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YOUR MONEY

Will GOP Vote to Raise Debt Ceiling Before U.S. Default?; Motown Becoming 'Techtown'?; Elizabeth Warren Explains New Consumer Bureau Initiatives

Aired May 21, 2011 - 13:00   ET

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


ALI VELSHI, CNN ANCHOR: America has hit the debt ceiling. So now what happens? I'm Ali Velshi. Welcome to YOUR MONEY. Treasury Secretary Tim Geithner has begun a series of what he's calling "extraordinary measures" to prevent default. He wants to make sure lawmakers know that the clock is ticking. Yet some Republicans argue that there are other means to fund the government after Geithner's drop-dead August 2nd deadline.

They say they're willing to withhold a vote to raise the debt ceiling if they don't get some serious concessions from Democrats.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: We have over $50 trillion in unfunded liabilities, very popular programs, Medicare, Social Security, Medicaid. All of them are unsustainable. I think we need to do something in connection with the decision to raise the debt ceiling that deals with the debt, both medium -- both short term, medium term, and long term. That's what it would take to get my vote.

(END VIDEO CLIP)

VELSHI: Will Cain is a CNN contributor.

Will, Secretary Geithner has said that not raising the debt ceiling would be catastrophic for the economy. Now he concedes that no one knows for certain what could happen in the event that it's not raised. Are Republicans willing to risk sending this fragile recovery that we're in into chaos to find out if they're right?

WILL CAIN, CNN CONTRIBUTOR: No. But neither are Democrats. Let me tell you why I'm so certain about this. A, the debt ceiling has been raised 74 times since 1962. So I've got that in my pocket. Second, the consequences for not raising the debt ceiling are dire and everyone knows it.

I have got my Tim Russert my prop here. Let me show you. The issue is, if we don't raise the debt ceiling, the government cannot issue new debt. Well, the problem is we take in 60 cents for every dollar we spend. We spend 40 percent more than we take in. At that point, the government has a choice to make.

You can choose to not pay the interest on your current debt, which amounts to effectively a default. How would the markets react to that?

VELSHI: And that's bad.

CAIN: That's bad -- well, we think so. Currently the U.S. is used as the dollar as the safe haven. Would markets continue to think of us that way? We don't know. But we don't want to find out.

The second choice is even more scary to me, even as a conservative. And that is, if we choose not, we have to cut spending by 40 percent. And that comes from Social Security, Medicare, defense.

VELSHI: That's a big, big cut.

CAIN: Ali, it's a huge number.

VELSHI: And where does your arrow go after that, if you do that?

CAIN: It goes to depression, Ali. Now listen, I want to cut government spending but I don't want to do it overnight. If you have to cut spending by 40 percent, you're looking at a 10 percent contraction in the economy. You're looking at depression. That's a pretty clear choice. Raise the debt ceiling.

VELSHI: All right. Well, that's not exactly what we're hearing from a whole lot of other conservatives. But you lay that argument out very well. Gloria Borger is a CNN senior political analyst.

Gloria, 60 percent of Americans say they oppose raising the debt ceiling, just 37 percent would be in favor of raising it. Now that would seem to bolster the Republican argument that they want severe cuts in exchange for their vote to raise that credit limit.

So let's say the debt ceiling is not raised and the U.S. does, as Will postulates, possibly default on some of its payments. Are the consequences as dire as Secretary Geithner warns? Is the public going to blame Republicans who voted no or Democrats who wouldn't give them the cuts? What's going to happen?

GLORIA BORGER, CNN SENIOR POLITICAL ANALYST: Well, you know, the public will blame everyone. I think, first of all, the Congress, and that means Democrats, Republicans, and also the president of the United States needs to go out there, as the secretary of the treasury has, and explain just what the consequences are.

Because it's very clear from looking at that poll that people may be saying, debt ceiling, we don't want to pay more money. They're not quite sure. Part...

VELSHI: Right. You're absolutely right about that.

BORGER: Part of the burden of leadership is explaining these things. But I would also say that this is really a test of leadership because when you look back at votes on the debt ceiling, they're always political votes.

Go back to 2006. None other than Barack Obama and his fellow Senate Democrats...

VELSHI: Voted not to do it.

BORGER: 2004, unanimously, all House Democrats voted against it. Why? George Bush was in power. So this, again, is another test. And if it doesn't get done and there are real problems in the economy, then the American public will turn very quickly and blame all of the members of Congress and the president.

VELSHI: Chrystia Freeland is the editor of Thomson Reuters Digital.

Chrystia, what Gloria says is exactly right. No one has been able to actually explain, beyond Tim Geithner saying it's going to be catastrophic, what happens if we don't make those payments.

But let's go back to September 14th, 2008. A whole lot of smart people sat around a table and said, it's not going to be all that bad if we let Lehman Brothers collapse. We didn't know what the consequences are either. You are a global financial journalist. What happens?

CHRYSTIA FREELAND, EDITOR, THOMSON REUTERS DIGITAL: Well, I think actually this isn't something we need to debate that much. It is absolutely clear that if the U.S. defaults on its debt, that is a catastrophic event for America and for the global economy. That is a moment when people stop having faith in the U.S. government and they should stop having faith in fact U.S. government.

The U.S. government would not be paying its creditors. And so new creditors are not going to be knocking on America's door. And if they do come in, they will require much, much higher rates of interest.

VELSHI: Right. And that's -- by the way, for viewers out there, that's how it affects you. Because if the U.S. pays more to borrow money, you pay more for your mortgages, your companies and employers pay more to borrow money. And what that tends to do is give them less available cash to hire people.

FREELAND: And you would have to pay higher taxes, right? I mean, right now, the trick -- America actually is in a fabulous position in the global economy because even though America has very high debt, it is being charged very, very low rates of interest by the rest of the world.

VELSHI: Right, right. Because our credit is thought to be very good.

FREELAND: Because America's credit is good.

VELSHI: Gloria?

BORGER: But, you know, Republicans want to get something out of this. And in a way, I don't blame them. They're saying, OK, you want our votes to raise the debt ceiling, Mr. President, fine, how about dollar for dollar we talk about spending cuts?

Mitch McConnell was talking about some grand bargain on entitlements. I don't think they're going to get that. But I do think you are going to get substantial deficit reduction or promises of deficit reduction.

VELSHI: But, Will Cain, Will Cain, this is not the last word or the last debate on how to cut spending. So if you are a conservative, if you are a fiscal conservative, if you are a Republican and you really believe strongly that there need to be cuts, like many Americans do, we have the 2012 budget to discuss. We've got until October to sort that out.

Why are some Republicans picking this as the fight and not that, which is really the place to have this discussion?

CAIN: Because I've said this to you before, Ali, Democrats have shown no willingness to cut at any point in time. So it's almost like you have to put them, and the country for that matter, in these positions of emergency to make decisions.

But let me agree with something that Chrystia said, in the end, this is barely worth a debate because it is going to be raised. It is that clear to everyone what the problems are. Here's the perfect metaphor.

In "Braveheart," remember before William Wallace comes along, the two armies get up on the battlefield and look at each other like they're about to shed all kinds of blood. And the young soldier turns to the older one and says, what's going to happen? He said, the nobles will negotiate and then we'll go home. That's what's going to happen here.

FREELAND: I don't want to paint nightmare scenarios here, but Ali made a reference to Lehman Brothers, and that was absolutely correct. So we've been talking about if America defaults, then you would see higher interest rates charged to the U.S. government. That's absolutely true.

What we don't know but what I think we can really predict with high probability is you could plunge the world into a new financial crisis.

VELSHI: Right. It may not happen, but there's some chance that it could happen.

(CROSSTALK)

VELSHI: Gloria?

BORGER: I have to tell you, there are, you know, 80 freshmen Republicans, 60 of whom have never held elected office before. And, you know, a lot of those folks are saying, you know what, I'm not sure it's going to be so terrible, there are a lot of Chicken Littles running around.

And these are the people that John Boehner...

VELSHI: Dangerous thinking. That's a negotiating...

BORGER: These are the people that John Boehner has to talk to.

VELSHI: That's negotiating talk.

BORGER: For some of these people, it's not negotiating talk. But it is the burden of leadership right now because John Boehner runs the House of Representatives.

VELSHI: And John Boehner and Eric Cantor are not freshmen, so hopefully they'll be able to convince...

BORGER: Exactly.

VELSHI: ... their team otherwise. Gloria, great to talk to you, as always, thank you. Chrystia will stick around.

Coming up next, the other most important economic issue facing Americans today. And is it being ignored as a result of all of this focus on the deficit?

(COMMERCIAL BREAK)

VELSHI: I hear it from some of you every day, I'm out of work, I need a job. It doesn't get a lot more complicated than that when you ask Americans why they believe that unemployment is the most important economic issue today. Unemployment tops the list of the most important issues. It's at 38 percent, 10 percent more, by the way, than the number of people who say the federal deficit is the most important economic issue.

Will Cain is still with us. I want to bring in former New York Times columnist Bob Herbert.

Bob, let's look at this. You and I both know that the unemployment rate is a bit of a red herring. It doesn't tell the full picture, but it's at 9 percent. Is Washington doing everything it can to create the right environment for companies to create jobs? I think we all agree that other than in a recession, government doesn't have a particular role in creating jobs, but it does set the tone.

BOB HERBERT, FORMER COLUMNIST, THE NEW YORK TIMES: It does set the tone. And I -- to answer your question, I don't think the government is doing enough. The big problem right now, especially with all the talk about deficits is that you lose sight of the need for investments if you're actually going to create large numbers of jobs.

It costs money, but it's not wasted money. It's not money just poured into a ditch. It's money that ultimately would bring a return. And right now, there doesn't seem to be much political sentiment in favor of the kinds of investments we need.

VELSHI: Well, that word, "investment," sometimes triggers people to think spending and they want to know what the return on that investment was and they point to the stimulus and say, did it create as many jobs as it was supposed to?

Will, the speaker of the house, John Boehner, he wants trillions of dollars in spending cuts. Because he wants as much in cuts as they're prepared to increase the debt limit. And we're talking at least $2 trillion there. But he also claims to want to help those who continue to struggle in this economy. Listen to his words.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: I think America has a strong safety net for those who live near the bottom of our economy. And I think that we should. I'm a big believer that in a country like ours, those who have the opportunity to succeed and do succeed have a responsibility to help those who can't compete.

(END VIDEO CLIP)

VELSHI: A lot of respect for a guy like John Boehner who's a small businessman, he's sort of self-made. Where is that safety net? We -- the Republicans voted against extending unemployment benefits unless they got a hold on tax increases. We have these groups called the 99ers who have been out of work for more than two years and are now unemployable, almost, and not matched to jobs available.

So where, from a conservative perspective, is the safety net, and where should it be?

CAIN: Well, I don't know if the conservatives -- or the Republicans, better said, have the answer to that. But I don't think the Democrats do either. Bob's characterization was, I don't know that we're doing enough. Here's how I would change that. I don't know that we're doing the right things.

The things that we invest in are welfare largely for the middle class. Medicare, Social Security, these are programs that are designed to help people be comfortable, not to innovate. So if we were to invest, which I wouldn't oppose, and we create this social safety net for the poor, truly for the poor, I think we need to start looking beyond things like affordable housing or unemployment benefits and start looking at investing in things like education.

Fareed Zakaria here had a great stat one time. He said, for every $4 we spend on the elderly, we spend $1 on kids.

VELSHI: Right.

Bob, let's talk about this, I'm going to address this. He says education, which I fully agree with. Retraining, because we have a very large population that are just not trained for the jobs that we need them to be trained for, and innovation, which would be tax credits, really, right?

HERBERT: Well, this is not an issue on which we disagree because when I talk about investments, I was specifically talking about investments that ultimately would create large numbers of jobs. That would include investments in education. I think we should have a tremendous investment in infrastructure and certainly on innovation.

So that's moving in a direction that I'm in favor of.

CAIN: But we can't do everything. We can't do everything. So we have got to cut back on some of those comfortable welfare programs for the middle class like Medicare and Social Security.

HERBERT: But here's the problem as I see it with the Republican proposals that are -- that we hear on the Hill right now. I don't think it's possible -- I don't think it's workable. One, tax cuts -- tax hikes are off the table. That's one thing.

And they want cuts that are going to bring down the deficits while at the same time saying that we have to maintain a safety net. So that requires spending. I just don't think that that adds up. You can't do that.

VELSHI: Let's just put this to both of you. Either take a 50- year-old man who was an auto worker in the Rust Belt, in a place -- some sort of factory worker, in a place where the factory town has almost shut down because the factory has shut down.

So there aren't jobs in the area. They can't sell their house. Maybe the kids are not going to college. But we keep telling people there are open jobs in this country. So that person has got to become either an accountant or some sort of a software worker or a medical worker of some sort or a truck driver, work in the energy industry. All of these industries have jobs.

But how does that person, my viewer, get from unemployment and being trained for the wrong thing into employment, Will?

CAIN: There is no way, Ali, that I possibly have the answer to that. Nor does Bob even if he tries to pretend. And I'm not saying...

(CROSSTALK)

VELSHI: OK. I'll give you a question you might have an answer to. What can government do to encourage the ability to get that person retrained and into a job?

CAIN: We're going to have to use abstract words like I just suggested, things like retrain, Ali, educate older people. But the problem is, in the end, I don't know that the government can or should be the person that figures out how that man, which you anecdotal-ized very well, transitions, in an entire economy that's transitioning, in a whole economy that's moving from an economy that has a spectrum of jobs, from low wage, low skill to high, and we're phasing out of those.

(CROSSTALK)

HERBERT: Well, let me answer your question, because I've been going around the country interviewing these 50-somethings. There's nothing that can be done for them right now given the current situation. They're falling out of the labor force. They're not even being counted as unemployed. They're taking early retirement when they can. They're going on disability. Those roles are increasing. And I don't think you can retrain them for these other jobs that you're talking about.

CAIN: But, Bob, can you put them on welfare for 30 years?

HERBERT: No, no, no, no, no. What I think we should is I think that we should have a massive infrastructure rebuilding effort in this country.

VELSHI: A Works Progress Administration?

HERBERT: And those people who have been working in manufacturing for years, who have been working in construction, construction got killed in the recession, they have skills that you could put to work in rebuilding a modern infrastructure for the 21st Century and the industries that we're going to be approaching going forward.

CAIN: Let me just say this, Ali. I'm not opposed to that if the right motive is in mind, if we need infrastructure projects.

VELSHI: We do know that we need better bridges.

CAIN: But you don't create jobs just to create jobs, otherwise, we're shifting dirt from one pile to another.

VELSHI: But do you agree, being a guy who travels around this country, that we need infrastructure projects?

CAIN: We could probably pour some more concrete on the highway system.

VELSHI: We could get...

(CROSSTALK)

HERBERT: It's not just roads and bridges. Exactly right. It's the electrical grid. It's the inland waterways. It's the ports on both sides and on the southern coast of the United States. I mean, infrastructure is in sorry shape in this country.

CAIN: If I agree to take a nonpartisan position to invest in education, infrastructure, I have got to have -- and, by the way, I'm willing to look at increases in tax revenues, I've got to hear from your side that you're willing to cut back on these comfortable welfare programs for the middle class, such as Medicare, because, by the way, that's where the deficit is coming from.

HERBERT: All right. Let me -- I think in the real world, you are not going to cut back sharply on Medicare. I just don't think that's going to happen.

CAIN: Just as a political reality? HERBERT: Yes, mm-hmm.

CAIN: Well, that's sad.

VELSHI: All right. We'll have to continue this, try to figure out a way -- figure out an answer to this. Tells you how complicated it is, because these are smart guys who actually know about this stuff. All right. Will, thanks very much. Bob, always good to see you.

One big city is becoming a hotbed for technology jobs. You might be surprised by this one. I'm going to show it to you right after this break.

(COMMERCIAL BREAK)

VELSHI: Where are the jobs? It's a question we ask frequently on this show. But this answer might surprise you: Detroit. The Motor City is seeing a technology transformation of sorts. Companies like Google and Ford are hiring tech workers in droves. Now it could just be the reinvention that Detroit has been waiting for. Here's CNNMoney's Poppy Harlow.

(BEGIN VIDEOTAPE)

DOUG VANDAGENS, DIR., FORD CONNECTED SERVICES SOLUTIONS: What we do here is we simulate the vehicle. People don't realize that there's five times the computing power in a car than there is even in the most sophisticated smartphones.

POPPY HARLOW, CNNMONEY (voice-over): Could the Motor City be turning into "Techtown, USA"?

VANDAGENS: We've hired some people from Silicon Valley. We've gotten somebody from Microsoft and a number of other companies.

HARLOW: Some say it just might be. Detroit has seen an 82 percent increase in tech jobs in the past year at companies like Ford.

(on camera): Is there a tech job boom here, would you say?

VANDAGENS: There is. I've never seen this much hiring in technology since I've been here. My particular group, we're going to triple over the three-year period.

HARLOW (voice-over): Josh Kitchens locked in a job with this Ford tech team.

JOSH KITCHENS, MICHIGAN STATE 2011 GRADUATE: I was offered other positions but I chose to stay here. I mean, salary was a big part of that.

HARLOW: Detroit tech workers make an average of $71,000 a year, less than Silicon Valley, but a great living here.

KITCHENS: It's very competitive. And it's -- and they want us to stay. They want to rebuild Detroit.

HARLOW: These Michigan State engineering students all had jobs lined up before graduation.

MICHAEL POTTS, MICHIGAN STATE 2011 GRADUATE: I chose engineering mostly for job security.

HARLOW (on camera): Is there also a sense of pride in wanting to sort of tell the world, hey, Detroit is still here?

POTTS: Definitely. Come in, start up a company. And there are people that need jobs badly, so.

HARLOW (voice-over): Google says this will be its biggest hiring year yet in Detroit.

BILL ZAJAC, MICHIGAN STATE 2011 GRADUATE: But to actually come out of college and be able to basically be put on a career path is amazing.

HARLOW (on camera): So why has there been such a big boom in tech jobs? Well, some people say in cities like right here in Detroit, so many jobs have been lost, the only real place to go was up.

TOM SILVER, SENIOR VICE PRESIDENT, DICE HOLDINGS: Employers, particularly in "Autotown, USA," are realizing that they need to be more efficient with their operations. Technology plays a really big part in that.

HARLOW (on camera): Can we call this a tech boom in Detroit?

SILVER: I think I'd call it a boomlet.

HARLOW: A boomlet?

SILVER: I'd call it a boomlet. Markets like New York City and Silicon Valley are certainly a little bit bigger, but they're not growing as fast as Detroit is anymore.

DAN GILBERT, FOUNDER, QUICKEN LOANS: Whether those deals close or not doesn't matter.

HARLOW (voice-over): Detroit native and founder of Quicken Loans, Dan Gilbert, says his company is making some 1,200 new hires here, many in tech.

GILBERT: We're basically going to keep our talent here. Because we are now, as everybody knows, in a brain economy and not so much a muscle economy.

(END VIDEOTAPE)

VELSHI: OK. Poppy joins me now.

Poppy, you and I have both spent a lot of time in Detroit, and sadly we've watched the erosion of jobs there. This is fantastic. But we constantly talk about engineering being your ticket anywhere you are in the country. What a great deal. They earn good money in a place that costs very little to live in.

How does this help everybody else who has been laid off, those autoworkers in those industries that were connected to autoworking?

HARLOW: I think that's the key, just to be honest here. If you're an autoworker and you've been out of work for a few years in Detroit, and you don't have these tech skills, you're not going to get one of these jobs. But you can go through retraining, you can do it online. It's cheaper online.

But bottom line, these jobs aren't for everyone. You need the skills. So I think the advice to young people in college right now, look at those engineering degrees, four- or five-year degrees in engineering. All of those grads we talked to had multiple job offers. But if you don't have the skills, you're not going to get these jobs.

VELSHI: Poppy, grads out of college on average earning about $50,000. If you're in engineering, you're pushing $80,000 or you're in software...

HARLOW: Yes, easily.

VELSHI: ... things like that. But we've seen hints of a tech bubble again with these IPOs. We saw Linkedin coming out. Is there some sense that these tech jobs -- or these engineering-type tech jobs are here to stay or are we in a bubble?

HARLOW: Well, in Detroit this boom started about 18 months ago. And what the experts say that followed these jobs is that they see slow and steady growth for Detroit. If you look at the numbers, Ali, we're not back to pre-recession levels for tech jobs. We're about 15 percent below those, but we're still doing really well.

The unemployment rate for people in technology is about 4.5 percent. It's 9 percent for everyone else. So the jobs here, especially in Michigan, I think finally with Michigan, you have a manufacturing base, manufacturing is becoming more technical. So you've also got a low cost base in a city like Detroit. So for companies, it's a dream.

VELSHI: Right. So you have cheap property.

HARLOW: It's cheap.

VELSHI: You can train people. And there are these two-year degrees that people can get into to work in technology. Excellent. Well, it's always good to know. And if there are people in Detroit getting jobs that they can pay taxes, that's going to help the place too.

HARLOW: Yes, it really is.

VELSHI: Poppy, great to see you. We'll be together as we watch Detroit rebuild, I hope.

All right. We've come to know the phrase "too big to fail," made famous during the financial crisis. Now nearly three years later, it's a movie. We're going to take you inside the film which takes you inside the crisis, next.

(COMMERCIAL BREAK)

VELSHI: Three years ago, the world stood on the brink of financial ruin. "Too Big To Fail," HBO's new movie, which premieres Monday night, chronicles how it all unfolded from the bank failures to the bailouts. Chrystia Freeland is back with us. And we're joined by the film's writer and co-producer, Peter Gould.

Let's take a look at the movie. In this scene, former Treasury Secretary Hank Paulson, played by William Hurt, is desperately trying to save the insurance giant AIG.

(BEGIN VIDEO CLIP FROM "TOO BIG TO FAIL")

TOPHER GRACE, "JIM WILKINSON": It's another bailout with no legislation. The Hill is going to go crazy -- the country is going to go crazy.

WILLIAM HURT, "HANK PAULSON": The plane that we flew in on this morning is leased from AIG. Construction downtown, AIG. Life insurance, 81 million policies with a face value of $1.9 trillion. Billions of dollars in teacher's pensions. It's everywhere. You want too big to fail? Here it is.

(END VIDEO CLIP)

VELSHI: Peter, as you wrote the script, who are the villains? Who are the heroes of that financial crisis?

PETER GOULD, WRITER & CO-PRODUCER, "TOO BIG TO FAIL": Well, you know, it's very interesting because I started off with a lot of preconceptions about who the heroes and villains were. But the truth is that one of the ironies of the piece is that there are a lot of heroes and a lot of villains and sometimes it was the same people.

You know, you have people in power like Hank Paulson who went from being the CEO and chairman of Goldman Sachs and was certainly part of the Wall Street trend of working Washington and trying to deregulate. And now here he is in Washington as the secretary of treasury trying to deal with the situation that he himself has been part of the creation of.

So that's -- a lot of it was very surprising. I have to say, you know, one of the villains of the piece, really, is the idea that financial markets are inherently self-regulating and should be just left alone.

VELSHI: You're absolutely right.

FREELAND: So maybe it's Alan Greenspan. VELSHI: Well...

FREELAND: The guy -- you know, really not actually one of the big players in the movie, but if the villain is that idea, he's the guy who articulated it, right?

VELSHI: Somebody who pushed deregulation, Chrystia. It has been a few years since this has happened. What -- could it happen again? What has really changed to prevent what happened in 2008 from happening today?

FREELAND: Oh, it absolutely could happen again. You know, I think, in fact, one of the really scary legacies of 2008 is that the bailout, although it was necessary, has probably made another bailout not less likely but more likely. Because before 2008, we really didn't know, would the U.S. government step in with hundreds of billions of dollars to bail out failing financial institutions?

Well, right now, if you're in the markets, you know the answer to that question.

VELSHI: Which means we don't necessarily take less risk but more.

Peter, Chrystia and I are business journalists, we've been following this for a long time. You, as a writer, when you looked at the world of finance and putting together this film, what did you find out that you didn't know before? What's sort of the biggest lesson you took from this?

GOULD: So many things. I think if you're talking about the biggest lesson, I think the biggest lesson is how surprisingly interconnected the whole system is. And I think even -- another thing that surprised me was even the people at the top, the people you would think would really understand in depth how the system worked, how it was connected, even they didn't truly understand how things were going together.

I think when you watch the film, you see that they're constantly surprised by the fact that AIG is hooked into everything or that all of the implications of Lehman going down.

So those were the things that really surprised me. And the other things that surprised me is basically how human these guys are. And, you know, when you think about the market, you think of this giant faceless ocean that's incomprehensible and is ruled by the invisible hand.

And then, you know, when you start looking at it, there's a lot of individuals and there's a lot of psychology that's involved.

VELSHI: Chrystia, let me ask you this, earlier in the show we discussed how Treasury Secretary Tim Geithner has warned that a failure to resolve this debt ceiling debate that we're in right now could launch us back into a financial crisis. At some point he has intimated that it might even be more serious. Are we at a dangerous point where the lessons from "Too Big to Fail" are already fading in the distance?

FREELAND: Yes, I think that's an excellent point, Ali, and really, really true. And I think part of the problem is for the people making the rules, for the people on top of the economy and government, actually 2008 turned out to be not such a bad thing.

You know, bonuses are back on Wall Street. You look at people in Washington, they're making a lot of money, too. Hollywood is coming back as well. And so, you know, the sense...

VELSHI: Stock markets have come back in a big way.

FREELAND: Stock markets have come back. You know, we're having a boom now in Silicon Valley. So, you know, that sense that, well, actually maybe it wasn't that catastrophic. And I think really, you know, the debt ceiling debate is important because in a way, you know, how you could see what happened in 2008 was this was a failure of commercial financial institutions.

And the way that the system was bailed out was the government took on that debt. Well, a consequence is a lot of governments around the world, the U.S. government, the Irish government, the Portuguese government, the Spanish government, they now have a lot of debt.

So we sort of pushed the problem down the road. And that could be where we see the next big crisis.

VELSHI: All right. So we're not out of the woods yet. Peter, great movie. It premieres Monday night on HBO. It's worth watching. Peter Gould is the writer and co-producer of "Too Big to Fail." Chrystia Freeland is the editor of Thomson Reuters Digital, thanks for being with us, both of you.

Hey, if you've ever had a mortgage, you know how complicated it can get. Well, soon enough, that mortgage on your house is about to be a simple two-page document. I'm going to explain it to you next.

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VELSHI: More of a reason to go by buy a house right now if you're looking for one and you can afford it, a new report shows that mortgage delinquency rates are falling. The Mortgage Bankers Association says this is an indication that the housing crisis maybe be coming to the beginning of the end.

Now if you combine that with the news that mortgage rates continue to be below 5 percent for a 30-year fixed mortgage, you might think it's a good time to buy a house because prices are historically low. Now owning a home has always been a part of the American dream, for better or for worse. But in recent years, that dream has turned for some people into a nightmare, not only for millions of homeowners stuck with toxic mortgages, but also for the country.

Out of the crisis, the Consumer Financial Protection Bureau was born. And this week the bureau unveiled something called "Know Before You Owe." Take a look. These are two prototypes of a simple two-page form to replace the existing lengthy and mostly confusing disclosure documents involved in getting a mortgage.

Elizabeth Warren is one of the architects of those documents, amongst many other things. And she has been chosen to get this consumer watchdog group off the ground.

Elizabeth, the CARD Act reformed to some degree the credit card industry by mandating some degree of simplicity on statements, including an easy-to-understand disclosure of how much people are going to owe if they just make the minimum payment, how much they'll owe if they make more than that.

Do you look at that and see it as a precursor to this "Know Before You Owe"? Is it going to be successful in helping people out when they get mortgages?

ELIZABETH WARREN, SPECIAL ADVISER, CONSUMER FINANCIAL PROTECTION BUREAU: Absolutely. I see the CARD Act as the first step, sort of the down payment on a real shift in what we're trying to accomplish. And "Know Before You Owe" is where we're really going to drive it home.

We want consumers to be able to tell what the cost of something is, in this case, what the cost of that mortgage will be. We want them to be able to see the risks up front. And we want them to be able to compare two or three mortgages with each other so they can know if that's the best deal for me.

When we can deliver that, then we have consumers who are better informed and making good decisions, and we start to have a competitive market in consumer credit that actually works, works to deliver lower prices and better products, just like it should.

VELSHI: So you'll get more information out there. You'll have a more informed consumer. However, that was only one ingredient in the mortgage meltdown. Greed was the other, both on the industry side and on the consumer side. What do we do to combat that?

WARREN: Well, you know, I want to say part of it was greed and hype. People were signing all kinds of documents that it wasn't clear what was going on in those documents. And a lot of people thought they headed one way and headed another.

The "Know Before You Owe" project is really about the sober look, there's what this thing is going to cost. It says, you know, before you bite something off, check out the size of the bite and see what you're going to be involved with here.

We've put these things up on the Web site, at our Web site, consumerfinance.gov. We really want Americans to take a look at it and kind of test drive it and say, you know, that's the kind of thing that if everybody faced that sober piece of information, you might make a difference in the margin. Not everybody, but you might make some differences in how people behave. VELSHI: You've helped me understand a lot of these things over the last couple of years. And one thing I like about you is you completely know what the criticisms are going to be of this. I don't get what the criticism is of giving people greater information. But there have been some people in the industry -- the banking industry, who have said that these types of revisions and simplifications could limit innovation and variety in lending. What do they mean by that?

WARREN: You know, I have to say on this one, the notion that telling people the price clearly means you might not want to offer the product or, more to the point, somebody might not buy it, that just seems to me to be the wrong way to go on this.

And I really want to say, I'm very pleased about how the industry generally has responded. Sure, there are some people who are going to have their remarks about this. But we did this whole project because it started with conversations with community bankers and credit unions.

We talked to them about where the paperwork was too burdensome, where there was too much regulatory apparatus, and where they weren't able to serve their customers. They identified this project and we're the ones who picked it up, we ran with it. We've talked with them.

And right now, what they are telling us, what those folks who are on the ground trying to serve their customers are saying, hey, this looks good for us, it cuts costs for us, it reduces the burden on us, it makes it a little cheaper to put a mortgage forward, that keeps more of us in the market, and we're behind this, behind it big-time.

And I just couldn't be more pleased. Something that's good for consumers and good for banks.

VELSHI: Well, what a number of those prototype forms, a couple of them, show is exactly what you should be paying for the various parts of a mortgage, what's optional, what shouldn't be there. I mean, I would have loved it for the last several mortgages that I've gone through.

Let me ask you about the Consumer Financial Protection Bureau. How much authority does it have?

WARREN: Well, it has, in my view, enough authority to get the main job done, that is, to be able to work on things like this, to make prices clear, and to make it easy to compare products. But it works under real constrictions.

When Congress built this thing a year ago, they put a lot of constraints on this agency, constraints that are not there on other banking regulators. Two big ones, we have a real constraint on our budget. Other banking regulators set their own budgets. Ours is capped.

But importantly, it is kept out of the political process. There are politicians now who want to put it in the political process so that the lobbyists will have a real influence over the activities that we take.

The other thing we have that I think there's nothing like it anywhere in government is that the other banking regulators can take a look at our rules and say, well, yes, it may help consumers, but we think it might not work out for financial institutions or be hard on the economy, and therefore we're going to veto your rules.

Nobody else does that. And I have got to tell you, I don't think we'll do anything like that, but, boy, you kind of look over your shoulder when you know that your rules could be vetoed.

So there are real constraints in place on this agency, and of course the ultimate one, if Congress doesn't like what we do, they pass a law and say, not that. They can do that any time.

We have real constraints but here's the good news, come July 21st, we're going to take over from -- we're going to take over the authority from 19 different federal statutes that are out there right now in consumer protection.

Right now, they're administered by seven different agencies, none of whom has consumer protection as its central mission. We're going to take that over on July 21st, start to work with these statutes. And once we get a director in place, we're going to be in a position to start rocking and rolling on behalf of the American consumers.

VELSHI: You have been working on this. This is your passion. You are incremental in your approach. So even if you don't have all the authority you need right now, I suspect you will win it over time.

Elizabeth Warren, always a pleasure to speak to you, I wish you the best of luck in your endeavors. Thank you.

WARREN: Thank you.

VELSHI: All right. And for my views on political involvement in the Consumer Financial Protection Bureau, you can refer to my "XYZ" from last week's show.

All right. Speaking of shows, I know you love your TV, and hopefully YOUR MONEY is one of your favorite shows, you can invest in the companies, by the way, who put shows on television for you to watch. When we come back, I'm going to talk to you about how to invest in media stocks.

Stay with us.

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VELSHI: Hey, talk about a quick return, investors in the Linkedin IPO saw the worth of their shares more than double on Thursday. The stock priced at $45. It opened at $83 and quickly topped $100 a share.

So if you sold it high, you did very well. Only problem is few of you out there were able to get in on the stock at the beginning. That opportunity is generally limited to big investment funds and their top clients.

It was also a big week for Hollywood. Broadcast networks unveiled their new prime time lineups this week in what's known in the TV world as "up front week." New schedules are announced, new programs will be showcased. And advertisers start placing their bids.

We all love our favorite TV shows, but is this a good opportunity for you to invest in the companies that actually show those shows? Here to tell us about it is Matt McCall, he's the president of Penn Financial Group and the author of "The Next Great Bull Market."

Let's start, Matt, by talking about these IPOs, Linkedin. That sort of makes me go back to the late '90s, early 2000, these tech type IPOs that just, you know, drive the market.

MATT MCCALL, PRESIDENT, PENN FINANCIAL GROUP: Yes, I got bit scared actually yesterday watching the market because I was getting these flashbacks of 1998 and 1999, right before the bubble burst.

So if you think about Linkedin, they're just a first -- they're a first to the market. You know, what's next? It's going to be Groupon, it's going to be Facebook, Twitter, you name it, they're all going public at valuations that are enormous. I mean, they're trading at P/E ratios of 600. It's mind-blowing.

VELSHI: So how do you get into it? Should you invest in the media sector in general? And I'm lumping these -- you know, we talk about networks and we talk about Linkedin. Is media a good place to be?

MCCALL: It is a good place to be right now because everybody still is in media, if you think about.

VELSHI: Right.

MCCALL: I mean, there's a couple of risks of, you know, if the U.S. economy slows down, they're based on advertising. People are not spending as much money on...

VELSHI: Right. And it's mostly banks and...

MCCALL: ... you know, whether it be Linkedin or...

VELSHI: ... autos and things like that. So we've seen a real comeback in that advertising spending.

MCCALL: We've seen a huge comeback. If you look at the stocks, they have outperformed the market over the last two years. They've had a great run. The problem is, if this economy starts to slow down, what happens then?

VELSHI: Give me a network. Who do you like?

MCCALL: I have to say CBS. I hate to say that. But I have to like CBS. The stock is amazing. The chart is amazing. And you look at what it has done, and even more importantly, Charlie Sheen. Charlie Sheen is gone, but Ashton Kutcher is coming back. I mean, Ashton Kutcher is coming. And this stock has been...

VELSHI: This doesn't scare you, 82 percent in a year?

MCCALL: I don't, because if you look at the valuation, if I take every cable and network television company, it is actually the most attractive right now. Taking names away, it's the most attractive company out there.

VELSHI: All right. Let's talk about a non-network play, what else do you like in media?

MCCALL: Netflix. I mean, you think about this. I mean, that's the future. Because everybody wants to invest in the future. The future right now is, I'm watching my television shows, I'm watching my movies wherever I want to watch them.

And you talk about being scared, look at the chart of Netflix. It's...

VELSHI: That's 771 percent in five years, although most of it has been in the last year.

MCCALL: I know. I look at this and I think to myself, where the heck was I four years ago?

VELSHI: Yes, yes.

MCCALL: But at the end of the day...

VELSHI: You know where you were? You were a subscriber.

MCCALL: I was. I was. I was spending $15 a month to get the movies. But I look at this now and I think that is the future.

VELSHI: Why is it -- but you said -- when you started, you said Netflix is one of something that could become many. That was Linkedin. That's what Netflix was. I mean, things changed for Netflix in the last few years, but ultimately it was just a service that mailed you DVDs.

MCCALL: But if you think about it, Linkedin, what did they really do? I'm on Linkedin, to be honest with you, but it doesn't really give me anything at the end of the day. Netflix, I can go home right now when I leave this show and watch any television show I want on demand.

I mean, it's the future. It's where we're going. And I think it's something that's not going to change. Worst case scenario, this company gets bought out by somebody else. A big media firm comes in and says, we want your technology, we're taking it.

VELSHI: One thing I like about you is you always give us some option for a slightly more risk-averse investor, an exchange-traded fund, you can buy them and sell them like a stock, but it's a basket of funds. Tell me what you like in media as an ETF. MCCALL: The Powershares Media ETF, so it's a basket of 30 stocks. So you think from CBS to Time Warner, News Corp., you'd throw them all out there, they're in that basket. And you don't take that company-specific risk. You pay a little bit of fee for it.

But, again, you look at the chart, up 21 percent, beating the market actually over the last 12 months. And this is a great way to just say, you know what? I want to invest in media without picking one stock.

VELSHI: Which for many of our viewers is probably a better way to go because they may not have time to be stock pickers.

MCCALL: Absolutely. For the individual investor, it's so difficult to pick one stock. That's why you go to ETF, pay a little bit of a fee, and then you have exposure to everything.

VELSHI: The ticker on that ETF happens to be PBS, not to be confused with the media company. Matt, great to see you, as always, Matt McCall is the president of Penn Financial Group.

All right. To go to college or not to go to college? When jobs for grads are hard to come by, is college worth the expense? I'll tell you next in my "XYZ."

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VELSHI: Time now for the "XYZ" of it. What is the value of a college education these days? According to The College Board, average tuition at a private university has jumped to nearly $30,000 a year. That's triple what it was just a generation ago. State-run schools and two-year junior college tuitions are also way up because states are trying to trim their budgets.

So it's not surprising that American families are weighing the financial costs of a college degree. Now, according to job placement firm Adecco, 60 percent of recent graduates coming into the job market since the "Great Recession" have not been able to find full-time work in their chosen profession.

Eighteen percent of those recent grads have been forced to take jobs outside of their college major, many of them going into jobs in which their degrees aren't even required.

Now you add to that the incredible stress of years of paying back student loans, and the return on investment starts to look questionable. But despite all the rising costs and the job placement hardships, you'd be wrong to forego a college education.

You need to look at the long-term picture. And according to Census data analyzed by Pew Research, over the course of the typical 40-year working life, a college grad is estimated to earn more than a half million dollars more than a worker with just a high school diploma, even after you factor in the cost of going to college.

A simple comparison of last month's employment numbers will illustrate what I'm talking about. We saw an overall unemployment rate of 9 percent. College grads, the rate was half of that, 4.4 percent.

Two more numbers and then I'll let you go. Half of all those with a bachelor's degree made more than $1,000 a week, while half of those with a high school diploma made just $626 a week.

So even with rising tuition costs and higher student loan interest rates, and everything else, it still pays to go to college. That's my "XYZ."

Earlier during our conversation with Elizabeth Warren, I mentioned my "XYZ" from last week with my not-so-subtle feelings on the Consumer Financial Protection Bureau. If you want to check it out, I'll be tweeting a link to that "XYZ" in just a minute.

You can follow me on Twitter @AliVelshi. Let me know what you think. I do read all of your comments, even the nasty ones.

Thanks for joining the conversation this week on YOUR MONEY. We're here every Saturday, 1:00 p.m. Eastern, Sunday at 3:00 p.m. You can also catch Christine Romans on "YOUR BOTTOM LINE" Saturday mornings at 9:30 a.m. Eastern.

Have a great weekend.