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YOUR MONEY

Candidates and Their Economic Plans; Economic Stimulus Bill Signed; The President's Effect on the Economy; Updating the Mortgage Crisis

Aired February 17, 2008 - 15:00   ET

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


(NEWSBREAK)
ALI VELSHI, CNN HOST, YOUR MONEY: Welcome to YOUR MONEY where we look at how the news of the week affects your wallet. I'm Ali Velshi.

STEPHANIE ELAM, CNN HOST, YOUR MONEY: I'm Stephanie Elam sitting in for Christine Romans. Coming up on today's program, see if the presidential candidates are as far apart on economic policy as they sound.

VELSHI: Plus with a new foreclosure rescue plan out this week, we'll check in on the mortgage crises.

ELAM: And later the presidential candidates talk up their economic policy, but how much does the president really mean to your money?

VELSHI: This has been quite a week. The economy took center stage this week in Washington. On Wednesday, President Bush signed on to the $170 billion economic stimulus package that was passed by Congress last week. Starting in May, eligible Americans will receive rebate checks of up to $600 for individuals and $1200 for married couples. Families with children 17 or younger will receive an additional $300 for each child.

ELAM: So who is eligible for a rebate check? Most people who pay taxes and earn at least $3,000. That includes income from Social Security and Veterans disability benefits. Singles making more than $75,000 a year and couples with income topping $150,000 will see smaller checks. And the amount continues to shrink as income rises up to the top limit for any rebate. Now --

VELSHI: You can see those on the screen are $87,000 for individuals, $174,000 for couples.

ELAM: And all of this as the race for the White House speeds up. The economy still a top concern for the voters and the Republican Party seems to have a defector nominee. Of course that would be John McCain, but the Democrats are still duking it out state by state.

VELSHI: Senator Barack Obama for the first time in this race pulled ahead of Senator Hillary Clinton. Senator Clinton has gone on the offensive pushing her economic plan.

(BEGIN VIDEO CLIP) SENATOR HILLARY CLINTON, (D) PRESIDENTIAL CANDIDATE: I am the only candidate left in this race with a comprehensive plan to address the foreclosure crisis. I have been calling on the banks to observe a 90 day moratorium and freeze all foreclosures and interest rate and let's help families stay in their homes instead of being forced out.

(END VIDEO CLIP)

VELSHI: Joining us now to break down the race and the candidate's plans for YOUR MONEY, Cynthia Tucker the editorial page editor of the "Atlanta Journal Constitution." Cynthia thank you for joining us.

CYNTHIA TUCKER "ATLANTA JOURNAL CONSTITUTION:" Your welcome.

VELSHI: While the candidates would love it make more out of this than there actually is, when we research their economic plans, particularly the Democrats, Senator Obama and Senator Clinton, they're not all that different.

TUCKER: No, they aren't. The striking differences are two the Republican nominee, apparent nominee, John McCain, and the Democrats. Senator Obama and Senator Clinton spend a lot of time trying to persuaded voters that there is a great deal of difference between those policies when, in fact, there's not.

The Democrats as is pretty traditional for Democratic candidates promise a lot more in the way of government intervention. Senator Clinton has proposed a freeze on foreclosures and a program to help bail out homeowners in trouble. Senator Obama has not proposed a freeze, but he does want to help homeowners in trouble. He also has a plan that promises jobs and tax rebates as does Senator Clinton have a tax rebate plan to lower middle class and working class workers.

Senator McCain on the other hand is generally relying on tax cuts. He promises to make President Bush's tax cuts permanent. And so the stark differences between the Republican side and the Democrat side.

ELAM: It's interesting, though, because the last few weeks, obviously Senator Obama has picked up some owe momentum' and he's been talking more and more about the economy. And that seems to have helped. How do you think that's going it play out as this race continues here to get tighter and tighter going into the next few states?

TUCKER: There is absolutely no doubt that the number one issue on voters' minds at the moment is the economy for very good reason. Paulson and Bernanke were before Congress just earlier this week talking about the economy and having to admit that it's in worst shape then they were willing to say just a few weeks ago.

They're not yet willing to use the r word, recession, but certainly there are many signs that the economy could already be in recession, if not it's certainly teetering right on the brink. So among Democratic voters and Republican voters, we see from exit polls that the economy is the number one issue.

ELAM: Thanks so much Cynthia for helping us get some insight on something we'll be watching very closely over the next week. That was Cynthia Tucker. She is the editorial page editor with the "Atlanta Journal Constitution."

VELSHI: Coming up next on YOUR MONEY, 30 days to save your home. We'll tell about a new plan aimed at helping people on the brink of foreclosure and she if it goes far enough. Stay with us. You're watching YOUR MONEY.

(COMMERCIAL BREAK)

ELAM: The department of U.S. Treasury and Housing and Urban Development along with six U.S. banks unveiled a plan this week to pause foreclosure proceedings for borrowers who are more than 90 days late with their payments.

VELSHI: These banks, the six banks service about 1/2 of all U.S. mortgages. They say it will give troubled homeowners an extra 30 days to come up with some solution to the problem they face. During that time, the banks are evaluating whether these homeowners are eligible to modify their loans.

ELAM: And while some critics say it's a too late, but others see it as a step in the right direction. Allan Chernoff has the story.

(BEGIN VIDEO CLIP)

ALLAN CHERNOFF, CNN CORRESPONDENT (voice over): Daisy Respas is struggling to hold on to her home outside Baltimore as her high interest subprime mortgage has pushed her to the brink of foreclosure.

DAISY RESPAS, HOMEOWNER: That I may lose my home from the bank is really devastating.

CHERNOFF: Respas left a secure state job when she had to care for her ill mother. Bills piled up and she decided to refinance her mortgage. Now saddled with an interest rate above 9 percent, she's been unable to find a new job.

RESPAS: It is very frightening, it is indescribable.

CHERNOFF: The Bush administration is offering some help, convincing major banks to hold off on foreclosures for 30 days and renegotiate loan terms with homeowners in trouble.

HENRY PAULSON, TREASURY SECRETARY: Project Life Line has the potential to offer new solutions to responsible able homeowners who want to keep their homes.

CHERNOFF: Maryland need a life line, foreclosures in the state have jumped approximately 13 fold in the past year. The nonprofit Southeast Community Development Corporation says it counseled as many people facing foreclosures in January as it did all of last year.

CHRIS FREYER, SOUTHEAST COMMUNITY DEVELOPMENT CORPORATION: We've seen a number of people come into the office from all over the Baltimore metropolitan area that are in danger of losing their homes. CHERNOFF: Respas's lender Indymac is on board with the administration's Project Life Line. The savings and loan told CNN we're actively reaching out to our customers to ensure that as many as possible who have the desire and ability to stay in their homes may do so. Indymac would not address Respas's personal situation. Daisy Respas is hoping her lender will agree to easier terms in addition to the 30 day reprieve and she's turning to her state government, applying for an interest free loan. Ms. Respas hopes all those steps will allow her to get out of her debt squeeze and hold on to the home she loves.

Allan Chernoff, CNN, New York.

(END VIDEO CLIP)

ELAM: Nicholas Retsinas the director of the Joint Housing Center at Harvard University.

VELSHI: Is joining us now, Nick welcome back to the show. Your view on this is it isn't necessarily going to work?

NICOLAS RETSINAS, JOINT CTR FOR HOUSING STUDIES, HARVARD UNIVERSITY: It is a small step in the right direction. The problem is the speed of this treadmill is picking up and it is going backwards. So we'll give a little more time to people on the brink to do something that was already in their interests of the lender's interests. But it's hard to imagine this being a large scale solution to an ever increasing problem.

ELAM: Nick, I'm having a hard time with the idea that if you're really behind on paying your mortgage, that somehow magically one month is going to make a difference. It's like, oh, let me go to my offshore accounts and see if I get that money wired in right away. It is like a rich people's solution to something. How much time is really needed here to make a difference?

RETSINAS: Well, you need a lot more time, but more than time, you need a way to restructure these mortgages in a way that makes the borrowers able to pay them off. The problem is just extending the time without dealing with the fundamental problem, the fundamental problems of a housing market that's falling in value every day, a fundamental problem of people either losing their jobs or on the brink of losing their jobs, 30 extra days didn't make a major contribution to those problems.

VELSHI: Let's take a look at what those options are likely to be. Somewhere in the process of foreclosure, it all comes to a grinding halt. Hopefully you can speak to your bank; your bank calls you up. You can talk to the bank with refinancing into a lower interest loan. You can talk about repayment plan for the months that you've missed.

The bank can freeze your rate if it's so chooses if that makes sense. Or you can do something called a short sale which is when you don't have -- the problem's not going to be solved, so the bank takes your house and you're free and clear at that point even if it's not the same value of the mortgage. Those are roughly the options that delinquent borrowers have?

RETSINAS: Those are options, but all those options are available to them before they necessarily get to default. I mean, it is clear that borrowers' talking to lenders is a good way to begin because it does open the door to some of the options you suggested. And 30 days is a little more time for that to happen. The fundamental problem of people not being able to pay their mortgage, of not being able to sell their house, remains and I don't know how much value 30 days adds to those issues.

ELAM: You know I'm looking at how this problem has evolved. It is different than it has happened before. Previously people lost their jobs, they weren't able to work for a reason, and then they were forced to have issues with their mortgage.

VELSHI: Which is what we've seen in Detroit.

ELAM: And now we're taking a look at a situation here where you have people who are being forced into foreclosure because of the mortgages. So the remedies being put out here, aren't they just old band aids for different wounds?

RETSINAS: It's an awfully big country. As you point out, there are parts of the country that have traditional problems of foreclosure like the upper Midwest, the slumping economy, people losing their jobs. But other parts of the country, it is the nature of the mortgage products themselves. Which were offered to people sometimes honestly, sometimes dishonestly, with certain teaser rates? And now people aren't able to accommodate those sorts of rising rates. Those are fundamentally different problems than tweaking at the margin.

VELSHI: Nick, you're a good friend of the show. We don't really usually read your bio, but you were assistant secretary for housing. You were federal commissioner for the United States Department of Housing. You've done a lot of this kind of stuff. So it's not typical that you'd be here giving advice to people. But if you're not in foreclosure yet, as you said, that list of things that you could do and things you could have done if you weren't in foreclosure. The bank loses money if you foreclose on your mortgage. Am I correct?

RETSINAS: You're absolutely right. We just commissioned a paper as a matter of fact that said if you take the median priced home of say $200,000, the beginning of the foreclosure process pretty much guarantees they'll be a loss in value of about $75,000. So lose/lose for the borrower and it is lose/lose for the bank. So there are plenty of incentives to get together. But the question is, at this point in the market, we may need more than tweaking. We might need a little more intensive government information.

VELSHI: It's an interesting point because I think Stephanie what we found, we've read a lot that people are reticent to go to the bank. They don't think the bank will be on their side. But if you know that the bank could lose money on you, it might be better to go in there and talk to them as soon as possible.

RETSINAS: You're right. And it gives a little more time for that to happen so it is a good step, but a small step in the right direction.

ELAM: Nicholas Retsinas thank you so much for giving us your insight on this one. Hopefully we'll get some people to go out there and get on it. Nick is from Harvard University.

VELSHI: All right. We're going to take a break. When we come back, a top U.S. company wants to overall it's entirely hourly workforce and wait until you see who wants to partner up with Yahoo! now. Stay with us.

(COMMERCIAL BREAK)

VELSHI: Welcome back to YOUR MONEY and welcome to Stephanie Elam who is sitting in for Christine Romans. And our good friend Jennifer Westhoven good to see you again.

JENNIFER WESTHOVEN, CNN CORRESPONDENT: Thanks.

VELSHI: There are in case you were wondering still some employees left at General Motors. It's kind of one of those strange stories that they've opted to buy everyone out.

WESTHOVEN: Right. And union workers are there, but they've got a big choice to make right now. GM offering by outs and early retirement to all union workers. All 74,000 of them this week. For General Motor, it's an easy choice. They want to save money. The company hoping to hire a flood of new people. Now they would still be union workers, but they'd be coming in under a new umbrella contract with United Autoworkers at a much lower rate.

So some workers, for example, so not assembly line workers, they could make half as much as the current workers. And all the Detroit three, General Motors, Ford and Chrysler have all been doing this to try to cut their costs with these kinds of packages. But this is a decision that's going to be made in kitchens and bars around the country.

VELSHI: I think if you're 30 or 35, could you probably sit there and say, sure, I'll take the buy out. If you're 55 and you buy the didn't get a college education because this was going to be your job to life, we often talk about where you can in the country to get a good job, but if you've got a family and a life, it's a tough decision. Do you stay on at GM, not take the buy out, and risks getting laid off or do you take this and move on?

WESTHOVEN: And they do get to keep their retirement benefits, but the amount of money isn't that huge.

ELAM: It's definitely not like the time before when you saw buy outs and people going, woo, and let me take this. It's a very different game at this point.

VELSHI: Who owns Yahoo!?

WESTHOVEN: So far we know that Yahoo! Said no thanks to Microsoft. It's believed to want a lot more than that $31 bid that Microsoft came in with. So far it's been quiet. So now Rupert Murdock riding into the ring. There's a record that News Corp is talking with Yahoo! about joining forces. Of course this has been the subject of rumors for years. And I can imagine for weeks you'll still be hearing about who's going to end up with Yahoo! Google, News Corp, Microsoft and maybe even Time Warner.

VELSHI: Interesting story. Most people say for the time being it won't affect the user experience on any of the sites owned by these companies. It is just business.

ELAM: I think it would be hard for them to mess with that because that's what really drives people coming in to their sites.

VELSHI: Anybody mess with my e-mail, I'm against the merger.

WESTHOVEN: Now, speaking of messing with stuff, kids can make a big mess. So a Houston mom looks around the playroom and says I've had it, I'm sick of seeing all these toys piled up. So she came up with this amazing idea. Baby plays. It's like Netflix but for toys. So you pay this monthly fee, you go on the Website, you figure out which ones you want, and a couple toys come to you in the mail each month and at the end of the month, you put them in a box, ship them back. And if your kid is in love with them and they can't give it up, you just keep that one for a little longer and get one less toy.

ELAM: OK, but you know my main thing is who's cleaning these toys? Because you know what kids do to these to spread germs.

WESTHOVEN: She says they are cleaning the toys and one better that, they're checking them for lead paint. But then you think about just the wasted money you do with toys they don't want to play with. Then the trash that you accumulate. And you can just cut consumption.

ELAM: And you are saving money. You spend a lot of money.

WESTHOVEN: Do you know what it's like to go to a toy store with a screaming kid?

VELSHI: Thank you very much. And you willing back in a little while. We're having a great discussion with Greg Hunter so don't go too far.

ELAM: Federal Fed chairman Ben Bernanke and Treasury secretary Henry Paulson said this week that they see the U.S. avoiding a recession.

VELSHI: Recession or not, the average American wants to know first and for most that they will keep their job. Why YRC Worldwide chairman Bill Zollars runs one of the world's largest trucking company. He's in a unique position to see just where the economy is headed and how it will affect U.S. workers across a wide range of industries.

(BEGIN VIDEO CLIP)

WILLIAM ZOLLARS, CHAIRMAN, YRC WORLDWIDE: I think as the economy slowed, we've had some issues in our industry that have mirrored the issues in other industries. As an example, during the Christmas stock build up which usually starts in September and runs through Thanksgiving, we would normally have everybody working in our 60,000 person workforce. This year we had about 5,000 people on layoff even during that peak season. That just is an indication of how soft the economy really has been.

VELSHI (voice over): And now everybody else is getting into this. Tell me as of right now, do you feel we are in a recession or headed for a recession?

ZOLLARS: I think parts of the economy are in and have been in a recession for quite a while. I call it the shipment economy. But the shipment of goods around North America has been very soft for a long period of time. And I think we've been in a recession really from a shipment standpoint probably for six months or so.

VELSHI: But just like you can probably see the economy turning down, your industry is always one of the first to see it picking up.

ZOLLARS: We'll be at the front end.

VELSHI: What will you see?

ZOLLARS: We'll see that weight for shipment pick up and then we'll see the number of shipments pick up after that. As I said, to this point, we haven't seen that begin yet. So we may be kind of bumping along the bottom right now. But really no positive signs that things have started to recover.

VELSHI: I almost skipped this discussion because we're so used to it now. But the energy price issue. We saw oil hitting $100 a barrel. Obviously that is one the one thing you're going to see every day. You probably burn more fuel than most companies in America.

ZOLLARS: We do. We drive about two billion miles a year. So we use a lot of fuel. And fortunately for us, back in 1996, we put in a fuel surcharge which has really saved us in terms of these higher fuel prices. However, it's really impacted our customers pretty dramatically.

Right now if you look at the way that trance lays, they're paying about a 25 percent premium just because the fuel prices are as high as they are. So if you had a $1,000 bill for moving shipments, it's now $1250 and that goes on the invoice as a separate line item tied to the published price of fuel every week. So it's almost an immediate cost to the customer. For us, it's a great way to make that cost a variable cost. But it really has had an impact on our customers.

(END VIDEO CLIP)

VELSHI: So you know they pass along the increase in the price of fuel and the company had to make a decision about paying all that much more to ship something, they might just make the decision not to ship it especially when we don't have a robust market. So it's a complicated and interesting issue. But it is always useful to watch those shipping companies because they have a very quick indication of whether the economy is coming out of the recession.

ELAM: All right. Coming up, how much control does a president have over the economy? The answer might actually surprise you.

(COMMERCIAL BREAK)

(NEWSBREAK)

(BEGIN VIDEO CLIP)

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I'm pleased to be joined by leaders of both parties to enact an economic growth package on behalf of the American people. A lot of folks in America probably were saying that it's impossible for those of us in Washington to find common ground to reach a compromise on important issues. I didn't feel that I way, I know the leaders didn't feel that way. And as a result, we have come together on a single mission and that is to put the people's interests first.

(END VIDEO CLIP)

ELAM: President Bush signed the economic stimulus package into law this week. Treasury secretary Henry Paulson and Fed chairman Ben Bernanke then told Congress the rebates and rate cuts should help keep the economy out of a recession.

VELSHI: Which makes us wonder whether the president and his advisers, how much control they actually have over the economy. Specifically as we are in this election cycle, how much weight does the president have over the financial health of the nation? Our friend, Justin Fox, a business and economic columnist at "Time" says less than you might think.

JUSTIN FOX, COLUMNIST, "TIME:" First of all, it's just really hard to tell. Because you can sit there and look at economic growth during different presidencies and when you do that, you find out that the most successful one in the post war years was Kennedy and Johnson, that administration together. And the least successful was either Harry Truman or George Bush the first. And you can come up with all sorts of little reasons why that shouldn't really count. So there's no easy statistical measure of, OK, that president --

VELSHI: But right now with the economy being the number one issue amongst voters, and the candidates are being asked about this, and we're trying to muddle through what their positions are on things, but they can't do everything that they want on do. They just don't have that type of sway. How do we make that connection as a voter?

FOX: I think the first thing to remember is it is really hard for a president to affect the over all rate of economic growth. Whenever you hear the GDP numbers come out and somebody says, oh, that shows the brilliance of the Bush administration or it shows that they're idiots because only grew .6 percent that's bologna. They can affect maybe longer term growth through taxation. What they can really affect is how the pie is divided.

And when presidential talking about economic policies and what they're going to push through Congress and the like, a whole lot of it is just who see going to pay the taxes and who isn't. Who's going to be getting money from the government and who isn't? That stuff really matters.

ELAM: So when you have a presidential candidate who is saying we don't need the Federal Reserve, obviously that would directly impact the economy. How does that play out as far as where this goes as the economy and people look at their candidates?

FOX: Obviously Ron Paul had some really radical ideas and you can't really know how they'd play out. My initial thought is they'd be chaos for at least a couple of years there and then I guess we'd figure out how to live with the gold standard again.

And I guess countries survived pretty well. I would just say that anytime a presidential candidate makes it sound like they're going to utterly transform your lives and the economy, take it with a whole lot of grains of salt.

VELSHI: There's some talk now that Ben Bernanke, 56 years old in his first term as Fed chairman, following in the foot steps of Alan Greenspan who was there for 18 years, something like that.

FOX: A lot.

VELSHI: There's some talk that maybe Alan Greenspan is reconsidered as chairman of the Federal Reserve by the next president. He certainly has not so far; general history will say that so far hasn't hit it out of the park.

FOX: The great -- I can't imagine Greenspan coming back. I just can't. I guess McCain did have that famous quote once about weekend at Bernie's and bring Greenspan back.

VELSHI: But could the next president decide to bring somebody else in?

FOX: Yes, definitely. I'd say there's a really big chance of that.

ELAM: That also makes me wonder too, if the economy sours or if it's really strong during one -- let's say it sours. For one let's say the Republicans have it since the situation that we're in now, and the economy sours, does that automatically mean the Democrats are more likely to take over the economy even though the president really doesn't control it?

FOX: Yes, if you have bad timing and you have a recession in your last year in office as a party, its trouble. That's one thing there's some pretty good evidence for. And you never can be sure, but if there's a recession this year, it's really bad news for John McCain.

VELSHI: And then the bottom line is McCain has not taken big positions on a number of things. He's not getting in to economic detail. Hillary Clinton is getting in so some detail. Barack Obama really is not. Maybe this will change over the next few months.

FOX: Right, if that's what people want to talk about, that's what the candidates will wind up having to talk about.

VELSHI: Justin good to see you, thanks for coming in.

FOX: Thanks for having me.

VELSHI: Justin Fox a columnist with "Time" Magazine.

Well still to come, find out what's really threatening how much money you have. As if you didn't know already. Stay with us.

(COMMERCIAL BREAK)

VELSHI: All right. We're back on YOUR MONEY. We're talking about the things that matter to you about your money. It is not this obscure discussion we continue to have about markets and things in the past. It's about things that actually cost you money and that is inflation. Jennifer Westhoven joins us once again she is here in New York. Greg Hunter is with us in Washington. Greg said they're all lying to you about inflation. It's out of control; it's a run away train. Am I paraphrasing you correctly?

GREG HUNTER, CNN CORRESPONDENT: Well, I don't know if I would say lie, but I'll tell you the government has an interest to understate inflation. And last year the government said inflation rate was around 2.8 percent. The reason why they understate inflation, because my mother, she's 78 years old, she just got a raise in Social Security. It was $24 dollars, based on whatever it was last year. At any rate, if she was getting the real inflation rate and that depends on what decade you want to compute the real inflation rate, she'd be getting much more money. And also people would feel like they wanted to pull back, they'd feel like, oh, my gosh, I'll falling behind.

VELSHI: Jennifer, is that the biggest problem we are facing right now?

WESTHOVEN: I think we've got a lot of hidden problems out there and I think some of the biggest problems are the ones that a lot of people don't know about and they're really going to affect all of us. We found out that the Port Authority of New York and New Jersey, their debt was being sold. Their municipal debt, couldn't find a buyer. The entire market is dead. They saw their interest payments jump $300,000 immediately.

That's taxpayers really who end up having to pay for that. We're all going to see our taxes go up. And it's not just the Port Authority. It's happening to lots of institutions. So we're seeing it happen to universities, it happened to Georgetown, Nevada Power. It can affect hospitals, museums. So that's something where big institutions that rely on this fund are all in a lot of trouble and it's all still tied to what happens in the subprime mortgage market because a lot of these bond insurers are still into that. We don't know the extent.

ELAM: Let's talk a little bit about that. When you talk about the housing and what's going on with the housing situation and how people are more likely to lose more of their homes, let's it talk about that a bit.

WESTHOVEN: That's another hidden thing out there which is the head economists from Goldman Sachs just came out and his prediction is that by the end of this year, 15 million Americans are going to be in those upside down mortgages. That's where you owe more than your house is worth because home prices are falling. We just got a report on that.

In the mean time, a lot of people are facing resets or mortgage rates have been creeping up despite what the Fed is doing. But when you have people in upside down mortgages, they're encouraged to say forget it. Why should I even bother making these payments that are killing me? I'm going to walk away in three years, I can probably patch up my credit and I'll by a smaller house and everything will be fine.

VELSHI: Greg Hunter, you heard from Henry Paulson this week. You heard from the president. You heard there Ben Bernanke. You heard from a whole bunch of people saying all right, we'll cut interest rates; we're throwing out this life line to people for their mortgage foreclosures. It's OK; it's not going to get too bad. It might get worse before it's going it get better, but there's no recession coming.

HUNTER: Hey listen, some frank talk from Dick Durbin who says, you can't say this is just a little slow down. This is a crisis in confidence. His words, crisis. Also if you take look at Richard Shelby, what he said about all these incentives, on the Senate finance and banking committee, he said this is like pouring a glass of water in the ocean and expecting it to make a difference. That's a U.S. Congressman. What does that tell you about what he thinks of the size of this problem? It is huge.

That one point that Jennifer brought up about you walking away, reflection of pop culture. New Website, you walk away.com where they tell you your rights and how you can walk away from your house for that upside down house. If somebody has a $400,000 house and all of a sudden it becomes worth $350 or about $300,000, you're not going to sit there and pay an extra hundred grand for something you're not getting anything for. And that's a huge problem. Not just for the people who bought the mortgage, but for the banks. And the banks are in trouble. They have a lot of bad debt.

ELAM: Greg, you are definitely a fount of information there with that one. Jennifer as well. Thank you so much for a lively discussion about this.

WESTHOVEN: Paulson kept saying banks recognize their losses. Recognize their losses.

VELSHI: All right. Jennifer and Greg thanks for joining us.

ELAM: Up next, Carrie Lee is stopping by to tell what you need to pay attention to next week when it comes to YOUR MONEY. Stay with us.

(COMMERCIAL BREAK)

VELSHI: Well there's a lot coming up in the week ahead that could effect your wallet. Carrie Lee is here to tell us what we need to pay attention to. Carrie welcome. CARRIE LEE, CNN CORRESPONDENT: We'll start with the Daytona 500. Which isn't going to affect our wallets. It will affect the winner's wallets because the price $1.5 million, 50 million people expected to watch the 50th Daytona 500 race on Sunday. And the thing that I think is interesting about this; the Census Bureau put together some stats since it is the 50 year anniversary. The price of a new car in the first year in 1959, $2200.

VELSHI: A real car or racing car?

LEE: This is a real person's car. And a price for the price per gallon of gasoline, 25 cents. So just kind of puts things in perspective. Average price of a new home at that time, $12,400. Which today won't even really buy you a new car. So kind of putting things in perspective there.

ELAM: Things to celebrate.

VELSHI: Have you guys ever been?

ELAM: No.

VELSHI: its nuts.

ELAM: You've gone in.

VELSHI: Yeah.

LEE: You've gone as a fan?

VELSHI: I did a story there once. It is a phenomenal experience.

ELAM: I didn't realize how inverted the track is until I saw a shot earlier. That's really scary actually.

VELSHI: It's very exciting. What else you got?

LEE: Presidents Day on Monday. And, of course, stock and bond markets are closed. But here's the thing I want to talk. The Federal holiday is actually Washington's Birthday. States celebrate Presidents Day, but the Federal holiday is Washington's Birthday. So we all think that it was changed to Presidents Day some time ago to celebrate Washington and Lincoln. And that's not actually true. States can decide if they want to celebrate Presidents Day, but Washington's Birthday is the Federal holiday. And some states do celebrate Washington's Birthday and Lincoln's birthday separately. There you go.

VELSHI: Which states would those be?

LEE: So if you're in a good state, yeah, you get two.

VELSHI: We don't get any of these extras living in New York.

ELAM: I don't feel like we do either.

LEE: Being a reporter and an anchor is a whole different ball game anyway.

ELAM: I'm working Monday.

LEE: Me, too. Finally on Tuesday, Wal-Mart reporting profits and you know that this is really one of the bell weathers to watch when it comes to consumer spending. Wal-Mart saw a big mist in January same store sales. They are expecting a 2 percent increase. And they saw sales rise just a half percent and we know the consumer spending drives 2/3 of the economy. So this will be a big deal to watch. Wal- Mart says it is comfortable of estimates of --

VELSHI: It sometimes gains where a lot of the other retailers have lost because of migration of people who shop at Wal-Mart because it's more affordable.

LEE: That's true. But now analysts are saying that even these middle to lower income shoppers are starting to cut back on spending. Wal- Mart claims January core gift card redemptions and one analyst said no that's not true. Wal-Mart's never been a big gift card place. So this is something that could really affect the market.

ELAM: Definitely.

VELSHI: Good to see you.

Diversifying your stocks and bonds is an important part of building a strong portfolio. We talk about that a lot. Christine Romans takes a look at a less traditional investment that some may call off the wall.

(BEGIN VIDEO CLIP)

MICHAEL MOSES, CO-FOUNDER, ARTASANASSET.COM: This is the first painting I ever bought.

CHRISTINE ROMANS, CNN CORRESPONDENT (voice over): Michael Moses looks at art a little differently than most people. As co-founder of the Maine Moses Fine Art Index, he can appreciate art's beauty and also determine how its value has appreciated over time.

MOSES: From 1950 on, you can see that the growth rate, the slope of these two lines, is about the same.

ROMANS: On Moses's website, artasanasset.com potential investors can track the value of over 12,000 works of fine arts. A valuable tool for those interested in investing beyond the stock market in real estate.

MOSES: We have given individuals this information that allows them to assess art versus other assets that they hadn't that had that ability to do before.

ROMANS: According to Moses, art has traditionally stacked up pretty well against more conventional investments.

MOSES: Compared to the traditional assets, total return for the S&P 500 has been a little bit over 10 percent over the last 50 years. And the return for our index over the same period has been about the same. ROMANS: But he says there's more to it than just dollars and cents.

MOSES: Art is an enjoyable thing to invest in because it has beauty outside of its investment potential.

ROMANS: Christine Romans, CNN, New York.

(END VIDEO CLIP)

VELSHI: Just e-mailing Christine, seeing how she is.

ELAM: Because you haven't seen her.

VELSHI: I just see her only about once a week.

ELAM: And you have nothing better to do right now.

VELSHI: We're going to see if -- he can't do it.

ELAM: He can't do it. He's going to try to e-mail, go one day without e-mail. But we'll try to tell you who is doing that next.

(COMMERCIAL BREAK)

ELAM: It's on your computer, your phone. And for most of us, e-mail helps the world go round so can you imagine one day a week without it?

VELSHI: No. I totally couldn't imagine a day without e-mail. One NBA team however, decided to give it a shot.

(BEGIN VIDEO CLIP)

ELAM (voice over): Shoot, swish, send. E-mail is it the part of the game for the Houston Rockets. On the court, off the court, they see themselves as a team. So to build relationships the Rockets did away with e-mail on Fridays.

TAD BROWN, CEO, HOUSTON ROCKETS: When you have face to face conversations, many times you can get a lot more done because more issues come up that you may just get if you drop an email or if you talk to somebody on the phone.

ELAM: While blocking human interaction, one research firm says constant interruptions can also keep workers unfocused.

JONATHAN SPIRA, CHIEF ANAYLST, BASEX: We lose about 28 percent of our day or 2.1 hours in the day to unnecessary interruptions in the time it takes to get where to where we were before the interruption.

ELAM: Of course logging off isn't always easy.

BROWN: One of the only draw backs was for me personally; it certainly limited my scope of communication. I relied upon e-mail so much.

ELAM: For the Rockets, no e-mail Fridays officially lasted two seasons and came with a marketing campaign dubbed Face to Face Fridays. But the effects can still be felt today.

VIVIAN MORA: I think at some point you don't have to keep pushing the message. I think people got it. And even today, with no overt campaign going on, Fridays you see a noticeable difference in e-mail traffic. Now people actually get up and they go and talk to each other.

ELAM: Like most of us, the Rockets don't plan on giving up e-mail all together. They just want to bring back that human element.

BROWN: There's definitely a place for e-mail, but there's without question a need for e-mail, I think personal relationships, personal communication and really working together to integrate all of your teams in that regard is the way to go.

(COMMERCIAL BREAK)

ELAM: So you can imagine actually doing that? I imagine when I travel and I can't get all my messages, I feel naked.

VELSHI: I get the human connection thing. I definitely phone people less or go to see them less because I can get things done. I get that point. It is like Ron Paul wanting to go back to the gold standards, a little bit interesting idea worked at one time, I don't know that it would work today.

ELAM: Maybe for one day just to work out talking to people more. Think about it we see each other about twice in the hall.

VELSHI: Well it is good to see you.

ELAM: Good to see you to Ali.

VELSHI: Thanks for joining us for this edition of YOUR MONEY.

ELAM: We will see you right back here next week.

VELSHI: But we will email you in between. Saturday at 1:00 and Sunday at 3:00. See you then.

ELAM: Good bye.

(COMMERCIAL BREAK)

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