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tv   Real Money With Ali Velshi  Al Jazeera  May 6, 2014 7:00pm-8:01pm EDT

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you can follow all of today's stories on our website at i'm michael yves, even more information is coming up next with "real money with ali velshi." other. >> catastrophic flooding, devastating drought and wildfires. the white house calls it climate disruption, and says that the cost is too great. what america can do to stop it. and the potential price tag, and also, the uphill climb for the middle class. a single mom trying to claw hire way back to prosperity with a shot of success. and i'm talking to north carolina's pickle lady. how she turned a family recipe
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and a few cucumbers into a global business. i'm ali velshi in washington d.c. tonight, and this is "real money." this is "real money", and you are the most important part of the show. tweet me on ali i am here in washington d.c., where the white house today released an 800 page gorilla of a report on climate change. now, this report describes the damaging present and future affects of global warming, warming temperatures on the united states. and it's called the national climate assessment. it's the result of three years of work by more than 300 scientists and other experts, and this report says that extreme weather linked to
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climate change like prolonged heat, heavy downpours, floods, and drought is "disrupting people's lives and damaging some sectors of our economy." like everything in this town, both parties will try to score points by praising or bashing this report in the leadup to the midterm leaks. more on that in a moment. but right now, i want to focus on some of what is actually in this monster. look at this map. look at these colors. i don't have to give you alienliened. it's a heat map, and it shows that america, generally speaking, is getting a lot hotter. you can see generally oklahoma, mississippi and alabama, places are getting cooler but most of america is getting hotter. this map shows you temperature changes over the past 22 years, compared to the average temperature increase between 1901 and 1961. the darker shade of red, that you can see a lot of is a gain
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of more than 1 and a half° fahrenheit over that long-term average. report says the past decade was the country's warmest on record in every region of the country, and it warns that if greenhouse gases like carbon monoxide and methane continue to grow at the pace they're growing, warming could top 10° by the end of this industry. that scenario is bad news for many american businesses, including those in the $700 billion u.s. tourism industry. much of that depends on attracting people to coastal areas, and the report specifically warns that rising sea levels spell trouble for the florida keys and the everglades. those spots could lose $9 billion in revenue by 2025 and $40 billion by the 2050s. and it points out that warmer summer months could be a plus
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for maine's beaches and it's tourism industry. the report pushes the idea that society needs to find ways to prepare for climate change. for example, it says that climate change could inflict billions of dollars in damage on plants own bed the oil and gas industry and in the gulf of mexico. but is said that investing $50 billion to prepare could prevent $135 million in climate related losses in the gulf of mexico region. in other words, america needs to spend money to save money to deal with this huge issue. problem, experts say, is that the total cost of slowing climate change or preparing for it is almost impossible to quantify. and whatever the the size of the tab, paying will have to fall on both business and government. patricia sabga has the story.
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>> farmlands parched by doubt, heatwaves, temperatures that could intensify. that's the warning from the national climate assessment. an 840 page call to action to mitigate greenhouse gases and adapt out modded u.s. infrastructures to meet the climate change. a less costly alternative to doing nothing. >> hurricane sandy caused lots of damage in new york, and ruined the subway cars. it would be cheaper and better to plan ahead and build walls that protect shields against these kinds of storms. >> analyzing eight geographical regions and seven sectors, the report notes that while rising temperatures have some economic benefits, such as longer growing and shipping seasons, the impact on society and the economy are
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far greater. the question is, how great? because the national climate assessment does not tell us exactly how much climate changes cost in the u.s. economy or the price tag for maintaining and countering it's negative affects. >> there's no past appearance on which to base these estimates. i think that the reason people don'don't like to put a number t is because it's bound to be wrong. any number is way too high or way too low. >> but one thing that's clear. cost of taking proactive measures are steep enough that the businesses cannot prepare alone. >> it's going to require government to do it because it's the only way to provide the infrastructure that all businesses can use. >> pat aljazeera, new york. >> republicans wasted no time criticizing the report as politcal. they say the obama administration will use it to push through costly regulations,
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which will kill jobs. they say environmental issues belong to the states. white house correspondent mike viqueira joins me now. mike, the president says he's losing patience with climate change deniers, and the gop response to this report appears to be setting up another battle. what are your thoughts? >> i mean that's absolutely right. we saw the senate republican leader who has his own election coming up in november, and virtually the only people who vote in midterm elections and non-presidential elections are the hardcore base motivated supporters, and this is both of those angles. the president has serious problems with those on the left, particularly those who are part of the environmental activist community, they're angry about keystone, he hasn't killed that. and many suspect that he's going to approve it after the midterm elections. they're angry about fracking, and there's almost a panacea to america's energy needs, saying that the united states is going to surpass russia and saudi
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arabia as top oil and gas producers. we have seen mitch mcconnell on the floor of the senate today, saying that this is a sob to the left, those who advocate environmental rules and low flow toilets, those are the quotes that he used. so the president does have moves that he can make here. he's expected to come out with very new and controversial reses on coal fired power plants across the country, electricity that runs on coal fired plants. and that comes down the pike as well. so there are arrows in the quiver that he can enact without congress, but cap and trade, it's a dead letter. >> mike t. good to see you, >> ucla professor matthew kahn says there is no turning back on climate change. it's coming and we can't stop it. but it doesn't have to be as dire as the predictions. he's author of the book "climatopolis: how our cities
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will thrive in the hotter future. he joins us now. matthew, how will our cities thrive in a hotter future? >> so we face very serious challenges, but when we anticipate such challenges, and this report today is sort of like paul revere. when we anticipate challenges, this gives our entrepreneurs sharp incentives to make a lot of money. the next zuckerberg could be in designing water and electricity and minimize disaster risk to help us adapt to this very real challenge. >> but as mike viqueira aptly points out, it's not whether it's a call to arms or a paul revere, another call to arms, the fact is that not much is going to come out of washington. so are you saying that private enterprise and mitigation will help us with this, or will government have to be involved. >> for progress like cap and
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trade, you need at least 50% of the vote for house and congress, but for amazon, it was one entrepreneur out of 7 billion people. so we have many more bullets in the gun. when it comes to entrepreneurship, we don't need the average citizen to be ready for this issue. it's a question of what do our entrepreneurs focus their scare set on? >> this is interesting, because you know it's coming and we can't do much about it. there are those who say maybe we can, but the debate in the united states is not particularly in congress, but whether or not this is actually real. is there any doubt or reasonness to anybody who says this is no longer real. and we have to do something to mitigate it? >> i sit in the ucla institute of the environment and i'm convinced by my colleague's research that it's a real challenge. i think with the paralysis at
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the federal level, where you are going to get political at the state level, like arnold schwarzenegger's guinea pig experiment to show whether you can launch cap and trade and still have a booming economy, so california is running that guinea pig experiment for the rest of the country. >> and nobody in washington wants to hear, but the idea that you can tradeoff four more credits if you want to pollute more. >> you're right about that. but in europe, they issue too many credits. i think in sacramento and california, it's running a cleaner experiment to learn whether the green economy advocates are right and the wall street journal is wrong with its editorial polluting the agenda at the time we're trying to jump start the economy. >> what is it? we seem lax in the united
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states. united states is the only developed economy that is continuing to have a debate that most people got over probably ten years ago or more. >> i see a two pronged approach. on mitigation, california will continue with this eb32. california is in the second year of a cap and trade, where electric utilities and fossil fuel users are going to have to pay for their emissions, and at the same time, as your segment did a great job of conveying, coastal areas are going to have to step up and adapt to the challenges that we have unleashed, so we're going to have to simultaneously reduce our greenhouse gas emissions, and through all of us adapting in a narrow self-interest. >> does any of that adaptation involve americans moving from where they live? >> that's an interesting
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question. after hurricane katrina, there's a question of new orleans. protecting people in such low-lying coastal areas. they can either pov to higher ground, or if we're determined to protect such low-lying areas, the government can step in and build seawalls. the question i have is whether federal move should be used to sub dies them or if it should be local money. do we want to subsidize risky places? if you want to live if a risky place, should you be using your own money? >> professor, thank you for joining us. >> you know the saying "nobody rides for free?" coming up: i'll tell you what that could mean for our interstate highway system. also: more of my look at america's middle class, with a single mom who's tasted success, but now can't seem to catch a break: >> sometimes i question, why is this happening to me? i know that i'm a good person. i work hard. you know, i'm doing everything
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right. >> now she's taking a big chance on her small business. i'll have her story and more as we continue. keep it here.
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>> the stage is being set for a showdown over the cost of fixing the nation's infrastructure and roads. house republicans today unveiled their version of a transportation bill. among other things, it slashes grant funding for roads, bridges and light rail projects by 83 percent. the gop measure comes one week after the obama administration rolled out its own $300 billion transportation bill. the administration wants to lift a federal prohibition on most interstate roadways to collect tolls. the revenue raised would go toward fixing highways. that idea is already meeting opposition in congress. let's talk more now about the
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nation's infrastructure with robert puentes. he oversees the brookings institution's metropolitan infrastructure initiative, a program that addresses transportation and infrastructure challenges facing america's cities. rob, good to see you and thank you for being with us, first of all, we have a problem with this transportation bill. and there's funding that runs out for highway repairs. how serious is that? >> it's a major issue. the money coming into the federal government is usually through the federal taxes, and it goes up and up every year, and it starts to decline. americans are driving much less, and when they drive, they drive more fuel efficient cars, so less money to go around. so we have less money available. >> what's the solution to that? if we don't get that money, what do we do? >> the problem in the summer, the states are going to be very hurt. they're counting on the money, and infrastructure is it a long-term project. and they're waiting for this money to come in.
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they will figure out how to get from the end of the summer to the midterm elections. >> but this is fundamental. how we pay for the upkeep of our infrastructure, and i know you study this, what other options are they? cutting the gas tax, or what the obama administration is talking about, allowing tolls to be collected on federal roads or what republicans are doing, and saying we're not going to raise the money. >> we have not made those hard decisions, raising the revenue that we need just for the upkeep. >> several years ago, it was suggested that we roll it back for political reasons. >> it goes on and on and on. but there's overemphasize i think on the federal level here. the federal level only provides 27, 30% of money that's going for transportation and water projects throughout the country. you would think that it would be very federally supported.
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it's the states and the cities, and the metropolitan areas, in the private structure that are starting to do the hard work to get the country back in shape. we should focus on the federal government. >> you bring a good point. with infrastructure in general, which america doesn't do that well with, there's more being done in terms of the private and public partnerships on the state and local level. but there are things that away need to talk about as a country, and one of the topics that comes up now and again, the idea of an infrastructure bank that would allow some federal money and private money to get more decision making to get it done. >> it definitely has a role. something that we need to do in this country, on projects that are truly of national significance. but the problem, since we have taken two abstract notions, infrastructure, transport, water, energy, and telecommunications, also, because once you start thinking
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about infrastructure, what you start to do, you get better solutions. the infrastructure bank, in the u.s., without having that specificity with specific projects, doing specific things. >> critics tend it say it's a thing that is going to allow money to be funneled for political purposes and there will be port projectses and bridges by the to nowhere, but there are details about things that are necessary, on a national level. and of national importance for infrastructure, and things that are loam. and it doesn't seem to be something that's important unless the air traffic has slowed down too much, until we find the water polluted. we turn the switch and expect the lights to go on. >> this is something that we can learn from other countries, where they have social or
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environmental objectives, and infrastructure is not just safe, but we're trying to accomplish certain goals. other countries, canada, australia, the uk, germany, a lot of countries are starting to identify what they want to accomplish, and the infrastructures support that. it's not just we're going to build things in the abstract, we were going to work on shuttle-ready projects for the short-term, but now we want to think long-term. what do we want to accomplish as a country and what's the long-term? >> rob, a senior fellow. what a great discussion, >> what started in a small southern kitchen quickly grew into a successful global operation. coming up, i'm talking to north carolina's pickle lady: how she didn't let a setback sour her ambition and why she's big in china. plus, high hopes and high stakes: my look at america's middle class continues with a single mom who's making a bold
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move to try to keep her small business afloat. that and more when we come back.
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>> march was a good month to be in the import-export business. u. s. exports posted their biggest gain in nine years. that helped shrink the nation's trade gap nearly 4 percent. the trade deficit coming in at 40 point 4 billion dollars. that's a good sign for the economy. that is a difference between what america buys and sells from other countries. but here's the thing: the trade gap was a bit higher than the government predicted in its first-quarter gross domstic product estimate. and that means the economy may have actually contracted in the first quarter. that would be the first slinkage in three years. exports are a big driver of profits for many of our country's small businesses. take miss jenny's pickles, based in kernersville, north carolina, just ten miles east of winston-salem.
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jenny fulton and a co-worker started the pickle company four years ago after both were laid off from their stockbroker jobs during the recession. now, with nearly 10,000 jars of pickles being shipped to china each year, the company is thriving, and looking to move into markets with massive demand for their sour - or sweet - products. jenny joins now from winston-salem north carolina. jenny, and your twitter handle is at pickle ladies. and i don't understand one thing. cucumbers, i feel like they're like onions, they grow everywhere in the world. and why does anybody need to buy them from somewhere else? >> basically in north carolina, they're produced in two seasons, and we have no junk in our jars, so we're sharing north carolina goodness all around the world. >> you started in exporting, and you were exporting to the united kingdom and my hometown in
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canada. and in 2011, you started sending pickles to china. tell me about this. >> basically, the north carolina agriculture department and exporting department brought qualified buyers to north carolina. it was an inbound trade mission, and they sampled all north carolina goodness, and they fell in love with miss jenny's pickles, and we made a deal that day to export to china. >> what did you know about exporting to china, and how did you get any know how? i bet your pickles are great. but how would you know how to export to china? >> well, to be honest with you, we have fabulous resources, we're gifted in the state of north carolina to have tools between the north carolina agriculture and the southern united states trade association, they have been invaluable to us. as well as the ex fort-inport bank of the united states of america.
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>> let's talk about pickles and the demand for pickles. the u.s. creates $2 billion in pickles, and russians eat $22 billion in pickles a year, and germany eats $15 billion in pickles every year. so in fact, your market is probably more lucrative ultimately outside of the united states than in the united states. >> i would agree with that. 95% of the world lives outside of the united states, and i learned that early on being a stock broker, so it was really important for me to find a niche for miss jenny's pickles. because a lot of people do enjoy pickles. nine pounds of pickles are consumed every year americans. and when i started diving into the numbers and researching the picklish market, and i found out that russians eat $22 billion in pickles, and germany agents
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$15 billion in pickles, and those were resources that i received through the small business numbers that just came in, and i was like, we got to get north carolina goodness out there worldwide. and in fact, i went to germany in october, and 2013 to open up that market. and i'llish headed to dubai in november. so i'm very excited to share our product around the world. we want to be a household name, and i think we can do it with our great product. >> tell me, what are the best-selling pickles? i like all sorts of pickles but what do you do the best with it? >> we do the best with our signature salt and pepper but we have ahabnero butter, sweet with heat. and it's something that you've never had before. it's fantastic. i just got a call today, ali, a guy picked under one jar, and now he wants to order a case. it's something unique, and it's a boutique niche market. and we're filling that need. because remember, there's no
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points in pickles, you can eat all you want. >> i love it. no points in pickles. jenny, a pleasure to talk to you. jenny fulton, the cofounder of miss jenny's pickles. at pickle ladies on twitter. sweet and a little heat. >> another day, another drug deal. so to speak. today merck announced the sale of its over-the-counter consumer products division to bayer. the price tag is more than $14 billion dollars. bayer will now own such products as dr. scholls, coppertone suntan lotion and claritin allergy medicine. the deal will make bayer the world's second-biggest consumer health care company. this comes after a bunch of other pharmaceutical deals and pfizer's so-far unsuccessful attempt to buy astra zeneca for $106 billion. although i'm guessing that price is going to go. if you're middle class in america, there's almost no room for mistakes. one financial slip and you could fall to the bottom. my look at middle class families trying to rebuild the american dream continues tonight with a single mom putting a brave face
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on her struggle: >> it's the long, long-term struggle of noting able to have basic needs met. basic needs, as in food in the refrigerator, shoes to work in. >> she's down, but she's not out. i'll tell you how she's giving success one last shot and taking a big gamble with her small business, coming up.
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>> attracting customers, targeting business opportunities, and finding new business are among the top
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challenges facing small business owners in the u-s, according to a new gallup survey. but it's kind of according to anybody whoever owned a small gins. jodi bowlin, the owner of a struggling gift shop in knoxville, tennesee is hoping she'll be able to attract new customers by moving her store to a new location. we'll be tracking her progress throughout the year as part of our continung series "america's middle class: rebuilding the dream". >> sometimes i question, why is this happening to me? >> do you need a card? customer: uh huh- jodi: ok over here. >> jodi bowlin is a struggling gift shop owner and the single mother of 16-year old son julian. >> she's like my role model in perseverance. >> the 46-year old knoxville tennessee native has experienced a lifetime of ups an downs. when she was 15 jodi went to tokyo to work as a model and actress.
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>> i was making 20 to $30,000 a most >> after six years of living the high life the southern transplant returned to the u. s. in 1990 with great memories - but very little saved up. >>i started teaching modeling for barbizon schools (after) ; just trying to figure out what i was gonna do. >> jodi eventually married the owner of a small printing business. we were living on $50,000 or $65,000 a year, and it was very comfortable. >> but when her marriage began to unravel she took a job working as a manager at a gift-shop close to home. >> i did everything. all of her buying, all the books, all the closing, i mean, i basically was doing everything that an owner would do. >> after managing the store for three years, jodi and a partner bought the business for $62,500 in 2008, financed in part with equity from her home. >> the store was doing at least $20,000 a month. >> then the recession hit- and things went from bad to worse.
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>> during the first six months of us buying the store, our sales declined by 40% and my business partner was diagnosed with breast cancer. my business partner had left and then i started letting the girls go, one by one. >> it was a blow from which the divorced mother of one has still not fully recovered. last year her store had about $200,000 in sales. but jodi only brought home about $10,000. >> the rent alone is close to $65,000, $70,000 a year. and then tax is almost 10% . >> like many others jodi has fallen out of the middle class. >> it's the long, long term struggle of not being able to have basic needs met. basic needs, as in food in the refrigerator, shoes to work in, gas in my car.
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i've had to be on food stamps or we wouldn't have food. >> since 2008, the number of people who consider themselves middle class has decreased by nearly a fifth- from 53 percent to 44 percent. forty percent now identify as either lower-middle or lower class up from 25 percent in february 2008. >> i'm headed to the new store now, and i'm going to be this for two hours. >> but rather than admit defeat the small business owner is taking a high-risk gamble. she is moving her gift shop to a different location. >> the rent here is almost $5,000 a month. in the new location, it's a third. and this area of town is extremely isolated. my new zip code, is the most affluent zip code in knoxville. night maybe the p can come to the right. >> the logistics of opening a new store are complicated and expensive >> this new system i told you about comes with two cameras
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>> i'm not worried about the 57 dollars a month for it. what im concerned about is the initial $450. >> despite a volunteer army of friends, family and boyfriend richart. the cost of getting the new shop up and running will be about $10,000 -increasing jodi's credit card debt to $17,000. adding to the pressure: a loss in revenue everyday the new store is closed. >> there's a fine line right now for me of needing to open immediately. i don't want the store to open and not look right and customers not come back. >> the stakes couldn't be higher. if jodi's gambit fails she'll likely have to sell her home. >> my inventory is right on target. >> but the woman who has lived a life of economic extremes is banking on an upturn for the next chapter in her life. i'm looking forward to that point where i'm in the new store and there's a paycheck. and there's a manager. and there's a day off. and i'm able just to pat myself on the back and say, "you did it, girl
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>> we'll keep you updated over the next few weeks to see how jodi bowlin's business is doing in the new location. a recent survey of 1,000 small business owners shows that a majority of them are confident they'll succeed, despite a high failure rate of 50 to 70 percent within the first 18 months. george cloutier is the founder and ceo of american management services, a firm that specializes in turn-around advice for small and medium sized companies. he is here with advice for jodi bowlin and other small business owners so they won't end up among the casualties. george t. good to see you and thank you for being with us, and let's start with jody's decision to move. she cuts her rent by 2/3, and she's going into a more upscale area. what do you think of that? >> cutting costs is always great, and it seems like a good decision, but more importantly, what is she going to do to build traffic into her store. if she doesn't that, the location will not be
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particularly successful. >> what do you do to build traffic into your store? so many stores hope that if they build it, it will come, but that doesn't always happen. >> first, you look at your marketplace. she said it was a more affluent marketplace. and she might want to adjust her prices a little bit. but more importantly, she wants to do something like have a mailing list, have a once a month or once every other month party, a cheese party for her clients, once a person comes through the door and buys something, give them a discount on the next purchase they make so they will have an incentive to come back and see you again. you have to get the traffic building through your front door. >> let's talk about cash flow. i think with businesses you've dealt with, you helped turn
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around, and jedy, cash flow seems to be top of the list of everybody's problems. >> absolutely, it has always been, but it has been very aggravated by the last five years, due to the economic downturn, and the almost complete collapse of the small business economy. these businesses are down. >> what do you recommend? go ahead. >> these businesses are down anywhere, the small businesses from 20% to 80% over the last five years. although they have begun to come back, they're nowhere near, with some exceptions, the heights they achieved in 2007 >2007, which would explain again why they are business is down. >> given that she's a woman who owns a small business, i know that the state and the federal government give a softer eye to these, and can she tap loans
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guaranteed bit federal government? >> absolutely, if she wants to take out loans, i would recommend that she go to the small business administration's local office tomorrow, and find out the programs that they have. they are particularly good with women-owned small businesses and i believe that they have a couple of programs for them, both in terms of voice, and inexpensive money, so i think that she should start there. the local banks are probably not going to be particularly good with her, because she doesn't have a lot of net worth, and she doesn't have a lot of income, so she should start with the small business administration for sure. >> george, thank you for talking with us. join us tomorrow for our continuing coverage of " america's middle class: rebuilding the dream. we will hear more about the struggles of the sabino faimly. despite earning over 95,000 dollars a year they are barely getting by- living paycheck to paycheck.
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>> all right, it's tag lined as a canadian bank, how a canadian hour house is gaining massive ground here in the united states, and later, the anniversary that wall street would love to forget. the flash crash, and why it matters now more than ever before.
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>> some call it canada's best export to the united states. investors love it for its steadily rising stock price. while consumers love it for customer service perks like longer hours, lower fees, and of course free pens. i'm talking about td bank, which many americans may not even realize, is a subsidiary of the toronto-dominion bank, the second largest bank in canada. through a series of acquisitions over the last decade, most notably its purchase of commerce bank in 2008, td has grown into
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the 10th largest bank in the u-s by deposits. its footprint has grown tremedously along the east coast, with about 1300 retail locations spanning from maine to florida. that's why td is considered the first bank from the north to make a significant mark in the u-s retail banking system. and its canadian roots are exactly what's helping its american focus. i spoke with howard green, author of "banking on america: how td bank rose to the top and took on the u. sa. at the milken conference. i asked why people consider fundamentally safer than the american banking system. >> there are a lot of things, they hold more capital. and there are tighter mortgage requirements in canada and they're more supervised and more anal than u.s. banks, and more conservative. you need a higher down payment
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when you buy a home. and it's not that they haven't stepped in it over the years, occasionally they do, but they make gobs of money. it's an ol i gonely, and there's a stable base from which they can lend from. and they're very successful. you can't take them over. if you're an american bank, you can't buy them. and there's a british law, that they can't themselves. >> there's a reason we see it. d and bmo operating in the united states, because when they couldn't expand each other, they expand out. >> they make gobs of money, and they can't buy each other. and some do it internationally, but td bank has made a concerted effort to buy in the united states, and over the course of 2004 to 2010, they bought 1300 branch locations in the united states through a series of
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acquisitions, which is about 200 more locations than they have in canada and they have been in business for 150 years there. >> so is the u.s. a bigger part of their business yet some. >> no, canada is hugely profitable. they make about 40% return on equity in canada. they make basically the cost of their capital in the united states. 9% on their return of investment in the u.s. so it's going to take them, if they make a success of it, it's going to take seven years to make double-digit returns, say 15% on that investment in the united states. it's going to take time. >> now, in the united states, the banks, the td ban ki-moons here, it's a big bank, and yet it feels more like a community bank. they have longer hours, and they give you free pens, and they give you snacks for your dogs.
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>> there are bathrooms. >> you can put money in the machine and does that matter? >> it matters. they have a td university down new jersey where they teach that. they bought a bank on broadway, in new jersey, one by hill, who was in the burger king business and jiffy lube. >> runs retails. >> he does the same as burgers, banking burgers, great customer service and great locations. they call them stores. in canada they still call it branches, and they're almost two different banks. they're the same company, but in the united states, most americans don't know what td stands for. >> toronto dominion. >> i call it the alphabet
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soupization of banks. it's a way to work into other markets and not really flag that you're canadian. ubs does it, and rbs in scotland. hsc. it's code so they don't know who you are. >> most of our viewers on the east coast will know it. d bank, they're all the way down from maine to florida, and it's not the rest of the country. do they have to make acquisitions to do that? >> they say that they want to stay in the eastern seaboard footprint. there are 130 million people, three times the population of canada in that footprint alone. they can get economies of scale. they can look like a jpmorgan or bank of america in that seaboard footprint. if they spread across the country, they won't have the same density advantage ta they have. new york city, they look like
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they're as big a bank as any others, and that's because they bought commerce, which got them into new york faster than they could have imagine. and the funny thing is, in the greater metropolitan new york area, there are almost as many deposit dollars as there are in all of canada. so they don't have to go to idaho or arizona. bank of montreal, it's concentrated in the chicago land area, and the midwest. and td is back to the maine to florida footprint. >> good to talk to you, my old friend. >> four years later and still haunting wall street. why the flash crash could have some traders in more hot water than ever before. coming up on "real money."
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>> a potential chinese blockbuster is coming to the u.s. the chinese e-commerce company alibaba today filed for its initial public offering. it's one of the most anticipated tech ipos of the year. the company is china's largest internet company, with an estimated value of $150 billion.
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it's often described as ebay, amazon and paypal all rolled into one company. yahoo owns about a quarter of alibaba. >> okay, four years ago today, may 6th, 2010, is a day many wall street traders would love to forget. that afternoon the dow jones industrial average plunged a whopping 998 points -- wiping out a trillion dollars of value - only to recover most of the losses a few minutes later. it was a mysterious, sudden crash, which became known as the flash crash. it wasn't until five months later that the securities and exchange commission issued a report suggesting that high-frequency traders may have been largely responsible for the crash. at the time, many people never even knew high-frequency trading existed. today, it's infamous. scott patterson covers financial market regulation for the wall street journal. he's also written two books about advanced computerized trading, "dark pools" and "the quants.
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scott, good to see you. ists on a flight that didn't have wi-fi when it happened. i landed and saw all of these emails, and there was a sense that it all came back, and it was okay. but in reality, "real money" got lost. somebody lost shares, and locked in their loss, and this is not a non-event. >> no, that is definitely one of the odd things about the flash crash. if you weren't paying attention to just a few minutes of trading that day, you could have mixed the whole thing, and that illustrates really how scary it was, because it happened so quickly and so many things broke down that it really showed that there are huge flaws at the heart of the united states stock market. >> walk me through that day, what happened? >> so it was 2010, and the markets were still really jittery and we were still coming out of the financial crisis, and at the time, the financial rice
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in greece was really heating up, so people were worried that what was happening in greece could spread to the rest of europe. the market was way down in the afternoon, several hundred points, and the worries were really bubbling up. somewhere around 2:30 to 2:40 eastern time that day, things went totally nuts. it had nothing to do with greece, and all to do with computerized trading that runs the market today. and basically, what happened, according to the fcc report that you refer to, the high frequency traders, who today are largely responsible for maintaining the flow of the market day-to-day, pulled out. as we actually discovered at the wall street journal that day, i called up a number of our high frequency officials that i know, and i said, what are you guys doing, and what did you see today? and they said, well, we got the hell out of there, because it
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got too risky, and when that happened, a huge gap opened up in the market and pricey totally collapsed. >> you've written two books about this, advanced computer trading and how it influences the market. and i've written two books on fundamentals but you're trumped mine. greece's problem is fundamental. but something turned over and it became about momentum and other people selling and levels at which a stock hits that triggers something to sell. that worries me that everything that i tell people about the markets and how you should understand management and look at the growth in the company falls aside when you deal with frequency trading. >> well, it's unfortunate because this is something that most investors shouldn't are to care about. it's the guts, the nuts and bolts of the market and how it works, but as we have seen, after the flash crash and other
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big glitches like nasdaq justify years ago, totally flubbed the facebook due to glitches, which hurt the market and investor confidence, and i think you can look at it a number of different ways. you can say these are just growing pains that the market is undergoing as it evolves and becomes more and more computerized. and it is true that this is an unstoppable process. we're going to see more and more computerization. but the problem is that this market is locked in the race for speed. where everybody in the race, the high frequency traders and others are trying to be in the market faster than everybody else, and the speed at which the trading is measured at mind-boggling. these guys are literally trying to beat one another by a billionth of a second. >> thank you for joining us, scott patterson, of the wall street.
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wall street journal. >> time for tonight's history lesson. you probably know i'm a big infrastructure junkie and since i'm here in the nation's capital, it's only right that i acknowledge the anniversary of one of the largest public works projects this country has ever seen. seventy-nine years ago today, then-president franklin d. roosevelt signed an executive works progress administration - or wpa. it was a major component of the new deal, fdr's massive response to the great depression then crippling america's economy. in 1935, unemployment stood at 20 percent. the wpa put millions to work on massive public projects, building roads, bridges and dams. the massive infrastucture build cost 10 billion dollars - a huge amount of money equal to 172 billion in today's dollars. when the wpa was retired a few years later in 1943, almost nine million americans had done some
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sort of work through the program. it helped provide support to more than a quarter of america's families during the worst of economic times. in the end though, it wasn't the new deal and programs like the wpa that helped lift the country out of the depression, it was world war ii. even so, the wpa's legacy is still with us all these years later: 650,000 miles of roads built or paved; 78,000 bridges; 16,000 miles of water mains; and 24,000 sewage facilities installed - all across america. and that's the problem today: much of that infrastructure is still being used, but it's in desparate need of repair or replacement. america today is decades overdue for an infrastructure rebuild. whether that's done with massive public works, the way fdr did it, or done completely by the private sector, the way many republicans say it should be done, or some combination of both, which is what president
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obama advocates, america needs to invest in upgrading its infrastructure now. that's our show for today. i'm ali velshi. thanks for joining us. i will see you again tomorrow. >> good evening, everyone, this is aljazeera america. i'm john seigenthaler in new york. the consequences of climate change. who is at risk, an and it take o turn things around. our special report coming up, the search, now, the u.s. is trying to find hundreds of kidnapped nigerian schoolgirls, and closer to war. the crisis in ukraine goes from bad toker worse. intense fighting and new warnings. aviation mix