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President Obama's Approval Rating Tied to Economy; Economic Recovery Moving at Moderate Pace; Oil and Gas Prices Higher; Bernanke Gives Rare Press Conference on Economic Policy; Does Buying a House Make Sense?; Investing in Autos; The Future of Nuclear Power
Aired April 30, 2011 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, HOST: Pessimism on the rise; President Obama's approval rating is falling.
I'm Ali Velshi. Welcome to YOUR MONEY.
Gas prices are soaring, unemployment remains stubbornly high, and partisan bickering has once again come in the way of a serious plan to deal with this country's debt.
Will Cain is a CNN contributor.
Will, this CNN poll, let me show it to you. Average of three national surveys, 45 percent approves of President Obama's - the job he is doing. But that's down 7 percent since mid January. Forty eight percent now disapprove of the job he's doing.
Bottom line, can the day Obama ran on the idea that President George W. Bush and the Republicans were responsible for the economy that he inherited, now people are mad about the economy. Are they giving him a taste of his own medicine with these polls?
WILL CAIN, CNN POLITICAL CONTRIBUTOR: Yes. You know, unfortunately the American public wants quick responses to very big problems. The economic situation we find ourselves in is not the result of a simplistic blame like Republicans or Democrats and will not be solved simplistically over two years. We are looking at an economy in my humble opinion Ali; we will be working our way through to recovery for several years. President Obama unfortunately, will pay the price for some of that.
VELSHI: Who is responsible for making people - I mean this has been age old that we want instant fixes or is it us? I mean a lot of people point to us, the media, and the 24-hour media cycle. The president himself says it. Are we the ones who force people into thinking that these age-old problems are to be solved quickly?
CAIN: No we are probably ourselves to blame. Meaning we the American public, not the media. It is easy to blame politicians of the media for all of our problems.
Look at any poll that takes account of where our problems are. Do you want to touch Medicare? Talking about the debt and deficit? Do you want to touch Medicare? No. Do you want your taxes raised? No. We are like children and we want everything.
So the fact that politicians or the media suggest that there may be a short-term answer to our problems is because we are asking for it.
VELSHI: All right. Lisa Desjardins, the Capitol Hill correspondent for CNN radio, she is the co-author of a great new book called "Zombie Economics." I wrote about it. I even -- wrote a blurb to tell people they should read it.
Lisa, great to see you.
Federal Reserve Chairman Ben Bernanke held the first of its kind, press conference, earlier this week.
Listen to this.
(BEGIN VIDEO CLIP)
BEN BERNANKE, CHAIRMAN, FEDERAL RESERVE: The committee sees the economic recovery as proceeding at a moderate pace. Household spending and investment in equipment and software continue to expand supporting the recovery. But nonresidential investment is still weak and the housing sector is depressed. In the labor market, overall conditions continue to improve gradually.
(END VIDEO CLIP)
VELSHI: Man, he's dry. Translation, we are doing good but not great. The housing market remains a disaster.
Lisa, we economic squares hailed this as this new era of Fed transparency which, by the way, they were brought into kicking and screaming by lawsuits and Congress. Is this going to change anything that we are going to hear that kind of speak from Ben Bernanke?
LISA DESJARDINS, CNN RADIO CAPITAL HILL CORRESPONDENT: Right. I know. Fed transparency. Whoo! We want transparency.
But honestly, Ali, I think that to some degree, especially going in this next election year, Fed transparency may be more of a distraction than anything else. We are hearing Ben Bernanke say more words but -- substance hasn't really changed. We haven't gotten anything new.
I do think one thing that could come from this transparency more spotlight on the Fed and more of another ring at the circus, I guess, is that it could give Republicans another place to hoist blame on President Obama because he, of course, kept Ben Bernanke in this office. Bernanke is not popular with the Tea Party or with Libertarians. Of course President Obama had to defend his own economic policies and not just the independent.
VELSHI: But nobody is popular with the Libertarians when it comes to the Fed. I mean Ron Paul continues I mean he use to say the Fed should be eliminated entirely. He certainly wasn't impressed by this.
Roland Martin is a CNN contributor.
Roland, we are about to hit that debt ceiling. There are some people in Congress, the Tea Party led Republicans in particular, who say that come May 15, and with a little bit of extension the first week of June, they will not vote to raise the debt ceiling without future spending concession.
Before you answer this, Roland, let me just show the viewers what we are talking about.
The debt ceiling, the credit card limit of the United States, $14.294 trillion dollars. The debt itself that is the red, has piled up to $14.42 trillion, about $50 billion shy of the limit which we are going to hit in about two weeks. The debt ceiling covers spending that we have already committed to. This isn't new spending, this isn't future spending.
Roland, they are playing with fire. America fails to pay its bills; there have been warnings, that this could trigger another global economic crisis.
ROLAND MARTIN, CNN CONTRIBUTOR: Hey --
VELSHI: What's your take on this?
MARTIN: You know what, if they want to play that dance, go right ahead. Trust me they will get burned on that. This is the kind of silliness that we see.
But also, Ali, understand this here. Washington, D.C., just like state capitals across this country, just like city halls as well, county governments, we only respond in this country when we are facing this kind of pressure.
We don't believe in doing anything proactive. It is always reactive, there is always last minute. So the only thing that matters is the actual deadline. That's what is going to force Congress to do something.
Now the Tea Party folks want to sit here and play around and cause widespread problems on the market. Hey go right ahead. When it happens, guess what. The blame is going to be at your feet and trust me, the Republican Party. The last thing they want is to get the blame for this economy going further in the tank. Trust me, they will raise the debt ceiling.
VELSHI: Will, answer that.
CAIN: Here's the problem, you are exactly right. We only respond to quick, immediate political pressure.
But here is the deal, you either believe we have a debt problem or you don't. If you do believe we have one, you are going to believe spending contributes to it or it doesn't. Now we only have at least Republicans rationally believing yes spending is contributing to our debt problem.
But unfortunately Democrats have fought every single cut in spending that's come along the way. We only had as country of three of these pressure points that you talked Roland, the 2011 budget, the debt ceiling and now the 2012 budget.
If we pass on the debt ceiling, and by the way I would suggest we should not hold it hostage and I don't think they will. We will be left with only one negotiating point yet. The 2012 budget and nothing left to show for it.
MARTIN: Actually Will you are on a one point right there and that is you say only Republicans get it. No. They get it when it comes to Social Security. They get it when it comes to Medicare and Medicaid. But they love the bypass defense. The argument that I kept making is very simple. Ali knows this. Democrats cannot talk about the deficit and ignore Medicare and Medicaid, and Social Security. And Republicans can't talk about the deficit and ignore defense.
CAIN: That's fair enough, Roland.
DESJARDINS: Let me jump in here.
Some numbers that we are not talking about that actually have been important in the last couple of weeks, poll numbers. We have seen speaker Boehner's approval numbers go down significantly since the government's shutdown debate. He is someone that wanted to avoid the shutdown and they managed to do it.
But I think that kind of pressure is going to be on top of Republican leadership. They see the effect of playing with these kinds of government shutdown, national debt debates. And I think -- I think that's one thing that makes me think they are going to figure this out by July.
VELSHI: You know Will one of the problems -- that's a good point. We started with that poll about President Obama's approval rating. The fact of the matter is this now on -- in a Congress that is a different party than the president's, we are now going to see the blame shared for our inability to solve these problems.
DESJARDINS: You know, I want to go back to something Will said. Obviously the American people do share part of the blame in the way that we want short-term fixes.
But I have to disagree with you, Will. I think the media is partially to blame. We have fallen into this habit we have kind of become suckers for the politicians playing all of these sound bites that they want us to play of them blaming each other. So the story does become who is to blame.
Who is going to solve this?
VELSHI: Hold on before anyone else says anything on that. Hold on. She is talking about playing these sound bites. Roland, Lisa and Will, stay where you are.
Donald Trump said he wanted President Obama to show his birth certificate and he said that he got it to happen. Now he wants President Obama to lower your gas prices. Is that going to happen? I will tell you when we come back.
VELSHI: Oil and gas prices are higher. You know that. Bottom line, oil and gas prices are going to get more expensive. Virtually regardless of what we do in this country, we don't move gas prices in this country.
Oil prices are up largely to rising demand from China and India. At some point we have to seriously develop alternatives and not focus on who is to blame and fact finding missions into why gas prices are high. We know the answer to that.
My answer to higher oil prices is higher oil prices. A few years ago when prices were higher than they are today, you heard the famous oil man, T. Boone Pickens promoting wind energy on this show and elsewhere.
Auto shows began featuring smaller cars and selling fuel efficiency instead of Hummers. This time instead of focusing on alternative energy for some reason we seem to have a thirst for easy answers that make us feel better. Here was Donald Trump's take when speaking to reporters in New Hampshire this week.
(BEGIN VIDEO CLIP)
DONALD TRUMP, CEO, THE TRUMP ORGANIZATION: Yesterday our president said that he's very little impact over the price of gasoline. I think he is 100 percent wrong because OPEC is setting the price of fuel. We have -- we have oil all over the place, all over the place.
Every ship at sea is loaded up with oil; they don't know where to dump it. Yet, every day we are setting records and pretty soon we are going to be at that $150 a barrel, the all-time record. Now when the president says he has no power over that, I mean, it is pretty sad.
(END VIDEO CLIP)
VELSHI: Roland Martin, Donald Trump has a lot of guts calling somebody 100 percent wrong after what happened this week. But -- the president did set up a commission, a fact finding commission, to find out why gas prices are higher.
I -- I'm offended that somebody is going to be paid anything that there is a limousine driver who is going carry some commissioner to some meeting and who is going to stay at some hotel on my taxpayer dime to try to come up with an answer to high gas prices. Gas prices are high because oil prices are high.
MARTIN: Well, look, here is the deal. If you want to deal with the whole issue of energy, you talk about solar and wind, trust me, all the hot air from Donald Trump can stand to stop all the wind we need in this country. He is an absolute idiot. I will not support anything that he does and I will not support any company that advertises on his show "Celebrity Apprentice." He is absolutely a liar and was proven this week.
But understand this when it comes to the economy, and you hit it on the nail. We could talk about the government. We could talk about the president and Congress. We can talk about higher taxes.
But at some point Americans have to understand as long as we keep sitting here and getting mad when gas prices go up, then all of a sudden we get green. Then all of a sudden we believe in public transportation and then believe in buses and HOV lanes. Then when it goes back down, we are like OK, cool, pull the SUV out.
The American people, yes, you folks at home, you are the problem here! So we can't keep sitting here and begging some other country to lower gas prices when we don't want to take ownership of this problem. This is our fault. So deal with it.
CAIN: This ought to be good for ratings Ali, the theme of the night is Americans, it is your fault.
MARTIN: But Will at some point --
CAIN: No, I agree with you. You don't have to defend it Roland.
Look let me say this, A, Donald Trump doesn't speak for Republicans; B, Donald Trump isn't a Republican; C, there is very little the president can do about oil prices. The best he can do is what Bush did is and hold hands with Abdullah (ph) of Saudi Arabia and hope. There is not much more you can do beyond that.
VELSHI: The best thing I can say is having gone to the auto show recently, I mean the car companies, I'm going to talk about Ford later in the show, and they are actually doing something about it. Even the Fed, Lisa, got into this week with that historic press conference. Somebody asked Ben Bernanke what he can do about gas prices and he said we can't produce more oil.
DESJARDINS: Right. How about an honest answer from the fed chief? He basically said honestly there's not much we can do at all. The truth is there's not much that Congress or the president can do short term that oil or gas prices -- you can talk about the strategic reserves. That's not really on the table right now. And the truth is whether -- even if gas prices, we hope, go back down a little bit this summer, already consumer confidence is factoring it in.
I'm already changing from my summer travel plans because of it. A lot of other people are, too. Here is the thing. Like we described in the book, "Zombie Economics," little plug there, gas is an absolute necessity for most people the way this country works right now. It is something that people will pour more money into means they will spend less money on other things. You know, as Will and Roland are saying we need to get more toward an alternative energy future. But right now really there is no other practical solution to cars and planes other than oil.
VELSHI: Let me -
CAIN: Let me be clear. I didn't say that Lisa. You had me until the alternative -- we should just discount the things, arguments that don't make sense. Arguments that don't make sense are is the president can do something about oil and Donald Trump seems to think he can change that by bullying him.
VELSHI: And Americans are somehow driving the price of oil up. We are not. It is the Chinese and the Indians and everybody else who is.
CAIN: The other argument that doesn't make sense, we have a supply problem. Anybody that goes out and suggests that we should release some oil from strategic oil reserves knows nothing about what the problems are --
VELSHI: We agree.
DESJARDINS: We produce -- we have the third largest oil supply in the world right now. Definitely agreed. Sorry if I misunderstood.
CAIN: The last thing which I'm challenging you on is that we can somehow build smaller windmills and select our -- fix our gas price problem. They have no connection.
DESJARDINS: We agree.
CAIN: That's what I'm saying.
MARTIN: Ali, let's go to history.
There use to be a time when we were a nation and we rode horses. Then we transitioned from that to cars. But what did we need with cars? We couldn't have dirt roads. We needed to build highways and road system. So it took us over a period of years to get ourselves away from horses and from carriages to cars.
The point of this is here, we can't keep saying oh, no, we can't do anything when it comes to gas. When it comes to wind and when it comes to solar. It is a process, the problem, though, is we don't like spending the money on the front end and we complain on the back end.
VELSHI: Which is exactly why we get to the place I started on this. My answer for higher oil prices is higher oil prices. Only until - if these things stay here that's what is going to prompt us to actually find these solutions. I will pay good money Roland to see new a Nissan Leaf or something like that. Good to see you.
MARTIN: As they make it a good looking car. I saw that new Mercedes SLR with the wings.
VELSHI: It uses gas.
Nice new car but uses gas. Good to see you all. Lisa thanks very much.
DESJARDINS: How much energy goes into producing Roland Martin's ties?
VELSHI: That is right.
Lisa Desjardins is the author of "Zombie Economics" an excellent book. Will Cain always a pleasure to have you here on the show. And Roland you are looking sharp, as always. Good to see you all.
Hey, listen, if anybody owns -- do you own a Sony PlayStation? I actually do. You may have heard about that major security breach on its network exposing credit card numbers, passwords and whole lot more personal information.
By the way, I have never put so much information as anything as when I signed up for the Sony PlayStation network. Now some hacker nerd has it. You do not have to be a video game junky to be at risk on this one. I'm not. I will explain it after this.
VELSHI: Don't change the channel. I'm going talk about Ben Bernanke, Federal Reserve Chairman Ben Bernanke, because he held an historic debut press conference this week and a clear theme emerged about his feelings towards the state of the U.S. economic recovery.
(BEGIN VIDEO CLIP)
BERNANKE: Expect a moderate recovery to continue. We are in a moderate recovery. Growth was very moderate. The recovery process looks likely to continue to be a relatively moderate one.
(END VIDEO CLIP)
VELSHI: Pete Dominick is with me. In the house, Christine Romans.
Pete, how do you feel that? He was overly optimistic about a moderate recovery.
PETE DOMINICK, CNN CONTRIBUTOR: Nobody cares. You know who cares? People like and you Christina in economic wrongs who understand what he's saying. Here is what people like me who understood what he was saying. He said the Fed doesn't produce oil and I'm more concerned about inflation than employment or unemployment. We are --
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: See you are a Fed watcher. That's exactly what he said.
DOMINICK: Well, I have to because I had to do this segment. I do the radio show. But most of us don't --I watched that whole -- we carried the whole entire thing. It is so hard to understand what he is talking about and all I was thinking was wow his lips sound dry, he sounds like a little frightened. But the whole -- VELSHI: Let's hone in on one thing that you did observe here Christine. It was evident from that and if you don't know what the Fed does, it sounds like he was saying I'm worried way more about inflation than I am about unemployment and jobs.
ROMANS: Yes. And we are going to keep interest rates low for the foreseeable future he said and they are going to stay the course. Look, this is a Fed chief who said moderate many, many times.
What moderate means it means that the economy is not recovering the way he would like. He said that, too.
And he said the American people have every reason to be impatient because there are three things that aren't happening that make us feel like the recovery isn't happening. That is high gas prices and continued unemployment and the foreclosure crisis. Those are the three problems for the economy.
VELSHI: But there are a whole bunch of things happening Pete that should make you feel like there is a recovery. You got the lowest interest rates we have had in generations. You have a stock market, the Dow and the S&P, three-year highs. The NASDAQ, a ten-year highs. WE have this whole disconnected thing. Do guys like you that don't Fed watch not see that there are some things in the economy going right?
DOMINICK: No, because we don't measure it that way. We are not looking at those numbers that much. Some of us look at unemployment numbers every month. Mostly we are looking at ourselves and our neighbors and our community and the homes have they been foreclosed upon, and on our street and do I have health insurance this month. That's what most people are looking at. Of course, gas prices.
ROMANS: Right. One thing I think was interesting that he did address the fact that so many people have been out of work for six months or longer and he said your skills start to atrophy at some point you can't get back into the labor market. Some people may never be fully employed again. And that is an issue here that he touched on. So is the Fed going to accept - its mandate, its maximum sustainable growth. And full employment without inflation. That's what they are supposed to be doing. At what point are they going to accept that unemployment is going to have to be too high to keep inflation --
VELSHI: It is kind of like that whole, it is kind of like the president and gas. How much can he actually do? I have a question for you. Either of you gamers?
DOMINICK: No. Because I'm a grown man.
VELSHI: All right. Even I have a little bit of a snicker about gamers but Sony is facing legal action after this PlayStation security breach placed personal information of over 77 million users in jeopardy. All week I have heard about how this is bad for gamers. Guess what?
The PlayStation network, I'm a member of it. It affects people like me because I use my PlayStation network to get Netflix. It used to be you had to insert a disc. Now I have to actually download it. So when I signed up for it I had to provide so much information. Guess what, all of that information has been hacked by some nerd somewhere who will sell it --
ROMANS: Hopefully a nerd and not like some big --
DOMINICK: You are a hard guy to -- identity to steal. First of all, stop telling people, Ali Velshi, that you are in the PlayStation gamer network. Nobody believes that you are using it for movies. That being said, here is --
VELSHI: I have never done one of these games in my life.
DOMINICK: I'm sure you haven't. Here is the provocative thing I will say. The more hacking the better because this is a serious, serious security concern. Nobody seems to be paying nearly enough attention to it. And this is going to bring it to the government's attention. And this is something that we better, because when it does happen and shuts down the whole grid, guess what is going to happen? We are going to overreact and all hell will break loose.
VELSHI: And legislate.
ROMANS: What is the next movie you are going to see? I'm just curious, if you are really just using it for Netflix?
VELSHI: Good question. I just don't remember these things. Probably some civil war movie.
DOMINICK: "The Call of Duty."
VELSHI: Let's get on to another of my two favorite topics actually that you both know about, Chicago and food. Food trucks, by the way, something I love. I love cheap instant food.
Food trucks provide cheap food while you are on the run. You would think it would be popular in this economy.
In Chicago, which is a great walking town and a food town, but in Chicago food trucks are causing quite a controversy.
Stephanie Elam has this story.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: What's up?
STEPHANIE ELAM, CNN BUSINESS CORRESPONDENT (voice-over): There is a food fight on the streets of the windy city.
UNIDENTIFIED MALE: Kind of a take on, you know modern street fare. UNIDENTIFIED MALE: We are the Meaty Balls Mobile.
ELAM: Gourmet food trucks are welcomed by lots of cities. In Chicago, they have to meet some strict guidelines or risk getting ticketed. The city says that it is a matter of health and sanitation.
UNIDENTIFIED MALE: There you go.
ELAM: Food trucks must be at least 200 feet away from a restaurant and nothing can be prepared on the truck.
We can't actually assemble or even cut sandwich on half in the truck. It is illegal.
ELAM: This doesn't deter customers who follow these food trucks on twitter and Facebook.
UNIDENTIFIED MALE: The price, the smell. I mean, definitely the smell is a big factor. It just trying to draw you in.
ELAM: So before the folks trying to Gastrowagon, even left the restaurant and before they could even find a parking space, folks were lined up here. They know that they have to get here early because if they don't, then their favorite sandwich could be sold out. Mororini even wrote a proposed ordinance. Introduced to the city in July, it has since stalled.
UNIDENTIFIED MALE: New ordinance would allow us for -- to assemble prep, cook, finish, on a truck, out on the streets.
ELAM: The proposal would also shorten the required distance from a restaurant. That's not sitting well with some.
UNIDENTIFIED MALE: No doubt in my mind that food trucks are a fad and not a trend.
ELAM: Dan Rosenthal owns seven restaurants in Chicago.
DAN ROSENTHAL, PRESIDENT, SOPRAFFINA MARKET CAFE: For a truck to be able to come into that location without paying a similar rent, it is like -- starting a 50-yard dash with them starting on the 40-yard line.
ELAM: But the food trucks have hope. Mayor-elect Rom Emanuel said in a statement he would, quote, "Support a city ordinance to expand licensing for these trucks while ensuring that local small businesses aren't negatively affected."
Even if the ordinance does pass, the food truck folks plan to keep at it.
UNIDENTIFIED MALE: Keep fighting a good fight. Thank you very much. Enjoyed it.
ELAM: Stephanie Elam, CNN, Chicago.
(END VIDEO CLIP)
VELSHI: OK, so the Ron Pauls, the Libertarians in the world would say let there be food trucks if they can provide food for less money, that people like, and the -- that restaurant owner in there was sort of saying, you know what, we restaurants have to rent a place and renovate it and it pay taxes and these food trucks just drive up --
ROMANS: You know, in Chicago, you have a lot of elder men Ali and a lot of older men who have a lot of important patrons in the big restaurant companies.
Also, maybe the restaurant companies could try to get involved. Maybe they should have a food truck with their own food, too. And then you could get some other fares and more competition on the street.
DOMINICK: Sounds like a war. They could put their little tray out there into the food trucks and they tried this out here. There more of it inside of a restaurant. Think -- you could see this both ways. You know, free market Libertarian idea. Competition. We can put our food truck out here. And you can say, hey, this is not fair. They have overhead and they have rent.
VELSHI: And taxes.
DOMINICK: And taxes. But I will tell you this. I totally disagree that food trucks are a - are just a fad. I remember people said that about snowboarding versus steam. They are not.
VELSHI: Shaving is a fad, too. By the way, the next movie in my Netflix cue is "Shutter Eyelet."
DOMINICK: What your next game in the cue?
VELSHI: I'm a big angry bird's guy. I have to admit.
All right. Coming up next why you should buy house right now if can you afford one and why one of my guests completely disagrees with me.
VELSHI: Home prices dropped for the seventh straight month, and there's no sign of an end to the decline. Those of you who are in the market for a house probably want to know if you should wait to buy or buy now. I say don't wait. Buy the house if you can afford it.
Patrick Newport is an economist at IHS Global Insight. Patrick, if -- if -- underline if -- you can afford to buy a house, meaning you have the money, the down payment, you've got strong credit, you've found a fairly priced home, I believe the time is now to stop waiting for a bottom of the market and lock into the lowest mortgage rate you will ever get. Based on where you think housing prices and interest rates are going, do you agree with me?
PATRICK NEWPORT, ECONOMIST, IHS GLOBAL INSIGHT: Oh, I agree with you, even though -- even if -- even if I had no idea of where interest rates were heading. I don't think it's a good idea to gamble on where housing prices are heading or where mortgage rates are heading. Right now, owning a home is about as affordable as it's been in at least 50 years. So I agree 100 percent with you.
VELSHI: James Altucher is the managing director at Formula Capital. James, there is a difference between buying a home to live in it and buying a home as an investment. If you are buying a home solely as an investment, I would argue that a house probably won't bring you the best return for your money. But you argue that it's never the right time to buy, despite falling home prices and despite those historically low interest rates. Explain.
JAMES ALTUCHER, MANAGING DIRECTOR, FORMULA CAPITAL: I'll go one step further. I actually think housing is a good investment. I'd be going out there and buying housing-related stocks. But I think owning a home is always a horrible investment. You lock up your cash, you borrow too much money, it's illiquid, so when you need the money, you can't get it out. There's no diversification.
And by the way, every year, your maintenance costs, your property taxes, everything's going up with inflation. So it's not as if you really get the benefits of locking in the price of your house --
VELSHI: But you're not -- you're not -- if I rent, I'm still paying those costs because somebody else is paying them and transferring them over to me.
ALTUCHER: Sometimes yes, sometimes no. You don't know what the maintenance costs are going to be for the upcoming years. Pipes could burst. Plumbers could get called in. And your rent stays the same. And you don't have to deal with it. You call the landlord. You don't have to -- for me, personally, owning a home -- too much stress. I'd rather have -- have -- be able to call somebody up, have them come over and fix may dishwasher, shovel the snow, mow the lawn. And by the way, they handle all the maintenance costs, the property taxes. When I own the stock, I get a dividend. When I own a house, I pay taxes, maintenance, all sorts of --
VELSHI: You know, this is a conversation Christine and I have had for years. Christine Romans, I have to say I've been an advocate of buying a house for a long time. James -- what he's saying is very attractive. This whole post-recession "take the stress off my back" thing sounds very attractive.
CHRISTINE ROMANS, HOST, CNN'S "YOUR BOTTOM LINE": Well, my big concern is that there are some people who are in love with this idea of home ownership, and they've found themselves in a position where they can't afford the down payment or they're in the house, it's gobbling up 50, 60, 70 percent of their monthly income, and they should be saving and investing for their future, for their retirement, and instead, they're saddled with a house.
Like everything in personal finance, it depends. If you have the money, oh! Now is a perfect time to be buying a house. A lot of people are doing it in cash, quite frankly. Thirty-two percent of all home sales are cash. But if you need to repair your life, you know, give up that dream and become a renter and repair your personal finances (INAUDIBLE)
VELSHI: That dream is dead. The dream is something different now. Hey, listen, here's one of the things that people always tell me when we talk about buying a house. They say, Oh, that mortgage interest rate deduction is such a great thing.
I recently sat down with the secretary of Housing and Urban Development, Shaun Donovan, and I asked him if that estimated $100 billion -- with a B -- that the U.S. government spends each year on paying for those mortgage interest rate deductions is a good use of our government's money, or if those deductions should be cut in an effort to rein in government spending. Here's what he said.
SHAUN DONOVAN, HUD SECRETARY: First of all, we've clearly got to a place in this country with home ownership where we were thinking about our homes as ATMs. That wasn't a good place to be, and we've seen the consequences of that. And so we've taken a lot of steps to try to make home ownership safer, to protect consumers from the kind of terrible loans that we saw. But home ownership remains an important goal for millions of families around this country. And more than that, this recovery is too fragile, I think, to take precipitous steps right now that could have hurt that market.
VELSHI: Patrick, I'll take him at his word that maybe now is not the time to eliminate that. But I got to say, $100 billion -- we have 67 percent home ownership in the United States. Canada, where I come from, has no encouragement, no tax encouragement to take a mortgage, no mortgage interest rate deduction. You know what the mortgage -- the home ownership rate there is? It's 67 percent, exactly the same as in the U.S. So Canada saves $100 billion that the U.S. spends that doesn't seem to give us much of a return.
NEWPORT: Well, I agree with that. I think that we are -- one thing that we're doing in this economy is we're overinvesting in housing and underinvesting in equipment and software and -- and business investment. And one of the reasons for that, of course, is this home ownership deduction. If we get rid of that, we'll build fewer houses and we'll build more plants and buy more equipment. And over the long run, that's better for economic growth.
ROMANS: Well, you know, that interest deduction is something that is going to be very hard to get rid of because a lot of people want it, including maybe 50 million home owners, 75 million home owners who have a mortgage. I mean, that's a very big deduction. You got two big lobbies, the home builders and the realtors lobby, who would -- who will fight kicking and screaming. But if you have honest tax reform in this country, where you're getting rid of all the loopholes and you're having a more simple, fair and efficient tax system, then you can start talking about that. We're at very, very beginning stages of that conversation.
VELSHI: There may be a way to grandfather that. But I got to tell you, I like it. It's a conversation killer, man.
VELSHI: On Saturday night, when I'm out to dinner and I say, You know, the government could get rid of $10 billion, James, by getting rid of that, nobody wants to talk to me anymore. Good to have all of you. Great, diverse views on the future of housing in this country. Thanks to James Altucher, Patrick Newport from IHS Global Insight, and my friend, Christine Romans.
The auto industry, a very interesting investment space right now. Some companies are doing very well. Some of them are struggling. So how do you invest in the auto industry? I'll give you a look after this break.
VELSHI: The economic recovery is slowing down, but Americans are still buying cars. Ford Motor Company announced its best first quarter earnings since 1998. Now, is that going to translate into profits for you? Not if you're not invested in it. So how do you invest in the auto sector?
We're joined by Matt McCall. He's the president of Penn Financial Group. Matt, let's talk about Ford. It's a company I like a lot, but let's talk about how it's doing. Let's look at the stock price on Ford. By the way, back when things were really bad for the auto industry, beginning of 2009, the stock was $2. Started the -- it was about $14 a year ago, ran its way up to above $18, now at about 15 bucks.
Don't tell me about the investment. Tell me about what you think about Ford relative to other companies.
MATT MCCALL, PRES., PENN FINANCIAL GROUP: Ford relative to other auto makers?
MCCALL: Probably the best of the breed, let's put it that way. The problem is, the industry as a whole faces some major headwinds going forward. You look at Ford, the numbers are fantastic. Couple of big reasons.
MCCALL: One, 31 percent sales increase in Asia. That's a big market for them. They also have some fuel-efficient cars, which with gasoline close to $4 per gallon, of course, they're moving in that direction. But again, the problem is if you're in that industry, so many headwinds going forward next year.
VELSHI: And then look as that stock price at around 15 bucks. You really liked it at $2.
MCCALL: Exactly. We actually picked some up around that time. The problem is, at $15, if you have a stock that's gone up seven times in the last two years, tough to buy it at this price.
VELSHI: You've got a very interesting way to play to the auto sector because in the world, people are going to be buying more cars. We're in mature markets here in the West. What's your idea?
MCCALL: My idea is actually lithium, believe it or not. And what -- the reason behind that is lithium ion batteries -- they go into the electric batteries. Right now, it's about a $10 billion business. They think it's going to go to $70 billion in the next 10 years. The Global X Lithium exchange-traded fund -- and I know it's a lot --
VELSHI: That's the one we're looking at right now.
MCCALL: But basically, this is made up of companies that actually mine for lithium, and the other half of the fund is made up of companies that make these batteries that go into fuel-efficient electric cars.
VELSHI: All right, this thing's up 37 percent in a year. Has it had its run, or it's got further to go?
MCCALL: No, I think you're looking at this possibility of, like, a tech stock back in the '90s. I think the up side is unlimited for this. And there's only a few companies, but what I love about this fund is you don't take that company-specific risk. You're not investing in just one company. You're investing in the industry. Plus, you're not investing in one auto company. It doesn't matter who's doing well --
MCCALL: -- if it's Toyota, Ford, GM --
VELSHI: They're all --
MCCALL: -- all need those batteries.
VELSHI: Matt, good to talk to you. Matt McCall is the president of Penn Financial Group with some advice on how you take advantage of the auto sector.
OK, coal, nuclear energy, natural gas, oil. It seems like every energy source has some sort of down side. So what does the future hold for your choice of energy? And is it going to be safer? We're going to ask one of most powerful figures in energy right here on this show next. (COMMERCIAL BREAK)
VELSHI: In April, oil prices averaged nearly $110 a barrel. That's up 20 percent from the start of the year. I think the era of cheap oil is over.
Jim Rogers is the CEO of Duke Energy, one of the largest utility companies in the country and an operator of a number of nuclear plants in the United States. Jim deals mostly in electricity.
Jim, everywhere you look, though, in energy -- I mean, energy in some fashion moves as a basket. I don't think we're going to see substantially lower oil prices, given the growth that we've had in China and in India. And we've seen a backlash against further development of nuclear power in this country after what happened in Japan. So give me some sense of where you think we are in energy, Jim.
JIM ROGERS, CEO, DUKE ENERGY: First of all, and most importantly, the national grid of the United States relies on just a de minimus amount of oil. So the movement in the oil price really doesn't affect the price of electricity very much.
Secondly, with respect to nuclear, I think at the end of the day, we will look at what happened in Japan, we will learn from it, and we will be better for it. Deeply embedded in the culture of a nuclear operator is safety and continuous learning. We will learn from what happened there, and that will make our units even safer.
And as you know, over the last 40 years, we have a remarkable record of operating nuclear, which represents 20 percent of the electricity in this country, with zero greenhouse gases. And probably more importantly, we've operated in a safe way, with no fatalities and just a minimal radiation leakage.
VELSHI: It does seem tricky, though, Jim, that we -- you know, when this thing happened in Japan, everybody split into two camps. You had those who don't like nuclear saying, See, we told you so. And strangely, we had those defenders of nuclear power coming out and saying, No one's going to get killed, this isn't all that dangerous, almost seeming to be in denial about the whole thing.
We've got 60 nuclear reactors being built around the world. We've got 104 plants in the United States. We don't have a lot of activity in terms of new plants or expansion here in the United States. What does that do to the future price of electricity? ROGERS: I think the price of electricity over the last 50 years has been flat in real terms. The real price of electricity's going to go up significantly over the next several decades as we retire and replace our plants. That's inevitable almost regardless of what we build going forward. So the challenge is to make sure we're building the right mix of generation for the future and taking really a 30 to 40-year view of that.
VELSHI: All right, let's talk about a mechanism. Is it important that we need to develop a mechanism here in the United States for reprocessing nuclear waste or a long-term storage solution? Where are we with that discussion?
ROGERS: I think one of the issues is, how do we deal, as you've suggested, with our spent fuel? Today, it's in the pools. We've been moving it into the dry cask storage. I think we should probably accelerate the movement of spent fuel to dry casks and look at regional storage for that. But I think at the end of the day, the key is recycling because we only use 5 percent of the energy in a fuel rod.
ROGERS: If we recycle, we can reuse that energy and drive our production of electricity in the future. So the smart way, the sustainable way --
ROGERS: -- to deal with this is to recycle.
VELSHI: Where are we in the technology or the science required to get more than 5 percent out of a fuel rod?
ROGERS: I think in France, they've used a technology that's been very successful over the last 40 years. I believe we can improve on that technology and deploy it in the United States. And I think that is one of our challenges. And as we move the spent fuel into the dry cask storage, that buys us time to develop this technology that's more advanced than what the French have used. And that, to me, is the solution.
VELSHI: And they certainly are a world leader in the use of nuclear power to create electricity. Give us a sense of the breakdown at Duke Energy, where you generate electricity from, whether it's from coal or from natural gas or from nuclear.
ROGERS: In the Carolinas, almost 50 percent of our electricity comes from nuclear and 50 percent -- or less than 50 percent from coal, and some hydro and renewables with it. System-wide, 70 percent of our electricity comes from coal and 20 percent to 25 percent from nuclear, and the rest from gas and renewables.
But the important point here is we need a complete mix. Every one of these technologies that we use -- and today we're investing in wind and in solar, in energy efficiency, in coal plants. We're building --
VELSHI: We'd love to get to more of those alternatives. Do you, as a company, need something to happen to create greater incentives to use more solar and wind? Are you using as much as you can? What has to happen to generate more electricity from non-coal sources?
ROGERS: I think what has to happen is they have to drive the costs down. There's significant subsidies for solar and wind. And we're a huge wind operator. What has to happen is we have to drive the costs down of that technology. That is the key because in America, they want affordable, reliable and clean electricity. And the emphasis, particularly during these tough times, is on affordability.
VELSHI: Right. And at different times, in a strong economy, clean becomes a more important thing to some people. But in tough times, particularly these high oil prices, your energy costs as a household continue to increase.
Jim, always a pleasure to talk to you. Let's continue this conversation another time.
ROGERS: OK. Delighted to talk to you today.
VELSHI: Jim Rogers is the CEO of Duke Energy, one of the nation's biggest electricity producers and utility providers.
Discriminating against the unemployed simply because they're out of work -- it happens, and now one state is doing something about it. My "XYZ" is next.
VELSHI: It is time now for the "XYZ" of it. I've talked a lot about the plight of 99ers on this show, an estimated five million Americans who have been out of work so long that they have exhausted the maximum 99-week limit on state and federal unemployment benefits. Now, they are a growing underclass who rightfully feel forgotten because efforts in Congress to extend further benefits to these folks are going nowhere, especially with a Congress that's talking more and more about cutting spending.
One of the big challenges 99ers face is job discrimination, companies that overtly say, If you're out of work, don't even bother applying. Now, this is happening across the country legally -- until now. I want to give a shout-out to New Jersey, which has just become the first state to ban "help wanted" ads that explicitly say that the unemployed need not apply. If you break the New Jersey law, you get a $1,000 fine for a first offense and $5,000 for any subsequent offense.
Now, this doesn't do anything to solve the underlying problem, and anyone who's enough of a knucklehead to place such an ad in the first place isn't probably going to hire the unemployed. But it is an expression of our collective wisdom and disgust with that sort of prejudice.
I've heard enough nonsense over the last three years about how people would work if public assistance just weren't so generous. Public assistance isn't generous, and people would work if there were jobs. There are several times more people unemployed in the United States than there are jobs available today, and those millions of unemployed didn't cause the economic crisis that led them there.
It hurts us all to perpetuate an underclass of unemployed people who don't have purchasing power and who don't pay taxes that we so desperately need to get out of our staggering debt.
By the way, house Democrats have introduced a bill banning discrimination based on current employment status. That should become the law of the land.
That's it for me. Thanks for joining the conversation this week on YOUR MONEY. We're here every Saturday, 1:00 PM Eastern, and Sunday at 3:00 PM Eastern.
Catch Christine Romans on "YOUR BOTTOM LINE" Saturday mornings at 9:30 a.m. Eastern, both of us Monday morning on "AMERICAN MORNING" starting at 6:00 a.m. Eastern.
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Have a great weekend.