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Lou Dobbs Moneyline
Markets Stabilize in Wake
Aired September 18, 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, HOST, MONEYLINE: Good evening. I'm Lou Dobbs and this is MONEYLINE. The markets today moved lower, but only modestly, as stock prices stabilized on a traumatized Wall Street. Investors were buying today. The Dow Jones Industrials actually climbing more than 70 points early in the session, settling back for a 17-point decline on the day. The Nasdaq fell 24 points.
Adding to investor concern, an investigation into illegal stock activity before last week's terrorist attack: the terrorists now suspected of profiting by selling airline and insurance company stocks short.
In another concern in the war against terrorism, the nation's nuclear power plants: are they vulnerable to assault? We have a report for you tonight that may well shock you.
And a new and potentially devastating computer virus is spreading throughout the world. There is concern tonight that Nimda could be much more costly than last month's Code Red. We will have the story for you. And President Bush and French President Jacques Chirac meeting at the White House tonight at 6:30. Comments are expected. We will of course have live coverage of that meeting and those comments as they occur.
Wolf Blitzer joins us now, and he has the latest developments in America's new war -- Wolf?
WOLF BLITZER, CNN, WASHINGTON: Thank you very much, Lou. We do have some new developments to report at this hour in America's new war. The White House, as you point out, is awaiting the arrival of French President Jacques Chirac. His arrival is expected within the half hour. He'll be meeting with the president on an effort to shut down terrorists around the world.
U.S. officials tell CNN that Mohamed Atta, one of the 19 hijackers who struck last Tuesday, held a meeting this year with an Iraqi intelligence agent. The officials say the lead is being pursued, but in and of itself, they say, it does not necessarily mean Iraq had a direct role in the catastrophic terror attacks a week ago today.
Also today, the number of dead and missing rose to nearly 6,000, including more than 5,400 in New York City. Mayor Rudy Giuliani now says there is little hope of finding any more survivors. Today the Federal Emergency Management Agency released this videotape that offers a graphic look at the damaged site and conditions facing the workers.
And today in Pennsylvania, a memorial service in honor of the pilot of United Flight 175. That was the second plane to crash into the World Trade Center. The pilot Victor Saracini left behind a wife and two young children.
We'll have more news as it becomes available. We turn now back to Lou Dobbs in New York -- Lou.
DOBBS: Thank you very much, Wolf. And Wolf Blitzer will be keeping us up to date on developments throughout, of course, the next hour and the evening, here on CNN.
As we said earlier, investors today buying. Christine Romans, Greg Clarkin joining us now, and they have the story of today's activity in the markets.
And we begin with you, Christine.
CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, there was a modest buying early on, but it fizzled here, and the Dow ended with a loss. But it was a slim loss, down about 17 points on the day. Traders cite heavy volume and a cautious, confused investment public. Dragging down the Dow here today, American Express falling to a lowest level since October, 1998. It's displacement of headquarters and a warn on the third quarter because of the World Trade Center explosion.
Boeing down as well, broker downgrade there. Boeing makes airplanes, and the airline industry itself says it's in trouble. GE also lower. This one had warned already about its exposure to its insurance business, because of the attacks on the World Trade Center. Johnson & Johnson, 3M, also dragging down the Dow here today.
Want to take a look at the airlines quickly, as well. Airline stocks actually stabilizing here today, and the S&P airline index up about 6 percent. Southwest Airlines is on the bottom of that list, there. It's down about a penny at the close of the day, but it was very actively traded here today, some folks saying that they are a little bit more optimistic about these stocks in light of the fact that airline officials are in Washington, trying to hammer out some sort of financial aid package from the U.S. government.
Overall, here, we saw IBM, a bright spot throughout the session, Lou. Traders saying they were just trying to stay where they were closed yesterday and not lose any more ground -- Lou.
DOBBS: A pretty good performance, in point of fact, on the day. The Nasdaq today fell 24 points. Greg Clarkin at the Nasdaq marketsite -- Greg.
GREG CLARKIN, CNN CORRESPONDENT: And, Lou, we did see a little touch of volume in morning part of the session, but really nothing significant in the Nasdaq. Again, down about 1.5 percent, 24 point loss. It closes at 1,555. Now, particularly hard hit today were the chip stocks. We did see the Philadelphia Semiconductor Index breaking through its own 52- week low. It was down 6.3 percent to a new 52-week low. Want to give you a sampling here of some of the research notes that we're starting to hear now, as the research communities kind of digest the events of last week and how they'll affect technology stocks.
Over at Credit Suisse First Boston -- this is specifically on the semiconductor stocks -- they say the tragedy is likely to delay recovery, and they say the lost full week of shipments for September is going to hit the industry hard. And Goldman Sachs says the events last week may be a catalyst for investors to reconsider how much to pay for tech stocks in general and chip stocks, specifically.
Now, if you take a look at those chip stocks there, you can see some sharp losses and, again, the Philadelphia Semiconductor Index down big today, down 6 percent to a new 52-week low. Lou, back to you.
DOBBS: Greg, thank you very much.
Tom Galvin points out that historically, the Dow has moved higher after traumatic national events. These events obviously classify in that category, and Tom joins us now.
Tom, this market today stabilized. That's got to be gratifying to just about everyone.
THOMAS GALVIN, CREDIT SUISSE FIRST BOSTON: I think there are a couple take-aways. I mean, first of all, we are seeing an orderly, functioning system. I thought the most interesting statistic was the actively-traded Fed funds rate, actually going to 0.25 percent today, which reflects more than adequate supply of liquidity coming into the system, as well as the fact that we're not under financial stress. The demand for that is in grades, so I think that's a very important positive to stabilize the markets.
I think, as well, some people are also going back and looking again at some of the cyclical that they tossed out yesterday, the thinking being that maybe we'll get a sharper, V-shaped economy next year than we might have seen otherwise, when people thought it would be relatively muted.
DOBBS: Just the operational success of reopening the New York Exchange, in particular, but operating both the Nasdaq and the Big Board, as well as the American exchange, a considerable achievement, to handle all of this volume.
GALVIN: I think that's right. And, now, I thought there was a positive lead indicator last week, which was the fact that very active globally traded commodities, such as oil, gold and the dollar, were really relatively stable, very much in contrast to the explosion of those commodities that we saw back in 1990, suggestion being again, that cooler minds prevailing on a global basis. People, I think, are realizing that the systems are operating. We learned something from long term capital, in terms of adding monetary stimulus. At the same time, Y2K taught us how to get some systems back up and running pretty quickly.
DOBBS: We can deal with philosophy and the abstractions later. Let's keep the economy moving.
Your best counsel to investigators here.
GALVIN: Well, I think you want to play it safe. I think that people will pay a greater premium for predictable growth so, certainly, I think the health care stocks, like American Home, Pfizer, as well as Bristol Myers, I think look very attractive here, along with Medtronic and Amgen.
I think we'll also see again, the consumer stables, particularly those buying back stock, like Philip Morris. Consumer franchise names in drugstores, CVS, and some of the supermarket stocks, will be where people should gravitate right now. Too earl to say how deep the economy will fall right now, but I think you want to keep the powder dry a this point and remain defensive, and predictable growers.
DOBBS: OK, Tom Galvin.
GALVIN: Thanks, Lou.
DOBBS: Well, the airline industry has lost more than a billion dollars since last week's terrorist attacks on the World Trade Center and the Pentagon. Airline revenues are now down more than 50 percent. Airline stocks have lost more than half their value over the course of the past two days, and train travel has risen 60 percent.
Greyhound bus ridership is at holiday levels, we're told, and several air carriers are facing outright extinction. Today those airlines went to Washington and they are looking for help.
Tim O'Brien has the story.
(BEGIN VIDEOTAPE)
TIM O'BRIEN, CNN CORRESPONDENT (voice-over): Transportation Secretary Norm Mineta met with the airline CEOs, acknowledged the difficulty they faced, and promised the government would help.
NORMAN MINETA, TRANSPORTATION SECRETARY: President Bush and his administration are committed to working closely with all industry members, with the Congress, in order to find ways to maintain the strength of our nation's aviation industry.
LEO MULLEN, DELTA AIRLINES: We have had an excellent response from the White House on all elements of the package.
O'BRIEN: Industry proposals circulating on Capitol Hill call for a bailout totaling around $24 billion, including an immediate 5 billion in cash grants to cover immediate losses, and also allowing the airlines to keep $7 billion they owe in ticket and cargo taxes. "Without immediate and significant government support," they said, "most of the US airlines that make up the commercial air transportation system will go bankrupt."
Senate Democratic leader Tom Daschle said he'll try to get the Senate to begin work on a relief package by Thursday.
SEN. TOM DASCHLE (D-SD), MAJORITY LEADER: This is a vital part of restoring our economic health and strength.
O'BRIEN: Even Phil Gramm, longtime foe of government bailouts, agrees, telling "MONEYLINE" the airlines are at least entitled to compensation for their losses so far.
SEN. PHIL GRAMM (R), TEXAS: The actual losses since Tuesday represent a very strong claim. Once you get beyond that, it gets to be gray, and the question is: Where are you going to make the cut-off?
O'BRIEN: There is some resistance. Senator Earnest Hollings, for example, the influential chairman of the Senate Commerce Committee, said, "The airlines told us they were going broke long before these attacks occurred, while at the same time, giving their executives $120 million in salaries and bonuses this year."
Yet, there can be little doubt that getting planes back in the sky is a high priority. That some government relief is all but inevitable. The only question: How much?
(END VIDEOTAPE)
O'BRIEN: And late this afternoon, Lou, we learned that the White House and the Congress are close to agreement on a $15 billion package. That's much less than what the industry had requested, but enough to be still of substantial help -- Lou.
DOBBS: Very good. Tim, thank you very much. Tim O'Brien from Washington.
Today treasury bond prices fell sharply, particularly in the long bond. And on the minds of investors, the possibility that the government will now have to raise debt to pay for America's new war.
Economics correspondent Kathleen Hays is here, and she has a closer look for us at what's going on -- Kathleen.
KATHLEEN HAYS, CNN CORRESPONDENT: The reversal of what we saw last week, right? We had that big rally.
Let's just show you, for starters, how severe the sell-off was in the treasury bond market today, because that 30-year bond at the very longest end of the treasury curve suffered nearly a 2-point loss, the yield back up around 5.55 percent, actually higher now than just before the attacks occurred on the World Trade Center last week.
You can see the 10-year note also fell sharply, nearly a point. The five-year note down as well. What is on the bond market's mind? What's the big worry? Well, we are guaranteed now a huge fiscal stimulus. A huge fiscal stimulus means a shrinking budget surplus. Shrinking budget surplus means less debt reduction, and if that's the case, we're not going to have a shrinking bond supply. Even Laura Tyson, noted economist, is worried about this as well.
(BEGIN VIDEO CLIP)
LISA TYSON, ECONOMIST: If we don't set in motion some plans for future surpluses, I think the bond market may be saying they're worried about the return of deficit spending long term.
(END VIDEO CLIP)
HAYS: Deficit spending: that sounds like a blast from the past, doesn't it? We shall see.
Another thing on the bond market's mind, a little more subtle, perhaps, but people may say we're in a recession now. Bond market looks ahead at least a year, and if you look inside the consumer price report, which we got today, very tame.
But let's look at something interesting, here. Year-over-year rate of change in two different kinds of inflation. This takes out food and energy prices. This is core inflation. Along the bottom of your screen, you can see goods prices are about zero, they've even been negative, looking at their trend, their year-over-year trend. But services prices are climbing steadily higher, and bond investigators, bond traders, ever vigilante on inflation, say, boy, if the government gets it right between fiscal spending and Fed rate cuts and gets this economy going again, a year from now, we could be worried about inflation picking up again, Lou. So a lot of dark clouds hanging over Bond Investors' town.
DOBBS: Dark clouds, perhaps, but it is nice a week later to be looking at the longer term rather than absorbed by the immediate. At least at this time. Thanks a lot, Kathleen.
Well, for more now on the economic impact resulting from Tuesday attacks, Richard Medley. Richard is the chairman of Medley Global Advisors, and joins us now.
Let's talk about first the effect on these markets in this economy. What should we expect?
RICHARD MEDLEY, PRES., MEDLEY GLOBAL ADVISORS: Basically, what you should expect, I think, as Kathleen said, is full- throttle stimulus on the fiscal and on the monetary side. So if there can be a strong V recovery, as Tom said earlier, then there's going to be one.
But the real question is: What happens at the State Department and the Defense Department? Because, really, all the Fed and all the spending from Congress can do now is put a bottom under it, keep this from being a disaster. To get recovery going, to get confidence going again requires action on the military front and on the diplomatic front, that has Americans saying, hey, we're back in charge. We actually understand what our future looks like now. DOBBS: Let's assume that that is a significant amount of money that's spent...
MEDLEY: Absolutely.
DOBBS: And it appears that's the case right now. Is this economy, in point of fact, going to grow in the near term at a rate greater than it might have otherwise -- irrespective of the argument about whether we were going to have a recession or not.
MEDLEY: Well, I think that's the big question. Certainly, you'll have the government spending growing at a rate significantly above, as opposed to a 1 percent on GDP surplus, maybe you'll have a 1 percent GDP deficit by the time all this spending and tax cuts are through.
But is the consumer going back to the store? And that's really where the fear factor comes in, and only the actions of the Defense Department, the Bush administration, can settle that.
DOBBS: Well, in times past, markets have liked the fact that there has been a strong reaction from the United States government. The consumer has not backed off. In point of fact, we saw the end of a recession concurrent with the end of the Gulf War. Is there a parallel here that we can draw from?
MEDLEY: There's very much a parallel, and I think that's one of the major things at the White House they have in mind, is if they have this first step -- and remember, the president said that we've got a long haul ahead of us, here. But if the first action next week or late next week results in a tangible kind of success in Afghanistan, and our allies continue to rally around us, as I think President Chirac is going to tell President Bush today, that we do have the allies behind us, then next week you might have a reason to go back to the store.
DOBBS: Terrific. Richard Medley, thanks fro being with us.
MEDLEY: Absolutely.
DOBBS: Straight ahead here on MONEYLINE: Last week's assault on the World Trade Center is raising new concerns about the safety of the nation's nuclear power plants. Are they safe from terrorist attack? We'll have that story for you.
The major airlines are losing even more passengers. We'll tell you how business flyers are now getting to their destinations, and we'll tell you who's benefiting from this change.
Also tonight, a disturbing story about Osama bin Laden. He, or his associates, now suspected of making money on last week's tragedy. They sold airline, insurance stocks short, before those attacks.
(COMMERCIAL BREAK)
DOBBS: Computer security experts and the FBI warn of a fast- spreading new computer virus, one that has caused businesses today to shut down their e-mail systems. It is potentially far more damaging than Code Red.
Senior technology correspondent Bruce Francis with the story -- Bruce.
BRUCE FRANCIS, CNN CORRESPONDENT: Lou, major antivirus firms are putting us on high alert tonight. And Attorney General John Ashcroft said in a news briefing this afternoon that the new worm called Nimda could be more damaging than Code Red. That virus, which spread to hundreds of thousands of systems earlier this summer, cost an estimated $2.4 billion to clean up.
(BEGIN VIDEO CLIP)
JOHN ASHCROFT, ATTORNEY GENERAL: It may have started as early as yesterday, and it infects computers on the Internet worldwide. The computers that are affected then scan the Internet in search of other computers. And this very substantially expands the traffic load on the Internet.
(END VIDEO CLIP)
FRANCIS: The worm appears as an e-mail attachment called "README.EXE" or "NIMDA." Experts have noted that NIMDA is ADMIN spelled backwards. That's also a commonly used term in computer security systems. The work virus does contain Chinese language text, but that doesn't mean it originated there. The FBI says that there is now no evidence linking the worm to last week's terrorist attacks.
Security experts say the worm doesn't seem to be doing more damage right now than just spreading itself around.
(BEGIN VIDEO CLIP)
IRA WINKLER, INTERNET SECURITY ADVISORS: The way the worm spreads is, it gets on one infected system, and then what happens is, that system becomes infected, and then it looks for other systems to infect. Then it goes, finds a vulnerable system and then goes on to infect that system as well, and then that system and all the others that are infected look for other systems.
(END VIDEO CLIP)
FRANCIS: And you get the idea. Bottom line, if you get an unfamiliar attachment in an e-mail, don't open it, or you could end up being part of the problem, Lou. It often shows up as a music file, so watch out.
DOBBS: OK, Bruce, thanks very much for bringing us up to date. Bruce Francis.
Another potential target for terrorists could well be the nation's nuclear power plants. There are more than 100 of them, and an attack from the air or ground could prove, of course, catastrophic.
Steve Young has the story.
(BEGIN VIDEOTAPE)
STEVE YOUNG, CNN CORRESPONDENT (voice-over): At its annual conference in Vienna, the International Atomic Energy Agency said this week that, like the World Trade Center, America's nuclear power plants were built to withstand hits by big 1960s jets, not today's wide- bodied, fully-fueled behemoths.
DAVID KYD, INT'L ATOMIC ENERGY AGENCY: If it were successful, which is a very extreme scenario, then the containment could be breached and the cooling system overreactor could be impaired to the point where radio activity might well be set free.
YOUNG: It took four or more terrorists to turn hijacked planes into instruments of catastrophe. But just three mock terrorists, in controlled exercises run since 1993 by the Nuclear Regulatory Commission, have brought dozens of U.S. nuclear plants to the brink of war game meltdown.
PAUL LEVENTHAL, NUCLEAR CONTROL INSTITUTE: In half the cases of the 103 operational reactors in the country, they failed to repel this very small force, and they were able to simulate destruction of redundant cooling systems that would result in, if it were real, destruction, sever damage to core and a meltdown.
YOUNG: This tape of a terrorist test, obtained from a Congressional source, was shot by a nuclear utility in the South. The company passed the NRC exercise with flying colors, even added music for an internal pep rally. But there was nothing to celebrate after it faced a later test and flunked, even though plant operators get six months advance notice, to the day.
Before last week's horrors, the power industry was trying to convince the Nuclear Regulatory Commission to back off and let atomic power plants run their own terrorist tests. MONEYLINE today tried asking NRC Chairman Richard Meserve where he stands on that now. A spokesman said he decided this was not the appropriate time to do an interview.
The intent of proposing the changes to the security program were to enhance the effectiveness and the completeness of our evaluations of our security programs.
(END VIDEOTAPE)
YOUNG: The Nuclear Control Institute is now calling for National Guard troops to be stationed at the nation's 103 nuclear power plants to guard against ground terrorism. It also wants the emplacement of radar-control anticraft weapons operated by the military, to prevent terror from above -- Lou.
DOBBS: Steve, any response on those questions?
YOUNG: Not yet, Lou. And you have to consider that in the scenario, as horrible as the death toll is behind me, you can see a death toll double and triple in long-range cancer.
DOBBS: Steve, Thank you very much. Steve Young.
Law enforcement agents are of course checking every conceivable lead in the World Trade Center and Pentagon attacks, and some of those leads are financial. Late today, an official at the Treasury Department said -- quote -- "We're going to follow the money trail wherever it leads."
Allan Dodds Frank has the report.
(BEGIN VIDEOTAPE)
ALLAN DODDS FRANK, CNN CORRESPONDENT (voice-over): Securities regulators around the world are now looking into whether Osama bin Laden's followers profited from the very capitalist markets he detests.
The investigation starts with trading of stock options of American and United Airlines, whose planes were hijacked September 11th. Before trading days before the attack, the volume of options trading in American and United spiked sharply, with puts -- bets that the airlines stocks would go down in the future -- greatly exceeding calls.
On Thursday, September 6th, for instance, puts of United Airlines stock outnumbered calls 25-1, far higher than trading the month before.
JAMES GURULE, TREAS. UNDERSECY. FOR ENFORCEMENT: It could imply that the individual that traded that account, or had any kind of supervision over that account, may have been involved or may have had knowledge of the horrific act.
FRANK: The big move in American came the day before the attack. Puts in AMR exceeded calls by 6-1, a complete reversal of the month before. Volume on those days also was far above average.
UNIDENTIFIED MALE: We're going pursue the money. This is a global enterprise, the terrorism organization that has been targeted.
FRANK: Securities and Exchange Commission Chairman Harvey Pitt said: "Our enforcement division has been looking into a variety of market actions that could be linked to these terrible acts, including the subjects of the rumors."
The Chicago Board Options Exchange is also examining trades. From Tokyo to Frankfurt, regulators are focusing on suspicious movements in obvious targets: airline and insurance stocks, and oil futures.
Regulators in England, France, Germany and Switzerland are looking at transactions in three of the largest insurers of insurance companies: Munich ARENA: , Swiss ARENA: and AXA, a French company.
Although both the airlines and insurance companies have been facing rocky prospects, the sudden movements in these securities seem suspect to regulators.
Allan Dodds Frank, CNN Financial News, New York
(END VIDEOTAPE)
DOBBS: Joining me now is former defense secretary and MONEYLINE regular contributor, William Cohen.
Bill, good to have you with us.
WILLIAM COHEN, FMR. DEFENSE SECRETARY: Lou.
DOBBS: The treasury secretary saying that we're going to follow these money trails wherever they lead. One has to start with the question: Why hasn't there been greater international cooperation already in tracking the finances of known -- not suspected -- known terrorists?
COHEN: I think part of the problem is that many of the countries that we're looking at now have not been hit like the United States has been hit, and so the level of terrorism directed against them has not been so substantial that they want to either challenge their banking systems, open their banking systems up, or lend the kind of cooperation that's going to be necessary over the long term.
I think ultimately, you'll find that just as Osama bin Laden's organization has been going to flight schools, people within it, they've probably gone to business schools as well and tried to get some MBAs, because this organization is not vertically integrated, but rather horizontally aligned, much like a franchise operation. So it makes it much more difficult.
Plus, the fact that he sets up what appear to be legitimate businesses, who are conducting illicit activities, also appealing to charitable organizations who have a humanitarian function, but also may funnel some money into its organization. So this is a very sophisticated operation that's been running.
DOBBS: Those organizations that you're talking about, in point of fact, some of them are outright fronts as well.
COHEN: Absolutely. They are outright fronts. They have, again, the appearance of being a legitimate business, but in fact, they're simply laundering money which is going directly back into the coffers of the terrorist organization.
DOBBS: Bill, what do you rate the odds at, in this climate now, that the Treasury Department will able to work successfully, principally with European governments and their banking systems, to open up a transparent access to all of these (UNINTELLIGIBLE) capital that you and I and everyone else watching this broadcast know, had to be in effect?
COHEN: In the past, the response has not been exactly enthusiastic. Because of the magnitude of this loss, because of what it represents to the international community, we may have more luck this time than we've had in the past. I can't rate the chances. We now have the president of France meeting with President Bush. There will be others. We intend to put as much pressure as we can, calling upon their best instincts to help the United States, because it ultimately is going to help them, as well.
DOBBS: And if we do not successfully appeal to the best instincts, what recourse do we have here?
COHEN: Well, you've heard Secretary Evans talk about sanctions against various countries -- that's more difficult to achieve if you're talking about allies. What we have to do is to use the levers of persuasion and to show that when America is hurt, the rest of the world is going to suffer, financially and in other ways. So it's in their best interest to be united with the United States in this cause against terrorism. So I hope we can make an appeal that they will respond to, much more enthusiastically than they have in the past.
DOBBS: Let me ask you, in terms of now, in particular, the responses that we're getting from, particularly Afghanistan, the Taliban now talking about a holy war -- what is, in your judgment, just how effective can military operations be against strongholds in Afghanistan? The Russians fought there 10 years without success. What is there that should -- in the arsenal of the United States or our allies that suggest that we would be significantly more successful?
COHEN: I think we have to start from the proposition, first of all, that we are Americans and we are not barbarians. Even though there is strong public support for inflecting whatever damage is necessary, including civilian casualties, we have to be very careful that we don't respond in a fashion that destroys our credibility as holding up that flame of liberty and freedom and respect for human life.
So we've got to be careful in whatever military operation is planned. And that's going to be very difficult in Afghanistan itself, and that's why the administration is wise to say we have a number of military options, as well as financial, diplomatic, economic, etcetera. But there is a whole panoply of weaponry available. But it's very difficult in Afghanistan, and that's why you have to have inside information, you have to have inside help, you have to have the support of the Pakistanis and others.
DOBBS: Bill, Thank you very much. You're looking, of course, at live pictures of President Bush and visiting French President Jacques Chirac. Let's listen to the president.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: After that day I got a lot of phone calls, and one of the most meaningful phone calls of all was from Jacques Chirac, who expressed his concern for the American citizens. He expressed his desire to stand solidly with America during this terrible, terrible day.
President Chirac understands that we have entered a new type of war. It's a war against people who hate freedom. And I am honored to welcome our friend here at the Oval Office. Welcome, sir.
JACQUES CHIRAC, PRESIDENT OF FRANCE: Thank you.
QUESTION: Mr. President?
BUSH: Yes, Ron.
QUESTION: (OFF-MIKE)
BUSH: He speaks French.
QUESTION: One word, sir.
CHIRAC (through translator): I have come here to tell you of the emotion, the emotion of France, of the French people, an emotion which has no precedent in history before this tragedy, which it does not have a parallel.
Indeed, it is a tragic event, something which is beyond crime. There are no words to qualify it. I wanted to tell President Bush, who is my friend, that we stand in total solidarity. We bring you the total solidarity of France and the French people. It is solidarity of the heart.
And I also wanted to say that we are completely determined to fight by your side this new type of evil, of absolute evil, which is terrorism. And I also wanted to say that France is prepared and available to discuss all means to fight and eradicate this evil.
BUSH: Thank you. Yes, Ron?
QUESTION: Mr. President, sir, do you expect French and British soldiers to fight side by side with ours? And President Chirac, do you agree that we are in a war? And is France in it? Will you fight side by side with U.S. troops?
BUSH: This is a new kind of war. This war will require determination and patience of people who love freedom, such as Jacques Chirac and the people of France, who will join us. I'm confident of that. In finding those who feel like they can terrorize nations because they hate freedom.
We will -- it's a policy of my government not to discuss any plans we may have as to how we intend to deal with the terrorists and the terrorist networks that believe they can disrupt lives, any place, any time in the world.
I look forward to talking with one of our strongest allies in private about what's on my mind. But make no mistake about it, this administration has got a firm goal and a determination to achieve the goal. And that is to rally the world toward a campaign to find terrorists, to smoke them out of their holes, and to get them, and to bring them to justice.
And there's no doubt in my mind, France joins with us in this most important campaign. Jacques Chirac has -- this is my fourth meeting with this leader. He's a man of vision. He's a man who understand what I understand, that we've entered into a new era. And I feel confident that we're going to work in a collaborative way to achieve a common objective.
If you love freedom, you must join with us, must join with America and France. That's the message of this meeting. And we will discuss ways that we can work in a way that'll achieve the goal. And there's no doubt in my mind that we'll find solidarity with the French and the French government.
QUESTION: Will your citizens fight shoulder to shoulder with ours?
CHIRAC: I don't know whether we should use the word war, but what I can say is that now we are faced with a conflict of a completely new nature. It is a conflict which is attempting to destroy human rights, freedom, the dignity of man. And I believe that everything must be done to protect and safeguard these values of civilization.
Therefore, and we are naturally prepared to work in complete solidarity with the United States and do everything which is necessary in consultation with them to reach this target, which is the elimination of terrorism. And I would also like to add that practically all the leaders of the world are following the same line.
QUESTION: Mr. President, (OFF-MIKE) Don't you think it's high time for the (INAUDIBLE) to review in a very tougher way its relationship with a certain member of Arabic countries which have been helping or harboring the terrorists?
BUSH: In my statement to our nation, I told the people of the United States that we would not only hold those who committed these horrible acts accountable, that we would also hold those accountable who harbored them, who fed them, who hide them. That is -- that's our policy.
Many, many -- first of all, it is important to know that this is not a campaign against Islam. This is not a campaign against Arab people. This is a campaign against terrorists. This is a campaign against evil-doers who hate freedom. I have had and I'm sure Jacques as well, has had strong statements of solidarity from governments in the Middle East.
I've talked to many world leaders, Arab leaders, all of whom are outraged by the acts of terrorism against America. All of whom understand, it could be them as well. Terrorism knows no borders. And so, I've been very pleased with the outpouring of support. And we will take the governments for their word and we'll work with them.
To disrupt the finances, the travel, the communications, we will find them in their hiding places. And we'll get them moving. And we'll bring them to justice. Make no mistake about it.
QUESTION: Mr. President. BUSH: Yes. Patsy.
QUESTION: Do you think the Middle East cease-fire will hold and what do you think the next step should be to provoke the Israelis and the Palestinians?
BUSH: We've had very positive developments in the Middle East today. And it's one the subjects that my friend and I will discuss. I was very pleased by the statements by Chairman Arafat, followed by the strong statements by the Israelis that they would stand down troops.
And I hope, in my heart of hearts, that out of this evil comes good. I think it will. I'm a very optimistic person. And one of the goods that can come is that people involved with the Middle East conflict, that both leaders here want to resolve, realize that a terrorist way of life is not going to lead to a peaceful resolution for people.
The next step, of course, is to stay involved in the region, is to work with both the Palestinians and the Israelis to encourage them to seize the moment, to hold Mr. Arafat to his word that he will fight violence. And to encourage the Israelis to sit down and have meaningful dialogue with the attempt to get into metro process. And it's a glimmer of hope all of us hope that the parties involved will seize.
QUESTION: Mr. President, how will this (UNINTELLIGIBLE) new war against terrorism?
BUSH: It is new. And it's important for the world to understand that there are no beaches to storm. There are no islands to conquer. There are no battle lines to be drawn. It's a war that is going to take an international effort.
It's going to take all of us to gather the necessary intelligence, the necessary information, to be able to find the location of terrorists, to work with governments to smoke them out of their safe houses, to get them moving, and then have the courage to bring them to justice.
My government will commit whatever resources is necessary to be effective in this all important cause. I repeat, we're fighting for liberty and freedom, a way of life that is so essential for human kind, mankind to be realized their full potential. And we're focused on achieving the goal.
There's going to be a time when free nations settle into, to what is viewed as an ordinary life. And I hope that happens soon. I hope that happens soon. But make no mistake about it, my goal, my intentions will not diminish with time. I am absolutely -- I know that we are called to respond to terror now. This is the time. And the world is ready for leadership. And Jacques Chirac is ready to provide that leadership, as am I. I want to thank you all for being here. LOU DOBBS, HOST: Mr. Bush meeting with French President Jacques Chirac. The French president saying that he wanted to express the solidarity of the French people. And he said to the President and to our audience tonight that he, the French president and his government and the French people are ready to fight "by your side," as he put it.
And we will, of course, be covering the meeting between the President and Jacques Chirac throughout the evening. Their meeting to go to on at the White House for some time.
I want to turn now to Bill Cohen.
Bill, you've heard both Mr. Chirac and the President, a rather strong statement of -- as the French President put it, solidarity. Your thoughts?
COHEN: Very encouraged by that statement. I think that President Chirac made it very clear that France is prepared to stand side-by-side with the United States. He also did not want to use the word war at this point, but a different kind of conflict.
And both presidents also talked about the need to acquire information in one form or another. But it comes back to the question you asked earlier, Lou, what sort of options do we have? Obviously they're going to go after the financial network and exercise whatever diplomatic leverage they can to break up and tear up that network.
But if you're talking about military options, I think the key here is to not look for any major land type of operation but rather covert operations. And also, we have in our arsenal, the ability to conduct any type of military operation, but the key words to look at are actionable intelligence. Do you have intelligence that allows you to take action which will carry out the mission?
DOBBS: Bill, did you take, did you have a sense of importance in his comments, the President's comments that there are no beaches to storm, there are no islands to conquer? Is this an effort to perhaps lower the rhetoric a bit?
COHEN: I think it's important to lower the rhetoric a bit. And not raise expectations that the American people might think there's going to be some massive land invasion. I think he's going to get very good advice from the Joints Chiefs of Staff, the Secretary of Defense, that this is a different type of operation which will include, again, special forces, covert operations, as well as financial attack upon the network.
DOBBS: Bill, thank you. And if I may ask you to stand by just a bit with us here. And we're going to go now to the White House, where White House senior White House correspondent John King.
John, your thoughts?
JOHN KING, CNN CORRESPONDENT: Well, Lou, two points. One of them following up on what Secretary Cohen just said. You noticed the President said key goals of this war, he calls it, conflict the French President does. Disrupt their finances, disrupt their travel.
That is the number one thing President Bush is asking other world leaders in the short term. Do all you can to disrupt any financial support for the Bin Laden organization and others, pull visas, stop travel. That's one way of fighting a war, if you will, that does not involve military forces.
Another point, the President said publicly, if you love freedom, you must joint us. In public, no airing of the disputes between the United States and France. But in private today, we are told that the administration relaying the message President to President here at the White House, to French foreign minister who was at the State Department earlier in the day, that if France truly wants to stand with the United States in a war against terrorism, it will stop business dealings with the government of Iran and the government of Iraq.
That has been a thorn in the relationship the past few years, that past administrations have overlooked. Voice protests, but not done much about. We are told the Bush administration is saying, if France really wants to send a strong signal it is in this war in the end, it must stop those business dealings.
DOBBS: The business relationships, John, the financial dealings are looming ever more critical and more important as we get more into tracking this terrorist attack and that which supported it. Does this, John, in your judgment mitigate French President Chirac's words "stand in solidarity with the American people?" Does that mitigate the foreign minister Michel Elaine's attempt, it seemed, to qualify French support for the United States?
KING: Well, certainly President Chirac again said he wanted to call it a conflict, not a war. So there are some questions about if the United States requested French military assistance. And that's a big if. And as Secretary Cohen was saying, these are likely to be unconventional operations where the United States would want to use its own special forces and the like.
If it came to that, the French have not sent a signal they were be there militarily. What senior administration officials are telling us though is that this is a transforming event, the scope of the carnage. And that perhaps now, governments like France and others, that have publicly stood with the United States and others in the war against terrorism, but privately done things that have upset or in some cases publicly like those business dealings, upset the United States government, perhaps now they will change their practices because of the scope of this.
DOBBS: OK. John, thank you very much.
Let's turn now to Wolf Blitzer. Wolf?
BLITZER: You know, just following up on those points about French cooperation. As you know, over these past several years, the French dropped out of cooperating militarily with the United States and Britain when it came to patrolling the no-fly zones in the northern and southern parts of Iraq, as the French government clearly has a different attitude towards Iraq, and if you will, towards Iran than the United States.
And there is a significant development today potentially, Lou, that could affect cooperation among U.S., France other European countries. Namely, one of those hijackers, Mohammed Atta, who was involved in the hijackings last week and that was killed, of course, in the plane crash, U.S. intelligence now believes he did meet with an Iraqi intelligence agent in Europe earlier this year.
That does not necessarily mean that Iraq was behind the World Trade Center attack and the attack on the Pentagon. But it does open the door to that possibility. It's one that they're pursuing and certainly a lot of the military options, a lot of the issues become much more complicated if in fact, the U.S. government concludes that a state, perhaps Iraq, had a direct role in this terrorist attack.
DOBBS: And Wolf, as John King pointed out, the business relationships, specifically between France and Iraq, between France and Iran, those relationships now under a laser light of scrutiny as we're in a sea change of policy reversal internationally. Because if the President is going to pursue this war, he's going to have to attack a lot of issues that were sort of winked at and sort of nodded at, if you will, by the world powers. That is, banking deals, oil deals, financial deals, with countries not certainly helpful to the U.S., and even in many cases European interests.
BLITZER: And the flow of oil is at stake, too. Iraq being a major oil exporting nation, now generating a huge sum of income for Iraq. As a result, Iraq becomes a much more important economic flare.
While you have Secretary Cohen over there, you might want to ask him about some of the leads that some in the U.S. intelligence community did develop toward pointing a finger towards Iraq following the 1993 first World Trade Center bombing. And some believe, Jim Woolsey, the former CIA director among them perhaps, that those leads were not pursued enough because of the economic, diplomatic and military complications a director rocky role could generate.
DOBBS: Well, I'm going to do just exactly that. But first, we're going to break here for just a few moments. Stay with us. Our coverage continues.
(COMMERCIAL BREAK)
DOBBS: We're back. Bill Cohen, you heard Wolf Blitzer talking about some of the criticisms that perhaps in 1993 that there should have been more leads followed up on. What is your thought on that?
COHEN: Well first, I wasn't serving as Secretary of Defense during that time. So I didn't have access to some of the information that may have been available. But I would point out, we ought not to lay any total responsibility upon France.
It has extensive dealings in the Middle East, but so do many of the other European countries who are members of Nato. And so, what we have to have, if I could just point out, what we have is France solidarity politically. And also, on an intelligence basis what we need to have is international cooperation for all of our European allies and our Gulf states in terms of intelligence information to help, as the President said, to track down those terror networks.
I think that's where we have to overcome any commercial instincts on the part of the friends, and say that your liberty's at stake, since ours is at stake as well.
DOBBS: And rather, I think it's fair to say, rather apparently so.
Bill, thank you very much. Bill Cohen. And to Wolf Blitzer and to John King at the White House. W will of course, will be following these developments throughout the evening.
I want to turn now, if I may, to a man who's, who is the chairman of the Port Authority of New York and New Jersey, Lou Eisenberg, who is responsible for all of that -- those assets that make up the airports, the World Trade Center and of course, the tunnels and the access to Manhattan and who as chairman, is understandably somewhat still in the grip of concern about 74 employees of the Port Authority who are still missing.
Lou, good to have you with us here.
LEWIS EISENBERG, CHAIRMAN, PORT AUTHORITY: Thank you, Lou. Thank you very much.
DOBBS: What is first -- it is 74 employees now still missing, correct?
EISENBERG: Yes. And if I may point out that for the last week, I have really been just a spectator in a company of heroes at the Port Authority. And on behalf of our 12 commissioners at Port Authority and on behalf of the 12 commissioners and all those who are working hard now at the Port Authority, our sorrow and our grief goes out to all that have suffered as a result this tragic act.
DOBBS: At this point, with the Port Authority, obviously, running the airports, the curtailment and schedules, the devastation, the obliteration of the World Trade Center, where does this leave the Port Authority?
EISENBERG: Well, maybe one of the true miracles of our system, and I'm talking about the Capitol system, is that an organization, a bi-state organization like the Port Authority could have things up and running within hours of a terrible disaster.
We lost 37 civilians and we lost 37 heroic police officers. And within hours, their comrades, many of them, 2000 of them working at World Trade Center I, made it back to their post. They did not go home. And the 7,000 employees or so continued to work tirelessly so that the tunnels, the bridges and the airports are all operationally ready at the instructions of the President and the two governors. DOBBS: And the future of what was the World Trade Center, a great deal of discussion about what will be done there. Is it simply too early to ask for your thoughts?
EISENBERG: Yes, I think it really is too early. There are lot of discussions and they will be ongoing.
DOBBS: OK. Lou Eisenberg, we thank you for taking time to come by.
EISENBERG: Thank you.
DOBBS: Lou Eisenberg, chairman of the Port Authority.
That is MONEYLINE for this Tuesday evening. We thank you for being with us. I'm Lou Dobbs. Good night from New York.
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