Marketplace: News Archives

Monday, September 10, 2001
(Jump to the rundown)

It's Monday, September 10, 2001. I'm David Brancaccio

Friday's sharp spike upward in unemployment is a stark statistic that was grimly illustrated today by more layoffs. The telecom Qwest Communications cut 4000 jobs, six percent of its workforce and said economic conditions have gotten worse over the last month. Phrases like "worse than people expected" and words like "anemic" were sprinkled through the company's outlook. And the North American division of the French tiremaker Michelin says it's cutting 2000 jobs or seven percent of its workforce. Michelin has plants in Alabama, Oklahoma, South Carolina, and Nova Scotia. White one member of the Federal Reserve board was downplaying chances for another growth-promoting cut in interest rates prior to the central banks next formal interest rate meeting in October, politicians are looking for some kind of government stimulus to keep bad from becoming worse. A new tax break is one idea, as Marketplace's John Dimsdale reports.

Dimsdale: "The government is holding an unusual advantage in the current economic downturn. The surplus allows policy makers the option of priming the economic pump without going into the red ... at least for a while.

Republicans were first up with a tax solution for the economy's ills. They advocate a temporary cut in the capital gains tax ... the tax on assets held a long time ... especially stocks and bonds. Theoretically, a tax cut would encourage investors to cash in their stocks, spend some of the windfall and give the economy a jolt.

But some economists see a problem."

Siegel: "I think a lot of investors are asking ‘what capital gains?'"

Dimsdale: "Wharton School professor Jeremy Siegel says with stock markets hitting new lows, capital GAINS will be hard to come by."

Siegel: "The Republicans might do better by trying to pass a new law that will let people take capital LOSSES off of their taxes."

Dimsdale: "Democrats have recently floated their own type of stimulative tax cut. How about a rebate for the 34 million, mostly low-income Americans who did not get an advance on this year's income taxes?

That idea is being pushed by the chairman of the Senate Budget committee, North Dakota Democrat Kent Conrad."

Conrad: "Not only does it make sense in terms of fairness, but it makes sense in terms of economics. Those people would tend to be lower income people and would have a greater likelihood of spending the money which is, of course, what gives lift to the economy."

Dimsdale: "But the drain on government revenue would be bigger with a rebate than with a capital gains tax break ... in the short term at least. Senator Conrad says he would remedy that by reducing some of the Bush tax cuts that kick in later in the decade. That idea isn't gathering any Republican support. With little Congressional consensus, a fiscal jolt to the economy this fall seems unlikely.

In Washington, I'm John Dimsdale for Marketplace."

Moon: "One of the problems with the stock market right now is...we’re all sitting on our..."

Wachtel: "The entire world is sitting on their assets, and not willing to venture forth right here."

Moon: "It’s your ASSETS Prudential Securities market strategist Larry Wachtel says you’re covering right now...putting your money just about anywhere but the stock market at the moment:"

Wachtel: "Money market cash has been building up, bank deposits have been building up."

Moon: "Fahnestock VP and market strategist Alan Ackerman is also concerned that Wall Street can’t seem to shake this chronic case of the jitters:"

Ackerman: "People tend to sit on their cash, and not put it to work in a market of uncertainty."

Moon: "Ackerman - a 40-year Wall Street veteran - says even a weekend away from it all didn’t get the market beyond last week’s discouraging unemployment numbers:"

Ackerman: "The mood of the market is essentially nasty and negative. We came out of a very unsatisfactory August for investors and we’re in a September that’s beginning to show signs of the same kind of wear and tear."

Moon: "Just today, CNBC reported on the latest round of earnings news from 666 companies - and the devil is in those numbers, with 407 negative so far. Prudential’s Wachtel says this month has a bad reputation, anyway:"

Wachtel: "September is the worst month of the market year, so seasonally you’ve got that going against you. So, I would not be too venturesome in this market. I would, you know, if stocks come into my buying range, that’s one thing, I see no brave new world developing in the month of September."

Moon: "So what’s the way out of these doldrums? Fahnestock’s Ackerman says it’s through our wallets. He expects the Fed to lower interest rates again soon, and says tax cuts would help get more money out there to stimulate the economy. And as today’s numbers show, Wall Street is anything but stimulated.

In New York, I’m Bob Moon for Marketplace."

AOL/Time Warner would like to serve one third of the cable TV subscribers in the U.S. According to published reports today, the media giant is exploring the idea of buying AT&T Broadband, a move that would almost certainly invite the scrutiny of antitrust regulators.

From the Marketplace technology desk, Laura Sydell reports…

Sydell: "AOL has nearly 30-million subscribers and a merger with AT&T broadband combined with its own Time Warner cable franchise would give the company a leg up in the rush to combine cable television and Internet access. A merger would also give AOL Time Warner ownership of the cable lines to millions of American living rooms. And that’s why such a merger is likely to get tough scrutiny from federal regulators says anti-trust attorney Steve Nuborn."

Nuborn: "People might believe other new channels that are coming on that want to compete with CNN or something like that will have a much lesser chance of success if Time Warner the parent, which owns their own CNN will have the ability to keep a competitor off the airwaves."

Sydell: "But AT&T Broadband is likely to have many suitors. Comcast, the number three cable operator has already made an offer. And there’s speculation that smaller cable companies like Cox Communications or Cablevision Systems, could seek out a larger firm with big pockets to join in a purchase. In fact Lanny Baker an analyst at Solomon Smith Barney, thinks to avoid anti-trust regulations AOL Time Warner might be likely to try and make such a deal."

Baker: "Some kind of carriage agreement or economic sharing that would put for that cable operator, AOL out there into the hands of the cable subscribers in a way that benefited the cable operator, but also benefited AOL."

Sydell: "The one prediction analysts make with some certainty is that the chance to buy AT&T Broadband is likely to lead to a bidding war.

From the technology desk, I’m Laura Sydell for Marketplace."

Rundown

Despite a law school enrollment increase, minorities are still underrepresented at law firms, both as associates and partners. Trang Ho reports.

Welfare Paralegals

While the actual attorneys are mostly white, an innovative program in Chicago is moving former welfare recipients into the world of legal work.

Paint by Numbers

The original "art for dummies" turns 50 this year and the Smithsonian is celebrating with an exhibit. Arts desk correspondent Beatrice Black has the colorful business history of paint by number. Visit http://www.marketplace.org/features/arts/ for audio.

Spoiled Kids

Spoiled is as much attitude as it is behavior. Commentator Jayne Pearl talks about the slippery slope of raising spoiled children.

Look-Ahead

Coming up on September 11: Coming up on Marketplace, it's easy to get behind saving the cute, cuddly Panda Bear, but how about an ugly, yet endangered Sturgeon fish? A look at the PR push for the planet.