PBS NewsHour - 2009-02-19
Channel: malgent
Transcript
Language: English (original, YouTube automatic captions)
[0:00] or
[0:21] good evening. I'm Jim Lara. On the
[0:23] NewsHour this Thursday, the lead story,
[0:26] President Obama talks trade, energy, and
[0:29] more with Canadian Prime Minister
[0:31] Harper. The other news of the day,
[0:34] including passing a budget bill in
[0:36] California. And then for takes related
[0:39] to the ongoing economic crisis here and
[0:42] most everywhere. A free trade discussion
[0:45] key to today's Canada meeting. The story
[0:48] of an American manufacturer in Vietnam.
[0:51] A look at the success prospects for the
[0:54] administration's new housing plan and a
[0:57] Paul Salmon conversation with the
[0:59] savings man.
[1:03] Major funding for the NewsHour with Jim
[1:06] Ler is provided by
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[2:29] >> President Obama journeyed out of the
[2:31] country today for his first time since
[2:33] taking office. He went north to Canada
[2:36] for talks on the economy, trade, the
[2:38] environment, and Afghanistan.Wami
[2:41] Holman has our lead story report.
[2:44] >> Mr. Obama arrived in Ottawa late this
[2:47] morning honoring a tradition that new US
[2:49] presidents travel first to Canada. The
[2:52] Canadian Governor General Mik Ja was on
[2:55] hand to meet him. And a crowd of about a
[2:58] thousand watched as the president's
[3:00] motorcade pulled up on Parliament Hill.
[3:02] There he greeted Prime Minister Steven
[3:04] Harper and drew a huge cheer when he
[3:07] stepped out to wave to the public. The
[3:09] prime minister and the president held
[3:11] private talks and a working lunch.
[3:13] >> Today, uh Canada and the United States
[3:17] are closer, economically,
[3:21] socially, culturally uh in terms of our
[3:24] international partnerships than any two
[3:27] nations on the face of the earth. Closer
[3:29] friends than any two nations on the face
[3:31] of the earth.
[3:31] >> The two countries economies also are
[3:34] heavily intertwined and both are mired
[3:36] in recessions. Canada lost a record
[3:39] 129,000 jobs last month, raising the
[3:42] unemployment rate to a 4-year high of
[3:45] 7.2%.
[3:47] And today, the US Labor Department
[3:49] announced nearly 5 million Americans are
[3:52] on unemployment benefits, a record high.
[3:55] >> We know that the financial crisis is
[3:57] global, and so our response must be
[4:00] global. The economic troubles also put a
[4:03] spotlight on the US Canadian trading
[4:05] relationship, the world's largest.
[4:08] Canadians have raised questions about
[4:10] the byamerican section in the economic
[4:13] stimulus law that President Obama signed
[4:15] on Tuesday.
[4:16] >> I recognize the concerns of Canada given
[4:20] how significant trade with the United
[4:22] States is uh to the Canadian economy. Uh
[4:25] I provided Prime Minister Harper an
[4:28] assurance uh that I want to grow trade
[4:31] and not con contract it uh and I don't
[4:34] think that there was anything in the
[4:36] recovery package uh that uh is adverse
[4:40] to that goal. We have agreed uh in
[4:43] Canada and you know all the major
[4:45] countries of the world through the G20.
[4:46] We we agreed to pursue economic stimulus
[4:50] measures not just to stimulate our own
[4:53] economies but to recognize that we have
[4:55] a synchronized global recession that
[4:58] requires policies that will not just
[5:01] benefit ourselves but benefit our
[5:02] trading partners at the same time.
[5:04] >> The two men also vowed to work together
[5:06] on adding labor and environmental
[5:09] protections to NAFTA. the North American
[5:11] Free Trade Agreement.
[5:12] >> My hope is is that as our advisers and
[5:17] staffs and economic teams uh work this
[5:19] through that there's a way of doing this
[5:21] that is not disruptive to the
[5:23] extraordinarily important trade
[5:24] relationships that exist between the
[5:26] United States and Canada. Our position
[5:28] is uh that we're uh we're perfectly
[5:31] willing to look at ways we can we can uh
[5:35] address some of these concerns which I
[5:36] understand without you know opening the
[5:38] whole NAFTA and unraveling what is a
[5:41] very complex agreement.
[5:42] >> Beyond trade, the leaders signed an
[5:44] agreement to cooperate on developing
[5:47] clean energy technology. Canada is the
[5:50] largest supplier of crude oil to the
[5:52] United States. It also has the world's
[5:54] second largest oil reserves. much of it
[5:57] in oil sands, but extracting it yields
[6:01] large amounts of greenhouse gases.
[6:03] >> I think the clean energy dialogue is an
[6:05] extraordinary beginning
[6:08] because right now there are no silver
[6:10] bullets to solve all of our energy
[6:13] problems.
[6:14] >> Both of our governments are making uh
[6:16] large investments in things such as
[6:17] carbon capture and storage and other new
[6:20] technologies designed to fight climate
[6:22] change. The day's major foreign policy
[6:25] focus was Afghanistan. Canada has 2,800
[6:28] troops there, but they're set to leave
[6:30] by 2011. President Obama took note of
[6:34] their sacrifice.
[6:35] >> I certainly did not press uh the prime
[6:39] minister on any additional commitments
[6:42] beyond the ones that have already been
[6:43] made. All I did was to compliment Canada
[6:47] on not only the troops that are there,
[6:52] the 108 that have fallen as a
[6:54] consequence of engagement in
[6:55] Afghanistan, but also the fact that
[6:58] Canada's
[7:00] largest foreign aid recipient is
[7:01] Afghanistan.
[7:02] >> Closer to home, Prime Minister Harper
[7:04] vowed the closest cooperation on
[7:06] continental security.
[7:09] There is no such thing as a threat to
[7:11] the national security of the United
[7:12] States which does not represent a direct
[7:15] threat to this country. We as Canadians
[7:18] have every incentive to be as
[7:21] cooperative and alarmed about the
[7:23] threats that exist to the North American
[7:25] continent in the modern age as do the
[7:28] government and people of the United
[7:29] States.
[7:30] >> Afterward, Mr. Obama paid a surprise
[7:32] visit to a downtown Ottawa market,
[7:34] greeting shoppers and posing for
[7:36] pictures. Yeah, I understand you've got
[7:38] some some Canadian cookies shaped like
[7:41] shaped like maple leaves.
[7:42] >> The president also met with Canadian
[7:44] opposition leader Michael Ignached
[7:46] during his 7-hour stay. Then he headed
[7:49] home, saying he'd like to visit Canada
[7:51] again once it warms up.
[7:54] >> Also today, Wall Street took another hit
[7:57] from worries about banks, high tech
[7:59] firms, and the general economy. The Dow
[8:02] Jones Industrial Average fell to its
[8:04] lowest level in more than six years. It
[8:07] lost 89 points to close below 7466.
[8:12] The Nasdaq fell 25 points to close at
[8:15] 1442.
[8:17] The California legislature adopted a
[8:19] package of tax increases and spending
[8:21] cuts to close a huge deficit. Passage
[8:25] came after months of political stalemate
[8:27] and a week of allnight sessions.
[8:30] Governor Arnold Schwarzenegger welcomed
[8:32] the outcome.
[8:34] >> The legislator's action to solve our 42
[8:36] billion deficit was difficult but
[8:39] courageous and just what California
[8:41] needs. This is the perfect medicine for
[8:44] our ailing economy and it will boost
[8:46] public confidence in California,
[8:49] reassure the financial community and
[8:51] allow us to resume selling our bonds and
[8:54] rebuild our state. The budget impass had
[8:57] forced furlows of state employees and a
[9:00] halt to public works projects.
[9:03] Switzerland insisted it continues a
[9:05] tradition of keeping bank accounts
[9:07] confidential. Last night, the Swiss
[9:10] handed US authorities the names of more
[9:12] than 250 American clients of UBS,
[9:16] Switzerland's largest bank. They're
[9:19] suspected of tax fraud and the Swiss
[9:21] president said as such they are not
[9:24] protected. Today the US government filed
[9:26] a new suit for 50,000 more names.
[9:30] Allegations of fraud against a Texas
[9:32] billionaire sent shock waves across the
[9:35] Caribbean and South America. Venezuela
[9:38] seized a bank controlled by Allen
[9:40] Stanford and there was a run on deposits
[9:42] in Antigga. We have a report from Kimmy
[9:45] Inerum of Independent Television News.
[9:49] >> Once upon a time, Sir Alan Stanford was
[9:51] a prince, but now he's more of a pariah.
[9:54] Antigans queued up today to withdraw
[9:55] what they could from what used to be
[9:57] Stanford's main bank, which is why the
[9:59] Antigan government today promised to
[10:01] underwrite local deposits. The Eastern
[10:04] Caribbean Central Bank is in touch with
[10:07] the Bank of Antigga and the government
[10:10] and is currently putting in place a
[10:13] contingency plan. Therefore, there is no
[10:17] need for panic. But across Latin
[10:20] America, investors are starting to do
[10:22] exactly that. Ecuador, Peru, Panama, and
[10:25] Colombia all suspending Stanford's
[10:27] banking operations. Venezuela first
[10:29] seizing them and then putting them up
[10:31] for sale. Today in the UK, the serious
[10:34] fraud office began to look into
[10:35] Stanford's links here. The billionaire's
[10:38] books were audited by what turns out to
[10:40] be a family accountant with somewhat
[10:42] underwhelming offices in North London.
[10:44] They're still listed here, but in fact
[10:46] moved out four years ago. So today, the
[10:49] Saralan Stanford Trail leads us to that
[10:52] well-known global accountancy hub,
[10:55] Enfield in North London. specifically
[10:57] here, this small room about 5 m by 5 m,
[11:00] which is where his accountancy firm was
[11:03] based at the time. Now, what's
[11:04] remarkable about this is that the
[11:06] authorities could possibly think that a
[11:08] firm of this size, no matter how
[11:10] brilliant, could possibly be in charge
[11:12] of looking over the books of a claimed
[11:14] $50 billion worth of global investments.
[11:17] And in a separate investigation in
[11:19] Mexico, the FBI is said to be looking at
[11:21] Stanford's connection with the powerful
[11:23] Gulf drug cartel. But last week, the
[11:26] authorities realized he was moving large
[11:28] amounts of money out of his banks and
[11:30] decided to act quickly.
[11:32] >> The US case against Stanford involves
[11:34] the Securities and Exchange Commission.
[11:37] It alleges he carried out a fraud scheme
[11:40] amounting to $8 billion. Stanford has
[11:43] insisted he's innocent, but FBI agents
[11:46] formally served him with a civil
[11:48] complaint this afternoon. Secretary of
[11:51] State Clinton raised concerns about how
[11:53] stable North Korea is. She spoke on the
[11:55] way to South Korea, the latest stop in
[11:58] her tour around Asia. She said it's
[12:01] unclear who is in charge in North Korea.
[12:04] It's widely believed Kim Jong-il, the
[12:06] North Korean leader, suffered a stroke
[12:08] last August. Clinton said even a
[12:10] peaceful succession would create more
[12:13] uncertainty about North Korean policy.
[12:17] The Parliament of Kyrgyzstan endorsed a
[12:19] decision to close a key US air base. The
[12:22] site is a major hub and transit point
[12:25] for US troops and cargo entering and
[12:27] leaving Afghanistan. The parliament vote
[12:30] was 78 to1 to evict American forces from
[12:34] the base. The legislation now goes to
[12:36] the president who is expected to sign it
[12:39] shortly. Still, US Defense Secretary
[12:42] Gates said the matter remains open. He
[12:44] said the US will consider paying more
[12:46] rent to keep the base. A Russian jury
[12:50] acquitted three men in the murder of a
[12:52] famed journalist. Anna Pollikov Skyup
[12:55] was gunned down in 2006. Her reporting
[12:58] targeted the regime of then President
[13:00] Vladimir Putin for alleged abuses. The
[13:03] defendants left court in Moscow after
[13:05] not-uilty verdicts on charges they aided
[13:08] in the killing. Prosecutors said they
[13:10] will appeal.
[13:19] And still to come on the NewsHour
[13:21] tonight, four bad economic times
[13:23] stories, talking trade, manufacturing in
[13:27] Vietnam, helping homeowners, and urging
[13:31] savings. Jeffrey Brown does trade. It's
[13:35] not only between the US and Canada that
[13:37] trade is becoming a critical issue. In
[13:40] hard times and in some cases in response
[13:42] to worker protests, governments around
[13:44] the world are acting or threatening to
[13:46] act to prop up their own companies and
[13:48] workers. Are such moves appropriate or
[13:51] do they signal a shift toward
[13:52] protectionism? We talk about all this
[13:55] now with Fred Bergston, director of the
[13:57] Peterson Institute for International
[13:59] Economics, and Theo Lee, policy director
[14:01] and chief international economist at the
[14:04] AFL CIO. Welcome to you both of you.
[14:06] >> Good to be here.
[14:06] >> Fred Bergen, let me start first. To what
[14:09] extent do you see the trade issue
[14:11] becoming an a source of friction as the
[14:14] global economy weakens? I think the
[14:16] trade issue will become a major source
[14:18] of friction both among economic
[14:22] relations but between countries more
[14:24] broadly. Over 30 countries have put in
[14:27] new trade barriers just since the group
[14:30] of 20 had its summit meeting here in
[14:32] Washington back in mid November. Most of
[14:34] those are minor to date. But it's clear
[14:37] that as the recession deepens and
[14:39] broadens, this is going to be a very
[14:41] very profound issue. Countries around
[14:44] the world are going to be tempted to try
[14:46] to export their problems to their
[14:48] neighbors, try to close their markets
[14:52] and prevent and create jobs at home at
[14:54] the expense of others. The problem of
[14:56] course is that it won't work. As the
[14:59] president said today in Ottawa, this is
[15:01] a global crisis. All countries are
[15:04] suffering downturns. So any country that
[15:06] tries to export its problems, export its
[15:09] unemployment, create jobs at the expense
[15:11] of others is going to face instant
[15:13] retaliation by others and the whole
[15:16] trade system will spiral downward. It
[15:18] just won't work, but it could become a
[15:20] major friction point between a lot of
[15:22] countries.
[15:23] >> All right, let me come back to the will
[15:24] it work or or the consequences. First of
[15:26] all, do you see it growing in terms of
[15:28] the friction between countries? No, I
[15:31] mean there's always going to be a lot of
[15:32] pressure and a lot of national
[15:34] governments are struggling to get their
[15:35] own economies out of the trouble that
[15:37] they're in. But I think there's it's a
[15:39] little bit of a distraction, a little
[15:40] bit of an exaggeration just how how big
[15:42] a danger protectionism is. Right now,
[15:45] the key thing, as Fred said, is to get
[15:47] the global economy going again. And
[15:48] countries have to come into step up to
[15:50] the plate and do take the appropriate
[15:53] measures. And I think one of the things
[15:54] that's missing right now is the kind of
[15:56] international coordination,
[15:57] macroeconomic coordination. But I think
[16:00] that the the the small steps that have
[16:02] been taken where countries are looking
[16:04] to protect their own workers and their
[16:06] own firms are very minor in the scheme
[16:09] of things. What's much more dangerous is
[16:11] if we have a a a prolonged global
[16:13] recession where countries don't take the
[16:16] appropriate steps to stimulate their own
[16:18] economies.
[16:19] >> What's an example? But but make this
[16:21] concrete. Yeah.
[16:22] >> Give us an example of something that
[16:24] countries have done or are thinking of
[16:25] doing that would that would be a
[16:27] problem. I think the best example was
[16:29] when the Congress here contemplated and
[16:33] then in the House of Representatives
[16:35] enacted some by American preferences for
[16:38] US products under the fiscal stimulus
[16:40] legislation that was really just a
[16:43] threat of action. It was not implemented
[16:45] action, but it set off a firestorm
[16:47] around the world,
[16:48] >> including we saw today in
[16:50] >> Canada, the European Union, all of our
[16:52] major trading partner partners
[16:54] immediately erupted, threatened quite
[16:56] explicitly to retaliate if the United
[16:58] States did it quite appropriately. Then,
[17:01] President Obama stepped back, urged the
[17:03] Senate to change the language so as to
[17:05] be sure it was consistent with our
[17:07] international obligations. The Congress
[17:09] did that. That's the way the bill was
[17:10] signed. Even that I have to say doesn't
[17:14] solve all the problems because there
[17:16] will be under that stimulus legislation
[17:18] under its byamerican provisions some
[17:21] increasing discrimination against
[17:23] foreign products and that in turn could
[17:26] lead to the kind of spiral I talked
[17:27] about.
[17:28] >> But do you see by and those kinds of
[17:30] actions differently? I I certainly do
[17:32] and I think we have to make a
[17:33] distinction between protectionism in the
[17:35] sense of raising tariff barriers and and
[17:37] stopping trade and government
[17:39] procurement decisions where governments
[17:41] choose to spend their own tax dollars in
[17:43] a way which is targeted towards creation
[17:46] of good jobs at home and it's actually a
[17:48] rational step for governments to take in
[17:50] a time when we don't have the
[17:52] coordination of fiscal stimulus. United
[17:54] States is spending a lot more money to
[17:56] stimulate its economy than most of our
[17:58] trading partners in the industrialized
[18:00] world. And uh to the extent that that
[18:04] we're doing that, American taxpayers are
[18:06] going into debt in order to do that.
[18:08] They're trying to stimulate the US
[18:09] economy, not the global economy. They
[18:11] want to create good jobs at home in
[18:12] their own communities. They want their
[18:14] tax dollars spent that way. and other
[18:17] countries may not step up to the plate
[18:19] and do the appropriate level of fiscal
[18:21] stimulus if they think they can free
[18:22] ride off of what the United States has
[18:24] done. So, I think it's an entirely
[18:26] rational and appropriate within the
[18:28] limits of our international obligations.
[18:29] So, so long as we are observing our
[18:32] international obligations, there's no
[18:33] reason for any other country to
[18:34] complain.
[18:35] >> Well, so this is putting on the table a
[18:37] question a lot of people have. I mean,
[18:38] isn't it right for countries to worry
[18:40] first about their workers or their
[18:43] companies? um especially when they're
[18:45] putting billions of dollars on the line
[18:47] in a in a stimulus plan like that. And
[18:49] can't it be done as the is suggesting
[18:51] within international trade law?
[18:54] >> Uh sure it's right to worry first about
[18:56] your own country and your own citizens
[18:58] but second no it's not right to try to
[19:02] restrict what you do to your own
[19:04] citizens. As again the president said
[19:06] and Theo agrees it's a global crisis.
[19:09] You need a global response. In fact, we
[19:11] all have to be thinking in terms of
[19:13] creating policies that stimulate the
[19:16] global economy. I totally agree with
[19:17] Thea on the need for coordinated
[19:19] stimulus measures around the world. Some
[19:22] countries have in fact stepped up.
[19:24] Contrary to what Thea said, there's at
[19:25] least one big economic power whose
[19:27] stimulus package to date is much bigger
[19:30] than our own relative to economy. That's
[19:32] China. It may surprise you. The
[19:34] Europeans by contrast are lagging in
[19:36] some sense free riding on the rest of
[19:38] the world. Germany, UK, others have to
[19:41] raise their sights, have to get more
[19:42] ambitious. That's what this G20 summit
[19:44] process is all about to try to galvanize
[19:47] all the major countries to expand
[19:49] domestic demand in their economies by
[19:51] enough to galvanize a world recovery.
[19:54] But that's the way to go about it. If by
[19:57] contrast, countries try to restrict the
[19:59] payoff from their stimulus programs to
[20:02] their domestic workers and their
[20:03] domestic economies, as I said before, it
[20:06] will lead to instant retaliation. No
[20:08] country, no country in this environment
[20:11] could permit a major trading partner to
[20:13] get away with that. If if the Europeans
[20:15] do it or if China does it, I assure you
[20:18] the United States will and should
[20:20] retaliate.
[20:21] >> Okay, so instant retaliation and it
[20:23] doesn't work. That's what we're
[20:25] >> Well, the instant retaliation first of
[20:26] all is a little bit silly and to the
[20:28] extent if the United States is honoring
[20:30] its obligations under the WTO and NAFTA
[20:33] and so on, there's no reason why there
[20:34] would be retaliation. uh we have
[20:37] negotiated flexibility in our
[20:39] international obligations. We should use
[20:41] that flexibility. Other countries
[20:42] already do. Other countries take full
[20:44] advantage of the exceptions that they
[20:46] negotiate at the WTO and other trade
[20:48] agreements. Many countries like China
[20:51] and India and Brazil have made no
[20:52] obligations. They are not obligated to
[20:54] open their procurement markets to US
[20:56] products. It actually would be silly for
[20:58] the United States to open its markets to
[21:00] countries that have declined to open
[21:02] their procurement markets to our own.
[21:04] There's a reason why we negotiate these
[21:07] in a reciprocal basis because countries
[21:09] tend to be reluctant to open their own
[21:11] markets unilaterally, their own
[21:13] procurement markets. We shouldn't give
[21:14] away what other countries are holding
[21:17] holding down.
[21:18] >> Let me ask you both uh a lot of people
[21:20] ask me about and I hear it at
[21:22] conferences and all of this a bigger
[21:24] picture issue here. Is the trade issue
[21:27] connected to a a kind of deeper crisis
[21:29] of confidence that millions of people in
[21:31] the United States and around the globe
[21:34] feeling that the system was of
[21:36] globalization that we've been hearing
[21:38] about for decades was supposed to work
[21:42] and now wondering if it works. In fact,
[21:45] is that what's driving some of this
[21:47] political pressure uh on trade issues
[21:50] and other and other factors that
[21:51] governments have to respond to? You see
[21:53] that?
[21:53] >> Sure. Absolutely. uh one of the
[21:56] backdrops for this current debate is a
[21:59] backlash against globalization that has
[22:02] been building in this country for 10 to
[22:03] 15 years. Uh a lot of people blame
[22:06] globalization for uh worsening income
[22:09] distribution, job insecurity, uh all the
[22:13] ills that we know have been prevalent in
[22:15] our economy. Now all studies show that
[22:17] globalization is only a modest cause of
[22:20] those problems but it is a proxy for
[22:22] them and US policy has failed in a major
[22:25] respect.
[22:27] We know that globalization in the
[22:29] aggregate is a big plus for the US
[22:31] economy. We've studied at my institute.
[22:33] We've shown the US economy is a trillion
[22:35] dollars a year richer as a result of the
[22:37] globalization of the last 50 years. But
[22:40] there are adjustment costs like any
[22:42] dynamic economic change. There are
[22:44] losers. There are costs, there are
[22:46] downsides. We quantify it as about $50
[22:48] billion a year. A 20 to1 benefit to cost
[22:50] ratio. Nevertheless, significant costs.
[22:53] You have to take care of that downside
[22:56] cost loser problem. You have to have
[22:58] social safety nets that deal with those
[23:00] problems. The US has done a very poor
[23:03] job. You lose your health care when you
[23:05] lose your job. Unemployment insurance is
[23:08] miserably inadequate. trade adjustment
[23:10] assistance works, but it doesn't even
[23:12] cover services workers who get
[23:13] outsourced and it's inadequate. So, one
[23:16] thing the Obama administration, I think,
[23:18] promises to do is to significantly shore
[23:21] up those safety nets. The stimulus
[23:23] package already began to do it in some
[23:25] respects. But we must deal with the
[23:27] downsized costs and losers if we're
[23:30] going to deal with that underlying
[23:31] problem and provide then a foundation
[23:33] for a sensible open trade policy.
[23:35] >> All right. And and a last word here. I
[23:36] mean, the downside is what is
[23:38] exaggerated at a time like this,
[23:39] clearly.
[23:40] >> Well, it's not quite as simple as as
[23:41] Fred makes it out to be. I mean, there's
[23:42] a tremendous distributional impact of
[23:44] the kind of trade and globalization
[23:46] policies that we've put in place that
[23:47] globalization has been used by American
[23:49] corporations to um bargain down uh
[23:54] workers benefits and wages and to bust
[23:56] unions and you know, they've done that
[23:58] not just in the United States but around
[24:00] the world. And so, we've had the wrong
[24:01] kind of globalization. It's been a
[24:03] corporate dominated globalization which
[24:05] has not really served working people
[24:06] here or in our trading partners very
[24:08] well. And so the impact has been that
[24:11] we've seen this long-term decadesl long
[24:14] stagnation of wages and growth of wage
[24:15] inequality in the United States even as
[24:17] we've been in a period of tremendous u
[24:19] economic growth, productivity growth,
[24:21] technological improvements and
[24:23] increasing globalization. So to the
[24:25] extent that the benefits haven't gotten
[24:27] down to the average worker, to the
[24:29] typical worker, of course there's going
[24:31] to be a backlash against globalization
[24:32] and of course we need to do our trade
[24:34] policy differently, not just throw a few
[24:36] crumbs to the losers.
[24:37] >> All right, we will leave it there with a
[24:39] lot of big questions out there. The Fred
[24:40] Bergston, thank you very much.
[24:42] >> Good to talk.
[24:50] And next, the story of one company's
[24:52] tough business decisions. Special
[24:55] correspondent Jeffrey Kay has that
[24:57] report.
[24:59] At a new factory in Vietnam, owned by
[25:01] the American underwear company Hannes
[25:03] Brands, workers are turning out men's
[25:06] briefs to be sold in the United States.
[25:09] This plant in Hui in central Vietnam is
[25:12] one of the firm's five new Asia
[25:14] factories. Two in Vietnam, two in
[25:17] Thailand, and one in China. Hannes
[25:20] Brand's Asia facilities opened in the
[25:22] past 2 and 1/2 years employ about 6,000
[25:25] people.
[25:27] Vietnam has a, you know, a good labor
[25:29] force, you know, good labor cost, you
[25:32] know, a good infrastructure, good energy
[25:35] cost, and it is convenient for our
[25:37] fabric location in China.
[25:39] >> Javier Chakan is Hannes Brand's vice
[25:42] president for Asian apparel operations.
[25:45] And the average wage here is why
[25:47] >> the average in in general in our
[25:49] location the the current annual uh the
[25:52] current uh monthly uh take home is about
[25:55] $80.
[25:57] Uh but that that might that that's the
[25:59] average. It might go higher, you know,
[26:02] depending on the productivity.
[26:04] >> The pay is $30 a month more than the
[26:07] country's legal minimum. It's a 6 day 48
[26:10] hour work week. Employees get free
[26:13] lunches but cannot legally join a union
[26:15] that's not approved by the Communist
[26:17] Party. Since 1987, Vietnam has been
[26:21] shifting to a mixed market system,
[26:24] undertaking what it calls economic
[26:26] renovation. It encourages private and
[26:29] foreign investment by offering low taxes
[26:32] and low wages. Some 10,000 overseas
[26:35] businesses have pumped in about $40
[26:38] billion worth of investments, mostly in
[26:41] manufacturing.
[26:42] At Vietnam's foreign investment agency,
[26:45] official Boyqu Chung says the country is
[26:48] on track to become an industrial nation
[26:50] by the year 2020.
[26:53] >> Vietnam is very attractive environment.
[26:56] >> The investments are making a difference
[26:58] in people's lives. At Hannes Brand's
[27:01] factory in Hi, 50% of the workers
[27:04] previously worked on farms making
[27:06] subsistance wages. Sewing operator
[27:10] Trunki Minang is 18 years old. Two years
[27:13] ago, her family sent her from their
[27:16] rural home just outside Hi to work as a
[27:19] seamstress in Ho Chi Min City, once
[27:21] known as Saigon in the south. She sent
[27:24] all the money she earned back home. She
[27:26] returned when Hannes Brands opened.
[27:30] It was difficult in the south working
[27:32] such long hours from 6:00 or 7 in the
[27:36] morning until 6:00 or 8 at night. Now I
[27:39] feel more comfortable working only 8
[27:40] hours a day.
[27:42] >> Tran lives with her parents and her
[27:44] brother. They have running water for
[27:46] drinking and use well water for washing.
[27:49] Primitive by American standards. But
[27:51] Tr's father, a 45year-old construction
[27:54] worker, says the local economy is
[27:57] improving.
[28:00] It's clear, he said, people have income
[28:03] and buy more things. More people have
[28:05] better things to sell.
[28:08] >> Even with the global downturn, Vietnam's
[28:11] economic growth continues, although its
[28:13] pace has slowed.
[28:16] But there are questions about the
[28:17] long-term commitment of foreign
[28:19] investors and about how Vietnam is
[28:21] managing its industrial revolution.
[28:24] Peasants from the countryside are
[28:26] flocking to the cities. In Hanoi, the
[28:29] capital, many live in dilapidated
[28:31] housing on the bank of the Red River.
[28:34] Air pollution is worsening. People are
[28:36] moving into once quiet residential
[28:39] neighborhoods. Street vendors set up
[28:42] makeshift shops outside housing
[28:44] tenementss. Water pressure is often
[28:46] insufficient.
[28:48] >> And what does it what does it cost to
[28:50] live around? Sociology professor Dong
[28:53] Wen an at the Vietnam Academy of Social
[28:56] Sciences is tracking Vietnam's growth
[28:58] paths.
[28:59] >> It's very quiet five years ago and then
[29:03] some business started and people keep
[29:06] coming here to leave and stay for years
[29:09] in this areas to work for the factory
[29:11] nearby here. the housing finally I mean
[29:15] it's very problematic because um to get
[29:18] the cheap rent you have to share the
[29:20] house with other workers so maybe three
[29:24] four person in one rooms and sharing the
[29:27] rents to supplement incomes migrant
[29:30] factory workers pedal vegetables or
[29:33] newspapers others polish shoes hastily
[29:37] constructed apartment blocks have become
[29:40] casualties of neglect and disrepair air.
[29:43] Dong says investment in Vietnam is
[29:45] uneven. He wants the government to
[29:48] direct more foreign businesses to the
[29:50] countryside. So they always looking for
[29:53] the urban center to invest. So that the
[29:56] problem of the patterns of investment in
[29:59] Vietnam, but we encourage people to
[30:02] invest on agricultures, on farming or
[30:05] livestock.
[30:07] There are other criticisms of foreign
[30:09] investors. While establishing its Asian
[30:12] factories, Hannes Brands closed 30
[30:15] plants in the US, Latin America, and
[30:18] Canada, putting nearly 19,000 people out
[30:21] of work. Outside a Hannes Brands plant
[30:25] in Eden, North Carolina, slated for
[30:27] closure, we talked to Scott Nova of the
[30:30] nonprofit Worker Rights Consortium,
[30:32] which monitors working conditions in
[30:35] global apparel companies.
[30:37] >> Nova questions how long foreign
[30:39] investors will remain in the places they
[30:41] move to. Corporations like Hanes Brand
[30:44] should make a long-term commitment to
[30:45] the communities in which they're
[30:46] operating. Wherever those communities
[30:48] are, whether it's Eden, North Carolina
[30:50] or Hanoi, Vietnam, they should make a
[30:52] long-term commitment, and they should
[30:54] make a commitment to treat the workers
[30:55] they employ decently, pay a decent wage,
[30:58] respect the rights of workers.
[31:00] >> In Vietnam, Hannes Brand's officials
[31:02] insist they're in the country for the
[31:04] long haul. But there is a caveat.
[31:07] >> So, at what point does Vietnam then
[31:10] become unaffordable for you? So far what
[31:12] we see is that we stay a very long time
[31:15] in the communities where we set
[31:16] operations.
[31:17] >> But at some point might you be
[31:19] reassessing and moving on to another
[31:21] country where the labor costs are
[31:23] cheaper.
[31:24] >> 20 30 years from now probably you know
[31:27] uh uh we cannot say never but we usually
[31:32] stay for a relatively long time in the
[31:34] comm in the communities where where we
[31:36] uh establish operations. Indeed, Hannes
[31:40] Brands has stayed in some places for a
[31:42] long time. They were in North Carolina
[31:44] for a hundred years before closing
[31:47] factories there. Richard Null, chief
[31:49] executive officer and board chairman of
[31:51] the Winston Salem based company, says
[31:54] Hannes Brands had to move.
[31:57] >> Our supply chain strategy has been
[31:59] consistent for many decades. It's to
[32:01] always operate in the lowest cost places
[32:03] that we can. that allows us to use that
[32:06] cost advantage to invest in our brand,
[32:09] invest in innovation, and keep prices
[32:11] low for our consumers.
[32:13] >> Well, Haynes brand's global strategy,
[32:14] unfortunately, is the same as the global
[32:17] strategy of virtually every major brand
[32:18] and retailer in the apparel business is
[32:21] essentially it's a smash and grab. Go to
[32:23] a country,
[32:25] pay very low wages there for clothing
[32:27] for a short period of time, make some
[32:29] money, move on to the next cheaper
[32:31] country. I think we've certainly seen a
[32:33] race to the bottom.
[32:35] >> Is it a race to the bottom?
[32:37] >> I don't think so. As you look at the
[32:39] places that we go and we operate, as
[32:41] industrialization is taking hold and
[32:43] we're able to bring uh jobs to those
[32:45] localities so that they can get their
[32:47] economic engines going. Actually, I
[32:50] think on a worldwide basis when you take
[32:52] a view across all boundaries, you're
[32:55] helping a lot of people rise their
[32:57] standard of living, which is good for
[32:58] all of us.
[33:00] >> They've posted jobs with us. Right now
[33:01] we don't have any.
[33:03] >> But where does that leave those left
[33:05] behind? A Winston Salem building once
[33:08] used by Hannes Brands is now a state
[33:11] unemployment office where former Hannes
[33:14] Brands workers come for counseling.
[33:16] >> Well, they say this is the way the world
[33:17] is going. That you've got they've got to
[33:19] be in China. They got to be in Vietnam.
[33:21] That the labor is cheaper there. That
[33:23] >> Okay. Well, what about us here?
[33:28] >> We not supposed to have a job.
[33:31] The land
[33:32] milk and honey. Where is that?
[33:35] >> We have no milk and honey anymore.
[33:38] >> Everybody else got it. They took it from
[33:39] us.
[33:40] >> Barbara Plater and Willie Hill say they
[33:42] are boycotting Hannes Brand's products
[33:45] regardless of where they're made. Hannes
[33:47] Brand's officials recently announced
[33:49] that because of the weakened economy,
[33:51] sales are off and its American plant
[33:54] closures would have to be accelerated.
[34:06] and to the global economy. Take three.
[34:09] Reaction in the US to the president's
[34:11] home foreclosures plan. Judy Woodruff is
[34:14] in charge.
[34:16] Two of the nation's largest banks, Wells
[34:19] Fargo and Bank of America, gave a
[34:21] partial thumbs up to the housing rescue
[34:23] plan, announcing today that they would
[34:26] continue to hold off on any foreclosures
[34:29] into next month when the plan is
[34:31] enacted.
[34:32] >> The home mortgage crisis, the financial
[34:34] crisis, and this broader economic crisis
[34:37] are all interconnected, and we can't
[34:39] successfully address any one of them
[34:42] without addressing them all. The
[34:44] president's plan announced yesterday is
[34:46] a sort of shock therapy for the
[34:48] deepening recession aimed directly at
[34:50] the housing crisis. Almost 1 in 10
[34:53] homeowners were late on mortgage
[34:55] payments last year. In the last 3 years,
[34:59] 3 million people lost their homes and
[35:01] the administration said as many as 6
[35:04] million homes could go into foreclosure
[35:07] unless immediate action was taken. All
[35:10] the while, home prices keep plummeting.
[35:12] The plan I'm announcing focuses on
[35:15] rescuing families who've played by the
[35:17] rules and acted responsibly
[35:20] by refinancing loans for millions of
[35:22] families in traditional mortgages who
[35:24] are underwater or close to it.
[35:26] >> The key measures of the plan include $75
[35:30] billion to keep 3 to4 million at risk
[35:34] homeowners out of foreclosure. This
[35:36] would include cash incentives to lenders
[35:39] if they lower payments. The lender would
[35:42] agree to set payments at no more than
[35:44] 38% of a borrower's income. The
[35:48] government would then share the cost and
[35:50] lower the payments further to 31% of
[35:53] income. Banking chiefs like Jamie
[35:56] Diamond of JP Morgan Chase reacted
[35:59] positively.
[36:00] >> I think the plan is really elegantly
[36:02] done and really well designed. We think
[36:03] it'll be a very successful program. The
[36:05] plan also helps the four to five million
[36:08] homeowners with little equity in their
[36:10] homes refinance to cheaper mortgages.
[36:13] But many of the estimated 14 million
[36:16] other people who are in worse shape
[36:19] underwater, meaning they owe more than
[36:21] their home is worth are left out of this
[36:23] plan. Russell Sterns of Washington State
[36:26] was underwater and drowning. He took a
[36:30] $300,000 loss selling his home to avoid
[36:34] foreclosure.
[36:35] >> It is a big mess.
[36:37] I don't see um I don't see a solution
[36:40] for it. I definitely don't see how
[36:42] throwing
[36:43] money at the problem is going to help.
[36:45] >> Regardless, more money is coming. Fanny
[36:48] May and Freddy Mack will get an
[36:50] additional $200 billion, doubling the
[36:53] government's commitment to them to
[36:55] increase credit availability. That's got
[36:58] some in Congress upset, asking why Fanny
[37:01] and Freddy should be getting more
[37:02] taxpayer money. And some of Mr. Obama's
[37:05] plan will require congressional
[37:07] approval. He's seeking legislation that
[37:10] will allow bankruptcy judges to modify
[37:13] mortgages for owners in trouble. Many
[37:16] bankers say this housing rescue is
[37:18] incomplete and not broad enough. But
[37:21] FDIC chairwoman Sheila Bearer said the
[37:24] plan will have a big impact and soon
[37:26] there will still be some borrowers who
[37:28] lose their home to foreclosure. Some of
[37:30] that will be inevitable, but this should
[37:32] have a significant uh reduction in the
[37:34] foreclosure rate, bringing it more in
[37:36] line to historical levels and uh
[37:38] decreasing the unnecessary foreclosures
[37:40] which are putting artificial downward uh
[37:42] pressure on home prices which is hurting
[37:44] everybody.
[37:45] >> Meanwhile, 10,000 Americans slip closer
[37:48] to foreclosure every day.
[37:51] For more, we get two perspectives now.
[37:53] John Corson is the president and CEO of
[37:56] the Mortgage Bankers Association. And
[37:58] Ellen Harik is senior policy counsel for
[38:01] the Center for Responsible Lending, a
[38:03] consumer advocacy group. Thank you both
[38:06] for being with us. Ellen Corson, I'm
[38:08] going to turn to you first. Overall, in
[38:10] brief, what do you think of this plan?
[38:12] >> I think overall it's a very good plan.
[38:14] It's smart. It's practical. And it
[38:16] addresses some of the problems that
[38:18] we've been hearing bankers and
[38:20] servicesers express as reasons why they
[38:22] haven't been able to turn these loans
[38:24] that are failing into loans that would
[38:26] be sustainable.
[38:27] >> John Corson speaking for the mortgage
[38:29] bankers. Uh what do you think of this
[38:30] plan in brief?
[38:32] >> Well, we do Judy uh commend the uh
[38:34] administration for the plan and uh it's
[38:39] efforts to refinance and modify loans.
[38:40] Actually, I think it's a solid step to
[38:44] uh returning uh stability to home prices
[38:47] and allowing uh those our citizens to
[38:49] stay in their homes. So, we think it's a
[38:51] solid plan.
[38:52] >> Well, Mr. Corson, let me stay with you.
[38:53] Let's break this down. First, the
[38:55] refinancing piece of this. The
[38:57] administration saying it's going to help
[38:58] an estimated four to five million what
[39:01] they call responsible homeowners who are
[39:03] current on their mortgages, but who
[39:05] would benefit from refinancing at a at a
[39:09] lower rate. What does the mortgage
[39:11] industry think of that particular piece
[39:13] of it?
[39:13] >> Well, I think that's a solid piece. I
[39:15] mean, obviously, what we want to do is
[39:17] prevent foreclosures and we want to help
[39:19] people stay in their homes, particularly
[39:21] those that are uh able to make their
[39:24] payments but are, as we say, underwater.
[39:26] I would add, however, that uh this plan,
[39:29] of course, will only help those who
[39:30] would able be able to borrow 5% over
[39:34] what their current appraised value is.
[39:36] And really since Fanny May and Freddy
[39:38] Mack already have that risk on their
[39:40] books, we think there may be an
[39:42] opportunity to expand this plan really
[39:44] far beyond the 5% cap. Since they have
[39:47] the risk, they could really reduce the
[39:50] interest rates as they are in the
[39:52] present plan. And there's a precedent
[39:53] for this under the Federal Housing
[39:55] Administration. They have what's called
[39:56] a streamline refinance where they are
[39:59] willing since they already have the risk
[40:00] of the insurance to go ahead and offer
[40:02] lower payments to a much wider band of
[40:05] borrowers than those would be covered by
[40:07] the uh present restriction of 5% over
[40:10] the appraised value.
[40:11] >> But even without that expansion, do you
[40:13] think this part of the plan will work?
[40:15] >> Oh, sure it will work. I mean, it has
[40:17] been proven to work under other
[40:19] programs, too. And what we're trying to
[40:20] do obviously and we applaud is get
[40:23] borrowers into current interest rate
[40:25] loans where in fact the fact that they
[40:28] are underwater that they are incented to
[40:30] keep those houses able to make those
[40:32] payments and stabilize values in their
[40:34] neighborhoods.
[40:35] >> What about Ellen Cor Ellen Hornik
[40:36] Hornick to you first or second I should
[40:38] say on this piece of it the the
[40:40] so-called refinancing piece. What's your
[40:43] take on it and and do you agree with Mr.
[40:46] Corson that it really should be
[40:48] expanded? Well, I think it's a very good
[40:50] piece. I think it addresses a problem
[40:53] that we're seeing uh in the way that the
[40:56] crisis has changed. The crisis started
[40:58] actually with these very tricky
[40:59] mortgages that had confusing terms and
[41:03] some of their costs were obscured. And
[41:05] as those mortgages started to fail, we
[41:07] saw foreclosures rise. What we've seen
[41:10] now is that the housing market has been
[41:13] so impaired and the credit market so
[41:15] impaired as well that borrowers who've
[41:18] got loans that were not tricky 30-year
[41:20] fixed rate loans that were uh held by
[41:22] Fanny May and Freddy Mack, they're now
[41:25] at risk of foreclosure for reasons
[41:27] having to do with the general economic
[41:29] uh crisis. And so I think this part of
[41:31] the program is aimed at helping those
[41:33] people to avoid foreclosure so that we
[41:36] uh so that the foreclosure problem does
[41:39] not deepen. So I think that is an
[41:41] excellent part of the plan. I think
[41:43] what's also key is the part I suppose
[41:45] we'll come to next which is dealing with
[41:46] the people who are immediately at risk
[41:48] of foreclosure.
[41:49] >> And and I do want to bring us now to
[41:51] that P. This is a group the
[41:53] administration saying roughly 3 to four
[41:55] million uh people who are seriously at
[41:59] risk where the loan balance they have is
[42:01] well over the value of the house. Now
[42:04] this Mr. Corson creates cash incentives
[42:07] for the lenders to modify down uh the
[42:10] terms of the loan. What does the
[42:13] mortgage industry think of this? Is this
[42:14] something that's going to work?
[42:16] >> I think it will work. I think it's very
[42:18] helpful. As a matter of fact, it really
[42:20] aligns the interest of of lenders and
[42:22] the interest of borrowers. There's also
[42:24] incentives obviously for borrowers who
[42:26] need modifications to take advantage of
[42:28] this plan. And when you look at uh the
[42:31] 31% debt to income ratio and bringing
[42:34] those people back in to where they in
[42:37] fact can afford to make those payments
[42:38] again is an excellent alignment of of
[42:41] the interest. The industry has worked
[42:43] diligently to modify loans. It's not
[42:46] like this is going to be the first time
[42:48] or the first incentive they've had, but
[42:50] clearly the incentive is there. And in
[42:53] addition, they have an incentive as does
[42:55] the borrower to make sure that the
[42:56] modification works. There are incentives
[42:59] for the borrowers to continue to make
[43:00] their payments once their loan is
[43:02] modified.
[43:03] >> But help us understand why if this if
[43:06] these modifications are lower, improving
[43:08] the terms is already happening. Why are
[43:10] these incentives necessary? Well, this
[43:13] incentive is necessary because what
[43:14] you're doing now is you're getting
[43:16] additional loans and a sharing. I mean,
[43:18] there is a sharing here of the of the
[43:20] government uh pushing uh loan to value
[43:23] ratios uh or loan to value debt debt to
[43:26] income ratios down to 31% and a sharing.
[43:29] And that's a low level. That's the level
[43:31] in fact that was going to truly be very
[43:34] important to assisting these borrowers
[43:35] to have affordable payments over the
[43:38] next five years.
[43:40] Ellen Hornick uh what about this P the
[43:43] fact that the banks are are being
[43:44] offered uh incentives to give people
[43:47] more favorable terms
[43:48] >> I think it's important to make to to
[43:49] note the role of these companies that
[43:51] are called servicesers servicesers step
[43:54] into play when a loan has been sold to
[43:57] investors and in that case a loan is
[43:59] held by hundreds of investors around the
[44:01] world and so the borrower is not dealing
[44:03] with a lender when they run into trouble
[44:06] they're dealing with this company called
[44:07] the serer that has to manage the loan
[44:10] and the problem that the servicesers
[44:13] have been having is that they have mixed
[44:17] incentives when it comes to modifying
[44:19] these loans. So for example, if a serer
[44:21] allows a loan to go into foreclosure,
[44:24] the serer gets reimbursed for all its
[44:26] costs of foreclosing which are
[44:28] substantial. Under the current
[44:30] arrangements, if the serer tries to
[44:32] modify the loan, which is a lot less
[44:35] expensive than foreclosing, but has a
[44:36] cost, currently the serer is not
[44:39] reimbursed for this. And so,
[44:40] >> so there's a disincentive now.
[44:42] >> There's a disincentive.
[44:42] >> So, does this undo that?
[44:44] >> Well, it does because the plan would
[44:46] provide a payment to servicesers for
[44:48] each loan that they modify. That's one
[44:50] piece. The second piece is most of the
[44:53] in most cases loans are falling into
[44:55] foreclosure at a much higher rate than
[44:58] the modifications. Uh credit Swiss had a
[45:00] study that showed 3% of 90-day
[45:02] delinquent loans got a modification. And
[45:05] many of those modifications didn't lower
[45:07] the monthly payments but increased them.
[45:09] And so what a key piece of this plan is
[45:12] it will set a a guideline about what
[45:14] kind of modification will qualify. And
[45:17] it's going to be important to lower the
[45:20] payments. so that their the loan is
[45:22] sustainable.
[45:22] >> And you think that'll be done?
[45:24] >> Well, I think it'll be I think there's a
[45:26] very good likelihood that it will be
[45:28] done. I mean, we will be watching to see
[45:30] if uh if the servicesers do take up
[45:33] these incentives, but um I think we have
[45:36] uh the mortgage bankers association, we
[45:38] have John Corson saying he thinks it's a
[45:39] good plan. I think that that's a good
[45:41] indication of where we hope the
[45:42] servicing industry will be.
[45:44] >> Mr. of course. And what about the
[45:45] millions of other homeowners who are
[45:46] also underwater but are just not as bad
[45:49] off as this second group that we've
[45:52] described? Um how how do you I mean do
[45:54] you defend the dividing line that was
[45:56] drawn here by the administration?
[45:59] >> Well, you you have to I mean there it's
[46:01] clear you have to draw a line. I mean
[46:02] there is only so much that obviously we
[46:05] can do and we can help. This line is
[46:06] very broad. As I've said before,
[46:08] however, I think that the line can be
[46:10] expanded. I think we can expand the line
[46:12] and those who are available for the
[46:14] refinance piece. And frankly, as Ellen
[46:16] said on this piece, the the modification
[46:18] piece, there is still a segment of
[46:20] borrowers whose loans are in securities
[46:24] that are private label securities that
[46:27] will still have trouble being taking
[46:29] advantage of this modification because
[46:31] the servicesers uh are dealing under
[46:33] contractual arrangements with the
[46:35] investors and are limited to what they
[46:38] can do for those borrowers. And so one
[46:40] of the things that we have talked about
[46:42] as an association and our members is
[46:44] some sort of a safe harbor so that our
[46:47] servicesers can get to those borrowers
[46:49] inside those securities and modify them
[46:52] without the fear of litigation. That's a
[46:54] very important piece and we need to work
[46:57] aggressively to achieve that goal to
[47:00] include even more. So I think it be more
[47:02] expansive on both sides.
[47:03] >> Okay. So just to translate that in lay
[47:05] person's terms, uh Ellen, uh are you
[47:08] saying is that something that you your
[47:10] organization would go along with?
[47:12] >> I'm very sympathetic to that view. So
[47:14] just to to spell it out, these services
[47:17] are in a bind because they represent a
[47:20] bunch of investors who have different
[47:21] interests. And so you'll have a
[47:23] situation where everyone agrees that
[47:25] foreclosing will be m will yield much
[47:28] less than a sustainable modification,
[47:30] but some investors will do better if you
[47:33] structure modification one way and other
[47:35] investors would prefer it another way.
[47:37] And so it's important to create some
[47:41] sort of way of giving services comfort
[47:43] that they won't be sued.
[47:44] >> So it sounds like there's still some
[47:45] pieces of this that have to be worked
[47:47] out and we're going to be looking for
[47:48] more details. The administration will be
[47:50] rolling out more information, I guess,
[47:52] two weeks from now. All right. I want to
[47:54] thank you both, Ellen Hornick and John
[47:56] Corson. Thank you very much.
[47:57] >> Thank you, Judy.
[47:58] >> Thank you.
[48:06] >> And finally tonight, some closing
[48:08] thoughts on the economy from a super
[48:11] saver. Economics correspondent Paul
[48:13] Salman has that story.
[48:16] And now another adventure with Savings
[48:19] Man.
[48:19] >> For a decade plus, this musclebound
[48:22] financial adviser has been urging
[48:23] Americans to mend their proflegate ways.
[48:26] >> Oh dear, I can't afford that.
[48:28] >> Char, you can pay it off later.
[48:30] >> Not so fast, credit card guy.
[48:31] >> Savings man.
[48:33] >> For most of the time, too few of us
[48:34] listened. Dallas Salbury runs
[48:37] choosetosave.org,
[48:39] the funer of these TV public service
[48:41] announcements. But if lots of folks saw
[48:44] them,
[48:44] >> thanks savings man.
[48:45] >> No thank you.
[48:46] >> Why didn't the super saver superhero
[48:49] save the day?
[48:50] >> For every dime that we spent, others
[48:53] were spending millions
[48:56] telling them that the smart thing to do
[48:59] was to borrow.
[49:01] The smart thing to do was to consume.
[49:04] the smart thing to do with your house
[49:06] was to refinance and put part of that
[49:09] money in the stock market to take out a
[49:12] home equity line of credit so that you'd
[49:14] be ready to spend more.
[49:16] >> And with 0% down, all you have to pay on
[49:18] this mortgage is the interest.
[49:19] >> Now that's affordable.
[49:21] >> Watch out you two. This is not your
[49:22] typical mortgage guy. He's really a sub
[49:25] primate. But if the road to ruin was
[49:28] paved with perverse incentives and
[49:30] upgraded with debt, the American
[49:32] consumer has done an abrupt about face.
[49:35] Personal savings rates were nearly 3% in
[49:38] December, up sharply from a negative
[49:40] savings rate just 3 years ago. The
[49:43] sudden turnaround has amplified the
[49:45] shock to an economy long based on
[49:47] consumerism, and has the government now
[49:50] scrambling to make up the shortfall via
[49:52] stimulus spending. Indeed, governments
[49:55] the world over are urging consumers not
[49:58] to delever, pay down their debts, but to
[50:01] spend more instead.
[50:06] >> This public service ad from Finland
[50:08] casts the recession as an invisible pet
[50:11] on the floor, foolishly fed by
[50:14] frightened savers.
[50:20] But Dallas Salbury is a voice of
[50:23] dissent. It's about time we saved, he
[50:26] says. If not now, when?
[50:29] >> Saving aggressively is probably at the
[50:31] individual level and the household level
[50:35] more clearly important and necessary
[50:37] than at any time in the last several
[50:39] decades.
[50:40] >> But do you feel a touch unpatriotic? I
[50:44] mean, the advice you're giving people
[50:46] could undermine the US economy.
[50:48] >> I don't think it'll undermine it. I
[50:50] personally think that if we will spend
[50:53] another 5, 10, 15 years deleveraging,
[50:58] we might actually get back to where
[51:00] individual real incomes start to go up
[51:02] again
[51:04] and to where people are able to save and
[51:06] spend money on real things as a as
[51:11] opposed to spending so much money
[51:14] sending it to some financial institution
[51:16] in the form of interest payments. I'm
[51:18] guessing here, but I think a lot of
[51:19] people in our audience listening will
[51:21] say 15 years we have to wait. This guy's
[51:24] got to be crazy. Individuals
[51:28] want to feel like all this is going to
[51:31] turn around quickly.
[51:34] But you've done programs on social
[51:36] security, on Medicare, about what the
[51:39] next 20 and 30 years look like in
[51:42] spending on entitlement programs. To me,
[51:45] the good news about the current economic
[51:47] situation is it may well be just exactly
[51:51] the shock therapy that we need to get us
[51:54] to focus on some of the changes that are
[51:57] really needed and on, if you will,
[52:00] becoming responsible
[52:02] as individuals and responsible as a
[52:05] nation.
[52:08] >> Savings Man here with a story for you
[52:10] about two young spenders. Whereas up to
[52:12] now, no matter how savings man tried to
[52:14] get his message across, it fell on deaf
[52:17] ears.
[52:17] >> As they grew older, they spent all their
[52:19] pay on fancy cars, houses, two lattes a
[52:21] day. They lived in the moment, never
[52:23] saving a dime. When they tried to
[52:24] retire, they'd run out of time.
[52:26] >> How many years do you expect before we
[52:29] get back to the level of prosperity we
[52:31] were enjoying?
[52:33] >> Personally, as somebody that's uh about
[52:35] to move into my 60s, I don't personally
[52:38] expect to see it in my lifetime.
[52:41] And since my father lived till 94 and I
[52:44] expect to live beyond 100, that says in
[52:48] quite a while.
[52:49] >> In a world where saving for the future
[52:53] is not as popular as spending for the
[52:55] present, only one man can help.
[52:58] >> Meanwhile, choosetosave.org will keep
[53:01] its cartoon champion on the air.
[53:11] And again, the major developments of
[53:13] this day. President Obama journeyed to
[53:15] Canada on his first foreign visit since
[53:18] taking office. He held talks on the
[53:20] economy, trade, and the environment. The
[53:22] Dow Jones Industrial Average finished at
[53:24] its lowest in more than six years, below
[53:27] 7466.
[53:29] The California legislature adopted a
[53:31] package of tax increases and spending
[53:33] cuts to close a huge budget deficit. And
[53:37] several Latin American nations seized
[53:39] banks or froze deposits at institutions
[53:42] tied to Texas billionaire Allen
[53:44] Stanford. He faces allegations of fraud
[53:47] in the United States.
[53:56] and once again to our honor role of
[53:58] American service personnel killed in the
[54:01] Iraq and Afghanistan conflicts. We add
[54:05] them as their deaths are made official
[54:07] and photographs become available. Here
[54:09] in silence are nine Four.
[54:41] the customer outside, pulled out a
[54:44] knife, and slashed his tires. No word
[54:47] yet if he lost his job or if that
[54:48] customer ever got his coffee, but
[54:50] >> I'm sure that worker is going to be busy
[54:51] with some court dates ahead.
[54:53] >> Oh, he's got he's got grounds for a
[54:54] lawsuit. Oh,
[54:58] >> Fisher Communications.
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