Archive for August, 2008
August 31, 2008 8:29PM
By Alexis Glick
11:30am
It’s Sunday morning, and I just arrived in New Orleans. It’s hard to properly describe what I am feeling. I have never been in a hurricane and I don’t have a clue what to do.
I bought a book in the airport before we left New York so that I could better understand the impact and ramifications of a hurricane. The book, Hurricane Force: In the Path of America’s Deadliest Storms, is by Joseph B. Treaster, a writer for The New York Times.
It was the only book they had on hurricanes at the airport. Treaster walks you through the worst storms in history, providing facts and information about different types of hurricanes and why some become Category 3 or higher. Throughout the book, he talks about his own personal experience living through more than a dozen hurricanes while growing up in South Florida, and then reporting on Katrina at the peak of the one of the worst hurricanes in history.
I’m sure this is one of those cases like when you’re pregnant and the OB-GYN tells you not to read “What to Expect When You’re Expecting.” The more knowledge I have of past hurricanes, the more anxious I get. I know the next couple of days will be difficult. I will do what I can to describe what I am seeing on the ground. I think it may make me feel better, because frankly I’m scared and need an outlet to talk to someone. It also will hopefully serve as a means of communications between friends and family.
Our outbound flight from LaGuardia was delayed due to refueling. The pilot got on the intercom to tell us that they shut down the fuel tanks at the New Orleans airport and we needed enough fuel to stay in the air in case we were diverted due to the winds. Not looking promising.
As we flew in, everyone on the right side of the plane was looking at the cars below on the highway. Route 10, the major highway leading in and out of New Orleans, was jammed in one direction: out of the city. The road going into New Orleans was empty. So is the airport. Almost every plane is a U.S. Air Force plane — C130s, apparently.
All you can see are people dressed in military uniforms with rifles and boxes full of supplies on the runways. Clearly, they’re preparing for the worst. We just exited the New Orleans International Airport, and the National Guard shut down entry into the airport. I met someone with a TSA uniform who said he was flown in from Pittsburgh a couple days ago to help. I asked if he was here during Katrina. He said no. He, like me, looked a little bewildered.
11:45am
We’re driving down Williams Boulevard. All entrances to the highways are shut down. The stores along the road are boarded up, everything is closed or vacant. Nothing is open. Even the gas stations are closed. It’s like a ghost town. I’ve never seen anything like it. Homes are empty, with a handful of cars parked outside homes along the way. We’re now trying to make our way toward a highway. There isn’t a person in sight other than seeing the occasional car as we drive down the road. Some people, I gather, will ride it out. If it were me, I would be out of here in a minute.
12:15pm
We’re in downtown New Orleans in the French Quarter, and everything is boarded up. Every hotel. Stores. There is no one around. Only police and National Guard. I have never seen anything like this. Pat O’Brien’s, an institution here…closed. Just green shutters. I wish I had my camera. My mistake. Journalists with cameras are the only people on the streets. I’ve never seen military trucks like this.
12:45pm
We arrived at our hotel. It’s fully boarded up. We came in through the garage below. It’s called the Royal Sonesta. Apparently, this is mission control for the press. Everyone is here or on their way to this hotel. Shepard Smith, Anderson Cooper, Geraldo Rivera, you name it. Journalists and photographers are hugging each other. Many of them have not seen each other since Katrina. I can’t imagine what that is like.
6:00pm
I just arrived back from a walking tour with our crew. We walked down Bourbon Street and Canal. No one is in the streets. It’s eerie. I talked to three men from the National Guard, all were born in New Orleans. Two of whom were in Iraq during Katrina and arrived home 10 days after it hit. One of them told me New Orleans has never been the same. The levees are not safe. The research I have read suggests the same sentiment. Only 70% of the pre-Katrina New Orleans residents are back in the city. The only difference this time around, from what residents and crew members tell me, is that people have left. I don’t know whether to feel happy about that or more fearful.
7:15pm
It just started pouring. I have the television on mute. I can hear the rain coming down next to me. Our rooms have an access door to a hallway on one side and a courtyard on one side. A couple hours ago, they rigged closed the shutters outside the glass doors to the courtyard.
I don’t think I’ll be able to sleep. Tonight the television — sound — will be my best friend.
August 22, 2008 5:59PM
By Alexis Glick
This morning on Money for Breakfast I interviewed Kirsten Kemp Becker, a real estate expert and host of a new show on TLC (The Learning Channel) called Hope For Your Home. It’s a show that focuses on homeowners who have hit a financial rough patch. At a time when 1.3 million properties have entered into foreclosure in the first six months of this year, it couldn’t come at a better time.
The premise of the show is to give participants $10,000 to fix up their homes over a 30-day period. The show tells homeowners exactly what to do to either appreciate the value of their homes so that they can refinance for a better rate and cheaper monthly mortgage or tells them how to prepare the home to sell. So far, Kirsten said they’ve had some great success. One home made an $80,000 profit off a $10,000 investment and, in another case, a homeowner’s monthly mortgage payment was reduced by 25%!
Hope For Your Home debuts this month on Saturday nights at 8:30 P.M. EST. I’m really looking forward to watching it. I’d like to see what I can do to improve the value of my home with minimal investment.
Take a look. She has excellent tips.
August 22, 2008 5:51PM
By Alexis Glick
Next week, U.S. regulators will begin doing on-site inspections of brokerage firms involved in the sale of auction-rate securities. So far, New York Attorney General Andrew Cuomo has settled some high profile settlements with the likes of Citigroup, UBS, JPMorgan Chase, Morgan Stanley and Wachovia. Last night, Cuomo reached a settlement with Merrill Lynch, Goldman Sachs and Deutsche Bank.
The settlements include paying civil penalties for wrongdoing and repurchasing auction-rate securities from retail and institutional clients. The issue, if you are not familiar with the story, is the purchase of auction-rate securities in money-market accounts without the clients proper knowledge of the risks. These auction-rate securities allow municipalities, student loan agencies and closed-end mutual funds to sell long-term debt with lower short-term rates for short-time durations. The problem ballooned when the $330 billion market for these securities collapsed and investors who didn’t understand the risks or investments couldn’t access what they thought was a safe and liquid money-market account. The question now is whether Wall Street and the banks that sold these securities misguided investors.
I don’t know what regulators will find when they begin these inspections next week, but one thing is for sure: There will be more regulation, fewer loopholes and much more stringent rules regarding the fine print attached to the sale of any security in the industry. The latter has to be a good thing for all of us. The question is whether you and I will learn from our mistakes and read the fine print.
This morning Anthony Carfang, a partner at Treasury Strategies, Jacob Zamansky, a securities lawyer with Zamansky & Associates and Chad Bray, a reporter for Dow Jones Newswires, joined me to discuss the importance of these settlements, what you should do if you are one of the people who invested in these products and how the industry will change as a result.
Take a look.
August 21, 2008 12:13PM
By Alexis Glick
This morning I interviewed two pretty well known brothers, the Trump brothers, Eric and Donald Trump Junior. It was my first time meeting Eric. I have known Donald Trump Junior and Ivanka after meeting Donald Trump Senior well over five years ago. They’re a terrific family.
I must admit, if my sons grow up with the work ethic that these two have, I would be thrilled. They are very down to earth. No sense of entitlement. In fact, they’re just the opposite. Having one of the most famous dad’s on the planet has probably made them even more conscious of the world’s perception of them. Clearly the Trump family is doing something very right because they’re doing very well and each kid is contributing to the real estate empire.
In fact, the Trump Organization just completed a highly publicized project here in the United States in Chicago. They built the second largest concrete-reinforced structure in the world. It’s a 1,350 foot building, the largest completed since the Sears Tower at 92 stories. It houses 486 luxury residential condominiums and according to Eric was sold at the right time, just before the credit crunch unraveled.
Donald Junior has been overseeing another huge project for the Trump Organization, the Trump International Hotel and Tower in Dubai. It’s a 62 story hotel and residential building that they are developing in conjunction with Nakheel, a world renowned developer for larger than life projects like Palm Islands. It is expected to open in the summer of 2009 and so far the per square foot cost on average is going for, get this, $3,000 dollars per square foot!!!! Is that unbelievable? To put it in context, New York City real estate, which is one of the most expensive in the country, is closer to on average $1,000 a square foot. Hard to believe in today’s climate but so far Donald Junior says it’s exceeding expectations.
August 21, 2008 11:54AM
By Alexis Glick
On today’s show, two of my favorite vice chairmen joined me. Bob Doll, vice chairman and global CIO for Equities at Blackrock and Bob Hormats, the international vice chairman for Goldman Sachs.
First up, Bob Doll, who had a lot to say about the increased fears surrounding Fannie Mae and Freddie Mac. Bob believes a solution in the short term is necessary but may also be somewhat unrealistic. He does give the Treasury Secretary and the Federal Reserve Bank a vote of confidence saying they are doing a good job. However, he does acknowledge the greatest risk to the financials and the economy is the ability for banks to raise funds. He looks for banks and brokers to combine in the next eighteen months to cut costs and in some cases prevent failure. Makes sense!
Bob Hormats, my international guru, still feels comfortable with China’s economy despite the perceived need for a fiscal stimulus package due to slowing growth and rising inflation. He is still bullish on investing in the BRIC Countries as a whole over the next 2-5 years. On credit, Bob notes the only way to fix the problem is to change habits. He rightly points out that Americans need to begin replenishing their savings rate. A difficult task in a difficult economy!
August 20, 2008 7:10PM
By Alexis Glick
I.O.U.S.A., a new documentary that exposes the alarming amount of debt in this country, hits theaters tomorrow. Some critics have suggested it’s the “An Inconvenient Truth” for the economy. It highlights the one fact that we cannot escape — that the federal government’s deficit has risen to a new high at $9.5 trillion dollars.
The film’s executive producer and co-writer Addison Wiggin’s decided to make this movie back in 2005 when everyone thought they could get rich by buying real estate. He and his co-writer looked at the balance sheets of banks and thought the mounting access to credit could create unprecedented problems. Talk about timing! The movie is 87 minutes long and includes frank conversations with Warren Buffett, Alan Greenspan, Paul O’Neil, Paul Volcker and David Walker, the former Head of the GAO (Government Accountability Office), who resigned from his post in March so that he could speak frankly about the mounting debt crisis.
According to Wiggin, we are actually in a $53 trillion dollar hole if we account for entitlement programs like Social Security, Medicare and Medicaid. He goes on to point out that “the debt has increased our risk of being held hostage by foreign leaders.” No surprise there.
In an election year, where the economy is the number one issue people are voting on at the polls, a movie about our financial future seems perfectly well timed. I have not seen I.O.U.S.A. yet but I do intend to go. The reviews have been surprisingly good. Maybe it is time we all looked ourselves in the eye and took some individual responsibility for our own personal debt.
Are you more highly levered today than you were five or ten years ago?
August 20, 2008 3:49PM
By Alexis Glick
Since 9/11 when we talk about security, for the most part, we focus our attention on our airplanes and airports but what about our ports? The port of Long Beach, Calif. the second busiest seaport in the Country is responsible for $100 billion in trade revenue and yet it’s top deputy, Commission President Jim Hankla, says he would give the Department of Homeland Security a “C-“or a “3 1/2 on a scale of 10,” for the lack of investment and increased security at his port. Make you nervous? Make you wonder? It should.
The second busiest seaport moved 7.3 million TEU (standard cargo containers) last year compared to 4 million containers in 1998 yet the infrastructure and funding has been abysmal. According to Hankla, he received $50 million in aid last year from the Department of Homeland Security. The department has a budget dedicated to Port Security funding in excess of $3 billion. What is wrong with that equation? Where is the money going? Should the two presidential candidates make a greater effort to secure our ports? How is it possible that the second largest seaport receives only $9.2 million from Homeland Security?
The statistics and honesty, with which Commission President Jim Hankla spoke about the progress or lack thereof, would surprise anyone. Take a look. Trust me! This is a subject that gets way too little press.
August 19, 2008 1:53PM
By Alexis Glick
The clock is ticking and the moment is almost here. Early reports this morning suggested Obama could announce his VP pick as early as tomorrow; now we hear Thursday or Friday. What about McCain? Word is he will announce his pick on August 29th in a rally in Ohio on his 72nd birthday. Not sure that’s the best decision, but maybe it suggests that he’ll pick a much younger VP candidate to offset the age gap.
What about the feeding frenzy on the internet surrounding their VP selections? It’s a wonder that they have been able to keep their discussions under lock and key, especially given word that the vice presidential staffs have been selected. One would think with the proliferation of Internet gossip that the cat would be out of the bag already… but kudos to both candidates and their campaigns for making us wait with baited breath.
So, given that we are waiting, and waiting, and waiting, we asked Jordan Lieberman, the publisher of Politics magazine and Larry Ward, the president and CEO of Political Media, to join us on Money for Breakfast this morning. They discussed the Internet phenomenon and whether the campaigns are capitalizing on our hunger for more by satiating us with things like texting, community involvement, viral and video marketing. How much is too much? Are they both doing it successfully? How does the perception and chatter on the Internet effect who they think the candidates will select as VP candidates?
August 18, 2008 3:21PM
By Alexis Glick
On this week’s edition of America’s Greatest Business Rivals, we threw a curve ball. We took a look at Electronic Arts versus Take-Two Interactive, despite Electronic Arts’ offer to buy Take-Two for $25.74 per share or $2 billion.
I know, I know… if you’re a gamer, you think the real rivalry exists between Activision Blizzard and Electronic Arts, but, if the deal doesn’t go through, will they become stronger competitors? The deal is set to expire at midnight this evening.
At this point, the deal is off the table according to Take-Two, although over the weekend Take-Two agreed to show some private presentations of non-public information to Electronic Arts. Almost everyone I talk to says Take-Two would like to do a deal, but feels they deserve a richer premium. See what Matt Vella of BusinessWeek and Michael Pachter of Wedbush Morgan Securities had to say about that and the future of gaming for both companies.
