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tv   Real Money With Ali Velshi  Al Jazeera  February 9, 2014 2:30pm-3:01pm EST

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>> the florida mansion where notorious gangster, al capone died, is back on sale. it's going for 8 and a half million dollars, even though the current owner bought it just 6 months ago for $7.4 million. thank you for watching, and stay tuned for aljazeera. plus many people are now convinced that twitter can help them make money in the stockmarket. we'll explain. i am ali velshi. this is "real money." this is "real money." you are the most important part
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of the show. jour our live conversation on twitter. america's job market got off to a slow start this new year. just 113,000 net new jobs were added to the economy last month. a whole lot less than the 194,000 monthly average we saw for all of 2013. many economists say we need 150 to 200,000 net new jobs a month to keep up with the number of new working-age people who enter the economy. let me put it this way: more people reach working age each month than retire or pass away. as you can see on the chart, things started today go south in december when we saw a mere 75,000 jobs added for the economy for the month. now, back then, i said to wait and see what happens in january. two months of disappointing data aren't enough to call a negative trend, but they are worrying. as much as a gas-half-full guy as i am, this is tough to be optimisting about.
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i look for the good, and there is some. an estimated 523 people entered the work force in january. now, these are people who either found a job or actively looked for one during the month. and this reverses the downward trend that we have been seeing in labor force participation. we still got a long way to go. in january, 63% of all americans who could be working were either working or looking for a job. increase. >> labor force participation rate is stuck at close to historic lows. it has not recovered from the beating it has taken since the recession. so what's going on? economists blame the drop-off in new jobs in december on the bad weather. let's face it. january's weather was no better. but that didn't stop the weather-sensitive construction industry from adding 48,000 new jobs to the economy. other job winners include professional and business services, 36,000 jobs there. among the losers, retail trade, 13,000 jobs lost. >> happens sometimes in january.
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just as significant, the 12,000 federal jobs shed in january. 9,000 of them from the u.s. postal service alone. clearly, there is something more going on than the weather. it's not clear if the lower pace of hiring will persist into 2014, but we will be watching that closely in the coming months. all right. you have been hearing a lot. a lot of noise about obamacare and how it hurts job creation. last week, we got a new report from the congressional budget office, the non-partisan division of the government that advises congress on budget and economist matters. it now projects 2 million fewer workers in the labor force by 2017 with obamacare than would have been the case if the law had never passed. let me be clear. the cbo still projects that the number of jobs in the economy in general will grow in the coming decade but that the growth will be less than it would have been without obamacare. the big reason why the cbo says there will be fewer workers with obamacare: it's not about businesses laying off employees. instead, as more workers obtain
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health coverage through the new law, some of them may choose to cut the number of hours they work or forego work all together. the assumption is that these people may want to keep their income low enough to qualify for subsidies to healthcare or medicaid. if that happens, the cbo projects the combined pay of all of america's workers will come down by 1%. and the dollar amount is equivalent to 2 million full-time workers in 2017, rising to 2 and a half million workers by 2024. the obama administration was quick to refute some of the cbo's claims and says this is not about businesses cutting back on jobs. it's a result of people having no no new choices. patel it was director of policy at the whitehouse under president obama. i started by asking her about the cbo's calculations: it uses dollar amount and then translates it to jobs. >> this really looks at projections for as they are called, the congressional
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budget office, budget implications and it's not the demand on jobs. it's exactly what you said. it's really looking at the supply of labor or, as the white house put it, kind of weather people choose to work or not. >> it does seem strange to me. does it seem strange to you regardless of what the number is? 2 million seems high. 2 million jobs between now and 2017, that people would choose not to work to keep their income medicare? >> it's also not clear. you are right to react that it seems strange. something else that's added in to this confusion is that people might not work in a full-time job because they might decide to take less hours or start a new business or do something different. so what we are not 100% sure of is if you are not taking a full-time equivalent job with benefits, are you doing something else that could be more productive? >> potentially more? >> you are right to be confused.
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>> more part-time, more freelance, more part-time work? is that a possibility? >> it's always a possibility. and something that i think has gone unnoticed if you look deep in the congressional budget office report, which i know you and i have done, which it states that the jobs that will get reduced or at least the fewer hours, are going to be in jobs that have below-average wages. so, you know, we might be talking about a phenomenon where people are taking jobs that are >> right. >> but now they can get benefits and it may be they can do something else that they can have higher wage earnings. possibility. >> what fundamentally? we both looked at the report -- the difference is one of us understood it better than the other. and that would be you. let me just ask you this: when designing obamacare, obviously, the primary goal was not employment. it was access to healthcare and coverage. there was probably a secondary goal that wasn't achieved as well. and that is the cost of healthcare.
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in theory, we should see costs dedeadline because america is a high-cost place for healthcare. the third goal would have been greater prosperity, possibly through employment. was there any thought given to the fact that antipolicecare is supposed to create more jobs or supposed to create more jobs or fewer jobs? >> absolutely. you are right about what the main points were. but there were two kind of -- kind of forces around the job conversation with health reform. one is that we would actually see a productive healthcare work force. and, in turn, that might have some effect on employment. we might have fewer hospitals. but we might have more primary care doctors, for example. and the second force was that if we can find afblingdable ways to provide forfordableable ways to provide for you might find growth in small businesses and growth in what we have been calling "the middle class" for a long time that we all know has been suffering. >> when you say "productive" because we know we have shortages of teenage things.
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a productive healthcare system may mean that you have got more people who are able to to produce or provide primary care who are not doctors, but we also know we are short of doctors. but fundamentally, the people always bandy around the figure that healthcare in america costs twice as much as a percentage of gdp as it does in other developed country. so, if you want to reduce that cost, ultimately at some point, it means reducing jobs. does it not? >> that's right. we definitely thing part of some of the reduction numbers is also the fact that we may not need as many people who operate hospitals because we won't have as many hospital beds in this entire country. but i think that, you know, what that means for the overall work force, we still have to tell. i want to point out, ali, the congressional budget office has been wrong on numbers before. part of the news was that they revised their estimates about how many people would enroll in the affordable care act. so, i would say to your viewers that we should stay tuned and
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see how this plays out. >> a couple of other points out of the cbo report. the u.s. budget deficit will fall sharply through 2015. this year, it's projected to shrink to about $514,000,000,000, about 3% of the economy. it's going to narrow to 2.6% of the economy in 2015. now, that's not the debt. >> that's just the deficit, the shortfall between what the government takes in and what it spends in a given year. while the deficit has shrunk, debt has not. the cbo projects u.s. debt will grow to 74% of gdp this year. >> that's the highest level since 1950. it expects debt to hold at this level until 2019, after which, it will resume growing. what you don't know about your bank account could back to bite you. next, why overdraft protection if you are not careful could do you more harm than good. many people are convinced twitter can help them make money. we will explain how the social media site is used to gauge stockmarket sentiment.
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and me when we spend more money than we have in our checking accounts? the cogassumer financial protection bureau says overdraft protection may actually put some consumers on the greater risk of financial harm. the decks have been stacked in favor of the banks. david shuster has the story >> reporter: jacqueline ford, a mother of two who lives in brooklyn learned the hard way about the potential dangers of swiping her debit card. >> some months, i would have 250 to $300 in overdraft fees for that month alone. they keep charging me insufficient funds, insufficient funds, insufficient funds fees. the amount of overdraft payments that i had to make when they take out those overdraft payments, then i didn't have rent. >> even though banks only make about 5% of their total revenue from checking accounts, overdraft fees are a huge profit center. how big? last year, u.s. banks raked in overdraft fees totalling
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$32,000,000,000. >> over draft protection allows a bank customer to over draw their checking account even if there is no money left in it. the american bank can association says it's a service customers freely elect to have and it provides peace of mind to know your payments will be covered. critics contend that overdraft protection is more like a loan with an interest rate as high as 5,000% according to some surveys. >> many con assumers don't even know they have opted in for overdraft protection because the information is often buried in lengthy disclosure agreements like this. indeed, in a recent survey, 54% of people who overdrafted did not believe they opted into coverage and 75% said they would rather have the transaction declined. the form is not very clear. so when you are opening a new account, the banker is handing you pieces of paper. if you just sign away, you've just opted into the most expensive form of overdraft.
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>> even more disturbing t here is how it works. in this sample account, the transaction charges are processed in colon logical order, causing the draft to be overdrawn, an over-draft penalty fee from the bank. when a bank reorders the transaction charges from the highest to lowest amounts, the checking account is depleted more rapidly. >> now, with monno money in the account, each in that kn another fee. the total is $140. the bank has just boosted its fees by 300%. we asked several banks to tell us why they reorder from highest to lowest. most did not respond. but one bang, pnc, did did he ever to the american banking association which said that for some customers, paying the largest transactions first is
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important because it ensures that payments like mortgages, rent, or credit card bills will be paid. >> i have had it with these overdraft fees. i closed that account. i decided to get a bank that is safer, that doesn't do this kind of trick. >> david shuster, al jazeera. for now, the cogassumer financial protection bureau recommends that you track your balances carefully and link your checking account to your savings account instead of opting into cosley and potentially dangerous overdraft protection plans. chances are you have heard of payday loans, those short-term, high-interest rate loans with high default rates and high fees because they are so hard for people to pay back on time. in fact, they are illegal in about 20 states that consider them predatory. now there is a new kid on the block in the short-term place, workplace loans. they are offered by your employer as part of your benefits package. they are billed as a safer and lenders. you avoid late fees and penalties because repayment is
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deducted from your paycheck. as stacy tisdale reports, as with most loans, let the borrower beware? >> last november, melissa jones, a single mother of three boys, moved her family from kentucky to tennessee to ax septa job as an account manager at medical billing company patient focus. >> the move hit me financially at the wrong time of the year. so there really wasn't a lot of christmas. >> soon after starting her new position, melissa learned her new employer offered a benefit called "workplace loans ". >> i borrowed $700, and the -- it took me six months to pay them back, and they took it out of my payroll every two weeks. >> hundreds of large and small employers like melissa's are offering employees workplace t the company's contract with the near half dozen lenders who provide the programs. currently, they are offered to about 100,000 workers across the country. industry watchers say they could grow to more than 10 million.
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david frederickson, a ceo of patient focus and melissa's boss says the loans allow his employees to focus? >> it's more important for them to be able to come to work and not have to worry about, you know, getting their car fixed payment. >> proponents say workplace loans are a creative funding option for low and middle income americans. nearly 30% of u.s. households go outside the traditional banking system for loans. >> it's individuals increasingly who are in the income ranges of $50,000 annual household income or above. >> here is how it works. you fill out an application on line and share how long you have worked, your salary, and information about your credit history the letter helps determine how much you can afford to pay. loan sizes range from 150 to 10 dollars. most, like melissa's are in the $700 range. repayment terms are between four and 36 months. once the size and rate of a feasible loan is determined, you
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get the money, usually within a day or two of applying. repayment is set up with the human resource department and deducted. some workplace lenders report the history to credit bureaus. >> all of our loans are credit building loans, meaning we report the positive repayment history to credit bureaus to critics. >> when you add up the fees, workplace locations carry an average annual percentage rate between 36 and 165%. well, that's at least half the cost of those payday loans. borrowers can get into financial trouble . >> any time you are caring 100% interest rate annually t very quickly becomes a burden that people just can't carry, that it gets you into a debt trap that you really can't get out of bankruptcy. >> analysts say the credit repair that attracts many borrowers could be reversed. >> so if that
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makes you less able to to pay a credit card bill, those are going to be delinquence sees that are reported to the credit bureaus. >> but most important to people like melissa, the loan provided short-term financial relief while allowing her to keep her dignity intact. >> they didn't make me feel like i was some poor person, you know, that needed to borrow money out of a cash advance place. i didn't feel that way at all and that meant a lot to me. >> stacy york. >> melissa jones told us it meant a lot to her that her lender looked at her over all bucket and wouldn't let her borrow more than $700, saying a bigger loan would cause her financial strain. well, remember when social media was just for spontaneous chatter and pictures for your cat. now, a single tweet could be the difference between making and losing money on stocks. >> if you are an investor in a company and you are not paying attention to the twitter sentiment of -- about that
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company, you are missing a puzzle. >> twitter's power to move the markets and more as "real money" continues. keep it here. the stream is uniquely interactive television. in fact, we depend on you, your ideas, your concerns. >> all these folks are making a whole lot of money. >> you are one of the voices of this show. >> i think you've offended
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>>r >> . shares fell 17% last week after twitter's first quarterly earnings report since it became a publicly traded company last november. total sales and profit during the last three months were
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expected. the opening bell sent investors to count bits of data, and these days, an increasing number of investors looking for an edge are using twitter as a gauge of market sentiment. raj he'd chanda specializes. >> if you are not paying attention to the twitter sentiment about that company, you are missing a real important piece of the puzzle. >> examples of twitter's power to influence stockmarkets include october 13th, 2013, on that date, billionaire investor paul ikon tweeted to his 142,000 followers: we currently have a large position in apple. we believe the company to be extremely under valued. spoke to tim cook today. more to come. >> trading volume more than doubled.
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$17,000,000,000. >> karl ikon is a smart man. >> howard linson, stock twist, the company got started on twitter but it has more than a half million users. his website has rules designto the use users. posts are not investment advice. >> investors need to be aware. this is still the wild west. >> on january 28th, 2014, ikon tweeted he just bought $500,000,000 more dollars worth of apple stock, after its share price plunged following disappointing earnings but his tweet did not reverse the stock's decline. >> carl ikon wouldn't be the only impacter. >> joe gets run social analystics that collects twitter data and sales analysises to investors.
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his company developed al program that turns tweets into bits of data and there is gnip, draatdatasift and social sonor. >> we have been selling hedge firms, big financial institutions that can take advantage of this in a programittic manner. >> the stock exchange is a client. social market analystics tracks tweets from professional investors to determine which stocks groups of traders are tweeting about. it vets the traders and tries to eliminate erroneous posts. it ranks the most mentioned stocks. a positive score means investors are talking about buying. a negative score suggests they may sell. social market an litics started traders. >> we are not taking the sentiment of individuals. we are taking the sentiment on individuals. >> that approach could minimize the risks of tweets designed to manipulate markets or situations
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like the hacking of the associate's press's twitter account in april, 2013. a group known as the syrene army posted an erroneous text claiming there had been an explosion at the whitehouse. >> the dow dropped about 150 points, erase calling bill you don't know of dollars in market value before eventually recovering. while regulators can't always stop hackers or those intent on using twitter to manipulate the market, they are trying. the security & exchange commission fined an investment manager for making miss ing statements via twitter. >> the sec has not really put out that much guidance partially because i think they are waiting to see how things develop. >> how much more powerful 140 characters can be when it comes to financial markets. al jazeera. final thoughts to this great nation's low wage earners, if you work 40 hours a week and made make the federal minimum wage, you earn $290 a week t or about $15,000 a year.
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$15,000 a year. income inequality has reached crisis proportions in america. an energetic push is underway to raise the federal minimum wage to $10 and $0.10 an hour. delta airlines agreed to raise the wages of 2,000 contract workers by a dollar an hour. they have also agreed to raise the wages of those making $9 an hour or less to $10 and $0.10 an hour, though that won't take effect immediately. in another move, more symbolic than economic, delta has agreed to make martin luther king junior day a paid holiday. the workers affected do difficult often be thankless work, baggage handlers and aircraft cleaners. this isn't a simple decision t may cost delta shareholders or the traveling public. but remember, we are getting these people to $10 and $0.10 an hour, $21,324 a year. it's just above the poverty threshold for a family of 4. the most prosperous nation on earth needs to find a way to let
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the best among us and the least among us live and work with dignity. the port authority of new york and new jersey which runs the airports has asked that united, america and jet blue do the same. if they do, we will recognize them as well. we thank delta for leading. that's or show for tonight. i am ali velshi. thanks for joining us.
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