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Lou Dobbs Moneyline
Dow Advances 149.33; Nasdaq Advances 41.43; Interview with Benjamin Netanyahu
Aired November 06, 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.
ANNOUNCER: This is LOU DOBBS MONEYLINE for Tuesday, November 6.
LOU DOBBS, HOST: Good evening, everyone.
The United States continues to bomb terrorists in Afghanistan, and Osama bin Laden raises the stakes. He's looking for nuclear weapons. The United States is looking for more support from its allies. We'll have the report for you.
And then, are U.S. efforts to build support in the Middle East straining relations with Israel and complicating the war against terrorism? Former Israeli prime minister Benjamin Netanyahu will join us.
We'll also be joined by Bernadine Healy. Dr. Healy is the outgoing president of the Red Cross. She'll tell us where the money donated for the September 11 victims and their families is going and why she is resigning.
On Wall Street, stock prices soar as interest rates fall. The Fed cut interest rates for the 10th time this year today. We'll tell you how this cut may or may not help the economy and the markets.
And major league baseball owners have overwhelmingly voted to reduce the number of teams in major league baseball by two.
In the latest developments in the war against terrorism, U.S. jets pummeled Taliban targets by day and night today. A CNN cameraman saw several explosions followed by plumes of smoke near Bagram. Today, Northern Alliance commanders claim to have captured the town of Kisindeh, just south of the city of Mazar-e Sharif.
The Northern Alliance also says five Taliban commanders and 400 of their soldiers defected. Defense Secretary Donald Rumsfeld would not comment on those claims.
The Pentagon saying U.S. jets and bombers carried out 100 sorties yesterday, focusing their attention on the support of opposition forces. Rumsfeld says the increased number of sorties is the result of better targeting information from ground forces.
President Bush warning Europe for the first time that Osama bin Laden is looking for nuclear weapons and that freedom in Europe is at risk.
John King joins us from the White House with more. John?
JOHN KING, CNN CORRESPONDENT: Lou, that escalating rhetoric from the president today part of a carefully calculated White House verbal offensive, if you will, to back up the fifth week of the military strikes. Some indications from public opinion polling in Europe that support for the U.S.-led campaign is dropping, skepticism rising.
Some Arab leaders, of course, have called for a cessation of bombing during the coming holy period, the Muslim holy period of Ramadan. But Mr. Bush serving notice today that the bombing will go on. He said for the first time something the CIA has said for several years, voicing the belief that Osama bin Laden is trying to acquire not only chemical and biological weapons but perhaps nuclear weapons as well.
And after saying that in a speech delivered via satellite to an antiterrorism conference in Warsaw, Poland, the president had a blunt message for anyone who thinks the bombing campaign is about to end. Mr. Bush served notice it is just beginning.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: We are at the beginning of our efforts in Afghanistan. And Afghanistan is the beginning of our efforts in the world. No group or nation should mistake America's intentions. We will not rest until terrorist groups of global reach have been found, have been stopped, and have been defeated.
(END VIDEO CLIP)
KING: Mr. Bush also saying that in a speech Saturday to the United Nations General Assembly, he would make clear in very blunt terms that words of sympathy were not enough, that he expected all nations to step up and contribute in the war on terrorism.
And Lou, a late-breaking development here tonight on the domestic front, a very blunt meeting, we are told, between the president and congressional appropriators tonight in the budget battle. Many in Congress want to spend an additional $20 billion above a previous agreement with the president on the domestic war against terrorism. We're told the president looked them in the eye tonight and said he would veto that measure, that he believed there was enough money to go around.
A lot of talk of the bipartisan cooperation in recent weeks around this town, the president in a major showdown with both Democrats and the Republicans in Congress tonight.
Lou?
DOBBS: John, any idea where that number $20 billion came from on the part o the congressional representatives in that meeting? KING: There are a number of appropriators in Congress who believe much of that money would go to homeland defense issues, airline security, more aid for law enforcement around the country, steps (ph). One member we're told tonight told the president point- blank at this meeting, Americans are afraid to take their children to school, they're afraid to go shopping. We need to spend more on homeland security.
The president, I am told by senior officials, looked him right back and said he believes there's enough money in the budget to fund all priorities, and if they need more next year, come back and do it as part of next year's budget battle.
The president opened the meeting, though, by saying he would veto that legislation. I'm told more than one appropriator looked him right back and said, We don't think you will, Mr. President.
DOBBS: John King from the White House, thank you very much.
Well, senators frustrated with the lack of progress in the anthrax investigation grilling FBI agents during a hearing on Capitol Hill today. FBI agents were unable to provide answers to questions about the number of laboratories which produce anthrax, or whether the perpetrators are in the United States or abroad.
We'll have a live report for you from Washington in just a moment.
Anthrax tests now show that Food and Drug Administration buildings do not, do not contain anthrax. Initial anthrax tests showed they did. Mail room employees at those FDA buildings were given antibiotics as a precaution.
A New York City hospital that closed because of an anthrax scare today opened. The Manhattan Eye, Ear, and Throat Hospital closed a week ago after a female stockroom employee was diagnosed and then later died from inhalation anthrax.
Anthrax has been discovered in a diplomatic mail bag received by the U.S. Consulate in Ykaterinberg (ph), Russia. The mail originated at the State Department in Washington. It is the first known anthrax case in Russia since anthrax was discovered in Boca Raton, Florida, a month ago.
As we reported, the FBI under fire on Capitol Hill today. FBI officials criticized after saying they did not know the source of anthrax that has now killed four Americans.
Jeanne Meserve joins us now. She has the story on the FBI anthrax investigation. Jeanne?
JEANNE MESERVE, CNN CORRESPONDENT: Well, Lou, the FBI has not come up with many answers in its anthrax inquiry, and today members of the Senate wanted to know why.
(BEGIN VIDEO CLIP) SEN. DIANNE FEINSTEIN (D), CALIFORNIA: How many labs handle anthrax in the United States?
JAMES CARUSO, FBI COUNTERTERRORISM EXPERT: We do not know that at this time. I can assure you...
FEINSTEIN: You don't know that?
CARUSO: No, we do not. We're pressing hard to determine that.
FEINSTEIN: Could you possibly tell me why you do not know that?
CARUSO: The research, the research capabilities of thousands of researchers is something that we're just continuing to run down. I know it's an unsatisfactory answer and unsatisfying to us as well.
(END VIDEO CLIP)
MESERVE: That was James Caruso, the FBI's deputy assistant for counterterrorism. He made the point to the senators that thousands of people from around the world have come to the U.S. and received educations that might have given them the knowhow to handle anthrax. Some are still here, some are gone.
Caruso said that the FBI had 7,000 people spread around the world working the case, but, he said, FBI resources have been stretched because of the number of hoaxes involving anthrax and other potential weapons of mass destruction have gone, in his words, "off the charts."
(BEGIN VIDEO CLIP)
CARUSO: Since mid-September, the FBI has responded to approximately 7,089 suspicious anthrax letters, 950 incidents involving other WMD matters, such as bomb threats, and an estimated 29,331 telephone calls from the public about suspicious packages.
The vast majority of these responses were not actual incidents.
(END VIDEO CLIP)
MESERVE: Hoaxes not only drain law enforcement and public health resources, they take a psychological toll. And for all those reasons, officials have promised repeatedly that people who perpetrate hoaxes will be prosecuted. But today a Justice Department official told the senators there should be some new legislation. Current statutes, he said, simply leave too many loopholes -- Lou.
DOBBS: Jeanne, did the FBI officials suggest to the senators that there was some time frame here where they expected results?
MESERVE: Absolutely not, Lou. Absolutely no mention of any time frame whatsoever, just that they are applying all the resources they have to this investigation, and they hope to get some answers -- Lou.
DOBBS: OK. And we are, after all, one month into this unfortunate process. Jeanne Meserve, thank you very much. MONEYLINE has learned that authorities are investigating the role U.S. banks played in providing a pipeline for terrorist funding. As Chris Huntington reports, when the order came to freeze al-Qaeda's assets, authorities didn't have to look far from ground zero.
(BEGIN VIDEOTAPE)
CHRIS HUNTINGTON, CNN CORRESPONDENT (voice-over): Just blocks from ground zero, federal law enforcement agents are scouring accounts at major U.S. money center banks. Of the $4 million of terrorist assets currently frozen in the United States, federal officials say that a significant portion is in accounts managed by Citibank, J.P. MorganChase, the Bank of New York, and Bank of America.
SEN. CARL LEVIN (D), MICHIGAN: One of the most dramatic proofs that our banks have been misused by foreign terrorists is bin Laden's comment when he said that his operatives knew the cracks in our banking system and our financial institutions like they knew the lines on the -- their hands.
HUNTINGTON: The investigators are particularly concerned that terrorists found a back door into the U.S. banking system by exploiting a service known as correspondent banking. A correspondent account with a U.S. bank allows banks based overseas to conduct business in the United States without the expense or regulatory exposure of setting up their own branches.
All major U.S. banks provide correspondent accounts, collecting billions of dollars in fees for processing trillions of dollars in transactions.
IRWIN NACK, NEW YORK BANKING DEPARTMENT: The problem with correspondent banking is, it allows banks which may be operating in jurisdictions that don't have strong money-laundering laws, that they're not subjected to the kind of supervision that we have here in the United States.
ROBERT MORGENTHAU, MANHATTAN DISTRICT ATTORNEY: There can be a shell bank in the Cayman Islands. They can have an account with a major U.S. bank or the foreign branch of a U.S. bank or the U.S. branch of a foreign bank, and then they can send terrorist money through and nobody's going to be able to identify it.
HUNTINGTON: Earlier this year, a Senate panel issued a blistering report on correspondent banking, calling it a "gateway for money laundering," "a widespread and ongoing problem," and blasting U.S. bank oversight as weak or ineffective.
The banking industry insists it did a good job.
EDWARD YINGLING, AMERICAN BANKERS ASSOCIATION: For a few years preceding September 11, there actually had been an ongoing strengthening of procedures in the larger banks with respect to correspondent accounts.
HUNTINGTON: Still, the terrorists found a weak link. In June of last year, Mohammed Atta received $100,000 in a Sun Trust bank account in Florida wired from a bank in the United Arab Emirates. That transfer was made through a correspondent bank account.
(END VIDEOTAPE)
For years, U.S. banks have been required to know their customers. That's a skill for which they have shown little commitment. Under new anti-money-laundering laws passed last week, banks handling correspondent accounts will need to go a step further and know their customers' customer -- Lou.
DOBBS: Chris, I couldn't help but notice the American Bankers Association representative was talking with you. This is the same group who were lobbying against that provision for tighter controls in that antiterrorism bill just two weeks ago.
HUNTINGTON: Lobbied against the bill and then, in the final weeks and days when it was clear that it was going to pass, they rallied on board and kind of claimed full partnership.
DOBBS: Well, it's a partnership due.
Chris, thanks. Chris Huntington.
Still ahead here on MONEYLINE, Americans are angry with some charities and the pace with which they are disbursing money to victims and the families of victims of the September 11 attacks.
Red Cross president Bernadine Healy appeared on Capitol Hill to answer one burning question.
(BEGIN VIDEO CLIP)
UNIDENTIFIED SENATOR: In the eight weeks since the events of September 11, thousands and thousands of Americans have reached into their pockets and their checkbooks and written -- given their money to the Red Cross. Can you assure them today that every dime of those contributions will go to heal the wounds...
(END VIDEO CLIP)
DOBBS: We will have Dr. Healy's answer. We will be repeating the question as well. And we have a few others when she joins us later.
And a former Israeli prime minister will join us in a matter of moments to discuss how America's new war is affecting the prospects of peace in the Middle East.
All of that and a lot more still ahead on MONEYLINE.
ANNOUNCER: After the break, Lou is joined by Benjamin Netanyahu, former prime minister of Israel.
(COMMERCIAL BREAK) DOBBS: In the latest developments in the war against terrorism, the federal government today announcing it's hiring 225 additional security employees, that on a temporary basis, trying to improve security at airports around the country. The Federal Aviation Administration says those employees will begin working within the next few weeks.
CNN has learned that information that prompted warnings about a possible attack on bridges in Western states was not credible. Last week, the FBI warned six Western states about the possibility of such an attack but stressed the credibility of that information was unknown, and in fact uncorroborated.
California's governor, Gray Davis, went public with that threat.
More fighting and more death in the Middle East today, Israeli and Palestinian forces battling in the West Bank. And with the United States preoccupied with the war on terrorism in Afghanistan, peace talks have all but stalled.
Joining us now, former Israeli prime minister Benjamin Netanyahu.
Good to have you with us.
BENJAMIN NETANYAHU, FORMER ISRAELI PRIME MINISTER: Good to be with you, Lou.
DOBBS: At this point, within the larger context of the war against terrorism, are there any prospects for significant developments for peace in -- between Israel and the Palestinians?
NETANYAHU: The Palestinian dictator, Yassir Arafat, happens to be the only man who qualifies under President Bush's categories of being both a perpetrator of terrorism and a harborer of terrorists. He's both bin Laden and Taliban. So I think the important thing is if -- the first road to peace is to stop the terror, and to tell Arafat what Tony Blair and President Bush have told him, surrender terrorism or surrender power.
You can't have peace while Israel is being blown up all the time.
DOBBS: But you negotiated and negotiated in point of fact successfully with Yassir Arafat...
NETANYAHU: You know how? I stopped the terror. I told him it's either stopping the terror, or your regime goes down. That tended to concentrate his thinking. And in fact, he stopped the terror. And that's how I could get negotiations. The pre -- the... I would say the precondition for negotiations is to have Arafat dismantle this terror apparatus that he's unleashed against Israel, because I think as long as the terror goes on, you wouldn't negotiate with bin Laden or with the Taliban, and neither would we.
DOBBS: And the position that Israel is in now within the context of the larger war against terrorism, larger in the sense of involving now 60 nations, what does this do to Israeli interests? NETANYAHU: Well, I think it's probably a very healthy thing that the United States has taken the charge against the war on terrorism. I think that the only way that you will win, we will win, the democracies will win, all the countries affected by terrorism will win, is if the U.S. makes it very clear, terrorism is unacceptable anywhere.
DOBBS: You don't think the president has done that?
NETANYAHU: He has certainly said it. Now it's important to follow through. And that means two things. One, that you go not only after the terror organizations but the regimes that harbor them, and he's doing that, first in Afghanistan, and as Washington is signaling very, very clearly, there'll be other stops after Afghanistan.
DOBBS: He repeated that signal today.
NETANYAHU: Very important. Secondly, that terrorism -- that fighting terrorism is legitimate for those who are attacked, and I think that has to be understood as well.
The most important thing that is going to happen is that the various countries on the sidelines, who are either blackmailed by terrorism and pay them, for example, Saudi Arabia, or others who have refused to uproot the terrorist, there are some Middle Eastern regimes, who are sitting on the sidelines. They're saying, If you want to include us in the coalition, don't hit this terrorist, don't hit that regime.
You have to say no. Come back to basic principles. You're either with us or against us. And we are sticking -- stick to the mission, don't worry about the coalition. The coalition is less important.
DOBBS: The president has actually articulated that, as you know. He has said that the coalition will not define the mission, the mission will define the coalition.
NETANYAHU: Right on. Couldn't agree with him more.
DOBBS: And to the degree to which Israel must constrain itself within this war against terror and the implications it might have for the success, what do you think of those constraints?
NETANYAHU: I think Israel has been extraordinarily constrained. I mean, we have pretty enormous firepower. We're not using our jets, we're not using our firepower. We're trying to surgically strike at terrorists.
By the way, that's not particularly effective, because when you...
DOBBS: (inaudible), I'm sorry, which is not particularly effective?
NETANYAHU: The surgical strikes is effective in the sense of stopping a particular kamikaze suicide bombing coming at you, but unless you go after the carrier, the aircraft carrier, you can't stop the terror. The aircraft carrier happens to be in this case Arafat's regime, which has suicide kindergarten camps, Lou, suicide kindergarten camps, where 3-year-old Palestinian children are taught to be martyrs, suicide martyrs.
Unless you go after that regime, you cannot neutralize terrorism.
DOBBS: In the hierarchy of priorities here, obviously the United States has made the determination it will be, the president has said it will be al-Qaeda, it will be the Taliban. What is your personal judgment as to the rest of the priorities in that hierarchy?
NETANYAHU: I think this is an obvious and natural starting place. But the president too has said that this is not the last stop, for the following reason. You have really a terror network that consists of about two dozen terror organizations that are satellites of terror regimes. There are about half a dozen. The most prominent ones, other than Afghanistan, which has bin Laden's situation there, are Iran, Iraq, Syria, the Palestinian dictatorship, and one or two other Middle Eastern states.
That's it. If you can neutralize these regimes, and I stress the word regimes rather than the organizations, because the terrorists are not suspended in midair, they can't function for long without an enviable (ph) base that the regime provides.
DOBBS: As you've pointed out more than once.
NETANYAHU: Indeed, and that's the key to fighting terrorism. The key to fighting terrorism is not fighting the terrorist organizations, it's fighting the terrorist regimes. I think if he proceeds on this plan that he's charted so ably and so clearly, I think he'll get the American people behind him, I think it's much more important whether Saudi Arabia or any one of these countries is behind.
I think if he stays the course, he'll win. We'll all win.
DOBBS: It's clear the American people are behind the president and this administration in this war, this new war, as the president says. In terms of homeland security, former Pennsylvania governor Tom Ridge is now in charge of homeland security, director of homeland security. What is your sense? Because you have had to live and to administer a government, a sovereign nation, in the midst of terrorism.
What is your sense of the security within the United States and the steps we must take?
NETANYAHU: You need to upgrade domestic security. It's not easy to do, but I think that you're well on your way. And I think it'll take a year or two to debug this, maybe more. But you're already taking care of aviation security. It took us quite a while. We didn't become instantaneously adept at this, you know. It's an unfortunate accumulation of experience, sometimes very painful experience.
But I think the most important thing is this. Other than going on the attack against the offend -- the perpetrators of terrorism, the other thing that you have to do is condition the public to be vigilant and, in many ways, to also accept the inevitable civilian casualties that will accompany an aggressive war against terrorism.
You don't end terrorism in one shot. Sometimes there are bouts. Sometimes the terrorists will strike back, until those regimes and those organizations understand that it's over. And the response of the American public has been on the whole, I think, very good. And very courageous. I think people are obviously anxious, but they're giving that backing, and they know that there may be additional casualties.
That is not stopping the United States government, as best as I can see, nor the American people.
DOBBS: Benjamin Netanyahu, good to have you with us.
NETANYAHU: Thank you.
DOBBS: We will be continuing, and when we do, U.S.-led attacks hitting Taliban targets in Afghanistan tonight. We'll have the latest for you in the war over Afghanistan.
Then, Red Cross president Bernadine Healy under fire on Capitol Hill today. Tonight Dr. Healy will join us to clarify the way the Red Cross is disbursing money to victims of the September 11 attacks and their families.
And for the 10th time this year, the Federal Reserve has cut interest rates. We'll be talking with one of Wall Street's leading economists about what this means for Wall Street, the economy, the markets, and your financial well-being.
ANNOUNCER: Coming up, Lou talks to Edward Jardenny (ph) of DeutscheBank Securities.
(COMMERCIAL BREAK)
DOBBS: Now for the latest developments in the war against terrorism.
The U.S. Postal Service says anthrax mail attacks will cost the Postal Service well into the billions of dollars, money it says it will try to recover from Congress. The Postal Service says the expense is a one-time cost resulting from buying new sanitizing equipment and other cleanup measures.
A New York City hospital that was forced to close because of an anthrax attack reopened today. The Manhattan Eye, Ear, and Throat Hospital closed a week ago after a female employee was diagnosed and then later died from inhalation anthrax. Investigators still don't know how the woman contracted the disease. U.S. jets striking Taliban targets around the clock. Night vision video here showing several bright blasts, those explosions near Bagram.
Today Northern Alliance commanders claim to have captured a key town just south of the city of Mazar-e Sharif. The Northern Alliance also says five Taliban commanders and 400 of their soldiers defected. The Pentagon did not confirm those claims.
It looks as though the proposed settlement in the Microsoft antitrust case could tonight be in jeopardy after a third of the states involved rejected the plan.
Steve Young reports.
(BEGIN VIDEOTAPE)
STEVE YOUNG, CNN FINANCIAL NEWS (voice-over): Microsoft's euphoria at reaching an antitrust settlement last week with its long- time foe, the federal government, was marred today by a double blow. There were more holdouts refusing to go along with the agreement than there were states willing to sign on the bottom line. The nine states that approved after marathon negotiations included Ohio, Louisiana, and New York.
ELIOT SPITZER, NEW YORK ATTORNEY GENERAL: What we get is an opening of the marketplace. And what we get is a substantial improvement over the deal that was inked by the Department of Justice last Friday.
YOUNG: But nine states including Connecticut, California, Iowa, and the District of Columbia said no, mindful, perhaps, of Microsoft's violation of a previous consent decree it signed with the government in 1994.
RICHARD BLUMENTHAL, CONNECTICUT ATTORNEY GENERAL: The settlement reached today reflects a triumph of hope over history. Some of the parties have reached common ground despite a history of legal conflict.
YOUNG: During the state litigation that now follows, Judge Colleen Colarchitelli (ph) will use a tougher standard than her review of whether the settlement is in the national interest.
Outside court, the Justice Department's antitrust chief strongly denied reports that in the final crunch, he and a Microsoft lawyer crafted the ultimate deal, shunting aside the Justice Department's professional staff.
CHARLES JAMES, JUSTICE DEPARTMENT ANTITRUST CHIEF: I can tell you that on the last day, I was at home, so the stories that this was hammered out in some backroom deal between myself and Microsoft are absolutely false.
(END VIDEOTAPE) YOUNG: At this point, Judge Colarchitelli is on a parallel track. It now seems that it will be six months at the very soonest before the settlement, perhaps toughened by the holdout states, could go into effect -- Lou.
DOBBS: Steve, thank you. Steve Young from Washington.
Investors today sparking a late session rally, stocks higher after the Federal Reserve cut interest rates by a half percentage point. This is the 10th interest rate cut of the year. It brings the Fed funds rate down to 2 percent. That is the lowest level in four decades.
The Dow Jones industrials gained 150 points at the close, the Nasdaq surging 41 points, and the S&P 500 rose 15 points.
Let's turn now to Christine Romans and Greg Clarkin, who were following this story from the Nasdaq and the New York Stock Exchange.
Kind of an exciting day.
CHRISTINE ROMANS, CNN FINANCIAL NEWS: It really was, Lou.
DOBBS: To say the least.
ROMANS: Yes, there was some Hewlett-Packard drama, and then there was a Fed cut and there were some earnings, and there was strong buying heading into the closing bell. So things look pretty good. Traders liked the feel. The question is, a lot of people were talking about sustainability. There are some people who still think the market needs to retest at least some of the distance it's crossed over the past several weeks.
And so there are those holdouts who think you got to go back to refresh things, you got to go back lower.
DOBBS: Greg?
GREG CLARKIN, CNN FINANCIAL NEWS: You know, we are heading into a quiet period, so it's going to be really interesting to see where the markets go from here. The Nasdaq up about 27 percent in five weeks' time, a tremendous gain. The Federal cut today really giving the impetus for the Nasdaq to get over 1800 in a significant fashion, 1835 was the close. We haven't seen that since late August.
DOBBS: Well, it is a dramatic recovery from that week of September 17, when we watched a trillion dollars ripped out of the market.
But also, within context, the Na -- the Dow is off 11 percent since the beginning of the year, after 10 interest rate cuts, the Nasdaq off 20 percent, just about 21 percent. There's a lot of pain still out there.
CLARKIN: Oh, without a doubt. But we're hearing from a lot of traders and fund managers that, you know, they're looking at big tech, at least they have been in the last five weeks, as a fairly decent place to park money for a while. Now, whether that continues, obviously, is another story. But they're less...
DOBBS: Did you say "park money"?
CLARKIN: Exactly. Yes, (inaudible)...
DOBBS: That is a frightening expression.
CLARKIN: It's one I hear often.
ROMANS: Yes.
DOBBS: Then you're a much braver individual, but we knew that, than me.
Christine, tell me you haven't heard about parking.
ROMANS: I have. Well, because interest rates are just so low now that the folks are saying that if they want to put their money to work, they're starting to look at the stock market, saying if you've got a long enough time horizon, things just got to get better.
They're trying to anticipate this recovery, but they just don't what it's going to look like.
DOBBS: Expectations for tomorrow, since we're focused here on the short-term?
CLARKIN: A lot of folks I spoke with said they would not be surprised at all to see a bit of a pullback. It's natural at this point. The Nasdaq, again, after a tremendous run. Would not be surprised at all, see it give back.
ROMANS: I'm hearing -- that it follows through.
DOBBS: Terrific. Christine, Greg, as always, thank you very much.
Well, Wall Street is betting the Fed's interest rate cuts will be enough to help fire up the economy. But after 10 cuts this year, is the Fed achieving anything? Economics correspondent Kathleen Hays is here tonight and she has more on that.
Kathleen?
KATHLEEN HAYS, CNN CORRESPONDENT: Thank you, Lou.
Well, you know, you asked a provocative question. And I think one way of looking at it, people say look...
DOBBS: That's what I do here.
HAYS: I like that. If we didn't have all these rate cuts, where would the economy be and where would the stock market be? That's one way to think about. It may be in a lot worse shape. We showed you that chart of how much the Fed has already cut. You say to yourself, "What is the Fed so worried about?" Let's look at their policy statement, because they outlined it very neatly and nicely, as they always do.
For starters, they talk about heightened economic uncertainty. We're showing you, of course, this dramatic step down in rates. Deteriorating business conditions. In other words, we still think things are getting worse, and are focused not just on weakness here, but weakness overseas. Japan in another recession. Europe weakening. All these are worries on the Fed's plate.
Now I got some interesting research from Credit Suisse First Boston this afternoon about what they see next. Basically, the rule of thumb is, as long as unemployment is rising, the Fed will keep cutting rates. So they see unemployment going up to 6.25 percent. It's now at 5.4, in 2002.
They say the Fed is going cut at the next three meetings, which is December, January, and March, and that the funds rate is going to bottom at 1 percent. Now that is a very extreme forecast, because other people are saying, hey, look, we've got mortgage refinances. We had record auto sales in October.
But that is maybe looking for too much from the Fed. In other words, that the rate cuts, even if they're not firing up the stock market yet and firing up the economy, some people think they're keeping our head above water and that, but the Fed might be closer to finishing than keep going.
DOBBS: Well, at this point, they're talking about three rate cuts. That would take us to maybe two quarter -- cuts and a half. What would be the sequence?
HAYS: They're looking for 50 and -- no, 50 and two 25s. A lot more.
DOBBS: A downward direction, all right.
HAYS: Yes. So maybe those stock market bulls will be ready to go, yes.
DOBBS: Well, it's about time.
HAYS: Yes.
DOBBS: It's been a tough couple years.
HAYS: Yes.
DOBBS: Kathleen, thank you.
Well, joining us now for more on today's interest rate cut, and to tell us whether it will prove effective in moving this economy back on a winning trajectory, Ed Yardeni of Deutsche Bank Securities.
Ed, always good have you here.
ED YARDENI, DEUTSCHE BANK SECURITIES: Thank you very much.
DOBBS: 50 basis points. The consensus was right. This is a strong move by the Fed, isn't it?
YARDENI: This has been a very market friendly Fed. I mean, every time the villagers call out for a half point cut, the Fed delivers. And so far, so good. And looks as though the markets are asking for another half point cut. We'll probably get one shortly.
DOBBS: Well, the villagers are beset with problems. As I said, these averages are off significantly, despite 10 interest rate cuts. What more can the villagers cry out for?
YARDENI: Right. Well, you know, I mean when you look at the economy, remember the cash burn problem in dotcoms? Now we've got it in airlines. Now we've got it in the auto industry. There's a lot of companies that are burning cash.
And the economy is not in a recession yet, but it's awfully close to it. The reason it hasn't really fallen in is because companies are giving away the store, literally. I mean, the auto industry had amazing car sales in October, but it's not sustainable.
DOBBS: Not sustainable because of the great incentives that they're offering?
YARDENI: Yes, I mean, Lou, how long can companies cut prices to bring the consumers in, and then realize it's awful for profits and fire the workers? Some things just doesn't add up here. At some point, there's a real risk the workers, consumers are going to get concerned about their jobs.
DOBBS: And the auto companies, what you're suggesting, are bringing next year's sales?
YARDENI: I guarantee you the car sales are going down big time in December and January! There's no way you can sustain this extraordinary pace maybe past November.
DOBBS: Past November, the implications then further layoffs?
YARDENI: Well, unfortunately, the consumer recession may still be ahead of us. I mean, the unemployment rate, I agree, is going higher. Companies are certainly firing workers. People are not going to get the bonuses they're used to. It's all going to come together at a very bad time.
DOBBS: You have to be a little amused as you sit next to Kathleen there, listening to a CSFB forecast on unemployment. I think we've got to give you at least equal opportunity to give us a forecast.
YARDENI: Yes, I think we'll see 6 percent, probably by the end of year. And I wouldn't be surprised if we see as much as 7 percent by March, April. The good news...
DOBBS: Put that in some context though. That would be another million jobs at this level.
YARDENI: Absolutely. The good news is 93 percent of the labor force would still be employed, still maybe enjoying 6, 6.5 percent mortgage rates.
DOBBS: Right.
YARDENI: It's not all bad news. We will come out of this recession, but I don't think it's over yet.
DOBBS: What about these rates in terms of the consumer? Because as you said, the consumer has stayed through this. But we have not seen much of a ratchet down at all in consumer rates, that is specifically credit card rates. The 10-year note has been tenacious, which is the benchmark for most 30-year mortgages. Where does the consumer get a break here?
YARDENI: Well, so far, it's been all in the mortgage market. They've been able to refinance several times. They've taken out some equities. You know, housing's benefited dramatically from that, thank goodness.
But I think, you know, if we do see the unemployment rate going higher, and I think it's all a bit inevitable, there are going to be some consumer credit card problems. And some of the stocks have already reflected that.
DOBBS: Your council in terms of these markets? What do you see happening over the next year?
YARDENI: Well, I think preserving your capital is not a bad idea. I think there's going to be lots of opportunities. I know the market's been extremely strong, but I think the market's going to be surprised by the weakness in the first quarter. So I think they'll be better opportunities down the road.
DOBBS: And alternative areas for investment, specifically real estate?
YARDENI: I think real estate's a good one. After the bursting of Nasdaq bubble, more and more people felt their house is a good place to put more money.
DOBBS: OK, Ed Yardeni, good to have you here.
YARDENI: Thank you, Lou.
DOBBS: Coming up next, heated arguments today on Capitol Hill about the distribution of charity funds for victims and the families of those victims of September 11. And taking the brunt of the criticism, the outgoing president of the Red Cross. She is our guest here right after this break.
ANNOUNCER: Next, Lou talks with Bernadine Healy.
(COMMERCIAL BREAK)
DOBBS: Overwhelming generosity has turned into, in many cases, overwhelming frustration for many of us since September 11. At issue, the slow process of distributing the billion dollars of funds donated to the families of victims. The problem tackled on Capitol Hill today.
Peter Viles has the story.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): The soon-to-be ex- president of the American Red Cross comforting a September 11 widow on Capitol Hill. But soon, she faced a barrage of criticism that the 9/11 charities are a mass of red tape and confusion.
UNIDENTIFIED FEMALE: Why then haven't these charities been able to get together and agree on one uniform application? Why haven't they been able to get together and develop a quicker way for families to receive these funds? We all have the missing persons reports, death certificates, and any other proof needed to avoid fraud, but the charities are not sharing these documents and information with each other.
VILES: Healy was hammered for the Red Cross' decision to put aside nearly half the money it has raised for future needs, perhaps for future terrorist attacks.
ELIOT SPITZER, NEW YORK ATTORNEY GENERAL: I see the Red Cross, which has raised hundreds of millions of dollars that was intended by the donating public to be used for the victims of September 11. I see those funds being sequestered into long-term plans for an organization.
REP BILLY TAUZIN (R), LOUISIANA: What's at issue here is that a special fund was established for these families. It was specially funded for this event, September 11. And it is being closed now because we're told enough money's been raised in it. But we're also being told, parenthetically, by the way, we're going to give two- thirds of it away to other important Red Cross needs.
VILES: Healy, who has announced her resignation effective at year's end, defended the decision.
BERNADINE HEALY, PRESIDENT, RED CROSS: The liberty fund is a war fund. It has evolved into a war fund. We must have blood readiness. We must have the ability to help our troops if we go into a ground war. We must have the ability to be there for the victims of tomorrow.
(END VIDEOTAPE)
VILES: A contentious hearing. And it continues at this hour on Capitol Hill. The subcommittee asking the Red Cross to submit a more detailed account of how it intends to spend the money raised since September 11, also asking for verbatim accounts of any advertisements the Red Cross ran either on television and newspapers, trying to get at the issue of what was the donor intent? Exactly what did the Red Cross ask for because the committee feels the donor intent was clearly that the money should go directly to the victims -- Lou.
DOBBS: And Peter, your sense of the satisfaction on the part of the committee today with the answers they received?
VILES: Well, they do want some more follow-up. They want some more information from the Red Cross. And as I said, the hearing continues at this hour. We should say there is another hearing before another subcommittee on the same topic two days from now. So clear to me, in any event, that Congress is not through with this issue, Lou.
DOBBS: OK. Peter Viles from Washington. Thank you.
Well joining us now is Dr. Bernadine Healy. She is the outgoing president of the American Red Cross and joins us now from our studios in Washington, D.C.
Dr. Healy, thanks for being here.
It looks like you had a rather tough day before the House panel. Is it your sense that the problems that have arisen can be easily remedied by the Red Cross at this point?
BERNADINE HEALY, PRESIDENT, RED CROSS: Well, I think that it's a question of what the Red Cross is. We are congressionally chartered. We are a service organization. We're not just an organization that funnels money to other organizations.
DOBBS: Right.
HEALY: We have been working in this area for 120 years. And what we have done with these horrible, horrible terrorist attacks is gone out and said to the public that this is about the events of 9/11 and its aftermath. This is about a broadbased American Red Cross response to the American public. This is a national crisis. This is not just a problem for New York or just a problem in Pennsylvania. This is the nation at war, in a way.
DOBBS: Dr. Healy, no question that all of that is true. But it is also true, is it not, that you were on the air on this network and others, talking specifically and appealing for money into this fund specifically targeted the victims' families of September 11. Can you...
HEALY: No, we didn't do that. I mean and certainly...
DOBBS: You did not?
HEALY: ... in almost all of my appearances, I always say we have a broad range of responsibilities, which include, first and foremost, the victims. It includes a strategic blood reserve. We can't be stuck without vaccines or Cipro, And we can't be stuck without blood with the next attack.
DOBBS: Right.
HEALY: We've extended our programs to the anthrax victims. We also absolutely have to prepare America for weapons of mass destruction. All of this has been outlined. It has been articulated, voted on by our full board. We've had full paged ads showing the whole range of issues that we are raising money for. And of course, it's first and foremost for the victims. We felt we needed $200 million dollars for those victims. We raised it.
DOBBS: Dr. Healy.
HEALY: We will continue to raise money for other issues that we have to respond to.
DOBBS: Forgive me, the Liberty Fund that you put together.
HEALY: Yes.
DOBBS: It was created, though, without the board's approval, was it not?
HEALY: Well initially, I didn't realize to set money aside and segregate it and put it under the close scrutiny of auditors, so that it would not be mixed in with other funds was an issue. Once we discussed it, they voted for it.
DOBBS: Right.
HEALY: The more important issue is, they supported from the very beginning the range of important uses the Red Cross has to have for the money it raises.
DOBBS: Certainly. And everyone, I think, is both appreciative and respectful of the Red Cross for all of the good that it does. Why did you create a separate fund called the Liberty Fund?
HEALY: Well, because our existing disaster fund focuses on hurricanes and floods. It is a general disaster fund that's used for many other purposes, for 60,000 disasters all over the country. This was a different kind of disaster.
Lou, we have not seen anything like it since the world wars. We felt it had to be segregated, because this was not just a fire in North Carolina. This was about the whole nation who was being attacked.
DOBBS: For many of the people...
HEALY: A new kind of war.
DOBBS: Dr., you'll excuse me.
HEALY: Yes. DOBBS: For many people who were sending in their money, and we have heard from, I mean, I'm sure you have, people extraordinarily frustrated because for them it was about the victims and the families of the victims of September 11.
May I quote to you and get your reaction to it, because this to me is a remarkable statement from the president of the American Institute of Philanthropy, Daniel Borochoff. He says, "The Red Cross overdid it and acted opportunistically, raising money for other programs that were not on the minds of the donors when they gave them the money." How do you respond to that?
HEALY: Oh, we you know, we went out there and worked day and night for an attack on this nation that no one could have anticipated. We planned for a weapon, a mass destruction attack. We knew our obligations under the congressional charter. We knew it involved victim assistance and sheltering. We knew that it involved dealing with the rescue workers. We knew that it involved blood. We knew that it involved training the rest of the country, communities everywhere, that they can know about weapons of mass destruction.
We've disseminated material on anthrax. We've disseminated material on training for weapons of mass destruction. This is the broadbased role of the American Red Cross. We have been working night and day. We have tried to get that message out. We have done it in numerous communications and PSA's in full page ads in newspapers, the major newspapers all over country just because, Lou, there is a blot of background noise that says, and many other charities are saying, that this is only for the victims in New York.
That is not what we ever said. Of course those victims in New York were our first priority. And we've set aside $200 million, which I think is more than any other program. $150 million has basically been spent on those victims. Lou, I don't know that anyone else has poured that much money out into the hands of the victims.
But we have other obligations to this country, to you, Lou, to communities all over America. This is still an ongoing terrorist threat. We have uncertainty. And we have obligations under our charter to serve there. And I'm so sorry that there seems to be confusion about this.
DOBBS: OK. I think that we're all sorry that this -- because everyone is well intended, and also at the same time frustrated. But what I asked was, how do you feel about Daniel Borochoff's statement, saying that the Red Cross overdid and acted opportunistically?
HEALY: When an event goes out, you go and do the best job you can. And you hope that people respond by investing in the jobs that you're trying to do. And I think that's what happened here. You know, when we first started, we didn't think that we would be able to raise $200 or 250 million. We were astounded at how much we raised as well. And all the more reason to keep that segregated in a separate Liberty Fund, so it's not used for anything else. It is there for the events of 9/11, the aftermath, and future terrorist events.
DOBBS: Has the Red Cross and its management learned something?
HEALY: Well, I think that what you always have to do is make sure that you communicate, communicate, communicate. And I mean take out ads every single day to say to the public, "This is what the Red Cross is doing. Don't confuse us with the 9/11 Fund in New York. Don't confuse us with Habitat for Humanity. Don't confuse us with a scholarship fund in New York for the victims." This is what the Red Cross does. We have to get that out.
DOBBS: You said communicate, communicate. Has the Red Cross learned anything about listen, listen, listen?
HEALY: Oh, absolutely. We must listen to the people we serve. We must listen to those firefighters. We must listen to those kids in Chicago, Illinois, who were worried that their city may be at risk. We must listen to the hospital systems that are now saying we don't have enough Cipro and we may not have vaccines. We must listen to the fact that we have an obligation to prepare this country. Of course, we must listen.
DOBBS: And to daughters...
HEALY: Especially to those we serve. We always listen. In fact, Lou, many of the donors came in and gave money just for the strategic blood reserve or just for international. We had a lot of international money that came in.
DOBBS: Dr. Healy...
HEALY: We always listen to the donors.
DOBBS: Excellent. And we appreciate your taking the time to be with us here tonight.
HEALY: Thank you so much.
DOBBS: Dr. Bernadine Healy, the outgoing president of the Red Cross.
Coming up next, we'll have your thoughts and we'll take a look at what's in store for tomorrow.
(COMMERCIAL BREAK)
DOBBS: A struggling decision by the leaders of major league baseball. The baseball owners have agreed to eliminate two teams possibly as soon as next season. Baseball commissioner Bud Selig tonight saying the reason for the cut is a number of franchises are simply not bringing in enough money.
(BEGIN VIDEO CLIP)
BUD SELIG, MAJOR LEAGUE BASEBALL COMMISSIONER: It just shows you how committed we are to solving our problems. And therefore, when we made an analysis of the clubs and their ability to generate revenue and the ability to survive because of that generation of revenue, I think that shows a willingness on our part to do the things that we have to do.
(END VIDEO CLIP)
DOBBS: Even though Selig didn't say which teams would be dropped, the teams most often mentioned are the Montreal Expos, the Minnesota Twins, and the Florida Marlins.
"WOLF BLITZER REPORTS" begins in just a few moments. Let's go to Wolf now for a preview from Washington. Wolf?
WOLF BLITZER, HOST, "WOLF BLITZER REPORTS": Thank you, Lou. We'll have details of President Bush's latest warning about Osama bin Laden and weapons of mass destruction. Is bin Laden trying to get nuclear weapons? We'll ask our panel, former CIA director James Woolsey, Senator Paul Wellstone and former CIA case officer Ru Algerecht (ph). Also, the latest on the war front. That and much more -- Lou.
DOBBS: Wolf, thanks so much.
Coming up next here we'll have your thoughts on interest rates and we'll take a look at tomorrow. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Tomorrow, a look at the nation's productivity. For the third quarter, economists are expecting an increase of two percent. Quarterly results are due from Waste Management and Aetna, amongst others. And please join us tomorrow night when the special representative to Washington for the Northern Alliance, Harun Amin, will be our guest here.
The Fed's interest rate cut today for the tenth time this year, setting some records. Let's take a look at some of your thoughts on that issue.
Dave in Roseville, California saying job security is the key to economic health. And he writes, "We're in a downward economic spiral until we have assurance our jobs are secure. It would be irresponsible to keep spending with so much economic uncertainty, especially employment."
And from P. Lerro, "The half point rate reduction today indicates the Fed is panicky and that things are worse than we thought. The Fed may think we will be in a deflationary spiral soon. Otherwise, how could they institute a half point cut now?" Well, it's pretty much what most economists wanted them to do.
Andrew Russell says that no matter what happens to the direction of interest rates, the best hope for the economy, the consumer, that is the consumer will still be the one who loses out. He writes, "Now that the Fed has cut rates to the lowest in 40 years, should Congress protect the consumer from the credit card companies that charge high interest rates?"
As always, we want to hear your thoughts. Please e-mail us at moneyline@cnn.com.
For this Tuesday evening, that's MONEYLINE. Thanks for being with us. I'm Lou Dobbs. Good night from New York. "WOLF BLITZER REPORTS" begins right now.
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