tv Nightly Business Report PBS July 22, 2009 6:30pm-7:00pm EDT
>> paul: preside obama's taking h prescription for health care reformirectly to the people, with a prime te news conferenc toping his agenda, finng the cost cuts need to pay for the illion dollar overhaul. >> sanne: speaking of doctors, this man haseen known as doctor dm, predictor of the financial crisis a mortgage meltdo. tonight, we ask econics ofessor nouriel roubinwhere the economis headed next. >>aul: what do gas masks and the credit crisis ha in common? coming up,e introduce you to a new jersey companyhat knows the aner. >> suzan: tonight's "street critique" guest says he'rather be in this mart than sitting onhe sidelines. he's david garrity, incipal at g.v.a.esearch. >> paul: i'm paul kangas. >> sanne: and i'm suzanne pratt. susigharib is off tonight. this is nightly business report for wednesd, july 22.
"nightly business report" is made possib by: mi this progr was made possible by contributions to your p statiofrom viewers like you. thank you. >> suzanne: good eveng everyone. president obama willell the nation tonight that alth care reforms central to repairing the economy. if it fails, the predent warns yo insurance premiums and out of pocket costs wi skyrocket. health care reform is boggin down in congressand tonight's newsonference is part of an
effort to get it back track. but as darren gersreports, the key answered question is still how to control cos. >> reporter: with negotiatns over healtcare reform in intensive care, house decrats like xavr becerra stressed the need to cut costs in a stem everyone agrs is inefficient. >> in a two and a ha trillion dollarystem, you should be able tfind the savin you need to pay for any reform.lth e do repter:ealth care experts do agree on where to find a chunk of those savgs. starting with medicare, whe more efficnt delivery of services cld save more roughly $120 billion a year. reducing the employetax inceive to offer health surance, some $250 billion a yearwould also save money by forcing businesses to ek out mo efficient health plans, hospitals and doctors treat their emplees. there is just onproblem with saving money in health care ys the heritage fndations stuart tler. >> somebody has to make th decision. somedy has to stop certain things from happening.
and either the government going to do thatr the market is gng to do that. 's got to be one or the othe each of them require chaes, very profound changes,n the way in whi we organize health care. the problem inongress is they don't want to make those decisions. >> reporter: uer prodding from the obama administration, dr makers and hospita have volueered to trim $235 billion from their part of t health care pie sounds like a lot,ut that's less than 1% of spenng over thnext decade. at is needed, wilensky says, is a fundamental cnge in medical. that means doctorsorking in teams ross specialties, paid not per visit or procedu, but by the bune to treat a patit's disease. >> it's a loof changes and it much tougher than saying we have 7,000 ces we pay physiciansnder medicare and we're ing to take them down by
5% or 10% or $10cross the board. that's the kind ofhing congress this about when they want to save money. >> reporter: if health care reform is to succe, congress may ne to come up with some new ideas and fast. as theaby boomers age, they are requiring more medic care. d analysts agree the country can't wait anotherecade or two to aress rising health care costs. rren gersh, "nightly busines report", washingn. >> suzanne: joining meow with his thouts on healthcare and the economy is uriel roubini. he is theconomics professor at nyu's stern school of buness, who forecaed the housing bubble, way before everyone else. professoroubini, welcome back to nightly business repo. >> pleasure beg with you tonit. >> suzanne: i nt to start with health car whato you thinkf there is health care reform and we see something in the near future, 's likely to do toconomic recory in this country. >> we need universahealth care but in a way that controls the
fial costs. the new bill the costt a trillion in a half or the next two years. oneis to make sure t government worksith companies direct and reducing the cost of medicines anthe system giv inntive to docts withtoo many tesand procedurebecause they're paidn that and control and change that system >> suzanne: so what is your focast for the recery right now. i' been hearing par growth. at does that mea >> fst of all, in m view the recessiois going to contie through the end the year it's not ov yet and t potential growthate for the u.s.economy is thr percent i expect the grth rate for theeconomy will be anemic on one trend and one percent for the next twoyears. you have u.s. consumers are opped out and spending ss and they're not gng to consume very much yore financial system is
severely damaged and credit growth is going be limit and you have the relieve rathing of the blicsector with a large budget deficit and increas in public debtill crowd out t economic recory of the private sector. i dot see a lot of economic growth ahead of us. >> suzne: are you worried about a double-dip ression? >> yeah, the risk is by the d of the next year if it remains large arnd one and a half trilli and ifhe feds keep prting money to increase interestates expect inflation is go to go up and if were to up mortgage rates will go u and barrowing coughs fo barrowi and affect recovery sohere's a recognion being of a double-diprecession. >> suzne: is there a percentage you'd be wiing to put it at? >> it will depen on the decisis made about exit
strategi from the massive monetary easing a fiscal easing. itill be difficult because if you reducehe fiscal stimulus too much toooon and raising tax and cut spending the econo will tip in the ression. if you wait toong and the deficit remains tooarge the market will worry abo sing ination and deficits and you' have recession again so the timing and the sequencing and when to do it will be a very diffict policy proposition. >> suzanne: if youe econoc projectionare correct and have to point out they're below consensuit would seem the ock market may have gotten way ead of itsel at the current leve. do you agree th hat? >> yes. the stk prices are justified because they're void of e ris of a near depressn that's the race bn riskn the first quarter and if the economy is going to be weaker and profits won't recover as fast andif you have
weaknesses in the rest of the world, eope, japan i tnk there will be down-sized risk from the sto market with this points on. >>uzanne: what are youlooking for your money overseas or u.s. eitiys to do the best. >> my mind is sll in cash becae i think there's rk on equitieson credit and coodities. i think e downsid is too many risky assets it's better to wait foa mow robust recovery. >> suzanne: what wld you expect t stronger signs to be. what do y look for? well, we have to look whether there ll be stablization o the b market and unfortunately i see unemployment rate wel above ten percen in yearnd close to eleven pcent at the peak next year and there's a massive weaknessecause of coumers being hit by the housing alth and falling labor inco and rising debt and
that's why i'm some how bearish about the recove i expect it to occur anytime soo and that will be a negati for the markets. >> suzanne: very ieresting though from you. thank u very much for joining us. >> please being with you. >> suzanne: my est this ening pressor nouriel oubini. >> paul: wall street went fr a strong open to mixed finish as vestors focused on the continuing flood of coorate earnings. the dow opened wh a 31 point advae while the nasdaq was up 11 points. but after a week of gains prit takersmoved in and by noon the blue chip dow wain negative terrory. the techs managed to hd on giving the nasdaits 11th straightession to the upside. but the dow slumped to a csing loss of 34.6at 8881.26.
>> suzanne: smalbusinesses are stl reeling from the credit crisis. the national small busess associatiosaid today nearly % of its members can't get t financing they neeto run their compies. that's up from a thi at the end of lt year. as we continue our "revivi the economy" coverage, stt gurvey shows us how onemall business is facing its owcredit challenges >> 60-year-o and family owned ames in hamburg new jersey ds things with ruer. it mes gas masks for the army, copying machine rolls for xerox. it coats the inses of engines fothe f-35 jet fighter. it's workingn a prosthetic dece.
inhe last 15 months the $25 million company s seen sales gr 20% and now employs nearly 200 people. if youe looking for green shoots, ames seems a likel candidate. the coany is adding to its payroll and itants to expand its products andncrease producti. the problem with theredit markets inheir current state, is getting the financing. while es has been doing business with the me local bank for 40 years, that bank is now pa of a much bigger banking giant. and ames c.e.o. charleroberts says thagiant likes doing business with bigger fms, rather thaa smaller one like his. >> certainly they're loong at their risk profile and what e they willing ttake on. anyou know, maybe as a small business, we don't f that profilnice and neatly and its being,ou know, looked as from is this now ansset based lendinrisk as opposed to a tradional lending opportunity. >> reporter: thearket for asset sed lending is virtually frozen. as it's biggest ayer, c.i.t. group, is struggling to st loat.
few banks are rushinto relieve the credit cruncfor hundreds of thousands osmall businesses one exception is new yorbased sterling bcorp. c.e.o. louis cappelli says h company sees opptunity. >> we would take cusmers on from anybody, any other institution, not necessaly from c.i.t.. and, our appetite for fferent business is very wide. we do manufacturers, distributors, importers, professional firms, and our scope is rather deep. >> repter: the small business administration reportsome thawing in the market for loans it backs. but issuers of cret cards, often ed by small businesses to carry short terexpenses, are raisg interest rates and cutting credit lines. am c.e.o. roberts says it is important the banks appreciate how smalbusinesses impact the economy. >> the lending institutions need to undersnd and help us to achievend continue this employment a growth stream that we're on, because at e
enof the day we're going to help accelerate the turnarnd of the curre economic doldrums that we're in. >> reporter: rerts says ames would like help in theorm of easier credit, but is t looking for a ndout. scott gurvey, "nightly biness report", hburg, new jersey. >> suzanne: when icomes to regulang "too big to fail" financial firms the ama administraon wants to share the load. the treasury today st congress a proposed bilcalling for a council ofegulators to address systemicisk in the financial industry. the fincial services oversight council wod include an alphabet soup of regulator cluding the heads of the
>> paul: tonight's "street itique" guest is seeing strength in the tech stor. he's david garrity princal at g.v.a. resrch david welcomback to n.b.r. >> thank y, paul. goodevening. >> paul: before weet into technolo. what's your opion on the mark and the economy in general? >>n the market we're ov weight uities we thk the centl banks are supportive an the equitie ll behe class at out performs. divided opiniohow strong the econy will be andthe market will continue tobenefit. paul: so you're a bull at the moment >> yes, sir. >>aul: we saw big technology names this ek. how do you feel the sectoris going ovell. >> we're seeing strong expen control anthough revenue ha't been as robusts analysts hope for aswe start to see growth unfold such as
ndows 7 fr microsoftwe think there's nice verage for investors to look rward to. >> paul: speing of microsoft it posts results tomorr. at are you expecting? >>e're looking for 36 cents versus 4cents a year agoand thbig storyis the interduction of windo second in the second half. >> paul: we're been hearing with the ogle-microsoft competitn. how do you feeit's moving out? >> t competition fro google in 2010 going to intensify with t operating systems google said they'll intruce in th mart. >> pau and tomorrow amaz reports results and tay it bought onle zappos for $850 million. what'sour take on tha deal. >> amazon has increed the number of products t their site d it will me an interestg addition especially if weee consumer incomes rise. >> paul: any oer particular names you like now and why in the tech sector? >> certainly, are we spect to
tech names, crisco we think is well positioned and we see them asattractivelyval you'd wit smart ones and resrch in motion opposed to ale or palm provides a bter risk tradeoff for inveors. ? cs the symbol onasdaq and go ahead, david. >> yes, and then last but not least we tnk yahoo as we start to see a display recoving in the second half of the year looks attractive andith regard to yahoohey may have a trans, with microsoft. >> pau do you own any of the stocks weentioned here? >> certainly. we own microsoft as well as crisco in personally and in our portfoli. >> paul: thankou for sharing ur insights, avid. thank you, paul. >>aul: my guest david jarrity of dva research. >> suzanne: tomorrow, rd c.e.o. alan muly joins us with update on the automaker's turnaround.
>> suzanneit appears bailed out insurer aig learned a leon from its bonuscandal. the firm whheld $2.5 million in bonuses to its senior managers last week. aig iseviewing bonus payments with washington's compensaon czar. inarch, aig sparked national outrage whent paid $165 milln in retention bonuses. after taking $200 billn in government a. >> paul: cysler is looking to clear its shrooms of 2009 models by doubling the government'scash for clunkers" incentive. the autoker will offer up to $4500 in cash or zerpercent fincing for six years to nsumers who trade in their g guzzlers for new vehicles. at's in addition to a federa voucher worth up to $450 towards a fuel-eicient car. "casfor clunkers" and the chrysler inceives start tomorr.
>> you probably haven't noced, but there's a mar new law on the bos that's designed to reform credit cards. well, of course yohaven't noticed. because hasn't taken effect yet. and that's t key reason why e credit card companies continueo play their hijinks. and consumers contue to suffer. most of this new law wont uch the industryntil next februa. but credit card coanies are lookg at the calendar and slipping into place nosome big penalts and a few things that wont be allowed if thewait until next yr. such things as: -lowering credit lims. -significantly ireasing the minim payments. -raising the cret score requiredo get a card. and, in a punishing trend,ome big issuers of fixedate cards have stched to variable rates. the rerm law will force credit cards to actually te their customers fore a rate goes up. t, if its a variable rate
card, they canust slip it in the, no notice required. net result: you'll nevernow today what re you'll be paying tomorrow. creditard companies seem to be doing their level st to show the bad behaviors that we need to regula out of existenc yes, reform iseeded. now. not next february. congress needs trewrite the rulefor them, again. i'm harriet joson brackey. >> paul: rapping today's maet action a split decision on wall street: the dow lost 34 points while the nasdaq loggeits eleventh seson to the upside ining 10 points. toearn more about the stories in tonight's broadst to watch our staming video and to take part in our daily blog go "nigly business report" on pbs.org. you can also email us at n.r. at pbs.org. >> suzanne: that's "nitly business rept" for wednesday, july 22. i'm suzanne prt goodnight, eveone. and good nig to you, paul.