tv Nightly Business Report PBS September 16, 2009 6:30pm-7:00pm EDT
captioning spoored by wpbt >> paul: senate nance chairman max bauc unveils his plan to fix the health care system the st: $856 billion. the white house calls it a building block, but publicans pan the meure saying it would put w burdens on families d small businesses. >> sie: a big positive for american consumers tonht: flation is under control as conser prices edged up only slightly last month. weook at why low inflation is key tohe recovery. >> paul: paul laon, equities stratest at morningstar joins us for tonight's "reet critique he says when it comes to stos there aren't as many bargain today as tre were a couple of mont ago, but he's still a buyer. >> we're gng to trace back the major reads that led to the
collapse of the erican financial systemthat brought us tthe precipice. >> susie: me the man inveigating the whys behind the financial crisis. we tk with phil angelides as we contie our special series "lessons from hman." >> paul: i'm paul kangas. >> sus: and i'm susie gharib. thiss "nightly business report" for wednesday, sepmber 16. "nightly business report is made possle by: this program wasade possible by contributions to your p station from viewers like yo thank you.
>> susie: od evening everyone. finally it's her the "gang of six" unveiled toy its long- awaited health care bill this $856 billion propos from three democrats and three republicans on theenate finance committee calls for insurance coverage forll americans. it does t include a public health insurance option. but spite the group effort and months of negotiations, the ll has no repubcan support. stephanie dhue rorts. >> rorter: senator baucus called his hlth care reform plan a good beginng. the proposal wouldequire most indivials to buy health insurancor pay a fine. insurers would not be ab to deny or cancel covage for sick people. >> it's common sense bill that can pass the sene. >> reporte the proposal has subsidies for lor income americans to pay for coverag while there is nmandate on employers to provi coverage, compies with more than 50 workers ned up to $400 per
emoyee if they don't provide insurance. baucus says it's just e of the compromises in his pla >> on the one ha we want employers... we want empyers to keep providing coverageor employs. on the other hand, it's...e got to make sure that insurae is not too onerous formployees and the ployer does not too sily drop coverage. >> reporter: to help payor the pl, there would be a 35% tax on firms offering high cos health insurance it wouldlso raise $93 billion fromealth-care related busisses, including $40 billion from the medicalevice instry. that iustry is fighting the tax. jeffrey binder, thc.e.o. of biomet, which spializes in orthopedic dices says the tax is a job kilr. >> we expect that this particular fee would wipout about % of all the profitabily in the medical devise industry and there'
absolute no way that that won't effect employment. >> reporter: goldman sachs policy analyst alec phillips says making chans to the plan is tcky, as lawmakers each have the own ideas. >> those different mbers of congressll want different ings and so far they haven't found the recipe for bill that works from a policy persctive and get 60 votes in the sete. >> rorter: the baucus plan doesn't include so-called public oion, instead it proposes non-prot co-ops to keep t insurance companies in check. some docrats say the co-ops don't goar enough, and the congressnal budget office today said thewill do very little to save money. stephanie dhue, "nhtly business rept," washington. >> paul: good ne for the nation's weak econy and consumer retail pces barely budged in august suggestg inflation remains in check. the consumer pri index ticked up jusfour-tenths of a percent st month. but when you take out e votile food and energy groups, core prices rose just one-teh of a percent. sct gurvey looks awhy
keeping inflatn tame is good for the economy d the fed. >> reporter: the fed sets monetary policy to meet thre als: maximize employment, stabilize prices, and modera long term intere rates. it is often impossible to all three at theame time, which is why wall street is relved to find that prices are stable d inflation not on the near rm horizon. economist dean maki barclays pital says that good news means it's "stdy as she goes" for the fed. >> right now the fed'sop priority is, is trying tlower the te of unemployment. trng to prevent deflationary pressures from developg. we thi they will be successful on both onts. entually, the fed will start to become more conceed about inflation. buright now the fed is really focused on fosteringrowth. >>eporter: if you're an investor, low interest res are good because they rece the cost of trading. if you're in thearket for a homelow interest rates mean lower mortge costs, and other stuff you buy on cdit. but for most of us, hethy
economic growth ans companies adding to payrollsnd that has yet to occur. still, en on that front, economist jonathanasile of credit suisse, ss there are sis the low inflation-- low interestate environment is having a positiveffect. >> we'veeen a stabilization in labor inme in the last two employnt reports. prior to tt, you had ten straight declinein this labor income measure which cbines private jobsnd hours and wages. sohere's more than just the jobs and wes to talk about. d the hours are a powerful rce and what we're seeing right now that we're seeing companies increaseheir hours t not yet increase the... th head count. >> reporte at its last meeting, the fed's open maet committee id it expects to hold interest rates at exceptionally low leve for an exnded period of time. is week's reports on inflati imply it will peat that message when it ets next week. scott gurvey, "nhtly business rert," new york. >> susie: new york's aorney
general bpoenaed five members of bank of america's boardf directors today, pt of a probe into the bank'purchase of merrill lynch. at issue: whether b. oa. lied to sreholders about bonuses paid to merrl execs, just before the two companieserged. the five dectors subpoenaed re reportedly on the audit commtee at the time of the merrill al. no comme from bank of america. on monday, a federal jud rejected the bank'$33 million settlement with the s.e.c.ver the matter and ordered a tal. >> paul: it was , up and away from the srt on wall street today as investors welcomed e tame news on ilation. a stnger than expected 8/10 perct rise in august industrial production ga stocks additionastrength. so by on, the dow posted a 77 point gain. thsurge fed upon itself thanks short covering and buyers fearful of missing me gains. and with that, scks ended at their best levels the year. the dow jones gained 1.30 at
9791.71. the nasdaq jumped 30.51 2133.15. ths&p 500 gained 16.13 to 1068.76. in t bond market, the 10 year note fell 8/32 to 1-8/32 putting the eld at 3.47%. >> susie: it is not anniversary to celrate. one year a today, the government steppedn to bail out a.i.g. the insurance git was on the vergof collapse after lehman brhers went bankrupt. coress appointed a financial crisis inquiry commission to find out what haened. as we contue our special series, "lesso from lehman,"
darren gersh ske with phil angelide the man leading that commission. daen began by asking where angelides pls to start examininthe implosion that brought down wall stet. the to start the iniry. have you got a leading cause you're gng to start lking at? >> well, we're goingto look at somebvious starters. we're gog to lk at, for example, t rules of the credit rating agencies. in this process. we're going look at what happen in the mortgage mark. from the creation of these exotic packages to the fraud thatappened at the ground
level. we're ing to look at what regulators didr did not do as ourfinancial system transformed and its risks grew exponeially. but the onthing i want to say is i ink we have a very important role he because everyone hasheir they about what happen. everyone has their ideolocal approach to what's the bes way fi this system. t what the arican financial system isike is a patient who has had a near death experience, a massive heart atck. and whate arebout is undertaking t diagnosis, the full medical exa that hopefullwill give the public policy makers and peoe in earketplace a good historical accounting based on facts of what led to the meltdown. >>eporter: through are you too la in that? cause a lot of people already are their diaosis. they s look it'svery clear, fannie ma, freddie mac, the government created this probm, government rulation made it worse. on the other side peoplesay
it the market, theseuys were out of control, they clearly needore regulation. sounds like people already ow why the patient almost die. >> wl, the proponent have given ideology areutting their they'reious out there. but here what i think the country need. afr this period of excess, th magnitude of what's happened he has, will require that we do a serious self examination. there's a t of peoe who want to use this for tir ideological purposes, there's a lot of peoe who wa to blow by what hapned and g back twhat they wereoing. it will serve the country well if we have a trough unbiased historical accountin so i don't thinke're too late at all. >> reporter: y're charged by congre with looking atefk firms that failed. how deeply will you look at the decisions that mr. beanke made, the fear chairmanand mr. geithner made who is now the treasury secretary, look their decions, because people i've talked to say we're not car exactly what happened wi ar sarns and what the options were discussedr were
on the table. how deep will you look at their decision makin >>e will do a deepive here we are not going to conduct star chamber proceeng, this isn'going to be a circumstce us,. the goal is to do the deep di, the fa finding, and including at the tail end of this implosion, wn the financial systems onts knees, what were the actions taken in tha crews bel of crisis crucible ofrisis. people are ask are we going to embarrass people, that's not our rpose. but factsre when theyre, factturn out to be embarrassingif there was stupid behavior or criminal behaviorthat will come out in the course of is. but this self examination, this accountability that's this respoibility is a fundamental step to reforing the trust the american people and our fincial systems. >>eporter: missing in this seems to be a discussi of thendividualsnvolved. when i tk to people on wall street, some of them say, look
it was venalit, people in positions ofresponsibility o were acting against the inrest of sharolders and were acting to line their ow pockets. are u going to cal indiduals up, are you going to look at tirompensation structures, are you going t me names in th sense? >> as i sai, i don think we wod serve our mission well ifll we did was name names. >> will it be part of it? >> it s to be pt of it. is isn't a the ret cal exercise. aig, where wve now put as taxpayers more than aundred billion into tt instituon, we gotta look at what that institutn did, and what individus within that individualwithin that institutiodid. so this isn'oing to be a story of tory. it will be a story of hard fact, chronology history. me of it i think ll be very grippin >> reporr: phil angelides, thanyou for your time. >> thank you.
>> sus: bud is back on the big board. the icic american beer made itreturn here at the new york stock exchange, just0 months aftebeing bought by belgium's inbev in a $ billion deal. ameran depository receipts of ab inbev began trang today under the ticker symbol ud." the world's largesbrewer by revenu stressed today's move is a seconry listing. and paul, while recently anunced plans for an office in new yorkity, the company says s headquarters will remain i belgium. paul: susie, bud shares ros 70 cents to $46.. let's see what else was ewing on wall street as we taka look at our stocks in the news
>> thanks for hang me again. >> pl: if the markets are looking for a v recoverywhat happens if that letr changes? >> well, if the letterhanges to something like w, and we get an econo th doesn't recover immediately d sort of recovers in fits and start, thinkhat stocks ok like they're mildly overvalued today. does indeed lkike the rket is expecting t v-shaped recover given the priceshat are out there at thmoment. >> paul: well, t market ha come long way in short time. what do you think of the current fundamenls? well, right nowe are indeed recovering, but wheth or note are going to get a v or not, i think is really the 64,000 dollar question rig now. things look pret good right now, but are they going to be sustned? i'm not so sure. paul: you like wha moingtar causes we moat
stocks. grif us some recommeations of we moat stocks. >> sure. one company th a wide economic moat tha i like i ollo group. thiss a company that at the university of phoenix, a for-profit education compa, exptionallhigh returns on invested cital, a lot free cash flow, and right now it's a coany that is benefiting from the recsion, with hh unempyment and under emplment there are a lot of adults who are auted in going bk to school and upgring their skills. this is company that's actual growing while the rest of theconomy is contracting. >> paul: we just have a minute how about anher choice? >> sure. another pun, paychex, a payroll prossing company, a company very entrenched with companies around the cntry. al as employment rebounce and interest rates rebound, think thin cpany is going to get aretty strong tail
win in terms of earnings. >> paul: okay. cayxs the symbol. and one re, quickly. >> sure, jnson and johnson i think righnow that the maet is painting t entire health care secto with a very broad brush. but i think that volumes are going to g up if we get more people herednd this o i a top flight compa that's trading onhe cheap in our j and j on the big board. paul, you own any of the stocks menoned or have other disclosure to make >>bsolutely, the cook i eating the coong here, i own all three of the stock i mentione >> paul: okay, vy good. i wa to thank you for sharing ur views with us on again. >> thank you. >> paul: my guest,aul larson of morningar. >> susietomorrow, depression versus recession. nyanville's kevin depew look at both sides ofhat's happening withhe economy. >> susie: k.b. home is seeina turnaround in e housing sector. today, the compa announced plans to resume nstruction in the burbs of washington d.c., after a two-year hiatus.
and, the fm will re-start sales in five communities. the nation's fifth largest he buildeplans to build smaller, more aordable units to compete wi lower-priced foreclosures. >> paul: first time me buyers have been cashinin on those lopriced foreclosures and a hefty tax credit now the presidens economic team is studying wheer to extendhat credit. it's worth up to $000 dollars onhe purchase of a first home, and set to expire november 30. the measure wapart of the presidens massive stimulus program.
>> susie: here's a look at what's happeni tomorrow. wely jobless claims and august housing starts areeleased. in the money file night, the safety of safe haven investments. here's jason zig, personal fince columnist at "the wall street journal." >>ould the pursuit of safety put vestors in danger? in august alone, taxable and municipal nd funds took in $45 billion in new iestments, the greate inflow in at least a mo of the investors pouring money into bond funds are probably in t pursuit of
safety. bonds are traditionally e safe han for investors who cannot withstd the rough ride on the stormy seas of the sto market. but manyf those who are barrelg into bond funds today manot fully understand what could go wrong tomorrow. u.s. treasury bonds are considered theorlds safest investme because almost no one thin the american government would everefault on its debt. but thatery low risk does not mean there is no risk in govement bonds. after this latest nd-buying bing there's very little room left for eor. the ten-year u.s. treary bond yields only about 3.4%n interest income. that's no gher than the long- term pace of inflation ithe u.s. and well below e average historicalnterest rate. when rates rise-- and trust , at some point they sury will-- the marketalue of existing bonds will fal many bond fundcould easily lose 10% or more if you want income wh safety, consider a short-terbond index
fu, which should provide yiel higher than cash at lower risk than longer-term nds. just don't fool urself into thinking that uncle sam arantees immunity for investors. i'm son zweig. >>usie: that "nightly busine report" for wednesday, september 16. i'm susie gharib. goodnight everne, and good nighto you, paul. >> paul: goodnight, susie. i'm paul kangas wiing all of you thbest of good buys. "nightly business port" is madeossible by: