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The Latest on the Jobs Report; Chicago Loses Olympic Bid to Rio de Janeiro; Who the Real Culprits Are in This Economic Crisis
Aired October 3, 2009 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN HOST: Hello, and welcome to YOUR MONEY. I'm Christine Romans.
Ali Velshi is in Chicago. He joins me in a moment, but first, for most of us, our personal economy depends on our job. New information about the shrinking American labor market. September brought our 21st straight month of job losses. The jobless rate jumps to 9.8 percent - that's the highest it's been in 26 years. Employers slashed 263,000 jobs last. Now 7.2 million have been cut since the recession began.
Let's try to put this in perspective for the year. That 263,000 jobs lost in September is a big improvement from 741,000 jobs lost back in January. You can see how the job cuts have generally gotten smaller as the year goes on but September's decline there is still larger than many economists had expected.
Some of the hardest hit sectors include construction, 64,000, manufacturing 51,000. We're used to seeing cuts in those sectors but not in government jobs. Government jobs, people hoping that's a bright spot during this recession with all of this government spend but it wasn't the case in September, 53,000 government jobs cut.
Let's break it down a little bit further; adult men have been hit harder than women at 10.3 percent. Blacks and Hispanics have unemployment rates above 15 and 12 percent as compared to whites at 9 percent.
Let's get started with Diane Swonk the chief economist at Mesirow Financial and Terry Savage, personal financial editor for the "Chicago Sun Times" and she is also the author of the book "The New Savage Number." Ladies welcome to the program. Let me start with you, first, Diana. These numbers, worse than we expected but really not that much of a surprise. We know that the economy is fragile and we know that the jobs market is still so difficult, don't we?
DIANE SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: Absolutely. In fact, the consumer confidence numbers had deteriorated earlier in the week really was a forewarning that people are feeling very bad particularly about the employment situation. Even as the economy struggles to recover, it's held up by government spending.
The other issue is that the loss in jobs and education jobs are now losing teachers which you really worry about because that's a loss and investment in human capital going forward. These job losses would be even greater without the government support we've had so, you know, it really gives a sense of how bad things would be if we didn't have it but it's less bad is not good enough.
ROMANS: Do we next year, Diane, start to see actual job creation? At what point is it enough job creation in your forecasting that it will make up for new people entering the work place and actually will stop the unemployment rate from rising?
SWONK: Well, that's the million dollar question. I do think we'll see job creation by about January or so but very modest job creation. These businesses need much more cash than they once did to actually execute and feel confident in hiring because they don't have credit like they did. In terms of the unemployment rate peaking well over 10 percent by mid 2010 coming down a little by the end of the year but in my analysis I can't get back down to 5 percent handles on unemployment until 2014, 2015. That's a very hard political situation and reality for us to live through.
ROMANS: And that's what we call a jobless recovery, right? That's a jobless recovery if you're talking about 2014.
SWONK: That's more than a jobless recovery yeah. That is a long way to climb our way out of this hole.
ROMANS: A big hole. Terry Savage, you make a very good point. We had some very difficult times back in 1981-82. You point out that the prime rate was a whopping 21 percent, 12 percent unemployment. You had a double digit inflation. You hear people talking about the mortgages that they had at 18 percent or something interest at that time. We got through it. I mean, your point for people on sort of the micro finance level is we got through that.
TERRY SAVAGE, PERSONAL FINANCIAL EDITOR, "CHICAGO SUN TIMES:" Yeah, you know, it's hard because most people don't have that perspective. Actually you had to be over 50 years old to really be out of college and faced with the jobs situation we had in the early '80s. Nobody is making light of this. Economists talk about job losses. But what this really is is people losing jobs and those people have families, they have mortgages, they have children in college, and so this is spreading dramatically.
Just late Friday we had the numbers for consumer bankruptcies now over a million for the first nine months. We haven't seen that since the new bankruptcy laws went into effect four years ago. So this is spreading through the economy. It's hard to maintain perspective much less a positive attitude but history tells us we will get through this. It's just not going to be easy.
ROMANS: Terry, what are the consequences for the consumer here? The consumer is 70 -- 2/3 of the economy at least is the consumer. If you're worried about your job, you're worried about your house, you are worried about your neighbor, and you can't get credit to maybe grow your small business. This makes things pretty difficult.
SAVAGE: Yes. So the consumer has been the engine of the economy and the smart consumers now are pulling back, the ones that still have jobs are trying to save money and pay down debt. That's very good on a personal financial basis. Just what I would advise. We see it happening to the entire economy, though. It means things don't get moving again. And that's the tough balance the government has to deal with.
Raising taxes certainly isn't the answer. We need tax cuts to get the economy growing. We need the banks as Diane pointed out to start lending this money that's backed up in the banking system now to small businesses where the jobs are created.
ROMANS: OK. Let me ask both of you one quick question before we wrap it up. I'll ask you first, Diane. What is the one thing someone watching here can do or take away from what we know about the economy right now and the jobless recovery? I want to ask both of you. What can somebody do right now if anything to improve their own situation and their own security? Diane.
SWONK: Well, my view is that keeping the job you have is paramount. If you are employed remember 90 percent of the labor force is somehow employed at this stage of the game and the real key is maintaining your employment. It means taking the cuts in your wages, taking the cuts in compensation and staying out there. This is not an easy time and it is not a time to be demanding. I know that's not easy but that would be my biggest emphasis is if you do have a job, you're lucky and you're one of the lucky ones.
ROMANS: Terry, wrap it up for us.
SAVAGE: Absolutely. Keep saving. Don't just save and put it under the mattress. Start investing because if you're going to plan on living in America 20, 30 years from now you know we'll be better off in the long run so keep investing. Just that little bit in your retirement plan, especially if the company is matching it.
ROMANS: Exactly. That's free money. Recession or no if your company is still matching that's free money. Terry Savage, a personal finance editor, "Chicago Sun Times" and Diane Swonk, chief economist at Mesirow Financial. Both of you in Chicago thank you so much.
Ali is also in Chicago in the very disappointed kind of sad city there this weekend. Hi, Ali.
ALI VELSHI, CNN HOST: Christine, we don't agree on everything you and I but we agree on this. We both love Chicago. This is a vibrant, exciting city and when we come back I'm going to tell you things about Chicago you may never have known and why you may want to make it your next destination. Stick around you are watching YOUR MONEY.
VELSHI: All right. It is the aftermath now. We are in Chicago, a city that was hoping to be celebrating the fact that it was awarded the 2016 Olympics. It didn't happen. Here in Chicago and we want to talk a little about why and what's next for Chicago. Why this is interesting to you. Congresswoman Jan Schakowsky joins me, she is from the ninth district and her district is on the north side of Chicago, a beautiful, vibrant part of this great city. Richard Quest is joining me from London. Richard, let's start with you. We'll take that big view for a second about what the world thinks about why Chicago didn't win when so many people thought Chicago was at the front of this thing.
RICHARD QUEST, HOST, CNN'S "QUEST MEANS BUSINESS:" And that of course is exactly the point. If you go back seven years or so when London was awarded the Olympics games it was a race between of course London and Paris, then Madrid dropped out and Madrid's votes went to London. So you've got to look at the voting in all of this.
Why did Chicago drop out in the first round of voting? Possibly because the Asian nations all voted for Tokyo, thus putting Chicago at the bottom. Remember, that first round of voting is as much about politics as it is about sport. Unfortunately, on this occasion the sportsmen in Chicago may be sorry, Ali, but those who have to spend the money may be quite pleased at not having the bill for the games.
VELSHI: Interesting. That was definitely one of the things we talked to Chicagoans about. It wasn't a hundred percent of the population supporting this bid. There were many people who thought that Chicago would do very well from having the Olympics. There are others who think Chicago is doing just fine and will continue to. What do you think?
REP. JAN SCHAKOWSKY, (D) ILLINOIS: Well, Chicago is the greatest city in the world and we will do just fine but I think what the complaints were typical of any city that's bidding for the Olympics. We had such great support from the private sector as well as the citizens of the city of Chicago and I appreciate the play, Ali. I think this is a destination city. Even just for having done this bid I think that we have shined the light on Chicago as a world class city.
I don't think that -- we just didn't have the votes in the first round because people vote for their own region. They vote for their own continent. We knew from the start that the first round was going to be the most dangerous.
VELSHI: Tell me a little about the idea that the president going there, this last-minute round of fire power with the president and the first lady and Oprah is there some danger that back fired now that we sent our best and our brightest out there and we got dropped down to the first round?
SCHAKOWSKY: I think clearly if the president had not gone he might have been blamed for our not getting the Olympics here. I don't think that it was about the president. I don't think it was about the Chicago bid at all. I think there might have been the feeling that South America had never gotten the Olympics before, that it is a boost even more than to the city of Chicago which is strong as you said to the city of Rio de Janeiro. I don't think that we have anything to be ashamed of.
VELSHI: Richard, I've had a few people in the crowd here tell me that they thought maybe there was a bit of an anti American bias. I also spoke to the Reverend Jesse Jackson who said something interesting to me. He said the IOC is so powerful and can really make a city into something different. That maybe it chose not to say who's got the best infrastructure for our Olympics but who can our choice helps the most? What do you think about the reasoning on that front?
QUEST: I think he's absolutely right on that point. The Olympic Committee has time and again said that when they evaluate the bids it is the prospect of regeneration, it is the legacy aspect. Take London, for instance, when the London bid was put in, a huge amount - I mean, London, a world class city, but the area where the Olympics are to be held, the east end of London, the down and out part of the city, that was going to be where the regeneration was going to be. And no doubt Chicago played those parts of the city that would have lasting benefits.
But fundamentally and frankly, Ali, when put together with Rio, the first South American city to potentially host the Olympics with the magnificent sort of sales job that the president did down with the IOC, I'm afraid it just was not going to be possible. I don't think President Obama takes any blame whatsoever for what happened. If he hadn't gone he'd have been blamed. If he went and it was too short he gets blamed. If he stands on his hands and sings the stars and stripes he gets blamed. No. The blame doesn't lie there.
VELSHI: And there is some talk around about how with all the problems plaguing our economy should the president have been there. I think you're right. He gets blamed one way or the other when you have an economy like this. I don't think that's relevant that he spent a few hours in Copenhagen. What happens next for a city like Chicago that was probably hoping that this would give it a bit of a leg up? This is a city that's got some big plans. Is anything put on hold because the Olympics aren't here?
SCHAKOWSKY: No. I think the city of Chicago moves forward. We were looking forward to welcoming everybody to our diverse city where we celebrate our diversity.
VELSHI: Very diverse by the way. The president was saying 130 different ethnicities within the city limits.
SCHAKOWSKY: And we're proud of it. We are an immigrant friendly city. We would have been able to welcome our guests in all of their languages. So of course it is disappointing but we're very resilient. We make it through every winter and we're proud how tough we are. We'll be just fine.
VELSHI: There was a bit of rain today, a little bit of cold. Nobody in Chicago cares. Richard, I know you like fine dining. There is every flavor; there are flavors in this city that might even make your palate a little nervous. You come down here and you and I will celebrate one of these days in Chicago with a great dinner.
Richard, always a pleasure to see you. Thank you for being with us on this day. Congresswoman, thank you for being with us. We wish you continued good luck here in Chicago.
SCHAKOWSKY: Thank you. VELSHI: All right. A few weeks ago we told you about a woman who was so mad about the way she was being treated by the bank that she refused to pay her credit card. Well, what happened when the bank came calling? We'll let you know after this.
ROMANS: All right. This is the ticker where each week we take you beyond the headlines. Shawn Tully is editor at large at "Fortune" and Matt Taibbi is a contributing editor with "Rolling Stones." Let's be blunt, Matt is not a beloved figure on Wall Street these days which stems from articles like the one out in this week's "Rolling Stone" entitled "Wall Street's Naked Swindle." You can pick it up for all the details.
But lets examine a few of the over all themes. You say Wall Street is designed to rip off the middle class and you make the case that our economy is currently so screwed up, actually that's not the word you use, imagine a word by mistake on "SNL" and that is the word you meant. Screwed up that the rich are running out of things to steal. What's worse is that Matt argues that no one, not the S.E.C., the Federal Reserve, or the Treasury Department is making any real effort to punish the culprits.
For starters who specifically are the culprits and why aren't they being punished?
MATT TAIBBI, CONTRIBUTING EDITOR, "ROLLONG STONES:" Well in the story that I looked specifically at two cases, Bear Stearns and Lehman Brothers and what happened in those companies and what I found is that there was a kind of bear raid that had been happening to smaller firms in years previous to the Bear and Lehman episodes where there was sort of a pattern of credit default swaps.
People who were buying, naked short selling of these stocks, rumors being spread in the media. This was always happening in the smaller companies and hedge funds and predatory, you know, sellers were doing this to small companies.
In this instance they did it to Bear Stearns and Lehman Brothers. There was a massive amount of undelivered shares and obvious evidence of naked short selling and manipulation in these instances. It was clear that they had run out of smaller companies to do this to.
ROMANS: So who did it?
TAIBBI: Well that's the problem. We don't know. This data is available to the S.E.C., it is a relatively simple matter to find out who was doing all this naked short selling but they haven't released the data and a year and a half later they haven't made any progress in an investigation at all.
ROMANS: Well, the criticism that I hear most often is that after the decline of Bear, why didn't they figure out some way to resolve this if this happened to Lehman? Why was it that they were left when Lehman was in trouble, the Federal government that is, you know, our regulators, to try and figure out what to do about Lehman?
SHAWN TULLY, EDITOR AT LARGE, "FORTUNE:" Well, Lehman was in a different position from Bear. Lehman was really insolvent. Lehman's liabilities were much bigger than their assets so they had a big negative net worth which we're seeing playing out now in the bankruptcy filings where they clearly were leveraged by 40 to one. They were funding with very short-term ...
ROMANS: 40-1. Isn't that crazy?
TULLY: 40 to 1. They were leveraging with very short-term debt, liquid assets, they had loans out on a lot of commercial buildings which they made at the absolute height of the bubble. So they couldn't get out of their investments and fund themselves and pay back the short-term debt when there was essentially a run on the short-term debt, given that they really were insolvent. Their fall was inevitable.
It was hastened by the short selling problem but I think in the Bear case, Bear was a viable company. It did have a positive net worth and perhaps, and Jamey Diamond has said this from JP Morgan that he thinks the demise of Bear may have been cause bide short sellers. Of course he bought it and he got a good deal but you look at the building alone is probably worth a billion dollars. I think that Bear was a viable concern but perhaps was toppled strictly by the psychology of the short sellers.
TAIBBI: It is important to remember there is a distinction also between normal short selling and naked short selling. Both happened in both of these cases but naked short selling in most cases is illegal and criminal and there was enormous evidence of this in both the Bear and Lehman episodes.
ROMANS: Tell our viewers what is the difference between naked short selling and plain old every day short selling.
TAIBBI: Naked short selling is selling shares that you don't have and share that you aren't going to deliver. In the normal short selling you borrow shares, you sell them out in the market, you wait for the price to drop and then you go out in the market and you buy the shares again and you return them to the person you borrowed from. In naked short selling you just don't even borrow the shares. You just sell without ever having them. And this produces extra shares in the market and devalues the value of the stock.
ROMANS: Someone at Bear once told me short selling is just a good bet or a hunch but naked short telling is just cruel.
TAIBBI: its counterfeit is what it is.
TULLY: Profiting at someone else's misery. Matt has amazing examples of the story. He compares it to going to a desert island and having a printing press and being able to buy anything you want with printed money and you have to pay it back when you leave and it's worthless.
ROMANS: Matt did a story about Goldman Sachs recently. What was the -- blood sucking -- what was the line that everyone talks about?
TAIBBI: Great vampire squid wrapped around the face of humanity.
ROMANS: Yeah. That was a piece of journalism that got a lot of people's attention and had some I would say savage humor in it about what has happened here. A lot of people can't really laugh because it has been such a treacherous last year. We're still sorting through the wreckage of it all.
I want to switch gears and talk about another story, something people can't understand, and that is the story about bank fees. This is when you know right away when you're getting hit with these things and it's something you can definitely see and understand as its happening. I want to follow up on a story a couple weeks ago that garnered a huge response to review.
Ann Minch was the Michigan woman who claimed Bank of America had raised her credit card interest rates to 30 percent and then she took to YouTube to let everybody know she wasn't paying until the company came to the bargaining table.
(BEGIN VIDEO CLIP)
ANN MINCH, BANK PROTESTER: I'm telling you, B of A. I officially notify you. Ken Lay that I'm staging a debtor's revolt right here right now and thereby refuse to pay you one more red cent on your 30 percent credit card account. This is called civil disobedience.
(END VIDEO CLIP)
ROMANS: OK. To make clear when Minch says Ken Lay she actually is targeting Bank of America CEO Ken Lewis and not Ken Lay the deceased former head of Enron. Enron a whole other story that made people mad. While Minch never heard from Lewis she does claim that a Bank of America rep got in touch with her and her rate was dropped from 30 percent to just under 13 percent.
We asked Bank of America and they told us they don't discuss specific details but they did reach a mutually agreeable resolution. She says a tax revolt is now in the works. Shawn Tully looks like this a revolution? People are so mad they're not going to take anymore.
TULLY: I'm really applauding her, 30 percent is an outrageous number. When we have the treasuries at 3 percent it's ridiculous. The bank should have been embarrassed. Fortunately they did get an executive to call her. They eventually settled on letting her go back to her original rate but even if she had a couple late payments which apparently she did have but they were only a couple days late, jacking your rate up from 13 to 30 percent is absolutely ridiculous.
It's a penalty that someone who has essentially a good payment history, who lost her job but still has the resources to pay, should never have to go through. And the only way to get these banks really to do the right thing is to embarrass them.
ROMANS: Right. TULLY: Bank of America clearly was embarrassed. The line about Ken Lay instead of Ken Lewis the late head of Enron, you couldn't make it up it's so funny.
ROMANS: She had some savvy points. She said look, the Fed is loaning money for essentially nothing and then they're turning around and giving me that money back and now I'm paying 30 percent for it even when I'm paying ...
TAIBBI: She is absolutely right. I think the people should organize debtor strikes because beyond even embarrassing these companies they have to hurt them at the bottom line. Then they'll pay attention. I think even 5 or 10 percent of the people who owe these debts if they organize they would do a lot of damage.
ROMANS: Some of these debts people have to take responsibility for. You've spent money that you don't have and now you lost your job and the world is trying to reel in the credit because times have changed. Thirty percent seems really excessive but we also want to make sure we send a message, people have to cut down -- people have to handle their debt. They have to handle and get their debt under control.
TULLY: Yeah. These credit card defaults are now in the 12 percent range at Bank of America.
ROMANS: So that is why Bank of America is raising its rates on everybody because they're losing money.
TULLY: But 30 percent is going to drive the default rate up. In other words they have to work with these people to give them payments they can afford. I don't think 30 percent is moving in that direction.
ROMANS: Stick with us guys we are going to talk about this more. But up next, would you go to work if you had the swine flu? We'll explain why more employees than you would think may say yes.
And office etiquette means social networking. What do you do if a colleague or a boss friends you on Facebook?
ROMANS: Welcome back to YOUR MONEY.
Matt Taibbi contributing editor at "Rolling Stones." And Shawn Tully editor at large for "Fortune." The are both back for the ticker story number one. If your co-worker had the swine flu you obviously wouldn't want him or her anywhere near you. Sounds simple, but nearly half of private sector workers in the U.S. don't get paid sick leave according to the National Partnership for Women and Families so should paid sick leave be mandatory?
You know, the economy is really rough right now. If you have a little bit of a sniffle of a nose and you've got the beginnings of this you might still go to work because you got to pay the mortgage. TULLY: That's true but I think that a good employer when they hear you sniffling is going to send you home and pay you. But I don't think this should be made into an entitlement or a law that mandates six or nine or ten sick days a year. There is a bill proposed in the Senate to do that. San Francisco has done it, New York City is thinking of doing it. Typically what that that does is simply adds to vacations. We've seen it with the teachers union where they add up sick days.
ROMANS: So they come to work sick anyway and then you use it for vacation.
TULLY: The problem is OK. If you're in a low paid profession like a waitress say you may have to not be paid on those days. And not have, have the good judgment to stay home but, you know, some people are sicker typically than others and to pass a carte blanche law mandating which is the type of law they have in Europe which is one reason they have such high unemployment rates is a major mistake.
ROMANS: Shawn Tully generally doesn't like the government telling you what to do about things like this. This is a serious issue for public health reasons.
TAIBBI: It's a good thing for political reasons. It's crazy. If we found $17 trillion to bail out Bank of America and Goldman Sachs and all of these companies and we suddenly can't find the money to make sure people --
ROMANS: Ironically those companies pay for sick leave by the way. I will point that out. Interesting though.
TAIBBI: Right. But if we have a situation where people have to go to work with the swine flu because they're in that serious financial trouble, that's absurd.
TAIBBI: I think there has to be some kind of minimum standard that says even five days a year people get some kind of paid sick leave.
ROMANS: Or maybe assistance. This is potentially an emergency and maybe companies as Shawn is saying will see the light and tell you to get home and you get paid.
All right. Switching gears you remember Representative Joe Wilson yelling you lie at President Obama when the president said that illegal immigrants would not be covered under a new national health care plan? Well a group of Democratic lawmakers hope Joe Wilson's claim comes true.
They've written a letter making the case for illegal immigrants to be able to buy insurance under any revamped national health care plan, they argue that excluding illegal immigrants would actually raise costs for taxpayers and put a burden on emergency rooms. Should illegal immigrants be covered? Isn't the real story here that people forget, they are already covered under federal law, their emergency care is covered if they go to an emergency room.
TULLY: They're not covered under Medicaid.
TULLY: But he makes a good argument. They probably should be covered. They're not leaving the country.
ROMANS: But politically it's disastrous.
TULLY: It is.
ROMANS: The president and his advisors are never going to stand up and say let's include illegal immigrants in this bill. It would totally rile the other side.
TULLY: They should be covered but the problem is that the subsidies in this bill are ruinous and we can't afford them. They're too high. People should be allowed to buy catastrophic care insurance especially if they're young and healthy which most of these illegal immigrants are. Unfortunately, all of these bills pretty much outlaw that kind of insurance by setting the deductibles and the value of the plans, deductibles too low and the value of the plans too high.
So instead of having illegal immigrants and anybody else who is young and healthy to buy an inexpensive plan spend out of their own pockets for routine things you have to be insured for everything you would never be insured for for your own money. That's why I object to the plan but I do think that illegal immigrants should have the same rights as anybody else.
ROMANS: This is one thing I've been saying for sometime is that people have been trying to fact check this and say no. Illegal immigrants will not be covered. There is a bigger debate to be had and a bigger analysis to be had of your' not really covering the uninsured then if you're going to exclude a big chunk of the population.
TAIBBI: Also like you said we're already paying for these people. I mean, if they're going to come into the hospital when they're sick you can't turn them away and you shouldn't. If that's the reality of the situation, you know, I agree. I think the problem here is the amount of the subsidy and the amount of the coverage.
I think if there's some kind of minimum catastrophic coverage that everybody has to have, so that it alleviates some of that burden especially on the states, for this kind of emergency care, I think, you know, it makes sense for everybody and everybody wins in the end. It's just a political football. Everybody is going to cry about the fact that their illegal immigrants are getting benefits.
ROMANS: At least 22 Democrats signing onto that letter and saying let's move this forward. Will they or won't they to why in their case they say they should.
All right. They're your friends and they are your co-workers right? Facebook and other social networking sites are really blurring the lines between work life and private life. We heard about one fortune reader who said he was friended on Facebook by his former boss who had fired him with no warning and no severance. Doesn't sound like a good friend to me, what is your co-worker Facebook etiquette? Wow. This is almost like, you know, my high school boyfriend who dumped me now wants to be my friend 20 years later. Do you friend the old boss?
TULLY: Well, this kind of job market you don't want to cut anybody off.
ROMANS: In this economy?
TULLY: Even circumstances like that. Because you don't know who can get you another job or who may be useful to you a couple years down the line. But certainly you don't want this person seeing a lot of the old pictures, frat party pictures that you may have on Facebook. So you may want to go with linked in or use the privacy functions on Facebook to protect your privacy and some of your personal --
ROMANS: You could make a whole setting, crazy bosses, crazy coworkers, colleagues so all of those people go into one setting maybe.
TAIBBI: I think if I get fired and my boss tries to friend me on my Facebook site I'm going to sign him up for every internet porn site I can find for the rest of time so he sees that stuff coming into his inbox. The gall of some people. The punishment should be appropriate. Put it that way.
ROMANS: I think we're working out the etiquette especially the business etiquette of these social networking sites. It's incredible. Some people have hundreds and hundreds of friends -- friends and colleagues and the like and it starts to get kind of sticky. All right guys thanks so much. Shawn Tully, Matt Taibbi, thanks guys.
OK. Chicago's lost the bid for the Olympics. Why some Chicagoans think the city is better off this way.
ROMANS: It's official. Olympics are not coming to Chicago but is the verdict a lost opportunity or a blessing? Let's bring in someone who knows this city inside and out. Carol Marin is a political columnist for "The Chicago Sun Times" and my co-host Ali Velshi he is at Daly Plaza among many disappointed faces. Let's talk first just quickly about what this means for Chicago.
You know, economic report card still out for all 50 states and Illinois at least still has some work to do. The state earned a "c" which ranks right in the middle according to a report out by the Corporation for Enterprise Development. Illinois does OK in education, assets and income earning a "b" but got its worst grade a "d" in housing and ownership largely due to its high foreclosure rate. So is Chicago doing as poorly or better as its parent state? Carol, what is the situation there? CAROL MARIN, POLITICAL COLUMINIST, "CHICAGO SUN TIMES:" The situation in Illinois is what it's been for sometime. It's a struggling state. It is sort of swimming in the middle as you suggest. I'm surprised that it didn't get an "f" in unfunded pension liability because that is where we really have an Achilles heel.
ROMANS: Ali, given the state's economic troubles some are saying that the Olympics are simply just what the doctor ordered and others say it was a recipe for more economic hardship. You've been talking to a lot of folks there and a local Chicago ad executive felt so strongly about his city not getting the Olympic bid he created a website backing Rio de Janeiro. The disloyalty! Chicagoans for Rio.com features the city's deficit ticker, recent crime in Chicago and Chicagoans sounding off on why they don't want to back the bid. What is it, Ali, is it an economic opportunity or a mess?
VELSHI: Look, this is any big city that has a bid for the Olympics has its detractors. Chicago had a fair percentage of them. I think the last two years has taught us, the economy is a very big thing. And when you get the Olympics to your city, it may detract attention from other things but it brings all sorts of new attention. Chicago is a world class city. It is very much like other Midwestern cities in that if you look at Milwaukee or you look at Minneapolis or you look at Chicago, these cities are not exactly the same as the areas around them.
This city brings in a great deal of revenue to the state. It's dynamic and it should be on the map for things like the Olympics and other things like that. So it's a little close minded to say, we shouldn't spend on the Olympics because we have other things to spend on. We always have other things to spend on -- the education priorities, crime issues. These are always priorities but it's not a zero sum game. So I think people always take this advantage to draw attention to those kinds of things.
ROMANS: Carol, the city is a host of the World Cup. It hosted numerous very high prestige kind of events, soldier field for example, the Cubs. There's a -- this is a town that has really done the big event well. Maybe it was simply the fact that the Olympic committee wanted to give, you know, Rio had more to gain from hosting the games. You know, Chicago is a pretty cool, established, vibrant town already.
MARIN: It is. But it's new at this. It put together by all accounts a superb bid proposal. But the fact of the matter is that Rio and Madrid were in this game way ahead of us. And the fact is, also, that on that first vote you're going to deal with the constituent communities that are more likely -- it's like the Iowa caucuses. It's the second vote that really makes the difference or the third.
And so in fact Chicago knew perfectly well this was a dangerous vote. Having said that, and I think this is where Chicago holds its head quite up high, is that it gave it all that it had. It gave it the three O's, the two Obamas and Oprah. It brought in every Olympic athlete of some note in Chicago and beyond. And it had its business community and it's not for profit community behind it. So, in fact, there were citizens who were opposed to it, no question, but there were plenty of people for it as well.
ROMANS: You know, Carol, I was getting e-mails from Tim Smith from the Walter E. Smith Furniture Company and he was there inside talking about the star power, how overwhelming it was and how cool to be in Copenhagen and you think of that image of all of these people from Chicago trying to sell their town and then how disappointed they must be in the end, you know, coming home without even making it through the first round. So where -- go ahead.
MARIN: It's true. I think they're disappointed or many people are disappointed but they still feel that Obama did what Obama should have done. He stood up for his hometown and for the United States because this was a U.S. bid. I don't think there is a lot of blame going on around here about it. I think there would have been some criticism if he hadn't shown up.
ROMANS: I want to switch gears a little bit here because this might be -- I don't know if this story pertains to Ali or not. He spent a few days in Chicago here now and has been working hard but I'm sure he's been having nice dinners at night. Let's talk about a different kind of revenue stream. Chicago cab drivers are proposing a variety of fees and fare hikes to boost revenue and the one that caught our eye, customers could soon be charged $50 for vomiting in cabs. God help all the people at Wiener Circle.
VELSHI: Best idea ever.
ROMANS: Have you ever been to Wiener Circle yet Ali?
VELSHI: Best idea ever. I love it. I once many years ago was in a New York City cab, clearly shortly after somebody had vomited in it and it is the most disgusting thing in the entire world. They should institute that fee. If you're going to vomit don't vomit in the cab, tell the guy to pull over. I do hope if they do this the cab driver is compelled to keep a receipt to show that the cab was cleaned.
ROMANS: That he didn't just take the money.
MARIN: For the record as a Chicagoan who has taken a lot of cabs I've never been in a cab where somebody vomited so I want to say our cabs are pretty good.
ROMANS: I think they are pretty good. I will vouch for that. No offense to Wiener Circle and I'm sure they won't take it but Ali I'll give you the address.
VELSHI: Still a good plan.
ROMANS: All right. Carol Marin thank you so much, great to see you. Thanks for joining us. Political columnist "Chicago Sun Times" and she knows a lot about the city in Chicago so we're glad to have her with us.
VELSHI: All right. Christine, I love Chicago for a lot of reasons but one of the reasons I love it is because it's as liberating from a food perspective. When you think of Chicago you think of steak. You think of Italian beef sandwiches. You think of hot dogs. But Chicago is a culinary dream and I am going to talk to one of the top chefs in America when we come back.
VELSHI: Well, I couldn't come to Chicago without engaging in my favorite activity which is eating. I sat down with top chef Rick Bayless he was a winner of top chef masters on Bravo and he runs a few restaurants here including Frontera Grill. I sat down with him and I asked him why he is pushing Mexican food in Chicago, a city that's known for steaks and deep dish pizza and hot dogs.
RICK BAYLESS, CHEF, FRONTERA GRILL: We have the second largest Mexican population in the country here in Chicago. And we have spun off from this restaurant a dozen or more restaurants doing the same style of food which is sort of contemporary versions of regional Mexican dishes but we've got them all over Chicago now. The people in the know come to Chicago for a great dining experience and they never have the Italian beef sandwich or the deep dish pizza or the steak.
VELSHI: What's with you and Mexican food?
BAYLESS: I fell in love with Mexico when I was a teenager. I went there for the first time and to me it was like going home. I felt totally comfortable. I loved the vitality of the culture but I really loved the vitality that was on the plates. It was so intricate in it's flavors, it was complex, it was varies; it was all the stuff I like to eat.
VELSHI: I like street food. People look down on that. You have raised street food. You have a brand-new restaurant that is raising the profile of street food into something that you can't get anywhere else in the city, possibly, not in the United States.
BAYLESS: You know all over the world, street food is the main focus. It's so vibrate in its flavors, it is gutsy, and it is the kind of stuff that we really like to eat. It's made fresh in front of you. In Singapore, where they are so well-known for their street food, the government has actually moved it off the street into these places that are sanitary. You can go and have an inexpensive meal. But it is just made of the best ingredients and it is so satisfying. That is what we love about street food.
VELSHI: We are sitting in the first restaurant?
BAYLESS: Yes, this is Frontera Grill, 23 years old next March.
VELSHI: OK. What is the theme here? What do people get when they come here?
BAYLESS: It's what you would find in family style restaurants in Mexico. But we do them in slightly more contemporary style; they fit in very well to downtown Chicago. That was our goal here was to give you the satisfaction on the plate, but to present it in a style that was what you would expect in a downtown restaurant.
VELSHI: I don't know if you like President Obama, but he likes your restaurant.
BAYLESS: He likes the flavors. We work with bold flavors and he likes that kind of thing. We have good margaritas and he's been known to have one here.
ROMANS: There is a table in the restaurant next door which is a different restaurant, they are all connected but you have a restaurant next door, there's a table there that's President Obama's table. People want to sit there.
BAYLESS: We haven't put the plaque up, yet, but its table 65.
VELSHI: Your newest concept, Zoco, I was talking about with the street food. What is the point with having three restaurants right next to each other?
BAYLESS: I don't like to travel. I can be over there. If I want to greet a guest, I'm still right here.
VELSHI: How is business?
BAYLESS: Our business is really good and solid. It's one of the reasons that I love working in Chicago. Chicago seems to not fluctuate so much. We tend to be stable in the Midwest. I like that. I thought about this a long time before opening in Chicago. Chicago's clientele is loyal. If you give them good food that's got some value to it, they will come back forever.
VELSHI: How does it feel to be a celebrity chef?
BAYLESS: The whole notion of a celebrity chef is kind of a funny thing. I got famous for doing what I love to do. I still want to do that thing. I don't want to be a celebrity; I want to be a chef.
VELSHI: Well we have some sense of where Rick Bayless and Chicago's culinary scene is going from here, but where is the rest of the city going now that it's missed its opportunity to be the host city for the 2016 Olympics? We will tell you about that when we come back.
ROMANS: A loss for America on the worldwide stage this week. Ali, we know everyone in Chicago was excited before the Olympic bid announcement. Even the daily plaza was in Olympic orange. Now, I think it's gone, isn't it?
VELSHI: I think it's still going. They have enough dye for it to go through the weekend.
Chicagoans are very tough people. They have built a marvelous city. No one was angry. They know the city is on the right track. It has problems it has to solve. The Olympics may have excelebrated the solution to some of those problems; some people think it set the solution back. The bottom line is they are moving on. There are things that would have happened that are not going to happen now. The bottom line is a world class city, it is a first rate city and it is going to continue to chug along.
ROMANS: As Carol Marin put it the three Os were there, two Obama's and an Oprah and they did everything they could, but now we just move forward. There was some talk about the president having all these things on his plate, he has a meeting with General McChrystal about Afghanistan, he has Iran and the nuclear ambitions in Iran and he has the economy that is souring in this country.
What was he doing for four hours in Copenhagen? In the end I guess a few hours in Copenhagen to give the big pitch for the United States of America wasn't so bad even though they didn't bring it home, what do you think?
VELSHI: I think the president should be at every pitch if it involves an American city. The bottom line is if the Olympics had come to Chicago it could have generated 313,000 jobs. We just learned that we lost more than 200,000 jobs in September again.
I just think that it's a narrow minded view to suggest that the president should be behind his desk in Washington and somehow that is the only way that you are effective as a president. This is an economy we have never seen the likes of before. It's going to take a lot of things including getting tourists and international prestige and getting people to like America. I think it's a silly argument. He would have been blamed if he wasn't there and Chicago lost.
ROMANS: You know it is interesting too; we had a 25 minute meeting on Friday on Air Force One with General McChrystal talking presumably about Afghanistan and what it is. A real one-on-one without all the politics and all the aids around. There was some work done there, of course. This is a presidency and an economy and, you know, right now everything is multidimensional.
We are doing so many different things at the same time. We are talking about global climate change, we are talking about health care reform, and we are talking about a job market that's really sputtering. Trillions of dollars of injection into the economy. It's remarkable all the different balls that are in the air right now.
VELSHI: You have to have those different balls in the air. There are people are saying in this economy how could Chicago even think of spending billions of dollars in attracting an Olympics. But, the bottom line is you have to keep moving. You have to keep doing different things; you have to keep laying the groundwork for the future. Some things work, some things won't.
There are people today who are starting new businesses while we see people unemployed. The reality is this economy is dynamic because it keeps on changing and that's the heart of what America is. It has to keep on changing and it has to keep on doing these things. The rule book Christine has been thrown out. We have an economy we have not seen the likes of ever before. We have to try different things and give everybody and cut them a little slack to try and do what they can to make things better.
ROMANS: And I think I will leave it on the note from Terry Savage that best selling author and personal finance editor from Chicago when she said you have to put this recession into perspective. A little bit of perspective. Taking longer view in 20 or 30 years she says don't count out America. So that is one way to look at it.
Ali Velshi, great to see you from all the way over there in Chicago. Have a great weekend there. Thanks for joining us on YOUR MONEY. You can follow Ali Velshi on Facebook and Twitter at Christine Romans and at Ali Velshi. Make sure you join us every week for YOUR MONEY, Saturdays at 1:00 p.m. Eastern and Sundays at 3:00 p.m. You can also log on 24/7 to CNNMONEY.com. great information there. Have a great weekend, everyone.