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CNN IN THE MONEY
Will Global Warming Bring Us to 'Day After Tomorrow'? Working Poor Slipping Through Cracks; Ronco Founder Extols Inventing & Selling
Aired May 29, 2004 - 12:59 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CATHERINE CALLOWAY, CNN ANCHOR: First, the headlines.
A group calling itself the Jerusalem Squadron is claiming responsibility for today's deadly attack in eastern Saudi Arabia. The claim appeared on a Web site that had published statements for al Qaeda. Gunmen killed at least 12 people, including an American, at an oil company compound in Khobar. Sources say they're holding several Westerners hostage there.
And in the Iraqi holy city of Najaf, U.S. forces and army militia continue to fight today despite a pledge by radical cleric to withdraw his forces there. The coalition halted its offensive in Najaf and it says it is cautiously optimistic about the peace deal there.
The former NFL player who turned soldier who died in Afghanistan last month may have been killed by friendly fire. The U.S. Army says that Pat Tillman was probably killed by gunfire from his own unit while battling enemy forces. The Army says that the finding does not diminish Tillman's bravery and sacrifice.
We're about an hour away from the dedication of the World War II Memorial in Washington. Security very tight for this historic event which will include an address by President Bush. The memorial honors the 16 million Americans who served in the military during World War II. Their spirit of sacrifice is something that the first President Bush says still lives today.
(BEGIN VIDEO CLIP)
GEORGE HERBERT WALKER BUSH, FORMER PRESIDENT OF THE UNITED STATES: The men and women who make up our own volunteer forces fighting today in Iraq and Afghanistan and serving with honor and integrity in countless other locations around the world are every bit as great as any generation that preceded them.
(END VIDEO CLIP)
CALLOWAY: CNN's Paula Zahn will bring you the dedication ceremony live, beginning at 2:00 Eastern time. More news at the bottom of the hour.
I'm Catherine Calloway in Atlanta. IN THE MONEY begins right now.
SUSAN LISOVICZ, CNN ANCHOR: Welcome to IN THE MONEY. I'm Susan Lisovicz. Jack Cafferty is off this weekend. Coming up on today's program, the folks at the Pentagon can't write off scenes like this as just another disaster movie. Find out what we have planned if the worst global warming scenario comes true.
You can't fly to Saudi Arabia and get them to pump oil faster. So we offered the next best thing, some tips on how to stretch your gas tank before you head back on the road this Memorial Day Weekend.
And the minimum wage equals maximum problems these days for Americans looking to make ends meet. We'll take a closer look at the working poor.
Joining me today in jack's absence, he would say "the usual suspects," "Fortune" magazine editor-at-large Andy Serwer and money.com managing editor Allen Wastler.
Good to have you guys. You know, Memorial Day weekend means barbecue, it means golf, it means the beach, it means big holiday sales for millions of Americans. But this weekend in Washington something probably that should have happened half a century ago, a memorial finally to the greatest generation, the World War II veterans.
ANDY SERWER, EDITOR-AT-LARGE, "FORTUNE: Yes, I guess it is so ironic because of course the Vietnam Veterans Memorial, the wall attracted so much attention. Here we are 60 years later, now they say 1000 vets dying every day in this country. It took this long to get the memorial up. And it has been too long, I think.
ALLEN WASTLER, MONEY.COM: But, the thing is, not to denigrate the contribution they made, but the Iwo Jima memorial has been up there for some time. And I think a lot of people just view that as sort of, well, that's representative of the whole conflict there. I mean, they have had something with which to just sort of go to a place and remember.
LISOVICZ: But doesn't it speak to the humility, something we were talking about before, the humility of this generation, never really clamoring for attention. My dad actually awarded the Distinguished Flying Cross, he was a navigator in the South Pacific in the very famous Liberators. My uncle Lenny Lisovicz, part of the D- Day invasion, Omaha Beach, he was awarded the Silver Star and the Purple Heart. These people went on to raise families and contribute to society, and never really spoke much about all of this bravery and their sacrifices.
SERWER: I think it was just part of being an American. And that's part of that generation that felt that way. You have a lot to be proud of, obviously, Susan. And so many people, I mean, millions of Americans, it was a total nationwide effort. But I think, you know, our views on it are changing now. Each war deserves a memorial.
LISOVICZ: And this weekend certainly it will be the focus of a lot of activities. Also of course, any Memorial Day weekend very popular movie-going. A new weather disaster movie is making waves at the box office. "The Day After Tomorrow," which depicts a new ice age brought on by global warming, opened this week and it is expected to do big business. But the prospect of this kind of wild weather is more than just a movie script. It is also a scenario the Pentagon is trying to prepare for.
Late last year the Defense Department commissioned a study of various national security threats brought on by global warming. Joining us today is Paul Epstein, he is the associate director of the Center for Health and the Global Environment at the Harvard Medical School.
PAUL EPSTEIN, HARVARD MEDICAL SCHOOL: Hello, Susan, Allen and Andy.
LISOVICZ: It is good to have you. You know, I interviewed the producer of "The Day After Tomorrow" just a few days ago. And he said, relax, it is just a movie, eat your popcorn, sit back, enjoy it. The fact is the drama in that movie is kind of unlikely that this new ice age would be brought on in just a few days. But the aspects of global warming that bring on this dramatic change are not outlandish.
EPSTEIN: This is true. Clearly three days is something no one projects. But three years, three decades, behind this movie is a lot of science. And in 2002, January, the National Academy of Science put out a report called "Abrupt Climate Changes and Inevitable Surprises."
And what they looked at is the ice core records which show just this kind of cold reversal when it is warming. And while there are other scenarios that could happen that are abrupt as well, we could have melting of tundra in Alaska and release of methane that could warm things up dramatically. We could have slippage of some of the ice in the Antarctic peninsula, and that would raise sea levels.
But this particular one is very important to us because it is in the Northeast and we're already seeing some changes in the circulation of the North Atlantic that are reminiscent of the kind of event that happened 13,000 years ago when we were warming up and suddenly cooled.
SERWER: All right. So, Paul, I mean, how likely is this kind of a scenario? And what could happen here?
EPSTEIN: Well, this is the question, how likely? And I would say five years ago, we would have thought this was very unlikely. What we're seeing now is that climate is changing. Humans are responsible. Biological systems are responding. And the costs, the money associated with these extreme weather events is going up. And I would like to touch on that because what we're already seeing is dramatic and affecting the economies and security.
It also represents increased chances of such an event or such surprises because we're seeing the rate of change increase, warming is happening faster. And the volatility, the variance around the mean, the swings from high temperatures to low temperatures to cold winters, to hot winters, to droughts like we have had in the West, now we're in the fifth consecutive year, extreme heavy events like we're seeing in Haiti today of five feet of rain in 36 hours. This was in "The New York Times" on Friday.
These are the kinds of extremes that we're seeing, of droughts, punctuated by heavy rains and it is the instability that tells us that such events and such surprises are more likely than they were several years ago.
WASTLER: Dr. Epstein, Allen here, tell me a little bit more about that economic effect. Can you put some dollar figures on what exactly gets hit and how much it may just add up to the old pocketbook?
EPSTEIN: Good, yes. And clearly this is what is affecting industry and particularly the finance sector and the reinsurance sector that has to ensure the insurers. Extreme weather events and other catastrophes like volcanoes and earthquakes cost about $4 billion a year into the '80s. In the '90s it went up tenfold to $40 billion a year. The United Nations environmental program is projecting that the cost of extreme weather events and these disasters could go to $150 billion a year within this decade if current trends continued.
In fact, they were $60 billion last year, $55 billion the year before. So we're on a trajectory. I hasten to add of that $60 billion, a quarter of it is insured, about $15 billion. So we're seeing an escalation of the costs and as we see more events in the northern hemisphere, in the U.S., with droughts and winds and so on; in Europe, like the summer heat wave last year that was so devastating in terms of lives; in terms of crop failures, in terms of wildfires, and it lost 10 percent -- the alpine glaciers lost 10 percent of their mass in the Alps. We're seeing this clustering of events and this is what is affecting the life and health sector of the insurance industry, the property and casualty and actually the markets and the stability.
LISOVICZ: Dr. Epstein, what you're saying is frankly a lot more scary than that movie, "The Day After Tomorrow." But you know, it seems the government is completely focused on oil, getting enough oil and terrorism, preventing another attack. And those are obviously very serious concerns. Is the government in your mind taking enough precautions, take any precautions? What can we do to try to at least slow this process?
EPSTEIN: Well, good. And I clearly -- focusing on oil is the first necessary, though, insufficient step, because we have other global problems. But if we don't get this clean energy transition correct, and make it a win-win for the economy and the environment, we're not going to start this process of sustainable development properly.
Oil, I'm a medical doctor, we look at the health and ecological ramifications of our dependence on oil, and from the extraction to the mining of coal, for instance, the transport and the spills to the refining and the benzene. And then we come to the combustion and here we have acid rain, air pollution and climate change, which is the icing, or should we say, the de-icing on the cake. There are so many security reasons and health and ecological reasons, now the financial reasons for getting off oil are mounting up. This government is clearly very influenced by the oil sector. I think to the exclusion of many other sectors. And we see industries trying to become more efficient. We see many of them beginning to look around at each other and say, what kind of incentives do we need to build into this system, to push these new trends -- these new technologies into the marketplace?
LISOVICZ: Dr, Epstein, you've raised a lot of very important issues. And this is an election year. And we hope that a lot of people listen to what you're saying. Dr. Paul Epstein, the associate director at the Center for Health and the Global Environment, at the Harvard Medical School. Thank you for joining us.
EPSTEIN: Thank you very much.
LISOVICZ: We have to step out for a minute. But when we come back, with gas prices where they are, you might be tempted to hit the open road on horseback. Not to worry, we'll have some money-saving travel tips.
Plus working more for less. The ranks of the working poor are growing in America. Find out what it means for your future.
And the real king of late night. Ron Popeil's infomercials have dominated the airwaves for decades. We'll get his own recipe for success.
SERWER: Memorial Day marks the unofficial start of the summer driving season, but with gas prices continuing to hover near record levels, some Americans are rethinking their vacation getaways. Joining us today with some tips on how to stretch your driving dollars a little further this summer is Justin McNaull from the Automobile Association of America.
Welcome, Justin, how are you?
JUSTIN MCNAULL, AUTOMOBILE ASSOC. OF AMERICA: Doing great. How are you doing?
SERWER: I'm fine. Why don't you tell us how to save money? And you know, I love that tip where you said, don't bother driving to Hawaii. Very funny.
MCNAULL: Well, it's the most expensive gasoline in the country. So you're better off flying there instead of driving. Really at its most basic, it is about reducing your use. If, in your day-to-day travels, you can avoid taking a couple of errands that have to go by the car, certainly do that. But when it comes down to summer travel and vacation travel, we're going to drive anyway, so it makes sense to use your most fuel efficient vehicle. If you're not trailering a boat, if you're not pulling a couple of horses, you're not going mud bogging, you probably don't need that full size SUV. Granted, if you have five kids, it's hard to fit them all into a little Honda Civic, but if it's just you and your honey going for a weekend at a bed and breakfast somewhere, really that little car that gets 30 miles to the gallon should be just fine.
LISOVICZ: That speaks to me, all right. That's for sure. That sounds really nice, Justin. Let's talk about other quick tips and money saved per year. For instance, speeding. I've been guilt of that. How much money does that cost you a week -- a year would you say? And what limits should you put on your car, in terms of -- what should you be driving at on a highway?
MCNAULL: Well, the impact of speed obviously is going to change depending on the aerodynamics of the car. But you're pushing a large SUV or something that's not designed to cut through the wind and you get at speeds above 55 or 65 miles an hour, you're significantly reducing your fuel efficiency, and we're talking about 10 percent, perhaps even more as your speed gets higher and higher; which across a span of a year can add up to $100 or $200 or $300 depending how much you drive.
There is also significant safety risk involved in speeding. So driving the speed limit is safer, it will save you money, it's better for the environment when you look at the emission side of things. And it is the right thing to do. So the speed limits are there for a reason, obey them.
WASTLER: Hey, Justin, Allen here. I drive a big honking pickup truck. And I'm proud of it. But I figure I'm doing right by the environment because I drive a manual, so therefore that gives me more opportunities -- you know, go down a hill, punch in the clutch, hey, I'm not burning up anything. Am I right, yes or no, are manuals more efficient than automatics?
MCNAULL: Freewheeling, being able to slip into neutral does help you out a little bit. But the automatic transmissions that we have these days have gotten smart. So there is really not a drastic difference in fuel economy. It could be one mile per gallon the way that some of the EPS ratings come through. It's not a real deal- changer.
SERWER: You know, Justin, what is really interesting to me and getting a lot of attention these days are hybrid cars. I want you to talk about that a little bit. One thing I noticed, you get better fuel mileage in the city than on the highway because you're using the electric motor in town, right?
MCNAULL: Right now we're looking at two main hybrid versions that are out there. It's Toyota's version and Honda's version. And Toyota's actually gets better mileage in the city whereas Honda gets slightly better mileage on the highway. And it is related to the way the engines function versus the energy distribution from the battery systems. But you're right, it actually, with the Toyota Prius, gets better mileage in the city in that stop-and-go traffic or in that lower-speed traffic that most of our cars just see fuel economy plummet when we're in it. The Toyota Prius is actually the fastest moving car, maybe not at a traffic light, but it's the fastest moving car off a dealer's lot these days according to J.D. Power.
LISOVICZ: Hey Justin, overpaying for octane. Nobody wants to pay more than they have to. And this is something that most Americans or all American drivers don't need?
MCNAULL: The vast majority of our cars, more than 90 percent, just require the 87 octane, the regular unleaded, the cheap -- well, the cheaper stuff. So if you're paying for the high test and your car doesn't say, put high test gas in me, you're probably spending money that you don't need or that you don't need to spend at least.
WASTLER: Hey, Justin, many traders say that the price of gasoline typically hits its highest peak around Memorial Day and then sort of tapers off during the summer. Is that true and do you see that happening this year?
MCNAULL: Traditionally that's what we see in part due to demand in trying to build up some reserves. But on other side we also in the spring go through refiners, crossing over from producing winter blends into summer blends. We have made it through the crossover really without any major glitches, which is good. If we were to add some glitches on top of the global supply and demand right now, it could've been really messy. So we're optimistic. I mean, the last couple of days we have actually seen prices hold nationally hold at about $2.05. We're not sure if this is the top of the peak, if this is sort of a mesa and we're going to drop back down from there or if this is a plateau on the way to higher levels. We're not sure.
SERWER: Justin, quick last question, tire pressure, important, yes?
MCNAULL: It is that simple. About a third of our cars are underinflated, have at least one tire that's underinflated. And that could impact your fuel economy by up to 10 percent. So there are little things, keep them inflated, change your oil, tune ups, all those things that your father reminded you do when he sent you away with your first car. They're important.
LISOVICZ: And clean out your trunk. That's another tip that you advise. Justin McNaull, national spokesman for the Automobile Association of America, I am a member, thanks for joining us.
MCNAULL: Excellent. Thanks for being a member.
LISOVICZ: Coming up after the break, home is where the heart is. But find out if it is also where your investment money should be.
Also the work load. Americans are working harder than ever. But more and more are slipping into poverty. We'll check the fallout. Plus, there's more, we'll even through in the kind of the TV infomercials. We'll find out how Ron Popeil made his fortune selling everything but the kitchen sink.
LISOVICZ: Now let's take a look at the week's top stories in our "Money Minute." Former investment banker Frank Quattrone is asking for a new trial. Quatrrone, of course, was convicted of obstructing justice while federal investigators looked into how his firm, CSFB, doled out shares in initial public offerings. Quattrone's lawyers say he should get a retrial because of "confusing instructions" the judge gave the jury.
Seniors can start using the new Medicare discount drug card starting Tuesday. But they may not be in time to beat some price hikes at the pharmacy. A new study shows prices for the top 30 name brand drugs for seniors have increased by more than four times the rate of inflation in the last year.
And Treasury Secretary John Snow would be wise to take some of his own advice. Snow has been touring the country, urging Americans to improve their financial literacy and pay more attention to their investments. But it turns out the secretary himself missed an almost $11 million mistake made by his own investment adviser because he didn't bother to read his financial statements for more than a year. That's a no-no.
SERWER: Sales of new homes tumbled in April by about 12 percent. And that sent shares of home building companies way down when the government announced those numbers on Wednesday. One of those companies was Toll Brothers. Shares of the Pennsylvania-based company have enjoyed a mostly steady rise in the past year. But are the good times over for this company?
That makes Toll Brothers our "Stock of the Week." And I've got to tell you something about this company. People have been waiting for this sector to blow up, to go down for a long, long time. And these stocks have been cheap for a long, long time. And Toll Brothers has doubled over the past year. At some point rates will rise. These companies may be able to handle it.
LISOVICZ: But the rates are still going to be cheap. And I think that's one of the reasons why, perhaps, the money is still there. Also Americans cramming to get in on their refinancing and just while the money is so cheap.
What do you think, Allen?
WASTLER: I'm a little bit worried. I'm a little bit worried.
SERWER: He's like that.
WASTLER: Sales are going down but if you look at building permits, they're still going up. And this last minute binge buying that you're talking about has kept the prices up there. But that can only go on so far. This is the makings of a classic bubble. I think we'll see it explode. Not maybe one big huge bang, but maybe a lot of little pop, pop, pop, pop, pops in some areas. And I think, you know, if you're going look at this stock, you have got to understand the risk inherent in it. It's a risky play, I think.
LISOVICZ: So you think the whole sector would be impacted, not just the luxury sector like Toll Brothers?
WASTLER: I think that the luxury sector might feel it a little bit more than some others. Of course, there is the argument that because they're big and bad they can just rob it from the little guys. But I just think that this is an inherently risky play at this point and that maybe it should be for the professionals, not for the average investor.
SERWER: Right. Well, these guys, though, Robert and Bruce Toll, they founded this company back in the '60s, went public in the '80s. Like you said, Susan, luxury, their homes average $500,000. They're smart people. They started out in Philadelphia. They moved gradually across the country. They didn't get blown up the last time the housing market tanked. So maybe these are people who can ride it out. However, it is probably true that in this situation you're better somewhere else because another stock group will do better relative to this group.
LISOVICZ: Yes, but how is it that they survived the last crash?
SERWER: Well, they didn't get overextended. They didn't overleverage. And again, they didn't try to take too much off the table. I mean, how often do you to see that? We're just going to go for one little more crumb. And that's what always gets you in the end.
LISOVICZ: So do you worry like Allen? Do you stay in or get out?
SERWER: I wouldn't get in at this point, even though the P/E, the price to earnings on this company is 11. I mean, it is a cheap stock. It is a cheap stock. We'll talk more.
Coming up on IN THE MONEY, when having a J-O-B is not A-OK. We'll look at dead end facing many Americans working at minimum wage jobs.
Plus, the insomniac marketplace. We'll talk with the father of the infomercial about his success and what he's peddling now.
SERWER: And if you can't get to the real golf links this Memorial Day weekend, we have a fun site that will let you tee it up on your own computer. So don't go away.
LISOVICZ: America has always been called the land of opportunity, the place where you can be born poor but die rich. Yet today some say the American dream is dying because too many low-income workers don't have the chance to get ahead any more. Their minimum wage jobs have become a dead end rather than a stepping stone. The plight of America's working poor is the cover story on the current issue of "Business Week" magazine. And joining us to talk more about this is the magazine's reporter, Michelle Conlin.
MICHELLE CONLIN, "BUSINESS WEEK": Thank you. Good to be here.
LISOVICZ: Michelle, let's just clarify the -- some of the standards that you used for this cover story. You didn't actually measure the minimum wage, which is $5.15 an hour. You actually were taking it above that at $9.04 an hour. What did you find?
CONLIN: Well, you know, we found that 25 percent of the workforce, prime age workers, these are people who 18 to 64 years old, because we wanted to cut out the very young and the very old. What we found was that there is 25 percent of the U.S. workforce between this age range, earns $9.04 or less an hour.
What is more, they're not only sort of crushed by not making enough to support themselves or their families, but they're the people who are most likely to lack health benefits. And if their jobs provide health benefits, they're often so expensive that they simply can't afford them. And they're also the people who, you know, once you start making $7, $8, $9, $10 an hour, you start losing out on what little safety net there is in America. And so you really become kind of crushed in the sort of no-man's-land where it is more difficult now to get up out of that than it used to be.
WASTLER: Hi Michelle, Allen here. Immigration has been a hot button topic in this country for a while now. And it relates very strongly in your story, I noticed. If we were to, like, really enforce immigration laws, stop illegal immigrants from coming in, how would that change the situation as you saw it?
CONLIN: Well, it is a great question because I think the common perception is, you know, yes, we have a large class of working poor in America but they're mostly immigrants and that's -- part of the American dream is you can come here and if you have enough moxie and hustle you can work your way up.
But what we found was that actually, you know, immigrants only make up probably a fifth of this group, which is a big chunk, but you know, nearly 60 percent of the working poor are white. The majority have a high school degree and even some college. And those are both things that 30 years ago would have assured them at getting a shot at the middle class if not a slot.
SERWER: Michelle, but what do you propose we do about this situation? Raise the minimum wage, provide more health care? If so, who is going to pay for it? It is one thing to see the problem, how do we solve it?
CONLIN: Right. That's another great question how do we solve it? And there has been so much gridlock and really so much paralysis over how to solve it, especially since the working poor are really dropping out of political system like flies. If you look at their voting rates, they go down every year, whereas voters from the investor class and of course the elderly have big voices in the political world. And so they get a lot of the largess.
But you know, as to how to solve it, we sort of ran over the various things that can be done and looked at, everything from increasing the earned income tax credit to providing more child care systems because, of course, that's a huge problem in this country. We have daycare center teachers who can't afford baby-sitters for their kids and millions of nurses aides who are health care workers who have no health care benefits from their jobs. So it is an incredibly complex labyrinth and there is no one easy magic silver bullet.
LISOVICZ: And you know, Michelle, one thing contributing to this labyrinth is the nation's biggest private employer, Wal-Mart. On the one hand, yes, of course, everybody wants a better standard of living. On the other hand, everybody wants to shop at Wal-Mart, which is not unionized. And the way -- I think your article says that the hourly wages are about a third of that, of the average union workers in competing businesses?
CONLIN: Actually, you know, a third less. And what you're seeing in the grocery industry right now is a lot of the grocery workers who have good jobs, paying maybe $18 an hour after they worked themselves up, they have health care. They're just scared, especially in California where they're seeing Wal-Mart come in. And they're afraid that they too will be earning $7 an hour and have to go on California state MediCal because they simply can't afford Wal-Mart's expensive benefits.
I mean, certainly, Wal-Mart is the largest private employer and they've been very aggressive about cutting labor costs. I remember one Wal-Mart manager I interviewed, he had worked there for 17 years with the company and he used to have to actually load his employees into the back of his pickup truck and drive them down to the United Way, and other food banks and social service agencies because they simply couldn't make it on their paychecks.
In fact, when you apply for a job at Wal-Mart, on the employment application form there is a whole list of local social service agencies that workers can go to to get assistance because so many of them just simply can't make it on their paychecks.
SERWER: All right, we're going to have to leave it at that, Michelle. Obviously a very important topic, Michelle Conlin, working life editor at "Business Week" magazine, thank you.
CONLIN: Thank you.
SERWER: Lots more to come here on IN THE MONEY. Up next, need a grill for your backyard barbecue? Ron Popeil has got what you need. Meet late night TV's master salesman.
And using your mouse to go from the tee to the green. We'll show you how you can hit the links without leaving your living room. Back in a flash.
SERWER: Our next guest is a bona fide television star. But he didn't get that way by acting in a sitcom or reality show. He became a star by selling products like the Pocket Fisherman and the Showtime Rotisserie to legions of late night TV viewers. Joining us today is Ron Popeil, master inventor and one of the fathers of the TV infomercial.
Welcome, Ron. I've got questions, you've got answers! You've got information. I've got to know! I'm sorry, I just had to do that to you. Listen, tell us how you got your start.
RON POPEIL, RONCO FOUNDER: Well, I got my start working in a Woolworth store demonstrating product. And I was convinced by a friend of mine who became aware that there was a TV station down in Florida that would make a commercial for me for $550. That week I was on a plane down to Tampa, Florida, WFLA-TV, and I made that commercial. I put the product on the air. I put some product in some retail stores in that marketplace and people went in and ended up buying the product.
And it became another product and another product and until we ended up into the infomercial business. The short form in those days was 30 seconds, 60 seconds and 90-second or two-minute. When we gave our presentation in that short form, it sounded like a machine gun because it is pretty difficult to introduce a product, tell all the problems that product solves, tell them the price and where he or she can buy it. If you try that in and do that in 30 seconds, it really does sound like a machine gun.
With an infomercial, you have 28 minutes and 30 seconds to do the same thing but do it in a slow and sometimes very entertaining fashion. And, of course, the prices of the products get higher and higher and the volume gets bigger and bigger. So that's how I got started.
WASTLER: Hey Ron, I was always a big fan of the pocket fisherman. I carried that thing with me -- you can care it on your bicycle, fish on the way home. It was great.
POPEIL: I still carry one with me in my trunk of my car.
WASTLER: It's great!
POPEIL: Of course, you never know when you are going to catch that big fish.
WASTLER: That's right. And you always have got to be prepared.
WASTLER: Anyway, what is your favorite product that you've done and what has been the most successful and least successful? POPEIL: OK. The most successful without a doubt is the Showtime Rotisserie & Barbecue. Most of the successful projects, like the Pastamaker and the Food Dehydrator and Mr. Microphone and the Smokeless Ashtray, those kind of products do about $100 million at retail. The Rotisserie in the last -- well, it has done over a billion dollars, and probably will succeed in doing another $2 billion more in the next five to 10 years. And so the rotisserie by far is the most successful.
What is different about this product over all the other successful projects is that when people use it for the first time, they love it so much that they have to buy them for other people. I was talking to a gentleman the other day who owns a bank and he was telling me that he bought a lot of stuff on television. It didn't work too good, but when he bought the Rotisserie and used it, he loved it so much that he ended up buying 32 machines to give away as Christmas presents. And he had to come over and compliment me on the -- but that's not unusual with this product. It is unusual with all the other products. We never saw that kind of need to buy so many for everyone else because you enjoyed that product.
LISOVICZ: Well, so it is not only the product though. Let's face it, Ron. It is also the salesmanship, the entertainment value that comes along with your infomercials. You have been satirized by Weird Al Yankovic, a Chicago museum had the "Appeal of Popeil." And then of course probably your greatest moment was the "Saturday Night Live," Dan Aykroyd, the Bass-O-Matic.
LISOVICZ: I mean, how humbled are you by that?
POPEIL: Well, you know, it is pretty nice. I don't spend a lot of time digesting that stuff. There is a lot of it out there. I basically -- it is a business to me, inventing products is a hobby. And so I'll probably do it for the rest of my life. I like the idea that I can think about a product that the consumer needs, create it, it takes about a year or a year-and-a-half to create the product. And you put it in the marketplace. And when people enjoy it, especially like they enjoy the Rotisserie, it makes you kind of really feel good. And, of course, I'm always thinking about bringing forth a new product.
But when you talk about sales, if you're an inventor, the easiest thing that you can do after spending a year-and-a-half of your life working on this project and making it as good as you can make it, when you invent that product, it is just a blessing. But you should be able to sell it so easy. And that's why I have such a passion when I get up on the stage and do the infomercial -- which by the way is unscripted, everything in that infomercial from the testimonials on down are really real.
And so, as I said, people would rather buy a product from an inventor than from just someone who in fact -- someone gave them the perfect and they went on the television, or celebrity and they put their name or face behind the product. Inventors, I believe, can sell their products better than someone who is just a good salesman.
SERWER: Ron, we only have one -- time for one more quick question. I guess I have to ask this. Does the Veg-O-Matic really slice, dice and chop?
POPEIL: It cuts a cow in half and that's no bull.
SERWER: All right, good. I think we've got to end on that note. That's a high point definitely. Ron Popeil, of course, the founder of Ronco and the father of the infomercial. Thank you for coming on.
POPEIL: Thank you so much, folks.
SERWER: All right. Lots more to come here on IN THE MONEY. Coming up, think you know the difference between a stock and a bond? We'll test your busiest -- business acumen. Excuse me, with a little pop quiz.
And put our producers to the test with your e-mail insights. Drop us a line. The address is firstname.lastname@example.org.
LISOVICZ: Sad but true, even most educated Americans are really lacking when it comes to financial literacy. That's something Allen Wastler has been seeing firsthand over the last few months. He has more on that and the "Fun Site of the Week."
Straighten us out, Allen.
WASTLER: You know I'm bumming here. We hit this subject every so often. But I actually have a job opening on the Web site. And I've been interviewing for it. And as part of the interview process we have a test. The applicant has to take it, because plenty of people interview well, hi there, yes, I'm very interested in business journalism. They interview well and everything, and then when they come to writing, it is like, and duh...
LISOVICZ: They know nothing.
WASTLER: They just don't know anything. So we have a quick knowledge basing. And applicant after applicant, these are people with fine resumes, good educations.
WASTLER: No MBAs in the bunch because it is an entry level position. But they're crashing and burning on the test. And I wonder if I'm being too hard on the test. I'm going to give you some questions here. And just see..
LISOVICZ: OK. All right. Andy and I.
WASTLER: How many companies are in the Dow industrials. And name three of them.
LISOVICZ: Alphabetically? ALCOA, Boeing, Citi.
WASTLER: Very good. And how many companies?
WASTLER: OK. You win. All right. Another question for you...
LISOVICZ: That was easy.
SERWER: You didn't say how many are in the Dow Jones 30, though?
WASTLER: No, I didn't that, that's a good one. Here we go, name three top Wall Street investment banks.
SERWER: Merrill Lynch, Goldman Sachs, Morgan Stanley.
WASTLER: There you go. Mr. Serwer, right in there.
SERWER: I'm getting the job, that's pretty cool.
WASTLER: Final question. Final question. Here is a hard one. In general, if interest rates go down, then bond prices, go up, go down, aren't affected or none of the above?
WASTLER: Very good. All right.
LISOVICZ: What do we get?
WASTLER: You guys can come work on the Web site. This is concerning me because in the previous segment when we talk about the working poor and we touched on the fact that the education system seems to be breaking down, and even people with good educations seemingly aren't getting the right kind of jobs. To me this is sort of indicative of well, maybe, something more deeper is wrong.
SERWER: Susan and I are professionals here.
LISOVICZ: I was nervous about this. I have to tell you, I was trying to cheat and look at the questions. Anyway, tell us the fun site.
WASTLER: Anyway, fun site, Memorial Day, I was thinking picnics, I was thinking golf. Picnics ants, golf, ant golf!
SERWER: Ant golf?
WASTLER: And that's what you've got right here. This funny little site, that's a map of the hole on the top there. And what you do is use the space bar and the arrows to aim, and you could actually -- on some of the holes, you actually have to play off the ceiling of the tunnel to come get at the shot. It's a nine-hole course...
SERWER: Quadruple bogey, nice. Was that you, Susan, come on. Get your mouse going there, come on.
WASTLER: Anyway, it's lots of fun and if you've got to work, you know...
LISOVICZ: What kind of ants are those, I never those yellow ants?
WASTLER: Big golfing ant-type thingies.
LISOVICZ: A new species. A new species. Allen Wastler, thanks as always.
LISOVICZ: Coming up next on IN THE MONEY, it's time to hear from you as we read some of your e-mails from the past week. And you can send us an e-mail right now too, we're at email@example.com.
LISOVICZ: Now it is time to read your answers it our question about whether you think the U.S. is safer from a terrorist attack now than it was before September 11. A viewer from New York City wrote: "I survived the September 11 attacks, even though I worked at the World Trade Center. While New York City was not focused enough on the issue, it was the federal government's inaction that really was to blame. Now that Washington is more motivated, I do feel safer."
Ron from Idaho wrote: "Our cities are not safer. People are afraid of government intrusion into their lives like when children are threatened with jail time for making a threatening picture in art class. All that does is anger people and make us less prepared for when the real thing comes along."
And Marty and Jim wrote: "We're definitely safer. Between the state and local government's ineptitude, more people are moving out of the cities. Now the terrorists have fewer targets in those cities."
Now for our e-mail question for this Memorial Day weekend: What's the best way to honor our troops killed in action in Iraq? Send your answers to firstname.lastname@example.org.
And you should visit our show page at money.com/inthemoney. That's where you'll find the address for our "Fun Site of the Week." Thanks for joining us for this edition of IN THE MONEY. Thanks to "Fortune" magazine editor-at-large Andy Serwer, and Money.com managing editor Allen Wastler.
Join us tomorrow at 3 p.m. Eastern when we'll look at the case against former New York Stock Exchange Chairman Dick Grasso, the New York State attorney general is now suing him to get him to pay back more than $100 million from his pay package. That's tomorrow at 3. See you then. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com