tv Nightly Business Report PBS December 9, 2009 6:30pm-7:00pm EST
>> paul: first bank of arica now citigrou citi's wking a plan to repay billions in bailout money. the move comes as thtreasury extends e tarp through next fall. we talk with new hamhire republican jd gregg about the tarp and a health care deal the senate. it's a move that cld jettison a puic option. gold sold off sharply today, despite being up 26% othe year. we ask strt critique guest ank mcghee if thgold rush is over he head trader at ibs metals. then apple sharesurge after a keanalyst says the much anticipated tablet mac cld co this spring that sparked seing in amazon shares we'll tell you why. >> paul: i'm paul kangas this is "nightly busess report" for dnesday, december 9.
"nightly busins report" isade possible by: this pgram is made possible by contributions to ur pbs station from viewers like yo thank you. captioning sponsor by wpbt >> susie: good eveni, everyone. tarp gets a new ase on life than to treasury secretary timothy geithner. the "troubled asset reli program" was schuled to expire at the end othis month but today geithner extended th controversial feral bailout program through october 30. most of the nds were used to op up banks during the financial crisis.
and today, citi'chairman said it will sell stockhis week to pay ck its $45 billion loan. but now geithner says the moy will be used tstop foreclosures and makloans to small bunesses. in a letter to cgress dending the extension geithner said the finaial system still hasn't recored and treasuryeeds the money in ca financial conditions worsen and threaten the enomy. on capitol hill many lmakers criticizedhe tarp extension. take new hampshire rublican judd gre: he helped write the tarp law. heold our washington bureau chief darren gershhat he disagrees with the treasury' argument. >> from the standpoint of economicrowth we're sing economic growth now. it's ver unlikely th we're going to confront a systemic financial meltdown. certainly nothing like was about to occur last fall whe rp was created. >> s itt keepsn insurance
policy bically. >> i c understand w he says that, i can appreciate that fromis stapoint. and werethey actually cld ing that with this money would probably be reasonably receptive d say okay, hold the money at t desk, so to y, untilext october whe it formally tminates. but that's not what there ing with the money. they're prosing to use thi moy for all sor of things which ha nothing to do with financial, maintaing the financial struure of the country, andmoremportantly, don't to the essce of the tarp law, whic was that this is a ln, the arican taxpers were making these variou financial institutions, which is suppose to be paid back, an it is being paid back bmost of them, with interest. that money uld go pay down that debt t china or what ever els holds our debt. >> you were at t meeting about the jobation and the econy, the psident says the tarp losses mak room for a jobs program. what did you tell him?
>> we didn't getnto that discussion. i suspect out of courtesy he di't want to raise it becausit would have consumed a lot of time. buhad he asked i woul have said that you can't use tarp money r that purpose. and it basically a bit of finesse or games manship to claim that tarponey is available for that ppose, because there is no tarp money here. for them to u tarp money they would are o borrow about $550 t 600 billion that's been used for t purpose of finaial. all of that money was boowed. to the extt it wasn't ud, the difference beten 550 and 700 llion, it dsn't exist, it's not in some drawer somewhere. to get that money you have gout and borrow it. and so as a praccal matter there isno tarp money that hasn't been spent thas available be spent on some otr initiative. >> the treasy say they're goingo use a sum of mey fr tarp forousing stabilization the coming
year and that a fairly large poion of the losses they expect on tarp ll come from mogage tablization. is thatappropriate, and is that rht for the treasury to do tt? th housing market is suffering. >> it depends on h they do it. if they goin a expand mortgage buyback programor the purposes of stablizing medium sized bas, for example, tha would be within the coext of tarp because it woulgo to the hugh o stabling the systemic that to t financial ructure. if they were to try to put i into some otherrganizations, say hud some other organizationor the purposes of jus lending it out to mall businesses who came in and waed to borrow money that would not be consistent with tarp and would billegal. port medicare. demoats look like they're looking at program to expand medicare accs to peoplein their mid 5, instead of a public option. what do you thk of that idea? >>trulyerrible idea.
iean, masve compounding of the problem we already have. medicare has a $35 trillio works a t, unfunded oblition. and that means that the's obgations on the books, for seniors who wenow are already going rere, the baby boome generatio which exceeds income which w know is going to come in as sult of americans working, that is out of balance by35 trillion. so you're going to t another 20 or 30 million people into this system whh is already fiscal lay headed towards insolvency and will be insolvent starti in 2015? that's absurd. >> senat gregg, thank you for your time. thank you. paul: as just heard, a heal care deal in the sete could rap a public option. prident obama today praised that tentative deal among senate democrats sayg it would pave the way for a final passage of hlth care reform. the prosal changes the idea of a public option by opening
medicareoverage toeople between 55 and 64. ephanie dhu looks at what exnding medicare couldean. >> reporter: most ople between 55 a 64 get insurancthrough their emoyer. but about ur million people in that group don't have covege. e idea of opening up medicar has been around previous reformebates. health policadvisor julius hoon says the idea still faces obstacles. >> there are number of issue that go around wh this, number onis what's this going to cost. >> reporter: the congression budget office iseviewing the late proposal. but last year the agen estimated it wou cost 1.6 billiodollars a year to cover people age 62 to 64 withnnual premiums o$7,600 a year. another obstacle how doctors hospitals and otr health care priders will be reimbursed. medicare sets rates foservice, instead negotiating. hospitals have already aeed to take $155 llion in medicar and medicaid paynt reductions ov the next decade.
the american hospil association's rich umbnstock sa they shouldn't be asked for more. >> medicare pays 9cents on a dollarf costs, though we have toind those 9 cents on average to be made up somelace. it jusadds to the cost shift to the private sector, as to the fiscalnstability of many hospitals. >> reporr: the health inrance industry says an average fami of four already pays $1,500 in highepremiums cause of that type of cost- shifting. and increasi medicare coverage would make that worse. robert zirkelbacof america's healthnsurance plans says the proposal would reduce prive innovations like cooinated carend disease management. the medicare program has ha virtuallzero innovation in the last 40 years and does dthose types of services, so ifou expand the medicarprogram it's really goi to turn back the clock on a lot of the adnces
that have been made to impve the quality ofatient care. >> therere a lot of quesons about the proposal, among them how will exnded medicareork with the newly created health exchang. analysts say unt there are answers it's impossible to know the bomb line -- the bottom line pact. stephanie dhue, "night business report"washington. >> paul: wl street opened destly lower amid the cross currents of year-e portfolio shufflg. stocks perked however, after tober wholesale business inventories showed a sprise increase, eaking a string of 13 monthly declines. the dow erased an early point loss to po a 27 point gain by 11 a.m. the market felback into the rethis afternoon but a lower llar and some late buy progra helped stocks close moderately higher.
>> susie: it's one of th biggest failures imerger history: te warner buying aol. toy that marriage came to an end as the two firmsivorced and aol single again. but ashose companies are parting ways the pace of dealmaking overall see to be picking up after a long drought, the's been a resurgence high profile coinations this year. and erika miller reports, thers a new trend in the types of deals getting don >> reporter: for a hint at wt may liahead for wall stree dealmaking looat three big dealthis year.
comcast inked a joint ventur with n.b.c. unersal a marriage content and distribution. acle plans to buy sun micrystems uniting computer software and hardwe. and pepsi annound the repurcha of its two largest bolers. taken together, the three sial the resurgence of vertic integration. that's the corpora strategy of controlling both a proct's creation andts distribution. m&a pert nadia damouni says the trenis likely to continue next year. >> we will continue see taking out your supper, taking out your vendor if imakes logical see. and it's much more cost effective to have thatithin a company. absolutely, we'll finitely see moreertical mergers. >> reporte we're also likely to see more big deals in the healthcare arena. this yr pfizer purchased wyeth and merck united with hering plough. but m&a expert rich peterson says it won't necearily be healthca reform driving new deals. >> you have a refoation of the landape, regardless of what's
happening in washingn. you have an aging demograpc. you have gernecs coming next ye. i think althcare will be one to look at. >> repter: in fact, experts think virtually every seor wi see an increase in corporate marriages. standard and poors predicts e total dollar vue of deals next ar will rise 10% over this year. itould be the first improvement in three years. >> with an iroving economy, mpanies that may be more profitable have more rources to target uisitions. you have rates stillt low levels. you have theapital markets imoving. >>eporter: but merger activity is not expected topproach anythinglose to is heyday in 2006. therare still plenty of challenges to dealmaking includinweak consumer demand and a lack of financing. erika miller, "nightly busins report", new yk. >> susie: morrow we talk with aol chairman and c.e.o. ti armstrong as theompany begins trading here at e new york
stock change. the da of unlimted i-phone plans may be coming to an d. a-t-and-t plans toake steps a curtl excessive usage. usag while plans are ill vague, the coany says they could include a new pricing structure that limits downloads. thwireless try has been wrestlinwith the jump i big ta files. the wireless industry habeen wrestling thincreasing use of big data files used by i-phos and other smarphones because th require more bandwidth, network equipment and bles. paul?
d those are the stocks in th news tonight. tom, i understand go prices and precus metals are the focus of tight's street critique. >> tom: it's tougho ignore the yellow metal. the rally in gold has turned around this month in the past days, staging its steepest selloff this year. tonight's reet critique guest is frank mcghee, head meta trader at ibs mels. frank, welcome to nbr. is the gold rush over? >> not by any mes. this break only repsents about an 8% holdback in the
market there has en a substantial ount of money on the sidelines, a feeling that it missed the me. that mon is coming intothe maet and i think you'll see the market stablize, maybe move sideway a bit and then start heading ba up. >> tom goal has been seen a hedge ainst possible future inflaon, hedge against the weaker dolla and hedge against global fear. so he we seen a change in the relationship t the market? >> would say that youee me of the fear come out of the market especially as yo ve some of the banks repaying their tarp funds substantially earlier tn expected with much less losses. but at t same time what you really have is the story th got here in the first place. you've had seral central banks turn into net buyers, probablyy the end of the year you'll ha the central banking commity be a net buyer rath than an a net seller. that tellsou that central banks are starting to not trt each other's currency and are look fog air neutral currency that bodies fo gher pring. >> tom: whats that relationship that ses so
close tely bween precis meltssnd the u.s. dolr, as the dollar has walked we've seen gold prices reach new highs. >> absolutely. gold being priced in dollars, nerally will have an inverse relaonship, a stronger dollar will ually mean aker gold prices, and vice versa. what we've seen in the last severamonths though is an actual decouplin,here gold rallied ainst all currencys. while the u.s.oes state that it has a strong dollar policy, a weakening doar is one of theays to jp start an economy that is almos hit the edge of the depression and is coming back o of out slowly. so you'll see a lowerdollar going forward and that is ultimatelyositive for the ice of gold. >> t: we haveseen a positive me in the price of gold. we're going toook at a crt of gold price to date, up by 26%. gold gets all of attenti and all the accolades, but its smaller sibling silver has provided a biggerp side for thosinvestors that have been investing in silver and silver
stocks. silv prices up by 5 to date. why the dference in pre performance of these two metals? >> well, whil gold i almt predominantly a preous or motary metal, sver is at times a monetary or preous metaand at times an instrial metal. inhe selloff la year when the wod was coming unhinged and everybodyas selling everything they could ge theihands onto raise cash, silver suffered a mh greater decline than go did. as the economy stablized, i didn't fall into depressi and arted to reflight, silver got the doubl benefit of coming back o the economic recovery that we saw to the deee and comingack on the decline the dollar and e precious component of it. sohat led t ju simy almost twice the level of returns, to put us back to a relative area of e wil i ing up now. >> thankvery much.. thanks for joining us. our guest frank mcee, head
metals tder at ibs metals. >> susietomorrow bernie madoff and his ponzi scheme oneear later. we talk with the sec about enforcing the ruleon wall street, w. susie: advertising is "up" for disney but it'far from a wonderl world. ceo robe iger said today the ad market is improving andhe company is signing deals f the near term. overall sales are up abo 25% from the sprg season. but advertisers still n't want to sign ng term contracts. iger's commentadd to a growing lief the advertising market making a comebac >> paul: meantime, hlywood trade newsper "variety" wi now charge readers for its online content. starting tomorw, subscribers whlog in with a user name will have full access to variy.com. but non-sucribers may access only five pas of content in y given month. an annl online subscription costs nearly $250 about thsame as yearlong int subscription.
checking itwice time, and i'm not talking about santa. i'm talking about the listou need to draw up to make su your yeaend security sales give you the gifof the smallest possible tabill. considering thmarket unpleasantnesse were suffering at this time last ye, check '08 retu for carry over pital losses revi all security sales next review your securitsales to date. your goal is to see you have realiz a net gain or a net loss so far in 2009. be surto check with your mutual funds, too, so you ca crank in any taxle capital gains stributions they'll be making. so, ere do you stand? if you have a net loss inclung carryover loss from '08 it mighbe time to harvest some gains. if y have profitable positions in stocks or funds tt have rebounded nice, it might be me to take some of that mone off the table. and, if the losses a standing by to p up the gains so your profits are tax free so ch the better. if sales thus r leave you facing a capital gains t,
scour your portfolio f losers that you could selto wipe out thatill. don't let the tax anes dictate your iestment moves, of course. t if year-end sales make sense, make thmost of them by ecifically identify the shar you want to load, you know, the 100 shar of xyz that you boht june 30, 2004, for $18 a share. rather than ju 100 shares of xy pick the shares withhe cost basis th will deliver the tax result you're after. if you don't identify th shares, the law sumes you sell the shares you have owned e longest. d that could spoil all your planning. i'm kevin mccormally. >> susie: tomorrow, a look a those popular "fxible spending acunts". kevin sayshey could be in for changes from healthcare rerm. paul: recapping today's market action the bluehips move higher a rally in 3m shes. the dow gains 51 points and the nasdaq adds n points. to lea more about the stories in tonight's broadcastnd to read persol finance blogger jeff brown's take onhe difference beten good debt and bad debt go to "nightlbusiness report" pbs.org. you n also email us at