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Best Price in U.S. Might Come At Too High A Cost Half A World Away; New York City's Garment District Comments On Bangladesh Tragedy; A Cyber Theft Of Extraordinary Scope; Red-Hot Stock Market
Aired May 11, 2013 - 9:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN ANCHOR: You're out for a bargain but getting the best price may come at too high a cost half a world away. I'm Christine Romans. This is YOUR MONEY.
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ROMANS (voice-over): Another tragedy at a clothing factory in Bangladesh this week. At least seven people killed after fire broke out in an 11-story sweater factory. This just two weeks after a massive garment building collapse in that nation. Rescuers just miraculously pulled a survivor from the rubble after 17 days, but the death toll from that tragedy keeps rising, now at more than 1,000.
Images of the dead like this one have been heartbreaking. In a moment we'll talk to Christiane Amanpour. She's been covering the story out of Bangladesh extensively, even interviewing the country's prime minister.
But first, wondering what it has to do with you, what it has to do with your money? Capitalism, allow me to introduce you to your conscience.
What's your connection to how this was drilled, where this was grown or to the people who made these? Heartbreak and devastation in Bangladesh reminding American consumers of the link between the hangers in their closet and the rubble a world away; 98 percent of clothes bought in the U.S. are made abroad. In the 1960s, 90 percent of what we wore was made here.
A century after the Triangle Shirtwaist Factory fire killed 146 young immigrant girls in New York, American closets are stuffed with clothes made by young women working under similar conditions around the world.
More than three-quarters of Americans say they'd rather buy a product made in the USA. Most say they would even pay more. But wages are stagnant, costs are rising. Middle class buying power isn't what it used to be. The question, who pays the price for chasing cheap?
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ROMANS: Who pays the price and who is at fault here? The factories in the collapsed building had at some point or another made items for The Children's Place, Dress Barn, Benetton and Joe Fresh, among others. Those companies now are trying to do damage control for their brands.
In a statement, The Children's Place says, "This was a terrible tragedy and our thoughts and sympathy continue to go out to those impacted. We believe important systemic reform is needed, and we are actively evaluating a number of alternatives to support that goal."
The parent company of Joe Fresh started a relief fund for victims' families and says it's putting new standards and oversights in place.
I want to bring in Christiane Amanpour the host of "AMANPOUR" on CNN International.
Christiane, this story breaks my heart, these are young women who are making clothes for American and European consumers 100 years after the Triangle Shirtwaist Factory fire that killed so many young women getting their first job in the American economy.
We have things in our closets that are made by women under the same conditions somewhere else. Now Disney already stopped production in Bangladesh prior to this, before this. Other companies may decide to follow.
Would that be worse, though, for Bangladesh? The garment industry is 77 percent of the country's exports. It has provided socially acceptable jobs for women. They are low paying but they are jobs for women in a conservative majority Muslim country.
CHRISTIANE AMANPOUR, CNN INTERNATIONAL HOST: You know, Christine, that last factor is really, really important. It is one of the poorest countries in the world, and for the women who have this salary, they are not just supporting themselves, but their whole family.
You know, tens of millions of Bangladeshis depend on the 4 million or so who are actually working in the garment industry.
So the quick answer to should Western retailers pull out is no, obviously, because even though they make something like $38 a month -- imagine that; that is the cost of maybe one sweater from one of these sort of fast fashion retailers here in the West, that make that money per month.
The pope himself called it slave labor. Somebody of that moral authority has now focused attention on what happened there. And I've been doing a lot of interviewing around this. I did interview the prime minister of Bangladesh. I'll tell you a little bit about that.
But I also interviewed former State Department official Michael Posner, who, among other things, had his portfolio as labor reform. And he says very clearly that if Western retailers pull out, that is going to be the very, very deep detriment of those women and those families but certainly things can't continue as is.
ROMANS: Right. AMANPOUR: He suggests that all these Western retailers get together, stop competing in this regard and figure out how to have better labor reform, better pricing, better conditions for this retail.
ROMANS: Let's play a clip. You mentioned your interview with the prime minister of Bangladesh. I want to play a quick clip from that.
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SHEIKH HASINA, PRIME MINISTER, BANGLADESH: If they want to do business, this buyer, they also consider they should increase the price of the garments for that. The business can run properly and the labor can get good salary.
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ROMANS: Although there are others, I have to say, who say raise the price of the garment it goes right into the pockets of the political elite who will profit from the industry as well. I mean, it's --just seems to be such a big mess. What is the answer?
AMANPOUR: Well, exactly. There are two sides to this issue; one is that the Bangladesh government has to be pressured to be much more transparent, much more accountable and, yes, much less corrupt in terms of the owners of these factories.
You know, some 10 percent according to "Financial Times" and others, some 10 percent of elected parliament members there own garment factories, own this industry. And many more in parliament are business owners, so that's one big trouble.
Remember, this garment factory was owned by a man who was very closely tied to the ruling government party there. And he bought it by basically taking the land and officials simply turned their face away. Then he added more floors without a permit.
So when those huge cracks appeared on the walls of this factory, the government said, OK, people have to come out. But the private owner, who has now been arrested said, no, these people have to go back in. And they did and the next day the thing collapsed on them.
It's the worst garment industry disaster in the world ever, and this is a time for a turning point. But it's Bangladesh has to work in conjunction with the retailers. The Western retailers can't just say cut and run. They have to, according to the analysts, according to people who really know what's at stake here, they have to stay and improve.
ROMANS: It's not fair. It just isn't fair or right to be able to wring the profit out of a country and then wipe your hands of the problem later when American consumers become so outraged, and that's the message to companies. They have made money by chasing cheap.
It's not fair to run out when people are saying things like -- this was on Joe Fresh's Facebook page, "Shame on you, so many deaths to make products for you, shame."
There was this one as well, "Low, low, wages and no unions, this is why garments are made in Bangladesh, shameful. A wakeup call for all consumers. Time for us to show some humanity."
I mean, I feel like consumers are so -- they don't have a choice. You know, 98 percent of our stuff is made from someplace else, but companies have the -- hold the key here.
AMANPOUR: Yes, and Christine, I think it's everybody, really; retailers have the choice and consumers do, too. Look, we have now lived in a -- maybe decades, maybe more -- long era of fair trade. Consumers are very conscious right now of where their things are bought.
Yes, people want things that are less expensive, but I believe they'd be prepared to pay a little bit more if they knew what was at stake with these incredible slave labor wages that these people are enduring in places like Bangladesh.
And now Bangladesh has taken over as the lowest labor force after China, where gradual reforms has meant that Chinese laborers, they have seen their wages rise to a certain extent. So now retailers are flocking to Bangladesh.
But consumers are very conscious; corporate social responsibility is something we all know about and we have been reporting and involved in fair trade in many items around the world for the last many years, whether it's coffee, other food items, textiles and the like.
So this is something that can be expanded and can be done in places like Bangladesh, and I think the American consumer, the Western consumer, will be prepared to pay a few more cents, maybe another $1, something that may be little for them but make a material difference to the retailers and to the safety in that part of the world.
ROMANS: As long as you know that your extra 50 cents is not going into the pocket of a corrupt politician, but into the pocket of a person who is feeding a family, you know. I think this is -- in 20 years of covering globalization, Christiane, I will say this is the ugliest, ugliest downside of globalization story I've ever seen in the race to the bottom.
AMANPOUR: It is. It is, but on the other hand, look, the World Bank has said that in 1981, 56 percent of people in the developing world lived in extreme poverty. That's on less than $1 a day. Today that number has decreased; now only about 21 percent live in that terrible state.
So actually globalization has worked in a way, because it's lifted people out of poverty. But you're right; all these side issues now have to be dealt with -- the accountability, the reform, the respect for workers around the world.
ROMANS: Christiane Amanpour, so nice to chat with you today. Thank you so much for joining us. AMANPOUR: Thank you.
ROMANS: We're not done talking about this. Coming up, from the rubble of Bangladesh to the hanger in your closet, what responsibility do you have when you shop for clothes and is "Made in America" the answer?
ROMANS: Disaster half a world away in Bangladesh has many Americans questioning where and how the clothes they wear every day are made. Business correspondent Zain Asher went down to New York's garment district in search of clothing that's made in the USA. She joins me now.
ZAIN ASHER, CNN CORRESPONDENT: Hi, Christine. There's still about 7,100 people working in the garment district here in New York City, but American clothing factories are not as common as they once were. Wages in places like Bangladesh are around 30 cents an hour and production is a lot faster, with some sweat shops forcing workers to produce a new sweater every six minutes.
Outsourcing is clearly here to stay. The question is: how can we prevent another disaster from happening again?
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ASHER (voice-over): Tonia Silla has been a garment worker for about 30 years. This Donna Karan dress he's making will retail for about $1,800. His salary is about $125 a day, a far cry from his counterparts in Bangladesh, where garment workers are paid less than 2 percent of that amount.
TONIA SILLA, GARMENT WORKER: That's a hard labor over there. I don't know how they work in that kind of a condition.
ASHER (voice-over): Silla says the workers he supervises here produce three dresses a day. But production rates in places like this are much higher.
In a world where wages in China are roughly $1 an hour, are considered expensive, manufacturers are pressured to turn out product at low costs, sometimes jeopardizing safety.
The union leader Edgar Romney says cheap labor doesn't necessarily mean lower prices for American consumers.
EDGAR ROMNEY, UNION LEADER: I think something missing about American made products is that they're more expensive.
ASHER (voice-over): But there's another problem. CHARLES KERNAGHAN, DIRECTOR, INSTITUTE FOR GLOBAL LABOUR AND HUMAN RIGHTS: The companies will not give the American people the names and addresses of the factories they use. Well, why not? What is the big secret?
ROMNEY: Brands and retailers need to take responsibility for the actions that they are involved in.
ASHER (voice-over): Some companies are trying to do just that. For example, Gap Inc., which outsources to 40 countries, launched a $22 million program last October to improve fire safety at its factories in Bangladesh.
And The Children's Place, which manufactured garments at the Rana Plaza building in Bangladesh which collapsed, said they will likely implement changes such as narrowing their supplier base and conducting more frequent and extensive site visits.
Other companies have promised to be more aggressive in monitoring working conditions where their products are made. The American Apparel and Footwear Association says less than 3 percent of our clothes are made in the U.S., so what can consumers do?
KERNAGHAN: A boycott isn't of any help. I mean, it will only punish the workers who are already next to starvation. They need these jobs. If we paid $1 more for a good T-shirt, that you could use for years, would that kill us? Would that destroy our economy?
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ASHER: And clearly a complete boycott of clothing made in places like China or Bangladesh is unrealistic, but something we can do is demand to know more about where our clothes come from and the conditions in which they're made. Nike, The Gap and even Apple have all come under fire for how their suppliers treat workers and they've all implemented changes.
You know, Christine, I think transparency is really key.
ROMANS: Yes, absolutely, and you know what? So many people say what can I do? Can I not spend my money? It's not up to you. It's up to the companies. The companies, it's corporate responsibility. It's conscience, capitalism, it's up to the companies.
All right, Zain, thank you so much.
Up next, a brazen bank heist busted in New York, how thieves stole $45 million from thousands of ATMs within hours, next.
ROMANS: New details now on a cyber theft of extraordinary scope. Tens of millions of dollars looted from banks around the world. Mary Snow joins us now with that story. Mary, tell us how this all unfolded.
MARY SNOW, CNN CORRESPONDENT: Christine, this was a massive and complex operation. A federal prosecutor says the plot took months to plan, says law enforcement in more than a dozen countries worked together to unravel the electronic trail that led to arrests here in New York.
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SNOW (voice-over): A bank heist using keystrokes instead of guns, thieves stealing $45 million from banks and financial institutions. U.S. Attorney Loretta Lynch calls it the largest known theft of its kind.
LORETTA LYNCH, U.S. ATTORNEY: Moving literally at the speed of the Internet, the organization made its way from the computer systems of international corporations to the streets of New York, as well as major cities around the world.
SNOW (voice-over): Lynch announced charges against eight men in New York, accused of being part of a ring that involved potentially hundreds of people in two attacks. They used prepaid debit cards linked to accounts that had been hacked by cyber thieves, thousands of miles away. The thieves had raised withdrawal limits.
LYNCH: So a card that might have had $200 on it literally has $20,000 on it or $2 million on it.
SNOW (voice-over): The prosecutor describes how it worked. Hackers first targeted a credit card processor in the United Arab Emirates in December, then a second and larger attack in February in Oman. PIN numbers were stolen and then sent to teams, including one in New York.
SNOW: Those teams would then head to ATMs with plastic cards, even hotel key cards with the stolen information.
Authorities say here in New York, eight men were able to withdraw $2.4 million within a 10-hour period.
SNOW (voice-over): Some 3,000 ATM withdrawals were said to be made that day as part of the heist, with these gift cards. Prosecutors recovered cash and Rolex watches. Cashers are given about 20 percent of the money, and the rest is sent to the ringleaders.
But what's unclear in this case is who those leaders are, specifically the hackers.
Shawn Henry, a former executive assistant director of the FBI, says they typically come from one area.
SHAWN HENRY, PRESIDENT, CROWDSTRIKE SERVICES: My time in the FBI, many of these cases emanated out of Eastern Europe, out of Russia, Ukraine, Romania, throughout Eastern Europe, although now they're starting to spread into other areas like Asia and Latin America. But primarily, historically they've been in Eastern Europe.
SNOW (voice-over): And catching the hackers is a constant cat- and-mouse game law enforcement plays.
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SNOW: Now seven suspects in New York pled not guilty to the charges against them. The eighth suspect -- considered the ringleader -- was found murdered in the Dominican Republic in April. The prosecutor's office would not confirm reports that he was found with $100,000 in cash. Christine?
ROMANS: Mary Snow, what a story. Thanks, Mary.
Up next, new highs of the Dow this week, stocks still on a tear. But it can't last forever. How to make the most of this bull market right now.
ROMANS: It's a red-hot stock market. And for the first time ever, the Dow closed above 15,000 this week. If you're already in the market, is it time to cash out? And if you're not, is it too late to get in?
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ROMANS (voice-over): Record highs for the stock market. But investors are wary.
MOHAMED EL-ERIAN, CEO, PIMCO: Investors are, yes, excited they're making money, but they're really anxious. They understand that this has an element of artificiality.
ROMANS (voice-over): If that's what the pros are saying, imagine how anxious individual retail investors must feel about this market rally.
And what about the almost half of all Americans who are just too scared to invest in stocks?
Americans have few other choices out there to help build wealth and save for retirement. In today's low-interest rate environment, the returns on bonds and interest-bearing accounts are negligible.
MATT MCCALL, PRESIDENT, PENN FINANCIAL GROUP: A lot of individual investors, Christine, are still on the sidelines; they've been waiting to get in.
What are you waiting for? We're hitting all-time highs in the market.
ROMANS: But they're afraid that they've already seen a bull market that's more than four years old. They don't want to get in and be the sucker at the end.
MCCALL: They're afraid at the bottom; they're afraid at the top. They're never going to get in. You have to get in now if you want to own stocks.
ROMANS (voice-over): But get in how? One answer, look for value in companies that may be lagging behind in the recent bull market run.
LIZ MILLER, PRESIDENT, SUMMIT PLACE FINANCIAL ADVISERS: The way we've seen some of the industrial names lag, really, to me, is a buying opportunity because I think we will have economic growth. And these more sensitive companies have plenty of opportunity to get stronger and the stocks to move higher.
ROMANS (voice-over): Price-to-earnings ratios: that's a company's stock price compared with its projected profits. They're a standard measure investors use to judge stock prices. At an average of 19 times earnings, today's stocks look cheaper than past rallies back when P/E ratios reached into the 20s and 30s during the tech bubble of the 1990s. That suggests today's rally has room to grow.
But stocks have already gained 15 percent this year alone, and it's only May. Shouldn't you cash in now while you're ahead?
MILLER: You know, it's perfectly good to be happy and take a little profits off the table. And then keep the positions, keep the commitments.
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ROMANS: Thanks for joining us for this conversation today. Join me for a brand-new YOUR MONEY today at 2:00 pm.
Until then, you can find me on Facebook, ChristineRomansCNN. I'm also on Twitter. My handle is @christineromans. "CNN SATURDAY MORNING" continues now.