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Stock Market Performance Analyzed; Corporate Advertising Based on News Stories Critiqued; No Substitute For Good Taste

Aired May 12, 2013 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


(BEGIN VIDEOTAPE)

CHRISTINE ROMANS, CNN ANCHOR: We live in one America with two economies. I'm Christine Romans. This is YOUR MONEY. The stock market is hitting highs, corporate profits are soaring, but not everyone is feeling it.

As the Dow moves higher, America's middle class is stuck. You should be rolling in stock market riches. Instead, many of you are missing out. Only 52 percent of you are invested in stocks. That's down from 65 percent in 2007. Meanwhile, corporate profits are soaring, up 94 percent as a share of the economy in the last decade.

But wages are stagnant and America's companies are so hungry for talent they're importing it from abroad. Meanwhile, you can't pay for the college degree you need just to compete.

I want to bring in Terry Savage, Stephen Moore and Nomi Prins.

Terry is a nationally syndicated columnist for the "Chicago Sun- Times;" she covers personal finance.

Stephen is a senior economic writer and conservative commentator at "The Wall Street Journal."

And Nomi is a senior fellow at Demos, a left-leaning public policy think tank. She is also the author of "It Takes a Pillage, an Epic Tale of Power, Deceit, and Untold Trillions."

Terry, let me start with you this morning. The stock market is disconnected from the economy and the middle class. The S&P 500 is up 120 percent since those lows of 2009. And a new forecast guidance this week says it is not done yet.

Laszlo Birinyi, who has been right in the past few bull markets and has kind of legendary status on Wall Street, says the S&P could go to 1,900 by the end of the year. That would be a gain of around 17 percent. But half of Americans aren't invested. They're missing out.

What needs to change for more Americans to get in?

TERRY SAVAGE, FINANCIAL COLUMNIST, "CHICAGO SUN-TIMES": Well, you know, let's not blame the stock market or complain about it. It certainly feels a lot better than in March of 2009, when the Dow was 6,700. The real thing that's going on is the Fed has been extraordinarily successful at creating a lot of money. That helps the government refinance its deficit at very low interest rates, and since interest on the national debt, the third largest category of spending after defense and social spending, the government thinks it's great to have low interest rates.

But the Fed can't do everything and we're seeing proof of that. There is a lot of money in the economy, and yet businesses are so worried about what will happen with taxes and insurance and consumers are so worried about jobs they're not going out and even buying houses with low mortgage rates, so the money has to go somewhere.

And it has been going right into the stock market. And that's why you see the market soaring. When the economy and jobs struggling to grow but certainly not keeping up with what's going on and the market, it's a function of a lot of money looking for a home and the stock market, too.

ROMANS: A lot of money.

OK, Nomi Prins, a rise in the stock market used to mean a rise in the economy. The Dow's at 15,000 but the economy is struggling to grow at barely 2.5 percent.

Why the disconnect?

NOMI PRINS, AUTHOR, "IT TAKES A PILLAGE": Well, first of all the money that goes into the stock market that Terry was talking about is cheap money that is funneled in through institutions, through banks, through some of the corporations, through hedge funds, through mutual funds that can take money that's almost at 0 percent interest rates and funnel it into a place where it can push the market up. That's what's been happening.

But actual individuals don't have the luxury of additional income. In fact, incomes have declined relative to this rise in the stock market, as we know. The percentage of U.S. GDP that personal wages make up are at all-time lows.

So there is no available money for individuals to make ends meet in their homes and their lives, let alone push into a stock market that is being bolstered by policies and cheap money.

ROMANS: Talking about cheap money, Stephen Moore, the Fed pumped $85 billion into the economy every single month, $85 billion. That's driving the recovery in the stock market, the recovery in the housing market. We haven't seen the same kind of recovery in jobs.

Won't this slow jobs recovery ultimately be bad news for housing and stocks?

STEVE MOORE, "THE WALL STREET JOURNAL": Well, look, first of all, let's make the case that when you have got the Dow at 15,000, this is unqualified great news for the economy. Now, the argument is made, well, only half of Americans really have a lot of money in the stock market so only about half of Americans are benefitting.

And what I would say about that, Christine, which is really the crux of the issue, is what we need to do as we move forward in this 21st century is get -- is become much more of an investor-owner society so that every American can benefit from the wealth gains that are engendered by a rising stock market.

And what that means is we should have much more expanded 401(k) plans, we should have -- make it a lot easier for people to invest in the market as a way to get rich.

I have talked for many years on this show and others, why not finally allow young and lower income Americans to take some of their Social Security money and put it into personal account where they can actually invest in the market? Those kinds of things would actually reduce the income inequality in the country that we're all worried about.

ROMANS: And it's something that the Bush administration touted for a long time and then the market fell apart, and people said isn't it a really good thing that you don't have a lot of people with money in the stock market.

(CROSSTALK)

MOORE: But, you know, you can't have it both ways. You can't say on the one hand that if the market goes up, you know, that --

ROMANS: No, I know.

MOORE: -- and so, look, over the long run, this is an important point, Christine. Over the long run, especially for young people, where do you want to put your money? In the stock market because the long-term return is 8 percent.

ROMANS: Nomi, if you want a good job in this economy, you need a college degree. Take a look at this. The U.S. workforce has shifted over the last 10 years. The share of workers with a college degree now exceeds the share who have a high school degree or less. But student loan debt is on the rise, too. Two-thirds of college seniors graduate with student loan debt. The average amount $26,600.

Nomi, young people entering the workforce are getting a double whammy, stagnant wages and crushing debt. I am very worried that instead of people managing money going forward and planning for retirement, they are going to be managing debt and not even really getting that first step into the workplace.

How serious is this?

PRINS: It's very serious. The student loan situation, as we know, is diabolical. As you just mentioned in terms of statistics, people can't even find jobs to pay off their debt right now, and it is only going to increase and get worse in the future. You go back to a situation where even people who can save have accounts in banks at 0 percent interest, there is nothing there to accumulate. Everyone else is talking about maybe we should get into the stock market and have that be a way to increase people's disposable income.

But if you have no income to begin with and all the of your income is going into debt when you do receive it, there is nothing left over to save, let alone to risk what you should not do in a market environment. You risk money that you have. You don't risk money that you don't have.

And when you don't have a lot coming in and you're saddled with debt, it is a very precarious situation, not just for students but for the overall stability of our American economy.

ROMANS: You know, Nomi, it's companies that are going to drive the jobs recovery, right? Because they're the ones who have to create the jobs. Yet they're barely hiring; they're sitting on huge amounts of cash.

So if you need the income, you need the job, how do we get companies? What makes companies start adding more workers?

PRINS: Well, right now, because they're able to get money cheaply and invest and have to worry about short-term quarterly earnings reports and what Wall Street feels about them and how they can effectively increase their share holdership in their own companies and push their stock up, that's where their money is going.

There's cash on the sidelines and there's cash into their stock. There's no need for them to put cash into other jobs because they're getting those returns in a sort of artificial push that's being aided by low interest rates and cheap money.

And they don't have an incentive to therefore increase their growth strategies and increase the amount of jobs that people could have. Right now, there are three people looking for every one job. That is historically low. It's a bad scenario.

ROMANS: I know, the worst of the recession was in '07 looking for available jobs. So the good news is it's not as bad as it used to be, but the bad news is you still have to beat out two other people to get that job on average.

Stephen, consumer spending is what drives this economy. New research from Mint.com, you know, money management software, shows that spending is on the rise. American households now spend about 9 percent more than they did in 2009, Stephen. Two major segments of America, the young and the old, are getting pinched. Yet consumers are spending more.

Can that last?

MOORE: Well, you know, I am going to correct you on something, Christine. ROMANS: You do it.

MOORE: I have always believed --

ROMANS: And then I will correct you back.

(LAUGHTER)

MOORE: OK, you can do that. So I have always believed it is kind of a fairy tale that what drives the economy in the long-term is consumer spending. No, I don't believe that to be -- it is true in the short-term, Christine.

When consumers go out to the shopping center and spend money, that increases business. But in the long term, what increases the economy is when businesses invest, and this is exactly what you guys were just talking about.

(CROSSTALK)

ROMANS: I'm going to agree with you on that, because I go a little crazy when people keep talking about, you know, we got to get consumer spending, we got to get (inaudible) because (inaudible) economy and I say that's what got us in this mess.

MOORE: OK. So I'm glad I clarified that point.

So here is the problem with the U.S. economy. First of all, I have no disagreement that this is a terrible economy for low income people. It is amazing; the very people who are most likely to vote for Barack Obama have been the people who have been most victimized by his policies.

But I will say this. If we want to see more growth in the economy and, by the way, higher wage jobs in the future, that is directly related to business spending. And the one thing we're not really seeing enough of right now in the U.S. economy is businesses investing in plant and equipment and computers, the things that lead to future growth. And I do think that's partly responsible.

Look, if you want more investment, you don't raise taxes on investment, which is what we did in January. And the other thing is -- I said this almost every week on this show; I have to say it again -- I do think ObamaCare is having a very negative effect on the willingness of businesses to expand right now.

ROMANS: I'm going to ask Terry to weigh in on that, but with a final thought on that, too.

I mean, do you think that -- you have talked about new regulations. You talked about concerns about what tax rates are going to be.

Do you think that the president's health care plan is holding back businesses and holding back small businesses, Terry? SAVAGE: Yes, I know it is for a fact. I sat at a luncheon table a few days ago in Washington, D.C., and I heard people that I didn't know what business they were in, talking about whether they could make some of their people part-time or whether they would hire additional people or whether they would go over the limit, and the rising cost of health care to small businesses.

Look, what's going on in Washington is hurting the wrong people. It is hurting people, seniors who've saved; the Fed pushing down rates, now retirees can't live on their income.

It's insane that the government gets to borrow at a quarter of a percent, thanks to the Fed, but that we make students pay 6.8 percent interest to repay their loans.

And it's, as Stephen said, it is insane that we penalize growth and capital investment and hiring of people. What we really want to do is encourage more hiring, more investment. And we have got a lot of distortions in Washington. Both sides of the aisle need to understand this to move us forward.

ROMANS: All right. Terry Savage, Stephen Moore and Nomi Prins, come back again, we have so many things to talk about, so many things to talk about. Nice to see all of you this weekend.

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.

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(END VIDEOTAPE)

(COMMERCIAL BREAK)

ROMANS: It is 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?

(BEGIN VIDEOTAPE)

ROMANS: 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: 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 have been waiting to get in.

What are you waiting for? We're hitting all-time highs.

(CROSSTALK)

ROMANS: But they're afraid that they have 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 bottom.

MCCALL: They 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: 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 ADVISORS: The way we have 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: 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 is only May.

Shouldn't you cash in now while you're ahead?

MILLER: It is perfectly good to be happy and take a little profits off the table, and then keep the positions, keep the commitment.

(END VIDEOTAPE)

ROMANS: Up next, austerity backlash. Is Europe headed for a depression? We'll take a look.

And later, the bank heist that used keystrokes instead of guns. We're going to tell you how a $45 million ring was busted.

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(COMMERCIAL BREAK)

ROMANS: Economic crisis in Europe, the worst we have seen since the 1930s, when America faced its own depression. And what European leaders do in the coming months could determine whether the continent recovers or falls apart.

The private sector economy in Europe has been shrinking for 15 consecutive months, officially putting the continent in recession territory. Unemployment rates are hitting record highs in the Eurozone, breaking through 12 percent in March -- 12 percent unemployment.

It's even worse of some of the member countries, 27 percent in Greece and Spain,17.7 percent in Portugal. To put that in perspective, U.S. unemployment peaked at 10 percent during the height of its financial crisis.

And youth unemployment in Europe is drastically higher. Look at this, about 60 percent in youth unemployment in Greece, in Spain as well, 42 percent in Portugal. Leaders there have real cause for concern as these young people grow older without the job skills they need to support themselves and grow their economy.

It's going to put further drag on Europe's economy and already oversized deficits. Those deficits and the austerity measures enacted to deal with Europe's debt, they're a source of major controversy right now among leaders there. As the debate rages on, leaders in the U.S. are watching closely. Former President Bill Clinton said there's a right way and a wrong way to do austerity.

(BEGIN VIDEO CLIP)

BILL CLINTON, FORMER PRESIDENT OF THE UNITED STATES: If you don't kick the long-term deficit reduction plan in at the right time and we don't pass a plan in advance, then there's always the chance that the economy will start recovering and interest rates will go through the roof and it will make this sequester look like a Sunday afternoon walk in the park.

(END VIDEO CLIP)

ROMANS: All right. So here's the question, will too much government belt-tightening threaten the fragile U.S. recovery? And what can the U.S. learn from Europe and its crisis?

Peter Morici is an economist and professor at the University of Maryland School of Business.

Richard Quest is the host of "QUEST MEANS BUSINESS" on CNN international.

Gentlemen, thank you for joining me today.

Peter, let me start with you. You say it's too late. Austerity measures in Europe have failed. The whole of Europe is headed for a depression.

Why?

PETER MORICI, PROFESSOR, UNIVERSITY OF MARYLAND SCHOOL OF BUSINESS: Well, simply, there's no capacity in Southern Europe for a recovery, and the definition of a depression is a permanent recession. We have that in Greece, Spain, Portugal and parts of Italy.

That will spread north because the north is very dependent on the south to exports its products and we're starting to see unemployment grow in France and pressures on German companies.

ROMANS: So, tell me, Peter, is what is happening in Europe instructive for the U.S. as it deals with belt tightening?

MORICI: Absolutely. The lesson from Europe is you have to have structural reforms before it's too late. We need to get our Social Security under control, our rising health care costs, much higher than in Europe, under control.

But more importantly, what caused the southern countries to borrow so much was huge trade deficits. You have to pay for those by borrowing.

We need to export more, we need to become more competitive in the global economy so we can pay for the things that we buy. It we don't do that, all the money we're borrowing from the rest of the world and to finance our government will in the end put us in this kind of crisis in the next decade.

ROMANS: Let me bring in Richard Quest here; you're joining us today, Richard, from London, you're looking at the U.S. from where you are.

What advice would you offer our leaders?

RICHARD QUEST, CNN INTERNATIONAL HOST: The austerity debate which is raging at the moment and which Peter articulates so well really comes down to how much and how fast and how long.

And of course, you have got the northern countries led by Angela Merkel of Germany, who -- and even today, they are still suggesting that fiscal consolidation is the way forward.

But the problem here is they're trying to do two things at the same time. They are trying to repair the existing house whilst at the same time build a new one. And they're doing rather well on the second part.

They've got all sorts of new plans, fiscal compacts, six-pack plans, a banking union, all sorts of things that will pay dividends in the future, but they're still saddled with a euro that is dysfunctional, an austerity which is to extreme, and an inability to get growth moving on the southern part of the continent.

Now that is the lesson that comes from Europe. Everybody can't head for the exit at the same time. And in the United States, of course, there will come that moment when the deficit and the structural imbalances have to be dealt with.

But that time, as Peter would probably -- he might agree, he might agree, that time probably isn't just right now.

ROMANS: So I'll ask you, do you agree, Peter?

MORICI: Well, we certainly are rocking along right now, we're growing at about 2.5 percent, although there's a lot of danger signs out there.

We have very high underemployment among recent high school and college graduates. No, we're not facing the kind of crisis right now, our nose is not to the window, but we have the warning signs, and we're doing the very same things the Italians and the Spaniards did 10 years ago.

They didn't react appropriately, and now they're paying the piper. Sooner or later, that will catch up with us, even though we print the world's money, at some point, the world will say, no, we don't take your money anymore. Someone else will do the printing for us.

ROMANS: Richard, last word.

QUEST: I think -- yes, in a strictly academic sense, Peter is right. But he conveniently overlooks certainly flexibility issues of the U.S. economy and the mobility of labor, a single market that works much better, a single digital market which the Europeans don't have.

So perhaps in a theoretical sense, but we're a long way from the apocalypse in the U.S. that you have certainly seen in Europe. Europe is not out of this by any means.

ROMANS: Richard Quest, Peter Morici, so nice to see both of you this weekend. We'll talk again soon.

Up next, a fire at a clothing factory in Bangladesh this week. This after that deadly factory collapse just two weeks ago.

But do tragic events like this change the way we shop?

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(COMMERCIAL BREAK)

ROMANS: 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.

(BEGIN VIDEO CLIP)

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, 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. Wondering what this 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?

(END VIDEO CLIP)

ROMANS: Who pays the price and who is at fault? 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 trying to do damage control for their brands.

In a statement, The Children's Place says, quote, "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 oversight in place.

Gayle Tzemach Lemmon is the deputy director of the Council on Foreign Relations Women and Foreign Policy Program, and Eduardo Porter is a columnist for "The New York Times."

Gayle, let me start with you. What corporate responsibility do these companies have?

How far does it reach, to their suppliers, to their suppliers' suppliers? I mean, all along the way from the hanger to the actual manufacturer, companies and consumers tend to disconnect from where these things come from.

GAYLE TZEMACH LEMMON, DEPUTY DIRECTOR, COUNCIL ON FOREIGN RELATIONS WOMEN AND FOREIGN POLICY PROGRAM: Yes, I mean, I think you have a situation where fast fashion could lead to quick deaths. That's a question for all of us to wrestle with. There has been this race to the bargain basement in terms of where things are made.

And as you know, Christine, it is a high-volume, low-margin business with almost no margin for error for factory owners. One day late, a 5 percent discount has to be given to the company. A week later, the company has a right to cancel the order.

So I think all of us have to ask when we look at our closets, where did this come from, who is making it, what are they earning and what kind of pressures do they face?

ROMANS: (Inaudible) consumer outrage. I mean, the consumers say that, look, they don't want their dollar to be responsible for someone's death half a world away.

I mean, check out a couple posts on Joe Fresh's Facebook page. "Shame on you, so many deaths to make products for you. Shame."

Then there's this one, "Low, low wages and no unions. This is why garments are made in Bangladesh. Shameful. A wakeup call for consumers. Time for us to all show some humanity."

Eduardo, people can say they're upset, but they chase cheap. The middle class continues to chase cheap. You know, the whole point of fast fashion is that it's easy and it's cheap. If clothing prices rise, will the outrage fade?

EDUARDO PORTER, "THE NEW YORK TIMES": Well, yes, I think to some extent it will. People do care about, you know, working conditions in developing countries.

And I think that people really do honestly think that they would be willing to pay a higher price, and while this is very salient in their mind, they might do it for a little while.

We have other example of this, like fair trade coffee which is a growing, even though a very small, but a growing share of the coffee market. So people will pay for some sense of justice, for the sense of living in a moral world and being good people in it.

But there are many other considerations, and people's budgets are perhaps the most important one. And so I think that these other kind of like more ethereal considerations will fade over time.

ROMANS: Eduardo, but do companies have more responsibility to make sure that they're not doing business with shady operators, with people who are just throwing thousands of workers into a building with cracks and no exits?

I mean, look, this happened in the United States more than 100 years ago, and it changed the way we manufacture here, and now in our closets are the very things, the very things being made under the same conditions that we would never allow here.

PORTER: I would agree with you, that there is some possibility for this. However, the track record of the movement to press multinational corporations to ensure that their suppliers around the world, you know, actually pay living wages and improve their working conditions, is not very good.

And also, one other thing one must consider is that, you know, if we demand that wages and working conditions in a place like Bangladesh are the same as they are in the United States, that would probably lead to enormous unemployment in Bangladesh. So we also have to understand, kind of like the other consequences of what this pressure can do.

ROMANS: Sure, I mean, nobody wants to deny somebody -- and look, I mean, there are those who say this is not a time for big companies, Gayle, to be pulling out of some of these places because squeeze the good profits and now there's trouble, they can't just run away from a problem they helped create.

You know, Gayle, Disney already halted production in Bangladesh even before this because of a fire. They were concerned about a fire that happened last year. Other companies could follow.

But it would be worse for Bangladesh? The garment industry is about 77 percent of the country's exports. It has provided socially acceptable work for women -- low-paying, of course, obviously dangerous. It's a conservative majority Muslim country. You don't want the companies pulling out, but you do want them requiring higher standards.

LEMMON: That's right, and I think it is really important to remember that almost 85 percent of the 3 million or 4 million workers in Bangladesh working in this segment are women.

And women who have limited mobility otherwise, limited education otherwise, and often limited work opportunities otherwise. So it is important to remember that this has made a difference in women's lives. And therefore in families' lives in empowering women and in helping women to have money to change the dynamic within their households.

So I think the answer isn't to leave. The answer is to do better while you're there. And that really is up to all of us because every single one of us as consumers, we vote with our wallets. And the one thing that corporates respond to is pressure from consumers. When consumers want to see something, companies respond. That's what fast fashion is all about.

So I think it really is up to all of us to say that this matters. And you know, some studies have shown that even for less than a dollar additional per garment, you could make a huge difference.

ROMANS: Yes. I worry that these companies know that consumers always chase cheap in the end. And have a short memory, they really do.

Gayle, thank you so much, Eduardo Porter, thanks so much, you guys. We'll keep talking about this. Let's keep talking about it, keep talking about what the companies are doing to raise those standards.

We're not alone talking about this, from the rubble in Bangladesh to the hanger in your closet, what responsibility do you have when you shop for clothes, and is "Made in America" the answer?

(COMMERCIAL BREAK)

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.

Hi, Zain.

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?

(BEGIN VIDEO CLIP)

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, I mean, 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 that 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, Charles Ramsey became an Internet sensation this week after he played a key role in the rescue of three missing Cleveland women. Why what he was eating for dinner mattered, next.

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ROMANS: You have been watching the heart-wrenching story in Cleveland unfold all week, three missing women found alive after a decade of captivity. When the nation is hooked on a story, corporate America is never far behind.

This is Charles Ramsey. He is a neighbor who helped rescue the women, and in an interview after the incident, even in the 9-1-1 call to police, he was very specific about what he was eating before running outside to help.

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CHARLES RAMSEY, HELPED FREE KIDNAPPED WOMEN: Here I come with my half-eaten Big Mac, and I look, and I say, what's up. And she is like, I have been trapped in here. He won't let me out, me and my baby. And I said we ain't going to talk no more. Come on.

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ROMANS: A Big Mac. He also mentioned McDonald's several times in interviews with other news outlets. And after videos of Ramsey went viral on the Web, the company sent out this tweet, saying it would be in touch with Charles Ramsey. Some call it news jacking. Some say it is PR genius, and others think it is harmful to a brand's credibility.

It's when companies jump into a breaking news story either for press coverage to improve its public image or boost sales or just to acknowledge that it is their name and product that has been mentioned.

We spoke with McDonald's. It's waiting to contact Mr. Ramsey out of respect for the victims and their families. McDonald's received thousands of tweets following Mr. Ramsey's comments, and the company felt it had to respond.

But it strongly insists it is not taking advantage of the situation. Still, some PR experts have their doubts.

Rachel Sklar is a media writer and founder of Change the Ratio.

Rachel, in the days following the Cleveland girls' escape and Charles Ramsey's rise to Internet fame, his criminal record then came to light, specifically jail time he served for domestic violence. He pleaded guilty. He spent eight years in prison. He was released. He has since cleaned up his act.

But regardless of his past, he helped save three women from 10 years of hell.

What are the risks of companies attaching themselves to individuals that they haven't vetted?

RACHEL SKLAR, FOUNDER, CHANGE THE RATIO: Well, McDonald's isn't actually attaching itself to Charles Ramsey as a spokesperson for McDonald's. It is responding to the mention of McDonald's over and over again in the story. It was part of the story -- obviously not a big pivotal role, but mentioned enough that I think it would have been odd for McDonald's not to acknowledge it.

I think it would be appropriate for McDonald's to do something charitable, do something nice for Charles Ramsey, nice for the neighborhood, and probably appropriate for McDonald's to take the lead and demonstrate corporate responsibility by donating a big chunk of money by ending domestic violence.

ROMANS: Let's look at a couple other examples from February, companies wading into the news cycle.

During the blackout at the Super Bowl, Oreo tweeted this ad, "You can still dunk in the dark."

About a week later Florida Senator Marco Rubio said that now infamous sip of water, remember, that was in the middle of his televised response to President Obama's State of the Union.

This is what Poland Springs did, it posted this pic on its Facebook page with the caption, "Reflecting on our cameo, what a night."

Rachel, are these in some way more effective than traditional advertising because they don't seem so canned? I find it so interesting, big companies trying to figure out how to use social media because usually social media is about dissing companies, not about letting them get their own message or pitch into the mainstream conversation.

SKLAR: Social media is all about social platforms, and very smart, canny advertisers who are able to be nimble and react in real- time can use those platforms to get their message across.

Oreo is a fantastic example, just so nimble, so quick and really just won the Super Bowl with that tweet, with the dunk in the dark photo.

Poland Springs, they would have been ridiculously dumb not to capitalize on that infamous sip. They could have been more clever about their tagline, but sometimes you just have to do what you can do in the moment.

ROMANS: Sometimes you do something and it is not what you should do. I mean, let's talk about a Kenneth Cole tweet during the political uprising in Egypt. That tweet read "Millions in up roar in Cairo. Rumor is they heard our new spring collection is now available online."

Wow. They really got slammed for that. And they later issued an apology after an uproar from Twitter users.

What can companies learn from mistakes like this?

SKLAR: I think that just learn not to be tacky, I think.

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SKLAR: This is a judgment thing. Have smart, experienced people with proven judgment who are manning the hair trigger of social media. The worst is if you have an inexperienced intern or a junior person who thinks that it is their job to be funny or snarky and then tweet something out that crosses the line of respectability and good judgment.

I think to always react with on the side of decency and respect and compassion for victims or oppressed people. This sounds really basic, but it is amazing how Kenneth Cole just totally missed it, a luxury goods dealer, you know, surfing on the back of the Arab Spring uprising. It just didn't look good. It was terrible judgment.

ROMANS: They are still wading in, all these companies still wading into the social media space trying to figure out how to use it, because, remember, it is always been they would pay for what they want to say about their company, and this social media is the conversation. It's a Main Street conversation. It's word of mouth. It's not paid advertising.

So they're having a hard time, a slow tentative hard time figuring it out.

Rachel Sklar, really nice to see you today. Thank you.

SKLAR: Likewise, thank you.

Up next, a brazen bank heist busted in New York, how thieves stole $45 million from thousands of ATMs within hours, next.

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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.

Thanks for joining us for this conversation today. Find me on Facebook @ChristineRomansCNN. And on Twitter my handle is @christineromans. Have a good weekend.

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