tv Your Money CNN January 4, 2014 6:30am-7:01am PST
inside the business of being bloomberg. >> "your money" starts right now. >> see you back at the top of the hour. thanks for joining us this morning. the u.s. economy is taking flight. this year, will there be more room in coach? i'm christine romans. this is "your money." the rich got richer in 2013. is 2014 the year more americans share in the recovery? i'm going on the record with predictions for "your money." the economy will again be the big story. the year of economic growth and growing worry that the recovery is not benefitting everyone. the unemployment rate will likely fall below 7%. that is the trend. the real story is the under employment rate. don't expect that to budge as companies hold back on hiring full-time workers. the recently unemployed. they will have a better chance
of getting rehired next year. the long term unemployed still face the same problems. congress may reinstate recession long term benefits in the year. the minimum wage will rise in 13 states, but not as high as the $15 an hour that legions of low paying workers are vying for. the stock market may not return as richly as it did in 2013 as the taper is finally here. and mortgage rates will likely rise. will that end the recovery and home prices? probably not. rates are still below the post are world war ii 6.5%. it may spur banks to lending more freely to first time home buyers. expect low single digit percentage increases. those are some of my predictions. let's talk to somebody who
actually has money riding on their predictions. muhammad and greg. nice to see you guys at the beginning of the year. i have a lot of questions about where we go from here. muhammad, a lot of optimism about the economy for the year. what do you see is the biggest risk? >> so first, christine, happy new year. this is a year in which growth is higher, we create more jobs. wages will go up. the less good news are the risks. we have three in particular. one is that underlying all this is a fed that continues to use unconventional measures to support the economy and it's changing the way it will be doing business. so the uncertainty associated with the effectiveness of the fed as it pivots from one instrument to another. the second element is businesses. they have the wallet to spend,
but not the will to spend. it is really important that businesses deploy their cash into high investment in plant, equipment and people. that is a real uncertainty. business is risk adverse. finally, there is an issue of income and wealth inequality. at some point, this income and wealth inequality is more than a social and political issue. it is an economic drag. i think we are getting close to that point. >> that is a topic for economists and politicians. you have the economy recovering, but people don't feel it. greg, there is a mid term election this year. 35 seats are up for grabs. all of the seats up for grabs in the senate. most americans say it is in poor shape. >> happy new year. i think, christine, the republicans will have a fairly good election. they will keep the house.
largely because of the way the districts are drawn or perhaps one might say gerrymandered. i think obamacare doesn't help the democrats. in the senate, six seats would give control back to the republicans, they will win four or five. both houses stay conservative or get a bit more conservative. >> what are the risk factors you talked about muhammad. they are using the cash to buy back shares. they are not hiring. what is it? what is it that unlocks or gets the genie out of the bottle for that? >> one, less incentive for them to buy back shares. numbers have been enormous, christine. last year, 750 billion in authorized buy backs. that is a lot of dollars that went into share buy backs.
why? because interest rates were artificially low. it made sense for companies to borrow, accumulate cash and pay back and share. you need that incentive to go down. secondly, you need them to have more confidence about aggregate demand. >> greg, did you have trouble finding risks? what did you think about the forecasts about his risks to the economy? >> i agree. i would say you and your invest ors would make a resolution to not get faked out by washington. we come to the precipice and we fan and don't go over the cliff. there will not be a government shutdown in january. not a debt ceiling crisis later in the winter. we have a lot of hot air. when it comes to a real crisis, washington blinks. >> you made me feel happy, both of you. i feel better about things. muhammad and greg, don't go
away. another week and reminder if you put it online, you are risking your privacy. snapchat let's you share pictures or videos that disappear after a few seconds. this week, a group of hackers says it accessed information for 4.6 million of those snapchat users. they posted some of that information online, including partial phone numbers and user names. the hackers claimed no malicious intent saying they want to send a message that we trust companies with our information and they should be more careful with it. for more stories that matter to your money, give me 60 seconds on the block. >> it's a 50% raise this year for netflix ceo. a $3 million salary and $3 million allowance for stock options. netflix was the top stock in the s&p last year up nearly 300%.
big donations. 15 individual gifts of $100 million or more last year. that is four more than 2012. mark zuckerberg made the biggest donation. facebook shares valued at almost $1 billion. to the silicon valley community foundation. zappos is doing away with job titles. they will answer to one another instead of a big boss. home prices jumped 13% in october. the largest gain since the height of the housing bubble. 1.3 million americans now without their extended unemployment benefits. what will it take to get the benefits back. consensus in washington. >> it is immoral that we have people that work hard and play by the rules and under no fault of their own. it is a safety net. >> i do support unemployment
benefits for the 26 weeks they are paid. if you extend it beyond that, you do a disservice to the workers. >> muhammad and greg will be back with more on why the your money. [ all gasp ] oj, veggies -- you're cool. mayo? corn dogs? you are so outta here! aah! 'cause i'm re-workin' the menu, keeping her healthy and you on your toes. [ female announcer ] the complete balanced nutrition of great-tasting ensure. 24 vitamins and minerals, antioxidants, and 9 grams of protein. i see you, cupcake! uh-oh! [ bottle ] the number one doctor recommended brand. ensure®. nutrition in charge™. over the pizza place on chestnut street the modest first floor bedroom in tallinn, estonia and the southbound bus barreling down i-95. ♪ this magic moment it is the story of where every great idea begins. and of those who believed they had the power to do more. dell is honored to be part of some of the world's great stories.
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. 1.3 million americans are adjusting to life without unemployment benefits. more could lose the benefits this year if congress doesn't extend the program. should the benefits be extended? put on your blue glasses. failing to extend will reduce economic growth. democrats point to an unemployment picture that is getting better. it is getting better, but it is still bleaker than 2008. when president bush extended unemployment, jobless is 5.6%. americans are taking a longer time to find work. 37 weeks on average. that is more than doubled over
the past five years. now put on your red tinted glasses for the gop perspective. unemployment has been extended 11 times since 2008. some republicans say with the rate coming down, it is time to pull back on what was supposed to be an emergency recession era program. an extension, by the way, has to be paid for. extending the program for one year will cost $25 billion. that is money some republicans say could be put to better use by paying down the national debt. muhammad and greg are back with me. muhammad is the ceo of pimco. greg is the strategist for the research group. unemployment benefits are one of the best ways to get money into the economy. recipients generally put the money right to work immediately. do you think this extension is necessary? >> yes, i do. i think it is really unfortunate if it doesn't happen for two
reasons. one is bad economics. as you say, this is the best way of putting money back into the system and we suffer from a problem of lack of aggregate demand. to cut that at this point is bad economically. horrible social policy. we know we have a long-term unemployment problem. 38% are long-term unemployed. the system is having problems generating jobs for them. which ever way you look at it, not extending is the wrong thing to do. >> muhammad, from the perspective of economics, does it create a class of workers dependent on a paycheck from the government instead of going out and finding a job less than they would have liked. >> that assumes that jobs are available, right? if you look at the data, that is not the case. the problem with long-term unemployment is it is harder to reenter the labor force.
the longer you are unemployed, the harder it is that employers will spend more on unemployed. it is not simply forcing people back, it forces job retraining and all sorts of other things. >> greg, in 2002, the economy was in a fragile state. at the time, president bush called to extend benefits. let's listen. >> americans rely on unemployment benefits to pay for the mortgage or rent, food and other critical bills. they need our assistance in these difficult times. we cannot let them down. >> that was a whole different downturn. then it was a bipartisan issue. will democrats and republicans come together and extend them, greg? >> we get on monday, this coming monday, the senate will confirm janet yellen and pass the three-month extension. then it goes to the house. i think most republicans would agree with muhammad.
their issue is they have to pay it. $6 billion over three months. do you cut off saturday mail delivery? do you get savings in the fund? this could run into real trouble in the house. >> you guys, quickly, after this year, the emergency program is over, isn't it? >> my sense is maybe we will get one or two more extensions. a year from today, with unemployment close to 6%, there will not be more emergency jobless aid. >> i agree with greg. >> thank you so much, gentlemen. i think we can safely assume an extension, but this is the last year for this. thanks so much. nice to see both of you this weekend. coming up on the show, we talk about one america with two economies. now new york's new mayor talks about a tale of two cities. democrats are rallying around that message. >> this even equality and i can
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but it's a recovery of a majority of americans insist they are not feeling. in new york city, a billionaire mayor who oversaw a wall street renaissance has given way to a populist promising to take on income inequality, and he has a nation of democrats behind him. susan candiotti joins me now. hi, susan. >>ly. it's interesting to see how this new mayor, bill de blasio, just elected here in new york city, just taking office, how he's going to do. he campaigned as a man of the people, and that message was also made clear during his inauguration ceremony. new york's populist new mayor bill de blasio and his family got to his inauguration ceremony the way millions of new yorkers get to work every day. on the subway. before emerging, even running into his predecessor, former mayor michael bloomberg. in his speech, signaling a reversal of policies that saw business boom under bloomberg, some say at the expense of the poor and working class. >> when i said i would take dead
aim at the tale of two cities, i meant it. >> reporter: citing liberal leaders of the past century, de blasio promising to even the economic playing field, including taxing those who make more than $500,000 a year to pay for universal pre-k and after-school programs. telling the wealthy, don't worry. >> -- see their taxes increase by an average of $973 a year. that's less than three bucks a day, about the cost of a small soy latte at your local starbucks. we do not ask more of the wealthy to punish success. we do it to create more success stories. >> reporter: with bloomberg at times looking grim in apparent disagreement, other speakers attacked his administration. also invited on stage, a little girl named desani, who's become
the face of more than 22,000 homeless children, a record in new york since the great depression. >> we live in a gilded age of inequality, with decrepit homeless shelters and housing developments standing in the neglected shadow of gleaming, multimillion-dollar condos. >> reporter: some light moments. a son of the new comptroller fidgeting while daddy was being sworn in. new york's governor greeting activist actress susan sarandon, and former president bill clinton embracing de blasio's popular interracial family, a real-life modern family, as he called it, and his plan to change the city's economic landscape. of shared opportunities, shared prosperity, shared responsibilities. >> reporter: and with that, a synchronized kiss to the crowd from the city's first democratic mayor in 20 years. it's kind of big picture. we're looking at a lot of things
how this may affect people nationally. >> that's what's so interesting. i'm going to be honest with you. most people outside of new york don't give a hoot that there's a new mayor in new york. >> right. >> but what they're listening to this talk of one america, two economies and how it plays for them. new york is always much bigger and bolder and louder than the rest of the country, but there is this issue right there that seems to be playing out on the national stage, so it's sort of like a test tube for national politics. nice to see you, susan. new york's billionaire mayor, you saw him there, he's just a billionaire. no more billionaire mayor, just a billionaire, ahh. so what's next for michael bloomberg? >> i applied to teach spanish at a few universities, but i'm told that my accent isn't quite bueno. >> how about a lighthouse run, instead? the business of being bloomberg is next. i needed a new laptop for my pre-med classes, something that runs office and has a keyboard. but i wanted a tablet for me, for stuff like twitter and xbox, so my downtime can be more like uptime.
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mayor mike bloomberg bid farewell to new york city politics, but don't expect one of the world's richest men to simply disappear, armed with billions of dollars and a zeal for civic issues. michael bloomberg's next chapter promises to be very interesting. with a last wave, this multibillion air is out of work, for now. >> i'll be fulfilling a lifelong dream of enjoying a small soda on a nonsmoking beach. >> reporter: the net worth of $31 billion, makes him the seventh richest man in the country, and the 13th richest in the world, and it started with a layoff. when solomon brothers let him go in 1981 with a $10 million severance package, bloomberg started what would become bloomberg l.p. it's now the largest financial data provider on the globe. the company on track for a record $8.3 billion profit in 2013.
bloomberg stepped down as ceo in 2001 to campaign for mayor. financing that campaign himself. >> so help me god. >> reporter: $74 million in 2001. 85 million in 2005. and after a controversial change in term limits he pushed through city council -- >> so help me god. >> reporter: -- 108 million in 2009, the most expensive self-financed campaign in history. bloomberg ran new york city for 12 interesting years. from pedestrian plazas to public smoking bans to calorie counts to banning the big gulp. his no-nonsense approach made him his fair share of enemies. he took only a $1 salary, saving the city $2.7 million over 12 years. >> my checks used to be 93 cents and now they're 95 cents. >> reporter: he opted not to live in gracie mansion, and he took the subway to work. according to "the new york times," he gave the city at least $650 million for a wide variety of perks and programs.
his foundation, bloomberg philanthropy has distributed $370 million in 2012, alone. he's given more than $1 billion to his alma mater, johns hopkins, and donated $2.8 billion for causes like art to public health. >> the thing that gives me the most pleasure in the world is knowing i'm making a difference. >> reporter: what's next for the billionaire mayor? >> i don't know what the future holds. president, pope, naked cowboy. >> reporter: he has quashed rumors about white house dreams for years, but he is deep in the political fray. championing causes from gun control to immigration reform. business mogul and billionaire mayor, the business of being michael bloomberg is far from over. thanks for starting your saturday's "smart" with us. coming up at 2:00 p.m. this afternoon eastern time, stocks finished last year with record high levels. is the market set for a drop this year? a bull and a bear face off on a brand-new "your money" here at 2:00 p.m. eastern.
coming up at the top of the hour, an nfl player murders his girlfriend and kills himself. now, his mother is suing his team. did dramatic brain injuries drive him to do it? the attorneys step into the "cnn newsroom" right here right now. we'll have wind chills as low as 25 below. it is anticipated. >> the governor of connecticut sounding the alarm about the deep freeze on the way. listen, if you think that you might avoid it, consider this. 140 million americans are facing temperatures below zero. he murdered his fiancee, killed himself, and left his baby an orphan, but now the mother of former nfl star jovan belcher is telling a court it wasn't his fault. if you missed the '6