CBS’s Chen Describes ‘Perfect Storm of Economic Woes’

Julie Chen, CBS On Tuesday’s CBS "Early Show, " co-host Julie Chen lead the show with a depressing segment on the economy: "...with the economic woes hitting the nation, we have your complete guide to surviving the big squeeze." Chen proceeded to highlight high gas prices, then explain how "...the crisis in the housing market is also a drag on the economy," and finally, "Completing this perfect storm of economic woes, the devastating floods in the Midwest and how they will directly impact food prices."

When discussing the housing crisis with correspondent Thalia Assuras, Chen asked in desperation: "Thalia can you tell us anything good? Is there any relief in sight?" Assuras then offered a small glimmer of hope: "Well, the Senate toady is actually going to consider a foreclosure prevention plan or rescue plan of looking at the numbers here. It's going to provide $300 billion in new cheaper mortgages for high risk homeowners." However she then made it clear that Bush Administration would soon crush such hope: "But you know Julie, there's going to be a lot of squabbling and the White House has threatened a veto."

Following Chen’s report, co-host Maggie Rodriguez talked to financial advisor Dave Ramsey and took the same pessimistic tone: "So with all this economic volatility, what are we supposed to do?...if there was ever a time to panic, is this it? It sounds pretty gloomy." In contrast, Ramsey was having none of it: "Absolutely not. I'm sorry I'm not with Chicken Little and we're not handing out helmets. There -- it is not a time to panic, there's lots of good things going on in our economy and for most people this may represent opportunity."

Rodriguez again tried to turn the discussion negative: "But as somebody who's looking for a home and is terrified to buy because I don't know if prices are going to keep going down, what real estate advice can you offer?" Ramsey countered by pointing out:

Well, Maggie, you live in New York and New York is not down, it's actually up. If you go to Michigan and to Florida and to California, to Las Vegas and to Phoenix the market is down. If you pull the numbers in the foreclosures of those markets out, you'll see Dallas, and Houston and Atlanta and Nashville and Kansas City and Manhattan doing very well. So real estate is no longer a national economy. It is a local economy. So most people that are watching this morning really don't need to panic. We've got troubled spots in the market and we've got some folks hurting but overall we're not doing too badly.

Rodriguez’s final question was: "What about the fact that every -- all the prices are going up? Ben Tracy reported gas, food. What advice do you offer to consumers there?" Again, Ramsey took the optimistic approach:

I've done financial coaching for 20 years and one on one budgeting sessions and people just get to make choices. You know, lattes sell for $55 a gallon and bottled water sells for $16 a gallon, so maybe we make some choices in our budget as to what we're -- how we're going to adjust to eat the $4 a gallon gas and the eggs that have gone through the roof...But we've kind of got to balance this stuff out between wants and needs in your budgeting process and then most people are able to make this balance and they'll get through the storm.

Here is the full transcript of the segment:

7:00AM TEASER:

MAGGIE RODRIGUEZ: Surviving the big economic squeeze. Oil, stocks, jobs, housing and food prices. Will the Federal Reserve do anything to help concerned consumers and a worried Wall Street?

7:01AM SEGMENT:

JULIE CHEN: But first, with the economic woes hitting the nation, we have your complete guide to surviving the big squeeze. We've got all angles covered with reports on how the early markets are reacting when the housing crunch may show signs of easing and why the cost of feeding your family continues to rise. And of course Wall Street is keeping an eye on the price of oil. In Asian markets overnight it held steady, nearly $137 a barrel. Bloomberg TV anchor Deirdre Bolton joins us with more on this. Good morning, Deirdre.

 

DEIRDRE BOLTON: Good morning Julie. Nowhere to go but up, that is what some traders say about oil's direction. So, in the past year alone the price has almost doubled, up 98%. Higher energy costs not just unsettling for consumers but for the Fed as well. Oil's cost key to the inflationary pressures we are seeing right now. Now the Federal Reserve is meeting today to try to figure out how to manage those in a slowing economy. All 101 economists we surveyed here at Bloomberg News say the Fed will keep interest rates unchanged. In the meantime, United Airlines going to be laying off 950 pilots, this is as it pulls planes out of service to save on fuel. Pilots not alone. Executive recruiters say the world's biggest financial firms may cut as many as 175,000 jobs by this time next year. The biggest U.S. bank, that's Citigroup, may begin another round of job cuts this week. Citi has already announced that it's getting rid of about 13,000 jobs this year. Julie, back to you.

 

CHEN: Wow. Deirdre Bolton of Bloomberg TV. Thanks Deirdre. Well, the crisis in the housing market is also a drag on the economy. And a new report says it won't rebound any time soon. CBS News correspondent Thalia Assuras is in Alexandria, Virginia. Thalia, good morning to you.

THALIA ASSURAS: Good morning to you, Julie. And in new a study from Harvard it comes to a disturbing conclusion and that is that the housing market is in a deepening rut. Here's one of the quotes from the study, it says ' with credit markets in such disarray, the for sale inventory at record levels emerging from today's housing slump could take some time and the numbers are actually quite grim. The foreclosures are sky-rocketing, nearly doubling between 2005, which was at 660,000 to 1.3 million in 2007. Prices have dipped 16% since the peek of 2006. And you know buyers are simply staying on the sidelines because of high loan rates and because it is really difficult to get credit. Julie.

CHEN: Thalia can you tell us anything good? Is there any relief in sight?

ASSURAS: Well, the Senate toady is actually going to consider a foreclosure prevention plan or rescue plan of looking at the numbers here. It's going to provide $300 billion in new cheaper mortgages for high risk homeowners. But you know Julie, there's going to be a lot of squabbling and the White House has threatened a veto.

CHEN: Thalia Assuras in Alexandria, Virginia. Thanks, Thalia. Completing this perfect storm of economic woes, the devastating floods in the Midwest and how they will directly impact food prices. CBS News correspondent Ben Tracy is in Williamsburg, Iowa with that end of the story. Ben, good morning.

BEN TRACY: Good morning, Julie. You know, farm fields like this one is what Iowa is known for. But unfortunately, so many fields in this state and throughout the Midwest are flooded or too wet to plant, and the rest of us are paying for it at the grocery store. Expect prices to rise even further on many animal products. Everything from beef, pork and poultry to dairy products such as eggs, cheese and milk. The cause? The floods have damaged many crops farmers use to feed their animals. As much as %10 of Iowa's corn and soy bean crops have been devastated. Some livestock owners are going out of business or slaughtering animals they can't feed. That drives up prices. 65% to 75% of farmers production costs are for feed. In some states the cost for feeding a single hog has gone up by $30, that means we pay about 15 cents more per pound for a pork chop at the grocery store. Now the pain at the grocery store could last for a while. Experts say expect the cost of that Thanksgiving turkey and the Christmas ham to cost quite a bit more this year than it did last year. Julie.

CHEN: Ouch. CBS's Ben Tracy in Iowa. Thanks, Ben. And now let's head over to Maggie.

MAGGIE RODRIGUEZ: Thank you Julie. So with all this economic volatility, what are we supposed to do? Joining us from Nashville with some tips is Dave Ramsey, financial author and radio talk show host . Good morning, Dave.

 

DAVE RAMSEY: Good morning, Maggie. How are you today?

 

RODRIGUEZ: I'm doing okay. But if there was ever a time to panic, is this it? It sounds pretty gloomy.

 

RAMSEY: Absolutely not. I'm sorry I'm not with Chicken Little and we're not handing out helmets. There -- it is not a time to panic, there's lots of good things going on in our economy and for most people this may represent opportunity.

RODRIGUEZ: Okay. I'm guessing that you're talking about housing. But as somebody who's looking for a home and is terrified to buy because I don't know if prices are going to keep going down, what real estate advice can you offer?

RAMSEY: Well, Maggie, you live in New York and New York is not down, it's actually up. If you go to Michigan and to Florida and to California, to Las Vegas and to Phoenix the market is down. If you pull the numbers in the foreclosures of those markets out, you'll see Dallas, and Houston and Atlanta and Nashville and Kansas City and Manhattan doing very well. So real estate is no longer a national economy. It is a local economy. So most people that are watching this morning really don't need to panic. We've got troubled spots in the market and we've got some folks hurting but overall we're not doing too badly.

RODRIGUEZ: People who do live in a down market though, what can you say to them?

RAMSEY: Well, they've got to spruce up the old house. I mean, if there going to put it up for sale, this is not a good time to sell if you're in Florida, it's not a good time in those markets I mentioned. And so you're going to have to really do the work on the marketing side and you're probably going to take a hit. However, if I lived in Tampa, Florida and I was thinking about buying a home, I would be all over it right now, it's a great time to buy.

RODRIGUEZ: What about the fact that every -- all the prices are going up? Ben Tracy reported gas, food. What advice do you offer to consumers there?

RAMSEY: Well, I think as -- I've done financial coaching for 20 years and one on one budgeting sessions and people just get to make choices. You know, lattes sell for $55 a gallon and bottled water sells for $16 a gallon, so maybe we make some choices in our budget as to what we're -- how we're going to adjust to eat the $4 a gallon gas and the eggs that have gone through the roof. But TVs for instance have gone in half in the last year. Not that you need to be going and buying a TV if you can't buy gasoline. But we've kind of got to balance this stuff out between wants and needs in your budgeting process and then most people are able to make this balance and they'll get through the storm.

RODRIGUEZ: We hope so. Dave Ramsey, thank you so much as always.

RAMSEY: Thank you.

Kyle Drennen
Kyle Drennen
Kyle Drennen is a News Analyst for MRC