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Lou Dobbs Moneyline
Dow Dives 684.81 to 8,920.70; Nasdaq Declines 115.75 to 1,579.55
Aired September 17, 2001 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, CNN ANCHOR: Good evening, everyone. America's markets reopened for trading today. The sell-off today was swift and it was severe. The markets falling, in fact, to the lowest level since 1998. The Dow suffered its worst one-point loss ever today. It is now 24 percent below its all-time high. That, making it an official bear market, defined as any market dropping from 20 percent or more.
Overall, the markets losing today almost $600 billion of market value. Today's sell-off coming, despite a half-point interest rate cut by the Federal Reserve. The Fed funds rate is now at its lowest point in nine years. The discount rate, at a level not seen since 1962. The discount rate at 2.5 percent.
Still, the markets were open, and that, the principle goal of this day, and a tribute to the thousands of men and women who worked diligently for days to restore phones, computers, water and power to lower Manhattan, to Wall Street, and specifically, the New York Stock Exchange, a tribute to the American spirit, if you will, as several leaders told me on Wall Street this morning.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Everyone coming together in demonstrating America's resiliency.
UNIDENTIFIED MALE: We took an attack right at the financial capital of America and the world, and we're back.
UNIDENTIFIED MALE: We've united as Americans to send a message to the world: America's back in business, and if you bet against America, you're dead wrong!
(END VIDEO CLIP)
DOBBS: For more on markets now we turn to Christine Romans, who worked throughout the morning, my teammate for several hours this morning, in fact, down there -- staying throughout the day on what was a historic session -- Christine.
CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, it was a fierce sell- off on Wall Street. It was record volume, folks trying to make up for four days of shut markets here, 2.4 billion shares changing hands here today. And it was with heavy hearts and grim expressions that they sold these stocks. Down 684 points, the biggest point drop ever, down about 7 percent. The Dow transports down about 15 percent.
Really, anything having to do with airlines got hit today. When you look at the Dow losers, you can see that in spades. United Technologies down sharply, warning on its fourth quarter, saying it could be 30 cents below views because of disruptions in the airline industries. Its Pratt & Whitney unit makes aircraft engines.
Boeing orders for airliners expected to slip - that stock down about 7 points. GM, 3M and Honeywell also lower here. American Express, insurance companies, financial companies all getting hit as well. American Express actually warning after the bell, saying that terrorist attacks will hurt travel and consumer spending in the third quarter. Microsoft, Home Depot, Disney, GE all sharply lower. GE, in fact, the most actively traded stock here. It has already warned on its third quarter because of the New York terror attacks.
Defensive stocks were the real winners here. General Dynamics, Northrop Grumman -- Northrop Grumman up 12 points. Look at Raytheon, up more than 6. It was on the most actives list, that's 26-percent gain for Raytheon -- a lot of talk about prospects of increased military spending. It's a group that traders on the floor and some analysts, Lou, are saying could continue to see advances in coming days -- Lou.
DOBBS: And, Christine, as we pointed out, the most severe point- loss ever for the Dow, but in point of fact, in percentage terms not making the top 10 worst percentage declines.
ROMANS: Not at all.
DOBBS: OK, Christine, thank you. Christine Romans.
Well, the Nasdaq today plunged 115 points -- no record in that performance, either, in terms of percentage loss or point loss. Greg Clarkin has the story from the Nasdaq marketsite for us -- Greg.
GREG CLARKIN, CNN CORRESPONDENT: Lou, it's a day when one week ago what was considered routine and kind of taken for granted, today seemed extraordinary to many people, the markets getting back up and running. And, yes, the Nasdaq did sell off. It was down 115 points. That doesn't even rank in the top 10 in terms of point loss. It was down 6.8 percent, again, not even in top 10. Two-point-two billion shares traded -- not even close to top 10 in terms of volume.
Now, the composite did finish at the lowest level since October of 1998. What we saw were a lot of the big cap technology stocks selling off today. If you take a look at a sampling of some of those, you'll see across-the-board weakness, and the travel stocks also sharply lower.
Northwest Airlines, Skywest, both losing about a third of their value. The online travel-related operations, Priceline.com also suffering greatly. We did see pop in some of the technology companies that specialize in various security areas. Those did very nicely. Now, let's take a look at those big caps, give you a sense of where they finished the day. We did see Intel, Cisco, Oracle and Dell all posting losses on the day. Cisco Systems -- in its case, it came back a little bit with just a 47 cent loss.
So again, Lou, the composite sits now at the lowest level since October of 1998, but it was one of those days where a triple-digit loss really didn't faze a lot of folks. They were just really pleased to get back to the routine, and they didn't see a lot of those waves of selling that some folks expected after that initial wave -- Lou.
DOBBS: Greg, as you say, severe point loss on the day, but in point of fact, orderly, the session orderly throughout. And not certainly in terms of the Nasdaq registering in the top 10, so that's something to be grateful for, in addition to the fact that the markets themselves opened today.
CLARKIN: Exactly, where we could just point out. Technically, the Nasdaq held up very nicely. The system never appeared to be taxed and things were incredibly orderly.
DOBBS: OK, and of course I think it's also fair to point out the Nasdaq had suffered far greater declines than the New York Stock Exchange composite or the Dow Jones or S&P 500 over the course of the past year and half as well.
Greg, thank you very much. Greg Clarkin at the Nasdaq marketsite. This is, without question, a day that was anticipated with some considerable anxiety: the open this morning, in question, frankly leading into the end of last week, and some skepticism about whether these markets would open.
Hillary Lane reports on what turned out to be a triumphant session.
(BEGIN VIDEOTAPE)
HILLARY LANE, CNN CORRESPONDENT (voice-over): Flags in their hands, masks over their mouths, emptiness in their hearts -- workers make their way back to a very different Wall Street, arriving to hear that the Federal Reserve had moved to bolster confidence.
UNIDENTIFIED REPORTER: Twenty-one minutes after the hour, the Federal Reserve, just hitting the wires here, announcing that they are cutting interest rates by 50 basis points.
LANE: Five minutes before the start of trading at the New York Stock Exchange, comes the call to action.
UNIDENTIFIED MALE: Today America goes back to business!.
LANE: But at the 9:30 open, no rush to start trading. Instead, two minutes of silence.
BILL MCLAUGHLIN, BEAR STEARNS: It was very emotional. When they sang "God Bless America" there wasn't a dry eye in the trading room. LANE: The open, according to one trader, plays out like a script. Within minutes, the Dow has lost 130 points, the Nasdaq 108. Then, as each of the major components opens, the Dow slide worsens. Less than an hour into the session, down 629 points.
Dozens of companies begin to buy back shares. At 11:00 a.m., Merrill Lynch President Stanley O'Neal walks among some of his relocated 9,000 employees.
STANLEY O'NEAL, PRESIDENT & CEO, MERRILL LYNCH: We're actually seeing more buying orders coming into the market, starting to give a little bit of balance to the market.
UNIDENTIFIED MALE: 25,000 at 135.
LANE: Before noon, the Nasdaq attempts a rally, but slips back.
(on camera): By midday, the markets remained near their lows/ Traders said movement was so volatile that even the most seasoned investors didn't know what to expect.
(voice-over): 1:24 p.m., the White House holds a news conference and the markets resume their slide. Traders say, because there is nothing new to build confidence. Just before 3:00 p.m., the Dow was off 720, the Nasdaq 114. And neither moves much from there.
The heaviest volume ever at the New York Exchange, and the heaviest hearts.
Hillary Lane for CNN Financial News, New York.
(END VIDEOTAPE)
DOBBS: If history is any indicator, today's losses will indeed be short term. This is how the markets have reacted historically, after other traumatic events. In 1915, the British ship Lusitania was torpedoed. A short time later, America entered World War One. The Dow fell more than 4 percent after one day, off more than 7 percent after a week. But after five years, the Dow had gained 43 percent.
Following the bombing of Peal Harbor in 1941, the Dow lost 3 percent, losing five percent after a week. Five years later, it was almost 50 percent higher.
The Dow dropped two percent after Iraq invaded Kuwait in 1990, nearly 4 percent lower after a week. Five years later, the Dow had risen 63 percent. And after the 1993 bombing of the World Trade Center, the Dow was down half a percent. A week later, it was a percent lower, and after five years, the Dow had grown in history's most impressive bull market, 152 percent.
So where do the markets go from here? We're going to turn to John Manley of Salomon Smith Barney and Roger McNamee of Integral Capital Partners, to give us, at least, their views.
And, John, if I may, let me start with you. This sell-off today anticipated, if you will -- what did you make of the day's session?
JOHN MANLEY, SALOMON SMITH BARNEY: It was orderly, it was never out of control. I think they were able to match up buyers and sellers, and I think the market is pricing in the unthinkable, which is what it's had to do for the last several days.
DOBBS: And, Roger, the Nasdaq held up well, the technology stocks that have been severely beaten -- I certainly don't have to point that out to you -- what do you make of the performance there?
ROGER MCNAMEE, INTERGRAL CAPITAL PARTNERS: Lou, I was actually incredibly impressed by how well the systems worked today. And frankly, the whole thing turned out pretty much as the script would have suggested. Had the market closed for four days -- clearly there had been a lot of bad news, and clearly the economy was affected, so stock prices were going to be lower. But the fact that you could have record volume on the New York without a problem, that you could have a bad day on the Nasdaq and have it, you know, not be in the top 10 of history -- not even the worst day of the year, I think speaks volumes about how appropriate your positive long-term attitude really is here.
DOBBS: OK. John, as you say, the markets were orderly. What can we anticipate from here?
MANLEY: I think you're going to see a lot more volatility. I don't think anyone can say this was it, that it's over now. In fact, I can't give you any reason to say you have to buy it tomorrow morning on opening, which is exactly what the market's pricing in right now. It's the short-term concerns that I think keep people from buying into what, as you pointed out, historically has been a reason to buy longer term.
DOBBS: We have talked, on Wall Street, and certainly, investors, concerned about what came to be known in the year 2000, the end of 2000 and 2001, the lack of visibility. Certainly, visibility, it seems to me, has not been improved here, has it.
MANLEY: IT's been made worse, there's no question. The consumer will be weaker and the economy will be weaker, on a short-term basis. But then again, there are reasons for that the market can point to as being one time in nature.
DOBBS: Roger, visibility, here? Technology, it was absent before. What is it now?
MCNAMEE: Well, actually I think, Lou, you can see that the September quarter, which was already a write-off, is clearly going to be worse. And I suspect December and perhaps March will be difficult as well.
I think the good news comes in that the country is being given something to focus on, and we're going to rebuild New York, we're going to rebuild Pentagon. And I think, quite candidly, we're going to rebuild the national spirit in a really constructive way. So I expect a much sharper upturn when things finally do turn, so that, you know, on a five-year outlook basis, I think the market's going to be great. But I agree completely with John, the next few months are anybody's guess.
But candidly, with stock prices at these levels, I'm not sure I'm as worried about it as I was, say, six months ago.
DOBBS: Interesting. And with just a few seconds left, here, Roger, let me ask you this: your advice to investors, a lot of talk here about patriotic buying of stock -- your thoughts?
MCNAMEE: I just don't think that's appropriate. I think people have to look at their own situation. But the United States economy is very strong, and technology will lead it when it recovers.
DOBBS: John?
MANLEY: The market will take care of itself, as the country will take care of itself. We need, I think, people to concentrate on other things and realize there's a lot of potential, and there's a lot of resilience in America.
DOBBS: John Manley, Roger McNamee, thank you both for being here.
Well, before the markets opened, the Fed cut the discount rate and the Fed funds rate by 50 basis points, and that half-point interest rate reduction certainly welcome. But its impact, not easily assessed.
And the European Central Bank also, cutting rates. In fact, a great deal of coordination among central banks all around the world. And Tim O'Brien has that part of the story from Washington.
(BEGIN VIDEOTAPE)
TIM O'BRIEN, CNN CORRESPONDENT (voice-over): In lowering a federal funds rate from 3 1/2 to 3 percent, the Fed said: "Even before the tragic events of last week, employment, production and business spending remained weak, and last week's events have the potential to damp spending further."
BERT ELY, ELY & COMPANY: Frankly, I think it should have announced the cut last Friday. I think that would have been somewhat of a psychological boost to investors over the weekend.
O'BRIEN: The Fed may have been less concerned about market fluctuations than with the system's performance in light of Tuesday's attacks. It said it, "will continue to supply unusually large volumes of liquidity to the financial markets as needed, until more normal market functioning is restored."
SUSAN PHILLIPS, FORMER FED GOVERNOR: I think at this point, they're really concerned, no matter what the market does, that there's adequate liquidity so that all of the trades can settle, so that people can trade out of their positions and make whatever transactions are necessary.
O'BRIEN: And to some, an even broader message. JAMES GLASSMAN, J.P. MORGAN: I think what's going to be important right now as the message coming from the Fed is we know that we are facing a very uncertain situation, and we're going to do what it takes. And I think that has the ability to change the thinking, help to bolster confidence in the U.S. economy.
O'BRIEN: President Bush, speaking at the Pentagon, said the underpinnings for economic growth are everywhere, even in New York.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: After all, the Congress, in a bipartisan fashion, overwhelmingly passed a supplemental of billions of dollars, which will help -- not only get New York City up and running again, but will help provide some economic stimulus.
O'BRIEN: It all costs money, of course. To pay for it, the White House and Congress appear to have tacitly agreed they may have to lift the lid on the Social Security lockbox.
(END VIDEOTAPE)
O'BRIEN: As for the Fed, it said the risks still remained weighted toward conditions that may generate economic weakness. And, Lou, you know the translation. It means there could be more rate cuts down the road.
DOBBS: Thank you very much. Tim O'Brien from Washington.
Well, Treasury Secretary Paul O'Neill was among those officials who were on the balcony to open trading at the New York Stock Exchange today. And earlier, I asked him for his thoughts on today's market.
(BEGIN VIDEOTAPE)
PAUL O'NEILL, TREASURY SECRETARY: I'm very pleased the markets are open again. It is a beginning and end note for the U.S. economy, that we have, in effect, a world financial switching center, where buyers and sellers come together and make markets, and not having them for four days, really very unusual, not since the first world war. It's nice to have the markets back in business.
DOBBS: These markets being closed, as you say, for four sessions. It has been a very long time indeed since that has happened. With that pent up frustration on the part of buyers and sellers, this is not an entirely unexpected result in, at least, the early going today.
O'NEILL: Well, I think that's right. You have to always remember, when you're looking at markets, for every seller there's a buyer, and for every buyer there's a seller. My guess is that when we look a year down the road, the people who bought today are going to be the happy people. The people who sold will be sorry they did it.
DOBBS: Well, this morning, when you and I talked earlier, you said you felt that we would see new records in this market. I guess the question to follow up with here a couple of hours later is, how soon?
O'NEILL: I don't know. I think it's conceivable we could be approaching the tops on the Dow side in another 12 or 18 months, no one knows for certain. But I think we've not retreated so far on the Dow side that we couldn't be looking at their records again, when we get into the middle of the next expansion phase in our economy.
DOBBS: The expansion phase of the economy, a lot of mixed views, obviously, in terms of where this economy is headed. The strength of this economy, obviously, ebbing. Going into the last month, we started to see some weakness, in terms of the consumer, that we had not seen. Is it your judgment that this economy is stronger than some would have it?
O'NEILL: Well, you know, I think those who saw weakness weren't paying any attention to the positive factors that continued to exist in our economy in the last few months. I thought the positives outweighed the negatives, not by a lot, but by an amount, and that with the flow of funds going into the economy, a week ago today, I would have said then and I will say now, I think we're on the move back. we have a resilient economy. The crops are still growing in the fields and the people are still showing up in the factories, and the shopkeepers are out there. Even here in midtown New York, you can begin to feel a quickening pace again. We'll get our act together. We're going to be OK.
DOBBS: No recession?
O'NEILL: I don't think so.
DOBBS: And, in terms of the event that precipitated all of this, the devastating terrorist attack on the World Trade Center and the Pentagon, all of that, whether one looks at it geopolitically in terms of terrorism, howsoever, but fundamentally, there are economic and financial underpinnings. All that happened required money, planning, sophisticated maneuvers of money. As your department and other agencies, as well, have you found any links, any indications, as you go from bank to financial institution around the world, looking for the money of Osama Bin Laden and other countries or organizations?
O'NEILL: Well, you know, I think for some time, we in the United States have lived in our minds, in a world that was free from terrorists and the murders. And it turns out we were too soft in our understanding of what could possibly happen to us.
And what you are going to see now is an all-out attack on -- first of all, labeling terrorists and suspected terrorists, and then systematically going after their financial access -- not just waging a usual kind of war against these kind of people, but waging a financial war, and enlisting the leaders of civilized world countries and their financial institutions in helping us identify who these people are and where their money is and taking it away from them.
DOBBS: Mr. Secretary, let me put it straightforward-like. There are countries, and banking systems within those countries that have said they are either neutral or not to be in any way complicit in an investigation with the United States or any number of other countries. The president has said you are, in effect, either with us or against us. Does that apply to international banking?
O'NEILL: Absolutely. Absolutely. The civilized world needs to band together. We need to use all the tools that are at our disposal to get these people, and we intend to do that.
DOBBS: Mr. Secretary, we thank you for being with us on this opening day of the New York Stock exchange, and return to what we hope is normalcy in U.S. markets and markets around the world.
O'NEILL: Thanks for having me.
(END VIDEOTAPE)
DOBBS: Well, amongst those markets, of course, importantly, the bond market. Now, bonds normally rally when stock prices decline. But today was an exception, as the decline in the equities markets, as they reopen today, swamped the bond market as well.
Economics correspondent Kathleen Hays is here now to explain what happened -- Kathleen.
KATHLEEN HAYS, CNN CORRESPONDENT: Hi, Lou.
As we talked about last week, the bond market was already expecting the Federal Reserve to cut rates. That's one reason why we didn't see bonds doing better, and in fact, why we saw a bit of a sell-off. When I say a bit of a sell-off, for example, the 10-year note down a half-point, yield back up 4.61 percent. The 30-year bond, the long bond, down about 7/8 of a point, the yield at 5.41. Another reason people said, as you know, stocks did poorly, but some people thought they would do even worse.
Now, in terms of what the Federal Reserve did today, cutting its key rate by a half percentage point, it's not just what they did, it's what they said. The Fed said, in its policy statement, they will continue to supply an unusually large amount of liquidity to the markets, as needed. That's important, they're going to stay very friendly. The Fed said that the economy was already weak in terms of employment, business investment and spending, and in light of last week's tragic events, it could weaken more.
Finally in the directive, they left the door open to lower rates by keeping their focus on a worry about weakness in economy -- that's Fedspeak for, "if we do anything next, folks, it's going to be another rate cut." In fact, a former Fed governor says that next rate cut could come at the next meeting in October.
(BEGIN VIDEO CLIP)
WAYNE ANGELL, CHIEF ECONOMIST, BEAR STEARNS: The Fed will undoubtedly, then, at least do another 25 to a 2.75 percent funds rate. Or possibly, and hopefully, they'll do another 50 on October 2nd. The Fed hasn't finished this process of easing.
(END VIDEO CLIP)
HAYS: Let's look at a couple other important markets. You might think that oil prices would be surging right now. Well, today they didn't. Light sweet crude fell some 72 cents. A couple things happened: the U.S. asked OPEC to supply more oil to ease prices and help the U.S. economy after last week's attacks. Also, people looking at the weak stock market, as a sign U.S. economy is going weak, that means less demand for oil.
In the currency market, the dollar has been pretty weak but it did manage to advance today. The Bank of Japan intervened to stop the Yen from rising, that means supporting the dollar. Japan's economy is so fragile, the last thing they need is a strong currency that would choke off exports. The dollar also managed to improve against the euro.
Interesting that we saw the European Central Bank cut, the Bank of Canada cut, the Swiss National Bank, Lou. Everyone is jumping on board, but people said not too much growth anywhere. So actually, those kinds of calculations didn't have too much to do with exchange rate movements today.
DOBBS: Not much growth, but everyone look for it.
HAYS: That's -- hoping, maybe, yes.
DOBBS: Thank you very much.
Well, important to that growth, certainly in this country, will be consumer confidence. And there had been some signs of weakening in that consumer confidence. But, as a result of these terrorist attacks, those fears of weak consumer confidence have heightened over the past several days. Casey Wian now reports from Los Angeles, that the impact may be overstated.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): Some called it patriotism, others therapy. Whatever the reason, many Americans went shopping over the weekend. At the Glendale Galleria, traffic returned to near-normal levels after a sharp drop following Tuesday's terrorist attacks.
UNIDENTIFIED MALE: We have all the confidence in the world, and we can't let them ruin our life. We have to leave our life the same way that we were living before. Because, if we change it, then they are going to win.
UNIDENTIFIED FEMALE: I guess, trying to get break from everything. And just, you know, I had to pull myself away from the television.
WIAN: Most retailers, including industry leader Wal-Mart, report traffic returning to stores after a lull last week, but sales slightly lower. Reminders of the attacks are everywhere, from mall memorials to retailers collecting Red Cross donations. The tragedy brought back painful memories to the manager of this Sears store in Northridge, which closed for 10 months following the 1994 earthquake. Since Tuesday, sales here have been slower, but are improving.
ED TIRITILLI, SEARS STORE MANAGER: The customer dictates when they want to come back into the marketplace. As soon as they have confidence again that -- in their jobs and their safety, they'll be coming back in.
WIAN: It took four years for consumer confidence to recover following the Gulf War. Before the World Trade Center and Pentagon attacks, confidence was already at its lowest level in nearly five years. This time, economists expect federal money for rebuilding, military needs and banking system liquidity will help keep cash in consumer hands.
PRESTON MARTIN, MARTIN ASSOCIATES: Anyone that wants to go into his or her bank branch and cash out their deposits -- well, you know the only question they'll be asked? "Would you like it in fifties or in hundreds?"
WIAN: Several retailers report customers buying plenty of what they need, but not much of what they want.
(END VIDEOTAPE)
WIAN: Consumer reaction to the terrorist attacks will be included in next week's conference board report on consumer confidence. That should provide a clearer picture of what long-term impact the terrorists will have -- terrorist attacks will have on consumer spending -- Lou.
DOBBS: All right, Casey, thanks very much. Casey Wian tonight from Los Angeles.
Well, consumer confidence only one of the challenges now facing this economy. Chief economist John Lipsky joins us now, and he has a perspective on this, as always.
John, good to see you. Are you encouraged at all by some of the upswelling of national pride, some of the contrarian views now following those terrorist attacks?
JOHN LIPSKY, J.P. MORGAN CHASE: Well, of course. I'm sure that that has been the response of government at all levels, local, state, and national, has been very effective. And I'm sure that will be helpful going forward.
DOBBS: How concerned are you about the prospect of recession?
LIPSKY: Oh, quite. And not because of the events of last week. The economic impact will be relatively short-lived. More concerning has been the slowdown in income growth and the drop in consumer confidence that you mentioned earlier. It seems very likely that we're going to have a decline in GDP in the third quarter. DOBBS: A decline in GDP for the third quarter, that makes the fourth quarter very important in your forecast...
LIPSKY: Yes, it does.
DOBBS: ... with the classic definition of two consecutive quarters of decline. What do you think about that?
LIPSKY: We think, again, in the fourth quarter we're going to have another contraction in GDP, as we get a knock-on effect from slowing consumer spending and a new round of cutbacks in the corporate side.
DOBBS: Treasury Secretary O'Neill today told us that he believes that we're going to see records set in this market over the next 12 to 18 months. He believes that we're going to avoid recession. You just think he is flat wrong.
LIPSKY: Well, I hope he is right. But it seems to us that in the near term, we're going to -- a negative quarter this quarter seems almost inescapable. It seems very likely that next quarter will be similar. But we're getting strong policy action, just as we think that the economy is dropping in the current time, the recovery is going to be sharper.
DOBBS: When you talk about strong policy action, we're talking about eight consecutive interest rate cuts, three intermeeting cuts. We're talking about tax rebates, we're talking about energy prices that are remaining under control -- I don't know if we should put that under policy. But we're also talking about what appears to be a large fiscal stimulus to this economy through -- resulting from these terrorist attacks.
LIPSKY: It seems likely that that's going to be part of the response, but the Fed's not over yet. And given the normal lags with monetary policy, we should be feeling the effects in the coming months of the actions the Fed's already taken. We'll be feeling more next year, based on the action that we think they're likely to take in the coming months.
Add to that fiscal spending, and that starts to put together a potent brew for the second half of next year.
DOBBS: Your forecast, capped, in terms of GDP growth for the year 2001?
LIPSKY: For 2001, it looks to us like we're going to be basically, flat, just up slightly for the year.
DOBBS: And the unemployment rate?
LIPSKY: Unemployment rate, this year and next, is probably going to peak something between 5 1/2 and 6 percent.
DOBBS: Did you get the feeling tonight that I'm resisting your recession forecast? LIPSKY: I do, indeed.
(LAUGHTER)
DOBBS: It's always great to have you with us. John Lipsky, thank you very much.
LIPSKY: Thank you, Lou.
DOBBS: Well, as we turn to the matters of the economy: They made their way by water, by ferry, by land, and they drove and walked all the way to the nerve center of American capitalism today. We will have that story next.
(COMMERCIAL BREAK)
DOBBS: And as of now, these are the very latest developments. President Bush today naming Osama Bin Laden as the prime suspect in last week's attack. He says the United States want to capture Osama Bin Laden now, in his words, "dead or alive."
The President meeting with military officials at the Pentagon today, talking about details for activating the 35,000 reservists who will called up to help secure the skies and protect American cities, homeland defense.
Secretary of State Colin Powell now says he's pleased with the international community support and its pledge to fight terrorism around the world. The Secretary of State says he's trying to assemble an anti-terrorism coalition that will have many parts to it, including legal, intelligence and of course, military.
While traders and analysts are making their way to the New York Stock Exchange today, rescue crews, of course, were working to pick through the rubble that was once the World Trade Center. It has been several days since anyone now has been found alive, but emergency workers have not giving up hope.
We join Gary Tuchman now in lower Manhattan. He has more for us on the search and rescue effort there -- Gary.
GARY TUCHMAN, CNN CORRESPONDENT: Well Lou, when we first arrived in New York, we were told almost immediately by rescue workers that five survivors had been found, five survivors within the first 14 hours. Based on that we and they, the rescue workers, thought we'd hear more good news, but it hasn't come.
Here are the distressing numbers. 4,957 people are still missing in this rubble right behind me. And no people been found alive since early Wednesday morning. It is believed that if there are survivors, they are under the World Trade Center complex. There are six levels below the complex, stretching a total of about 120 feet. Most of those levels have been explored, and no survivors been found.
Earlier today, a car was found down there. A rescue worker saw someone in the car. It turns out it was someone who was killed during the disaster. It was very disappointing.
But much of the underground area hasn't been explored. And the reason is, it's too dangerous for rescue workers to go down there. We are told that there's a reasonable expectation a rescue worker could go down there and not get hurt or be killed, they would try it. The problem is, the contrary is true.
There's a reasonable expectation they would be hurt or killed. And it's too dangerous, the rubble's too precarious and there's much of the area they can't get to. That is the fear right now that people could survive for days and that they'll never be recovered.
Lou, back to you.
DOBBS: Gary, thank you, Gary Tuchman.
Well, today in Wall Street, the insurance industry, insurance companies certainly the worst hit sector on Wall Street, along with airline sectors. Investors are now predicting that the large insurance claims in the wake of Tuesday's attack will have a significant impact, insurance issues across the board in those companies.
Allstate, which lost a half dollar a share. AIG, Chubb, Cigna, all down well over $3 a share. Metlife losing almost $2 a share. The current -- the largest commercial insurer now says while claims will be significant as a result of the terrorist attack, they will not affect the companies bottom line.
We are joined now by AIG's chairman and chief executive officer, Maurice Greenberg. And it is good to see you.
MAURICE GREENBERG, CEO & CHAIRMAN, AIG: Good to see you, Lou.
DOBBS: I know these are difficult times. Your offices just a few blocks from the epicenter of this devastation, your employees, your company, what shape are you in?
GREENBERG: We're in pretty good shape. We're going to occupy our building again tomorrow. We're fortunate we only had two casualties. We had about close to 100 at the Trade Center and 2 didn't get out.
DOBBS: That -- in the wake of this disaster, well, it is of course devastating I know for you to lose anyone.
GREENBERG: It's terrible.
DOBBS: That is very fortunate indeed. In terms of those other companies, and the other lives down there that have been lost, the claims against insurance companies will be massive. How significant will be the claims be against your company, the largest commercial insurer?
GREENBERG: Lou, it's very hard to predict the ultimate claims. Right now, we put an estimate out of approximately $500 million. Probably will go higher than that. But AIG's a triple A rated company. Close to $50 billion of net equity. So from that point of view, it will not be devastating. But the loss of lives, you can't measure that in money.
DOBBS: Hank, as we know, following the bombing in 1993, a lot of litigation followed that, a lot of discussion over various clauses and those in those contracts and subsequent claims for compensation. This time, much is being made of the issue of an act of war as a waiver of the liability of insurance companies. What is your company, your position on that?
GREENBERG: I think any company that tries to escape liability by invoking the war clause is just out of step. It is not an act of war. It's a terrorist attack and will be covered. Our company will obviously do that. And I'm sure that most, if not all companies, will.
On the question of liability, though, I would hope that we can have one jurisdiction to handle this, rather than have the trial bar begin to make hay out of this. And there have been discussions today with officials in the Treasury Department and in a number of other companies to see if that could be -- expedite claims, payments, and avoid this circle of litigation.
DOBBS: Well, the federal government, credited the Bush administration, has moved to expedite those claims for benefits for the survivors and the families that the victims claimed in this attack. So that would be a very happy.
GREENBERG: It would be a best way of doing it.
DOBBS: OK. Hank Greenberg as always, good to have you with us.
GREENBERG: Good to see you, Lou.
DOBBS: Hank Greenberg, AIG.
And the last several days, of course, difficult for everyone. Rescue workers combing the rubble still for signs of life. We'll have the latest for you throughout the evening here from ground zero. These difficult days, difficult for all of us. For New Yorkers, however, specific and a very, very sharp pain and mourning and anger. We want to take a look now at the struggles of the rescue workers and all the people who have shared that pain over the last several days.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: I can't sleep. I have dreams and jump out of bed.
UNIDENTIFIED FEMALE: What's your reaction to going back to work today?
UNIDENTIFIED MALE: Nervous, just like everybody. Wore my sneakers just in case I have to do any walking or running today. Sort of like everyone else, I said my prayers before I left. UNIDENTIFIED MALE: It's pretty mixed emotions. I lost a lot of friends, a lot of co-workers, a lot of people -- your life goes on. Got to get moving.
UNIDENTIFIED MALE: I can't wait to get back and start trading.
UNIDENTIFIED MALE: Thank you.
MAYOR RUDY GIULIANI (R), NEW YORK: We need you to do the things that you've been doing. We need you to start trading again. I don't understand what you do actually.
(LAUGHTER)
UNIDENTIFIED MALE: Things are definitely not normal.
UNIDENTIFIED FEMALE: There's excitement about getting back to work, about getting back to normal. Our city has cameras and has police everywhere. It's almost like we're in a military zone.
UNIDENTIFIED MALE: Driver's license?
UNIDENTIFIED FEMALE: It's like everything else, when times are bad, you know, now something like this, all of sudden security will be tightened. And then you know, when nothing happens for year, then it's lax again. When they have to worry, they worry. And then, you know, think like OK, it's OK, but it's never going to be OK.
UNIDENTIFIED MALE: We just had a bomb scare. And I had to walk. It's just awful for the American people. We're in trouble. We have to fight back these people and keep on going.
UNIDENTIFIED MALE: There's only three things that I think has pulled everyone together. And that's hope, faith and love.
(MUSIC, "GOD BLESS AMERICA")
(APPLAUSE)
(END VIDEOTAPE)
DOBBS: Well, certainly principle amongst those achievements today, reopening the New York Stock Exchange, reopening the equity markets in this country. The result, large losses in the indexes and specifically in a number of sectors. I mentioned the insurance industry and of course, the airline industry in particular.
In fact, airline stocks simply collapsed today. Some $6 billion dollars in market cap were erased. The industry, already suffering in was a slowing economy, struggling now simply to stay solvent after this last devastating terrorist attack and the curtailment of flights and the shutting down of airports.
Kitty Pilgrim has the report on prospects for the industry.
(BEGIN VIDEOTAPE) KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Airline stocks sold off heavily on the day. American, Continental, Delta and United heavily hit right from the start of trading. Few carriers were spared from the sell-off. Continental put 12,000 workers on hold over the weekend. U.S. Air is cutting 11,000 workers. CNN has learned American and Northwest cuts are imminent. Continental's Gordon Bethune predicts 100,000 job cuts in the industry.
GORDON BETHUNE, CEO, CHAIRMAN, CONTINENTAL: Three day shut down, we estimate, caused the loss of more than a billion dollars. It's a staggering amount. That's $15 million an hour.
STEVE LOTT, "AVIATION DAILY": The airline industry is a very fragile industry. They operate normally on very razor thin margins. So any disruption of service sends the airlines into a tail spin.
PILGRIM: Delta Airlines is calling for government help.
LEO MULLIN, CEO, CHAIRMAN, DELTA: They wouldn't want the airline industry to be the first economic casualty of this war.
PILGRIM: U.S. Transportation Secretary Norman Mineta will meet with airline industry leaders in the next few days. The House initially voted down a package of aid and loan guarantees totaling some $15 billion. But the Bush administration says that it's open to some kind of help for the industry.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: These are the kinds of subjects that we will talk with the Secretary of Transportation, with the airline industry and as importantly with members of Congress. Congress must be involved.
PILGRIM: At Newark airport, Senators Torricelli and Corzine were calling for more federal help.
SEN. JON CORZINE (D), NEW JERSEY: And I think that's actually a cost of government. It's a cost of all of us to make sure that our system works. And so, I will be personally be supportive of federal activity to make sure that our security measures are consistent.
(END VIDEOTAPE)
PILGRIM (on camera): U.S. Transportation Secretary Norman Mineta meeting with industry leaders early tomorrow. There has been no decision, we're told, on the size of the package. But Lou, it's interesting because the estimates are ramping up. The initial cash settlement was $2.5 billion. It's now probably double that, we're told by congressional leaders. And $20 to $24 billion in additional assistance, including loan guarantees.
DOBBS: And the assistance, as you point out, desperately needed.
Kitty, thank you very much. Kitty Pilgrim.
Well, the president is, as we have reported to you, calling Osama Bin Laden the prime suspect in last Tuesday's terrorist attacks. He now says the United States wants to capture Bin Laden dead or alive.
We are now joined by the former Secretary of State Madeleine Albright to discuss what our expectations should be in the prospects for success in soon capturing Bin Laden.
Good to have you with us and we....
MADELEINE ALBRIGHT, FORMER SECRETARY OF STATE: Good to be with you, Lou.
DOBBS: We want to turn first and foremost to this war. It's a new war. It is, as the President said, going to be a long war. How soon should we expect, in your judgment, some success in that war?
ALBRIGHT: Well, I think we have to be patient, Lou, it's a very difficult war. A lot of attention was paid to it when we were in office. And we added a lot in terms of security and trying to go after Osama Bin Laden. And it is not easy.
And I think the most important point here is to understand that this has to be a sustained effort by the United States and the coalition that Secretary Powell is putting together. And to understand the difficulty of pursuit of this man, who could hide. Very hard to get concrete intelligence on him. And we have to just keep, as the President said, we've got to stay with it.
DOBBS: The president has made it clear, this administration's made it clear that there is a world now that is either with us or against us. And that extends not only to military geopolitical issues, but as Treasury Secretary Paul O'Neill revealed today, it goes to the international banking system, the international financial system. And this country is insisting on cooperation from every nation state in tracking down these capitol flows. What do you think?
ALBRIGHT: Well, I think it's very important that people cooperate. And the point made by Secretary O'Neill is essential. We found that it was important to have international cooperation on tracking down money.
It's kind of a new activity, but we did it with money laundering and drug dealers, as well as looking at what was going on in Serbia. So this is something that does require international cooperation. It requires the banks to cooperate, the governments to cooperate. And following the money is an essential aspect of putting a noose around Osama Bin Laden's operation.
DOBBS: And the impact of this new world that we are now engaged in, on business?
ALBRIGHT: Well, I think that obviously it will have an impact on business. But I was very interested in all your report today about the fact that that the market worked. And I don't think we should underestimate that. That's a big deal, the fact that after these days of disruption, they were actually able to do business. And it's important for us to have confidence in America, to invest in ourselves. That, in effect, provides a certain amount of confidence to the rest of the world because we're in all of this together. I think the biggest job we have is to persuade the other countries and the other businesses in countries is that our interest and their interests are the same. And that we're all in this together, bonded in an economy that is clearly interdependent.
DOBBS: Madeleine, thank you very much. Madeleine Albright, former Secretary of State. We will continue with MONEYLINE in just one moment. We're going to bring back our guests this evening to participate in a roundtable to assess the economic and the political prospects. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Well, the Dow Jones Industrial, as we reported to you, suffering its worst point loss ever. In percentage terms, however, not making even the to 10.
We have asked our panel to come back with us. And to -- and we're going to engage in a little, if you will, roundtable about what the prospects are. Gentlemen, let me turn to you first. We've seen, -- what should we point of fact be thinking of as investors now?
JOHN MANLEY, SALOMON SMITH BARNEY: I think we decide how we play it for the long-term, figure what you want to buy in the weeks and months ahead.
DOBBS: John?
UNIDENTIFIED MALE: Absolutely. The latest events suggest we're going to have a negative period in the near term, but it also sets the stage for stronger recovery in the course of the coming year.
DOBBS: And as you've talked about the prospect of recession here. Is there a defensive stock strategy? I'm forcing you to buy into this. There was (UNINTELLIGIBLE)/ DO you believe that there's an appropriate defensive strategy here for...
MANLEY: I think there is, but only for a while. I mean, these things tend to get better. You know, one of the things that pushes things over the short term. But from that, I think as John is alluding to, you tend to get a rebound. And it's going to be an interesting time. We'll know exactly when to be in there, when to be out of these things.
DOBBS: Well, Roger McNamee always knows when to go in and out. Your thoughts?
ROGER MCNAMEE, INTEGRAL CAPITAL PARTNERS: The key thing, Lou, is that I think we now have a sense of how long we have to wait, which is to say sometime in the next few months, the economy is going to be fully reflected in the market. And then the only uncertainty out there will be the political side. And that to me is unknown. But the one thing I know is that will re-emerge from this very, very strong. And so in my sector, technology, I think that the risk of buying is now quite low because everybody understands the bad news.
DOBBS: Kathleen Hays, if we may go to you, your thoughts here?
HAYS: Well, Lou, I guess the thing that people are saying, I think, pretty unanimous among economists is that between the Federal Reserve cutting interest rates, the federal government going petal to medal with fiscal stimulus in the form of rebate checks we've already got, tax cuts, and now a lot of money that they're going to have to spend to get the infrastructure built again and many other things, many people say that the economy will be growing again, after the first of the year.
Some people think it could happen earlier. For now, we're probably in recession. But if looking six months down the road, many economists say the economy will be functioning again and maybe that does favor the stock market over bonds.
DOBBS: Christine Romans.
CHRISTINE ROMANS, CNN CORRESPONDENT: Near-term, Lou, they're going to be tallying the devastation and what it means for corporate America. We heard from United Technologies, American Express today. Folks are going to be looking at every single, corporate release to try to figure out just what the damage is on the bottom line.
DOBBS: Greg Clarkin.
GREG CLARKIN, CNN CORRESPONDENT: Well, Lou, traders we spoke with today said their main concern right now is how a long period of unsettlement will event kind of create for investors? What type of psychological impact will it have? We got through trading today. That was a big plus, no glitches to the system, but still a lot of folks looking for kind of a prolonged period of unsettledness as this works through the system.
DOBBS: Thank you, Greg Let's complete the circle by going back to where we began -- John Manley.
MANLEY: Well, you know, I think you have to realize that America doesn't start wars, but America tends to win them, win conflicts. And that's why you have the record that you were talking about with some of those incidents in the past. I think you have to take a long-term view on this sort of thing. We're still a resilient country. We're a country that's being tested, but I think we are a company that won't be found to be wanting.
DOBBS: Thank you. And thank you all. Thank you, John.
America went back to work today on Wall Street. Markets opened, but no one did so without remembering those lost. We'll take a look at that, next.
(COMMERCIAL BREAK)
DOBBS: Time now to take a look at some of your thoughts. Many of you are writing in to pay tribute to the rescue workers and their ongoing work at the World Trade Center.
W.R. Joyce writes to say every American can do something to support the market, saying "All Americans should buy and tell their broker they're buying for the long term, not for short-term profit. Well, indeed, W.R. Joyce, you're right if they are indeed buying for the long-term.
Judy Eby in San Diego, California writing to say she's buying stock in America, and suggests we all do the same, writing to say, "What would happen if every American bought stock in their favorite this week? The stock market would soar and so would hopes for our future.
I have to say, that is wonderful thought motivated by the of best spirit in America. But again, I would suggest to you if I may, Judy Eby, that you be serving your self-interests and making markets work the way they should.
As John Manley put it, these markets will serve themselves as they have all of us for a couple of hundred years now.
Zenobia, a junior at the University of Washington Business School in Seattle, says that terrorist attacks will spawn a new form of generosity, one that will define who we are for centuries to come. And she writes. "Although we might be perceived as greedy by less prosperous societies, our resilience to the evils of terrorism will project our image to the world as hard working, humanitarian, and anything but greedy."
Well, we want to remember always those who lost their lives here. Many Americans returning to work today on Wall Street, trying too conduct business as usual. But not before taking a few moments to remember the victims of last week's tragedy.
Let's take a look now at how Americans paid their respects on the trading floors of Wall Street and around the country.
(MOMENT OF SILENCE)
(MUSIC, "GOD BLESS AMERICA")
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Dick Grasso was gracious enough to give us space here at the New York Stock Exchange.
(END VIDEO CLIP)
DOBBS: The markets have reopened and the work, the hard work goes on.
That's this edition of MONEYLINE. Thanks for being with us. I'm Lou Dobbs. Good night from New York. Our continuing coverage "America's New War" continues in just a moment.
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