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tv   Real Money With Ali Velshi  Al Jazeera  January 11, 2014 7:00pm-7:31pm EST

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headlines after this.
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forcing general motors to recall 370,000 vehicles in north america. it's 2014 silverado and gm gmc sierra models have a software problem that can cause engines to overheat. eight fires have been reported so far during extremely cold weather. the company is warning customers not to leave idling trucks unattended. stay with us because "real money" with ali vel shi is next. always find us online. go to aljazeera.com.
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> . facebook can translate into real sales for a small business. i am ali velshi. this is re"real money." this is real money, you are the most important part of the show. so join our live conversation for the next half hour on twitter using@ajreecemoney or facebook/ajreal money. call it a december surprise. in january the u.s. created 74,000 net new jobs in the last month of 2013. >> is the lowest monthly number
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in three years. a steep decline from the 341,000 jobs added in november. way below the 182,000 average monthly gain in 2013 blame brutal weather for part of the drop. >> put a chill on construction which lost 16,000 jobs. the cold snap doesn't explain the healthcare sector losing 6,000 positions. >> that's the industry's first monthly decline in 10 years. now, many of you may have heard that the unemployment rate fell from 7% to 6.7 percent in december, the lowest level in more than five years but do not make the mistake of thinking that that is good news. it is not. fewer than a third of the people who were employed in november got jobs last month. >> means most of the decline in the unemployment rate is because 347,000 people dropped out of the labor force last month. >> number is far more meaningful than the unemployment rate. it explains the labor force
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participation rate, and it fell in december. the labor force participation rate is the proportion, the percentage of the working age population that is either working or looking for work. it fell last month to 62.8%. >> is near a 36 year low. one reason for that is that beeb boomers continue to retire. there has been a downward trend that doesn't have everything to do with the economy but a lot of it is that people are growing discouraged with an economy that is still not creating enough jobs. they give up and drop out. i asked u.s. labor secretary thomas perez how we can get those people back in the work force and looking for jobs. >> labor force participation has been going down over the period of decades, and part of the reason we see a reduction in long-term -- in labor force participation is because the population is aging. so there are those demographic trends. >> part of the reason is because we need to create more jobs, and you are correct that the
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reduction in the unemployment rate last month, you know, two-thirds of it was a function of reduced labor force participation, and that's why the extension of emergency unemployment compensation is so important because one of the requirements of the receipt of those benefits is that you have to keep looking for a job and the studies have pretty consistently shown that when you are removed from those benefits and you don't have that requirement, then you tend to become discouraged faster and you stop looking. so that's why these benefits are so critical. but really, the long -- the lock-term solution to the very good question you asked about labor force participation is we need to grow the economy. the biggest force that drives employment is growth, gdp is growth. we have got to grow the economy. it's consumption. we have to put money in people's pockets so that they buy more things and we do that by raising the minimum wage.
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we do that by investing in our infrastructure. the senate debate over extending long-term unemployment insurance benefits hit a snag late in the week. democrats were close to a deal with republicans on an 11-month extension which would cost about $18,000,000,000 but started bickering over how to pay for it. >> bill would help the roughly 1.4 million americans who have been out of work for 27 weeks or more. that's six months. i recently spoke with economist kevin hassett, director of comicpom studies at the conservative think tank american intrp prize institute. he believes when people are out of work too long, it hurts their ability to get back into the workforce. >> that's whee started our discussion. >> let's be clear that these are folks who really desperately need the help of all of us, you know, in government, too, that folks who are unrequested for more than a year have a really, really hard time getting job interviews. they get kind of a stain on their resume that really sticks out because you've got an empty
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spot, and so there are a lot of people that have been en concerned to become long-term unemployed by really, really long benefits who are now having a hard time getting a job, and they desperately need our help. so that's absolutely, you know >> the first thing that we have to relate to. we need to not leave these people completely to their own devices because they are going to have a really hard time connecting. but we need to do more than just throw money at them. this long-term unemployment problem is such a serious problem, we need to be creative about exactly what we do to help them, including like maybe thinking about subsidies for employers who higher the long-term unemployed or direct hiring problems into government jobs. but just throwing money at longer unemployment benefits, i think that's a bad idea. >> this is why i love having you talk about it. you bring these nuances, shades into it. the problem is the conversation going on washington, at congress is not all that shaded. these fem are going to get benefits or getting switched off. >> right. for that, what i would say is
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that the problem with the design that we have had, and it goes back to president bush really is if you extend the benefits, there is a bit of literature that shows that people tend to get a job right away after they lose their job or after their ui benefits expire. so what you to is you kind of create a long-term problem by encouraging people to intaibling stay unemployed for a while while they collect benefits. what you need to do is think about a design that doesn't encourage them to become long-term unemployed. now, with the expiration, all of the folks that the 1.3 million that you mentioned that might see their benefits disappear immediately if this doesn't extended, i would prefer to give them a lump sum of cash. whatever the average receipt that they are going to get over the next two or three months might be if they stay on ui would just give them a check for that right away and let them go look for a job. the problem is that they only get the check if they basically look for a job and don't get one. they don't find one. they don't really find one. >> i want to put up a chart that the economic policy institute
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provided but anybody could get this. this is just the jobs listed versus the population. and if you look at that the downward trend since that emergency aid was put into place in 2008, i don't know what that says to you. i am not an economist. does that say that those jobless benefits were helping because that's the number -- that chart shows the number of people for every available job. at the moment, it's about three people for available jobs. so no matter what the nuances are, isn't it the case there are too many people and too few jobs? >> for sure. the unemployment rate is high. bur there are a lot of vacancies out there. it's the matching that's messed up. i have labor economist friends. the problem is the long-term unemployed right now. the people who lost their job two months ago are in pretty good shape getting rehired right now. it's the folks who have been out of work for more than a year that are still really having a hard time finding a job. >> another senate vote is
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tentatively set next week. >> despite deep discounts and heavy promotions, foot traffic between thanksgiving and christmas was down 14.6% compared to last year, according to shopper track. mean while, overall retail sales did rise 2.7%, the smallest increase since 2009. shopper track data does not include unlined -- online sales. a larger snapshot will come on tuesday when the national retail federation announces it's sales figures. it's forecasting 3.9% but that does include olive sales. >> next, j.p. morgan is paying big bucks to put the bernie madoff scandal behind them. whether or not justice was served. why america's prosperity depends upon big banks staying big. the proof okaytive views of a man who has been studying u.s. banks for 40 years. those stores and more as "real money" continues. keep it right here.
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>> every sunday night, join us for exclusive... revealing... and surprising talks... with the most interesting people of our time... >> as an artist you have the right to fail... that's a big right to have >> his work is known across the globe. but little is known about the gorilla artist behind the glasses... we turned the camera on the photographer shaking up the art world. >> 2... 1... that's scary jr... >> talk to al jazeera with jr only on al jazeera america >> john henry smith has more. >> the ruling by arbitrator
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frederick harrow wits is in a fight that rodriguez began waging when his 211-game suspension began. a-rod showed up at the park any way. >> i'm going to respect the process. apparently rodriguez met the appeals process. he quickly challenged the ruling, taking aim at major league baseball and commissioner bud selig in the process. all this in the wake of rod gues a big price for failing to sound the alarm about bernie madoff's ponzi scheme. $2.6 billion to settle various criminal and civil cases involving the madoff fraud that bilked investors of billions of dollars. some of the victims will receive part of the 1.7 billion that
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j.p. morgan is paying to the department of justice for failing to file a suspicious activity record about madoff's trades. here is what u.s. attorney prique barara said about the bank. >> j.p. morgan as an institution failed and failed miserablmiser because of that failure, in part, for decades, bernie mad off was able to launder billions of dollars of ponzi proceeds essentially through a single set of accounts at j.p. morgan. >> as part of the settlement, j.p. morgan is admitting it violated laws requiring it to monitor customer activity for money laundering. a j.p. morgan recommend presentative said they realize they could have done a better job and is improving practices. victims lost $17,000,000,000. a court appointed trustee has recovered about half of it. victims included judd issue welling. they have recovered a little more than a million of what they
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lost. i spoke with judd iss think and asked what you can do to avoid a situation like hers. >> nothing. as far as i am concerned, we haven't changed the laws. we are chasing, thanks to the trustee, some of the law people, what's happening. but i think it's happening every day. we read about another part of the scheme. this one went on untenabley long. >> that's what made it different. he was protected. >> how did you decide to invest with bernie madoff? >> we had an unusual situation. my mother had invested many years ago through friends. and she, my dad had passed away, and we howere really helping he she was quite senior although totally with-it and a good investor. she had checked him out. she decided to stay, so we were looking at helping her. we put money into her account to give her more to live on. we felt -- we felt it was a
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safer investment than just trading stocks which she had been doing, successfully, i am afraid. >> you have heard people say of the victims, they should have done more to check it out. i don't know how much more because mother really was very good. my dad had even been a partner, limited partner in a brokerage fa firm. she was very good at that. she had checked it and files going back, talking about how he had run the nasdaq and he was an expert with the sec. i don't know what more you could do as an ordinary citizens, not a wealthy one who had all kinds of advisors. >> as you have followed this all over the years, is it clear there is one law that should have been in place that would have prevented this, or do you think bernie madoff would have worked around any laws that were there? >> we did have a whistleblower recently. we would never have invested what we did personally after she passed away. we just added to it, had we known that he had raised those issues with the sec.
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we have refused to follow leads given unless you do all of the laws in the world aren't going to help you. >> do you think we have gotten better at that? >> no. >> you think people are at risk? today, there could be somebody like bernie madoff? >> look at the standford situation. they thought they were buying cds. didn't they? >> yes. >> i have friends in the west coast of florida who did not invest with madoff but they have told me that there have been any number of ponzi schemes exposed down there. good to see you. i am glad you have been able to move o the madoff settlement is the latest legal set back for jamie diamond. in 2013, the bank agreed to pay nearly $20,000,000,000 to settle a variety of cases, many involving sale of toxic mortgage securities. long-time banking analyst dig
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boveir says as much as diamond wants to put these behind him, he faces years of court battles. he published "guardians of prosperity" why america needs big banks. it lays out his belief over regulation of banks is hurting american consumers and businesses. aren't the banks the ones who dragged so us into this? here is my first question. here is what he said? >> i don't think so. i think they were a big part in creating bad things, wrong things that odors during the financial prices. they didn't create the financial crisis if we had gone to the corps reasons for creation of the financial crisis we might have come up with a solution to real solutions we chose to focus on the banks and pated a lot of lauds and regulations which have harmed the american consumer.
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>> wid an enormous trade deficit in the united states which resulted in a billion and a quarter to a billion and a half dollars per day for decades being sent we built up those in those countries. when that money came back to the united states in the form of locations and investments, there just weren't enough good ones around. everybody grabbed for the money. the banks were one of the groups that grabbed for that money. basically, the core problem is we've got to deal with our trade deficit. we have to produce products that we sell overseas and that's not even being thought about. >> dick, the best argument in favor of banks is that there are people in this country anywhere in the world with an excess of capitol more money than they need and people who need that money to start businesses, buy cars, get loans, get a house, and the banks work to move money to places where they can best be used and make money in the process. >> correct.
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>> to say if banks are in the business of moving money from those who have money to tho those who need more. >> it's not a business that works well. it may shock you to know that we lose one bank of that nature, every 21 hours that's been through since 1986, 11,200 of these banks that just collect deposits and make loans. >> another example. i come from north of the border where it's cold right now in canada where there are a handful of banks and have been for its entire history. when i grew up, there were five in canada, same number of people own houses, same level of prosperity, same gdp growth. they exist with fewer than 20 banks. the top five banks in canada
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have tremendous concentration. they are an example of what works when you have big banks because the canadian banking system is driven totally by the 5 big banks, now maybe six banks that operate within that system. in fact, the banks are so big in canada that if you asked anyone, you know, of the 9 biggest banks in the north american continent how many are canadian banks action they would be shocked 5 of the 9 are canadian banks. they are an example of how big banks work. >> you just heard judith say she approves of the madoff settlement with j.p. morgan chase. you bring up the point that awful these settlement whether it's about the london whale or madoff are shareholders paying. it's not bank executives. >> in a company like facebook or twitter or microsoft, you have venture capitalists who own 40, 50% of the company. in the big banks in the united
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states, less than one-half of 1% of the shares are owned by insiders. 991/2 %. stock in these companies are directly or indirectly owned by you and me. the net effect of that is that the person who is being fined is you or me. what did we do wrong? nothing. who is not being find kerry kelling jer wasn't fined the guy at countrywide, angelo maz illa isn't fined. why are they penalizing you and i for something we didn't do and not penalizing the people who did the things that were incorrect. >> who says money can't buy you friends? companies are making big bucks off selling them to you. >> story and more as "real money" continues. keep it right here. i'm phil tores. coming up this week on techknow. techknow's shini somara goes straight into the storm.
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winds of 150 miles per hour. but this twister is created in the lab. >> i'm at the national wind institute where they can actually recreate a tornado. >> now science and technology take on mother nature. >> who wins? >> it's completely fine. >> techknow. sunday 7:30 eastern on al jazeera america. activists show the
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>> personal computers are so 20th century. if you need proof, taisales of desktop and laptop computers fell 10% in 20s 13 according to gartner data, the steepest annual decline ever. they cited the shift to mobile as the main reason. but the fourth quarter, pc sales alone dropped 7%. lenovo was top seller worldwide followed by hewlett-packard. the other day, this guy tweeted me. he told me if i paid him a thousand bucks he could get me 100 followers on twitter. i ignored it, choosing to acquire my social media friends the old-fashioned way. for many companies, building a good reputation increasingly involves having a lot of followers on twitter and friends on facebook.
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>> that's given rise to businesses that sell thousands of fake friends for just a few bucks. as stacy tisdale reports while this raises ethical issues, it's another reason of how perception is sometimes reality. >> in 2011, headi condel launched my tab, a travel gifting website that invites friends and families to make contributions to a wannabe travelers dream vacation. like many middle class entrepreneurs, starting a business was a financial challenge to say the least. >> you have to bootstrap and you spend money you ration, you r ramen noodle. this is how you live. >> with little money for marketing and few resources to attract new customers, she turned to a company called biver. she bought it tfiver sells bots, with the click of a mouse, you can buy everything from facebook friends to twitter followers to youtube views. according to a study by research
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ferm bear a cued a labs, a thousand cost $18 on average. analysts say the practice is gaining in popularity because a large social media following helps people and businesses create tillusion that their opinions and information are valuable and create the perception you can help get the word out about products and services. >> perception is reality and those fake followers might help you attract real followers and real customers. >> by some estimates, the market for fake social media followers has skyrocketed into a more than $300 million industry which is expected to grow to a billion dollar business within the next few years. social media companies are not taking this lightly and many have developed algorhythims. >> facebook and twitter are public companies if their user numbers aren't really what we think, well, then, that affects the value of those companies. the latest filing, facebook
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estimated as many as 12 million of its more than 1 billion users were undesirable accounts. a spokesperson for facebook told al jazeera, quote, we built a combination of automated and manual systems to block accounts used fraudulent purposes. we also take action against sellers of fake clicks and help shut them down. >> as long as the number of followers is a currency people are interested in having more of, there is no stopping it. these companies can, you know, figure outweighs to subvert algorithims. >> there is nothing illegal about creating, buying or selling a fake following. it does raise serious ethical questions. high-profile names like mitt romney and lady gaga have distanced themselves from allegations of follower fraud. proponents argue this practice is the new fronterian in marketing begin tight economy. >> there have been lots of ways companies or individuals can make themselves look bigger than they really are with a little marketing saavy and a little pr
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saavy. is this different from that? i am not so sure. >> hedi is sure. she is no longer living on ramn noodles and says my tab is now valued at $4 million, which she says is due in no small part to the ways the followers she purchased help her attract real customers and a bigger network. >> we have now got like 2 and a half thousand which are real followers on twitter, and we've got over 8,000 real likes on facebook. >> a new way of doing business in a social media world where size does matter stacy tisdale, al jazeera, new york. >> age lifts say if you want to grow your following the old fashion way and attract real people, the best way is to share interesting content. also, make sure to like and follow people back. analysts recommend advertising on social media sites for small businesses. my final thoughts go to j.p. morgan and it's $2 billion plus settlement with the government over dealings with convicted
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ponzi leader. j.p. morgan admitted it violated the law yet not a single executive has been criminally invited. the spin meisters will asures us it's a high school lodge but no one running the bake will go to prison or individually face any fines, some might think this is an enormous win for the bank once upon a time, the government prosecuted people responsible for de-bok els think junk bond king or enron chief's jeffrey skilling. what we have learned from the madoff scheme and the 2008 financial crisis is that wall street is too eager to profit off of risky behavior that can ultimately hurt the public. what we have also learned is that paying the price for that behavior is falling on banks and their blameless shareholders not the individuals who may have ultimately been at fault. that's our show for today. we are taking you inside the detroit auto show. i will be there live monday and tuesday at 7:00 p.m. eastern. i am ali velshi.
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thanks for joining us. >> hello, i am richard. you are at the "listening post." how bad have things grown for the media in egypt? even this puppet is accused of dealing in muslim brotherhood propaganda. daggers drawn in turkey between the prime minister and journalists trying to get to the bottom of a political scandal. citizen-generated news imagery and the career ending implications for proceed if he wassal photo journal accidents. -- journalists.

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