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Lou Dobbs Moneyline
Northern Alliance Makes More Advances in Afghanistan; Oil Prices Plunge; Retail Sales Rise to Record Numbers
Aired November 14, 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 Wednesday, November 14.
Here now -- Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening everyone.
The Northern Alliance has the Taliban on the run tonight. Those forces have taken Jalalabad in the east of Afghanistan. And they are closer to taking hold of the Taliban capital of Kandahar in the south. We'll have a live report for you.
The White House is, of course, delighted with the progress of the war, but also warning Americans that this war against terrorism is far from over.
Oil prices today plunged to the lowest point in more than two years. And tonight, it looks as though OPEC is locked in a price war with non-OPEC cartel countries. We'll tell you what that means for you and the economy.
Lower oil prices, a record rise in retail sales and dramatic gains in the war all combining to lift stocks on Wall Street today. We'll have the latest for you on there as well.
And as America recovers from the September 11 attacks, Toys "R" Us CEO John Eyler takes a bold step, telling us of his plans tonight to open a mega-store in the heart of New York City.
Then, a dramatic announcement today from the American Red Cross.
(BEGIN VIDEO CLIP)
DAVID MCLAUGHLIN, CHAIRMAN OF THE BOARD, AMERICAN RED CROSS: One hundred percent of that fund and our efforts will be devoted to support those who are effected by the terrible tragedies that occurred on September 11. And with this action, we hope the restore the faith of our donors.
(END VIDEO CLIP)
DOBBS: Tonight, Red Cross Chairman David McLaughlin will join us. We'll hear about his plans to repair the Red Cross' image. And we'll tell you what his decision means for other charities and for the families of the victims of September 11.
In Afghanistan tonight, the Northern Alliance continues to make amazing progress against the Taliban. The city of Jalalabad has fallen. The airport at Kandahar has fallen. And heavy fighting has been reported in Kandahar itself. The Pentagon will not confirm any of these reports.
Meanwhile, Taliban supporters in Kandahar have taken to the streets, saying they will fight for Osama bin Laden to the death. And while they rally, the Taliban is runs for the hills, and quite literally. Many of those Taliban soldiers are heading to the mountains around Jalalabad and Kandahar. The Pentagon is in pursuit of those troops. U.S. warplanes are bombing caves and tunnels in those mountains. Nearly 80 aircrafts sent bombs slamming into the hills where those soldiers are said to be now in hiding. And despite the stunning gains made by the Northern Alliance in Afghanistan, the Bush administration continues to warn Americans that this war against terrorism is far from ended.
(BEGIN VIDEO CLIP)
DICK CHENEY, VICE PRESIDENT OF THE UNITED STATES: The al Qaeda network is a global network. They have got cells all over the world. And there's no reason for us to believe, at this stage, that this operation is about to end. A far more appropriate way the look at it is, this is a good beginning of what's likely to be a long struggle.
(END VIDEO CLIP)
DOBBS: More progress in choking off the funding of Osama bin Laden and his al Qaeda terrorist network. The Treasury Department now says more than $56 million of al Qaeda money has been blocked; 1,086 accounts are under review in the United States alone. More than 120 countries have blocking orders now in force.
The Northern Alliance has liberated hundreds of thousands of people under Taliban control. And for a second day, many of those in Kabul are celebrating.
Joining us now for the latest from the Afghan capital, CNN's Christiane Amanpour -- Christiane.
CHRISTIANE AMANPOUR, CNN CORRESPONDENT: Well, Lou, the momentum of this war has been quite extraordinary ever since Mazar-e-Sharif fell last Friday and now great swaths of this country are no longer under Taliban control , but under Northern Alliance control.
As we flew in here with Northern Alliance helicopters, we were able to see firsthand just what had been accomplished in the northern part of this country. We were shown below us all sorts of villages, hilltops, towns that had been held by the Taliban now vacated and under the control of the Northern Alliance.
We also saw evidence of where the United States aircraft had been bombing to allow the Northern Alliance to take the advantage on the ground. Here in Kabul at the end of a second day of the liberation since the Northern Alliance came in, there have been, again, more people out on the streets. Shops were open today. The bazaar, the marketplace was fairly crowded. People were in a much more upbeat move than you would have expected over the last several weeks, indeed, several years of the regime they have been living under.
There were things just as small as music being played that had been banned for years under the Taliban. Men again lining up at various barber shops and even impromptu seats on the sidewalks to have their regulation beards trimmed, men who didn't want them, but had been forced to grow them by the Taliban.
Women cautiously venturing out of the homes to which they have been banned for the last five years, prevented from working, prevented from going about their daily business, prevented from being out in the streets, more or less, over the next five years, then coming out to see whether or not, in fact, things were going to revert to normal for them as well.
The Northern Alliance are in control of this city. Northern Alliance troops are clearly visible at various places around the city. They immediately moved to takeover the defense and police ministries. They say that is for security purposes. And they say it is an interim measure until the United Nations can come up with a security apparatus for this country. We, from here, have no confirmation about the fall of Jalalabad or, indeed, Kandahar Airport -- Lou.
DOBBS: Christiane, thank you very much. Christiane Amanpour reporting tonight from the now liberated Kabul, Afghanistan.
Well, Vladimir Putin is meeting now with President Bush in Crawford, Texas. And high on the agenda of their discussion, one would suspect, the extraordinary success in Afghanistan.
Senior White House correspondent John King is with the president and joins now -- John.
JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: That's right, Lou.
The Russian president, en route to the ranch here in Crawford, noted the fast changing developments on the ground in Afghanistan and said the military strategy needed to be adjusted to take those into account.
But he also made clear -- and the White House welcomed this statement -- that the military strategy must now include pursuit into the mountains of anyone, any Taliban troops, fleeing Kabul or elsewhere.
As you noted at the beginning of the program, Vice President Cheney also making clear today that the fall of the Taliban is but one and only a secondary goal of this campaign, that Osama bin Laden and al Qaeda are the true targets.
The discussions now about just what to do next in the military campaign will take place on the Bush ranch. You can see from the photos there when the Putins arrived today and were greeted by the Bushes, quite an informal, casual atmosphere. The president's helicopter used to fly the Russian president and his wife to the ranch and a quick tour of the ranch.
On the ranch here in Texas, the president gets to drive. He likes that very much. The Putins and the Bushes taking a quick drive around the ranch, dinner tonight, casual atmosphere -- these two leaders get along quite well. But a sense of urgency, Lou, adjusting the military strategy, what should the United States now do with its intelligence and its air strikes? How can the Russians help the Northern Alliance? All that to be discussed over the next two days at the Bush ranch here in Crawford -- Lou.
DOBBS: John, thank you very much -- John King, senior White House correspondent, from Crawford, Texas tonight with the president.
Incredible progress in the war in Afghanistan against the Taliban and the al Qaeda. Incredible movement in the U.S. relationship with Russia.
William Cohen, dining with president Vladimir Putin last night. The former defense secretary, MONEYLINE contributor, joins us now.
Bill, good to have you here.
As former defense secretary, even you, I would suspect, you have to be astonished by the progress of this war over the last several days.
WILLIAM COHEN, FORMER DEFENSE SECRETARY: I think all of us are very impressed with the skill in which this war has been fought.
For some weeks now, we have been discussing the strategy involved, the taking out of the air defenses, the shutting off of the supply of goods and arms as well as money. And so, every river begins with a trickle, then a stream and then finally the river itself. And that's what you're seeing now take place. But, as the vice president said, this is a long journey. It's a thousand-mile journey. This is the first step -- a long way to go.
DOBBS: And these incredible reports of success by the Northern Alliance and the bombardment and air support of the United States and Britain, it seems against this backdrop of success, the criticism that we had almost become accustomed to as a drum beat from certain Muslim nations and Middle Eastern nations has been extraordinarily muted.
COHEN: Well, I think most people like success. In this particular case, over the objection of many voices, the administration has pursued this with great resolve and determination. And I think that's exactly the way this war is going to continue to be prosecuted. They will continue to take down what remains of Taliban, following them, be it in the hills or into Kandahar itself. But, basically, this is going to be a continuation of the effort, knowing it's a long, long campaign. DOBBS: This success comes against a backdrop of requests, if you will, for constraint by the Bush administration in taking Kabul. The Northern Alliance took it as it was offered to them, in effect, with the retreat of the Taliban.
There is now the business of building for the future. How goes that aspect of the process?
COHEN: Well, you recall just a week or so ago, the administration and the military were being criticized for holding back, allowing the State Department and diplomacy to try to work its will, to put together an international coalition, of sorts, that would help to govern a post-Taliban regime.
Now, I suppose the criticism is you haven't put it together fast enough and the military acted too quickly. Under the circumstances, the Department of Defense pursued this with straight military objectives and now it's up to the diplomats to try to put together a post-Taliban regime. And hopefully, that can be done in the near future. But in the meantime, the campaign, the struggle, or the war has to continue.
DOBBS: This war -- I suspect that those diplomats, irrespective of their public statements, are in no way frustrated by the progress of the military here.
Let's turn if we may, Bill, to the subject of Russia here. Vladimir Putin meeting with the president out at Crawford tonight and for the next couple of days. These two men, along with Tony Blair, the prime minister of Britain, will they be the three principal architects of what occurs afterwards in Afghanistan or will there be a larger and more determinant role by the United Nations?
COHEN: Well, I think the United Nations is going to play a more significant role here. Certainly, the United States, Russia and Great Britain having -- principally involved in this -- will have a major voice.
But, ultimately, the United Nations I think is going to be handed this responsibility, working with all three, to try to put together some kind of a coalition arrangement that will bring some civility and civil life to a nation that has been torn by war over the decades. But I think that they will take the lead and the United Nations will be principally responsible
Also, we have to give some credit to Russia in this respect, because without Russian help, it may have been more difficult, allowing bases to be established in Uzbekistan, Tajikistan. This is all something that, I think, President Putin will call upon as they not only discuss Afghanistan and what will take place with the war against terrorism, but also arms control -- what will take place as far as reductions in the numbers of nuclear weapons and the continuation of the Bush administration to pursue a national missile defense system. That will all be on the agenda.
And I think that it will also help business. This new relationship that President Putin talked about last night at the dinner, I think will bode well for business in this country and in Russia, helping to develop new oil sources so that less dependence, perhaps, on single sources coming out of the Middle East will be important for everyone's security.
DOBBS: Bill, in that context, a couple of footnotes. One, as you say, support by Russia in this war against terrorism -- specifically Osama bin Laden and al Qaeda network -- the Russians providing dozens and dozens of tanks to the Northern Alliance for their advance.
Secondly, Russia not going along with the OPEC cartel call for a cut in production, which is to the benefit of all Western economies at this juncture. And, thirdly, Russia is experiencing a remarkable growth rate in it's own economy, an estimated eight percent this year. These are times, it seems, designed beneficially for improving relationships -- between the relationship between the United States and Russia.
COHEN: Well, Russia is a country with vast natural resources. Much of it still remains untapped. There's an opportunity for U.S. firms and others to invest in recovery operations for oil and gas, again, to make it a significant supplier of energy throughout the world. So there's a good deal of opportunity for Russia. They need Western capital and Western technology to assist in that.
But, I think that there's an opportunity here to build a relationship that can provide for a more stable relationship over the coming years. We ought not to be too euphoric about it, but I think in a very business-like way, the Bush administration will pursue a good relationship with President Putin to the benefit of all.
DOBBS: These days, a little euphoria, Bill can be forgiven, can it not?
COHEN: It can.
DOBBS: Bill, thanks -- Bill Cohen.
Now for the latest on the investigation into the crash of American Airlines Flight 587.
Investigators have discovered that American Airlines Flight 587, that jetliner took off just 90 seconds behind a Japan Airlines 747. The normal takeoff separation is at least two minutes. Investigators are saying the turbulence in the wake of that 747, one of the most powerful aircraft in the sky, could have contributed to the crash of the American Airlines jetliner.
On the plane's cockpit voice recorder, a rattling is heard just seconds before the aircraft went out of control. That is also another possible indication of outside turbulence and perhaps a contributor to the crash. American Airlines says it will inspect the tail section of it's entire Airbus A300 fleet. Investigators are puzzled by evidence that the plane's tail section sheared off first. Not only would that be an unusual occurrence, it would also render the aircraft, of course, uncontrollable.
The investigation has been slowed by damage to the flight data recorder. That box was discovered yesterday. It has been shipped to its manufacturer in Florida for repair. We are told tonight that it is capable of being repaired.
And Flight 587's engines also broke off from the plane. They were recovered. They've been sent to a secure location for examination. Initial examinations revealed no foreign objects flew into those engines.
For more on this investigation into the crash of Flight 587, we're joined by Kathleen Koch, who is at JFK Airport in New York -- Kathleen.
KATHLEEN KOCH, CNN CORRESPONDENT: Lou, as you explained, they are looking very, very carefully at how closely these two planes flew to one another, the very large JAL 747 -- a wide body aircraft -- much larger than the Airbus A300.
They are still sort of fuzzy on this separation as far as in midair. They still are saying here that those flights took off 2:20 apart from one another. They are saying though that as they were flying, the JAL was some 800 feet higher than the Airbus and that with these 12 mile per hour winds that apparently were blowing at the time, that it is consistent with this turbulence, this wake turbulence, for that air to blown into the path of the Flight 587.
Now, what you're likely seeing here is a test that was conducted by the NTSB into the whole phenomenon of wake turbulence. And they've found that this air that spins off the ends of wings can be very dangerous, can disrupt flight. The inspectors here, the investigators tonight, say that they find no evidence however that any air traffic controllers made any mistakes.
(BEGIN VIDEO CLIP)
MARION BLAKEY, NTSB CHAIRWOMAN: Well, everything we know right now is that the air traffic controllers stayed within the set procedures and the agreed protocol. So we are not seeing here a pattern that indicates a air traffic control issue or problem. However, we are looking at what we know about wake turbulence with 747s.
(END VIDEO CLIP)
KOCH: Lou, what they are going to be looking also very carefully at, again, as you said, American Airlines is going to be checking the tail fin sections of all the Airbuses in its fleet, only some 34, that out of a fleet of more than 800 aircraft. So they say it should not disrupt their operations in any way.
And they'll be looking carefully at the composite material. Much of the rest of the aircraft body is made out of metal, aluminum, something very, very hard and sturdy. Composite materials are a little different, lighter weight. They are -- it's tougher to determine whether or not there are weaknesses in them. So, inspectors though will be doing their best to go over those tail sections and check them very carefully.
An interesting point, this aircraft did encounter very severe clear air turbulence back in 1994. That occurred over Martinique. And, at that point, some 47 passengers on the aircraft were injured. And American Airlines is going back to take a look at whether, at that point, this aircraft was damaged in any way and, if so, what sort of repairs may have been made -- Lou.
DOBBS: Kathleen, obviously, the National Transportation Safety Board has a great deal to examine here. And they are under immense pressure. It's truly a sign, if you will, of the times that this investigation is being moved along as fast as it is, is that not correct?
KOCH: Absolutely, Lou. And also a sign of times, the intense media focus on this. Of course, when this happened Monday, everyone gasped and said, "Oh, my God, not again." Clearly, everything that we're hearing tonight and we heard yesterday as well is steering everyone away from this possibility that there was any sort of terrorist involvement, any bombs. So were continuing in that direction and hence, perhaps, the speed and obviously the attention.
DOBBS: Kathleen, thank you very much -- Kathleen Koch from JFK Airport tonight.
KOCH: You're welcome.
DOBBS: There have been alarming security lapses at our nation's airports since September 11. The Transportation Department's inspector general has told the Senate that there have been at least 90 incidents involving security lapses since September 11.
Kenneth Meade said machines used to screened baggage for explosives are undermanned and could easily check four times as many bags if they were properly used. Meade suggested the FAA issue a rule setting minimum usage levels.
Still ahead, the American Red Cross changes directions, admitting mistakes were made, saying it will honor the intent of all its donors The chairman of the Red Cross calling a press conference today to announce his decision.
(BEGIN VIDEO CLIP)
MCLAUGHLIN: This has been a disaster of unprecedented dimensions. It presents unique challenges to this organization. We do not always get it exactly right.
(END VIDEO CLIP)
DOBBS: Tonight, David McLaughlin will join us. He'll tell us of the difficulty of in reaching that decision and the problems he faces in implementing these broad changes. Toys "R" Us Chief Executive Office John Eyler will also be here. He'll tell us of his plans to help America recover by opening a new superstore in the heart of New York City.
And OPEC trying to cut world oil production. Non-OPEC members, however, are not buying. Has the cartel lost it's clout?
That story and a lot more coming right up.
ANNOUNCER: After the break, Lou speaks with Daniel Yergin of Cambridge Energy Research Associates.
(COMMERCIAL BREAK)
DOBBS: OPEC today agreeing to reduce oil production by one and a half million barrels a day. But, the cartel will only cut production by that level if non-OPEC producers do the same. The top OPEC rival, Russia, refuses to cooperate, essentially creating a world oil price war.
Diana Muriel joins us now from Vienna with the latest -- Diana.
DIANA MURIEL, CNN CORRESPONDENT: Yes, Lou, as you say, there's this deferred price cut coming. Yes, can you hear me?
DOBBS: I can indeed.
MURIEL: Lou -- good. Well, there's this deferred price cut, as you were saying, this deferred cut in production coming at the end of the year, if they get that cooperation from the non-OPEC oil producing countries. And it's a moot point as to whether or not they will.
Russia said they will cut by 30,000 barrels per day. But that's a drop in the ocean, Lou. That's only half a percentage point of what they produce each day, which is seven million barrels.
So, OPEC is now looking to other non-OPEC countries to come in with some big production cuts of their own. Norway has said that they see no reason to cut. However, Mexico has said that they could cut and Oman has also given some kind of an undertaking to the OPEC cartel that they will cut too, although the actual quota is not clear at this stage.
But if Russia, which is the third largest oil producer in the world, doesn't cut, that's going to make a significant difference and that could see a price war after the start of January because OPEC may not go ahead with their own cut. Russia could tolerate the price of oil at around $16 or $17 a barrel, but that would be very tough for countries like Saudi Arabia. They want to see the price of oil above $20 a barrel. They are hoping to get it between the $22 and $28 a barrel range, which OPEC has said they want to keep it at, but that's looking very unlikely. But it could become very uncomfortable for OPEC, the cartel countries if the non-OPEC countries decide not to play the game -- Lou.
DOBBS: Diana Muriel, thank you very much from Vienna, Austria tonight.
And, of course, while that is bad news for OPEC and difficult news for oil-producing countries, it is obviously good news for consuming countries.
Oil prices today tumbled on the announcement of the OPEC's decision, prices dropping more than 25 percent since the 11th of September. The OPEC cartel hoping to prop up oil prices to between $22 and $28 a barrel. But, today prices moving decidedly in the opposite direction. Light sweet crude oil plunged nearly $2 to settle under $20 a barrel.
For more now on today's OPEC decision, what it could mean for oil prices, Daniel Yergin, the chairman of Cambridge Energy Research, joins me from Washington. Dan, good to have you with us.
DANIEL YERGIN, CHAIRMAN, CAMBRIDGE ENERGY RESEARCH ASSOCIATES: Thank you.
DOBBS: Dan, this looks like an all-out price war in the making. Is it?
YERGIN: It's not there yet. As we've said, OPEC has thrown down a very big gauntlet and it's now going to be -- see what happens in the month of December to see if the non-OPEC producers come on board.
DOBBS: And this cut in production with prices at just under, tonight, $20 a barrel. How much of an impact would it have, in your judgment, if they were to succeed in a million and a half barrel cut with non-OPEC producers going along with it?
YERGIN: They would keep able then to keep prices above $20 a barrel. Their $22 to $28 range was not really created for a world of a global economic slump. And so it needs to be recalibrated in any event. But if they could make that agreement, they could hold these prices, at least for a while.
DOBBS: Let's talk about first appearances, if you will. Others might call it public relations. This is a very poor time, when relations are strained as they are with Saudi Arabia, for OPEC, led by Saudi Arabia, to be talking about cutting production and trying to drive prices up.
YERGIN: Yes, I think -- I mean, I think that if they talk about $20 a barrel, that's kind of more acceptable and has a notion of stability. But, any big increase in prices, this is not the time. What you have, in fact, with lower oil prices -- it's like a fiscal stimulus that doesn't have to pass the Congress.
DOBBS: Right.
Are we seeing, in your judgment, because you know the world oil market better than almost anyone, -- aw heck, you know the world oil market better than anyone.
(LAUGHTER) YERGIN: Go on, Lou.
DOBBS: The fact is Saudi Arabia looks to be in a major crisis here with its problems in terms of the economy, i.e. oil, and its relationship with OPEC and the world markets. Also, what is happening in terms of Afghanistan, its relationship with the United States, give us your best judgment about prospects.
YERGIN: Well, there's certainly a lot of pressure all around and Saudi Arabia has had a very rapid increase in population. It's tripled in two decades. And revenues and deficits are a very big issue for them, so lower oil prices would add to social pressures there and in a number of other important oil-exporting countries as well.
DOBBS: Can they survive these strains, in your judgment?
YERGIN: Well, I think that we're going to see a testing here going on right now. I mean, you have raised a very big question that really goes to the question of stability in the Middle East and the context and the news that we've the last few days, you know, points in a more positive direction.
But there's pressure on them. And as you noted before, Russia has been actually doing very well. And Russia has now become the bain of the existence of the OPEC countries.
DOBBS: In terms of economic contest, if you will, and political contest, the Russians are certainly preemminant to the Saudis now at least in terms of the public relations aspects with the United States. Are they not?
YERGIN: It's extraordinary. I was at the dinner last night at the Russian embassy with Secretary Cohen. And it's amazing to see this change in U.S.-Russian relations, what's it means. And one of things is an encouragement of Russian oil production, major part of the big increases in non-OPEC production that's happening right now is Russia. And it's in a context of a new relationship with the United States.
DOBBS: The president, when all of this began with the tragedy event of September 11, said that we were looking at a new war and a new world. And, indeed, it appears that it is being shaped and formed as we speak.
Dan Yergin, always good to have you with us.
YERGIN: Thank you.
DOBBS: Well, turning to some very positive news on the economy: Retails surged last month, in fact, the biggest increase ever. That sharp increase in retail sales largely because of strong automobile sales, zero-percent financing attracting many buyers to car dealerships.
Many of those aggressive incentives are now being extended. Ford today, following General Motors' lead, by extending deals into next year. Kathleen Hays is here. She has the best understanding of these things anywhere and tells us all about it -- Kathleen.
KATHLEEN HAYS, CNN CORRESPONDENT: We figured we would get a rebound from September, right? But this was beyond what anybody was looking for.
Retail sales up 7.1 percent last month. This was not just autos, even outside that -- clothing, home building materials, drugstores had very strong sales. Take out the auto sales and the picture is kind of more normal. Ex-auto sales were up 1.0 percent.
Now lowered gas prices depressed sales at gas stations. That's one reason why the number wasn't bigger. Even so, it didn't wipe out the previous month's decline. Auto sales up 28 percent, the normal monthly increase is about a half percent at best. This was very, very strong.
DOBBS: I'd call it a good month.
HAYS: Well, I'd call it a good month, a very good month, a great month.
But you know, the question now: Does this mean the consumer is coming back? Does this mean we put September 11 behind us? Is the rising stock market making us feel better? Here's the debate.
Some people say no. Look, those auto sales are just stealing from the future. And again, the ex-autos number didn't even wipe out the previous decline.
DOBBS: Those are just negative economists.
HAYS: So, here's the positive ones. The Fed rate cuts, 10 this year, are finally working. You know, there's so much liquidity. Dealers can afford to offer the zero incentive financing. It's making consumers feel better. This is, finally, a sign of that.
Here's the camp I like. This is my camp -- undecided. One month rebound...
DOBBS: You'd think you were married to an economist or something.
(LAUGHTER)
HAYS: You're right. You know -- OK you.
Anyway, you need more evidence to decide. But another positive -- because I know you like positives -- the home refinancing numbers kept by the Mortgage Bankers Association. They're at a new record. They're up 200 percent over last year. The latest week, according to the mortgage bankers, the busiest week they've had in about 10 years at mortgage brokers office.
DOBBS: And while refinancing is not tied to those short-term rates of the Fed's levers and management, there is though the indication of what's coming, the power of that looser monetary policy.
But you know the number you reported that's most exciting to me is not the 7 percent overall.
HAYS: No.
DOBBS: But that 1 percent, excluding automobiles. So just better things ahead. So let's be positive.
HAYS: You're in the second line. You get the green check.
DOBBS: You've got every type. Kathleen, thank you.
Well, despite a sluggish retail environment before last month, the economy slipping into recession, according to some and a slowdown in New York City tourism according to everyone. Toys "R" Us is opening its biggest store ever. And it is only blocks away from Times Square, the heart of New York City. The 100,000 square foot megastore includes a ferris wheel, a roller coaster, and opened right in time for the holiday season.
Engineering all of this in the midst of these times is John Eyler, the chairman and CEO of Toys "R" Us. John, good to have you with us.
JOHN EYLER, CHMN., CEO, TOYS "R" US: Thank you, Lou.
DOBBS: This is a bold step. I know this has been in your planning, but proceed into these circumstances, the city of New York is saluting you right now.
EYLER: Well, we think when we cut the ribbon on Saturday morning that this gives New Yorkers an opportunity to bring their families in, kind of leave the rest of the world behind for a few hours, and really be transformed back the time when we were all kids.
DOBBS: And I know that that's one of the places you'd like to live throughout your whole career and with great success at Toys "R" Us. You had hoped to be profitable in the fourth quarter. September 11 had turned all of that around for just about every business. What is your prospect?
EYLER: Well, we'll actually announce our earnings on Monday.
DOBBS: Right.
EYLER: But the last guidance that we gave was that we will in fact be quite profitable in the fourth quarter. I think the consensus estimate is around about $1.45 a share in the fourth quarter.
DOBBS: You're very happy with that.
EYLER: I will be very happy if earned $1.45 a share.
DOBBS: I think, John, you have just maneuvered through all of the SEC regulations, as well as one possibly could. And it is. It is terrific to see business advancing, particularly in the retail sales area. You've just heard Kathleen Hays talk about this incredible surge in retail sales for the last month. Which camp are you in? She gave us three options. Something tells me you won't be an undecided?
EYLER: No, I think our camp is cautiously optimistic. Because if you look at all of retail sales last month, the October sales results, as an industry were not particularly robust, as you know. However, we do research every week. And for the last four weeks in a row now in the toy sector, as many people are forecasting to spend more than they spent last year has spent less than last year. And people are going into this holiday season essentially neutral to last year with the pent-up demand that's come over the last two months, could be a very nice holiday season indeed.
DOBBS: Well, John, I can't think of a better way to conclude a talk with you than on an upbeat note like that. I'll just thanks very much for being with us.
EYLER: Thank you, Lou.
DOBBS: We hope your forecast is right.
EYLER: Come and visit the new store.
DOBBS: Guaranteed, especially given the season we're in. Thank you, John.
EYLER: Thank you.
DOBBS: Still ahead here, we'll have the latest developments for you in the war against terrorism, including life after the Taliban. Women in the Afghan capital of Kabul exercising new found freedom, freedom from oppression. And all of this unthinkable just a few days ago. And an about face for the American Red Cross. The charity responds to your pressure and takes a look at what's going to be done to help victims of September 11. That's next.
ANNOUNCER: After the break, Lou is joined by David McLaughlin, chairman of the Board of Governors for the American Red Cross.
(COMMERCIAL BREAK)
DOBBS: Let's bring you up to date with the latest developments from Afghanistan. The Pentagon tonight not confirming the reports that the Northern Alliance says it has taken control of the eastern Afghan city of Jalalabad and the airport at Kandahar in the south as well.
Taliban leaders and soldier now on the run throughout southern Afghanistan. They are reported to be heading to the mountains and hills, seeking shelter in caves and tunnels. But those areas in retreat are being bombed by U.S. warplanes. And those areas containing those tunnels and caves as well. Prime minister Tony Blair says British troops are on standby for service in Afghanistan. But the prime minister said the soldiers would be used primarily to secure humanitarian aid routes.
The son of Thomas Moore, the postal worker who died from anthrax inhalation, is suing Kaiser Permanente. He says the HMO misdiagnosed his father's illness. Kaiser claims it followed standard operating procedure.
Well, a dramatic announcement from the American Red Cross. Responding to intense public criticism, and some of it here, which led to congressional hearings, the American Red Cross says it will now distribute all the money raised for victims of the September 11 terrorist attacks. As part of the sweeping changes revealed today, the Red Cross saying 100 percent of the money raised for its Liberty Fund, some $543 million, will go to the families of the victims. The Liberty Fund will also remain separate from the Red Cross general fund. None of that money will be saved for future use. The fund will be audited by the U.S. Army audit agency and KPMG.
David McLaughlin is the chairman of the American Red Cross. And today, he said the organization is cutting through the red tape, making it quicker and easier for the relatives of victims to receive their help. David McLaughlin is with us now.
David, good to have you with us.
MCLAUGHLIN: Thank you very much.
DOBBS: I, of course, watched you today in that press conference. I have to say I know that that had to be tough for your organization and it had to be tough for you. How do you feel tonight about the decision you've made to respond to the criticism of your donors?
MCLAUGHLIN: I think it was exactly the right decision. The Red Cross was being criticized for things that -- how 1.3 million volunteers had nothing to do with. It is a wonderful organization, but it was being dispirited by circumstances beyond their control. We looked at the fundamental decision that was made and said we owe our obligation to the American public. The American public spoke and we listened and made the changes.
DOBBS: Were you personally surprised by the vehemence of the criticism that the management, and we should say this, that the management of the Red Cross was under for the decisions undertaken with that money?
MCLAUGHLIN: I was surprised, because the concept of the Liberty Fund, which was certainly to help those affected by the disaster, but also to prepare the Red Cross for future disasters of weapons of mass destruction, the concept wasn't wrong. And Red Cross does such good things every day that when there was that kind of a reaction to this great institution, I was surprised by the vehemence of it.
DOBBS: And that, if you will, failure to react, when that criticism began, whether it be, frankly let's be very candid as you well know. We had been reporting rather critically over the course of the past six weeks about the decisions undertaken by the Red Cross. What was the reason the Red Cross didn't respond sooner? Was it simply an insular management, an arrogant management? How would you describe it?
MCLAUGHLIN: Well, we were in the middle of a management change. And I'm certainly not critical at all of President Healy's management. But when she retired and Harold Decker stepped in as the new CEO, there is a certain amount of reshuffling that goes on. And Harold very promptly reexamined the policies that we had and led the board and the management to make the decision.
So I think it was -- I'm sorry it didn't happen sooner. We really regret the outfall of that. But I think we made the right decision. And now, we need to move forward.
DOBBS: Well, as you know, I've been critical. And so, I will say today, David, in watching business leaders and political leaders and reporting on them, I had a sense of the difficulty that you were in as you stood there, but when an institution publicly rights a wrong, corrects course, they're to be complimented. And my compliments to you for taking the action.
MCLAUGHLIN: I think you. And I -- but the credit really goes to the management and the board who stepped up to a decision that should be made. And I'm delighted they did.
DOBBS: You used the expression new CEO, not interim CEO?
MCLAUGHLIN: Harold is stepping in as the interim CEO.
DOBBS: OK.
MCLAUGHLIN: I don't like the title interim because I think it takes away from the authority. He's a very good man. And he's doing a great job. I don't know how long the search will take. I mean, the last search took almost a year. And we have a process to go.
DOBBS: Well, there is no more venerable institution, whether profit or nonprofit, than the American Red Cross. For all of you who contribute your time and who work tirelessly to support the organization, not to mention a million more volunteers, this -- how long do you think it will take to restore, if you will, let's talk in business terms the brand of the American Red Cross and the trust of people in it to do the right thing?
MCLAUGHLIN: Well, hopefully, it won't take long. I mean, people certainly were disappointed in our failure to react to what they were telling us. But we have 1038 chapters out there. Each of them are now have a cause to go after in a positive way. And I think the recognition and the restoration of whatever we did lose hopefully will not take long because the Red Cross is still there. It's there everyday for disasters.
DOBBS: Doing extraordinarily important work. And in terms of the money, this was such a release today to see the Red Cross say this money is going to those for whom it was intended. How difficult do you think it will be in the future, you know God willing there should be no future needs. But if you do need more money, how difficult do you think it'll be to raise that money from very generous Americans, obviously.
MCLAUGHLIN: Well, I don't believe that it will be that difficult because if there's a disaster like the American Flight 587, the Red Cross was there within 30 minutes. And we're serving the American public.
DOBBS: David McLaughlin, I need to interrupt just for a moment. We have some breaking news here and I want to turn, if I may, to that just for a moment.
This just in here to CNN. A senior U.S. government tonight confirms that eight aid workers, including two Americans have been taken out of Afghanistan. The eight were taken out of country by two U.S. military helicopters, which landed safely in Pakistan. Again repeating, those eight aid workers, including two Americans, have been safely taken out of Afghanistan and have arrived in Pakistan.
David, if I may turn back to you, I just wanted to bring that to our audience as quickly as possible. If I may offer a personal opinion. I happen to agree with you, one because knowing the hearts of the volunteers and watch what the Red Cross, but also knowing the generosity of the American people. And knowing you, I know this is not -- has not been easy. I also know that you're going make a full commitment to make sure that trust is well placed in the Red Cross as it has always been.
MCLAUGHLIN: That's our goal everyday.
DOBBS: You are a stand up fellow to be here. And again, our compliments to you. Thank you.
MCLAUGHLIN: Thank you for your comments.
DOBBS: Appreciate it.
Coming up next, we'll take a look at what today's decision by the Red Cross means for other charities. The Red Cross has not been alone and how they will be criticism of their own. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Today's decision by the American Red Cross to reverse it previous policies and to dedicate its Liberty Fund entirely to the victims and their families of September 11 is a major step, of course, not only for the American Red Cross and for the survivors and families of the victims of September 11, it will also contribute to help to unravel a maze of red tape that has engulfed nearly all of the charities of September 11.
But as Peter Viles reports, those charities still are badly in need of coordination.
(BEGIN VIDEOTAPE)
PETER VILES, CNN CORRESPONDENT (voice-over): The remarkable turnaround by the Red Cross gave hope to the man trying to cut the red tape that is separating thousands of grieving families from more than a billion dollars in charitable donations.
ELIOT SPITZER, NY ATTORNEY GENERAL: This is a wonderful step forward. I think it breaks the logjam. And I think things will move very, very quickly.
VILES: In his fight against red tape, New York State Attorney General has already lined up IBM, Qwest, KPMG, and Mckinsey and Company to donate free labor to build a database of victims. With the cooperation from dozens of charities, he hopes to begin assembling the database in two to three weeks, and finally offer families a one- step application process to apply to all charities at once.
SPITZER: There is nobody missing. The charities that are on board now control at least about 80, 90 percent of the funds that have been contributed. So we're very excited about this.
VILES: But there are still numerous issues delaying the charity money. The second-largest charity, the September 11 Fund, does not give money directly to victims' families. It gives only to other charities and non-profits. So far, it has disbursed $48 million out of $337 million collected.
There is still no authoritative list of those who died on September 11, no way of really knowing that they're getting help. And there is no clear guidance yet on the coming federal victims compensation fund, including two key issues. Who will qualify for that fund? And will the federal government reduce awards from the fund to families that have already accepted large charitable gifts? Another concern, will the IRS, which typically requires charities to assess the needs of those who receive aid, prevent charities from dividing money equally among families.
(END VIDEOTAPE)
(on camera): On that note, a hopeful sign, a reminder though that this is truly an unprecedented issue. The IRS, yes the Internal Revenue Service, now telling MONEYLINE it will be "extremely flexible with charities on that issue" -- Lou.
DOBBS: And that development, that statement from the IRS tonight, that's news also to many of these charities who have been told something quite different.
VILES: Yes, these charities have been afraid if we give it all away as fast as we can equally, we might run afoul of the IRS, which says we have to find out who needs it and how badly they need it. The IRS saying if you're going to move quickly, we'll give you some flexibility, perhaps not a year from now, but in the short-term.
DOBBS: Well, Peter, thanks to your reporting, another obstacle removed from between the charities and those for whom this money was intended. On the September 11 Fund issue, that money, was the September 11 Fund clear as it sought those donations?
VILES: That it would not go directly?
DOBBS: That it would not go directly?
VILES: Not in some of the appeals I have seen. They never said it would go directly, but they didn't make clear this money is going to come to us and then go out to charities that seek it from us, and then from there. That, I don't think was clear, how they appeal.
DOBBS: And Attorney General Eliot Spitzer obviously deserving enormous credit for bringing great focus to the issue.
VILES: And I think this gives him more credibility, as he moves forward, to try to get this job done.
DOBBS: OK, Peter, thank you. Peter Viles.
Still ahead here, strength is retail sales pushing stock prices higher today. Yes, we had a very good day on Wall Street. Blue chips gaining for a second straight day. The Nasdaq, well, posting a fourth straight gain. We'll take a look as well at your thoughts, including one viewer's plan to take care of the Osama bin Laden issue. We'll be right back.
(COMMERCIAL BREAK)
DOBBS: This just in to CNN. We're following up on a story that broke just moments ago here on CNN. Eight aid workers held by the Taliban in Afghanistan for more than three months tonight are free. A senior administration official says the two Americans, two Australians and four Germans have been taken out of Afghanistan. They were taken out by U.S. military helicopters. They have landed safely in Pakistan.
The aides had been held on charges of preaching Christianity. Again, eight Western aide workers tonight are free, taken out of Afghanistan by U.S. military helicopters.
DOBBS: Well, it was a winning session today on Wall Street as well. Stocks building on solid gains yesterday, boosted by today's report on record retail sales gains. The Dow, Nasdaq, broader S&P 500 all posting gains for today.
In tonight's corporate news, Germany's Bayer posting $165 million loss, despite strong demand for the anti-anthrax drug Cipro. They are suffering from the withdrawal of its leading cholesterol drug, Baycol, linked to more than 50 deaths.
Corporate America continues to lay people off. Telecommunications company Global Crossing laying off another 1,200 employees, in addition to the 2,000 already announced. Fannie Mae, the number one buyer of home loans, buying a record $34 billion of mortgage loans in the month of October. The amount of loans surging more than 100 percent from the previous month. Fannie Mae benefiting from the 10 interest rate cuts by the Federal Reserve and its influence in the bond and Treasuries market.
DOBBS: "WOLF BLITZER REPORTS" begins in just a few minutes. We're going now to Wolf in Washington. Wolf?
WOLF BLITZER, HOST, "WOLF BLITZER REPORTS": Thank you very much, Lou. We'll have more on that late-breaking news you just reported about those eight western aid workers, including two Americans who were taken by the Taliban. All this happening as the Taliban retreat continues. There are reports tonight rebel forces have taken Jalalabad and even an airfield just outside the Taliban stronghold of Kandahar. It's all coming up here in our CNN WAR ROOM next -- Lou.
DOBBS: Wolf, thank you very much. Wolf Blitzer.
Coming up next here, we'll take a look at your thoughts and we'll take a look at what to expect, at least in part, tomorrow. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Tomorrow, we will have corporate earnings reports. Those reports coming from Dell Computer, the Gap, Starbucks and Nordstrom, amongst others. Taking a quick look at some of your thoughts with Taliban forces tonight on the run in Afghanistan, Joyce Herzog in Missouri has a suggestion on how to handle Osama bin Laden. She writes, "Mr. Dobbs, wouldn't it be an economically sound move to offer the freedom fighters of Afghanistan a substantial amount of money?
Last night, we reported the National Bureau of Economic Research, the organization that tries to pinpoint the date of recessions, said it's very likely the economy fell into recession back in the spring. Well, David Matthews isn't having any of that. He says that conclusion is yet another example of another group of economists trying to put a positive spin on the downturn. David writes to say, "It's obvious that the reason the board is just now suggesting the recession started in the spring is to give the spin that the now official recession may be over in January or February."
We should point out that in NBER officials have not officially met to say the economy is in recession officially. Make of that what you may.
We'd like to hear from you, moneyline@cnn.com. Please include your name and address. And for tonight, that is MONEYLINE. We thank you for joining us. I'm Lou Dobbs. Good night from New York City. "WOLF BLITZER REPORTS" begins right now.
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