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QUEST MEANS BUSINESS
Dow Soars; Apple Announces New Product Line
Aired September 1, 2010 - 14:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MAX FOSTER, GUEST HOST, QUEST MEANS BUSINESS: The Dow soars on signs of economic strength, but fears of a double dip recession are still close to the surface. U.S. car sales run out of gas. Without Cash For Clunkers, Ford and GM suffer.
And a shiny new Apple: CEO Steve Jobs revamps its product range.
I'm Max Foster in for Richard Quest. This is QUEST MEANS BUSINESS.
It doesn't take much to send the Dow sharply higher, or lower, in fact. In a moment we'll be getting an assessment from Joseph Stiglitz, Nobel prize winner and former adviser to Bill Clinton. He believes the economy, the world economy, could be at risk of sliding back into a recession.
Well, Wall Street is starting September with a big bang. All the big three major indices are rallying. It has a lot to do with some upbeat figures on manufacturing. Alison Kosik joins us now from the New York Stock Exchange.
ALISON KOSIK, CNN FINANCIAL CORRESPONDENT: Hi, Max.
Those fears of a double dip, at least here on Wall Street, definitely put aside today. All of the major averages up sharply. You know, we got a good headline from China that manufacturing rebounded in August and then we saw the Dow especially pop after we got numbers from here in the U.S. We found out that ISM manufacturing, the index, showed that manufacturing grew for the 13th month in a row. That was more than had been forecast. In fact, the head of the survey says that production actually drove the number higher and that there is no sign of a double dip. In manufacturing, of course, that is exactly what investors want to hear.
We also got word from Australia, Australia's GDP stronger than expected. So, you combine all this, the U.S. numbers, with China and Australia. It is boosting optimism that a global economic recovery is underway, Max.
FOSTER: OK, Alison, thank you very much indeed for that.
Well, it is about time the U.S. got some positive economic news because recently there has been nothing to smile about in terms of economic news. A report from the payroll firm, Automated Data Processing shows private employees cut 10,000 jobs in August. Economists were expecting 13,000 new jobs. Government jobless numbers, which include the public sector, are due on Friday. Last week revised GDP figures showed just how much America's recovery has stalled. Second quarter growth came in at 1.6 percent. And that is a drastic slowdown from the initial estimate of 2.4 percent.
In Europe the jobs market is stuck in a rut. Government figures show Euro Zone unemployment held at 10 percent for July. It has been at 10 percent for five months now, showing that Europe's economic recovery isn't yet creating new jobs.
Well, let's get some perspective from Columbia University Professor Joseph Stiglitz, who won the 2001 Nobel prize for economics. Joseph Stiglitz joins us now from CNN New York.
Thank you very much for joining us.
I know you've been touring the world recently and giving some warnings about the state of the world's economy and what you think the world economy is at risk of. Can you just summarize your latest thinking on where we are?
JOSEPH STIGLITZ, ECONOMICS PROFESSOR, COLUMBIA UNIV.: Well, I think the fundamental problem is that there is a deficiency in aggregate demand. Part of what had propped up the global economy before the crisis, was what I call, hopeful (ph) American consumption. Savings rate was zero. It is going to almost surely, ought to, go up much higher than that.
And meanwhile, the balance sheets of households in United States and much of Europe have been devastated by the fall in housing prices. What had sustained, again, the economies around the world was this real estate bubble and it is now broken. And households have to deal with the consequences and so do the banks.
The news that came out just today, for instance, in the United States showed that while the government had poured money into the big banks, it did very little for the smaller banks, which are at the center of lending small and medium-sized enterprises. So the new news is that 10 percent of American banks are on the watch list.
FOSTER: What would you say is the best solution here of putting money into the system, like the Americans are doing, or cutting costs like the Europeans are doing?
STIGLITZ: I think the American approach is far better. We've tried the tough approach repeatedly. It is what Herbert Hoover did back in the Great Depression-made the Great Depression. It is what the IMF did in East Asia and converted those downturns into recessions and depressions. So we have had ample experiments in which you might say the austerity approach has been tried, and in almost every case it has failed.
The problem with the United States is that we didn't have a big enough stimulus. It did reduce significantly unemployment from what would have been. But the stimulus was too small and it was not well designed. And the problem here in the United States is that political will to do another round of stimulus is not there. And that means that the likelihood that unemployment will remain stubbornly high is very great.
FOSTER: The appetite for more stimulus isn't there because the country can't afford it.
STIGLITZ: Well, the United States can clearly afford it. Interest rates are at a record low. Those who have funds are willing to lend to the U.S. government, and moreover, if we spend the money on high return investments it means that the long-term national debt will be lower. All you need is a return of about 5 or 6 percent and the return on that investment and the return on taxes from the growth of the economy more than pays the interest. And the national debt will be lower. Studies that have been done repeatedly show that returns on government investment, public investments in technology, infrastructure, education pay far higher returns than this, especially in the United States where we have been starved. And the same thing is true in some of the European countries.
FOSTER: The problem in Europe is that there is-the fear is that if they keep borrowing money to throw it back into the economy they are going to get in such a terrible debt situation and they're not going to be able to borrow any more money. Greece is, of course, the classic example. Europe-well, Britain and France, for example are desperate not to get into a Greek situation. There has got to be a point, hasn't there, when the stop borrowing, and start actually sorting the books out?
STIGLITZ: Well, I think the focus ought to be on the direction of the spending. Obviously, if you are spending money on wars that you are-that don't really enhance your security, you are wasting money, the debt is going-the debt is going up. If you redirected that money from those unproductive spending to more productive spending the balance sheet can actually be improved.
You know, no business ever looks at-in looking at any business, you never look just at the liability side. You always look at the assets side. And a firm that doesn't invest is doomed to die. And the same thing is true about our society, if we don't make the essential investments. So, the issue is, how should we be spending money, not how much we should we be spending?
FOSTER: Well, if Europe and America are currently doing things wrong the suggestion from that is that they could well be heading back into another recession, a double-dip recession. Are you predicting that might happen in Europe and America? And if so, when?
STIGLITZ: Well, I think it is more likely that United States and Europe may sink into what might be called a Japanese style malaise. Growth might be a little higher than in Japan. Because in Japan population, labor force growth is zero. We have a, the United States, a population labor force growth of around 1 percent. Growth in the last quarter was a little over that, 1.6 percent. But this growth is so slow that it won't be able to get the unemployment rate down. So that is where I think you are more likely to go. Slow growth, not enough to get us back into a really healthy situation.
FOSTER: OK, I just want to ask you about the broader philosophical argument here. And if you are talking about economic models you seem to be suggesting a movement away from free markets and more government intervention. Are you suggesting a new economic model for the global economy?
STIGLITZ: Well we need, you might say, a better economic model than the model that got us into this crisis. The kind of deregulation, uh, irresponsible kinds of economic policies that mark the early years of this decade-of the previous decade, where banks were lending to people who couldn't repay. That obviously is a system that cannot work.
What I do think is that there is both a restraining role for government, preventing banks from engaging in excessive risk-taking, and bailouts by governments an inevitable consequence, happen over and over again. This is not the first financial crisis. In fact, the only period when we didn't have financial crisis was the 30 years after the Great Depression where we did succeed in putting on effective regulation.
But the government not only has a restraining role, but also has a creative role. The most important innovation of the latter part of the last century was the Internet. And that was financed by government. The problem is that in the austerity measures we will be not making these essential investments in technology that will provide the basis of a robust recovery. So, there are both parts of what we need, and unfortunately we're not doing enough in regulation. We got a little bit but not enough. And the austerity is cutting us back from the kind of positive role that would really make a difference.
You know, rather than investing wasting money on housing beyond people's ability to afford, if we take just a fraction of that money and invested it in the kind of basic science and applied technology our standards of living would be so much higher today than they are.
FOSTER: I just want to take this opportunity finally to ask you a question about Iraq. This is a key week for Iraq, the end of U.S. combat operations there. I just want to take you back to a quote from a book that you wrote a couple of years ago, saying, "The true cost of the war in Iraq, according to our calculations, will be by the time America has extricated itself, exceed $3 trillion. And this is a deliberately conservative estimate."
It was a very high figure by consensus standards and certainly not what the White House would put on it. Do you still stand by that figure or do you think it will be higher or lower?
STIGLITZ: The data that has come suggests that the true cost will be a little higher than that. You know the number that the politicians focused on is the actual expenditures that goes on the books. And what we did in our study is looked at the costs that go beyond that. For instance, almost 50 percent of those who fought in Iraq are coming back disabled. We're going to be paying for health care and disability payments for the rest of their lives. And the total amount of that is, by itself, around a $0.5 trillion, or more. At the time we wrote our book we make some conservative estimates. The numbers coming back with these disabilities are significantly higher than we estimated and the cost for each is higher than we estimated. So, the numbers that have come in look like that $3 trillion was a conservative number.
FOSTER: Unbelievable to think those figures could be conservative. Thank you so much, Joseph Stiglitz for joining us on the program. As ever, really appreciate your time.
Well, the cost of the war isn't just in the big numbers. For Iraqis it is revealed on every street and in every house. One family invites our Arwa Damon behind closed doors, next, to see what they have to do just to get electricity.
FOSTER: New Dawn, that is what the U.S. military is calling its new mission in Iraq. But is it a new economic dawn for the war-ravaged country? Well, no one is promising any miracles but Washington points to oil as the key to Iraq's post-war future. Iraq relies on oil for 90 percent of government revenues, would you believe. But oil production slipped to zero after the 2003 invasion. True, it has rebounded. Estimates put it back around pre-war levels. And Iraqi wells are now producing around 2.5 million barrels of oil a day. Iraq has the world's third biggest proven reserve. So it is, by far, its biggest asset.
The World Bank's 2010 Ease of Doing Business Report ranks Iraq 153 out of 183 countries though. Iraq is hampered, of course, by all of the security issues cumbersome regulations and 44 foreign firms have been allowed to bid for contracts to develop a chunk of Iraq's oil resources and those contracts are expected to bring billion of dollars in foreign, direct investment to the country.
Now the vast majority of Iraqi households get around three hours of public electricity a day. This is how it affects them. Demand is around one and a half times the available power capacity. Baghdad had hoped to provide 12 hours of power a day by this year, but a lack of money means new power plants can't be built or old ones fixed. Iraq says it needs $5 billion a year to keep the power on and it gets around $1 billion. Just what does that power problem mean for people then. Well, Arwa Damon follows the tangle on the streets to the frustrations inside.
ARWA DAMON, CNN BAGHDAD CORRESPONDENT (on camera): Check out this spider web of cables. This is how Iraqis get reliable power. The city grid just that bad. That tangled mess leads a generator and then the cables cut across streets, they snake into various windows of the apartments here. We are going to go inside to try to understand just how hard it is to live like this.
These are the electricity meters that are reading city power, which we were just told comes on for an hour every four hours. But of course that is on a good day. And then we have all these cables snaking throughout the staircase. That is the generator power.
This is Amfiras's (ph) household. We have just arrived here and because they have switched on all the lights and are running the fans they had to turn off their refrigerator. But Tanya was just showing us the cables.
(Speaking Foreign Language)
So this is the street generator. And this is the water pump, right here.
(Voice over): The city power box is on the wall.
(On camera): OK, so basically they have their own small generator in the house. There is a street generator and then there is city power. So depending on which one is available, and city power isn't really available all that often.
(Speaking Foreign Language)
DAMON (voice over): Only for an hour or two a day they tell us.
(On camera): Oh, so this is the air conditioning unit.
(Speaking Foreign Language)
It's not working right now. They can only run that when they have city power.
(Voice over): Temperatures have been running close to 50 degree Centigrade, or 120 Fahrenheit. Keeping the house powered costs about $250 a month. And expense they can just barely afford.
Before our clothes were nice, expensive," Tanya says. "Now, no. We used to wear gold jewelry, now not any more. We used to go out a lot, travel."
Everything is a careful calculation. If they want to turn on the TV they have to dim the lights. It is so dismal outside that they have tried to create an oasis indoors.
(On camera): This has to be one of the best decorated apartments, at least, I've ever seen in Iraq. And they've really paid attention to every single detail. Even here in the bathroom, its own unique decor. And it is what this family says they do to stay sane, to occupy themselves, to at least in the house try to create a non-war zone atmosphere.
"Our personalities have changed. We have no tolerance anymore," Tanya says. "We get aggravated quickly, from the heat, from the lack of power, there is no way to relax."
These are Tanya's nephews. She says she no longer wants kids of her own. Not if they have to live like this.
FOSTER: I talked to Arwa a little earlier about how Iraq is going to untangle the mess, not just those wires, but the whole economy.
DAMON (on camera): It is going to be a huge challenge. The problem is that the electricity grid in Iraq is very antiquated, so while it is generating more power than it used to, it is nowhere near enough. So what we have is throughout the country, in all of these neighborhoods. This tangled mess of wires and that is how Iraqis have managed to come up with a solution to the lack of reliable national power.
FOSTER: That is quite an attractive prospect, isn't it, for a foreign electricity company, for example, to look at that tangled mess and say, I can come in and sort this out. There is lots of demand there. How easy is it for those companies to come in and are they likely to come in?
DAMON: Well, when it comes to foreign investment, I mean, Iraq has always been a challenging environment to operate in. First we had, of course, the security concerns. Now that we have seen security improve, relatively speaking, we are seeing some foreign companies coming in. But when it comes to the power grid it is not just about being willing to take up the challenge and the risk of operating in a place like Iraq, it is also the fact that a lot of the times these power grids, the electricity infrastructure itself, does end up being an insurgent target. They do realize that by keeping power at a bare minimum they continue to agitate the Iraqi people. They continue to put forward the point that they are the ones that are in fact in control. So that is one challenge.
The other challenge, of course, is corruption. It is still rampant, which causes some foreign investors to pause and think that perhaps Iraq should sort that out first. And then there is also the issue that Iraq doesn't have a new government just yet. So some investors might hesitate trying to wait and see what kind of government is formed, what sort of ministries are formed. At the end of the day you are not going to want to sign a contract with a ministry if its entire structure itself is going to change as well, Max.
FOSTER: Yes, you want to know that you are going into a safe legal system to operate in, I guess. So any contracts that you do sign are going to be secure. But companies can't do that right now?
DAMON: No. I mean, a company wouldn't necessarily want to do that right now. I mean, if you are going to come in here as a foreign investor you are also going to have to take into calculation things like securing your own personnel on the ground. And things like that. That does come at a fairly significant cost. You are also going to want to know that the contracts that you are signing are going to be airtight. You are going to want to know that at the end of the day the investment is worth it.
That being said, we are seeing some foreign investment in some parts of the country. For example, Iraq's Kurdish north is booming. Construction there is everywhere. That is largely because the area is considered to be fairly stable. It was not plagued by the sectarian violence that really tore the rest of the country apart. We are seeing some smaller businesses coming in. We're seeing restaurants opening up. We're seeing a fair amount of foreign investment from the United Arab Emirates, from countries like Turkey and Iran.
But again, it is not as if foreign investors are flooding Iraq at this stage. Most people are waiting, sitting back, trying to figure out exactly how the politics here are going to come together, because the politics do have a direct impact on the violence.
FOSTER: Arwa speaking to me a little earlier. We want to bring you some breaking news now. It is a story outside Washington, D.C. in the U.S. And it is happening in Silver Spring, in Maryland, at the headquarters of the cable television channel, Discovery Channel. A man, believed to be armed, is in there with apparently at least one hostage. And he may have explosives, as we understand. FBI bomb technicians and ATF agents have been sent to the scene of that hostage situation. It is unfolding. But a man, believed to have explosives, and a hostage is inside that building you see, coming to us live in Maryland, U.S.
We will continue to monitor that for you. We'll be back after the break.
Apple boss Steve Jobs has just finished unveiling the company's latest gadget. The entire iPod music player range is getting an update. The iTunes software that goes with it is also getting a refresh, also a new smaller version of Apple TV. That gadget streams video to your TV. Getting films from Netflix and Clips from YouTube. The operating system that runs iPhones, the iPod Touch and iPads will get new features. A free update in November will bring multitasking to the iPad, apparently, so that you can run more than one application at a time.
Steve Jobs revealed just how popular those gadgets have been so far. We'll hear from him a little later on CNN. Right now we are going to look at the latest from Wall Street because there has been a surge in stocks, thanks to some better than expected manufacturing figures. As you can see, still pretty high, up 2.3 percent, the Dow.
Singled out and denied assistance Dick Fuld, the ex head of Lehman Brothers is crying foul about the U.S. government's failing to come to its company's aid during the credit crisis. We'll get an insider's take on the world's biggest ever corporate bankruptcy, next.
FOSTER: Welcome back. I'm Max Foster in London. An update on that breaking news story for you, coming from the U.S. just outside Washington, D.C., in Silver Spring, Maryland. A man is believed to be armed with at least one hostage inside that building you see there. It is happening at the headquarters of the cable television channel, Discovery Channel. These are live pictures for you. The man may have explosives, as we say, the FBI bomb technicians and ATF agents have been sent to the seen of the hostage situation as a result. We are watching the situation for you, but it's pretty calm from what we can see outside right now. We'll see how this scene unfolds live here on CNN.
Now, at least 28 people are dead and more than 200 were wounded in an attack during a Shiite Muslim procession in Lahore in Pakistan. There were three explosions in a 600 meter radius. At least one of the blasts is believed to be the work of a suicide bomber. Officials say security may be lax, because the attack took place as people were breaking their fast for the ongoing Ramadan holy month.
On the eve of formal Israeli-Palestinian talks at the U.S. State Department, President Barack Obama is holding a series of separate White House meetings today. He's seeing Israeli Prime Minister Benjamin Netanyahu as well as Palestinian Authority President Mahmoud Abbas, the president of Egypt and the kind of Jordan.
Those miners trapped underground in Chile are getting their first solid food in weeks. Many have also shaved and they're wearing clean clothes that were sent down to them. It could take months to drill a rescue shaft to rescue the men stranded 700 meters underground.
Comments by the head of Ireland's Catholic Church about the abuse scandal there are angering some activists. Tonight, on "CONNECT THE WORLD," we hear from Cardinal Sean Brady in a rare sit-down interview and look at what Ireland and other countries are doing to restore the trust of the faithful. That's tonight on "CONNECT THE WORLD," 21:00 in London, 22:00 Central Europe, about an hour-and-a-half from now.
Dick Fuld is pointing a finger at the U.S. government. The former Lehman Brothers CEO charges the government didn't ride to the rescue and financial world -- and the financial world then lost confidence in the investment bank. Lehman Brothers collapsed in September, 2008, taking the global financial crisis to a new level when the credit markets basically froze.
Fuld is testifying on Capitol Hill before a Congressional panel investigating so-called too big to fail phenomenon that emerged during the meltdown.
(BEGIN VIDEO CLIP)
DICK FULD, FORMER LEHMAN BROTHERS CEO: Lehman was forced into bankruptcy and not because it neglected to act responsibly or seek solutions to the crisis, but because of a decision based on flawed information not to provide Lehman with the support given to each of its competitors. In retrospect, there is no question we made some poorly timed business decisions and investments. But we addressed those mistakes and got ourselves back to a strong equity position with a tier one capital ratio of 11 percent. We also had financeable collateral and we also had solidly performing businesses.
(END VIDEO CLIP)
FOSTER: Federal Reserve chief, Ben Bernanke, is set to go before the Financial Crisis Inquiry Commission on Thursday, so you know.
Now, Larry McDonald was one of Lehman's most successful traders in distressed debt. Last year, he wrote "A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers".
He joins us live now from CNN New York.
Thank you so much for joining us.
You're an insider on this story.
What did you make of what your former boss had to say today?
LARRY MCDONALD, AUTHOR, "A COLOSSAL FAILURE OF COMMON SENSE": Well, Max, I mean this man gives the word denial new meaning. You know, many people -- many experts, including myself, many authors and also the examiner of the U.S. bankruptcy of Lehman Brothers, they looked at Lehman Brothers' assets and they saw a value of X. And Lehman Brothers was marking their assets at Y.
And I think throughout the testimony today, Dick Fuld is the same old hubris, arrogant self. And I really think this is the crime of the century. It never, ever should have happened.
FOSTER: Are you saying that he wasn't humble enough in his testimony today, because this was largely his fault, although some people would say you would say that, because you were there and it was partly your fault, as well, wasn't it, as a result?
MCDONALD: Well, the management team at Lehman Brothers, I mean this was gross negligence at the highest level. And so many people out there watching us right now have been absolutely crushed by this bankruptcy. 401(k)s have become 201(k)s. Credit lines were slashed on credit cards. And all the problems emanate from one of the most mysterious places on Wall Street, that 31st floor executive suite at Lehman Brothers.
FOSTER: Yes, and you have spoken out against Fuld in the past before. You eventually got sacked from the bank, didn't you?
I'm just wondering what you think we've learned since then, since that time, when the bank went down?
Because I know that you do have a -- an agreement with him in the sense that you think they should have been bailed out, the bank.
MCDONALD: Well, I've been a -- I've been on a global lecture tour. I've spoken all over the U.K., all over Europe and all over Canada and the United States.
And the biggest question I get is why did they let Lehman go, why were they singled out?
And I think the big lesson we've learned is that I hate bailouts. I despise bailouts. But to let Lehman go, as badly mismanaged as -- as they were -- and then bailout everybody else afterwards was really a bad decision, because the Lehman bailout made all the other bailouts after that much, much more expensive and it hurt the U.S. taxpayer.
FOSTER: So what do you think we need to get out of these hearings at the moment, as an insider, someone that saw what went wrong?
What do you think the conclusion -- what do you think we need to learn from this?
Because you know as well as I do, that most people think, actually, the financial sector has got back to how it was.
MCDONALD: Well, so many people watching us right now really feel they -- you know, they want accountability. If you look at all the grossly mismanaged companies, from Merrill Lynch to AIG, Countrywide, Lehman Brothers, not one charge has been brought up by the SEC. The only thing the SEC has done is gone after Goldman Sachs. And, quite frankly, Goldman Sachs wasn't responsible for the financial crisis the way all the other people -- all the other firms had been that I just mentioned.
So I -- I think what we have to get out of this is action. We need the SEC to do their job and file charges against the people that were responsible for driving Lehman Brothers into that iceberg at 167 miles an hour. I mean even the Titanic swerved.
FOSTER: OK. Larry McDonald, thank you very much, indeed, for joining us.
Now, U.S. consumers concerned about the economy and jobs aren't only shying away from the housing market. It appears that they're now also turning their backs on the car industry. We'll be back with details, next.
FOSTER: The U.S. is facing this worse -- its worst August industry- wide auto sales in more than a generation. A 26-year high in unemployment in July, a 27 percent plunge in existing home sales are keeping consumers away from showrooms. GM's sales tumbled 25 percent last month from the same period a year ago. Sales fell short of analysts' forecasts. Actually, sales at GM's volume branch, Chevrolet, slid 22 percent.
Now, Ford reported an 11 percent drop from a year ago. It also missed forecasts. Ford has trimmed its fourth quarter target ever so slightly -- a sign that its strong sales gains for the last two years may be starting to fall off there.
A plunge for Toyota. It's U.S. auto sales sank 34 -- 31.4 percent in August compared with a year earlier. And last year, the Japanese car makers' sales had been boosted by a government-funded incentive program.
Now, Geoffrey Pohanka is the president of Pohanka Automotive Group in Washington, where he sells both new and used cars.
And let's get his views now on the current state of the market straight from CNN Washington.
Thank you so much for joining us.
We're really interested in hearing from you, because you're dealing with consumers, buyers every day. And the concern is that, actually, the appetite from car buyers is down and that's going to have this knock on effect on the whole industry.
GEOFFREY POHANKA, PRESIDENT, POHANKA AUTOMOTIVE GROUP: Well, I obviously agree with that. We have to look at this in context, August sales. Last August, sales increased about 50 percent because of the government stimulus, Cash for Clunkers, which was wildly successful. That started at the end of July and went through the month of August. So it's really unfair to compare this August's sales with last August.
You know, car sales in the United States are in recovery. They have improved. They are averaging around 11.5 million sales rate annually. And but the normal is about 16 to 17 million. So it's going to take us a while to crawl back. But I think it's kind of unfair to compare August with last August. That was a one time event.
Now, September sales last year were not very good because dealers' inventories were basically depleted because of the rush of -- to come buy cars -- to buy cars in the month of August.
So I think we'll recover somewhat next month and we'll see last September's car sales, because of that, one reason.
FOSTER: But surely buyers are going to be put off by all the bad economic news if they were thinking about buying a car. Perhaps they're going to delay it at least a couple of months, seeing as they've got the -- the money in the bank.
Aren't you worried about that?
POHANKA: Yes. I think the past two weeks, there's been a lot of bad news, which I think has had some kind of a ripple effect on the market. We saw a slight reduction mid-month. But I think overall, people are -- you know, they -- they want to be optimistic. There are some really good opportunities, good sales, rebates, low interest financing. The banks are more willing to finance customers than last year.
So I think overall, there's a -- a lot of good things with the car business, with the understanding that we have a long way to go to get back to where we were three years ago.
FOSTER: And just give us some insight into the different models and different brands, because you sell the full range of U.S. and foreign brands.
Are they all suffering at the moment across the board or are some brands doing particularly well?
POHANKA: Some brands are doing very well. Now, I don't have all our dealerships' data. We sell about 22,000 new and used cars per year retail in -- in the Washington, D.C. metropolitan area. Our new car sales are up 32 percent through the month of July. Our used car sales are only up a few percent. And those are same store sales. We lost a couple of dealerships last year in the reorganization.
So we're seeing some pretty healthy increases in new car sales. Luxury sales, Acura and Lexus, are doing quite well. Hyundai is doing extraordinarily well. One of our dealership's sales are up -- new car Hyundai sales are up 163 percent from the same period last year.
So, you know, some brands are not doing that well or are doing about the same as last year. Some brands -- brands are doing much better.
Now one thing that really makes it difficult to determine consumer buying is that sales in the United States include fleet and corporate sales. So if avis or hertz or Enterprise goes and buys a huge -- or the government, per se, go buy extraordinarily large blocs of cars, that gets put in the numbers. But those aren't retail sales.
When you take fleet and corporate sales out of the numbers, that really tells a different picture.
FOSTER: Geoffrey Pohanka, thank you very much, indeed...
POHANKA: And that's a more important...
FOSTER: Sorry (INAUDIBLE).
POHANKA: There's a more important number to look at is consumer -- consumer sales. And some brands, like General Motors and Chrysler, have not performed that well. And in -- in July, Chrysler was actually selling fewer consumer sales than last year. And GM's retail sales to consumers are only up 1 percent through July. Now, they're doing a lot more fleet sales this year, which makes their overall numbers look better.
So you've got to peel away the layers of the onion a little bit and look at consumer purchases. They show a little bit different story.
FOSTER: OK, thank you very much, indeed, for joining us then, Geoffrey Pohanka, with your insight there into the car industry.
And for some insight into the tech industry, we're joined by Dan Simon.
He's at the Apple event we were talking about a little earlier in San Francisco.
What can you tell us about any announcements that were made today -- Dan?
DAN SIMON, CNN CORRESPONDENT: Yes, hi, Max.
A number of announcements. You and our viewers probably are not thinking about the holiday season right now, but Apple certainly is. They're unleashing their new products that will -- they hope will be huge hits this Christmas season. We're talking about new iPods -- a whole new slate of iPods and Apple's biggest announcement today, a new version of their Apple TV, which had not been really successful in the past. Today they -- they're unleashing their new Apple TV, only $99. And this is Apple's attempt to really make a dent in the living room, if you will.
Their previous version was -- was not very successful. They didn't -- they didn't sell it to anybody. They, in fact, called it a hobby.
What this new Apple TV is, is it's really small. It's about a fourth of the old one. Again, $99. And there -- there's no more purchases. In other words, if you want to get a TV show or a movie, you're going to rent them. And the prices are -- are very cheap -- $4.99 for a movie, $.99 for a TV show. And this is what they hope will be their big seller this holiday season -- Max.
FOSTER: Dan Simon in San Francisco.
Thank you very much.
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