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The Great Recession is Over, Right?; "Pledge to America" Versus "Contract With America"; Steven Rattner on the American Auto Industry; Some Aspects of Health Care Reform Go Into Effect This Week; Congress Debates Legalizing Online Gambling; Ted Turner Discusses the U.N. Foundation
Aired September 25, 2010 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, HOST: The Great Recession is finally over. Actually ended more than a year ago so where are all the jobs?
Welcome to YOUR MONEY. I'm Ali Velshi; Christine Romans will join us in a bit, she is back.
The deepest recession since the Great Depression came to an end in June of 2009 that is according to the National Bureau of Economic Research. They are the people who actually make these decisions. They say it's over and they take their time making that decision, as you can see.
Now, the recession claimed more than 7.3 million jobs. Since the recession has ended, however, the economy has lost another 329,000 jobs. That's net, that's what we've gained minus what we've lost. We're still down another 329,000.
The road ahead, economists are projecting unemployment in the United States currently at 9.6 percent will remain around 9 percent through the end of next year, 2011. In fact, we probably won't get to that 5 percent that we were at before the recession started until 2013, 2014.
Let's bring in P.J. O'Rourke he is the author of "Don't Vote, It Just Encourages the Bastards."
P.J. good to see you. Welcome to the show.
The recession was over a long time ago, do you not feel much better now that you found out it ended in June, 2009?
P.J. O'ROURKE, AUTHOR, "DON'T VOTE, IT JUST ENCOURAGES THE BASTARDS:" Why didn't I feel better back when it was over and why didn't I feel better until they told me it was over.
VELSHI: Did you feel much better once they told you it was over 15 months ago?
VELSHI: So the problem is this, it's the jobs? Right? I mean that is what is upsetting. O'ROURKE: Of course, it's the jobs; I mean, it's all about how people feel about the economy. There's a psychological aspect to economics that obviously the people at the National Bureau of pulling fingers out of your hat are not aware of. If you ain't got a job, the recession is still on.
VELSHI: Very good. All right.
Frank Sesno he is the director of the School of Media and Public Affairs at George Washington University. He's a former colleague of mine here at CNN; he was our Washington Bureau chief. Frank, even Warren Buffett chimed in this week saying by his definition the recession isn't over and won't be for a while.
Politically this is a tricky one for the president, for the Democrats heading into a midterm election. Boy, wouldn't you love to claim victory saying after we got into office the recession ended. I think if anybody tried to say anything like that in politics, they would seem more out of touch than normal.
FRANK SESNO, GEORGE WASHINGTON UNIVERSITY: Can't do it. I mean, you can't say it from the White House. You can't say it from Capitol Hill, can't say it from the State House, because you will call people on the carpet. But more importantly people who live this will call you on the carpet. The recession is over, is your kid employed? Are you employed? The recession is over. Is your house worth more than it was? How is your 401(k) doing, so right on down the line?
Politically this is the third rail. George Bush the first had this problem. Remember the scanner incident that didn't happen. There was so much of that stuff back then. It was like, well, the president is out of touch. Doesn't he realize what we're suffering through? So the statistics are way ahead of what people are actually feeling. In this case as you pointed out maybe years ahead.
VELSHI: Right. Interesting point. Statistics being way ahead. So we've got the political argument out there.
Let's go to Diane Swonk our economist, she is the chief economist for Mesirow Financial.
Diane are we in a recovery? Do the statistics, do the numbers indicate we are in a recovery? I certainly have seen some things that indicate that things are on the upswing.
DIANA SWONK, CHIEF ECONOMIST, MESIROW FINANCIAL: We're technically in a recovery but it's a game of semantics as we have all been debating. Because when you're coming out of such incredible losses and not generating jobs, we're in a jobless recovery, we've been in those before but not from such a deep level. We're trying to crawl ourselves out of this very deep hole.
Of course it's still very painful. It does seem rather trite to say it's over when there's so much pain. It doesn't provide any solace for all those employees who are still looking for a job. Many of them lost their jobs during the height of the crisis back in 2008 and 2009, the beginning of 2009. They have been unemployed for a very long time now. What we really worry about is how are people are going to reenter the labor force when jobs finally do pick up, which none of us are holding our breath on right now.
VELSHI: All right. P.J. O'Rourke, you specialize in satire, and some of it comes in the way of advice. What are you calling yourself a conservative these days or a libertarian?
O'ROURKE: I still call myself a Republican. I'm a Republican because Republicans have fewer ideas.
VELSHI: As a Republican, what does this administration have to do? What is in their arsenal? What can President Obama do, what can the Democrats do, right now to address what all four of us agree is the primary reason why we don't all feel we're in a recovery and that is that we do not have enough private sector jobs creation in this economy.
O'ROURKE: They should probably quit having ideas, too. I think this would be the perfect moment to knock it off with all the wonderful ideas. One of the worst ideas that they have had, among many, was the stimulus. Not the bailout so much but the stimulus.
My ex-Congressman, who hopes to be my Congressman again, Charlie Bass from the second district in New Hampshire said to me, he said, P.J. you realize the stimulus is costing us with in $10 billion -- within $10 billion of what it would cost to have a one-year personal and corporate tax holiday, no federal income tax for any corporation or people for one year, it would be about the same price.
Now, that would have been a stimulus. So if they would get out of this wonderful sort of central planning mind-set that they seem to have inherited from 1930s and get back to being just plain old stupid politicians, they might have one leg up.
VELSHI: Frank, the bumper stickers are out there, government, get out of my business. That's a sentiment the Tea Party has very successfully capitalized on in this midterm election. The bottom line is that's a problem for the Democrats.
SESNO: Look, it sells. It sells because people are angry and they got to have something to blame. We have a proud tradition in this country going all the way back to when we had a king across the ocean of blaming people in power. When the economy is bad, when your taxes go up, and it's very salient. This is big can do our DNA.
But here is the Democrat's real problem, here is Obama's real problem, among the 20 other real problems he's got. You don't get credit for what doesn't happen. He's not going to get credit for the people that didn't get thrown out if in fact, the stimulus, despite what P.J. said saved any jobs. He's not going to get credit for the auto industry that didn't disappear because of the bailout there as unpopular as that is. It just doesn't work that way. Put that on a bumper sticker.
VELSHI: All right. Diane and Frank stay there. P.J. I have something for you.
The Republicans actually have a plan it might sound like politics heading into the midterms, but is it actually going to be policy as well if they win? We're going to break it down with P.J., Frank and Diane when I come back.
VELSHI: Welcome back to YOUR MONEY.
Republicans have unveiled something they call a "Pledge to America." They would like you to think that it's similar to the 1994 "Contract With America." In some ways it is, in some ways it isn't.
Let's take a look at it. The first thing they say they are going to do if they get elected is stop the stimulus. Any stimulus money that has not gone out the door yet will in fact not be spent.
Number two, repeal health care reform. It was signed into law about six months ago. Some of the provisions have just started to go into effect. The Republicans are now taking the official position that they will repeal it. This is entirely new, a number of Republicans have already said that they will do that.
Number three, they want to extend those 2001 and 2003 tax cuts that are due to expire at the end of the year. As you know, that's under discussion, whether to extend them for everybody or for middle class Americans or for nobody at all. There are also some business tax cuts included in the Republicans' plan.
Number four, freeze all federal hiring except that which is related to national security or otherwise keeping Americans safe. And number five; they want all laws passed by Congress to go through a constitution check, although that is kind of what the Supreme Court does.
Let's have this discussion with P.J. O'Rourke again and Diane Swonk who joins us from Chicago.
First of all, Diane Swonk, I'm going to ask you, is this a situation, is there enough meat in this proposal by the Republicans to actually have some sense of how it's going to affect the economy?
SWONK: Well, there's some things I guess we could look at. My own view is the high income tax cuts to extend them now, although I wasn't in favor of them initially because of the deficit producing characteristics they had right now, it's just too dangerous to do it because of the extortions they cause to financial markets and to investors in financial markets so for a year I think to extend them.
My own view is that we really need to regroup here and rethink our entire tax code, simplify it, eliminate a lot of deductions and lower tax rates. That is a very different kind of rhetoric then we are hearing, we are just hearing a lot of bouncing around about what are the ideas already out there. I don't hear a lot of new ideas out there about how to really deal with the deficit. And dealing with the deficit, the elephant in the room is really Medicare and Medicaid. Nobody is talking about that right now. I think these are much more important issues to have to reframe the debate away from the politics, ideology and fiction and get back in to the facts.
VELSHI: Right and that's what we enjoy doing on this show.
P.J., the top ranking Republican in the House John Boehner says he is on the side of business. Listen to how he said it.
(BEGIN VIDEO CLIP)
REP. JOHN BOEHNER, (R) MINORITY LEADER: I am the business community. That's who I am. The heart and soul of me. When I see government, like I did as a small employer, choke the goose that's laying the golden egg, that's what drove me here, to fight for a government that allows the American people in the private sector to be the engine of opportunity for all Americans.
(END VIDEO CLIP)
VELSHI: OK. So there's a couple issues here. One is that we know that jobs are the major issue confronting Americans right now. We also know that historically small businesses P.J. in America have been the engine of job creation. So I guess, is that what he's referring to when he says the government is strangling the goose that lays the golden egg? How exactly is government holding back U.S. business?
O'ROURKE: Well, this health care reform thing is going to be a huge burden on small businesses. Increased taxes on supposedly rich people, who are the people who run those businesses that's going to be a huge burden. But, you know, back to what -- the world's most attractive economist had to say earlier, it is the entitlement programs, the real -- the Republican contract with America, the "Pledge to America," I say this as a Republican, this is bologna.
The core problem here is entitlements. When you start messing with entitlements, you are playing in traffic. You are playing in traffic with a blindfold on. It's probably the one thing I really have to say in favor of the Tea Party people. If you like some of these Tea Party people, they may actually be suicidal enough to go play in traffic and try and do something about those entitlement programs. Whether it will work or not, I don't know.
VELSHI: Let's talk about this, Diane. The president has got two commissions going at the moment, who are supposed to report in December about how to deal with the deficit. Obviously you cannot -- the debt, the national debt. You can't deal with the debt or deficit in our environment without having to deal with entitlements, you simply can't --
SWONK: Absolutely. VELSHI: You can't fix enough of it. Do you think someone is going to have the courage to actually, as P.J. says, go and play in traffic and start dealing with the things that will actually get our economy back on track?
SWONK: Well, you know, it's interesting. I just spoke with Delis Rivlin (ph) who is on that commission. Behind doors they say that both sides talk like grown-ups. They seem to grow up the minute the doors are closed and they are not talking as politicians. They are, many of the Republicans that are in office that are going to have to deal with this are worried about the fact they have to come up with some answers on these issues and these tough decisions that they have to make.
That said, I tell you, I'm not really hopeful about what's going to happen. I think the grownups are the ones that are actually going to continue to talk grown-up and those are ones not running for reelection and not in office. And they are having their own side commission that they are going to report before the bipartisan commission comes out.
That said, there's about six months between December and June before we get into 2012 politicking and running for the 2012 election. That only gives us six months to think about long-term plans, five, ten-year plans, that is not exactly really long-term here. Long term plans on restructuring the elephant in the room, entitlements and tax structure. I don't think we're going to get there and that's disappointing. I do think we will have Social Security will be dealt with by the end of the year by raising the age, that's the easiest thing and the low hanging fruit, to keep Social Security solvent for the majority of Americans.
VELSHI: OK one thing that is going to be very clear in our memories is about a year and a year and a half ago we were really worried about the future of the U.S. auto industry. Well in a minute, I'm going to talk to the guy that President Obama put right into the middle of the mess to try and save it. We'll see what he has to say about how the government went about saving the auto industry when I come back.
VELSHI: Steven Rattner was basically plucked from the world of finance and put in charge of President Obama's Automotive Task Force back in 2008, his assignment, save the U.S. auto industry from collapse. And remember back then, that felt like a very real possibility. He's the author of a new book called "Overhaul: An Insiders Account of the Obama Administration's Emergency Rescue of the Auto Industry." He's with me now.
Steven, in one word, yes or no, was the U.S. auto industry, as we reported it was, as we were told it was, was it on the brink of destruction?
STEVEN RATTNER, AUTHOR, "OVERHAUL:" Absolutely. VELSHI: It was really that close? Because we were warned by Ford that if GM goes down it could take down suppliers which could then have a connecting affect to the other automakers.
RATTNER: Without the government's intervention GM and would have run out of money sometime early in 2009. They would have closed their doors. They would have liquidated. A million people would have been out of work. By the way as he said, Ford would have shut down, too, because the suppliers wouldn't have been available for them.
VELSHI: They weren't the company on the brink and yet he was making a strong argument. What surprised you most when President Obama asked you to take over and you went in and had a good solid insiders look at what was going on. What shocked you or surprised you the most?
RATTNER: What shocked me the most was the state of General Motors? I've been in business 25 years, I've been an investment banker, and I spent a lot of time around companies. I'm not sure I've ever seen a major company as dysfunctional as poorly managed as bureaucratic as General Motors.
VELSHI: What was the president's response when you came back to report how dire things were in the auto industry, what were his thoughts? What did he have to say either directly to you or to others who reported it to you?
RATTNER: The president had been aware of this for some time. He was briefed on it right after the election. I have a scene in my book which I wasn't present for but from my reporting, in which he basically like everyone else couldn't understand how they had gotten into a mess like this. He said, well why can't they build a Corolla and the team said we don't know. Because we are all new, the team that was there was all new. So it was a mystery to all of us how this industry could have got off a cliff so quickly and so dramatically. The president stepped up. He knew that he couldn't walk away from this. It was his problem. He made the right decisions.
VELSHI: What is going to happen to these companies now? Are they on the correct footing? Tell me separately about Ford, GM and Chrysler.
RATTNER: Well Ford, as we discussed, has actually gotten through this in pretty good shape. They are making very good profits. There are always things to do. But Ford I think we certainly don't need to worry about. GM and Chrysler, we fundamentally restructured, we cut their debt, and we closed plants which was painful, but had to happen, changed management. I think both companies have a good shot, a very good shot at succeeding.
They have an opposite set of issues to concentrate or resolve. GM has to solve the management problem everything we talked about. I think with Dan's arrival that's another positive step and I feel good about it. They have had profits for two quarters in a row; they are holding their market share. They have good products. Chrysler has terrific management in the form of Sergio Marconi (ph) the CEOP. But Chrysler's cupboard was bear in terms of new products. And so with Chrysler what we have to see is how the new products that are going to be coming out later this year and early next year sell and that will determine whether Chrysler is a great success or not. But I feel very optimistic about both.
VELSHI: Steve Rattner thanks for your good worth. Thanks for the book. Steve Rattner is the author of "Overhaul." He is the former head of the president's Automotive Task Force.
Let me go to Frank Sesno now first to ask him. Frank you know this is a book about what happened with respect to the auto industry. There have been books that have come out about what happened behind closed doors with the bailout. We're now looking at this panic- stricken time in our history, in a rearview mirror, thank god for that.
Do you think after looking at this and listening to Steven Rattner that the government did the right thing with respect to the auto industry?
SESNO: I do. I think that when you look at what the alternative is, which is to have lost these gigantic companies, with all the ripple effect and the impact on the regional economies and the fact is these companies needed a life line in a desperate moment, this in the end, I think, will prove to be a wise move.
I think one of the very interesting things that Rattner was saying and I've climbed into some of these cars, you know some years in my reporting career I did a whole very kind of deep dive into the auto industry, spent a lot of time in Detroit and elsewhere.
The key issue is the products have been lousy. We're starting to see, this is what is interesting for me, and I'm going to be watching this very closely, we're starting to see some actual competitive interesting products coming out of Detroit. I think General Motors is leading the way.
The Buick division, which would have been your great grandfather's car a few years ago, is actually doing some things; it is the hottest brand in China. Now can General Motors become a global leader again? It's a very tall hill for them to climb, but they have got some very interesting products that they are developing globally. They were at that same point that the homeowner is when they are about to lose their home. Do you want a life line then? It was an expensive life line, big gamble, but I hope it will pay off.
VELSHI: P.J. O'Rourke, you're the son of an automobile salesman. How do you feel about --
O'ROURKE: Four generations of O'Rourke's in the automobile business. I have been a reporter for car and driver and automobile myself. Can that Rattner guy change my oil? I don't see any place for government in this kind of -- VELSHI: Even if there -- first of all do you believe what he said, that there was a chance that those companies could have gone under?
O'ROURKE: Well, we do a little thought experiment on that. Do we really believe that those companies had so little value that there wasn't enough international capital out there to get involved?
VELSHI: Chrysler said they couldn't sell it for a dollar.
O'ROURKE: Well, they may be right and that may have been about what it's worth. Now why are we the taxpayers keeping something alive that they couldn't sell for a dollar? You know capitalism isn't important because capitalism succeeds. It's a wonderful aspect of capitalism that succeeds. What's important about capitalism is that it fails. You want to know what happens to a bad idea like some of our entitlement programs when it is a government idea, it gets bigger. What happens with a bad idea when it's a free market idea, it disappears. It goes away. It goes the way of bell bottoms or whatever.
VELSHI: Diane, what P.J. is saying though is actually a sentiment that is reflected not just about the auto sector but about a lot of things that taxpayer money was used for over the last few years. In hindsight, what do you think about the degree in which we had government involvement and taxpayer involvement in both the auto sector and the larger bailout?
SWONK: You know, I guess as daughter of Detroit myself, I have to admit, and also University of Chicago graduate, so I have this sort of split personal, sometimes schizophrenic on my views on the economy.
But I think it's really important to point out that we didn't have a market. We didn't have a market in much of the 2000s, we had incentives, which incented us to fraud and to encourage people who didn't have jobs to own homes. We actually incented that that was a bad government idea.
The markets weren't clearing. After that in the after math of that we had a panic that meant markets didn't clear at all. The height of the panic I think going back and judging and saying it was like normal times when GM maybe should have just been let to go, it was not normal times.
Although I have mixed feelings about GM, at the end of the day I have auto suppliers that are clients of mine now that are running three production shifts six days a week, looking to maybe turn the key on idol capacity and hire up another whole production facility.
That tipping point is one of the few bright spots in the U.S. economy today. I think it was necessary. I think the bailouts were necessary at the time given the height of the panic. It was the interventions that averted another Great Depression. I know it's not easy to deal with. I'm with Ben Bernanke on this one and I side with him.
VELSHI: Good discussion from you all. Thank you so much. A pleasure to see you.
Diane Swonk of Mesirow Financial, Frank Sesno the director of the School of Media and Public Affairs at George Washington University, and P.J. O'Rourke, the author of "Don't Vote, it just encourages the Bastards" an excellent read. Thank you to all of you.
We will be right back after this.
VELSHI: Welcome back to YOUR MONEY.
And a big welcome back to my partner in crime, Christine Romans, congratulations to the new addition to your family.
CHRISTINE ROMANS, HOST: Thank you Ali.
VELSHI: We are also joined by good friends of our show, radio talk show host Stephen A. Smith and Lex Haris, the managing editor of CNNMoney.com, which is by the way the source for so much of our great reporting on business and should be the source for so much of yours.
This week, folks, mark the sixth anniversary, the six-month anniversary, half a year anniversary, of health care reform. Some big changes to your health insurance came into effect this past week. Here is a breakdown of some of the changes that you're going to see.
Number one, insurance coverage is expanded for adult dependents up to the age of 26. Children up to the age of 19 no longer denied coverage for pre-existing conditions. All new plans must cover preventive services like mammograms, and colonoscopies for free. Insurers are prohibited from rescinding coverage.
And forget the politics, Christine, are we on the right track with health care?
ROMANS: It is the law of the land, Ali. There are a lot of conservatives who say you're not on the right track and they are going to use it politically heading into the fall to say that they would like to repeal this.
But this is the law of the land. You have people writing these rules as we speak. Big rules are going to change how we receive healthcare in this country these things take a long time. But writing them they are moving forward, you can image some of the things that are happening.
Right now, this weekend, is when some of these first provisions really go into effect there is still a lot more to be rolled out.
VELSHI: Want to get a little nerdy with Lex for a second. Lex, one thing, we have all studied this a great deal. I'm hearing from people say this is going to cost a lot more for small business and individuals. We do not know that yet and will not know that for some time.
LEX HARIS, CNNMONEY.COM MANAGING EDITOR: We do not know. The projections are it's going to be five years though at least until you actually see the cost savings that they have been promising. To be fair this past year we had a 14 percent increase in health cost. It's not like things are so great.
STEPHEN A. SMITH, RADIO TALK SHOW HOST: Here is the difference, you guys are the experts and I disagree with both of you. I think we do know.
Let me tell you why we know, because it's the government we're talking about. Any time the government is running something usually ends up costing a hell of a lot more than they initially indicated. Let's just call it what it is, the fact is --
VELSHI: Do you think the insurance companies are being all together fair with Americans?
SMITH: No, absolutely not. And I think there needed to be some modifications, things needed to be addressed, there is no denying that and it all sounds good. But once you take the red tape into account, once you take the fact that it's the government involved with making sure that things are running appropriately, the fact is it always ends up costing more.
VELSHI: For those that don't like it, a recent poll by the way indicates 49 percent of Americans disapprove with the new health care law.
Now, some of those people disprove of it because they didn't think it went far enough, some think it went too far. Republicans by the way as part of their new pledge are pledging to repeal the new health care law if they win control of Congress. Republicans "Pledge to America", that's what their program is called, would roll back the six-month health care reform.
What happens then, Stephen?
SMITH: Well, what happens is that they repeal it
Bottom line they are in bed with the insurers, a lot of people in America believe that because they are in bed with insurers, you're going to have some people who side with them because they are emphatically against the Democrats, they are emphatically against the administration. They don't believe that they know what they are doing because they are more concerned about the economy than anything else.
If the Republicans in an effort to repeal health care legislation are of the mind-set that by doing so we're going to facilitate job creation, then the American people by and large are going to solve it right now. Because that's the panic button for the American people. When jobs are not addressed everything goes haywire.
ROMANS: It says if you are Republican you want to appeal to people who are concerned about healthcare reform and you don't like it they are in that poll. You want to appeal to that for the midterm elections. But do you want your opponent to come out and say, OK, John so-and-so wants to make pre-existing conditions for children legal again. He wants a little kid with lymphoma to not be covered.
VELSHI: This is a hard bet for anybody in this election. The Democrats don't like it because it is unpopular. Republicans they have to be careful about how they approach it. But remember that 49 percent of people that are against it is a split between some who think they went too far and some who don't think it went far enough. So you cut this one any way you like.
HARIS: That is right it is just too complicated. I mean a lot of people just don't even understand it. You can be for sick kids as Christine said but you can also be against long-term deficits.
ROMANS: And worried about bureaucracy.
VELSHI: Hang on, everybody.
Online gambling, long illegal in the United States, but should it be? Next we are going to talk about why that sin tax could actually do a whole lot of good.
VELSHI: Welcome back to YOUR MONEY.
Congress could soon vote to legalize online gambling. With the government scrambling for cash, the Congressional Joint Committee on taxation estimates that legalizing online gambling could bring in over $40 billion in tax revenue over the next decade.
Online gambling has been illegal since 2006, which, by the way, always confuses me. Because I feel like people can gamble online.
Stephen A., first of all, can people gamble online without it being illegal? Secondly, is this the way to go?
SMITH: From my understanding they can in some places. But the bottom line is this, I completely support it, absolutely. I'm a guy that proposed, I think marijuana should be legalized. I don't gamble and I don't smoke weed, but let me tell you I think they should be legal. Anything, when you've got a $14 trillion deficit and counting.
VELSHI: Take the money where ever you can get it.
SMITH: Take the money where you can get it. You can find a way to legalize it and tax it and at the same time sort of dissuade some of the people from doing it, why not.
ROMANS: What do we pay as a society for people who are addicted to it, lost productivity, etc. I mean I don't know, I'm just throwing that out there.
HARIS: I lost some credibility to online gambling.
ROMANS: Have you?
HARIS: I want them to change the rule about how you can deduct your losses against your winnings.
VELSHI: Because you pay your taxes on your winnings.
HARIS: And then they kind of -- I come out on the wrong side of that.
ROMANS: If you have a computer mouse, can't you just go to one of the online gaming services in the Caribbean?
VELSHI: People can do it. But I think you are right, if people can do it elsewhere, it is kind of like marijuana, people who want it seem to be able to get it. Very interesting.
SMITH: If you can profit off of it, why not? It's the American way. It's the American way.
VELSHI: Traditional gambling companies like Harrah's Entertainment and MGM Mirage, by the way, have had an unlucky couple of years, legalizing online gambling could put them at additional financial risk.
But changes to the American entertainment industry by the way don't stop there, here is another one for you. Blockbuster filed for Chapter 11bankruptcy earlier this week in an attempt to overcome nearly a billion in debt.
Now to help solve the debt problem the company began shutting down nearly a third of U.S. stores last year. Last year, 2009, they decided to shut down those massive video warehouses.
ROMANS: Too late.
VELSHI: When I can get DVDs by mail, I can download them, I can get them in little boxes in supermarkets. I can get them zapped to my head, if I wanted.
ROMANS: Downloaded through your ear.
VELSHI: Blockbuster is remarkable.
ROMANS: Part of this is a debt problem that was from a spin off from Viacom, part of it is a business model problem with all these new kinds of ways that we can get entertainment. Part of it is when was the last time any of us used Blockbuster a product from Blockbuster. I mean it has been at least 10 years for me.
VELSHI: It never made itself a better alternative to Netflix.
HARIS: I didn't even know Blockbuster was still around actually. I don't have a DVD player I just use the cable --
VELSHI: You just do video on demand.
HARIS: That's what Netflix and others have to worry about. There's going to be more competition.
SMITH: You said it is unbelievable. I'd use another world, it is pathetic. The fact of the matter is Blockbuster could have owned this business. It was theirs.
For me, I knew it was done for them when I preferred going to Best Buy than Blockbuster, it's really that simple. Because you can go in there and you can get a plethora of other things as opposed to just movies.
Blockbuster never adapted to the times, they never embraced the challenges that was staring them dead in their face. They just sat back and thought that they could rest on their laurels because they were Blockbuster that was the place to go for movies.
VELSHI: It was a '80s, '90s family experience. You walked around, you picked your movies, you bought some candy and you left. That's not how we get our entertainment anymore. It is something you either log on, you get it you download it, get it. We'll see what happens, it is bankruptcy protection, and maybe they emerge with a better model.
Mark Zuckerberg, you know him he is the founder and CEO of Facebook, 500 million member, he's giving $100 million back. The social networking guru donated $100 million this week to the troubled school district of Newark, New Jersey just across the river here. The donation comes just a week ahead of the release of the movie "The Social Network" which does not depict Zuckerberg very favorably.
Is this a good deed or is this good PR, Christine?
ROMANS: Both. It is a good deed and it is good PR.
Look, this is a guy who has got an awful lot of money. He's one of the youngest billionaires in history. He's got to start thinking about how he is going to spend that money in a way that will live on beyond him and beyond what he did for Facebook.
So if I were counseling him and I'm not -- but for a low, low price I can - I would say education is the way that he should go, he should focus on fixing troubled --
SMITH: Let's break this down.
He's 26 years old. He's worth approximately $1.6 billion. Not only does he give it to a city like Newark, in desperate need. They spend $22,000 per student, about 40,000 students in that area, you're talking about $900,000. This guy is donating $100 million.
And he is giving it to somebody like a Cory Booker, the mayor, who is going to not only is he going to be able to do something with it, he's elevating in popularity. You don't know whether he's going to be a governor some day or whether he is going to run for president someday. So it is not only that he gave the money but it is who he gave it to and how it's going to be utilized. It was smart.
VELSHI: She doesn't care whether it's good pr; it's good that he is giving a $100 million to schools.
HARIS: He's a kid. People made fun of him say he's social inept. He's built a great company and he is doing some good things with the money. I don't see a problem.
ROMANS: Bill Gates, Warren Buffett, he's got some big shoes to fill.
VELSHI: There are actually some reports that he wanted to wait until after the movie anyway, we don't know what the real story is but the reality is we're so focused on public education that if somebody wants to give $100 million to public education, you know what.
God bless them.
ROMANS: Now it is up to Newark to do the right thing with that money and to get results.
VELSHI: Cory Booker is proving to be a very good leader of that city.
Christine, I have a confession by the way. You were away for a little while you know and I cheated on you, but only in the movies. I'm going to come out with all the dirty details, including the other anchor next.
VELSHI: OK. It's been two years since we were right in the middle of the financial crisis, really the middle of the worst of it, because this was the crisis that was hitting Wall Street. This was the crisis that was hitting credit markets around the world. Deals couldn't be made, and part of the problem was this was the precursor to all the pain we felt later.
Now that active time two years ago is captured very effectively by Oliver Stone, a four-time Academy Award winner in his new movie, "Wall Street Money Never Sleeps."
Oliver Stone actually invited me to be in the show with another gentleman, I'm going to introduce you to in a moment. His name is Anthony Scaramucci. I talked to Oliver Stone and he explained why.
(BEGIN VIDEO CLIP)
OLIVER STONE, DIRECTOR, "WALL STREET: MONEY NEVER SLEEPS:" I'm glad I put you with a guy named Anthony Scaramucci, that runs a hedge fund. Because Scaramucci has got a real point. He takes the hard line. He says let it go. Let the banks go.
(END VIDEO CLIP)
VELSHI: Obviously that discussion continues to this day. Should we have let the banks fail back then or did the government do the right thing by stepping in after the failure of Lehman Brothers? Here is the scene from the movie.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Potentially at a point where we might actually lose the financial system as we know it?
UNIDENTIFIED MALE: If the government doesn't get involved there is a risk of a global meltdown of the global financial system.
VELSHI: This is a financial crisis and anyone who doesn't admit that is just kidding themselves.
UNIDENTIFIED MALE: Ali, I disagree. You've got to get the government to say no in a situation like this. True capitalism is about disaster and correction is a natural cycle. Without it, we create all kinds of artificial anomalies.
(END VIDEO CLIP)
VELSHI: If you keep your eyes off Carey Mulligan and Shia LaBeouf, you will actually hear that that was Anthony Scaramucci and me. Anthony is the founder and managing partner of Skybridge Capital. He served as a technical adviser to the movie "Wall Street: Money Never Sleeps."
And as you just saw, he also plays a panelist in the movie. We are taking - by the way, he's the author of a new book called "Good- Bye Gordon Gekko" with his views on what happened during that time.
Anthony, welcome. Good to see you, my friend.
ANTHONY SCARAMUCCI, FOUNDER & MANAGING PARTNER, "SKYBRIDGE CAPITAL": Good to see you.
VELSHI: Let's talk about this for a second.
You and I played roles in that movie. Mine was sort of a consensus view out there, we've got to get in, and we've got to save these banks. Only the government is big enough to be able to save it. Yours was a view that others were taking at the time. No, it's not the government's job to save these banks.
SCARAMUCCI: There's a scene that actually Oliver cut. I don't know if you remember this. You were saying to me you've got a fire in your living room. Don't you want to put the fire out? The curtains are on fire. I turned and said you're going to give gasoline to the arsonist that set the fire. That's thing behind the movie is moral hazard. The banks were reckless, they were over levered.
VELSHI: Meaning you do something wrong, somebody rescues you, bails you out, you don't learn the lesson.
SCARAMUCCI: You can take incremental risk with the understanding that you're too big to fail. As a result of which, if you take that incremental risk, then you create profits, it's really good for you, it is sort of a "heads, I win; tails, you lose" sort of scenario.
VELSHI: Where do you think we're going right now?
SCARAMUCCI: Economy wise?
SCARAMUCCI: I think you're setting up despite all the -right this second I think you setting up for some positive growth and some quarter to quarter consecutive GDP gains. I do believe that. These companies are lean and mean, their utilizations are down, and their capacity is tight. You have $2 trillion dollars of cash on the S&P 500 balance sheet. It has to be deployed.
VELSHI: Which means companies have this kind of cash, they're not deploying, they're not -- we want to see them buying companies, we want to see them hiring. We've seen some acquisitions, but we haven't seen hiring, which is going to turn this economy around.
SCARAMUCCI: Because there's a lack of clarity in our current government structure. This is a bipartisan calemic (ph). There's a lack of clarity from the government on things like health care, taxes, forward regulation. Everybody is frozen and not hiring because of that.
VELSHI: Good to see you, it was good to make my movie debut with you.
SCARAMUCCI: You great in the movie. He's also got a scene where he's blabbing on the phone, very good close up of Ali.
VELSHI: Not sure how good it is. Good to see you my friend.
SCARAMUCCI: Good to see you.
VELSHI: Anthony Scaramucci, his new book "Good-Bye Gordon Gekko." And of course you can you see him in "Wall Street: Money Never Sleeps."
You know his name, you know his face, we certainly know him around here, Ted Turner is the founder of CNN but he's not talking about TV. He's focusing on a much bigger cause, Ted Turner here to talk about it next.
VELSHI: This is a real treat for me; I hope it is for you too. You may know Ted Turner as the founder of CNN, but there is also another establishment near to him the United Nations Foundation. It was created by Turner in 1998, a public charity set up to support the U.N.'s causes, and this week marked the tenth anniversary of the U.N.'s millennium development goals. It's basically a to-do list for all 192 member states, all with a simple mission that starts with ending poverty.
How have they held up the deal on their end? Here is more on that and more on Ted Turner joining me now. Ted first of all welcome back to CNN, it's always a pleasure to have you around.
TED TURNER, FOUNDER, CNN: Nice to be here.
VELSHI: Ted, you committed yourself in a very significant way. You gave away a 30-year fortune you committed at the time to getting things on track with the U.N., because you felt that some people, some organizations like the United States were not holding up their end so you committed a billion dollars to the United Nations Foundation. You founded this organization. What has it done so far?
TURNER: Well, it's done a lot of good. Most of that money has gone out to different programs endorsed by the U.N. and the United States has paid its dues pretty much ever since then. The U.N.'s able to meet its obligations. That's one reason I did it, was to call attention to the fact that the U.S. was not paying the dues, and I was going to try to make up for it?
VELSHI: You actually wanted to pay those dues?
TURNER: Yes, the original idea was to donate the billion dollars directly to the U.N. But the U.N. at that time was not set up to take donations. It could only get money from sovereign states, now it can get money. They changed the rules. Then they couldn't take the donation from an individual.
VELSHI: Since you did that there's been a bit of a move with the Gates family, with Warren Buffett toward people who are very wealthy, solving some of the problems that we used to think of as problems that should be solved by nongovernmental organizations or governments.
VELSHI: There's been a shift. Melinda Gates early this week is encouraging the ultra wealthy to give away half their wealth. Obviously you have a take on this because you've done that?
TURNER: Sure. I think it's absolutely right. We did not know when we started the U.N. Foundation and the nuclear threat initiative which deals with trying to get rid of nuclear weapons, that governments didn't need help.
But before that donation to the U.N. Foundation, that billion dollars, no individual had ever helped ever donated money to the United Nations. They thought -- we thought it was governments, but it turns out that we really need -- we need all our institutions to deal with the problems that we have, all our major institutions, not -- we need the media, we need government, we need education, and we need philanthropy, and we need individuals and corporations. We are saving humanity is a job for all of us now.
VELSHI: The millennium development goal, a set of eight goals designed ten years ago by the U.N. we still have five years to go on some of these goals, I want to ask you specifically to do with the economy. Has the difficulty of the last three years set us back in achieving some of these goals?
TURNER: Yes, absolutely. Absolutely. We made tremendous progress, when I say; hundreds of thousands of people have been lifted out of poverty in China and in India. That is terrific. They're two of the poorer countries and they're moving up substantially. As are a number of others like Brazil and South American countries.
There's a lot of room for optimism and hope now. And we just have -- we have to -- as a species, the human race has to make the right decision, we have to have -- look forward a few generations, and plan for that future. And the future will be what we want it to be.
VELSHI: Do you feel we're well on the way? Despite the setbacks of the last few years, you look at these goals. You think maybe in five years we can get some of these millennium --
TURNER: They're not going to completely eliminate poverty, but the objective was to cut it in half. I think we can definitely do it.
VELSHI: Well thank you for your continued commitment to the U.N.
TURNER: I'm not going to give up, what is the alternative? Are we going to give up? No way. We are going to keep fighting.
VELSHI: Great to have you here, it is a real pleasure.
TURNER: Thank you.
VELSHI: All right. Ted Turner, thank you.
And thanks to all of you for joining us today. We are hoping that you connect to us on Twitter; I'm @AliVelshi and @ChristineRomans. We do read every single one of the messages you post there or on Facebook.
Make sure you join us every week for YOUR MONEY, Saturdays and Sundays. You can also log on to CNNMoney.com for all the latest financial news.
Have a great weekend.