Return to Transcripts main page

Lou Dobbs Moneyline

America's New War: President Bush Freezes Terrorist Assets; Dow Advances 368.05 to 8,603.86; Nasdaq Climbs 76.21 to 1,499.40

Aired September 24, 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: Tonight, the broadcast will focus on the money, the money that keeps Osama bin Laden, the terrorist money that today was frozen by President Bush, the money that is flowing out of the oil markets after the World Trade Center terrorist attacks, and the money that is flowing back into the stock market, adding nearly $400 billion of value in those markets today.

Investors today cheering the President's actions, buying back some badly beaten down stocks, helping Wall Street retrieve a quarter of last week's record losses. And tonight, we'll also track that big business is losing because of the events of September 11.

Honeywell, writing off a billion dollars, to cover thousands of layoffs. I'll be talking with Honeywell's CEO, Lawrence Bossidy, about what the future holds for his company and have his views about what this change world means for American business.

But first, the latest developments in America's new war. Attorney General John Ashcroft today urging lawmakers to approve a new anti-terrorism package, a package that would including giving law enforcement new surveillance powers.

Suspected terrorist Osama Bin Laden is believed to have sent a fax, a fax that calls on Pakistanis to resist the invasion of U.S. forces in Pakistan and Afghanistan.

President Bush signs an executive order freezing the assets of 27 individuals and organizations believed to support global terrorism. We'll have a full report for you on the terrorist money trail later in the broadcast.

Pakistan pulls its diplomatic staff out of Afghanistan. At the same time, the Pentagon officials are meeting with their counterparts in Pakistan.

The United States plans to publish a report that links Bin Laden to the World Trade Center and Pentagon attacks.

And the Federal Aviation Administration has extended a ban on crop duster aircraft until midnight tonight. That ban imposed because of FBI concerns of a possible biological or chemical terrorist attack.

Investors today cheering the President's attack on terrorist money, staffing up stocks that have been pummeled throughout the past two weeks. The Dow gaining back about a quarter of last week's record losses.

Christine Romans has the latest for us -- Christine.

CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, a stunning rally after a fierce week of selloffs last week. Take a look at the Dow Jones Industrial average rallying better today than it has been this spring. Pulling the stocks higher, bargain hunting, the effect of corporate buybacks over the past week, and bullish notes from Goldman and Bank of America.

Take a look at the big board winners. Proctor and Gamble, Goldman Sachs put it on its recommended for purchase list. Delta Airline, up 7 percent, investors showing confidence in that government aid package. GE, up again, its new CEO reassuring investors Friday. And that reassurance coming into Monday's session as well. And AOL/Time Warner, this was up 9 percent during the session, but down a $1.20 in after hours trade on Instinet. It warned that an ad slowdown and the September 11 terror attacks were going to hurt its cash numbers -- cash earnings numbers -- Lou.

DOBBS: Christine, thanks.

The Nasdaq today adding 76 points, this only the second time in September that the Nasdaq has ended the trading day higher. Greg Clarkin joins us now from the marketsite -- Greg.

GREG CLARKIN, CNN CORRESPONDENT: And Lou, the stage was really set this early this morning for a rally. First of all, there was no major military developments over the weekend. On top of that, you had a lot of cheerleading going on. As Christine mentioned, some of those strategists out with very bullish notes this morning.

And then a lot of beaten up stocks, especially big technology shares. And you can see the Nasdaq ripe to rally, really pop very sharply at the open and just maintain that throughout the day, up 5.3 percent.

Now those big name technology stocks, which we saw just hammered last week, made big comebacks today. Dell Computer, up almost 12 percent. Oracle, up 16 percent. Intel, Sun Microsystems, all posting nice gains.

Some of the other movers included the airlines. But still, they're not regaining anything as to what they were before the terrorist attacks. Northwest Airlines was trading above $20. It's above $11 today, after a nice gain. Skywest posted a nice gain.

And then the networkers had a nice day. JDSU Uniphase saying that business is stabilizing slowly. And that stock got a nice pop and spill over to Cisco Systems, which added 47 cents.

So all in all, Lou, a lot of traders still fairly skeptical if there's any sustainability to this, but they'll take today after the week they had last week. DOBBS: Yes, sustainability one day at a time toward that goal. Greg Clarkin thanks.

The terrorist attacks on the United States have sent world oil prices plunging. The cost of crude oil today fell $4 a barrel. It's at an almost a two-year low. Today's plunge, the biggest single-day price collapse in oil a decade. The industry hurt by a slowing economy and the prospect of fewer travelers.

Peter Viles has the report.

(BEGIN VIDEOTAPE)

PETER VILES, CNN CORRESPONDENT (voice-over): On the oil trading floors of London and New York, the biggest one day selloff since the Gulf War, as traders bet that the threat of war in the Middle East is far outweighed by the risk of global economic slowdown. Though after spiking initially on the terrorist attacks, oil prices have plummeted.

JEFFREY FREEDMAN, PRUDENTIAL SECURITIES: It is the market's interpretation that oil supplies currently are adequate, that demand for petroleum products globally is being impacted, and that oil inventories are probably going to be adequate. And the likelihood of any major supply interruption is diminishing.

VILES: Translation, traders are betting against a widespread war in the Middle East that would disrupt supply, and betting on a global slowdown that will cut sharply into demand. Already the airline slump in the United States has slashed demand for jet fuel. And that's just a local problem. Morgan Stanley economist Stephen Roach writing Monday "no region of the world economy will be spared from this recession."

Falling oil prices, however, could help those economies recover.

PETER GIGNOUX, SALOMON SMITH BARNEY: For every dollar a barrel that crude oil goes down, it pumps $7 billion back into consumer pockets, so the consumer's done very well today, and so have the economies.

VILES: That said, traders have no way of knowing how the war on terrorism will play out. One possibility not reflected in the price of oil today, another military conflict with Iraq.

MICHAEL ROTHMAN, MERRILL LYNCH: While there's been no direct mention of Iraq in any of the president's or Secretary of Defense briefings, there is clearly, in my opinion, a risk that Iraq comes into play.

(END VIDEOTAPE)

VILES: Today's steep selloff not limited to crude oil. Heating oil and gasoline futures also fell sharply, as the market tried to price in weaker demand across the board -- Lou.

DOBBS: This is a huge one day drop. What circumstances are different today than a week ago in point of fact?

VILES: Hard to say, although the numbers coming in from economists who crunch these numbers around the world are getting a little bit worse. Morgan Stanley, which has been bearish, got more bearish today and priced in a global recession next year.

I think add to that, the prospect that military intervention does not appear to be imminent on a grand scale.

DOBBS: OK, well, that's quite a leap in assumption.

VILES: It was, yes.

DOBBS: All right, Pete, thanks. Peter Viles.

Well, one industry reeling in the wake of the terrorist attacks: travel and tourism, a $600 billion a year business and one of the biggest employers. But the industry, which has grown 5 percent on average over the past decade, now faces one of its toughest challenges ever.

Kitty Pilgrim has the story.

(BEGIN VIDEOTAPE)

KITTY PILGRIM, CNN CORESPONDENT (voice-over): America is talking about whether or not to fly. Families planning vacations, holiday travel, it's all up in the air.

UNIDENTIFIED MALE: Let's put it this way, I certainly hope that security has been tightened.

UNIDENTIFIED FEMALE: I feel OK about it. I mean, I was sort of more nervous about how long and how complicated it will be, but it's all right.

PILGRIM: Hotel bookings fell drastically after the attack. The industry lost $45 million a day. Reservations at upscale hotels dropped about 30 percent, while those at family price hotels dropped less.

Vacation spots, Hawaii, Orlando, San Francisco, all saw business decline. Caribbean tourism declined by 50 percent, particularly in the Bahamas, Jamaica, Cayman Islands and Puerto Rico.

Cities associated with the attack saw travel drop sharply. Although rescue workers in New York filled rooms that would have stood empty. The online booking service Travelocity says business travel is down by 50 percent, leisure travel is down by 40 percent, but they predict a real push to get people flying again.

TERRY JONES, PRESIDENT & CEO, TRAVELOCITY: Prices are going to come down dramatically as airlines, cars, and hotel companies look to get people back traveling again.

PILGRIM: Disney says they are seeing families postpone their vacations for a few weeks to a month, but have surprisingly few cancellations.

PAUL PRESSLER, CHAIRMAN, WALT DISNEY PARKS & RESORTS: We saw significant attendance drops earlier in the week. But this -- as the week finished, we were in the kind of low teens in terms of attendance off of last year.

(END VIDEOTAPE)

PILGRIM: Now there are some discounts to be found on web sites, but travel experts say steep discounting for airfares and rooms may come in October. The industry is very sensitive about not wanting to appear too eager for business, while the country is still grieving -- Lou.

DOBBS: Entirely appropriate.

Kitty, thank you very much.

Well, MONEYLINE contributor Lakshman Achuthan believes we were in recession well before the terrorist attacks. As a matter of fact, Lakshman talking about recession four months ago. Now he points to new economic data that erases hopes of a year-end recovery.

Lakshman joins us. And let's talk first about this prospect of a year end recovery.

LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE: Right.

DOBBS: With all that's happened, with the economy slowing, and as you have been saying for some time in recession, how many people do you think were really thinking about a year-end recovery in the economy?

ACHUTHAN: Probably just a few of us in our office. But we were seeing some of the leading indicators show some very tentative signs of a year-end recovery as a result of some of these policy moves that have been going on.

That has been erased. That's evaporated with the last few weeks' data that we've gotten in.

DOBBS: As we were ending the third and about the begin the fourth quarter, when can we reasonably expect in your best guess, because that's what it is with all of the uncertainties now, a significant economic upturn?

ACHUTHAN: I'd be guessing. It would be speculating to predict the predictors. And right now, they're downshifting a bit. I think the soonest we could hope is sometime in the second half. And I might be forced to push it towards closer to the second quarter.

DOBBS: Consumer confidence, we'll get a reading tomorrow. What is your best take there?

ACHUTHAN: Well, it's going down. I mean, it is definitely going to be impacted by the employment situation. And piling on top of that, we have these other uncertainties.

DOBBS: And in terms of the economic indicators, the index of leading economic indicators first decline in I believe it's four months.

ACHUTHAN: Right.

DOBBS: What does your research show there?

ACHUTHAN: Well, I would caution people not to read too much into that because that's August. That's old news. I would look at these more promptly available weekly leading indicators.

And they're the ones that post attack are telling us things have gotten a bit worse. I think we have to take that seriously. And those are the ones that'll show us the first signs of recovery. We want to see initial claims for unemployment insurance come down.

DOBBS: As you and I have been talking, we've been talking on this broadcast for some time about cycles. A year or so ago, people were suggesting the cycles were really ended. But the fact is, we're talking about the return to normality here, if you will, up and down cycles.

We're definitely in a down cycle.

ACHUTHAN: We're definitely in a down cycle, but what is going on here? Stock prices coming down. Oil prices coming down. These are setting the -- these are the precursors required for a sustained cyclical recovery.

We're doing what has to be done right now.

DOBBS: For better days ahead.

ACHUTHAN: Yes, exactly.

DOBBS: Thanks a lot.

ACHUTHAN: Thank you.

DOBBS: Well, still ahead here on MONEYLINE, following the money trail of Osama Bin Laden. And the President today struck at the financial heart of terrorism, freezing their assets in this country, seeking help overseas to do exactly the same thing. We've got the latest developments for you. And we'll be talking with the chief executive officer of Honeywell. We'll get his reading of how all of this will affect the way big business operates in the future, both here and abroad.

(COMMERCIAL BREAK)

DOBBS: It has been a tough year for Honeywell. A slowing economic, dissolving profits, a blocked merger with General Electric and the recent terrorism hurting a major customer, the airline industry. Honeywell saying today, it will take a charge up to a billion dollars to pay for job cuts and plant closures.

Joining us now in his first television interviews since taking the helm of the company in July is Larry Bossidy. Good to have you with us.

LARRY BOSSIDY, CEO, HONEYWELL: Lou, nice to be here.

DOBBS: Let's start with the charge, a billion dollars, further job cuts of 10,500. Do you see this as the end of the cost reduction program?

BOSSIDY: I think this is a large step toward the end. As I see the economy, we'll have a tougher fourth quarter than we had in the third in terms of economic contraction and probably a difficult first quarter.

But I think sometime next year, perhaps by mid-year, you'll begin to see some light and the economy will recover. And hopefully, we'll be able to take a lot of those people back. But right now, you have to be as realistic as you can about the economy and then put a business plan in place to deliver the cut of earnings that your shareholders expect.

DOBBS: You had, with all of the analysts we talked with, many on Wall Street, your conference with them today. They gave you the highest marks, no small reason, I'm sure, for the fact your stock rose $3 today. Are you confident at this point that this economy and Honeywell's role in it will stabilize and move forward in the second...?

BOSSIDY: I think so. I think, as a consequence of the tragedy that the fourth quarter will be difficult. Certainly, our business with the airlines will contract some. On the other hand, we have a lot of security products. We have some defense offerings which will increase.

So in the short-term, our sales will compress. I think we'll have a better fourth quarter than the third. And I think we'll be on the right track as we enter into 2002.

DOBBS: Your judgment right now on what this new world, and that's what it is now, I think we all have to be straight up and admit that. It is a new world certainly in this country. How will that effect business?

BOSSIDY: Well, I think, in the long-term, Lou, it won't have a lot of impact. It certainly will have an impact in the shorter term. I mean, everybody is questioning the extent of the travel.

It has brought a lot of the nations of the world together. And that's also in a business sense. And so, I'm certain in the longer run, it won't have a lot of impact, but short-term, certainly, you have to be more careful where you send your people, and who you do business with. And obviously we're going to have to adjust to that new circumstance.

DOBBS: You obviously, your company does business globally. Your concerns there?

BOSSIDY: I think that it's a matter of confidence. I don't think in the long run, as I've said, we'll be impacted. But we are being more careful where we move our plants now. We are going to move some plants to lower cost locations in the world. And we're going to have to rethink some of that strategy. But by and large, I don't think it'll have a major impact on us in the long run.

DOBBS: You have said that you wanted to be playing golf in the latter part of next year. Have you begun thinking about succession?

BOSSIDY: I have. I haven't done a lot of it so far, Lou, since I came there, because we've been full of challenges. But come the first of the year, I'm going take that seriously and I still intend to step down in July of next year.

DOBBS: And as you look around this economy right now, give us Larry Bossidy's best judgment about when the U.S. economy will rebound from this downturn?

BOSSIDY: Well, you know, I don't have as much research as the preceding spokesman on the subject. My sense, my feel is that a tough fourth quarter, as I said. Probably difficult first quarter. But I think by mid-year, there will be clear signs that's the economy's turning around and that we can expect a year from now to feel pretty good about things.

DOBBS: Larry, as always, good to talk to you. Larry Bossidy.

BOSSIDY: My pleasure. Thank you, Lou.

DOBBS: Well, just ahead here, we'll be telling you about the efforts to freeze terrorist assets worldwide. How the government is planning to choke off the money that finances and supports terrorism.

ANNOUNCER: Next, Lou is joins by Jules Kroll, executive chairman of Kroll Associates.

(COMMERCIAL BREAK)

DOBBS: Now for the latest developments on America's new war. Osama Bin Laden is believed to have sent a fax, a fax that calls on Pakistanis to use "all their means to resist the invasion of American crusaders in Pakistan and Afghanistan."

Attorney General John Ashcroft asked Congress to pass new measures that will give law enforcement agencies new tools to fight terrorism. And the Airline Pilots Association asked Congress for training and the approval to carry guns in cockpits and have the authority to make arrests.

The President has launched an aggressive campaign to track down Osama Bin Laden' financial assets and the assets of those who have supported him. Mr. Bush also sending a warning to banks worldwide. Know your customers.

Allan Dodds Frank with the story.

(BEGIN VIDEOTAPE)

ALLAN DODDS FRANK, CNN CORRESPONDENT (voice-over): Show us Osama Bin Laden's money. That was President Bush's demand to the world.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We have developed the international financial equivalent of law enforcement's most wanted list. And it puts the financial world on notice, if you do business with terrorists, if you support or sponsor them, you will not do business with the United States of America.

FRANK: The President listed Osama Bin Laden and eight others already posted in earlier asset freezes, but the presidential order widened the money trail to the terrorists believed linked directly to Bin Laden and threatens banks that do business with his associates.

Among the new groups on the list, three charities, as well as Islamic groups with links to Egypt, Libya, the Philippines, Pakistan, and the South Arabian Emirates, groups actively raising money.

WILLIAM WECHSLER, NATIONAL SECURITY COUNCIL: That's still being raised under the guise of charitable organizations. It's still coming from business enterprises, some legitimate, some illegitimate criminal networks.

FRANK: Previously, no U.S. assets of Bin Laden have been found. Although $254 million belonging to Afghan National Airline Ariana and the Taliban government have been seized.

In Europe, the head of the German Central Bank said there is reason to believe people who knew of the attacks did try to manipulate oil and gold futures, as well as airline and insurance stocks.

(on camera): To force cooperation, the President's order warned overseas banks and businesses that their U.S. assets could be frozen if they do not hand over information and freeze accounts in their home countries.

Allan Dodds Frank, CNN Financial News, New York.

(END VIDEOTAPE)

DOBBS: Joining me now is a man who with the firm he founded, specializes in tracking down assets, among other things. Jules Kroll's experience includes tracking the finances of Imelda Marcos and Saddam Hussein.

Jules, good to have you with us.

JULES KROLL, EXECUTIVE CHAIRMAN, KROLL INC.: Thank you, Lou.

DOBBS: The task force that the President has put in place, freezing the assets of these 27 individuals and organizations. It is only the beginning. Where in your judgment, do we go from here? KROLL: Well, it's an important first step. We'll really have interagency cooperation now. There will be cooperation, not only as we saw it during the Gulf War, but it'll go to all of our allies. And this fundamental to blocking accounts and discovering funds and other assets.

DOBBS: In -- and I think the most exact parallel if there is one, the closest parallel, it would be Saddam Hussein's assets, which you played an important part in tracking down and ultimately they were frozen where found. How complicated, how difficult a task, how long should it take?

KROL: It'll take a while. There's been some intelligence gathered over the years. There's been some tracking, but this is a painstaking, difficult job. And the key to it, there really are three keys.

The first is to get the cooperation of other governments. Secondly, the wholehearted cooperation of financial institutions. And third and possibly most important is information from the expatriate communities and the countries that these terrorists are from.

DOBBS: We know that the first is already under way. The latter sounds as thought it's going to be a more protracted effort, because it's going to rely on the intelligence agencies of other countries.

In terms of getting the cooperation of other banks internationally, they have been reluctant in times past to cooperate. What leverage does the United States have here?

KROLL: Well, I think we've got something so profound that the -- much of the world is in shock as to the devastation that was caused, the loss of life, the civilian deaths. I think we have stepped this up because of the activities that have taken place and the cooperation will be much more easily forthcoming this time.

DOBBS: Corporate intelligence, business intelligence here, long a specialty of yours. How much cooperation do you think the administration, even with all of the power of administration behind it, the U.S. military, the U.S. intelligence apparatus, how much cooperation can the administration, this government expect from multinational companies and banks around the world?

KROLL: I believe what the cooperation received here will be unparalleled both from financial institutions, domestic and foreign, by multinational corporations. There is a political will in the winds that I have not seen before in my professional life.

DOBBS: And in terms of international, the multinationals particular, their securities concerns? I know they have been raised to an all-time high. What do you expect to happen there? KROLL: Well, your prior guest, Mr. Bossidy put his finger on it. In the short-term, the changes will be very deep. People will be concerned about their strategies, their plans. their facilities, their assets. Most importantly, their people. And that's going to be a big, big change. We're seeing it all across the range of our business.

DOBBS: OK, Jules, thanks.

KROLL: Thanks, Lou.

DOBBS: Jules Kroll.

Well, late today, Treasury Secretary Paul O'Neill said our economy may be a little longer -- our economic recovery may be a little longer in coming than first thought. The Treasury Secretary now says recovery may be delayed by a quarter or so. In his earlier estimates, he had pegged recovery to the last quarter of this year.

That's MONEYLINE for this Monday evening. We thank you for being with us. I'm Lou Dobbs. Thanks for being with us. Good night from New York. "CROSSFIRE" is coming up next.

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