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Newsroom/World View

NEWSROOM for February 14, 2001

Aired February 14, 2001 - 4:30 a.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

ANNOUNCER: Seen in classrooms the world over, this is CNN NEWSROOM.

RUDI BAKHTIAR, CO-HOST: From the CNN Center in Atlanta, this is CNN NEWSROOM. Thanks for joining us. I'm Rudi Bakhtiar.

TOM HAYNES, CO-HOST: And I'm Tom Haynes.

We have got a lot going on today. Let's start with a quick look at the rundown.

BAKHTIAR: In today's top story, better, stronger, faster: President Bush presses on with his vision for the U.S. military.

HAYNES: Next, in 'Business Desk": the unwelcome business of telemarketers. Is there any way to stop them from calling?

BAKHTIAR: Then in "Worldview": the booming industry of credit card cloning.

HAYNES: Finally, "Chronicle" salutes Valentine's Day with a gift that's not from the heart.

First today; United States' President Bush moves forward with his plans to modernize the military. Hoping to boost military morale, he's pledging to budget more money for pay hikes and housing improvements, among other things.

(voice-over): Mr. Bush is expected to budget a $1 billion military pay raise for the next fiscal year, which begins in October. That proposed raise would be in addition to the 4.6 percent across- the-board pay raise required by law. Altogether, Mr. Bush is expected to set aside about $310 billion for the military for the next fiscal year. That's about $15 billion more than what former President Bill Clinton had proposed. The White House says the extra money would pay for proposed salary increases, housing improvements, bonuses to keep men and women in the armed forces, research and development, and inflation.

BAKHTIAR: U.S. President Bush also is promoting his proposal for a multibillion dollar national missile defense shield. The system would be designed to protect the United States and its allies from attacks. President Bush emphasized his commitment to such technological advancements Tuesday at the Norfolk Naval Air Station. Major Garrett has details on Mr. Bush's visit and defense plan.

(BEGIN VIDEOTAPE)

MAJOR GARRETT, CNN CORRESPONDENT (voice-over): The theme: transformation and President Bush was not only referring to the U.S. military but the NATO alliance.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Eleven years after the end of the Cold War, we are in a time of transition and testing, when it will be decided what dangers draw near or pass away, what tragedies are invited or averted. We must use this time well. We must seize this moment.

GARRETT: But Mr. Bush made clear, NATO allies must prepare to deal with new threats in new ways, even if it means allowing the U.S. to press ahead with a missile defense system.

BUSH: In diplomacy and technology in missile defense, in fighting wars and, above all, in preventing wars, we must work as one.

GARRETT: The president outlined three priorities for the new modern U.S. military: beef up defenses against nuclear, biological, and chemical weapons; use new technology to make the military lighter, swifter, and more lethal; quickly develop promising new weapons systems and dump older, outmoded ones.

To highlight the power of technology, the president watched a military exercise 50 miles away via video up link.

BUSH: Power is increasingly defined not by size but by mobility and swiftness. Advantage increasingly comes from information such as the three-dimensional images of simulated battle that I have just seen. Safety is gained in stealth, and force is projected on the long arc of precision-guided weapons.

GARRETT: To get his way, Mr. Bush would have to force the Pentagon and its Congressional allies to absorb unprecedented defense cuts, or he will have to significantly boost defense spending, possibly at the expense of other domestic priorities.

SEN. JOHN WARNER (R), VIRGINIA: So, part of that would be look at the full range of weapons systems, now on the drawing boards, now in research, now being produced; and decide, do we need them all or should we stop some?

GARRETT (on camera): By linking the transformation of the U.S. military with changes in the relationship between the U.S. and NATO, the president has put the Pentagon on notice: The upcoming struggle over weapons and money is as much about the future of the military as the future of the U.S.-NATO alliance.

Major Garrett, CNN, Norfolk, Virginia.

(END VIDEOTAPE) HAYNES: Our next bit of info could give new meaning to the term empowerment zone. Former U.S. President Bill Clinton says he plans to locate his presidential office in the heart of an empowerment zone in Harlem in New York City. Empowerment zones have been around since the early 1990s. They're meant to spark growth in areas where economic development is needed.

Susan Lisovicz now on whether the former president can add a little power to this empowerment zone.

(BEGIN VIDEOTAPE)

SUSAN LISOVICZ, CNN CORRESPONDENT (voice-over): These are the landmarks of old Harlem: the Apollo Theater, Sylvia's Soul Food Restaurant, small businesses deeply rooted in uptown Manhattan's African-American community. And this is the new Harlem: Old Navy, Starbucks, Disney, big chains whose recent arrival was perhaps the surest sign that this long-struggling community had turned an important economic corner.

WILLIAM J. CLINTON, FMR. PRESIDENT OF THE UNITED STATES: I have decided to locate my office in this building if we can work it out. We're looking at it. We're working at it.

LISOVICZ: Former President Clinton's hopes to work out of an office on 125th Street within view of the Apollo is expected to accelerate Harlem's resurgence.

NAZARENE ROBINSON, HARLEM RESIDENT: Have you noticed? Harlem is growing. It's been growing for a long time, and this is the right place for him. You know, we love him.

LISOVICZ: President Clinton supported legislation that created an empowerment zone in Harlem to stimulate business.

(on camera): But the second renaissance of Harlem, as it has been called, may have its price. Some critics say that the gentrification in this area may push long-time residents out of the neighborhood.

(voice-over): Deborah Wright is president of the Carver Federal Savings Bank in Harlem, the largest African-American run bank in the U.S. by assets. She says office space on 125th Street used to go for $15 per square foot five years ago. It's more than doubled since then.

DEBORAH WRIGHT, PRESIDENT, CARVER FEDERAL SAVINGS BANK: Not all local entrepreneur will be able to afford 125th Street. They'll move over to Lenox Avenue and Adam Clayton Powell and Frederick Douglass Boulevard to make it work for them economically.

LLOYD WILLIAMS, PRESIDENT AND CEO, GREATER HARLEM CHAMBER OF COMMERCE: The same dollars that are earmarked to bring a Disney, that are earmarked to bring in a Modell's, that those dollars, portions of it could be set aside for the medium to small businessperson. So, we need to have a better balance and a better focus on the local entrepreneur.

LISOVICZ: But for the nearby Lenox Lounge, former President Clinton's presence would bring economic opportunity.

(on camera): You think the president is going to be good for your business, here?

(LAUGHTER)

UNIDENTIFIED FEMALE: Yes.

LISOVICZ (voice-over): The landmark nightclub that once hosted Billie Holliday, John Coltrane and Miles Davis hopes the saxophone- playing former president will not only work, but play, in Harlem.

Susan Lisovicz, CNN Financial News, New York.

(END VIDEOTAPE)

BAKHTIAR: Just when you think it's safe to pick up the phone, it's one of those telemarketers calling again with stuff you probably don't need. Well, believe it or not, there are laws on the books in the United States to limit when, where and how telemarketing can be done. The problem is those laws contain loopholes.

Frank Buckley explains.

(BEGIN VIDEOTAPE)

FRANK BUCKLEY, CNN CORRESPONDENT (voice-over): Ken Crusias is whipping together dinner for a busy family, and this is precisely the time, he says, when the phone seems to ring and bring unwelcome intrusions...

KEN CRUSIAS: Hello.

BUCKLEY: ... from telemarketers. This time they were spared. But the Crusias family says on some evenings they receive several calls from people trying to sell them something while they're trying to have dinner.

THERESA CRUSIAS: And I'm very angry and very frustrated.

If I want to buy something, if I want to give something to charity -- we're very generous -- I'll do it. I don't want anybody bothering me.

BUCKLEY: She's not alone, and her state legislature in New Jersey is now considering bills to block such calls.

Linda Greenstein calls it "commercial harassment."

LINDA GREENSTEIN, NEW JERSEY STATE ASSEMBLY: Certainly it's commercial, because we're talking about commercial calls, and I think it's gotten to the level of harassment. BUCKLEY (on camera): New Jersey is joining a growing number of states which are either considering or already have laws creating do- not-call lists. But some consumer advocates say these lists do little more than reduce the number of calls coming in because of exceptions allowed under the laws.

(voice-over): Exceptions for nonprofit or political organizations and certain businesses.

PAT FALEY, DIRECT MARKETING ASSOCIATION: The state laws represent important progress, but to get to the promised land we really need to have a national law that protects all Americans.

BUCKLEY: Telemarketing advocates say a national list already exists, an industry list used by members of the Direct Marketing Association, who voluntarily block calls to consumers who have said they don't want them. The industry also points to more than $612 billion in telemarketing sales last year as evidence some consumers appreciate the calls.

PAT FALEY, DIRECT MARKETING: I know in my own instance I was paying too much for my telephone bills, and I got an offer and managed to reduce my cell phone bill by 50 percent because of a call to me, which I did appreciate.

BUCKLEY: For those who don't want such calls, there's legislation in 13 states providing for do-not-call lists, other states considering similar laws. Or there's the "Seinfeld method."

(BEGIN VIDEO CLIP, "SEINFELD")

UNIDENTIFIED ACTRESS: Well, I...

JERRY SEINFELD, ACTOR/COMEDIAN: I'm sorry. Excuse me one second.

(PHONE RINGING)

Hello.

UNIDENTIFIED ACTOR: Hi. Would you be interested in switching over to TMI long-distance service?

SEINFELD: Oh, gee, I can't talk right now. Why don't you give me your home number and I'll call you later?

(LAUGHTER)

UNIDENTIFIED ACTOR: Well, I'm sorry. We're not allowed to do that.

SEINFELD: I guess you don't want people calling you at home.

UNIDENTIFIED ACTOR: No.

SEINFELD: Well, now you know how I feel. (END VIDEO CLIP)

BUCKLEY: Frank Buckley, CNN, Trenton, New Jersey.

(END VIDEOTAPE)

HAYNES: That was a great edition of "Seinfeld."

All right, so the telemarketers have stopped calling. Now they've started e-mailing you, though. I'm sure you've gotten them: those annoying e-mail pitches to buy, sell or download anything and everything. So what's being done about the cyber-onslaught?

Tom Bogdanowicz has the story.

(BEGIN VIDEOTAPE)

TOM BOGDANOWICZ, CNN CORRESPONDENT (voice-over): They arrive from around the world, unwanted and not asked for: Junk e-mails or spam clog up computers, consume workers' time and employers' money. Powerful new computer servers can each transmit 100 million e-mails a day. So, theoretically, just 200 companies could send out 20 billion commercial e-mails; that's 60 for every Internet user every day.

EAMONN TOLAND, ACCENTURE: Corporations have found an awful lot of cost, not just from the telecommunications side of people downloading junk e-mail, but also the wasting time involved in actually receiving important business communications.

BOGDANOWICZ (on camera): The spam problem often begins with registration on a Web site. On Hotmail.com for example, this box appears ready marked. Unless you delete the mark, you'll be entered in an e-mail directory, enabling commercial firms to send you unwanted mail.

(voice-over): Countries like Italy and Austria now have so- called "opt-in" legislation that requires Web sites to leave blank boxes which Internet users have to click on if they want to receive information.

The catch with a more restrictive approach is that it stops useful, as well as useless, marketing. What's called permission-based marketing is seen as the way forward. Net users specify what information they want and net retailers only message customers who are interested in their wares. It could be productive if companies play by the rules and customers learn to trust he them.

Tom Bogdanowicz, CNN Financial News, London.

(END VIDEOTAPE)

BAKHTIAR: We're taking care of business in "Worldview." We'll learn how a Canadian retailer is expanding his empire into the United States store by store. And from clothes to clones: Could your credit card be in danger? We'll head to Great Britain to examine the risks. And risky business to laughing matters: Time to laugh out loud if you know what's good for you.

HAYNES: Experts say people don't laugh enough, although kids do better than grownups. Statistics show that the average 6-year-old laughs 300 times a day, the average adult just 170. Go figure. We head to Great Britain for more laughing matters. Brits are known for their dry sense of humor. And these days, there's more to chuckle about thanks in part to efforts of a psychologist there.

She takes laughter seriously, as Margaret Lowrie explains.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: On your mark, get set...

(HORN BLOWING)

MARGARET LOWRIE, CNN CORRESPONDENT (voice-over): The 20th annual Great Pudding Race in London's Covent Garden raises money for charity and lots of laughs, something psychologist Mariana Funes thinks there should be more of, not just at weekends, but in the workplace: rib- tickling, thigh-slapping, deep-belly kind of laughs.

MARIANA FUNES, PSYCHOLOGIST: The body produces (UNINTELLIGIBLE) endorphins when we laugh.

UNIDENTIFIED MALE: It uses less muscles than frowning.

(LAUGHTER)

FUNES: I like that.

LOWRIE: Researchers say laughter lowers blood pressure, oxygenates the body, may even keeps wrinkles at bay. In short, says Funes, laughter is good for you.

FUNES: You look at the -- like, the physiological effects of laughter and how they can help us deal with stress, and they can help -- you know, how laughter can actually make us more creative and more able to deal with things. So you start to look at all that. And then you start to look at how little we laugh, certainly in the workplace. And then I think it does become a very serious matter.

LOWRIE: Funes takes it so seriously, she gives laughter workshops to groups such as these business managers as part of their MBA program at Roffey Park Management Institute near London.

FUNES: What makes one person laugh doesn't make Trevor laugh at all.

(LAUGHTER)

LOWRIE: A technique understood and refined by American humorist Samuel Clemens, better known as Mark Twain.

EDWARD PHILLIPS, BRITISH ACTOR: Although his stuff was humorous, it was also philosophical without being too serious. And there was always a lesson in what he said.

LOWRIE: British actor Edward Phillips portrays Twain in a one- man show.

PHILLIPS: There's only one thing that that will undermine tyranny of any kind. And that is humor.

(LAUGHTER)

LOWRIE: That is to say: Politics are always good for a laugh -- a message not lost on these managers, who see laughter, not tyranny, as a modern management tool.

CHRIS LAKE, ROFFEY PARK MANAGEMENT INSTITUTE: When something is fun, when people are enjoying themselves, when there's laughter in a training room, people are often learning quite a lot.

LOWRIE: Classroom, boardroom: not only the best medicine, sometimes the only defense.

UNIDENTIFIED MALE: I forgot to mention, they are carrying spray cans.

LOWRIE: Margaret Lowrie, CNN, London.

(END VIDEOTAPE)

HAYNES: More from Great Britain now as we turn from funny to phony. We focus next on fraud: specifically credit card cloning. It's a global problem, one that's costing businesses and consumers millions of dollars.

Helen Wright reports from London.

(BEGIN VIDEOTAPE)

HELEN WRIGHT, ITN REPORTER (voice-over): Adrian Graves' credit card was cloned last year. He only found out when his card company phoned to say someone in Japan had spent over 2,000 pounds on his plastic.

ADRIAN GRAVES, CUSTOMER: My immediate reaction was that I was gutted. I was immediately very concerned about my personal liability, although they had assured me that the card had been stopped.

WRIGHT: For the fraudsters, cloning is big business. But for consumers, it's impossible to tell if your card is being copied when you hand it over in a shop, pub or restaurant.

(on camera): And this is what the fraudsters use to clone cards: this device seized by police here in the city of London. An unscrupulous shop assistant or waiter can pass your card through the machine. It copies the details on the magnetic strip and stores them. And the information can then be transferred to a fake credit card and used anywhere in the world within hours. TYSON DAVIES, PAYMENT CLEARING ASSOCIATION: It's most likely that your card will get copied in some retail outlet, maybe a garage, maybe a restaurant. And then the cloning will take place, perhaps overseas. And there will be a row of transactions, maybe a designer outfits in the Far East. It could be something like that, somewhere you have never been in your life.

WRIGHT (voice-over): These credit cards are designed to beat the fraudsters. They have a microchip -- the gold square on the left -- which is read by shop tills in the same way as the magnetic credit card strip, though the fear is criminal gangs may one day be able to defeat even this technology.

Helen Wright, ITN.

(END VIDEOTAPE)

BAKHTIAR: We turn now to Canada, the second largest country in the world. Today, we explore a business relationship with its neighbor to the south: the United States. As Canadian retailers know, doing business right next door can come with a price tag. The high costs of rents and salaries can be daunting. One Canadian clothing firm is taking on the challenge, as it puts down roots in the U.S. and begins a stylish invasion.

Kitty Pilgrim has more.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE: They have beautiful things in there.

UNIDENTIFIED FEMALE: I just bought a nice leather jacket.

UNIDENTIFIED MALE: I got two pairs of underwear.

KITTY PILGRIM, CNN CORRESPONDENT (voice-over): This shop in New York's trendy Soho district is part of a dream come true for Canadian entrepreneurs Denise De Laurier (ph) and Gilles Fortin. The couple founded Tristan and America 25 years ago.

GILLES FORTIN, PRESIDENT, TRISTAN & AMERICA: My goal was from the beginning to move my company to the states.

PILGRIM: This downtown emporium is one of five Tristan and America stores in the northeastern United States.

FORTIN: The U.S. is a very tough market to conquer. And I knew we have something special. We're not a copycat. And I think that there's room for us as a player.

PILGRIM: The retail chain plays coast to coast in Canada. Seventy stores sell edgy men's and women's fashions to young professionals 25 to 35 years old.

KEVIN MIAO, STORE MANAGER, TRISTAN & AMERICA: They want to be very presentable, look professional, but yet still have fun. PILGRIM: The red brick headquarters in Montreal, Quebec houses more than stylish executive offices.

FORTIN: We're a vertical operation. We produce and manufacture our own garments.

PILGRIM: Gilles Fortin and his wife Denise De Laurier have a design house, a manufacturing operation, and an in-house marketing team to support the retail operation. De Laurier heads up design, while Fortin handles business.

The partners shaped their dream when they were very young.

FORTIN: We started the idea in high school. I met my -- my wife today was my girlfriend at that time. In high school, she was in haute couture. And I was doing some administration. And the idea of having our own chain store started there.

PILGRIM: The entrepreneurs were short on experience and money, but big on creativity and ambition. Their first small store outside Montreal carried unisex styles. They named it Tristan and Isolde after the 13th century love story.

FORTIN: After one year of success, the store was too small. So we divided the store an opening across the street for our men's division, which became after a time America.

PILGRIM: The couple always put quality first. De Laurier applied haute couture standards to her mass market garments. The vertical operation allowed tight quality control and kept prices competitive by cutting out the cost of the middle man.

FORTIN: Garment for garment, we can match to anything at 40 percent lower than anything that can be compared to.

PILGRIM: Loyal customers appreciate the quality, style, and emphasis on year-to-year coordination.

FORTIN: When they come back, it's easier to buy something that on the color, on the styling, and on the fit will match the rest of their garment.

PILGRIM: Fortin's retail skills complement De Laurier's talent as a designer.

FORTIN: Me, I'm the dynamo. I'm involved in any aspect of the business. I'm very involved in construction of the store, design of the store. I love to go in my store and have a direct contact with my staff.

PILGRIM: The store's offbeat marketing campaigns build image by using nonprofessional models and exciting photography. But Fortin knows Canadian popularity doesn't spell success in the states.

FORTIN: The adventure of going into the United States is very dangerous for guys like us. We're fighting against a mega-company. I'm patient. I didn't go there for a fast success.

PILGRIM: The company always planned to invade its Southern neighbor.

FORTIN: It's a tough ride. My chance of failures are enormous. My chances of success are small.

PILGRIM: The first Tristan and America opened in a suburban shopping mall on Long Island, New York, in 1995 followed by two in Boston and two in New York City.

FORTIN: We want to build one store by one, open them in area where people is interested by that type of fashion.

PILGRIM: Style-savvy shoppers in New York City apparently give the Canadian interloper a thumbs up.

UNIDENTIFIED MALE: The pants look like they're a great material, very good quality.

UNIDENTIFIED FEMALE: I bought a shirt, a white shirt.

UNIDENTIFIED FEMALE: The salespeople were fantastic, actually.

PILGRIM: The Rockefeller Center store in New York City is now the top selling store in the chain. But the volume carries a heavy price tag. The cost of doing business in the states is very high.

FORTIN: I need capital. That's for sure because if you don't open 10 to 20 stores per year in the states, you don't open. That's it.

PILGRIM: Fortin says he'll consider an IPO to finance further expansion.

FORTIN: I think there is place for something smaller and different. We're different, smaller, and there is room for us.

UNIDENTIFIED FEMALE: Please open in Chicago.

PILGRIM: I'm Kitty Pilgrim, CNNfn, New York.

(END VIDEOTAPE)

BAKHTIAR: Well, Tom, it's that time of the year again.

HAYNES: Yes, time to romance your valentine.

BAKHTIAR: That's right. This year, about $1 billion in candy is going to be sold. And 110 million roses are going to be given. That's equivalent to about $650 million worth.

HAYNES: But if you're looking to give something unique this year, our next story is for you.

Denise Dillon has a valentine's gift that's about as exclusive as it gets.

(BEGIN VIDEOTAPE)

DENISE DILLON, CNN CORRESPONDENT (voice-over): Chocolates and teddy bears: sweet, but very traditional Valentine's Day gifts. If you're looking to surprise your loved one with something a little more unique and personal, how about a few strands of deoxyribonucleic acid? That's right: DNA -- but not just any DNA, your DNA. You don't get much more personal than that.

For starters, you have to get a mucous membrane sample from the inside of your mouth. OK, from here it gets a little more clinical. The sample is put into a centrifuge to extract the DNA from the cells. The sample of DNA is then treated with alcohol and salt to make it visible. It is then placed inside a heart-shaped pendant. If you look closely, you can see the tiny white fragment inside the heart.

The company behind this, DNA Bank of Tokyo, admits it's not the most romantic idea.

KATSUHIKO MIYAUCHI, DNA BANK OF TOKYO (through translator): For ordinary people, DNA may sound like something complex. But we wanted people to have an opportunity to know more about DNA. So we came up with the idea of making a pendant which holds the individual's DNA as a gift for Valentine's Day.

DILLON: Not to put a price on something so personal, but a few strands of your DNA inside a pendant costs about $43. But if it's unique you're going for this Valentine's Day, you're guaranteed your DNA is one of a kind.

Denise Dillon, CNN.

(END VIDEOTAPE)

HAYNES: Happy Valentine's Day, wherever you are.

BAKHTIAR: Yes. Happy Valentine's Day. See you tomorrow.

HAYNES: See you.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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