that that is the biggest antitrust hurdle. Here's what U.S. Airways is going to have to do. U.S. Airways is going to have to decide which of those two hubs they're going to use for flow traffic. I assume it will be Atlanta. That's going to relegate Charlotte to local traffic only. They will no longer flow traffic over Charlotte. Then they'll concentrate simply on local traffic at Charlotte and when they do that, that will open up probably, you know, 100 gates there that currently aren't available.
Charlotte is the most concentrated airport of any airport in the United States. The 100 gates is an exaggeration, but they have 90 percent of the gates in there and they'll have to open up enough gates that you'll see Jet Blue, you will see Air Tran and Southwest all salivating to get in there. And Charlotte will be the big price, so if they can disconnect Charlotte, this will get through DOJ.
WESTHOVEN: OK, forgive me if I'm wrong. But it sounds to me like you might be stepping around the issue of Mr. Grinstene over at Delta. You're saying Delta is a dog with fleas; it was great until six years ago. I'd like to encourage you to tell it like it is. What do you think is going wrong over there?
JENKINS: You know, I don't know. I mean, I used to understand Delta so well. We knew everybody there, the only thing they wanted to do was give good customer service and from that they made a lot of money. And somewhere along the line they became side tracked and it breaks my heart.
CAFFERTY: How do you read Wall Street's reaction to this announcement on these two airlines? All the airline stocks got a bid that day pretty good.
JENKINS: That's right. The airline sector is up. U.S. Airways is up quite bit and Delta is selling much higher than it previously was, so certainly Wall Street has reacted very favorably, but there are a couple of hurdles. The first big one is in February and I think the creditors are going to be very impressed with this take-over attempt, seeing what's going on in Wall Street right now and I think it will be very, very difficult for Delta to emerge from bankruptcy as they currently planned.
CAFFERTY: Darryl Jenkins, aviation consultant and former director of the Aviation Institute of George Washington University. Darryl nice to see you. Thank you.
JENKINS: You, too, kiddo.
CAFFERTY: All right, partner. When we come back on IN THE MONEY, a tempest in a test tube. We'll look at whether the changes on Capitol Hill are going to light a fire under stem cell research.
And the stake in the future finds out what is behind the big gap between home ownership of blacks and whites in America.
And the fast and the furious, fast food is a prime target for anger over the obesity epidemic. We will talk with a guy who says that epidemic is more spin than substance as IN THE MONEY continues.
WESTHOVEN: Washington's has been wrapped up for ages debating the morality of embryonic stem cell research. As if Washington is any place to be telling the rest of us about morality. Anyway, now that the Democrats are dominating Congress, the stem cell business might be picking up. We'll have more about that from Arthur Caplan, he is the director of the Center for Bio Ethics at the University of Pennsylvania. He's also the author of "Smart Mice, Not So Smart People." An interesting and amusing guide to bio ethics. Nice to have you here, Art.
ARTHUR CAPLAN, DIRECTOR OF THE CENTER FOR BIO ETHICS: Thanks for having me.
WESTHOVEN: What kind of hopes do you have for stem cell research and embryonic stem cell research now that we have this change over of power in the Congress?
CAPLAN: I think we're going to see two things happen for sure. The states are going to continue to push to see embryonic stem cell research funded using state-based money or trying to attract business investment to those states that have passed laws that are favorable to embryonic stem cell research.
We all know that California did so in the recent election. Missouri passed this constitutional amendment. And there are other states like Maryland, Massachusetts, Wisconsin and New Jersey that have policies in place that I think are going to be par laid into trying to draw business. The other thing that's for certain to happen is more scientists are now going to step forward and say I'm going to try to get into that area because it looks like at least ten of the states are open to doing embryonic stem cell research.
CAFFERTY: Talk to me a little bit about the one-act play that happened going into the election between Michael J. Fox and Rush Limbaugh. There are people in this country that suggest that Limbaugh all by himself may have cost the Republicans control of the Senate when he took to mocking Michael J. Fox on his radio program and changed really the whole emotional climate for the discussion of embryonic stem cell research.
If you couldn't be sympathetic to watching Michael J. Fox in the condition he is in talk about need for funding for this stuff, then you didn't have a heart and sure enough Limbaugh came along and proved he doesn't have one.
CAPLAN: Well you I'm going to take credit here. I think I came out of the box and said Rush Limbaugh personally delivered the U.S. Senate to the Democrats. And the reason I say that is if you look Jack, if you looked at Missouri, Virginia and Maryland, close races in the Senate, a few thousand votes tipped those races. I know for a fact that proponents of embryonic stem cell research in disease organizations, people who either have, you know, spinal cord injury or Parkinson's or their family and friends went to the polls ticked off that Limbaugh had decided that an interesting political platform was to make fun of the disabled.
WASTLER: Art I want to clarify, though; it seemed to me it wasn't just a straight Republican versus Democrat issue. Right now even though the Democrats control Congress, it's not a slam-dunk that federal funding will be coming down for stem cell research, right?
CAPLAN: That's right. There are three interesting divisions among the Republicans. There's a group of libertarians who basically look at the stem cell issue and say, look, leave it up to the individual states, leave it up to private enterprise to work it out. Don't regulate this from Washington, at least with bans. There's another group of Republicans that are pro business that want to see this advance. They played a key role in the Missouri initiative. It wasn't just Democrats that pushed that through there.
And then there are the religious conservatives who tended to be aligned in opposition to all forms of embryonic stem cell research. So when Congress reconvenes, the Republicans are going to be in a bit of a bind because in the party, I would say a fair number want to move over and support this issue. The Democrats are going to present it to them. You can be sure that up on the platter first is going to be a renewed call for federal funding. Let's see where we are now.
WESTHOVEN: Well, no matter what those divisions are in the party right, the guy in the White House still says he doesn't like this stuff at all. Do you think that there essentially I'm wondering what do you think is going to happen when it boils down to those groups? Are they going to have enough power to override a veto?
CAPLAN: I don't think they can override a veto straight up on a vote. Maybe in the Senate they could, I don't think so in the House. However, what I think the Democrats will do now that they're in the majority in both places, they can start to attach the stem cell funding deal to other things. They're going to put the president in a position, I'm sure, of saying, hey, and you want to veto this in that, go ahead.
CAFFERTY: Talk for a minute about the economics of the potential of the kinds of break-through that we're talking about with stem cell research, particularly embryonic stem cell research and the kinds of windfalls that could generate for American companies if we become competitive on the world stage in this stuff.
CAPLAN: Remember, at this point in time, the debate about embryonic stem cell research and the ethics of it, in one sense, is over. It's now a debate about where is it going to happen? It's going to happen in roughly 20 percent of the states in the United States and California has made a major investment. It's happening in China, Singapore, Britain, Israel, Sweden, and other places. So from a business point of view, it is attractive to scientists to say let's be able to control basic mechanisms of embryonic development, see if we can create cells by design that we can use for therapies.
That said, it's also very primitive and early days for this science. There's no one who, I think, should be honestly saying, we're going to cure anybody in the next three to five years. We're at the very basic science stage of this stuff. That means the investment is going to have to be for a bit of a long-term return. If you're looking for a quick return, embryonic stem cell research I don't think is going to be your thing.
WASTLER: Art is that why we're not seeing a whole lot of private equity money flowing into this area and every body still talking about some sort government financing.
CAPLAN: Precisely. If you really looked at the embryonic stem cell research what's been done and what we understand about how to manipulate embryonic stem cells, it's the right brother stage in terms of making a comparison to airline flight. We can identify the cells, we can make some of them in dishes, but making them pure, getting them out of dishes into bodies, making sure they function properly, that's going to take years to develop.
That is not where private capital likes to put its money, they like the government to fund the basic, basic, basic, basic research and then step in say that theory looks promising enough let's develop that. We're not there yet. I think we'll see a few tentative steps in now by private money, but for the most part it's going to be state and federal that's going to have to drive this.
CAFFERTY: All right. Art, we have to leave it there. Great call, by the way, on Limbaugh. Art Caplan is the director for the Center for Bio Ethics at the University of Pennsylvania. And the author of a book with a kind of catchy title, "Smart Mice, Not So Smart People." An interesting and amusing guide to bio ethics. Thanks for being with us.
CAPLAN: Thanks for having me.
CAFFERTY: Time now for this week's look ahead on Monday, the October report on leading economic indicators, a key gauge of U.S. economic growth. The L.E.I. showed some positive signs in September. Next week, we have Black Friday that is the name of the massive shopping day, the day after Thanksgiving. It's a very important day for the nation' retailers. The kickoff to the Christmas shopping season, CNN will cover the action from several malls and storefronts all across the country. We'll probably see my wife in the footage of these reports at some point. That's so you'll be able to see a bunch of frenzied people beating each other to death for the lasted Tickle Me Elmo doll or whatever.
Coming up right after the break, along way from home. New statistics show blacks are getting left behind when it comes to home ownership; see what it would take to close the gap.
And just because America is getting bigger, does it really mean we're less healthy? We'll talk about that and whether the government has a right to get involved.
Plus a world apart, a lot of video gamers can't wait to get their hands on the new version of Sony's Playstation. It might be easier said than done. Find out how it stacks up against the competition. We will be back.
WESTHOVEN: Let's take a look at the week's top stories in our "Money Minute." More signs that inflation is tame. Prices fell last month both for consumers and for wholesalers. The producing price index had its biggest drop since 1993. And you can thank lower gas prices for that. Now, that ought to be a plus for the economy, but the Federal Reserve not impressed so far, notes from the last Fed meeting showed policy makers still worried about higher energy prices.
Now, lower gas prices may have saved Americans money at the pump last month, but where is the money going? Because we didn't spend it, the government has retail sales fell by .2 of a percent. That stumped some economists who figured Americans would take that extra money to the shopping mall.
And the nation's biggest Radio Company will soon be in private hands, a couple of private equity firms bought out Clear Channel for $19 billion plus debt. Clear Channel owns more than 1,000 radio stations and 42 TV stations.
One of the big pieces of news on Wall Street this week, the potential airline merger that we talked about earlier in the show. And another big story Detroit's automaker looking for some help from the White House. Susan Lisovicz joins us from the New York Stock Exchange for "Street Talk." Hi, Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Jennifer. Good to talk to you. What a week on Wall Street.
WESTHOVEN: Yes. We've got new records for the Dow, the Nasdaq and the S&P 500 doing their best in three years. How did the airline merger play into that?
LISOVICZ: They took off Jennifer. I mean you know analysts have been talking about consolidation in this industry for years, so when you get this unsolicited bid for Delta Airlines, which would link two of the nation's biggest airlines and create the world's biggest airline, you saw a lot of buying. U.S. Airways hit its all-time high on Wednesday. Continental and American hit 52-week highs. Basically what has been happening, even though they are fewer flights operating as airlines have been scrambling to make their fleets more efficient, is that analysts are saying that if you just merge a couple of these airlines, they would operate much more efficiently and you wouldn't have half the nation's airlines in bankruptcy.
You think about what's been happening in the last few years, U.S. Airways has been in bankruptcy protection twice. You have Northwest and Delta still in bankruptcy protection. United, which came out of it, and this is -- it's an industry that's obviously vital and can't continue to operate this way. I know you guys were talking about what it may mean for consumers in terms of perhaps if it went through, higher fares, and perhaps fewer flights. But the bottom line is profitable companies tend to perform better.
WESTHOVEN: I want to talk about another big deal on Wall Street this week and that is the initial public offering of Halliburton's business that does, you know, so many services for the army and for our military in Iraq and Afghanistan. How did investors react to the idea of buying a piece of Iraq Inc.?
LISOVICZ: Another buying frenzy. This KBR, which has been referred to as Iraq Inc., is basically the unit that does everything but fight for our men and women in Iraq and Afghanistan. They handle laundry, housing, all sorts of services that are vital for our men and women in uniform, and Halliburton has been under pressure with this unit. It's been subject to a number of probes for its no-bid contracts. The fact that a Democratic majority is now in Congress, that there may be more oversight for its operation, the fact that there might be a speedier pullout; this is its bread and butter. So Halliburton wanted its own exit strategy, if you will. The fact is though investors bought some analysts say it's because it was priced so well and that it also has other operations including liquefied gas. Which is a very hot sector of the energy market.
WESTHOVEN: Thank you so much, Susan Lisovicz for keeping an eye on what's happening on the trading floor for us.
Coming up on IN THE MONEY a housing market divided. Find out why fewer black Americans than white own the homes they live in.
Plus, conquering the universe from your living room couch. See what video games system is shaking up as the one to beat.
And the big fat obesity epidemic. We will hear from a guy who says it is myth that is making some people rich.
CAFFERTY: New statistics out of Washington show that when it comes to homeownership, most black Americans still can't get a foot in the front door. The Census Bureau says 46 percent of black households own their homes last year. That compares to 75 percent of white households. Lance Freeman is here to talk about why black Americans still can't get a break in the housing market. He's an associated professor of Urban Planning at Columbia University and the author of a book called "There Goes the Hood." Welcome, Lance nice to have you with us.
LANCE FREEMAN, AUTHOR, "THERE GOES THE HOOD:" Thanks for having me.
CAFFERTY: Homeownership has an indication of net worth. And home equity even more importantly an indication of net worth. Why is there such a disparity between blacks and whites when it comes to example the equity that we have in our homes?
FREEMAN: I think there is a number of reasons, I think a big driving force is the fact that African-Americans and whites tend to live in different neighborhoods and it's the case that the neighborhoods that whites live in tend to be better neighborhoods with better schools. That translates into housing that's worth less in black neighborhoods, so as a result of that the housing that blacks own tends to appreciate much more slowly than that owned by whites.
CAFFERTY: On the other hand more affluent blacks, more successful blacks tend to migrate out of the poor neighborhoods and into the more upscale neighborhoods. How is it that we separate housing out as an indicator of economic success when, in fact, those who have college degrees and white collar jobs and are making the bigger pay checks end up in the more affluent neighborhoods anyway?
FREEMAN: That's true to a certain extent, but not all of the upwardly mobile African-Americans are moving out of black neighborhoods. So there is a certain amount of segregation even among middle class and affluent blacks. I mean there are many suburban neighborhoods that are predominantly black. They own their homes, yet if you compare to suburbs on the other side of Washington, D.C., such as Montgomery County the housing is worth much less.
CAFFERTY: Why? Why is that happening?
FREEMAN: Again, I think it's a part -- you know, the fact that the black population is a much smaller proportion of the total population. So to some extent it is almost as though there are two distinct housing markets, one that's black and one that's white. Not to ignore other minority groups, but focusing on blacks and whites, you have two separate housing markets and the pool of people who are buying in the white housing market is much larger so you have much more demand for housing in white neighborhoods than black.
CAFFERTY: Are there elements of discrimination that still exist in this arena? If you look at the statistics and go back and few years, we've made a lot of progress. They don't red line the way they use to, some of the predatory lending practices are, at least, not as prevalent as they once were. Address that component of this.
FREEMAN: I think there still is some discrimination. You touched on a point as far as predatory lending. There may be some improvements with that. I think what tends is to happen is that some prime lenders and predatory lenders tend to focus on those who perhaps don't have that much experience with financial instruments, who are not that financially savvy, people that are maybe fearful that they'll be rejected.
CAFFERTY: Like these car ads that you see, if you have lousy credit, you can buy a car and they're hoping they'll get the car back in 90 days when you default on the loan.
FREEMAN: Exactly. People that end up with those loans they are much more vulnerable because the interest rate is higher, their mortgage payment is higher. You also have the think about the economic status of blacks in general. Unemployment rates are much higher among blacks. Blacks are much likely to live in a married couple household so their income streams is much more volatile. One person loses their job, if you're part of a married couple; you can rely on the other person for at least a while. Blacks are much more likely to live alone as single parents, so that makes their income stream much more volatile. And I think that also contributes to it as well.
CAFFERTY: What ought to be done about this in your opinion?
FREEMAN: Well I think in the '90s, we saw a number of programs that were designed to increase homeownership among low-income groups and minorities and they provided things like counseling to teach people how to qualify for mortgages. I think those types of programs need to be continued. I think programs that try to curb predatory lending, that are you know have really stiff penalties to groups that engage in predatory lending, those need to be strengthened. I think the big thing that needs to be kept in mind that the gaps probably aren't going to close that much until you start to see more progress in terms of education, in terms of income so that blacks have the means to buy homes equivalent to the homes that whites are buying.
CAFFERTY: That's obviously a slow process, although we're moving, I think, in the right direction if you take a look at where we come from.
FREEMAN: I agree.
CAFFERTY: Lance, good to have you with us. Thank you very much for being with us.
FREEMAN: Thanks for having me. . CAFFERTY: Lance Freeman, author of "There Goes the Hood." An associated professor at Columbia University.
Lots more ahead on IN THE MONEY as we continue. Coming up next, and that won't just pack up and leave. See how a VC firm is bringing long-term health to the developing world.
Plus the digital battlefield, with the new Sony Play station out find out about the three-sided fight for video game supremacy. It is a war out there. Stick around.
WESTHOVEN: Starting a new business can be a huge challenge, but group is showing that by providing a combination of business skills and funding a little money can go a long way. Ali Velshi has this week's "Mind Over Money."
ALI VELSHI, CNN CORRESPONDENT (voice over): When it comes to solving poverty in the developing world more money isn't always the answer.
JED EMERSON, GENERATION FOUNDATION: It's not enough to simply give money. You have to make an investment in changing the way the world thinks about and acts in response to these critical issues.
VELSHI: Just like Venture capital nurtured a generation of Internet companies, Venture philanthropy is trying to create successful enterprises dedicated to improving the world.
JACQUELINE NOVOGRATZ, CEO, ACUMEN FUND: We're trying to demonstrate that using some methods on capital and combing it with large doses of business, we can build thriving businesses that serve poor people.
VELSHI: Acumen Fund raises money for bill and profit ventures but doesn't give that money away. It invests it in companies dedicated to improving health, water, or housing and looks for entrepreneurs ready to think big.
NOVOGRATZ: Our approach is not to start at the top but to build these examples by showing that you can actually create self-sustaining companies or organizations that serve the poor people in a way that they can ultimately make their own decisions and serve themselves.
VELSHI: The key is sustainability. As the new company grows they can then repay their start-up costs allowing more companies to get funding. These private sector enterprises can then use their income to expand and serve more people. In India's largest city Acumen helped an entrepreneur fill a void in the health care system.
SHAFFI MATHER, AMBULANCE ACCESS FOR ALL: In India unfortunately people don't call ambulances when they face an emergency. Because ambulances are so unreliable.
VELSHI: Dial 1298 for ambulance started with a modern fleet equipped with GPS and advanced life support equipment. Now Acumen is helping 1298 expand service while keeping its promise to help everybody, regardless of their ability to pay.
MATHER: In India, while there is poverty, there is the affluent also. And the basis of the model is built on the fact that the rich pay higher and the poor pays lower.
NOVOGRATZ: We can bring this to government, to the world and say, here's the model. This is what it cost, this is how many people are reached and at the end of the day it will sustain itself.
WESTHOVEN: For more on the fund you can go to Acumenfund.org.
Next week on a special edition of IN THE MONEY, we're going to look at all the invasions that are changing philanthropy and talk to some of the big players to find out how they're giving their money away.
CAFFERTY: The law of supply and demand getting a work out as the long awaited Sony Playstation 3 hits stores this week. CNN Money managing editor Allen Wastler has the details in this week's edition of "The Number."
WASTLER: The number this week is 400,000. That's how many PS3s are going on sale and you'd think, you know what? That's not going to be enough for all the people we see lining up, camping out.
WESTHOVEN: No. You've seen the news stories. People are hitting them.
WASTLER: It's a game, folks. It's just a game.
CAFFERTY: Why is there such demand for this thing?
WASTLER: If you look at some of the footage of people in these lines, you know how you comment about --
CAFFERTY: Now, now, you can't do that.
WESTHOVEN: Some people are in it for the money. WASTLER: When you look at the PS 3, there are some amazing graphics there. And it is one these new machines that can do all sorts of other stuff. Now, our review on the Website said, it wasn't bad, but it wasn't the end-all. I think the 400,000 might be a manufactured sort of number. They're going to add to the supply later on, but they want to build the hype and get the demand and get it out there so that we'll take new crews to take pictures of the people waiting in line and build up the hype.
It's an interesting that you mention the Wii. Very stupid name, that that's what Nintendo chose. It's Wii. There you go, Jack. This thing costs about $250 bucks, much less than the $500, $600 PS3. It has this new nifty controller that apparently any fool can start to learn how to use and play the game. You don't have to memorize all this stuff and everything. I think Nintendo they might just eat Sony's lunch and take it away from them.
WESTHOVEN: It certainly can't hurt that on South Park they have a kid that's willing to time travel to get to the Wii because he loves it so much.
WASTLER: Yes. That's your number for today.
CAFFERTY: Thanks, Allen. Coming up next on IN THE MONEY do not feed the fat cats, we'll talk with a guy who says the obesity epidemic is really about making money for the weight loss industry.
And it is time to hear from you as we read some of your emails from the past week, you can send us an email right now if you are so inclined, we are INTHEMONEY@CNN.com. .
CAFFERTY: Do you have what the doctors refer to as a bit of a weight problem? Maybe so or perhaps you're a victim of society's obsession with our own waistlines. Our next guest argues America's obesity scare is a product of those with the most to gain, namely the weight loss industry. Joining us now to talk about this Eric Oliver is the author of "Fat Politics, the Real Story Behind America's Obesity." He's also a political science professor at the University of Chicago. Eric nice to have you with us.
ERIC OLIVER, AUTHOR, "FAT POLITICS, THE REAL STORY BEHIND AMERICA'S OBESITY:" Thanks for having me on.
CAFFERTY: There's a lot for the weight loss companies to work on out there, is it 1/3 of the nation is now obese? I mean, it's really a rather stunning statistic and all you have to do is walk down the sidewalk in New York City. I mean, we're an overweight nation.
OLIVER: Undoubtedly we are a very large nation and a pretty fat nation, but there is a big question about whether we're an obese nation. And a lot of it depends on how we define obesity. Right now the government defines obesity as having a body mass index that is your height to your weight, a ratio of your height to your weight of being 30 or more. So, say, for someone who's six feet tall like myself, that would be 220 pounds, 2/3 of Americans are now overweight because we have a BMI of 25 or more and for someone like myself who's six feet tall, that would be 185 pounds. I'm technically overweight.
WASTLER: Eric I wanted to -- what's fascinating about the story, you're a political scientist right?
OLIVER: That's right.
WASTLER: And not a doctor, yet you're fighting on the doctor things. Can you tell our audience a little bit about how you got into this? Because I think it sort of opens up the crux of your argument.
OLIVER: Sure. When I first starting writing this book, I like most people assumed that obesity and overweight were major health problems and I was interested in the politics of this. What it would it mean for the government basically to put everyone on a diet, how would this work out. And when I started actually doing the research into this and researching all of the medical health articles linking weight to mortality, I discovered something very interesting. That the scientific evidence there linking weight to all of these adverse health out comes was very really unclear. And so to me, the interesting question became why in light of all of this scientific evidence were the government agencies, were all these public health advocates out there saying that obesity was a disease? And that's where the story got a lot more interesting and the politics got a lot more dark and nefarious.
WESTHOVEN: What do you think is the reaction from the medical community to your argument that obesity isn't the problem it's made out to be?
OLIVER: I get a wide mix of reactions. Some doctors come up and say thank you, this is great. I've been waiting for someone to say that the emperor has no clothes, that this is bogus. Other doctors say oh, you're missing the whole case. In fact, obesity is a disease. It's killing hundreds of thousands of people every year. The mixture is across the board. But it really depends on whether or not someone is selling a weight loss product.
CAFFERTY: Lets go back to phrase you used a minute ago a dark and nefarious. I like that a lot, what are you talking about?
OLIVER: Well like take for example our current standards of what is over weight and obese? The current standards come largely from the origination called the International Obesity Task Force. They're based in Britain would seem like a legitimate scientific organization, but it's largely a front for a couple of pharmaceutical companies that make weight loss products. It's a sort of pseudo scientific organization that is out there advocating sort of obesity as a problem in the name of increasing the importance relative to, I think, an agenda of the pharmaceutical industry.
WASTLER: Go ahead.
OLIVER: In the United States there's an organization called the American Obesity Association and this is an origination that you'd think they'd have lots of, you know, obese people, but it has very few obese people, it's largely a front for the weight loss industry. They've been very active at lobbying the government for example to get obesity classified as a disease, to get weight loss surgery, make it tax deductible through the IRS and get the government to increase funding and attention towards obesity as a health problem largely in order to subsidize the weight loss industry.
WESTHOVEN: All right. Eric Oliver the author of "Fat Politics." Thank you for joining us and for, you know, we all really want to know the different ways to get most Americans as healthy as possible. Thanks.
WESTHOVEN: After nearly 36 years of working in Corporate America, Murray Scureman started to think do I belong here? Valerie Morris has the story of how he rediscovered his passion.
VALERIE MORRIS, CNN CORRESPONDENT (voice over): Murray Scureman spent his career working in the computer industry and for the Federal government but these days, you'll find him with his crew on construction sites.
MURRAY SCUREMAN, CEO, DENMAN DEVELOPMENT GROUP: My dad believed in training young men and when I was like nine years old, he gave me a power tool and taught me how to use it, and so, you know, he helped instill in me a love of using my hands.
MORRIS: Now at the age of 67, Murray is putting those lessons into action remodeling homes and running Denman Development Group.
SCUREMAN: It wasn't until I got involved renovating my own house that this hidden desire to do this kind of stuff sort of bubbled up.
MORRIS: This Princeton and Harvard graduate says what appeals to him most is the opportunity to be creative.
SCUREMAN: Remodeling has a lot of puzzle solving in it. You don't know what's in the wall until you open it up. I really like working for myself. I have a great social life, you know, outside of work. So it's a nice balance. There you go. That's it. It's like magic.
MORRIS: Valerie Morris, CNN.
WESTHOVEN: We'll be right back with more IN THE MONEY. Stay tuned.
CAFFERTY: The moment you've all been waiting for. It's time now to read your answers to our question of the week about what you think the Democrats should focus on now that they are in control of the Congress.
Silvia wrote in Glenville, Illinois, " It was public rage about Iraq that led to the Democrats taking office in Congress. If they don't address Iraq and make progress, they will be gone in two years."
Alicia in California writes this, "Congress must take charge of oversight when it comes to all the money that's being spent in Iraq. Billions of dollars are unaccounted for, and this issue is as important as any domestic problem."
We heard this from Phyllis. "There are only two things the Democrats must do: tell the truth and balance the budget. The American people want the budget under control, why doesn't the government?"
Here is next week's e-mail question of the week. Are the hassles of air travel convincing you to stay at home this holiday season? Send your answers to INTHEMONEY@CNN.com.
You should also visit our show page at CNN.com/inthemoney. On that note we thank you for joining us for this edition of the program. My thanks to "Headline News" correspondent Jennifer Westhoven and CNNMONEY.com managing editor Allen Wastler. We hope to see you back here next week. We're Saturdays at 1:00, Sundays at 3:00 Eastern. Until the next time enjoy the rest of your weekend.
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