Skip to main content

tv   Nightly Business Report  PBS  September 23, 2010 6:30pm-7:00pm PDT

6:30 pm
>> tom: president obama tells china's leader he's disappointed there hasn't been a bigger move in china's currency. >> we have to be careful that we aren't just setting a spiral where everybody seeks to close their markets. >> susie: that's u.s. trade rep ron kirk. he joins us for an exclusive interview about our trade issues with china. you're watching "nightly business report" for thursday, september 23. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:
6:31 pm
this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> tom: good evening and thanks for joining us. president obama today met with china's premier in new york city, and, susie the leaders of the world's two biggest economies pledged to work together on boosting the global recovery. >> susie: but tom, in their public remarks, the men didn't talk about china's undervalued currency. instead, that's said to have topped the agenda for their private meeting. the issue-- keeping china's currency artificially low puts american exports at a disadvantage overseas. >> tom: lawmakers in washington, meantime, are closer than ever to acting on threats to penalize china over its currency.
6:32 pm
earlier today, i caught up with u.s. trade representative ron kirk on the sidelines of an appearance in miami. i began by asking him about this legislation pending on capitol hill, and how it could impact what the u.s. and china want from their trading relationship. >> generally we think the unique circumstance of china's goal to move 600 million people out of poverty, you know, to a more middle income status presents a great opportunity for us to have a rebalancing of our trade relationship in that process. if you look at the nature of our talents in manufacturing beginning to be more on a knowledge base area in the services sector and agriculture, that actually their growth goals are complimentary to our skill set. >> a key set to all of this clearly is the currency issue. that always remains and it was in focus a couple of weeks ago on capitol hill. are you convinced that u.s.
6:33 pm
manufacturers are prepared to compete with a appreciating juan. >> u.s. manufacturers are competing now. but there are a number of issues that affect our competitiveness. so i think we have to be careful not to lump everything into currency bucket. one, china has rapidly become in less than ten years our second, some say third but clearly one of our top three trade markets. now we think there can be even more growth and not just focusing on currency, but on china's ambition and how they define indigenous innovation. some of their policies we think that unfairly try to move u.s. businesses to transfer proprietary technology, the still favouring, we think, of some of their state-owned enterprises all effect competitiveness. >> ambassador, in the previous quarter exports accounted for 12 to 13% of our gross domestic product.
6:34 pm
the president has stated we like exports to double in the next five years. what is standing in the way of that becoming a reality. >> well, a number of things. and as you know the president created a national export initiative to look at alls thof. some of those can be making sure we have access to new emerging markets. that's what we are trying to do by completing and bringing the congress say the pending from trade agreement with panama, columbia, and korea and our new proposed-- partnership. other elements can be infrastructure. >> year-to-date trade is up. export is up better than 17% compared to a year ago at this time is that kind of growth rate sustainable in this environment. >> we hope so. i mean we knew we would have this sort of growth rate coming out of the recession. but precisely, the reason and rational behind the president creating this export initiative and export counsel is to bring more rationalization to that because we know if we can
6:35 pm
get exports to keep growing at this level, we can create almost two million more jobs at a peer:-- a time when job creation is number one on the minds of most americans, number one on the minds of this president and everyone in the administration. >> the president's policy is focused on job growth and you said that the white house and administration wakes up every day focused on accelerating job growth. when it looks toward stimulus spending and public works projects should be there a buy american requirement to help toward that? >> in the case of the recovery act because congress did work with us and we did explicitly make it clear that it was done in come port with wto rules, we were very comfortable with what we did. now the rest is buy america looks very different when it becomes buy china -- you know, we have to be careful that we aren't just setting a spiral where everyone
6:36 pm
seeks to close their markets in favor of their own industries because that is what happened in the great depression. >> ambassador, i appreciate your time. thank you so much. >> thank you. >> trade between >> susie: a trade dispute between china and japan escalated today. chinese officials denied they've cut japan off from exports of so called "rare earth metals." japan said the move was in reaction to a dispute over a fishing boat collision. china virtually owns the market for those crucial minerals. so what are they, and why should we care about a trade fight half a world away? scott gurvey explains. >> plasma tvs, hybrid cars, windmills, turbines, missiles. what do they have in common? they all contain tiny bits of rare earths. these are 17 elements which mostly hang out together on the periodic table you've forgotten from high school chemistry. the truth is, they are not so much rare as they are difficult to mine safely. the process produces toxic waste. the only american rare earth mine was shut down in 2002.
6:37 pm
kevin kerr of kerr commodities watch says that gave china a near monopoly. >> if you want to call it red tape or safety, we have programs like osha, etc. we have green groups already saying they're fully against this. china doesn't have that problem. they make the decisions and they do it. we've seen that repeatedly. of course, workers conditions are very poor there. no concern for the workers or the environment, really. >> reporter: increases in demand for technology have led some to call china's dominance of the market for rare earth minerals a matter of national security, and accuse it of hoarding. industry expert jack lifton, says the blame is misplaced. >> in this case, the free market failed. it failed, from the point of view of our security. it didn't fail... it did cut the costs. isn't that what the intent was? but nobody was paying attention to the security of supply or the security of the country. >> reporter: for retail investors, there are few opportunities right now to place a bet on this trend. >> there aren't futures contracts.
6:38 pm
there are several e.t.f.s and e.t.f.s that are related. again, this is big in the defense industry. i believe there's an i-shares, and there's a couple of other e.t.f.s that are available to play the industries that use these metals. and that's as close as you can get to trading these rare earths right now. >> reporter: but that may change. kerr believes we will see e.t.f.s in some of the rare earth elements traded in the next few years. scott gurvey, "nightly business report," new york. >> susie: here are the stories in tonight's "n.b.r. newswheel." on wall street, stocks fell for the second consecutive day. the dow lost 76 points, the nasdaq fell seven, and the s&p 500 off nine points. trading volume was at roughly the same levels today as yesterday on both the new york stock exchange and the nasdaq. those losses came despite a better than expected jump in sales of previously owned homes. existing home sales were up 7.6% in august, bouncing off a record low. meanwhile, the number of people
6:39 pm
filing new claims for jobless benefits rose more than expected in the last week-- up 12,000 to 465,000. and the house passed a bill aimed at helping struggling businesses. it's now on the way to president obama's desk. the bill establishes a $30 billion fund to help banks lend to small businesses, and cut taxes on american companies, big and small. >> tom: still ahead, blockbuster enters chapter 11 bankruptcy protection. will it lead to a new chapter in the retailer's life? some answers in tonight's "market focus." >> susie: house republicans unveiled today a new agenda of policy recommendations. they're calling it their "pledge to america." house minority leader john boehner is leading the effort, and says it's time to end the spending spree in washington. the pledge vows to permanently extend the bush tax cuts, even for wealthy americans; canceling unspent stimulus money-- about $260 billion; and repealing the
6:40 pm
obama health care reforms, replacing them with republican proposals. boehner says the changes offer americans a "new way forward". >> government is out of control in washington, and we need to rein it in and begin a new drive for a smaller, less costly, and more accountable government in our nation's capital. these are the things that the american people are demanding. and our pledge to america is that the republicans stand ready to get it done, beginning today. >> susie: democrats branded the pledge a giveaway to millionaires and billionaires, and they warned repealing health care reform would add billions of dollars to the u.s. budget deficit. >> moments ago we heard from harry reid's office. he says the u.s. senate will not vote on whether to exend u.s. busharya tax cuts before the election.
6:41 pm
with the policy battle heating up, we continue our look at new ideas to revive the economy. i spoke to republican economist glenn hubbard earlier this week. tonight, we turn to robert reich, the former labor secretary in the clinton administration, and now a professor of public policy at u.c. berkeley. he also has a new book out, "aftershock: the next economy and america's future." our washington bureau chief darren gersh spoke with reich, and began by asking him what the first step should be to get our economy back on track. >> well, i do think that some more although the word can't be used any longer in play, company, stimulus is necessary. there is still a huge gap between the productive potential of the economy and really the demand that's out there from consumers who are being rocked by indebtedness and fear and loss of job and they are underwater or whatever have you. in the longer term, though, we have a structural problem. it's not just a cyclical problem.
6:42 pm
and that is that american consumers comprising 70% of the economy don't have the purchasing power they need to sustain the economy over the longer-term. >> one of the solutions you offer in your book "aftershock" is a reverse income tax where you would have the highest rate go up to 55%. as you well know there are many economists who say if it goes to 40% will you have a disaster. how do you respond to that. >> they don't know history. during the ice enhauer administration and nobody ever accused dwight eisenhower of being a radical, the marginal income tax on top incomes was 91%. i'm not suggesting going to 91%. my only point is that we've had in the past very high marginal tax rates. during periods where the economy has done remarkably well. there is no reason to believe that going to either back to the clinton marginal tax rate of 39% on top incomes or going to something higher as mi
6:43 pm
suggesting but still not nearly as high as it was in the '50s, '60s, and early '70s, will cause the economy to have problems. in fact, quite the reverse. i think that it will provide us the leeway both to deal with the long-term deficit problems and also to reduce taxes on the middle class and actually provide wage subsidys so that the middle class has the wherewithal to start buying again. >> you were labor secretary so it rass really noted here that you called for change our unemployment insurance system to a reemployment system. what is a reemployment system. >> a reemployment system helps people get new jobs, and not expect that they will get the old job back. we need to have an emphasis on job search assistance, on job counselling and on wage insurance so that if somebody gettings a new job that pays less than the old job they get, say, half of the difference for maybe up to two years. so that they have an incentive to get that new job. >> glen hubbard who was president bush's economic
6:44 pm
advisor and is to you dean of the columbia business school was on our program earlier this week. and he basically said that many of your ideas are exactly the wrong ideas. that stimulus is the wrong thing to be doing. that the government needs to be getting less involved in the economy, removing uncertainty. i wanted to give you a chance to respond to glen. >> well, first of all let me say that there is a replay here historically of the 1930s. in 1932, 1933 a lot of economists said we have to balance the budget. the worst thing is uncertainty. we have got to get the debt down. well it proved that that classical economic view which is now neoclassical economics really doesn't have anything to do with the real economy. wages are sticky. government government is needed to fill that gap between the potential of the economy and the demand that you get from consumers and from businesses that are not going to invest because they are worried that there are not enough consumers out there to buy their products. that shortfall means that
6:45 pm
you have a recession and the recession may turn into a recovery but a very weak, painfully weak recovery unless government does boost that economy and fill that gap. you call it a stimulus, we can debate over whether tax cuts are better than spending. but let's face it. there is this major shortfall. >> you have a new book out. has the president called you in. >> not yet but he may any moment. >> when he calls you, what piece of advice will you give him? >> i what say, mr. president, i salute. you've done a great job. don't pay any attention to your critics at all. but i think you need to do more. not only with regard to stimulus, but you also need to worry much more about the middle class and the distribution of income and wealth in this country. >> robert reich, you are the author, you know this of "aftershock" thank you for your time.
6:46 pm
>> thanks. >> susie: tom, it looked like september was having some nice gains until just the past couple of days. i'm wondering if this portfolio manager is doing some cleanup of their portfolios before the end of the quarter. what is going on. >> tom: it ends next week. september still worth remembering though. we're still in the green here this month despite the swoon last month, no doubt. let's get everybody updated if tonight's market focus.
6:47 pm
the major stock indices couldn't not hold onto their mid-day gains. financial stocks led the way lower. insurance stocks were among the weakest. metlife, principal financial, and prudential each fell by at least 3%. this week, prudential reportedly has been getting close to a deal to buy two a.i.g. businesses in japan. j.p. morgan was among the weakest in the dow industrials, slipping 2%. while the broad market was able to hit multi-month highs earlier this week, j.p. morgan stock did not break out of its most recent range before turning lower. also among dow components, the golden arches increased its quarterly dividend for the fourth straight year to 61 cents per share. the stock dropped fractionally, but still remains less than $2 away from its all-time high hit earlier this month. for-profit education companies found buyers. tomorrow, the department of
6:48 pm
education will release its timeline for final regulations on student loan repayment rules. among those rallying, capella education, corinthian colleges, and career education, each up on at least twice their usual volume. the government is putting together new regulations aimed at ensuring students at for- profit schools don't graduate into low-paying careers with big student loans. those schools with poor loan repayment rates may face penalties. you may not think of "washington post" as a for-profit education company, but the majority of its business is from its college unit, kaplan. shares have been trending lower over worries about these new government rules. in addition to the government announcement tomorrow, the company's board today okayed a plan to buy back about 10% of its shares. drug maker glaxosmithkline saw plenty of action today with six times its usual volume. shares dropped 2%. its diabetes drug avandia will be allowed to stay on the market
6:49 pm
in the u.s., but the f.d.a. thinks new restrictions will lead to a drop in sales. in europe, sales may stop entirely as drug regulators there recommend suspending avandia. score one casualty for netflix and coinstar's red box self- serve movie rental machines. blockbuster made it official today, declaring chapter 11 bankruptcy reorganization. the long-struggling blockbuster has more than $900 million in debt, but will remain open during its reorganization. it has a deal to cut its debt load to $100 million, with some senior bond holders getting equity while junior bond holders will be wiped out. senior analyst at pacific crest securities andy hargreaves thinks blockbuster needs to take netflix and coinstar head on on their own turf. >> you've got a brand name that's still recognizable, although it depends on who you talk to whether its recognized for being good or for charging you with late fees. if i'm blockbuster, you have to start online and with the
6:50 pm
kiosks, and come up with solutions that get movies into people's hands really, really simply and at a price that's competitive. >> tom: at least today, shareholders at both netflix and red box owner coinstar don't seem worried. both stocks added more than 2% today. after the close, a couple of shoe companies turned in their latest results. nike's numbers easily beat the street as profit margins improved and global future orders continued to grow in the double digits. meantime, shoe retailer finish line came up short on meager sales growth. each of the stocks were up ahead of their numbers, but after the close, they were going in opposite directions from these prices. nike traded over $81 a share while finish line fell below $13.50 per share. and that's tonight's "market focus."
6:51 pm
>> susie: the first major changes from president obama's new health care program kicked in today. so if you're purchasing a new insurance plan, here's what you can expect: insurers can no longer deny coverage to children with pre-existing conditions. certain preventive procedures like mammograms and colonoscopies will be free with no co-pays. and insurers are not permitted to put lifetime dollar limits on hospitalization and emergency services. consumers are advised to contact their insurer or employer for more details on how the reforms affect them. >> tom: here's what we're watching for tomorrow: the august reports on durable goods and new home sales. federal reserve chairman ben bernanke delivers a speech at
6:52 pm
princeton university. our friday "market monitor" guest is mark leibovit, chief market strategist at and we'll introduce a new, different take on the economy-- "ink-onomics" with david gillette. >> susie: abbott labs is recalling five million cans of its similac powdered baby formula. the reason-- contamination fears. there are concerns the product has bugs in it and could cause stomach problems. but abbott says the f.d.a. does not consider the suspected cans a serious health threat. abbott believes the recall will cost the company around $100 million in lost sales for the third quarter. >> tom: the senate budget committee voted to approve jacob "jack" lew as the obama administration's white house budget director. even though lew presided over surpluses during the clinton administration, getting the job won't be a slam dunk. he still must be approved by the full senate. late today, louisiana senator mary landrieu said she'll block
6:53 pm
his nomination unless the ban on deepwater drilling is lifted. that moratorium was put in place after the b.p. oil spill. euquuñ?ñ? >> susie: twitter plans to offer a new tool that will show users how their tweets are spreading in real time.
6:54 pm
it will also show how influential their twitter contacts really are. that's great news for businesses, marketers, and tonight's commentator. here's alfred edmond, jr., editor-in-chief at >> i was 21 when i decided i wanted a career in media. i've never felt beholden to defining myself as one type of media professional or another-- newspaper or magazine, radio or television. my passion has always been the mission-- to get people the information they need to live better lives, and to convince them to use it. nearly 30 years later, i find myself among a relative minority in my generation who are genuinely excited by the advent of so-called "new" media, and slightly bewildered by many of my baby-boomer peers who still mourn the demise of "traditional" media. in fact, i sometimes suffer guilt about having so much fun using social media sites such as twitter and facebook to share and gather news and information, and about picking up a newspaper less and less frequently. nostalgia for traditional media has its place.
6:55 pm
however, i happen to love it that the wall between those of us who create media and those who once had little choice but to consume what we delivered has been obliterated. i think it's great that consumers of media can go online and say exactly how they feel about the job we're doing, and that i can participate in the conversation. in many ways, i am celebrating my own impending obsolescence in the industry that i've loved and excelled in for nearly all of my adult life, as my ability to adapt to the demands of new media consumers is outstripped by the skills of those born and raised in the digital era. still, it's long past time that we all dropped the designations of "traditional" and "new" when talking about media. it's all just media. let's make the most if it. i'm alfred edmond, jr. >> susie: that's "nightly business report" for thursday, september 23. i'm susie gharib. good night, everyone, and good night to you, too, tom. >> tom: good night, susie. i'm tom hudson. good night, everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by:
6:56 pm
this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh >> more information about investing is available in: to order this dvd, call 1-800- play-pbs or visit online at >> be more. pbs.
6:57 pm
6:58 pm
6:59 pm


info Stream Only

Uploaded by TV Archive on