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CNN IN THE MONEY
Cafferty Discusses Economic Climate; Florida Congressman Foley Resigns Over Email Scandal; Air America Gives Airwaves a Liberal Voice
Aired September 30, 2006 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN ANCHOR, IN THE MONEY: The political documentary or talk radio. Here's a hint, talk radio. All that and more right after a quick check of the headlines.
FREDRICKA WHITFIELD, CNN CORRESPONDENT: Here are the top stories. A new scandal rocks Capitol Hill. Prominent house Republican Mark Foley of Florida has resigned. It happened after a revelation that he allegedly exchanged inappropriate e-mails with a male teenage page. The House voted unanimously yesterday for the ethics committee to investigate that matter.
Tragic news for families gathered at a Brazilian airport. Officials say they found the wreckage of a Brazilian Airliner that was carrying 155 people. Some reports say it may have collided with a smaller plane. But there are no reports, as yet of survivors.
The U.S. military says it is uncovered a suspected al Qaeda plot to attack Baghdad's fortified green zone. A guard for the leader of Iraq's largest Sunni party is now in custody.
Police in India accuse Pakistan's spy agency of masterminding July's deadly train bombings in the Indian city of Mumbai. More than 200 people were killed in that attack. Mumbai's police commissioner says evidence shows Pakistan planned it and a Pakistan-based Islamist militant group carried it out. The Pakistani official rejects that claim.
In Colorado, dealing with pain and anger over the killing of this young girl, 16-year-old during a siege at a high school. A public memorial service is being held today for Emily Keyes. She and five other girls were taken hostage and sexually assaulted by Duane Morrison on Wednesday. Morrison shot and killed Emily and then himself when a S.W.A.T. team stormed into the school.
We will update the top stories at the bottom of the hour. I'm Fredricka Whitfield. IN THE MONEY begins right now.
ANNOUNCER: From New York City America's financial capital, this is IN THE MONEY.
CAFFERTY: Welcome to the program. I'm Jack Cafferty.
Coming up on today's edition of IN THE MONEY, signs of the times. Home sale numbers tell you what the market has been doing, not necessarily how to react to it. We'll see what the new stats mean for buyers and sellers.
Plus, the shrinking safety net. The new study says fewer companies are now offering health insurance to workers. We'll find out who in the long run is going to pay for that.
And look busy, everybody, for lots of Americans, a big chunk of the workday isn't about work at all. Get the word on why so many of us are goofing off on the job.
Joining me today are a couple of IN THE MONEY veterans. Jennifer Westhoven and Andy Serwer.
So the clock is ticking on the midterm elections. Traditionally elections in this country are about economics, jobs, you know, health insurance. The war in Iraq threatens to take the economy off the front page when people show up at the ballot box. I wonder really what's going to drive this election whether it might be the trouble we're in overseas and the foreign policy and the war.
ANDY SERWER, EDITOR AT LARGE, "FORTUNE" MAGAZINE: I think it's the war. I think the economy is bunk. I think it reminds me of last time in 2004 when it looked like the economy was bad particularly in terms of job losses. Republicans were very concerned, month-by-month losing more jobs. Turned around in the summer and became a non-issue in 2004. I think the same thing is happening now with gas prices and also the stock market boosting people's feelings about that.
JENNIFER WESTHOVEN, "HEADLINE NEWS" CORRESPONDENT: Well I don't know, and I don't want to be too simplistic. With gas prices, people were so angry in the summer and you could hear people just ire at the administration and energy prices, they sort of lumped them all together with those really largely, you know, sharply down. It seems like the sting has gone out of that. I feel like I hear fewer people sort of ranting, you know, just generally in public.
CAFFERTY: The psychology is interesting. We have appropriations for the war in Iraq and Afghanistan totaling close to $500 billion. But if it costs me $6.00 less to fill up my gas tank, everything is fine.
SERWER: Maybe $20 bucks, like you are suggesting. And I think the war has people polarized and that's the issue.
CAFFERTY: All right. Well, we will keep an eye on it as we crawl toward November.
How do you feel about the latest housing statistics and how does that depend on whether you want to buy a home, unload one or just make a buck off the business. A report out this week from the National Association of Realtors shows existing home prices down for the first time since 1995. Washington says housing starts were down 6 percent in August, but new home sales in August were actually up. The National Association of Home Builders pegs its builder optimism index at the lowest point it's been in 15 years.
Shawn Tully is going to help us sort all this out and see what these numbers add up to. He's a senior writer with "Fortune" magazine, a frequent quest on IN THE MONEY and a very dear friend of all of us who labor here once a week. Shawn nice to see you.
SHAWN TULLY, "FORTUNE" MAGAZINE: Good to see you, Jack.
CAFFERTY: So was there a bubble? Is it bursting? What is a slight decline in home prices year over year for the first time in more than a decade tell you about what's going on in the market?
TULLY: We definitely have had a bubble. And that bubble built up through the late '90s through about 2001. We should have had a correction in 2001 or 2002. Instead, after the Nasdaq tech stock implosion, Greenspan cut interest rates below the level of inflation. That gave everyone a big incentive to buy, and it kept the housing boom going for an extra three or four years and that's why we had a boom on top of a bubble or a bubble on top of a boom, whichever order, so we need a double correction now to get back to normal pricing, where people can afford these houses coming on to the market.
Whenever you have very high prices, like you are seeing in the oil market, you get this surge in new supply. New York City is looking like Hong Kong there's so much building going on.
WESTHOVEN: So Shawn, Jennifer Westhoven hi.
TULLY: Hi, Jennifer.
WESTHOVEN: I'm one of these people. I missed out on the whole housing boom. I missed out on those gains. I'm looking now and I'm starting to think that, you know, things are starting to look pretty good. Is this a time to buy for people like me or should we wait a little longer?
TULLY: I would wait a little longer. However, we definitely see a lot of good deals coming up. We haven't had any reason to buy now for a while because we've had such high prices. Now prices are going to go down for about two years. Typically when you have these cycles reversing, then they stabilize and go flat for a couple of years. So in the early stages, you definitely tend to see major price declines in these very, very hot markets.
I'm talking about the coastal markets, not Houston and Dallas and Indianapolis. But the coastal markets where the prices have gone up more than 100 percent over five or six years. And those markets were definitely going to see major declines and far better buys. Buyers should be in no hurry.
WESTHOVEN: But if I wait too long, don't I risk mortgage rates going up?
TULLY: Well, it's possible, but I think the decline in prices will offset an increase in mortgage rates. So I would wait for distressed sellers and wait until these inventories build to enormous levels and especially the new home sellers and the sellers -- builders of all these condo projects that are going up all over the country. They have to sell. They can't hang on. They are going to have to discount their condos down to the point where the prices will be very reasonable again.
SERWER: Shawn, you and I are frequently on the opposite sides of equations here and I think we are right now. You are such a Dr. Doom. You are always thinking the world is going to end. This is no different than any other time. We're going to have a soft landing. The economy is slowing down. Interest rates are going back down. I mean, you know, is it very clear that this is just a little pause that refreshes? It's all in front of you.
TULLY: I love arguing with you. You're going to put me in charge of your kids' finances. I got to take care of you, Andy. No, I do not think there's going to be a soft landing in the housing market. The economy is in good shape. This is one of the most interesting facets of this argument about the housing market. Normally when you have a major decline in housing prices, in the markets in which you have those declines you have job losses and a weak economy. This is not the case this time.
In Washington, D.C. area in San Diego, these are strong job markets. Prices are dropping and the reason is this enormous excess supply of homes because the prices are so high and there's been so much overbuilding until that inventory gets worked off, prices can't go up. They can't even stabilize. The soft landing scenario in housing was we were going to have -- go back to five or 6 percent analyzed increases. That was supposed to be normal, in quotes.
Well, we're not seeing anything like that. We're already seeing decreases. When you see decreases year over year, it's much worse than it looks for two reasons. You are losing to inflation. If prices are down 1.5 percent you've really lost 4.5 percent. Number two; you don't see all of the discounting that the builders are using to move their inventory. They are giving away rec rooms and closing cost. The actual prices are significantly lower than the ones that are published.
CAFFERTY: Shawn, we've got to leave it there. But I want to thank you for coming by here and getting Serwer back on the right track.
SERWER: Dr. Doom.
CAFFERTY: It's good to straighten him out once in a while.
TULLY: I take pride in that title.
CAFFERTY: Shawn Tully, senior writer of "Fortune" Magazine.
When we come back on IN THE MONEY, how your boss could affect your next checkup. More and more companies are cutting health insurance as a benefit. We'll get some stats on that trend. And see what it means.
And motor city breakdown. Who is in talks with Carlos Ghosn the big guy at Nissan and Renault. We'll get his take on America's car business.
And some say it's torrid, others say it's tepid. Films like "Fahrenheit 9/11" helped turn the documentary into a political tool, not a huge one but a tool of sorts. See if it can generate more provocative talk radio, it can't.
WESTHOVEN: A new report out this week says health insurance costs jumped a lot faster than paychecks. More than double the rate of inflation so far in 2006. Some companies can't afford it. Fewer are offering health care coverage for workers. So is there an end in sight to the spiraling costs? Joining us Diane Rowland, she is executive vice president of the Kaiser Family Foundation, which conducts a well- respected survey that comes out each year. Diane welcome to the program.
So we're seeing employers drop health care coverage. Does it still make sense to tie health care coverage to your job anymore? Massachusetts we know is trying something different.
DIANE ROWLAND, EXEC. V.P., KAISER FAMILY FOUNDATION: We know the majority of Americans receive their health insurance coverage through their jobs, and even Massachusetts with its new experiment is still binding most of their individuals to employer-based coverage. So I think we're not seeing the end of an employer-based coverage system but we're seeing a lot of fraying around the edges that is going to take some fixing.
CAFFERTY: The numbers are coming down. Only 61 percent of companies still do this kind of stuff, down from 65 percent. The thing that -- the question that sticks in my head almost continually every time the subject of health coverage comes up is that we've got 46 or 47 million people in this country who have no insurance and I've got to know if you want to know how fast you can go bankrupt is to go price yourself a little chest x-ray or one of those sophisticated tests they do. We're the only industrialized nation in the world that is in such awful shape when it comes to providing health care for our citizens. What's up with that?
ROWLAND: You are exactly right. I mean there's 46 million Americans without health insurance coverage. Largely come from working families, 81 percent of them are workers or their dependence so there are gaps in employer based coverage and our inability to make insurance affordable is the major problem facing the U.S. health care system today.
SERWER: Hey Diane let me ask you a metaphysical question. I want your personal opinion on this. If you were in charge, how much responsibility would you put on the private sector, on companies? How much would you put on companies to provide health care coverage for workers?
ROWLAND: I would put a lot of responsibility on companies to offer health insurance coverage to their workers because through group offerings, you get the most affordable health care coverage with the most comprehensive benefits. But I think that we need to recognize that many small firms, especially low-wage firms, can hardly afford the premiums that they are being asked to pay for their workers. So we really need to begin to look at how we can do a better job through our federal tax system or directly through subsidies of helping make coverage affordable for the lowest income workers in the firms that employ them.
WESTHOVEN: Any suggestions?
SERWER: Isn't that what we're doing now? Aren't we doing that now and how come it's not working?
ROWLAND: It's not working because a lot of the small firms have a high turnover in their workers so that they haven't got the investment in being able to make coverage affordable to them. But we're also seeing that small firms pay higher prices. Their premiums are even higher than those for the largest firms in our survey. So we really still have an affordable issue.
Why you noted that the rate of increase has been coming down, it's still a substantial increase each year. And 87 percent increase over the last five years in premiums. So we really need to also focus on how to make health care and health care costs more moderate.
CAFFERTY: Why don't the delightful folks in Washington, D.C. pay any more attention to this subject than they do? We've been having the same conversation for, it seems to me a good long while in this country and those morons in Washington just keep looking the other way. Tell me about the politics behind this issue.
ROWLAND: The politics behind the issue is that the health care industry is one of our nation's largest industries. There is somebody who is going to lose in a major way every time we talk about health care cost containment. So many of the powerful forces in Washington are for keeping health care spending going up. We also saw an attempt a few years back to really provide stricter utilization controls in our health care coverage to try and bring down the costs, and we had a public backlash because the public basically complains about rising health care costs, but they don't want to give up any of the health care services that they or their family members may need.
WESTHOVEN: You know I wanted to ask you a little bit about that, though. There was an article in the "New York Times" recently that brought this up. Without minimizing the problem of 40 million-plus Americans with no health care coverage, there's this argument that the reason health care costs so much more is we have better technology, we have better drugs. We're all living longer. Maybe we shouldn't be complaining because we're getting an extra 10 years on our lives. What do you make of that?
ROWLAND: Well, in fact, the theory espoused by David Cutler at Harvard is that we've made a good investment by spending a substantial share of our GDP on health care. Health care is a large industry that's had very good effects in terms of improving our longevity. Yet we know that we're also spending more than we need to. We're not getting the same kind of health care results that other countries do by spending far less. So there are clearly ways that we can make our system work better. We can reduce medical errors, we can reduce duplication, and we can reduce a lot of unnecessary tests that are going on. So there are ways we can save money within our health care system and still have the kind of outcome we all expect.
CAFFERTY: Diane, we have to leave it there. It's a subject that's of vital concern, I would guess in some capacity to all of us and it's nice to have you on the program to talk a little bit about it. Diane Rowland is executive vice president of the Kaiser Family Foundation.
ROWLAND: Thank you for having me.
CAFFERTY: Now it's time for this weeks look ahead. A couple of economic reports due out in the coming week, auto sales out on Tuesday and truck sales come out on Tuesday, too. I prefer the truck sales myself. The big one to watch for though is the jobs report. That comes out next Friday. Payroll numbers for the month of September, right? The September thing and the unemployment rate. And we'll pick those numbers apart for you on next week's program. Take a look at Wall Street's reaction. We've got the Dow Jones Industrial average as we tape this program on Friday, making a new high for most of this week. You'll know by the time you watch this whether it made it or not.
Coming up after the break kicking the tires at GM. Nissan boss Carlos Ghosn has been talking with the U.S. car giant. Find out what he thinks Detroit has to do to get back on track.
And the mouth that roared. See whether talk radio stars like Rush Limbaugh pack a bigger punch than a political documentary. You bet they do.
And paid to surf. We are going to look at how much of the average workday does not involve work except here at CNN. Stick around.
WESTHOVEN: All right. It's the week's top stories here in our "Money Minute." A federal judge gave former Enron finance chief Andy Fastow a surprisingly light sentence. Just six years in jail down from 10 years. The judge said he was lenient because Fastow was sorry and his testimony helped convict Ken Lay and Jeff Skilling, the two men who once ran Enron.
Another executive went to jail this week. Former Worldcom CEO Bernie Ebbers started his 25-year prison sentence. Ebber was found guilty for his role in Worldcom's $11 billion accounting fraud. His lawyers are appealing the sentence to the Supreme Court.
And Congress summoned 14 people to shed some light on the boardroom leak scandal at Hewlett-Packard are and 10 of them plead the fifth. Current CEO Mark Heard did answer some questions. But he said the internal investigation is not a priority for him or the company.
And it's another case of buy high and sell low. Research shows most mutual funds jumped head first into oil investments this year. Just in time to lose $4.5 billion now that oil prices have gone down.
SERWER: The automotive world has its eyes fixed on Paris this week. The Paris motor show kicked off this weekend. Before the show began, Carlos Ghosn the man running Renault and Nissan met with GM CEO Rick Wagner to talk about a possible alliance. The two companies have been in negotiations since July. Jim Boulden cut up with Ghosn Friday at the show.
CARLOS GHOSH, CEO, NISSAN MOTOR CO: I am convinced based on the Renault/Nissan experience that only a win, deal can go through.
JIM BOULDEN, CNN CORRESPONDENT: How would you characterize the talks you had with Rick Wagner on Wednesday?
GHOSN: Cordial, serious and constructive in the sense that we both agree that we need by mid-October to come to a very clear conclusion, yes or no. Yes or no on a simple question. There are enough synergies on the table to make this deal attractive and possible. So we can go to phase two, which is eventually how.
BOULDEN: Did you motivation from the GM dealer?
GHOSN: Well I think motivation is something that doesn't appear immediately. You cannot say, I am motivated, I'm not. I start a little bit, and then I'm a little bit interested. Then after being interested I see the number and then I start to be excited. Then you end up with motivation. So it's a progressive, I would say, process.
BOULDEN: What would a three-way alliance bring for Renault and Nissan?
GHOSN: That's what we are examining today about how much can you save in terms of cost. How much can you increase your costs? How much can you share your investments by sharing? Many things that some of the partners have on their lot, that is exactly what we are doing today. I want to tell you that it's obvious that if a deal like this would be a problem or a threat to existing programs or to existing midterm plans, it's not going to work.
No one is going to accept it. I understand if -- when Rick says you know I have my turnaround plan. I want to make sure this is going to be only a strengthening of the plan and cannot be a weakening, I have the same attitude. We are here to make a win-win operation. If not, well, it's not going to happen.
BOULDEN: And Ford is still an option if it doesn't work with GM?
GHOSN: By talking to this, it means that we are taking initiatives. We are responding to an initiative, which has been taken by one major shareholder of General Motors. We think that the Renault/Nissan alliance is going well, that we can continue to progress with two partner. We still think that I think a third partner is a good opportunity. It's not mandatory. So if there is an opportunity or another initiative, we will respond to it very seriously.
BOULDEN: If you could put odds on the successful alliance between Renault and Nissan and any American partner, what would those be?
GHOSN: Depending on the timing. If you tell me few weeks, I tell you odds are very small. If you tell me in the long term, I think it makes so much sense that I think the probability is so much higher.
SERWER: Coming up on IN THE MONEY air rage. Air America has tried to muscle its way into a largely conservative playing field. See where that's gotten more clout than some fancy pants political documentary.
Plus, maybe they shouldn't call it the work place. Find out what's really going on inside all those cubicles. We'll look at the new on the job culture of goofing off.
We want to hear what you think about the show. You can send us an e-mail right now we are at INTHEMONEY@CNN.com.
WHITFIELD: Hello. I'm Fredricka Whitfield. Now in the news. Is Osama Bin Laden dead or alive? A French newspaper is sparking that question. That's an old story, sorry about that.
Inappropriate e-mails. A congressman allegedly sent to a teenage boy is now the focus of an investigation. New this morning the House votes to refer the case of former Congressman Mark Foley to the ethics committee. The Florida Republican resigned after the story broke.
The U.S. military says it has uncovered a suspected al Qaeda plot to attack Baghdad's fortified green zone. A guard for the leader of the -- of Iraq's largest Sunni party is now in custody.
And in the other war zone, Afghanistan, a suicide bomber detonated his explosives this morning in a crowded shopping area in Kabul. At least 13 people were killed. It is the fifth suicide bombing in the Afghan capital this month.
We'll have more top stories in 30 minutes. I'm Fredricka Whitfield.
CAFFERTY: There is no shortage of short films and full-length documentaries criticizing the Bush administration with the war in Iraq. Some critics say that these documentaries are the less answered to the success of conservative talk radio. Our next guest, though, says that's kind of a weak counter balance. Howard Kurtz is a media critic with the "Washington Post" and he is also the host of "CNN's Reliable Sources."
Howard nice to have you on IN THE MONEY program, welcome.
HOWARD KURTZ, MEDIA CRITIC, "WASHINGTON POST:" Thanks. .
CAFFERTY: I saw an interview on "The Situation Room" late last week with what's his face from Air America, the kid who used to work for "Saturday Night Live."
KURTZ: Al Franken?
CAFFERTY: Al Franken. Well, everybody is a kid compared to me. This Air America operation is sucking for wind. I mean, it's almost day-to-day now and looks like maybe they're not going to make it. Why can't a liberal talk radio operation get off the ground in this country?
KURTZ: Well, Air America tried to do something pretty bold and risky which was to buy a bunch of radio stations in major markets and make it work that way as opposed to syndicating programs. There are a few syndicated liberal programs out there. This is turf that has been dominated by conservative talkers for about 20 years and liberals don't seem able to really suit up and get on that playing field.
WESTHOVEN: Why is that? Is there something different about people that want to listen to the radio as opposed to go out and buy a Michael Moore documentary or is there something just wrong with the way Air America was actually structured? It seems crazy there are so many people who say they want this but then it didn't seem to have worked.
KURTZ: Well I think Air America's business plan was fundamentally flawed because it cost so much to buy these radio stations and they tend to be dinky stations that don't have huge signals and so forth. About 20 years ago with the rise of Rush Limbaugh and Sean Hannity and other conservative radio talkers is that people on the right who felt that CBS and ABC and CNN and the "New York Times" and the "Washington Post" were all leaning to the left, they wanted some place where they could go and hear opinions that were more pleasing to their ideological side.
So conservative talk radio filled that vacuum. Having filled that vacuum, it now has a very strong beachhead where people who are conservative tend to make up the bulk of the audience.
SERWER: Howard, let me ask you to look back at the whole spectrum of media and it seems to me we're getting to be more like the European model. In the United States, most media was the middle of the road. In Europe, in particular with newspapers if you are in Paris you read the conservative paper or the liberal paper. It's been like that forever. Is that where we're headed?
KURTZ: I resist that model until the sense that I think it's a good thing that organizations like the "New York Times" and the "Washington Post" and CNN try to achieve some kind of balance. Now we're not perfect and journalists have opinions and sometimes they show and all of that. But the numbers go against my argument which is to say with the rise of Fox News and conservative talk radio and NPR on the left and certain liberal cable programs, there is -- polls have shown that people like hearing opinions that reinforce their own, which makes me wonder whether or not we have two separate echo chambers in this country.
CAFFERTY: What about this idea that the general public out there is going increasingly disenchanted?
KURTZ: That's it.
CAFFERTY: There's something wrong with my mouth today. Disenchanted with the political situation in Washington. If you look at the public opinion polls that are opposed to the war in Iraq. They don't like President Bush as much as they used to. They hate Congress as a whole, which is also controlled by the Republicans and I've got a couple of things where there are some indications that the audience of the right wing, you know, media outlets, Fox News channel and some of the right wing talk shows are actually beginning to reflect this. Is that something that you are aware of and does it mean anything?
KURTZ: Well, look; the war in Iraq has not gone well. That's not an opinionated statement. That's the reality. The Bush administration has struggled politically in the last year and a half. Everything from the Social Security debacle to Katrina to obviously the situation in Iraq. So even the most conservative leaning, you know rabid right- winger has got to have some, one foot at least in the camp of reality and to reflect this. But at the same time it doesn't make we in the news business any more popular.
We get it from both sides. There are liberals who believe fervently. I get e-mails over day by the hundreds that you folks are not standing up to President Bush and your letting them lie to us and meanwhile, conservatives have their traditional distrust of us and feel that we are not giving this White House an even break.
WESTHOVEN: I think that's why with so much dissatisfaction out there it's surprising to me that the liberal radio isn't doing better right now. But, of course, what conservatives always complain about is that Hollywood is so far to the left that, you know, they can't watch anything. You know, everything is full of stuff that -- values that they don't agree with, let's just say. What do you think about the idea that Hollywood is a lot less powerful than talk radio?
KURTZ: I think Hollywood is pretty influential just in terms of its impact on the culture. Obviously, most films that are made are not sort of blatantly political films trying to change your mind about the Bush administration. And we do have this phenomenon as you mentioned, at the top of liberals going out and making documentaries. But with the notable exception of Michael Moore's "9/11," most of these movies are only in a small number of theaters and mostly you can get them on DVD.
They are flying under the media radar, but they represent I believe a frustration on the left with these news organizations that are supposed to be tilted to the liberal side that they feel are not being aggressive enough about the war, about President Bush. It doesn't match what they see as the political landscape. There's as much frustration with this business on the left as I've seen in all the time that I've been working as a journalist. SERWER: Let me ask you a quick last question. May be slightly uncomfortable. We talk about Fox on the one side. Then you mentioned the "New York Times," "Washington Post" and CNN do you think those last three news organizations are liberal?
KURTZ: Well, certainly the editorial page of the "New York Times" very liberal. "Washington Post," that editorial page is less so. I think when you particularly look at social issues, gun control, abortion; homosexuality there is a leaning to the left unconsciously, subconsciously or otherwise by organizations, including CNN. I think when you look at political issues; people didn't get into this business to be partisans of the Republican or Democratic Party. They got into it because they wanted a good scoop and like to report and tell stories. I'd like that distinction social issues versus political issues on this question of bias.
CAFFERTY: One last question. Give me your read on the timing of the release of the Woodward book, 40 days before the midterm elections coming out with a press campaign. They're going to do an interview on "60 Minutes." And this book apparently lacerates the Bush administration on its conduct of the war but more importantly on what they are telling us about the conduct of the war.
KURTZ: Well I think Bob Woodward has uncovered in his usual fashion some devastating details about the way in which the Bush administration has not been candid with the American people about this war. But from a media point of view, on Friday, the "New York Times" front page has the big scoop on the story, even though he works right here at the "Washington Post." It just shows you that Woodward is a big event and sometimes you can outsmart yourself at these publicity campaigns.
WESTHOVEN: That is fascinating stuff. Thank you so much for your insights on the political leanings of some of the media. Howard Kurtz who is a media critic at the "Washington Post" and also the host of "CNN Reliable Sources." Thanks.
Lots more to come here on IN THE MONEY.
Up next, busy signals. If you can fool your boss into thinking you are working, you're not alone. Find out how much of the American workday is actually playtime.
And back in the saddle. We'll introduce you to a guy who didn't want to just ride off into the sunset when he retired.
SERWER: There is no question that the Internet has made finding and sharing information at work much easier. But all that information isn't necessarily job related; we know that personal email, fancy football. All on the company time, our next quests says beware because big brother is watching. Joining us now is Nancy Flynn the founder and executive director of the Epolicy Institute. Nancy welcome to the program. I hope that employers realize that very often you know that if your are buying something online at work that you are actually saving the company time instead of running out and taking two hours to go to the store. Is that taken into account here?
NANCY FLYNN, EXECUTIVE DIRECTOR, EPOLICY INSTITUTE: Well that really depends on your employers policy and if your employers policy strictly limits or bans the amount of time you can spend online, you can end up being the one of the 51 percent of employees who have been fired for violating company email and Internet policy.
WESTHOVEN: Is that really fair Nancy? And I say this because like many people I wake up, I probably do an hours worth of work from home, I'm checking my company email, people have black berries, I letting the company you know bleed into my personal time, isn't fair that some of my personal time gets done here?
FLYNN: Absolutely. I agree with you. At the Epolicy Institute we advice organizations to allow their employees a limited amount of personal online time. But of course the key word there is limited. We conduct an annual survey with American Management Association and what we found is that 86 percent of employees are engaged in personal email at work, you have another 58 percent of employees who are using the companies instant messaging system for personal chat, and 10 percent of employees tell us that they spend at least four hours a day emailing. Now if you are working an eight-hour day there is half your workday gone to email, not all of which is business related.
CAFFERTY: You can probably add another 10 percent who are just flat out lying about what they do. Let me ask you about this idea that the company monitors our emails. Some days I really hope that is true, because I can't resist the temptation sometimes to write emails with the idea that some middle management is going to read it and begin bouncing off the walls. I hope that happens periodically. How much do they snoop around in what we are doing?
FLYNN: Right. Again in our most recent AMA policy institute survey we found that over 70 percent of employers are monitoring their employees Internet activity and for good reason. Another industry survey revealed that all of the cyber slacking that takes place by employees who are on the web wasting time during the day cost employers about $750 billion dollars a year in lost time. So it is really appropriate for employers to take advantage of that legal right. And keep an eye on what your employees are doing on the web, on e-mail, even on blogs if you have a blog system at your office.
SERWER: You mean all those Websites that I'm going to -- never mind. Let me ask you about e-mail. This is a real tricky situation. If you're saying -- sending out an e-mail saying hey Sylvia, want to go on a date with me Friday night, that's a personal e-mail. What is a personal e-mail when I'm e-mailing a friend and asking about something going on and he throws in some business stuff? Everyone nowadays has business and personal life that are intermixed. And how can a company tell?
FLYNN: Right, well, and you have raised a really big issue for business. The number one challenge facing employers when it comes to employee e-mail is you have to distinguish your business critical e- mail or business records from insignificant records. Because, remember, at the end of the day, e-mail is the electronic equivalent of DNA evidence. If your organization ends up on the wrong side of a workplace lawsuit, your employee e-mail will be subpoenaed. Our latest survey showed that 24 percent of employers had employee e-mail subpoenaed. You have to define what is business record e-mail what is insignificant e-mail, and then let your employees know because you don't want your employees work operating in the dark.
WESTHOVEN: All right. All this sounds a little bit like no fun of any kind. And it is a little like -- it feels a little heavy. We're all talking about what employees can do, right, which is basically stop using your work stuff for personal use. But what can bosses do? Because I don't hear too many people saying my boss said it is OK to go to Amazon and it is OK to go to Ebay a little bit. Shouldn't bosses be stepping up and letting us know what is appropriate and instead of having us guess.
FLYNN: I could not agree with you more. Not enough employers are telling their employees what the company's rules are. We know that only 51 percent of organizations actually inform their employees about their policies. But what some organizations do, again, are most recent survey revealed that about 65 percent of employers are actually taking advantage of technology to block employees from ever getting to those sites.
Whether it is a shopping site, a gambling site, your fantasy football site, whatever it may be, some employees are just so concerned about all of this wasted time. Not to mention potential liability that they're just blocking access before employees can go ahead and get online.
WESTHOVEN: All right. Nancy thank you so much. I hope my mom was watching and she's not going to send me those embarrassing e-mails at work.
FLYNN: Tell her to stop.
SERWER: That's the least of it.
WESTHOVEN: Thank you very much.
FLYNN: Thank you.
WESTHOVEN: Coming up next on IN THE MONEY, the medium is the message. Radio Shack recently made headlines for firing workers electronically. But other companies are doing it too. See why some companies think it is suddenly OK to K.O. people by e-mail.
And it is also a time to hear from you as we read some of your e- mails from the past week. You can send us an e-mail right now to INTHEMONEY@CNN.com.
CAFFERTY: Well call in the armed guards and the armored cars. That's actually what some companies are doing these days when they want to shed some employees as in fire them. Joining us now with some of the worst stories is CNNMONEY.com Jeanne Sahadi. Nice to see you again. Welcome back.
This Radio Shack deal where they sent out these e-mails, and said, by the way, don't bother coming back tomorrow, I had no idea is that stuff really happening in this country of ours?
JEANNE SAHADI, CNNMONEY.COM: Yes. Increasingly you're getting a lot of dehumanized strategies that come in the name of expediency. You want to fire a lot of people at once, much easier to do it by e-mail or conference call.
WESTHOVEN: Does it make news because people find it just despicable?
SAHADI: That's the good part of it. I talked to some H.R. experts and they came up with awful strategies that are not the firing by remote, sort of very inhuman ways of getting rid of people. The worst was cattle call. You bring a group of employees into an auditorium, divide them into two groups. Give each group a different color folder; you escort the groups out of the auditorium. One group goes back to the office; one group goes on to the street.
It doesn't -- it is -- corporations aren't warm and fuzzy creatures but they really overstep their bounds, I think, in terms of -- it is unethical. I was talking to an ethicist, he said when you treat people without respect, and it is an ethical violation.
SERWER: The company probably does really well with treating employees that way.
CAFFERTY: I mean it has a negative effect on the people that don't get fired. I mean if you're in the room and half the people that you were in the room with aren't there when you come back from lunch, how quick am I going to start looking for another job?
SAHADI: That's the long-term cause for the company. Morale will always be reduced in a layoff. Productivity will go down, voluntary turnover will go up. That's hugely expensive to the company. Short of short term thinking is not the smartest.
SERWER: Someone here has probably taken notes that the company. That's what scares me.
WESTHOVEN: Some people are scared. They don't want to go through the firing process. When you have to do electronic it is really tough.
SADAHI: I heard one company left the new org chart on the photo copying machine hoping people would figure it out and leave.
CAFFERTY: You have some e-mails as a result of your work. Want to share a couple with us.
SADAHI: We have a huge number of e-mails and blog responses from readers. One guy wrote in and said, "I was called into the boss' office and told the company was going in a different direction and was let go. Two days later I received a letter in the mailing that since I hadn't shown up for work, they could only assume that I quit." That's bad behavior.
SERWER: That's like Dilbert, you know.
SADAHI: Yes. Got another one that said, "Before you go to work read the morning paper, you might learn you've been fired. I was a chef at a four star hotel. One morning I was reading the local "Foodie News" in the paper. One of the stories WASTLER: an announcement about another chef who was taking my place."
SERWER: That is just crazy stuff. All right. I think we're going to leave it at that. Jeanne Sahadi, thank you very much from CNNMONEY.com.
SAHADI: Thank you.
SERWER: About six months after he retired from the army, Bud Strom used part of his pension to purchase a deserted piece of land, once home to a cattle ranch. With a lot of hard work, Strom restored the land and is now living his dream. Valerie Morris has the story.
VALERIE MORRIS, CNN CORRESPONDENT (voice over): On a 1,000 acres in Arizona along the Mexico border, 74-year-old Bud Strom is miles away from traditional retirement. He's a cowboy.
BUD STROM, CATTLE RANCHER: All right, guys. Let's push them around. I have two missions in life. I think one is to be a steward to my land and the other is to be a steward to my animals.
MORRIS: A cowboy at heart since spending summers as a teenager in Montana, Strom, however, chose a career in the military and served 31 years in army intelligence.
STROM: When I retired, I just said I think I would like to give this a chance. And this ranch came open. And I found an opportunity to make an offer on it and the offer was accepted. And lo and behold, my hands became very sweaty.
MORRIS: Strom says raising cattle is a hard living. But he loves his work so much, that he depleted his savings to stay financially afloat.
STROM: It is constant work. But it is something that I live for.
MORRIS: Strom's life on the ranch has inspired his literary side. He's published two books and one CD on cowboy poetry, work that exhibits his respect for the history of the American west.
STROM: I heard on a Montana cattle drive in 1989, my first cowboy poetry. I said, my god what a wonderful way to tell a story of a lifestyle. MORRIS: Valerie Morris, CNN.
SERWER: We'll be right back with more IN THE MONEY.
CAFFERTY: Time now to read your answers to our question of the week about if it is time for private business to take over NASA.
Jim wrote this, "That is easier said then done. A huge amount of the scientific value we get from NASA does not really have any financial value, at least not in the short run. The last time I checked, long term planning was not something corporate America cared for. If NASA goes to private companies, that's the end of NASA."
James in Boston wrote this, "Yes, the taxpayers should not be forced to foot the bill for these programs when so many other vital services on Earth are going broke."
And Alan wrote, "Let me put it this way: If you were an astronaut would you like to fly around in a spaceship built by the company that submitted the lowest bid? I rest my case."
Here is next weeks email question of the week, "Is the quality of your healthcare getting better along with the higher prices?" Send your answers to INTHEMONEY@CNN.com. You should also visit our show page at CNN.com/inthemoney.
We thank you for joining for this week's edition of this tidy little business program IN THE MONEY. My thanks to "Headline News" correspondent Jennifer Westhoven, and "Fortune" Magazine editor at large Andy Serwer. We hope to see you back here next week Saturday at 1:00, Sunday at 3:00. Until the next time enjoy the rest of your weekend.
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