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Lou Dobbs Moneyline
How Has Life Changed Since September 11?
Aired November 22, 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 a special holiday edition of LOU DOBBS MONEYLINE for Thursday, November 22.
JAN HOPKINS, CNN ANCHOR: Good evening and welcome to this special edition of MONEYLINE. I'm Jan Hopkins, in for Lou Dobbs.
Tonight, we take a look at life after September 11. The tragedy has had a profound effect on every aspect of our lives, from our sense of security to the health of economy. Tonight, we'll address a host of topics -- among them: the safety of our airports; fighting terrorism and the outlook for the economy.
And that is where we begin, with a look at our economy, the stock market, and the impact of the war, and what impact all of that could have on the consumer. Joining me to discuss this and more are Vince Farrell -- he's chairman of Victory Capital Management; Robert Brusca, chief economist at EcoBest Consulting; and Leah Modigliani, U.S. equity strategist with Morgan Stanley.
Welcome to all of you.
VINCE FARRELL, CHAIRMAN, VICTORY CAPITAL MANAGEMENT: Thanks, Jan.
HOPKINS: My question is: What is the market telling us about what we can expect in the economy, I don't know when, but sometime in the near future?
Vince?
FARRELL: The market is telling us that the recession is going to end. The stock market always has a sharp rally when there's still about four or five months to go in the recession. We've had a very sharp rally from the post-attack low. So it's trying to tell us that the economy is going to be OK.
HOPKINS: Leah, do you agree?
LEAH MODIGLIANI, MORGAN STANLEY DEAN WITTER: I would agree with that. I think that we're back to the levels prior to September 11. And I think the market is not too concerned about the future, given that.
HOPKINS: Should the market be concerned about the future, Bob Brusca?
ROBERT BRUSCA, CHIEF ECONOMIST, ECOBEST: Well, we've had a long slide in industrial production, 13 months of declines, the longest string since the Great Depression. But in terms of dating a recession, they may be only dating this recession as beginning in, say, March of this year. So there could be more. I don't know if the stock market is a little bit early. We don't know if this would be a normal recession or a longer one. It's hard to tell how much those events of September 11 are going to disrupt the recession that already was in progress.
FARRELL: I agree with that. And on that, I suspect it is going to be a little bit longer. You asked the question: Was the market telling us?
But, in a normal recession, you get about two million unemployed. And since March, specifically, you have had 700,000 lose their jobs, which is a tragedy, but if you are going to be average, you have a ways to go until you get to that two million mark.
HOPKINS: So we may feel more in the economy even though the stock market is anticipating that we move beyond this.
FARRELL: Yes. The market might be doing OK when the worst of all the news comes at you.
BRUSCA: Yes. The labor market does the worst, of course, at the end. It's in the earliest of the recovery the unemployment rate typically is going up. The market, the stock market, business economy will improve before we feel it as individuals.
HOPKINS: But, you know, what's also interesting, the market has anticipated the rebound of the economy earlier this year, and was wrong. So how can you tell if what's going on now is the real thing -- Leah.
MODIGLIANI: Yes, I think you do need to look at the landscape and decide for yourself if you really think the market is right. The marking is pricing in some complacency that maybe isn't quite correct. There still are risks to the downside for both the economy and the market, I think.
HOPKINS: You look at risks. What do you see?
MODIGLIANI: Yes. I mean, I think people are reaccessing things. At Morgan Stanley, we're definitely advising clients to maintain a diversified portfolio. It's fun to play in the stocks, but we really think it's important to go slowly and buy and hold at this point. And that's the kind of thing that I'm trying to do.
HOPKINS: You're a value investor.
FARRELL: Right.
HOPKINS: And you've done pretty well in this environment. FARRELL: Yes. In 1999, I hasten to add, we didn't do quite so well. But since then, yes, we have done well. And my best guess is that we're going to retest the September lows.
HOPKINS: Still? Ahead?
FARRELL: Yes, I just have never seen a bottom in almost 30 years that didn't get tested. I just think we're going. But, tracking what Leah said, go slow. There's no rush here. I believe we're going to get bad economic news coming ahead of us. And if I'm not aggressive in the stock market, I have lost opportunity on the upside. I haven't lost money.
So I would be cautious here. We're buying stocks all the time. I just think that we're a little bit ahead of ourselves and we're going to test the September lows.
HOPKINS: So what risks do you see into the economy, Bob?
BRUSCA: Well, there's going to be I think more unemployment ahead. I think we've seen a big decline in industrial production. But I think there is probably still more of an inventory cycle. There's been a tremendous liquidation. And these auto sales have really complicated things, because they're going to create a little bit of artificial boost in the fourth quarter.
HOPKINS: That 0 percent financing really worked.
BRUSCA: Yes, it did work. But, of course, it took sales from the future. And so that is what it really kind of makes it hard to puzzle this out, because it is going to soften what could have been the trough. But it might cause things to be sluggish for a few more months out in the future. And that is what could cause this just to hang on.
HOPKINS: So it's not a sharp downturn and then a sharp upturn.
BRUSCA: Well, I don't know how sharp it is going to be. It's hard to see how much we're going to be affected in total consumption in this quarter. This is something everybody is trying to get their arms around right now.
HOPKINS: Well, and the consumer is the real key to all of this. And, of course, the consumer is the investor as well. And consumers have been pretty scared in this environment. Are consumers feeling a little better?
FARRELL: I would lean against that just a touch.
The consumers have been nervous. But while you had the Nasdaq down 70 percent from peak to trough, the housing stock has gone up. Our house is worth more the last couple of years, because interest rates are down and jobs have been created. So the consumer has been cautious. But I don't think scared, because he has not seen wholesale liquidation of stocks on the consumers' part.
HOPKINS: Good point. Good point.
And the other thing is, consumers have been very smart. They have taken advantage of these low mortgage rates and refinanced at record numbers.
BRUSCA: Well, and that raises more cash for them, right? They have these equity takeouts when they do refinancing. That helps to keep the consumption going. But, remember, a lot of this has happened. Interest rates are already down. The thing you have to worry about in terms of recovery is, we haven't had a sharp V down. So there's no way we're going to have a sharp V up.
Recovery is going to be a little bit hard to get from here because the rates have been coming down all the way along. So it is going to be a bit turgid, this process of making the transition from the bottom to the recovery.
HOPKINS: We still have to talk about oil prices. We still have to talk about sectors that will do well. So we'll talk about that later in the program. We'll come back to our panel members. Thank you, at this point.
We're going to take a look at your thoughts on the economy in a moment. But, first, over the past few months, we have been inundated with criticism of charities which raised money for the families of the victims of September 11. Nearly all of you who wrote in said that these organizations should simply give the money you donated quickly and directly to the families of those lost. Thanks for the feedback. The charities are now responding. And we appreciate all your letters on the subject.
And now here's a look at some of your thoughts on the economy and interest rates.
Dave in Roseville, California says the key to economic well-being is job security. He writes: "We're in a downward economic spiral until we get assurance our jobs are safe. It would be irresponsible to keep spending," he says, "with so much uncertainty, especially employment."
And with the economy so dependent on the consumer, many of you wrote in with ideas on how to stimulate spending.
Gary Dowdy has a suggestion shared by many of you: "Want to spur the economy?" he asks. "Ask those credit companies to drop their interest rates."
Roberta Eckland agrees: "At a time Americans need relief the most, they're locked into exorbitant interest rates and various fees, with no way to reduce their debt load.
Andrew Russell says the problem is so acute the government should step in to put a ceiling on those rates. He writes: "Now the Fed has cut rates to the lowest point in 40 years. Shouldn't Congress protect the consumer from the credit card companies that charge high interest rates?" But Danielle Caestecker says that she thinks there is a better solution: "It's pretty simple. Avoid paying high interest rates" -- how to avoid paying interest rates, she says. "It's called living within your means."
Finally, on the subject of interest rates and the economy, Kerkstra writes in to say that we shouldn't forget about seniors living on fixed income: "It looks like the road to economic recovery goes over the backs of senior citizens with CDs and money savings."
Coming up on this special holiday MONEYLINE, we follow the terrorist money trail with an inside look at how Osama bin Laden funds his vast criminal network; plus, a look at how some terrorists cash in on coupons. And then, America takes comfort in the simpler things.
MONEYLINE will be right back.
(COMMERCIAL BREAK)
HOPKINS: From drugs to diamonds, Osama bin Laden uses covert means to hide the money flow that funds his criminal network.
And as, Allan Dodds Frank reports, tracking terrorist money is a very difficult process.
(BEGIN VIDEOTAPE)
ALLAN DODDS FRANK, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): Even more than religious fervor, it takes money to build and sustain terrorist networks -- lots of money for food, wages, and shelter no matter how modest, for training, weapons and communications, for transportation and support for terrorists, says the U.S. government in more than 60 countries. So where did the money come from?
Initially, from Osama bin Laden's own pocket. Along with his more than 50 brothers and sisters, he inherited a portion of his father's multibillion-dollar empire, the Saudi bin Laden Group. His share about $60 million.
In the early 1980s, bin Laden worked with operatives from U.S. intelligence, the Pakistani military and Arab states. They ran a wide-ranging covert network that recruited and financed Muslim fighters to battle the Soviet army. Using the covert techniques he learned, he built his organization, Al Qaeda, with fellow Muslim war veterans.
WILLIAM WECHSLER, FORMER NATIONAL SECURITY COUNCIL: It was this network that followed Osama bin Laden that he kept with him when he left Afghanistan the first time. He went back to Saudi Arabia, then to Sudan and then to Afghanistan. And all that -- during that period, it built. It got more complicated and it got moved to terrorist ends.
FRANK: But he lost millions when the Bank of Credit and Commerce International, the heart of the old Covert Financial Network collapsed in a global money laundering scandal in 1991. (on-camera): So that year, when he moved to Sudan, bin Laden set up the Alshamal Islamic Bank, which investigators believe, he used to send money to Al Qaeda cells around the world.
(voice-over): His organization kept a low profile, matching the images of the September 11 suspected hijackers who stayed in cheap motels and apartments and shopped at Wal-Mart. Still, staging the attacks was not cheap.
JIMMY GURULE, UNDER SECRETARY OF ENFORCEMENT, U.S. TREASURY DEPARTMENT: We're talking at -- at a minimum, is in the millions -- in the millions of dollars to underwrite just the expenses related to this operation.
FRANK: In the Clinton administration, William Wechsler led the hunt for bin Laden's money.
WECHSLER: The money that is used for terrorism is still being raised. It's still being solicited from people throughout the Muslim world. It's still being raised under the guides of charitable organizations. It's still coming from business center guises, some legitimate, some illegitimate.
FRANK: Contributors to charities claiming to aid Muslim refugees, in fact, maybe donating to bin Laden fronts. Drug addicts, too, may contribute unwittingly since investigators say one of his biggest sources of money is the drug trade.
In recent years, the poppy fields of Afghanistan have produced as much as three-quarters of the world's opium, the base ingredient of heroin. Heroin taxed by the Taliban and moved in caravans protected by Al Qaeda gunmen.
TONY BLAIR, BRITISH PRIME MINISTER: The Al Qaeda network and the Taliban regime have funded, in large part, on the drugs trade. Ninety percent of all heroin sold on British streets originates from Afghanistan.
FRANK: Then there's protection money. U.S. government sources believe rich, Arab businessmen have succumbed to extortion by Al Qaeda.
SEN. JOHN KERRY (D), MASSACHUSETTS: The number of wealthy people have effectively paid protection to Osama bin Laden, not unlike protection money to organized crime that have been paid in New York or other cities over the course of our history.
FRANK: Countries, the U.S. says, sponsor terrorism -- among them, Iraq, Iran, Libya and Syria also have lent bin Laden a hand.
KERRY: What we do know is there are contributions in kind, i.e. food, shelter, sort of support by just having a base of operations in a particular country.
FRANK: Raising money is only the beginning. Money laundering experts say bin Laden's associates exploit every avenue, including the practically paperless underground cash transfer system known as the wallet.
They used Islamic banks in the in Middle Eastern money centers, such as Dubai, to make the transition between east and west. And the favorite places to put money? Multi-national banks.
DAN KARSON, KROLL ASSOCIATES: If you're dealing with sums of money that are small, you are flying well under the radar screen. You are escaping scrutiny.
FRANK: Barclays, Bank of America, Citicorp, Credit Suisse, Credit Lyonnais, Commerce Bank and Deutsche Bank are among the money center banks that have frozen accounts. As for the bin Laden family business, it maintains close public ties with the Saudi royal family. But the privately held Saudi bin Laden group shrouds its finance in secrecy.
The family says it has had no dealings with the world's most wanted terrorist since his Saudi citizenship was revoked in 1994. But as government officials note, family ties are family ties. So doubts linger.
Allan Dodds Frank, CNN, New York.
(END VIDEOTAPE)
HOPKINS: In an effort to hunt down and cut off terrorist funding, investigators are following a money trail that runs through banks, Islamic charities and now the corner grocery. Terrorists may be funding their operations by cashing discount coupons.
Chris Huntington has the story.
(BEGIN VIDEOTAPE)
CHRIS HUNTINGTON, CNN CORRESPONDENT (voice-over): Twenty-five cents off Progresso Soup, $1 off Hefty storage bags, up to $2 off a pack of Eveready batteries: Nearly $200 billion worth of coupons issued each year help American shoppers save money and American companies move merchandise.
Federal law enforcement officials also believe coupons may help terrorists raise cash.
KENNETH DAM, DEPUTY TREASURY SECRETARY: There have been many suggestions that one of the ways in which the terrorists are financing themselves is by coming into large quantities of coupons, the kind of thing you use in the grocery store, and turning those into ways of transferring money. We are actively investigating that possibility.
HUNTINGTON: Several investigations in the last 12 years discovered that Islamic terror groups, including the Palestinian Liberation Front, Hamas, and Hezbollah, ran elaborate schemes in the United States, generating close to $100 million, cashing in coupons without ever buying the underlying products.
Ben Jacobson, a former New York City police detective, led one of those investigations.
BEN JACOBSON, PEREGRINE GROUP: In the United States, terrorist cells were using coupons, and are currently using coupons. We believe that still the same groups that were involved with the bombing of the World Trade Center the first time are still associated with this particular coupon fraud operation that operates in the New York/New Jersey area, as well as in the Midwest.
HUNTINGTON: The fraud works like this: Operatives obtain coupons in bulk, often from newspaper recyclers or through Web sites. Coupons are clipped, crumpled up to make them look used, and sorted for shipping. Crooked stores, in on the scheme, claiming to have sold the products, redeem the coupons with the manufacturers and collect the checks.
BUD MILLERS, COUPON INFORMATION CENTER: It's usually a small operation that is highly organized, highly concentrated, working through numerous retail outlets. Just individual cases, I have had, for example, $87 million in Detroit, $68 million in the greater Philadelphia area, $44 million in Florida. It's a substantial amount of fraud.
HUNTINGTON: Miller tracks coupon fraud for the industry. He estimates half a billion dollars worth of coupons are fraudulently cashed in each year, roughly 10 percent of all coupon redemptions. But criminal prosecutions are sporadic. Compared to murder and narcotics, coupon fraud is regarded as nickel-and-dime crime.
Major coupon issuers do intercept about $100 million worth of fraud each year. But compared to the billions of dollars in new sales generated by coupons, chasing criminals is not a top priority.
CHARLES BROWN: All sponsors of coupons have to make that cost- benefit analysis, the cost justification for controls versus. the benefit of detection.
HUNTINGTON (on camera): The average coupon is worth about 75 cents And last year, more than 250 billion of them were left unredeemed. That's an awful lot of paper lying around that organized criminals and possibly terrorists could convert into cash.
Chris Huntington, CNN Financial News, New York.
(END VIDEOTAPE)
HOPKINS: Next: As bioterrorism fears grip the nation, biotechnology companies are experiencing a boost in business. And the nation's reservist are being tapped for action. We'll look at the potential impact on corporate America. Plus, rethinking safety precautions in skyscrapers: Could parachutes be the answer? We'll take a look when MONEYLINE continues.
(COMMERCIAL BREAK)
HOPKINS: Fears of bioterrorism have made biotech companies hot again. The industry is expected to benefit from a wave of government defense spending.
Casey Wian has the story from San Diego, California.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): This device resembling a beefed-up personal computer may become one of the newest weapons in the war against bioterrorism. It analyzes DNA on the head of a microchip.
KIERAN GALLAHUF, PRESIDENT, NANOGEN: The application in bioterrorism is the ability to detect the presence of certain organisms. And by using a microchip, you can potentially speed that application. You can also potentially look for multiple organisms at the same time, because you may not know what you're looking for.
WIAN: Nanogen says its machine can perform accurate tests that now take three hours in 16 seconds. It's working on portable models for military and other government uses.
Another San Diego area company, Ibis Therapeutics, is developing both sensors to detect and drugs to treat infectious diseases.
DAVID ECKER, PRESIDENT, IBIS THERAPEUTICS: It's very apparent to us and very apparent to the government that there is an extraordinary sense of urgency to advance the technology faster.
WIAN: Stocks of companies working on bioterrorism defense have rallied in recent weeks, even though government spending remains modest. The biggest chunk, $140 million this year, comes from the Defense Advanced Research Projects Agency. Previous DARPA research led to the creation of the Internet.
(on camera): DARPA says it has not requested or received additional money for biotech research since the September 11th terrorist attacks or the anthrax outbreaks that have followed. But the industry is expecting more money soon.
UNIDENTIFIED MALE: The companies have been getting small seed grants from the government at this point, probably as a first step of a multi-layer or multi-part transaction that will happen in the future. It's usually the way that it works.
WIAN: In California, many biotech companies are preparing for the future by hiring. The state was expected to add 70,000 bio-tech jobs this decade, even before September 11th.
Casey Wian, CNN Financial News, San Diego, California.
(END VIDEOTAPE)
HOPKINS: There are always industries that will prosper in times of war and those that will suffer from the situation.
Joining me now again to talk about that and a lot of other things: Vince Farrell -- he's chairman of Victory Capital Management -- Robert Brusca, chief economist at EcoBest Consulting; and Leah Modigliani, U.S. equity analyst with Morgan Stanley.
We were talking about biotech doing well in this environment. Biotech has been one of these areas, like the Internet, really, that has done well in some times and not well in other times.
So, how do you invest in biotech, Vince?
FARRELL: Well, I would probably defer to Leah about the sector as to when it does well.
But on individual stocks, ever since '86, '87, when biotech first burst on the scene, the best way to buy the biotech stocks it to wait until the drug gets approved. You may be able to catch the speculative surge on anticipation of a new product, and then oftentimes it doesn't work. If you take a look at the companies with great success, Amgen, Biogen, Genzyme, Genentech, they have had terrific moves after the drugs have been approved.
And you get this flow back and forth with speculative money into the group and out of group. And I defer to Leah about what that works. But I would pick the stock after it gets the drug approval.
HOPKINS: We've also had moves in, like, security stocks and kind of stocks in the news. Is that the way to invest?
MODIGLIANI: I actually think one of most important things here, whether it's biotech or the market overall, is to focus on the difference between stocks and companies.
When you are investing, you want to buy stocks. You don't necessarily want a company that has done well, but the stock is up. That's not going to really help your portfolio. What you want to do is focus on stocks that you think will do well that haven't had a move yet. And that's really where we're looking for things.
HOPKINS: And so, what stocks look good to you?
(LAUGHTER)
MODIGLIANI: Well, for instance, I think Mattel is an interesting story right now. Mattel is a long-term play. I think they have got some interesting stuff coming out. They are certainly going to benefit from the "Harry Potter" stuff going on. But, also, they are really a restructuring play. And we're looking for them to make improvements in their business sort of long-term.
HOPKINS: In terms of when you buy a stock, aren't there certain times -- I mean, don't toy stocks do better as you go into the Christmas season and worse afterwards?
MODIGLIANI: There's definitely some seasonality to the story. But that's why I like things that have also an underlying longer-term trend. I like Mattel, what it's doing for its whole business. I'm not just buying it for Christmas. In fact, Christmas expectations at this point are very low. People are worried about consumers. So this gives us both things to play. HOPKINS: We talked about biotech with you. But are there other areas that you like at this point -- Vince.
FARRELL: Oh, I think so. We're kind of anticipating that somewhere out there, there is a recovery. So we're tilting a little bit more toward the cyclicality available in the marketplace, and not deep cyclicals like steel companies and chemical companies.
HOPKINS: Companies that do better when the economy does better.
FARRELL: When the economy does better. So we're buying AOL, parent of this network -- and you did not pay me to say that, I would hasten to add.
HOPKINS: Thank you.
FARRELL: Tribune, which has media properties across the country, because I think ad spending will come back. And what we are doing is, we're buying these companies for multiples that are discounts to their growth rates. And I think that we're going to do very well with them.
Lastly, property casualty insurance stocks still look good. In time of war, especially after what we have just gone through, people need this insurance. You're able to price it much higher than you did before. And these earnings are going to go up for the P&C companies.
MODIGLIANI: I think that's true. But the stocks have moved significantly. So I'm tending to lighten up on them a little bit.
FARRELL: For every buyer, there's a seller.
HOPKINS: Let's talk with Bob about energy prices, because it's something that all consumers are going to shortly be seeing at the gas pumps: a big decline in what we pay for energy. What impact does it have on the economy. And how significant is this move?
BRUSCA: Well, because a lot of your energy needs are fairly well fixed in the short run, when energy prices go down, it frees up income for you to do other things with. So it works a little bit like a tax cut. You've got more money to spend on other things.
There's even speculation that the drop in energy prices has been so severe that maybe we're not going to need the stimulus program for the economy. But I think you have to back off there and you have to say: This is fickle. You just don't know when OPEC is going to get its ducks in a line, when other non-OPEC members will get along to cutting back their production. And that situation can change in a heartbeat.
HOPKINS: But at this point, heating your home this winter costs about a third of what it did last winter. This is a big savings for consumers.
BRUSCA: Oh, yes, yes. It should be noticeable. It will help the economy. It is a piece of stimulus for us. And it's one of the things I think helping right now airline stocks. HOPKINS: It's helping airline stocks, but it hurts oil stocks. I mean, are there -- do you like airline stocks, oil stocks?
FARRELL: I hate airline stocks. I'm sure there's great people -- great matters of insight, but you have a high fixed cost capital structure. And you have a variable cost in fuel oil. And you have very educated militant labor force. This is not a business plan that I think you would get A, in business school, and on writing up.
I don't like the airline stocks. I like the oil stocks. You buy it when...
HOPKINS: Even though they've come...
FARRELL: Well...
HOPKINS: Because they've come down so much.
FARRELL: Because they've come down, yes. See, I think that the real issue with the price of oil is not that that there's that much supply. I think what it is that demand has slackened. And I think when the economy picks up, the demand will pick up.
MODIGLIANI: But I actually think that this is where the stock versus company business comes in. In other words, the airline companies, maybe they're not -- it's not a great business. I agree with you. It's high fixed cost. They haven't made money over the long term.
However, the stocks have been just killed here. And so actually I think, there might be some interesting opportunities there.
HOPKINS: What about oil?
MODIGLIANI: I also like energy. I also like energy, although I think here, it's going to struggle for awhile. So you know, I think it's important to keep those things separate again.
HOPKINS: Thank you all. Bob Brusca, Vince Farrell, Leah Modigliani, thanks.
And after the break, high tech workers holding visas who are out of work, may soon find themselves out of the country. The special training camp to fight terrorism sees a jump in business. We'll take you there for an inside look. Plus, airport security is a hot topic in Washington and beyond. We'll take a look at the cutting edge technologies available to fight terrorism.
(COMMERCIAL BREAK)
HOPKINS: High tech workers in the country on special visas are facing difficult times. Many are out of work, as a result of the recent economic slowdown. And since September 11, President Bush has made it clear that visa violators will be tracked down, which means H- 1B visa holders out of work may be deported.
Fred Katayama has the story.
(BEGIN VIDEOTAPE)
FRED KATAYAMA, CNN CORRESPONDENT (voice-over): High tech companies couldn't hire enough skilled, foreign workers during the dotcom boom. But now, many are laying off holders of the so-called H- 1B visa as the economy slows further. And following the terrorist attacks, Congress' focus has moved to economic and national security. So the half million H-1Bs and their employers could face tighter scrutiny.
Colorado Congressman Tom Tancredo has proposed rolling back H-1B admission to 65,000 from the current cap of 195,000 and cutting that back further if the jobless rate rises. He argues American workers should get preference in hiring. Immigration backers say that would hurt the U.S. economy because it would force companies to move work overseas.
Missouri Senator Christopher Bond wants employers who lay off H- 1B workers to immediately notify immigration authorities, a step some employers ignore or risk a stiff penalty.
SEN CHRISTOPHER BOND (R), MISSOURI: This does not make it foolproof, but it's the best check we have to make sure we know that people who come into the United States for a specific purpose don't stay here for other purposes.
KATAYAMA: None of the hijackers involved in the World Trade Center attacks was an H-1B visa holder, but immigration critics say some would have made good candidates because they were highly skilled.
MARK KIRKORIAN, CENTER FOR IMMIGRATION STUDIES: Immigration control is indistinguishable. You can't tighten up on one element of immigration control or the immigration system, without fixing it overall because a potential terrorist or other kind of bad guy will simply probe for weaknesses.
KATAYAMA: Many laid off H-1B workers don't go home. They pump gas, work at stores and perform odd jobs while they look for new high tech jobs.
(on camera): But so far, the Immigration and Naturalization Service has no plans to tinker with its H-1B program. And it still has policy on just how long H-1B holders can stay once they are jobless. And it's considering a 60-day grace period to give laidoff workers time to find another job or pack up and go home.
Fred Katayama, CNN Financial News, New York.
(END VIDEOTAPE)
HOPKINS: Just days after the September 11 attacks, President Bush authorized a call up of to 50,000 reservists and National Guardsman. Thousands of them have been called to duty in service that could last up to two years, putting financial pressure on those who are self-employed.
Susan Lisovicz has the story.
(BEGIN VIDEOTAPE)
MARK LOSACK, CHIROPRACTOR: Go ahead and swing your feet around.
SUSAN LISOVICZ, CNN CORRESPONDENT (voice-over): Chiropractor Mark Losack has spent five years building up his practice in southern California. As a Marine reservist, a call to active duty would cut his pay in half.
LOSACK: I'll be able to pay my bills and still maintain a little bit of a savings investing type of program. But again, I just won't be out of debt as quickly as I would have liked to have been.
LISOVICZ: Federal law requires that employers hire reservists back at comparable pay if they're called up into service. Some big companies such as Xerox, United Technologies, and Wal-Mart have recently gone beyond that, closing the gap between military and civilian pay for at least part of the duration.
(on camera): But there is no safety net for reservists who are self-employed. The Small Business Administration does provide a special disaster loan for reservists, but that only covers capital for necessary obligations, and does not cover lost income.
JAY SPIEGEL, RESERVE OFFICERS ASSOCIATION: We saw in the aftermath of the Persian Gulf War, many medical practices were destroyed. The bulk of military medical force structure is in the reserves. And when those folks get called up, their patients continue to need medical care. And they'll go seek it somewhere else.
LISOVICZ (voice-over): Reservist and ophthalmologist Lawrence Ginger says financial hardship is a second priority. His father was an infantryman who landed on Omaha Beach on D-Day.
LAWRENCE GINGER, OPTHAMOLOGIST: My father did his part and my grandfather did his part. And it was just something that I thought was the right thing to do.
LISOVICZ: Ginger says some of his competitors have volunteered to work in his office as their own way of sacrifice during this time of need.
Susan Lisovicz, CNN Financial News, New York.
(END VIDEOTAPE)
HOPKINS: Because of the recent terrorist events, security is foremost in the minds of the traveling public, as well as most corporate leaders. But the challenge of keeping employees and property safe is often made more difficult because of little or no standards for private security companies.
Tim O'Brien looks at the insecurity of corporate safety.
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TIM O'BRIEN, CNN CORRESPONDENT (voice-over): The September 11 terrorism has been horrific for New York and the country, but it has been a boon for the risk management and security industry.
RICH MAURER, AMERICAN SOCIETY OF INDUSTRIAL SECURITY: I hate to say that, but it has been good for the industry, but it's been good for the awareness of the country.
O'BRIEN: Pete Lambert's company, Blackhawk Security, was doing $7 million in business before September 11. It's up to $10 million now. And Lambert says he's now turning down jobs because he doesn't have enough security guards to fill them, even though the requirements are minimal.
PETE LAMBERT, BLACKHAWK SECURITY: In the District of Columbia and in Maryland, to be unarmed security guard requires zero training. An armed guard in Maryland only requires eight hours of training.
O'BRIEN: Is that scary?
LAMBERT: It's very scary. You know, you're putting guns on people out there that don't have a clue.
O'BRIEN: Nationwide, 10 states have no regulation of the security industry at all. Take that, add long hours and low wages, and it should not be surprising that some security guards pose risks of their own.
RICK HERNANDEZ, INTER-CON SECURITY: A real issue within the industry is background screening of personnel. Now we've heard a lot about that in the news. And I think it kind of underscores the -- what I refer to as the deplorable kind of services that have been provided from different companies.
O'BRIEN: The FBI will run background checks on security guard applications, but only if required by state law. Most states do not require FBI background checks. And station guards alone won't do it.
HERNANDEZ: I think just kind of willy-nilly throwing guards at the front gate, or people in the lobby is not a good approach.
O'BRIEN: Security professionals say we'll see more high tech access controls and more emphasis on incorporating security in building design.
(on camera): But even all that won't guarantee real security. Industry leaders acknowledge while business is booming, it is not necessarily getting any better. And with regulation ranging from little to none, it is buyer beware.
Tim O'Brien, CNN Financial News, Washington.
(END VIDEOTAPE)
HOPKINS: Coming up on this special holiday edition MONEYLINE, as airlines beef up security, new technology makes air travel safer and more secure. What's a company specializing in defeating terrorists? An inside look at their counter terror training terror camp. MONEYLINE will be right back.
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HOPKINS: As the nation responds to terrorism, airport security dominates the minds of travelers and lawmakers alike. Security companies are now looking for new technology to make the skies as safe as possible.
Allan Chernoff has that report.
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ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): Now in production, the first generation of walk-through scanners designed to detect any whiff of explosive. The Sentinel from New Jersey-based Barringer Technologies and the Entry Scan from Ion Track Instruments of Massachusetts blow air on passengers, then analyze that air for traces of explosives.
PAUL EISENBRAUN, ISI: There has not been any real device at any of the security checkpoints that has the capability to detect any explosives on people. And there have been terrorist incidents where bombs have been smuggled on board aircraft by people who have had the bombs on their body.
CHERNOFF: The two companies are awaiting approval of the products from the Federal Aviation Administration.
This new generation of airport security technology is designed to go well beyond the detection of metal objects. It is intended to find explosives of any type.
KENNETH WOOD, BARRINGER TECHNOLOGIES: You need a multitude of technologies, a system of technologies, to provide as total a solution as you can to contraband your terrorist threat.
CHERNOFF: Cyterra Corporation in Waltham, Massachusetts plans to use its new ground radar technology, which the military uses to find landmines in the airport to scan passengers for weapons. Responding to fears of chemical or biological terror, Cyterra has developed buttons that can detect, though not protect you, from such agents.
DAVID FINE, CYTERRA: You wear this badge. The badge is kept in a facility, maybe in a train station or in an aircraft. It's analyzed at the end of flight or once a week. And it tells whether there has been an exposure.
CHERNOFF: To best protect the public from chemical or biological agents, experts say the air in any building or even aircraft would have to be tested and filtered. On sight terrorist board, a device intended to neutralize impurities in the air by using electric shocks. (on camera): The FAA is in charge of approving and purchasing new security equipment for airports. And it's still waiting to find out how much money will be budgeted for such devices in the aftermath of the attacks. Experts say it will take plenty of money and years to deploy new equipment. They say the best immediate response is to improve operation of existing equipment, an effort well underway at the nation's airports.
Allan Chernoff, CNN Financial News, New York.
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HOPKINS: Across the country, law enforcement agencies prepare for the possibility of terrorist attacks. One company offers serious training designed to combat terror using specialized drills and real life situations.
Bruce Francis takes us inside.
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UNIDENTIFIED MALE: And ladies and gentlemen, welcome aboard Spirit Airlines flight 844 with nonstop service to Fort Lauderdale, Florida.
BRUCE FRANCIS, CNN CORRESPONDENT (voice-over): It starts with a familiar, even comforting routine, but then it soon looks like the scenario all of us dread.
UNIDENTIFIED MALE: Everybody in your seats. Get in your seats. Let her go. Get on the ground. Get on the ground. Put your hands behind your back. Police, everyone stay down. FRANCIS: Welcome to counter terror camp. In a Spirit Airlines hangar in Detroit, former law enforcement and special forces officers are training S.W.A.T. teams and flight crews. This morning's exercise is a demonstration of the pepper ball, an air gun that shoots high- powered pellets of a powder that causes victims to cough and choke. The advantage? Unlike bullets, pepper balls won't damage a plane.
ANTHONY ZARINNIA, SPIRIT AIRLINES PILOT: Would I feel safer with one on board? I might.
UNIDENTIFIED MALE: You're my doorman?
UNIDENTIFIED: Yes, sure.
UNIDENTIFIED MALE: You know how to work it?
FRANCIS: In this drill, Detroit area special forces officers train for a hostage rescue using a special assault vehicle.
UNIDENTIFIED MALE: Go, go, go. Freeze. Get down.
FRANCIS (on camera): Believe it or not, before September 11, the company that runs these training camps did most of its business overseas. That's about to change.
(voice-over): At least that's what Bill Spaulding hopes. He runs the Teal Team, training consultants who are largely former special forces officers. The counter terror camp is run in conjunction with U.S. cavalry, a company that sells equipment to police departments.
BILL SPAULDING, PRESIDENT, THE TEAL TEAM: It's taken several major, major attacks on our soil before the people realize hey, it is happening here. So now that it's happened, we're to prepare for it.
FRANCIS: That preparation is costly. Drills like these cost $1500 per trainee. And so far, most law enforcement agencies rely on internal training programs. But in these days of redefined priorities, training that was too expensive before September 11 may get a closer look now.
UNIDENTIFIED MALE: Flight attendants are under control.
FRANCIS: Bruce Francis, CNN Financial News, Detroit.
HOPKINS: The attacks on the World Trade Center raising fears among many who work in skyscrapers. Companies are now selling parachutes to workers in high-rise buildings, pitching those parachutist as life preservers.
Steve Young has the story.
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STEVE YOUNG, CNN CORRESPONDENT (voice-over): No one who watched will ever forget the horror of seeing dozens or more people jump from the World Trade Center catastrophe, which is why a Michigan company is racing to ship an $800 last ditch skyscraper parachute. The chute opens much faster than sports parachutes. It's more stable, but can't be steered, which means you could slam into the skyscraper you just fled or another nearby.
UNIDENTIFIED MALE: This line's attached to the building or wherever you're dropping from.
YOUNG: The design work started before September 11 with modification the chute used by acrobatic pilots, but it wasn't clear if there was a big enough market.
Orders are now pouring in. And other companies are racing to catch up to ExecutiveChute, who's product and training video became available this week.
JOHN RIVERS, EXECUTIVECHUTE: This is an option of last resort. It's kind of like putting on a life preserver if you're on a cruise ship. It's something you hope you never have to use.
YOUNG: ExecutiveChute was first urged to develop its device by lawyer John Larkin. His company ensures high-rise buildings. He works in the Chicago skyscraper.
JOHN LARKIN, ATTORNEY: I will keep it on the back of my door. And you know, God forbid, I hope I never have to use it. And I don't think I will. YOUNG: Is it sensible or reckless? One member of the Parachute Industry Association says diving out of a skyscraper is at least as risky as the dangerous sport of so-called base jumping from the top of buildings, bridges, and cliffs.
(on camera): But the association's president says would I give chutes to my mom and dad if they were in a burning building with no other escape? You bet.
Steve Young, CNN Financial News, New York.
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HOPKINS: The issue of personal safety and security has, of course, been something we have all been thinking about lately. And many of you who wrote to us have been particularly critical of security at airports.
Pamela Szymanski says, "The root of the problem, airlines have been cutting corners for just too many years." Her solution? They have to "suck up the costs of fixing the problems." Of course, past experience tells us those charges will swiftly be passed on to passengers. Some airlines are already adding a surcharge to the price of a ticket.
Norman Herald in Oregon writes to say that he has 36 years of military and civilian air service and says making baggage screeners federal employees is simply not the answer. He writes, "Who do you think will end up being hired to fill those new federal service jobs?" Norman asks. "Have you ever seen anyone do a better job just because he or she got a pay raise?"
Some of you seem more than willing to let the government look over your shoulder in the interest of greater personal safety and security. Florence and David Becker say, "Times have changed. If we find one terrorist bank account, it's worth it."
Hector Boterro in Miami arguing honest citizens have nothing to fear from scrutiny. Writing, "If the government wants to look at my banking transactions, they're welcome to it."
And Chris Moore writes, "Let's get someone to propose better solutions, instead of suggesting we just stick our heads in the sand."
Coming up on this special edition of MONEYLINE, mounting troubles at the nation's postal service. Anthrax, of course, tops the list. We'll have the story.
Then finding comfort in the traditional. Norman Rockwell making a comeback. That's next.
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HOPKINS: The United States Postal Service was losing money even before the events of September 11, but those attacks, coupled with the recent anthrax threat, have some wondering if the post office will ever recover.
Hillary Lane has the story.
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HILLARY LANE, CNN CORRESPONDENT (voice-over): From door the door, street to street, state to state, there's a timelessness to the mailman. The country's had a postal service in some form since 1672. Today, this quasi government agency employs nearly 900,000 workers, delivering 680 million pieces of mail a day. It's an inflexible giant, lumbering along in a far more nimble world. Snail mail, unable to compete with the fax machine, e-mail.
Even in the package business, the younger upstarts, such as Federal Express and UPS now deliver the vast majority of packages, especially for businesses.
GENE DEL POLITO, ASSN. FOR POSTAL COMMERCE: They can go in there and negotiate very, very favorable rates, much more favorable than the Postal Service is able to offer them.
LANE: The anthrax scare has made matters even worse. Unions representing postal employees are now suing to close mail facilities where anthrax fears worker absenteeism, adding to concerns about the safety of the mail.
The Postal Service gets just one percent of its budget from the U.S. Treasury. Its revenues come from stamp sales and other mailing services, but adding a few pennies to the price of delivery isn't enough to payoff the service's $11 billion in debt.
And the bleeding continues. Losses in the most recent fiscal year, an estimated $1.5 billion. Since September 11, the service has lost $150 million a week. First, planes were grounded, then came a slowdown in volume and an increase in security. A bill in the U.S. House proposes extensive changes to the postal system, giving it more independence in pricing and contracting out services. In the words of one postal commissioner, "Everything's on the table."
GEORGE OMAS, POSTAL RATE COMMISSION: I said to Senator Thompson that I thought that maybe some consideration should be given that the Postal Service do what they do best. And that's do the last mile, the delivery. And that maybe the processing and things that they can't get a grip on should be something that they should contract out.
LANE: Surviving as a smaller, swifter service behind the scenes, but maintaining the familiar face out front.
Hillary Lane for CNN, New York.
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HOPKINS: Bomb threats, anthrax scares, and worries over airline safety have many Americans searching for the simpler things in life. As a result, Americana is popping up everywhere.
Kitty Pilgrim as the story.
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KITTY PILGRIM, CNN CORRESPONDENT (voice-over): A sweet picture, but look again. The juxtaposition of nurture and menace speaks clearly in this Norman Rockwellesque ad for "The New York Times."
An exhibit of Norman Rockwell paintings is drawing record crowds at the Guggenheim Museum.
UNIDENTIFIED FEMALE: I get the feeling that right now, that Americans have become most aware of what they risk losing in that everydayness, if life changes too dramatically. And so suddenly, as we look at what -- at the small things that matter, Rockwell comes to mind because that's what he was a master of for six decades.
PILGRIM: Family, war, country, civil order, all with humble, human touch, a simple version of life. American art experts like Gavin Spanierman are not surprised by the new connection America is making to Rockwell in these troubled times, with themes of family and simplicity.
Spanierman points to the bucolic simplicity of Winslow Homer after the Civil War as a similar pattern. Yet, he says, Rockwell always implied the presence of world events in his paintings.
GAVIN SPANIERMAN, SPANIERMAN GALLERY: Besides that wonderful storyline, there's always this sort of presence of an outside -- obvious presence of an outside world, you know. It's not a snapshot. It's a -- it is part of a much greater whole. And that's what I think he conveys so well.
PILGRIM: Advertising executives say their clients are opting for a kinder and gentler message, but a modern version. Ads that emphasize camaraderie and connection, like this Mitsubishi ad.
DONNY DEUTSCH, CHMN., CEO, DEUTSCH, INC.: What will last is not Norman. You're not going to see Norman Rockwell in advertising, but feel good messages, family messages. And I think that's across all medias, not just advertising. That's just what the doctor ordered right now.
PILGRIM: Their era of edgy, demanding, abrasive may be over in both art and its commercial application advertising. If it doesn't feel good these days, many are saying it just isn't going to sell.
Kitty Pilgrim, CNN Financial News, New York.
(END VIDEOTAPE)
HOPKINS: That's it for this special holiday edition of MONEYLINE. Thanks for joining us. I'm Jan Hopkins in for Lou Dobbs. Good night from New York. Have a great holiday.
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