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tv   Your Money  CNN  June 29, 2013 6:30am-7:01am PDT

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...and we inspected his brakes for free. -free is good. -free is very good. [ male announcer ] now get 50% off brake pads and shoes at meineke. crumbling like a coffee cake. deen is losing one business deal after another, following her admitted past use, past use of racial colors. it started with the food network and it has not stopped. many will stop selling her goods, and even the diabetes drugmaker cut its ties with deen. and qvc says it is taking a pause. her comeback trail is getting harder by the minute. >> martha stewart went to prison
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for lying about a stock sale. >> i will be back. >> she is. her company did million in ref revenues. and post prison, michael vick became an ambassador towards animal cruelty. >> whether it's a dog or cat, a reptile, you know, if it's a horse. >> golfer tiger woods survived an infidelity scandal to obtain the number one's ranking, and a sportscaster came back from his career, but such comebacks are not guaranteed. cycling legend lance armstrong fell. >> did you ever take banned substances to enhance your cycling performance? >> yes. >> it forced him to step down from the charity he founded, but
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did paula deen cross an unforgivable line because her comments were about race? greek snyder was fired by cbs in 1988 because of this. >> black is a better athlete to begin with, because he was bread to be that way. >> and mel gibson suffered since rants were caught on tape, and then the offensive comments from don imus costs him his tv and radio show, and a few months later he was back on the air wivf waves. deen insisted she is not racist and she got biblical. >> if there is anybody out there that has never said something that they wished they could take back, if you are out there, please pick up that stone and throw it so hard to my head that
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it keuls me. >> so is paula deen redeemable or has she uttered her last y'all? i want to start with you. her "today" show appearance didn't seem to help her. more companies dropped her after that appearance. we know she hired a crisis manager. if you were advising her, what would you tell her to do? >> i don't know her, but i think it's important with anybody to not put them in a situation where they are uncomfortable. >> you thought she looked uncomfortable? >> yeah, i think she did. and anytime somebody is outside of the box, it's a diskwrser. >> it has blown up into a big public fight. if you are advising the companies, all of these companies dropping her or at least hitting the pause button, if you are advising the company boards, what do you tell them? >> i think you want to ask her
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to suggest that they with draw for a while, and let's step back and take a time out from the relationship and let me deal with the issues that i have and get through this and then talk about what we are going to do next. >> none of that happened there? >> that takes the company off the spot. instead, i am sure there is a morality clause in every agreement she has and they had to. >> is there a play book? >> yeah. >> every one is different. >> her book sales were soaring, and her new book has not been out, and got lines in front of her restaurant, so her hard core fans are outraged that she is being sort of victimized in a way. it's interesting, that response. >> it's like this backlash galvanized her fans, and you mention the long lines outside the restaurant in srau vavannah
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her book went to number one after the scandal. i was reading through the comments and a lot of people are saying i don't like to cook but i am buying paula deen's book because i want to support her. there was a second cruise line after this because the ticket sales shot up from that. and what is interesting here, the food channel, not to be confused with the food network is being inundated by the fans that are angry about it, and the food channel saying you have the wrong network here, and we are interested in picking up paula deen. they contacted the food channel to open up discussions about a relationship there. so obviously we have seen some big companies drop her, about half a dozen, but at the same time we are seeing her fans come together and we could see some new opportunities spring up from this. >> we have seen, and you never count out a comeback. this is the comeback country. this is how martha stewart handled the morning appearance when the trading scandal erupted
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her in 2004. >> my employees and i are hard at work at making our company the best in the world, jane, and we will continue to do that and i want to focus on my salad. >> can deen learn from martha stewart? >> different situation. and martha stewart was on the board of the new york stock exchange and she with draw. >> ye withdrew. >> that's a good point. and the celebrity culture in america, we see them built-up and torn down so quickly. do you think some of her fans were galvanized by all this, and see her as a scapegoat? >> we heard reverend jesse jackson, and that's what he said, let's not use her for the sacrificial lamb or scape coat for the state of southern
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culture. whether you disagree with that or not, i think a lot of her fans say, look, she said it 30 years ago -- >> and they are saying is this a word that you say just one time? >> and that's what the question still is. >> and there are those that are galvanized and saying she is made to be a martyr, and then some are saying this is the tip of the iceberg. her reputation has been very damaged here. how does she get it back? >> we sit in a city where eliot spitzer got a television show, and anthony weiner is leading the polls right now, and 70 miles up the road from where michael vick is lionized by people who pray he doesn't make a fumble. she can make a comeback. >> i interviewed a few times, and she wrote a blush for my
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book, and she is somebody i have never heard her use this language. she is a sauce character, though, and she says what she means and doesn't have a filter. mortgage rates just saw their biggest weekly jump in a quarter century. if you have been on the fence about buying or refinancing, it's time to get off the fence. what rising rates mean for your wallet and the economy is next. [ female announcer ] stress sweat smells the worst. and secret clinical strength gives you four times the protection against it. secret clinical strength. to your kids' wet skin. neutrogena® wet skin kids. ordinary sunblock drips and whitens. neutrogena® wet skin cuts through water. forms a broad spectrum barrier for full strength sun protection. wet skin. neutrogena®. for full strength sun protection. at od, whatever business you're in, that's the business we're in
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healing, and home prices are up and so are the home sales, and so are mortgage rates and they are moving higher fast. last week mortgage rates soared. the biggest rise in mortgage rates in one week since april of 1987. rates on 30-year fixed loans
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rose more than half a percent to 4.46%, and that's in one week. 15-year rates jumped to 3.50%. and now the highest level since july of 2011. let's do the math. a $200,000 home loan cost $880 a month, that's how much it was, a payment in early may, and that same loan in today's rates would be $1,000. that's real money right out of the family budget. why is this happening? ben bernanke said it could taper back the extraordinary stimulus, and that stimulus has kept mortgage rates low, and it can't last forever and that means you will pay more to borrow. don't get me wrong. rates still historically low but not the deal you were getting a year ago. if you want to lock in the low rates, you better do it soon.
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and i want to bring in a real estate appraiser. is it your opinion that mortgage rates will keep rising and it could pinch the housing rates from rising? >> i don't know if pinch is the right word, but it gets housing rates back to reality. tightness of inventory is caused by tight credit. as we see mortgage rates start to rise, affordability drops, but we will see credit ease which brings in a pwraubroader of housing. >> yeah, and mortgage rates are not a tipping point for consumers, really? >> i don't think so. it's not like we didn't see this coming for the last couple years. rates could not go lower and at some point that means they have to go up. >> don't get me wrong, it hurts, but if you can't buy a house because of the half of
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percentage move, you shouldn't be buying a house right now, and you should be able to buy a house no matter what the rates are? >> people on the margin that don't fit in, and what is interesting, with rates rising, that signals the economy is probably getting better, and it's not a direct correlation, but clearly, you know, we are seeing a better market going forward, and a better economy going forward and that's good for housing. i think housing has benedicten been addicted to home rates. >> the jump was 12.1% in april, versus a year ago, and you look at the trend a year ago. and the top real estate markets in the nation, the biggest annual jump in seven years, but inventory is still really tight. is it safe to assume the price gains we are showing you are bound to slow? >> what you will see with rising
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rates, it's a good thing in the long run, because what it will do is temper the price appreciation. you see the rise in the index, did their income rise? >> no. >> it's a tightness of inventory. >> talk about that. there are not enough houses for sale in some of the markets, so home prices are popping because if you have to buy, you just don't have a lot to choose from. >> yeah, inventory is down, virtually across every market in the u.s. >> because people are under water? >> that's a big part of it. >> you can't afford to sell it and put it on the market? >> exactly. homeowners, when they sell their home they have to buy or rent, and rents are rising across the country, and they have to qualify. if they don't qualify, what do they do? nothing. they don't list their home,
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therefore inventory remains tight. we are not replacing the housing stock that is being sold by new housing stock because credit remains historically tight. >> another reason why we are seeing the pop in home prices is because sometimes the foreclosures have been keeping prices down in some neighbors, and as you work through the foreclosures and get them out of the system and prices can start to rise, too. what is the foreclosure situation in your view? >> it's trending towards on the downward slope that we are still significantly elevated, and there is a heavy concentration in four or five states where over half of the foreclosures are occurring, but it's getting better and it's not what it was back a couple years ago. still, housing market can't truly be qualified as recovered until we get distressed real estate more fully aub soerbed. >> if you were giving a letter grade on the market what would
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it be? >> a c plus, really trying hard for a b minus. >> your one piece of advice for sellers? >> you have to look at the market. what sellers do, they read about everything popping they get tkpwr greedy. >> what about for buyers? >> buyers, i wouldn't panic if you really want to take advantage of rates. i think rates will be pretty reasonable over the next couple of years, and don't -- just take your time. find something you want and just don't rush in and buy something because you think you are supposed to. >> buying real estate is not buying an etf or something, and it's a very big commitment that is a lot of money. nice to see you. >> up next, college kids, you will pay double to borrow tuition to go to college next year, as if college is not expensive enough.
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all right. this next story is going to affect about 7 million people. on monday student loan interest rates set to double from 3.4% to 6.8%. they will double. that's because congress failed to reach a deal before the july 4th recess. we're joined to talk about what this means for students. >> first of all, it's not all types of student loans that will be affected. it's subsidized stafford loans. need-based loans for students who can demonstrate some degree of financial hardship. when the loan rates double, those students will end up paying $300 to0 to $3,000 more. >> i am almost $60,000 in debt, which will affect my ability to get a mortgage, to have children, and it will affect what kinds of jobs i choose.
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>> reporter: columbia junt rachel started out studying drama but skyrocketing tuition costs forced her to drop out. now at age 30 she's only just finished her undergraduate degree. >> we're asking too much of our college students, and we're narrowing the field of who can be a college student in the country. >> reporter: american college grads are more than $1 trillion in collective student loans. as tuition costs continue to soar, rising interest rates could soon be their next headache. interest rates for need-based or subsidized stafford loan were affixed at 3.4%. now that congress hasn't intervened, that rate is scheduled to double. >> i definitely think that doubling the rate to 6.8% would definitely increase default rates because, again, the students who are receiving the subsidized loans are from the lowest income brackets. >> reporter: while some lawmakers want to keep the rate at the lower 3.4% at least temporarily, others say student loan rates should be allowed to
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fluctuate along with market forces. >> i think there's going to be some kind of compromise, some kind of adjustment. i don't know if they will go to a variable rate loan. my guess is they may just kick the can down the road and say we'll do it one year and revisit it another year later. >> reporter: the higher rates could be a revenue booster for government generating $36 billion this year at a time when congress is scrambling for new sources of cash. but raising the rates could also cost students as much as $5,000 more in loan repayments over the next ten years. >> the president and mrs. obama just finished paying off their student loans and i think that the fact they are 40 years old and they still were paying off student loan debt is really skiry. we could be 50, 60 years old without having paid off our loans. >> the politicians have to look beyond their own self interest. we're counting on them. >> the good news is congress can reach an agreement after monday and enact it retroactively but right now lawmakers are
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deadlocked. on the one hand should they allow loan rates to fluctuate along with the ten-year treasury but is that really fair on students and parents not to give them any safety net? on the other hand, if you extend the lower loan rates at 3.4% s that really fair on the government when we are under so much pressure to reduce the deficit? >> and taxpayers. it is taxpayers who foot the bill. you can make this ideological argument do you want to fund someone else's degree that maybe they're not going to get a job? or their five years at school. we have to start to think about is it taxpayer support of out of control tuition? >> i spoke to students and they were saying to me, on the one hand, it is important to lower the loan rates. on the other hand, the government should really look at ways to lower the cost of actually going to college. $31,000, it's so much, especially when you can't guarantee you're going to get a job. >> i think if you're going to spend $60,000 or $100,000 to go to a fancy private college, you should think about a state
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the lexus es350 and epa-estimated 40 mpg es hybrid. this is the pursuit of perfection. if you're one of the millions of people who follow celebrities on twitter, you get an inside look at what the rich and famous are up to, but how can you tell if you're reading a genuine tweet or just an expensive ad? >> reporter: justin bieber gives tips on where to buy mother's day flowers. miley cyrus raves about her airline carrier. and kim kardashian tweets about her lip balm. but how do her 18 million followers know if she's getting paid or if she just really loves her chapstick? >> it's really important for the audience to be able to understand when someone is endorsing a product, saying positive things about it, whether they've been paid to do that or not. >> how long has it been since your mom has fixed yellow pudding for you? >> reporter: for decades advertisers have used celebrity endorsements to push their products. having a famous spokesperson
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gets a brand more attention and credibility. now social media has opened up a whole new world for advertisers. they can access a star's millions of followers with just one tweet. but that attention doesn't come cheap. ranging from a couple hundred bucks to tens of thousands of dollars for one little tweet. the federal trade commission requires companies to disclose a paid advertisement. >> we don't prescribe specific rules or words that have to be used, but ad is a very clear. >> reporter: some selects are using the disclosure. like when hilary duff wished her husband a happy father's day or when charlie sheen went searching for an intern so his 10 million followers knew he were compensated. >> the beauty of ad is only two characters long. >> reporter: with only 140 characters to spare, some say there's no room for an extra hash tag. >> thanks for joining the conversation on "your money." coming up at 2:00 p.m., if this generation has marissa mayer, my
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generation had carly feor reno. you can find me on facebook and on twitter. my handle is @christineromans. how hot is too hot? 95 degrees? 100? how about 129? get ready out west. a heat wave is coming. we know what they said, but a body language breakdown of two of the week's biggest newsmakers. and he made history when he won the gold just minutes after a head splitting injury. but it's a different victory that excites him today. my live interview with greg louganis.

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