>> judge just a little bit more than a week, the money from the government's cash for clunkers already needs new cash. >> the turbulent times of the airline industry. can it fly clear of the boom and bust cycles. >> the recession, has more people heading to the pawn shop in search of quick cash. but pretty high interest rates. really worth it? all ahead on this edition of first business. >> ahead of a fresh week, a fresh month of trading, welcome everybody. glad that you are along for the ride. one month has made a year. it used to be seven to 10% return in the stock market was a pretty good year. we've seen a 7 percent return in the month of july for the dow jones industrials average. >> and the s and p 500 up 9% since january, in the midst

of second quarter earnings, recent days these earnings have been coming in a little bit more disappointing. but keep in mind we still have yet to hear from big retail companies, wal-mart, target, j.c. penny's, kohl's. that will have the market's attention. >> a couple of consumer type of issues, unemployment coming out on friday, auto sales coming up monday. it will include one full week of the cash for clunkers program. >> this week u.s. senators are expected to take up the controversial cash for clunkers program. they are likely to vote on whether to infuse billions of more class. last week the house of representatives overwhelmingly voted yes to putting in an extra two billion dollars to continue the cash for clunkers program. after just one week, car dealerships across the nation are reporting they told tens of thousands of new cars under the cash for clunkers program. it allows consumers to trade in their gas guzzlers, get up to a $4,500 discount on a

new more fuel efficient car. >> car dealers say they will continue to sell the cars, 7 even though the money is about to run out. initially the government set aside one billion dollars. >> i'm going to keep going until someone literally comes out with an official statement saying the government is not putting out in more money into this program. i trust the government is going to take care of the program. >> this dealership in chicago sold more than 20 new few efficient cars in ththe first few weeks in the program. they have old ford, chevy, nissans, s.u.v.'s, eventually they will be taken to the junk yard. lawrms are surprised about the program's pro popularity. >> the response has been, as one of my dealers described it this week, he had chaos in his showroom. it accomplished what we wanted it to accomplish. i was skeptical when this program passed a while back. but it has delivered customers into the showroom and they are buying cars.

>> but as the votings to the u.s. senate this week, there is sure to be opposition about pouring more money into the program. some lawmakers continue questioning whether it's a good way to spend taxpayer dollars. >> recently one of the largest poultry producers in the america, pilgrim's pride, a few miles outside of my congressional district, they had to declare chapter 11. maybe we should have a cash for cluckers program and pay people to eat chicken. >> it's not clear yet just how many new cars have been sold under the cash for clunkers program. the obama administration says it will continue to find a way to keep it running. a white house spokesman says the government will honor all new qualified cars sold over the weekend. unemployment and foreclosure rates can cross racial lines, they do remain hire for minorities, both african-americans and hispanics. they also saw a higher

proportion of subprime mortgage during the boom. >> nice to see, sir, ray khouchaba. you have been surveying minority groups in a number of urban areas, how are you sensing they are approaching this economy? >> well, tom, we're seeing three things. first of all an increase in optimism amongst these groups. first. second, much greater focus amongst african-american and hispanic communities on what they are spending their dollars on. third and probably most important, a significant increase in savings. when you look at this group versus the national average across ethnic, across income. so -- so there's good news. >> yeah. >> there on the changes and behavior that we are seeing. >> what are you seeing -- where are you seeing those savings come from? certainly the national savings rates spike significantly higher as the

consumers are leveraging, paying back some of what they have borrowed. from the ethnic groups where are the savings coming from. >> we want to peel back, look at that more closely. as people assess needs versus wants, you know, as i look at my spending more closely, is this something that i really need to have or want to have? they are probably ending those wants at least in the short term. saving -- saving more which i believe is in turn driving the more optimistic behavior. >> savings certainly can be a reaction to concerns about job security. is there any sense of that that's being articulated. >> i'm sure it's in there somewhere. we haven't, you know, looked at a layover, you talked at the top about the impact of unemployment. i'm sure that's a driver of savings. but it's also -- also probably having to do with the risk, the heightened risk of unemployment. >> it's probably a driver

for increased savings. >> i don't think you surveyed this aspect, but certainly with community relations, how is the ethnic community approaching the financial industry after what we have been through? >> well, one of the things that we have to do, tom, in my role, the challenge is to how to leverage all of the citigroups resources in an effort to meet the unmet needs of often underserved communities. >> along those lines, can you give us specific instances that city is partaking of. >> great question. foforeclosure prevention, loss mitigation efforts, loan history and financial education. one of the great things that we're seeing from this data is increased family focus on appropriate financial planning. >> uh-huh. >> so i don't know about you, but for me, you know, my parents and i never talked about money growing up. you know, there wasn't a lot

to talk about. so, you know, they -- they paid the bills that they could and that was that. >> real quick, just on the mortgage modification and helping, doing more community outreach. >> absolutely. >> launching programs separate from the obama administration programs? >> absolutely. we -- citi was the first to create an office of home ownership preservation back in july of 2007. last year we had a 25 city tour around the country focussed on foreclosure prevention and loan modifications, so we're continuing to -- to -- in addition to president obama's initiatives, lead with our own. >> we will live it there, thanks for the update. >> erkz here with us with the global community relations of ci. eric eve. >> time now for trader talk. michael palmer of group one trading joins us from over at the chicago board options exchange. you work in the pits over there. what are traders really saying about the stock market rally, is it the real deal? >> well, i think that people

are cautious in that respect. we basically have seen the market up 10% over the last 10 trading days. and i think now people are kind of preparing themselves for a pull back this week. >> yeah, you also pay attention to the volatility levels here. are you expecting volatility to start to ramp up, which means we're going to start to see some selling pressure here? >> absolutely, from the customer base, traders everywhere, they seem to be buying volatility. it seems to have found a level where the mark is not going to get any quieter than it is right now. >> you mentioned the traders are turning more cautious here, essentially with the s and p 500 up 9% since january. talk about some of the trades that you are seeing crossing the tape right now? >> well, one of the main things right now that we're seeing is that last week we had the dollar selloff, gold rally, oil really just gain a lot more volatility than usual. so it definitely that breeds a certain level of -- you

know, cautionness in the marketplace, that people are thinking maybe we'll go lower, maybe we'll see the dollar continue to move around and prepare themselves against that. >> all right. we'll see what happens in the week ahead, thanks so much as always, michael palmer with group one trading. >> opening bell on monday, vehicle sales which will include one week of the cash for clunkers program, also earnings from a trio of companies, including tyson foods, still to come, looking for more from your pawn shop, but first the boom and bust cycle from the airline industry.

>> welcome back, everybody, there's perhaps no other industry in our economy that has gone through the boom and bust cycle as many times as airlines. and joining us now to talk about it, rob briton with airlearn.net. worked in the airline industry 40 years, 20 of those with american airlines, he's here to tell us whether or not airlines can stop this boom and bust cycle. let me ask you this question. when this recession finally ends, what are the chances that we'll see a major carrier in bankruptcy again? >> we might actually see the bankruptcy before the recession ends. and what is probably going to be different this time, from previous times, is that we will likely not see a chapter 11 situation. if you look back at the bankruptcies last year, you saw actually chapter 7 liquidation. and the reason for that is quite simple. the financial melt down has dried up available capital

so that so-called debtor in possession financing, the airlines used to be able to get is probably no longer available. there is some risk one or more larger airlines may not be able to make it through. >> when we talk about the boom and bust cycle, i think we can look at the history of american airlines share price. to illustrate that, take a look at this. boom times in the late 90s, going up to the late 90s in the aftermath of the 2001 terrorist attacks pushed several airlines into bankruptcy. then after restructuring, times were relatively good. i mean, better, than years past. in the middle part of this decade, then it was oil and recession that again pushed airlines to the brink of bankruptcy. can airlines do anything to weather this cycle? >> well, it's a tough business, as you know. one of the things that's -- that makes it particularly tough is in the u.s. industry, there's two kinds of competitors, an old

airline, came of age in a regulated period. all of the new ones led by southwest and air tran. the challenge is for the older airlines, delta, american, continental to be able to continue to make progress lowering their operating costs and getting closer to the newer companies who because they are new, because they areless unionized have lower operating costs. the prognosis is more challenging times. >> we know that southwest is gaining market share in this recession. what is it doing right that other airlines can learn from? or can they even implement some more strategies. >> southwest, again, is a new company. came of age 30 years ago with a blank piece of paper. they have done a lot of things very, very well. focus on cost control. focussed on simplification of their product. so on, so forth. what's interesting about southwest, though, is if you look at their recent business decisions, they are beginning to look more like an older, more conventional carrier. for example, they never said

they would fly to busy airports, they are now flying into la guardia, soon they will be adding more of these older airports that they said they would never do. there seems to be something to the aging process. now that said, they are still doing very, very well. >> let me talk about the regulation question here. the airline industry was heavily regulated from 1926 to '78. >> right. >> would a return to regulation benefit airlines? >> it probably would not. it's one of those things where you can't sort of put the genie back in the bolts. bottle. you really are in a situation where you are now in an open market. any effort i think to imposing sort of an economic regulation would be counter productive. probably would end up helping paradoxically the newer companies doing better, haysstenning the older companies to buy. >> rob briton of airlearn.net. we appreciate it. straight ahead how the recession is helping pawn shops see booming business.

>> since march bank stocks have more than doubled as the financial industry backed away from the abyss, a specialized type is done even better, pawn shop stock cash america is up 21%. what is it about it? we spoke with rick harrison owner of the gold and silver pawn shop in las vegas. >> i have taken in more merchandise, but i have to sell it. >> talk about the business model in the pawn industry, kind of how it's shaped by

the economic situation we see ourselves in. >> my model is a lot different. there's different aspects to my business. first off, when people come in, i do -- some people want to sell their items, so i buy them outright. and resell them. the other part is when people just want to get a loan. that way i am loaning them money and i have to hold the merchandise and, you know, the plan is that they eventually come back in and pay me back my principle plus -- principal plus in. if they don't come in, they default and then i sell it. >> go ahead, what's the third idea there? >> the third part is i have a retail business, i also manufacture at my store, too, also. so actually four parts. >> what's the manufacturing? >> i manufacture a lot of jewelry. >> okay, fair enough. let's -- let's tackle this from the pawn side of things here. we know publicly traded pawn shops margins are in the mid teens or so. is it a pretty profitable

business. >> it can be. as long as it's runs right. it's like any other business. you have got to certainly curtail the risks here. i imagine the risks are default or overpaying for the methods in the first place -- for the merchandise in the first place. >> yeah, that's a big problem. i have to -- my employees, i give them a lot of training on a regular basis. and, you know, our default rate has really gone up on merchandise. and when you get a regular customer that's been coming in there for years, a lot of these people we loaned them more than the merchandise is worth because that item was worth more five years ago when they started pawn being it and they expect the same price when they come in. >> so you are seeing a decline in all prices of assets in this financial vernacular is that right. >> yeah, the price of diamonds are down. people are worried about losing their job. whether they should believe that or not, they are not

buying diamonds, it's really brought the price way down. a lot of other items like that. >> let me ask you about those folks that use a pawn shop for short-term loans. effectively what's the interest rate that those kind of customers winds up getting? >> i charge 10% per month. which might sound expensive, but i don't think that you can actually walk into a bank, get $100 loan for 30 days and only pay 15 bucks, i charge 10% a month, and a five dollar pay above board charge. >> any kind of concern in this environment that you may see regulators try to limit that interest rate that you can charge. you are talking an annual interest rate of 120%? >> there are people in congress who want to try to regulate us. but you also got to remember, it's -- it's like my average loan, the average loan in the pawn industry in this country is $75. okay? and the average term of that loan is only like two or three weeks. you know, so -- so if i -- you know, if i loan someone

$75, i have to -- you know, i have the labor to write out the loan, i have a bunch of other paperwork and store it, i charge 10 bucks. >> rick harrison in las vegas. online search pawn to see two of the unusual items that people have left behind in his shop. still ahead here on the addition of first business, click and open -

>> in the know, stopping a car chase before it starts.

if subscribers are stolen, the owner can have on star. welcome back, everybody, and our viewers continue sounding off on all types of issues, including minimum wage and trading for this week. >> yeah, one of the newest

concerns is high frequency trading. larry sent us this note, why don't you all do a segment of high frequency trading, this is putting all individual traders at a severe disadvantage and is truly unfair to the system. if the individual traders become aware of this scam, they quit trading and where would the stock market be then? high frequency trading basically has computers trading huge volumes of stock in milliseconds. we have put the question to the director of enforcement at the sec. >> in the case of hi frequency training, take a look at that to see whether or not that kind of activity is on the right side of the law and whether or not further investigation is warranted. >> could it be a case that additional legislative rules may be -- maybe necessary for -- for -- hi frequency trading, if it is on the right side of the current law maybe the law needs to be changed. >> absolutely right. the enforcement perspective is really one that -- that -- that obviously is looking to current law and deciding whether or not conduct is wrongful. but -- but new legislation

could be extremely helpful in a whole lot of areas. >> you can see the whole interview, search sec on our website. >> if the minimum wage is $10 an hour, she said, or comparable salary, then the highest paid positions in the nation, including government positions, have no business being more than about 15 times that minimum level. this will eliminate the phenomenon we call the working poor. >> possibly, yes. but boy, i tell you, if you limit people's earnings incentives, odds are you are going to limit their desire to work harder and become more productive and quite frankly grow their own economy, let alone grow the bigger economy. >> certainly, time. the issue of money really struck a cord. people seeing so many bailouts, all of the money going to banks, even to home runs who kind of shot -- homeowners who shot themselves in the foot, buying homes too expensive for them. some of them are getting bailed out here. >> lots of people having strong opinions here.

>> comments. see you on line back here next time. >> thanks a lot, everybody.

to start the year for just $9 total. nine dollars. considering what you get... that's a really great price. back to school costs less at walmart. save money. live better. walmart.