Some Top Democrats Calling for Another Stimulus Package; Preventing Catastrophic Explosions in Jumbo Jets; U.S. Army Deserter Back Home Ready to Face the Consequences
ANNOUNCER: The "Opening Bell" brought to you by...</s>HARRIS: All right. Quickly now to the New York Stock Exchange. We're going to take a look at the numbers on the big board in just a second as we got the business day started. The DOW starting the day below 11,000 -- 10,962 after closing down 92 points. But that's yesterday's news. This could be another, another rocky day for U.S. stocks as you heard at the top of the newscast, inflation just surging right now. The biggest one-month spike since the early '80s. We're going to be following the markets. Stock futures indicating another down day for U.S. stocks. Hang on. It could be a bumpy ride. Stephanie Elam guiding us through the markets throughout the morning right here in the</s>CNN NEWSROOM. COLLINS: New measures of our misery this morning. Retail prices surged the highest one-month spike in 26 years. The consumer price index jumped 1.1 percent last month. And next hour, a view of the economy from one of its biggest policymakers. Federal Reserve Chairman Ben Bernanke opens his second day of testimony now on Capitol Hill. Yesterday, he conceded the economy faces, quote, "numerous difficulties." And the politics of money. Some top Democrats are calling for another stimulus package. President Bush says it's just too early to gauge the success of the last round of tax rebates. Your home's value is also eroding in all of this. Stocks are plunging and now new concerns over what has always seemed like a safe bet -- your bank savings. Terry Savage is a syndicated financial columnist for "The Chicago Sun-Times" joins us. Terry, we asked you to come back again today and maybe for several days to come. We hope you're not too busy with the other jobs, because there is so much to talk about here. Let's begin with the CPI. What do you make of the number?</s>TERRY SAVAGE, FINANCIAL COLUMNIST, "THE CHICAGO SUN-TIMES": Well, I think what it's telling you is that your biggest worry, even though we're going to talk about money in the bank or money in a brokerage firm, your biggest worry should be the fact that your money is disappearing bit by bit because of inflation. We now have 5 percent year over year inflation. At that rate, the value of your savings will be cut in half in 14 years. So the biggest thief to your money is not the failure of a bank or a brokerage firm, but inflation itself. That's the real worry.</s>COLLINS: Well, maybe we should just be talking about that today. I mean, when we hear those numbers, obviously they were higher than everybody thought they were going to be. And you mentioned the 5 percent inflation yearly number. That's the highest in 17 years.</s>SAVAGE: Exactly. And you have to go back to the early '70s. You know, when President Nixon long, long ago put on wage and price controls, a terrible idea. It caused a lot of problems. But what worried them back then, inflation was 4 percent. So, now we're getting up to these numbers which, if they continue, are really start to make an impact quickly on your money.</s>COLLINS: Yes. Well, we will of course be watching all of that. Unfortunately, some of the e-mails that we got came to us before this latest number so we'll be taking more of the e-mails on the CPI and people's reaction to that at a later time. But for now let's talk about the credit unions. This people are wanting to fine somewhere safe to put their money. And the first e- mail is that exact question -- are credit unions safe?</s>SAVAGE: Yes, absolutely. You should look for the logo on your credit union, National Credit Union Administration, NCUA, that's their insurance arm of the government. And so you don't have to worry. But I should point, and they have the same limits as the FDIC. And by the way, if you go to terrysavage.com, there is a direct link to the page on the FDCI Web site that explains those limits for joint accounts or individual accounts. One thing with credit unions, they are not all insured by NCUA, the federal organization. Some have bought private insurance. That's not where I'd keep my money but a credit union that has NCUA is just as safe as a bank.</s>COLLINS: OK, very good point. The next one, 401Ks, other brokerage accounts -- they safe?</s>SAVAGE: Well, brokerage accounts are insured by SIPC, Securities Investor Protector Corporation. Your money in those accounts is insured up to $500,000. And big difference now. You know, banks take your money and lend it out. They made some dumb loans. But securities firms must keep your securities segregated so you really don't need as much insurance. They don't insure you against loss because you made a bad decision about buying stocks. They insure you against fraud up to $500,000. So don't worry about that.</s>COLLINS: OK. All right. Yes, that's a big figure. What about this one -- if you have a mortgage with a troubled bank, are you protected?</s>SAVAGE: Well, your loan will still continue to be a valid loan. And no matter, whether your bank is troubled or sold or taken over, you must keep making those monthly payments.</s>COLLINS: They're still going to want your money.</s>SAVAGE: Yes. They want your money. Don't worry about that.</s>COLLINS: Yes. Unfortunately, it doesn't work in the reverse, does it? What about money market accounts? Are they safe?</s>SAVAGE: Very interesting. There are two kinds of money markets that we talk about. There are money market deposit accounts at banks and those give you liquidity and they are insured up to that $100,000 limit for single account, et cetera. Again, the FDIC rules apply.</s>COLLINS: Right.</s>SAVAGE: Money market mutual funds offered by the big mutual fund companies are actually securities. They're insured up to that $500,000 limit. A distinction. When you are buying a money market mutual fund, some of them buy short-term commercial papers, some of them stick to only U.S. Treasury securities. They're in a real crisis, there might be some fine distinction but no money market mutual fund has ever what they called broken the buck or lost any money. So, this is we're at the real far end of what I called chicken money, ultimate safety when you're in either money market deposit account or a money market mutual fund.</s>COLLINS: I like that, chicken money. That's my money, for sure.</s>SAVAGE: That's my term.</s>COLLINS: Yes. So if you do decide to withdraw your money, get it our of the bank, regardless if that's an emotional move or if there is true trouble with the bank, what is the process exactly? Yesterday, you mentioned, you know, you do not go to the bank and get a bag and put all your money in there and run out of the bank and go home.</s>SAVAGE: You know, this is very dangerous. First of all, you have two choices. If you really were to take it in cash, then where would you put it? You are exposed to a lot more risk walking home or taking the bus home or the train, whatever, with a bag full of money than you are by leaving it in an insured deposit account at the bank.</s>COLLINS: Sure.</s>SAVAGE: Your other choice is to wire it to another bank. But if you're under the insured limit, that's the same risk in either bank. And finally, I pointed out yesterday that you could go to the government's Web site whether you have $100 or $100,000 or $200,000 and buy IOUs direct from the government treasury bills. And that Web site is treasurydirect.gov. You'll find that at my site, too. And you can buy online Treasury securities that are the safest, most secure investments in the world. That's what the world thinks. The yields are low because they are perceived as the safest investment. You do not need to go stand in line to get your money out of the bank.</s>COLLINS: All right. Thank goodness.</s>SAVAGE: Makes for good TV, but not for good finance.</s>COLLINS: Yes. Now, we really don't want to see much of that actually. Terry Savage, syndicated financial columnist for "The Chicago Sun-Times." Thanks again, Terry. Appreciate you being here.</s>SAVAGE: Thanks, Heidi.</s>HARRIS: And next hour, federal officials are expected to announce new safety standards for airline fuel tanks. It comes almost 12 years after the explosion of TWA flight 800. Our Deborah Feyerick is in New York. And Deb, any advanced word on what's coming?</s>DEBORAH FEYERICK, CNN CORRESPONDENT: Well, Tony, this is really likely going to affect most large passenger jets. Airlines will be required to install a device that neutralizes oxygen in the center fuel tank. What that does is lower the risk that some kind of spark might ignite the fumes and trigger an explosion like TWA Flight 800. And this new rule would apply to some 3,000 jets used by U.S. airlines. The Department of Transportation, as you mentioned, and National Transportation Safety Board set to announce the new rules shortly. There has been a lot of back-and-forth with the airlines arguing it is too expensive to retro fit all the planes. The price tag four years ago was estimated at between $300 and $700 million. Clearly, it's not a good time for the airline. Now, that's going to be an additional cause. They might not be able to handle. This won't happen overnight. It could take roughly ten years, in fact, before every plane is actually outfitted with this device. Tony?</s>HARRIS: OK, Deborah, we'll wait for the announcement scheduled for 10:00 a.m. or so -- at least, in the 10:00 hour this morning. Deb, thank you.</s>COLLINS: Rob Marciano standing by now in the weather center to talk a little bit more about this tropical disturbance, if you will, in Florida -- is it, Rob?</s>HARRIS: He ran the candidate to avoid the Iraq war. Now, a U.S. Army deserter is back home ready to face the consequences.</s>BETTY NGUYEN, CNN ANCHOR: I'm Betty Nguyen. Coming up, how farmers along Myanmar's cyclone-ravaged delta are struggling to survive.