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Lou Dobbs Moneyline
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Aired December 03, 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 Monday, December 3. Here now, Lou Dobbs.
LOU DOBBS, CNN HOST: Good evening, everyone.
Israel has struck back after a bloody weekend of suicide bombings. And a new threat to the United States. Israeli gunships today blasted Palestinian targets. Prime Minister Ariel Sharon declared a war on terror. And the United States defends Israel's right to defend itself.
Joining us tonight, former National Security Adviser Zbigniew Brezhinski. And in Afghanistan, America continues its war against terrorism. U.S. warplanes there continued to attack Taliban targets. International terrorism expert Kelly McCann will join us tonight to lend his perspective.
The director of homeland security warns of a new threat to the United States. We'll have a live report for you from Washington.
Also, tonight, a special report on Argentina's economic and financial crisis. And the CEO of Williams Company's on the energy industry fallout from Enron, which yesterday filed for bankruptcy, and today announced thousand of layoffs. On Wall Street, concerns about Enron and rising tensions in the Middle East sent stocks falling.
After one of the bloodiest weekends in Israel in months, Israeli warplanes struck back today. Israeli F-16 jets struck a civil police headquarters and Palestinian Authority offices in the West Bank city of Jenin. Palestinian security officials say the police headquarters was destroyed, however, saying no one was injured. Helicopter gunships hit a security compound near Yasser Arafat's headquarters in Gaza City, damaging buildings, destroying two of Arafat's aircraft. Dozens of people injured in the attack.
The attacks, the first since a string of suicide bombings that killed 28 people in Israel over the weekend. In a nationally televised address today, Israeli Prime Minister Ariel Sharon said Palestinian President Yasser Arafat is responsible for everything that is happening. And he announced a war on terrorism. Sharon said he called a special cabinet meeting to decide what further action to take. Palestinian security forces arrested two Hamas leaders, as well as dozens of other Islamic fundamentalists. Arafat also declared a state of emergency following the suicide attacks. The White House says Arafat must show more a commitment -- demonstrate a commitment to peace.
For more on today's retaliatory strikes and the warring words from both sides of this conflict, we're joined now by Mike Hanna in Jerusalem --Mike.
MIKE HANNA, CNN CORRESPONDENT: Well, Lou, it's in the early hours of the morning here and the Israeli operation is continuing. Within the last few minutes received word that an Israeli military operation is being conducted at the Gaza International Airport. Eyewitnesses say that Israeli tanks have moved into the area. One report says that bulldozers are tearing up the runway of the area. In addition, we've heard that tanks have moved into one of the suburbs the West Bank city of Ramallah, have taken up position some 200 yards away from Yasser Arafat headquarters in Ramallah. So, Israeli operations continuing, this after a day in which Israel struck at several targets in Palestinian territories; one in Gaza City, a compound of Yasser Arafat's Palestinian Authority, where a number of Yasser Arafat's helicopters were destroyed. And in the West Bank city of Jenin a police station attacked, say Palestinian security sources by Israeli F-16 fighter aircraft.
So widespread Israeli action, and meanwhile the Israeli cabinet is meeting into the early hours of the morning, decisions being taken there by the full Israeli government. Earlier in the evening Ariel Sharon, the Israeli prime minister had addressed the Israeli nation, saying that Israel was now in a state of emergency. It was a facing a war of terror, and it was going to do whatever is necessary to protect Israeli lives. Palestinians have condemned the Israeli operations, saying it has made it difficult for Yasser Arafat to arrest militants on the ground -- Lou.
DOBBS: Mike, I know it is early in these developments, but any size of the strength of troops, the number of tanks moving now?
HANNA: No, it's not so clear exactly how extensive this operation is. The airport operation, we do understand that there are tanks, the exact number not clear. Also, obviously, some form of earth moving equipment if that runway is being bulldozed. So the full extent of the operation not clear, it's all too soon, it's all happening within the last few minutes that we are receiving these various reports. But it does appear that the particular targets being selected, direct striking at the Palestinian Authority and Yasser Arafat in particular.
We've had the helicopters of Yasser Arafat destroyed, a police station in Jenin and Yasser Arafat's headquarters in Jenin, now the airport -- so Mr. Arafat clearly running out of transportation options, among other things. Very strongly, says the Israeli government earlier in the day, that it is delivering a strong message to the Palestinian Authority. A very strong message, indeed, Lou. DOBBS: Mike, thank you very much. Mike Hanna from Jerusalem. And of course, CNN will be following the developments there throughout the evening.
Homeland Security Director Tom Ridge, late today, announced a new security alert, warning of possible terrorists attacks in the United States. John King no joins us from the White House -- John.
JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Lou, that alert delivered to the American people through us just about an hour ago, here at the White House. The homeland security director, Tom Ridge, saying in recent days, especially the last several day U.S. intelligence agencies have picked up a high level of information, increased volume if you will, of what they believe to be credible information raising the possibility of another wave of terrorist attacks here in the United States or on U.S. interests overseas.
Governor Ridge saying that these intelligence analyst believe the threat is especially high in the next several weeks, through the end of the Muslim holy period of Ramadan, and as key Jewish and Christian religious holidays approach. So the governor came in to the briefing room here at the White House, he said this is always a difficult decision for the American people -- for the government to make, excuse me, to put the American people on alert. But because of the credibility of that information, he said it was necessary to do so for the third time since September 11.
(BEGIN VIDEO CLIP)
TOM RIDGE, HOMELAND SECURITY DIRECTOR: President Bush promised the American people that when we have evidence of credible threats, we will issue appropriate alerts. That is exactly what we're doing here today. The president also reminded all of us that a terrorism alert is not a signal to stop your life. It is a call to and be vigilant, to know that your government is on high alert, and to add your eyes and your ears to our efforts to find and stop those who want to do us harm.
(END VIDEO CLIP)
KING: In public, the administration very reluctant to get into any details about this intelligence information, but senior U.S. sources telling CNN tonight that this increased level of communication about potential threats to the United States can be traced back to Osama bin Laden's al Qaeda network.
DOBBS: John, so we are faced again with credible, but unspecified threats, is that correct?
KING: And that is the dilemma facing the administration, Lou. No specific targets, no specific dates, comes of course at a very difficult period for the U.S. economy. The hope, retail shopping would boost that economy, but no specific threats at all, but the administration says that such a high volume of information it felt it had no choice, but to reiterate that warning to the American people and 18,000 law enforcement agencies across the country. DOBBS: And presumably, John, this alert will last about two weeks the end of Ramadan, coming in mid-December.
KING: Mid-December, although do not be surprised if the administration then continues it through the end of the Christmas period.
DOBBS: OK. John, thank you very much. John King, our senior White House correspondent.
In Afghanistan, tonight, America's war against terrorism intensifies. And thousands of Taliban troops appear to be ready to surrender.
(BEGIN VIDEOTAPE)
(voice-over): U.S. war planes continue to attack Taliban forces in Afghanistan. The latest bombing destroyed two bridges near Kandahar as U.S. Marines and Afghan opposition forces continue to pressure the last Taliban stronghold. U.S. aircraft, military personnel and supplies increased over the weekend in southern Afghanistan, for further possible attacks, but officials are cautioning that the war is not near an end.
REAR ADM. JOHN STUFFLEBEEM, PENTAGON SPOKESMAN: If I were a marine at the task -- at the forward operating base surrounded by a 1,000 red-blooded American fighters, I would probably feel that I'm pretty close to getting this thing to a conclusion. However, from a perspective above that altitude and maybe even outside of Afghanistan, the central command and certainly the national command authorities are prepared for a long -- a longer duration.
DOBBS: In a separate development in Balkh Afghanistan, a surrender is in the works for 3,000 Taliban fighter that surrender, to take effect Tuesday. CNN has learned Taliban and Northern Alliance commanders negotiated the surrender after opposition forces encircled the town and were planning a full assault.
And in a strange twist, an American Taliban fighter tonight is in U.S. custody. John Walker, who fought for the Taliban and survived the prison uprising in Mazar-e Sharif, said he joined the Taliban, because his heart became attached to them after studying with the Taliban and living in Afghanistan.
(END VIDEOTAPE)
And other attacks as well in Afghanistan. U.S. war planes blasting an area south of Jalalabad in northeastern Afghanistan, that because intelligence sources indicate Osama bin Laden and al Qaeda network leaders could also be operating there. For more on that, we're joined by Jamie McIntyre at the Pentagon -- Jamie.
JAMIE MCINTYRE, CNN MILITARY AFFAIRS CORRESPONDENT: Lou, U.S. Marines have pretty much settled in now to their dusty base, about 55 miles southwest of Kandahar, and they are preparing to embark on their first combat operations -- operations that Pentagon officials say will likely put them in direct conflict with Taliban fighters. But while their mission is undisclosed, Pentagon sources say it does not include a direct assault on Kandahar, instead U.S. warplanes continue to pound Taliban targets from the air.
Pentagon videos today showed areas where Taliban troops had taken up positions near buildings. The Pentagon still carrying out this air assault while relying on opposition groups to take the city where Taliban leader Mohammed Omar is believed to be holed up in a defiant last stand.
And, as you said, there are pockets of resistance. You mentioned that one up near Balke (ph). There are others, according to the Pentagon, as well.
(BEGIN VIDEO CLIP)
REAR ADMIRAL JOHN STUFFLEBEEM, PENTAGON SPOKESMAN: There are pockets of resistance. I can, in my mind's eye on the map, see about four of them in northern Afghanistan, a couple of them to the west of Mazar-e Sharif, a couple of them east of there. So, there are four pockets that I know are of concern to opposition groups and they are surrounding and negotiating and ultimately, they may to have fight them.
(END VIDEO CLIP)
MCINTYRE: But the area of highest U.S. interest remains to the south, near Tora Bora, south of Jalalabad, where top military commanders believe that Osama bin Laden is hiding in a cave. Bombing there has been relentless. While the U.S. does have special forces on the ground there, they are not conducting a cave-by-cave search, not looking into caves directly, at least not yet -- Lou.
DOBBS: Jamie, any indication that further ground troops, U.S. troops, are being move into the area?
MCINTYRE: At this point, it doesn't look like the U.S. is going to significantly increase the amount of troops on the ground. They've got more than 1,200 of those Marines southwest of Kandahar, several hundred special operations forces. They are moving troops in as they are taking more control of two airports. But that's mostly for humanitarian operations. Right now, the big focus is on the hunt is for bin Laden.
DOBBS: OK. Jaime McIntyre, military affairs correspondent, thank you.
Joining us now from Washington to assess this war against terrorism and this latest threat to America: Kelly McCann, a former Green Beret. He is the president and chief executive officer of Crucible Security, an international security and anti-terrorism company. Good to have you with us.
KELLY MCCANN, PRESIDENT & CEO, CRUCIBLE SECURITY: Good to be here, Lou. Thank you. DOBBS: Let me begin first with the ground operations in Afghanistan. It appears that we are going to commit very few ground troops and apparently are going to succeed magnificently in the campaign against the al Qaeda and the Taliban. How does that make you feel as a former special forces member?
MCCANN: I'm a former Marine actually, Lou, and was a Marine special operations officer, but it makes me feel fine that this plan has come to a good point right now. You know, we've said all along that basically a lot of people don't know what they don't know. And, all along, people have doubted and people have naysayed, et cetera. And we're seeing the culmination of a fantastic plan and good command structure and people staying within their roles. So, I mean, I feel very good about it.
DOBBS: My apologies to you as a former Marine. I suspect that had to wrinkle just a bit when I said Army. I apologize.
MCCANN: Semper fi.
DOBBS: The fact is that with this number of troops, do you see that as being adequate to get the job done in tracking down Osama bin Laden?
MCCANN: Sure. You know, it's interesting, Lou, because tracking down bin Laden, you know, is tertiary to enabling ourselves to be safe, worldwide and especially here at home. Those people who are still empowered to hurt us might be sleeper cells right here. And on the front page of the "Washington Post" today, the focus is shifting now to concurrent operations outside of Afghanistan, which is a good thing.
DOBBS: Tom Ridge today issuing this latest security alert. Let me, first of all, ask what do you for your clients when another of these alerts is issued?
MCCANN: It's an interesting question. And what we try to do with the corporations that we advise and instruct is basically construct a strategic security umbrella to try to guard against a tactical incident. It's trying to think like a madman and try to sort things out. You'll never be able to do it.
But what I think Tom Ridge can do is generally raise the security posture across the board here in the United States so that all information that could be hurtful to the United States is filtered through the strategic umbrella. Some of that could be related to narcotics, some of it could be related to crime, some of it will be related to terrorism. And at that point, law enforcement are going to be immediately enabled to intervene and that's how we are going to win this thing.
DOBBS: What is -- give us your best judgment in conclusion as to your sense of the readiness and the preparation for law enforcement agencies in this country right now.
MCCANN: I think that all law enforcers right now are reevaluating the way that they interact with the public as it comes to taking information and basically using that to go source out different problems.
I think that law enforcement is also wrestling with some issues like racial profiling, et cetera, which can't be ignored on this issue. And I think that also they are accelerating their training in order to be able to better identify patterns of behavior that are consistent with either being targeted for -- target value or an imminent attack. That's outside the common body of police knowledge because, remember, prior to this, they would intervene in an ongoing crime or they would come, post-crime, and sort through evidence. But suddenly, they really must become expert at pre-incident indicators. And that's going to be a little bit of a learning curve.
DOBBS: Kelly, thank you very much for being with us -- Kelly McCann.
MCCANN: Thanks, Lou.
DOBBS: Still ahead here, we'll hear from the chief executive officer of Williams Companies on the fallout from the collapse of energy giant Enron.
Argentina's financial and economic crises is worsening. We'll have a special report.
Then, tensions between Israel and the Palestinians escalating and America's hunt for Osama bin Laden is intensifying. We'll assess rising tensions around the world talking with a former head of national security.
ANNOUNCER: After the break, Lou talks with Zbigniew Brzezenski, former national security adviser.
(COMMERCIAL BREAK)
DOBBS: As we've reported to you, Homeland Security Chief Tom Ridge today warned of another terrorist threat to the United States. U.S. warplanes have intensified their attacks against the Taliban and al Qaeda network in Afghanistan. And violence has exploded between Israel and the Palestinians.
Joining us now from Washington, the former national security adviser to President Carter, Zbigniew Brzezenski. Good to have you with us.
ZBIGNIEW BRZEZENSKI, FORMER NATIONAL SECURITY ADVISER: Nice to be with you.
DOBBS: These are extraordinary times. Let me turn first, if I may, to the situation in the Middle East. With these -- now of the apparent movement of ground forces, Israeli ground forces, into Gaza, this is an escalating situation. Give us your best assessment.
BRZEZENSKI: Well, it's not only escalating, it's deteriorating. The fact of the matter is -- I think it should be obvious to everyone by now -- neither the Israelis nor the Palestinians together can solve this problem. And as it continues to boil and to erupt into violence, it is going to get worse and worse. If we're not careful, before too long, Arafat is going to be overthrown, perhaps assassinated. We'll have Hamas in charge of the Palestinians. The Israelis may then reoccupy the rest of the West Bank, the parts that they had vacated. Then there will be an underground war against the Israelis, and the whole process will be set back more than 10 years, which is roughly when it started (UNINTELLIGIBLE)
DOBBS: Does that not assume, however, that it will be a repetition of a cycle that has gone on now for the better part of half a century, and that is, could it be that Ariel Sharon means precisely what he said, that this is a war on terror, that he means to prosecute in full?
BRZEZENSKI: He certainly is determined. There's no doubt about it. But the point is, you cannot define that problem entirely as a war on terror. The fact of the matter is that there are unbridgeable gaps between what the Palestinian aspire to, and what the Israelis have a right to expect. Each side mistrusts the other totally. And each side is convinced that the other wishes it ill. And as a consequence, neither side is prepared to make some very difficult compromises. The resumption of occupation is no solution to the problem.
DOBBS: Difficult compromises, but this has been such a long standing problem. President Carter, Anwar Sadat and Menachem Begin made extraordinary progress. Some would argue the only progress that has really ever been made in the conflict, is it possible that we are consigned to watch this unfold without a U.S. or European solution to the Israeli and Palestinian issues?
BRZEZENSKI: I have taken what, to many people, is a controversial position. But my view is that precisely because neither side can take the final step, it would be helpful, even if it is initially disliked, for the United States, backed by Europe, to outline, in detail, what a fair peace would actually involve. What would be the details. Initially, I'm sure both sides wouldn't like it, but eventually at least, they would have something to react to. And I believe eventually, more and more would say yes, that's better than continuing.
Right now the Palestinians are convinced the Israelis want them to do them in, and the Israelis are convinced that the Palestinians ultimately want to destroy them. And hence, there is no basis for a compromise.
DOBBS: Without compromise in this situation, it is obviously conflict. What is your best guess or estimate as to how this will proceed from here?
BRZEZENSKI: I think it is going to get worse. That is to say, the Israelis have the power to beat up the Palestinians. There are casualties on both sides. Unfortunately most of them are innocent civilians, killed either by Palestinian terror, or by Israeli counter- military actions, which involve also killing innocents. This I am afraid is going to continue until the United States musters the political courage to take a clear-cut stand. Secretary Powell came close to it a month ago, but still he packaged it in such a way that only experts really know what he meant when he talked about the settlement. It needs to be spelled out in politically simple detail.
DOBBS: And, at this point, in Afghanistan it appears that's the coalition, the U.S.-led coalition, is prevailing in its war against the Taliban and al Qaeda. Give us your assessment of how that situation is progressing by your view.
BRZEZENSKI: The U.S.-led coalition is prevailing militarily, but it is beginning to divide politically in terms of its real objectives. For example, we have argued that the Northern Alliance shouldn't take Kabul, the capital. We have felt all along, that there should be some sort of a coalition super national government involving the Pashtuns. That's being negotiated, but with great difficulty.
The old game between Britain and us and the Russians and the Iranians and Indians and Pakistanis is resuming behind the scenes, and the maneuvering is quite intense.
DOBBS: And do you believe that irrespective of the double and triple games that you're referring to, that the United States is progressing effectively and successfully?
BRZEZENSKI: I think we're doing extremely well militarily. I'm less sure that we will have our way politically or at least entirely. I am quite sure we will destroy the Taliban. I'm quite confident we will wipe out at al Qaeda, maybe even get Osama bin Laden. But politically, our objectives will be more difficult to accomplish.
Zbigniew Brzezenski, thank you for being with us.
BRZEZENSKI: Good to be with you.
DOBBS: Good you see you.
Still ahead here, Israel blasts Palestinian targets and blames Yasser Arafat for not doing enough to stop terrorism. We'll have the latest developments for you. Enron has filed for bankruptcy, largest ever. We'll talk to the CEO of Williams Companies about what that means for the energy industry.
And then, it comes from Silicon Valley, they say, in somewhat understated fashion, that it could revolutionize transportation. We'll have the latest on the hype and the significance of the inventor's hope, for something called "Segway," next.
(COMMERCIAL BREAK)
DOBBS: Now for the latest developments in the conflict in the Middle East: A Palestinian chief negotiator says Israeli tanks have entered Gaza City International Airport that bulldozers have begun bulldozing parts of the runway. Saeb Erakat also says Israeli tanks entered a Palestinian town in Northern Gaza. Earlier, Israeli jets struck police headquarters and Palestinian offices in the West Bank city of Jenin.
Helicopter gunships also hit a security compound near Yasser Arafat's headquarters in Gaza City. Buildings, as well as two aircraft were destroyed in those attacks. The attacks in retaliation for three suicide bombings in Israel over the weekend which left 28 people dead, including the three bombers.
Israeli Prime Minister Ariel Sharon says Palestinian President Yasser Arafat is responsible for everything that is happening. Sharon called a special cabinet meeting to decide what to do next.
Chief Palestinian negotiator, Saeb Erakat says Sharon is making the mistake of his life and called on the United States and European leaders to stop Sharon.
In this country, homeland security chief Tom Ridge announced a security alert. Ridge urged Americans to be vigilant and to remain on high alert.
(BEGIN VIDEO CLIP)
TOM RIDGE, HOMELAND SECURITY DIRECTOR: The endless review this information believe the quantity and level of threats are above the norm and have reached a threshold where we should once again place the public on general alert.
(END VIDEO CLIP)
DOBBS: And for the fourth straight day today, U.S. bombers pounded Tora Bora. That's one of two areas where senior Taliban and al Qaeda terrorists are thought to be hiding. Osama bin Laden has reportedly asked anti-Taliban mujahedeen commanders not to attack that region.
About 3,000 Taliban fighters may surrender near the northern city of Mazar-e Sharif tomorrow. The Northern Alliance says 300 non-Afghan soldiers have vowed to fight to the death. Talks on Afghanistan's future back on track today. The Northern Alliance submitted a list of people it would like to see in a transitional Afghan government. Four Afghan factions have been studying a United Nations proposal for a 29- member ruling council for Afghanistan.
The world price of oil is rebounding. The turmoil in the Middle East is raising fear of a wider conflict that could disrupt oil production. Also boosting oil prices, hopes that Russia would agree to OPEC's call for supply cuts next year. Light sweet crude rising 65 cents, settling at $20.09 a barrel. But, the price of oil still almost 30 percent lower than before September 11.
The troubled energy firm Enron confirms it will layoff 4,000 of its employees. Enron said it instructed the majority of its workforce to go home for the day. It will call workers separately to tell them whether or not to return to work tomorrow. Enron says it has asked the court to provide $4,500 in severance for each laid off employee, but it is up to the court to decide on the amount of the money and the date upon which it would be given.
Enron filed the largest corporate bankruptcy in American history yesterday and sued Dynegy for backing out of its proposed merger with Enron. Dynegy is counter suing to protect its option to buy a valuable pipeline from Enron. And now there is late word tonight that Enron has lined up some bank financing.
Fred Katayama joins us from federal bankruptcy court in New York City with the latest on this story -- Fred.
FRED KATAYAMA, CNN CORRESPONDENT: Well, Lou, Enron's lawyers are meeting with a bankruptcy judge right now. The troubled energy company needs billions of dollars to pay its bills and to restart its energy trading operation as a separate unit. The company's asking the judge for authorization to access $250 million in short-term financing now, that it says it's just secured. It's also got another $1.5 billion in longer term financing from a syndicate led by J.P. Morgan Chase and Citigroup. It also is talking to three other entities it wouldn't name for more credit.
The next hearing is set for December 14. Now this broken off engagement has really turned into a slug fest. Dynegy counterpunched today with a lawsuit of its own against Enron. It is suing in order to try to protect its options to take control of apprised natural gas pipeline.
UNIDENTIFIED MALE: We put up $1.5 billion. And we expected if this thing went south, that we would have a pipeline. And now unfortunately, this company wants to keep the $1.5 billion and they want to keep the pipeline. That's not going to happen.
KATAYAMA: Now Enron claims that Dynegy wrongfully terminated its $9 billion merger deal. Dynegy, for its part, contends that it had the right to walk away from the deal because Enron did not fully disclose details of its rapidly deteriorating financial situation.
Now separately, a small company called Standard Power and Light says it'll make a bid to buy a majority stake in Enron. But analysts on Wall Street dismiss the move, saying it's just a little-known company. It only has $1.6 million dollars in sales. And the company's own executives wouldn't disclose how it would come up with financing -- Lou.
DOBBS: Fred, thank you very much. Fred Katayama from federal bankruptcy court.
Enron's bankruptcy casting a shadow of mistrust on the entire energy industry. Concern on the part of investors about those companies in the energy industry.
Joining us now from Tulsa, Oklahoma is Keith Bailey. He is the chairman and CEO of Williams Companies. Keith, good to have you here.
KEITH BAILEY, CHMN., CEO, WILLIAMS COMPANIES: Good to be here. DOBBS: Or at least good to have you there perhaps better put. The situation is obviously difficult for the entire industry. We're seeing a lot of concern about the amount of exposure that a number of companies, including yours, has to Enron. How bad is it?
BAILEY: Well, I think in the aggregate, certainly the exposure to Enron could be substantial because it is a risk management business. And I think you'll also see that the exposure created by Enron is fairly (UNINTELLIGIBLE). That no individual company or companies aggregate any significant amount of it as a general proposition.
I think the greater damage is coming from the fact that the markets are interpreting Enron's problems as being a condition that might be more generally applicable to those of us that are in the energy marketing and trading business. And that's simply not true.
DOBBS: Give us your best assessment. And I think I have to say here just it's not often I'm in this situation, but I think I have to divulge here that I own stock in your company. And you and I have known each other for some time. Would put you down as a friend. And I want our viewers to understand that, because we're going to touch on a couple things here.
One, is if this situation with Enron is not resolved in -- with Dynegy, what will be the impact?
BAILEY: Well, I think the most obvious elements of the impact, you've had a horrible human tragedy with regard to the impact that Enron has had with regard to just its own employees. The litigation and what's ensued from the aborted merger, at best, is going to be distractive I think to Dynegy. And at worst, if Enron were to prevail, it could cause Dynegy to have to move through with a merger that it clearly, at this point, doesn't want to do.
But I think from the market's point of view, that the markets will quickly adapt to Enron not being a factor. In fact, they already are. And you'll see the other market participants picking up the market demand. And the markets will move on. And again, I think the thing that people are losing sight of, is the fact that Enron was, in fact, an outlier in terms of the way it strategically pursued the trading business.
DOBBS: By that, you mean Enron pursued a business plan and a strategy quite apart from the rest of the principle companies in the industry?
BAILEY: That's right. It pursued what it called an asset light strategy, in fact, would talk about not needing assets, that assets were burdens, and that the companies that were like we were. And we view ourselves on the polar extreme from where Enron positioned itself, because we are very asset intensive company.
But they sort of said that we would not be able to carry the burden of the assets and continue to compete with them. And for a long period of time, the general market sort of bought into that proposition.
But I think what has become very clear as a result of what happened to Enron is that assets are essential and that the closer you are to the asset, the more solidly capitalized you are and the better value proposition you provide.
DOBBS: And that's represents most of the companies in your industry?
BAILEY: Yes, we would do analyst presentations and so forth. I would position Enron on one end of the spectrum, Williams on the other end. And everyone else would fall somewhere in between, but much closer to Williams then they were to Enron.
DOBBS: Keith, Enron was the number seven out of the Fortune 500 a year ago. Can you give us in 60 seconds, your best judgment, as to what in the world happened here?
BAILEY: Well, I think the issue ultimately was a balance sheet issue. Certainly what precipitated the decline or the start of the decline in the stock price were issues around trust and some of the partnerships and that sort of thing. And when that happened in the sort of market we're in today, the effect of it was probably amplified.
But much of their balance sheet was supported on equity-based structures. And as the equity declined, the debt became less viable. As the debt became less viable, the equity declined and it imploded.
DOBBS: Right. Your best -- can I ask for this, your best judgment as to how does Keith Bailey think this thing will finally end up?
BAILEY: Well, I think at the end of the day, the Enron assets will be distributed through an orderly bankruptcy preceding. There will need to be legal resolution of the issues between Dynegy and Enron. And with the possible exception of Dynegy being forced to move forward with the transaction, my guess is that Dynegy wants the distractions behind them and will move back and continue to be an important player in the market, and probably will be during the interim.
And the balance of the industry will fill the voids of the market demand that is very real, to meet a business that we believe is both sustainable and durable if pursued, and ran the right strategy.
DOBBS: Keith Bailey, thanks for being with us.
BAILEY: Thank you.
DOBBS: Appreciate it.
A bank run in Argentina has sparked fear of a possible default amongst the financial institutions of the global community. Argentina is urging its citizens to be patient at a time when analysts are growing increasingly concerned about a looming economic and financial crisis.
Kitty Pilgrim has the report.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): A run on the banks has brought Argentina to the brink of financial collapse. The government limited withdrawals to $250 a day, and is checking international flights. Anyone taking more than $1000 overseas could face smuggling charges.
JAMES BARRINEAU, ALLIANCE CAPITAL: Friday, we estimate that they lost over $700 million in the banking sector. And basically, each day brought a new wave of withdrawals. So they certainly couldn't let that go on. And it's one of those situations where you basically have to resort to extreme measures.
PILGRIM: Those measures may stop the cash hemorrhage, but will also make people cut back on spending, forcing the country deeper into recession, which it has been in for nearly four years.
Financial analysts call Argentina a slow motion train wreck. Rumors of a default of $132 billion of public debt have plagued the market for months. The Argentine market has been hammered, down 50 percent this year, as the country has failed to put its house in order.
The IMF is considering an additional $1.3 billion payment, but has not stepped forward yet. A 2002 budget is unclear. And a debt swap is underway. But the big worry is Argentina may have to devalue its currency or default on its debt. Still, the risk to other global markets is fairly contained.
ALBERTO BERNAL, IDEAGLOBAL: I don't think there's much of an impact on the U.S. market. I think that if this crisis has been called for so long now, that most of the investors have built some defensive positions in terms of the effects of the Argentine crisis to the rest of the world.
(END VIDEOTAPE)
PILGRIM: Now Argentina's market actually firmed up on the theory that the government is doing something. But credit agencies in the United States, both Moody's and Fitch rating agencies are not optimistic about the resolution of Argentina's crisis -- Lou.
DOBBS: OK, Kitty. Thanks very much, Kitty Pilgrim.
Well still ahead here, stocks fall today. Middle East unrest, worries about Enron's collapse, just two of the factors pressuring stock prices today. We'll be telling you all about that. Some signs of economic recovery. Auto sales rise. Consumer spending jumps. In fact, a record rise. But with that, there is also some troubling news in housing. And for the past year, it had Silicon Valley legions of technophiles buzzing. Is it revolutionary or is it just a lot of hype? We'll find out. (COMMERCIAL BREAK)
DOBBS: Stock prices falling on Wall Street today. Sparking the selling, the conflict in the Middle East, Enron's bankruptcy. The Dow falling 87 points. The Nasdaq dropping 25. The S&P 500 down nine points.
Christine Romans at the New York Exchange, Greg Clarkin at the Nasdaq marketsite to bring us up to date -- Christine.
CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, a variety of reasons conspiring to keep the buyers on the sideline today, as well good old fashioned profit-taking here after a pretty good month of November.
Take a look at the big board movers here today. Ford on the top of this list, down more than $1.00 here. Its November auto sales up 4.4 percent, but its laying off another 630 workers, cutting some benefits. It'll end its matching funds for slow pay program and cease merit pay increases for about 2200 top level employees.
Micron Technology up here though. Merrill upgrading on hopes for a strategic alliance with a company called Hynix. A move, Merrill says, is good for Micron's D-Ram business.
Pratt and Whitney's machinist union rejecting a management pay raise proposal, and voting to strike. United Technologies, the parent there.
Morgan Stanley, look at this one. Here as Goldman Sachs lowering estimates for the entire group and pulling Morgan Stanley Dean Witter from the top of its recommended list.
Also, Schlumberger is another one we're watching here today, up $1.42. All of these drillers doing nicely here today. There's a rebound in those oil prices.
Meanwhile, the Enron effect, can't go a day without talking about Enron down here, can't go an hour, Enron up 14 cents. The most active here. Dynegy down sharply. Also, very active. J.P. Morgan Chase and Citigroup, both of them lower as well on worries about their exposure to Enron -- Lou.
DOBBS: OK. Christine, thank you very much. I always like that when one brokerage downgrades another brokerage. It gets sort of interesting.
ROMANS: That I do, too.
DOBBS: An escalation. Christine, thanks.
Let's turn it over to Greg Clarkin. Decliners beating advancers on the Nasdaq by a 3 to 2 margin. Greg, Clarkin, tell us all about it.
GREG CLARKIN, CNN CORRESPONDENT: Well, Lou, it was one of those days where stocks, especially tech stocks, really just could not get any traction. You know, throughout the day, you had that backdrop of the escalating violence in the Middle East. That was something traders were talking about a lot. And then also, you had a lot of fears that some of these stocks had run up significantly. All that made for a very rough day for the big caps.
You take a look at Microsoft. It was really the only big name gainer today. It was up 56 cents. But Intel, Cisco and Sun Microsystems all sharp losers. All three of those companies will be updating analysts a little bit later this week as to their business environments. A lot of concerns that these stocks have run up too far, too fast.
And you take a look at Sun Microsystems. It's up about 70 percent since it reached a bottom back on September 21. As one analyst said, you know, the business environment for some of these folks has improved, but not that dramatically. So we did some profit taking in Sun today. It was down to the tune of about 5 percent. And all in all, just a very quiet day, a lot of profit-taking at some of those real, red hot sectors like the networking stocks -- Lou.
DOBBS: OK, Greg, thanks very much, Greg Clarkin.
And we want to update you on the Enron story. We just received word that the federal bankruptcy court here in New York has approved that $1.5 billion debt financing, Citibank and J.P. Morgan Chase leading on that as well. So some, in these very dark hours for Enron, at least a little good news.
Well, as I was saying, tentative signs of recovery. Manufacturing improving somewhat, suggesting the worst may be over for the battered sector. Consumer spending also rising, thanks to low interest rates. But on the downside, more of us are having trouble paying mortgages.
Kathleen Hays is here to put it all together for us -- Kathleen.
KATHLEEN HAYS, CNN CORRESPONDENT: I'll do my best.
Let's start with the manufacturing sector, Lou. We're talking about the National Association of Purchasing Management, a survey that is closely watched on Wall Street. They've talked to Manufacturers across the country.
Their index is set up like this. Any number above 50 means growth. Any number below 50 means contraction. So even at 44 for November, the manufacturing sector is still under pressure, but at last it's not as weak as it was in October, a month it really took a hit, following the September 11 attacks.
DOBBS: Breaking a trend.
HAYS: Maybe so. That's the hope. Absolutely.
Now here's something that's helping manufacturers, better auto sales. They were red hot in October. November's still looking pretty good. GM up 13 percent. Ford managed a 4.4 percent gain. And it's mostly trucks, Lou. When you look at the auto sales, they were flat or up a little bit at best. F-Series trucks at Ford, the Explorer SUV, double digit rate of selling. They just apparently can't sell enough of them, especially with zero incentive financing.
Now will it continue? Let's take a look at the spending and income report that Lou was just talking about for October. Personal spending up almost 3 percent. Again, that was autos. Personal income unchanged for the second month in row. Apparently, that is the worst showing for income. Think wages and salaries. Think your paycheck in seven years. In fact, after tax income was actually negative.
Now maybe that's one reason people are having a little trouble on the mortgage front. The Mortgage Bankers track delinquencies. They were .24 percentage points to 4.87 percent.
Let my give you numbers. There's about 32 million loans outstanding. That means in the latest month, there were about 76,000 more delinquent home mortgage loans. The total pool of delinquencies, Lou, is something like 1.6 million. So it's not huge, huge numbers you, but for the 76,000 people who are delinquent now, it is a tough story.
DOBBS: And unfortunately, I can add to that just taking a quick look at the corporate bankruptcies today year to date, this is going to be a record year. It's going to be a record year by a sizable margin. So we'll focus on the good news instead.
HAYS: Keep looking for those signs of recovery.
DOBBS: There you go. Kathleen, thanks. Kathleen Hays.
Still ahead, a spirit-lifting war adventure makes its debut at the box office. It does pretty well. We'll take a look at the weekend for the movie business. Harry Potter doing very well. And then, a much hyped gizmo makes its debut. The inventor convincing investors to put $100 million into it, but are you going to be using it any way soon? We'll explore that possibility next. Stay with us.
(COMMERCIAL BREAK)
DOBBS: For the past year, it's been Silicon Valley's most talked about secret. Today, after 10 years in development, $100 million invested, the invention was revealed. And here it is. There it is, the Segue Human Transporter, a two-wheeled battery powered scooter-like vehicle that its inventor promises will revolutionize transportation.
Sensors monitor the rider's center of gravity, telling the motor and wheels which way to turn and how fast, with gyroscopes apparently everywhere to carry out that mission. After a six-hour charge, the high-tech scooter can reportedly travel 15 miles at an average speed at 8 miles an hour. The cost right now, about $9,000. The company says, however, it will mass produce a consumer model for $3,000. Over the past three months, "Time" magazine's John Heilemann has been allowed behind this veil of secrecy surrounding the project and joins us now. John, good have you here.
JOHN HEILEMAN, "TIME" MAGAZINE: Great to be here, Lou.
DOBBS: What a terrific assignment "It," Ginger, its code name in development and pretty well held under wraps for that time.
HEILEMAN: Yes.
DOBBS: What's it like to ride it?
HEILEMAN: Well, there's a kind of quality of magic to it. I mean, if you don't understand how the technology works, there are no brakes on this thing. There is no accelerator. And there's no steering wheel. So when you're on it, the way that you control it and go forward and back is really kind of by leaning forward, to go forward, leaning back to go back.
But in fact, its creator, Dean Kamen, will often advised people just think about going forward or just think about stopping. And your body suddenly shifts. When you think about stopping, your body sort of freezes. The machine feels that and comes to a halt.
DOBBS: Can you stop on a dime, as it were?
HEILEMAN: You can stop pretty close to on a dime. And what's even more amazing, is if the machine runs into someone, it's self- correction is better than your self-correction would be. So where your momentum would cause some harm to that person, it pulls up and pulls away instantly.
DOBBS: Have you run into anybody with it?
HEILEMAN: I've run into lots of people with it. And what's...
DOBBS: No injury?
HEILEMAN: And no injury.
DOBBS: That's remarkable.
HEILEMAN: Well, that's -- this is very much a device that's designed to go on the sidewalk. If it can't go on the sidewalk, it's doomed.
DOBBS: Well, that's one of the issues. Kleiner Perkins, John Doerr, one of the investors that's their largest investment ever in this.
HEILEMAN: Right, $38 million.
DOBBS: John's quite a boy with a superlative. He said, you know, this is it. What's your judgment? HEILEMAN: Well I mean, if you look at how big some niche markets are. The markets for ATVs, for snowmobiles, for scooters. I mean, these are huge markets, it turns out. And the company in this first year is going to sell only to the enterprise. You're going to have the postman, Fedex, the police, the park service, lots of these -- huge establishment institutions. You could sell millions of copies to those people, but the bigger question is will this become, you know, the replacement for the car in big cities? And that's a much harder question.
DOBBS: What you're really, John, is even if it doesn't live up to the superlatives, it ain't going to be such a bad deal for the investors?
HEILEMAN: Right, that's exactly right.
DOBBS: And I'm sort of amused by some of the early digerati.
HEILEMAN: Yes.
DOBBS: Reaction, which is to sort of pooh-pooh this thing, calling it a lawn mower with an intuition or so forth. What do you think?
HEILEMAN: Well, part of the problem is the hype was raised so high. Right? People thought it was dematerialization device or a personal helicopter or something in a backpack. Compared to that, it's a let down. I think a lot of the people who are pooh-poohing it are people haven't ridden on it. And riding on it is a quantum leap more amazing than watching it on video.
DOBBS: Or haven't invested.
HEILEMAN: Yes, that's true, too.
DOBBS: Thanks for being with us.
HEILEMAN: Great to be here.
DOBBS: "Time" Magazine.
Well, "Harry Potter" topped the box office for the third consecutive weekend. After three weeks in theaters, "Harry Potter and the Sorcerer's Stone" has pulled in $220 million for Warner Brothers. And "Behind Enemy Lines" debuted in second place with $19 million. The release date for this wartime rescue thriller, starring Gene Hackman was brought forward. And we should mention (INAUDIBLE) as well, but forward by Fox after it tested well with audiences. "Spy Game" was third, followed by "Monsters" and "Black Knight."
(PREVIEW)
DOBBS: Looking forward to it, Wolf, thanks.
Coming up next here, we'll take a look at your thoughts and some of what to expect tomorrow. Stay with us. (COMMERCIAL BREAK)
DOBBS: Well, tomorrow, Cisco Systems will continue its three-day meeting with Wall Street analysts. The space shuttle Endeavour is scheduled to launch, after being postponed twice last week. Officials from the European Union's 15 nations will gather in Stockholm to discuss the future of the union, as well as globalization.
And now let's take a look at your thoughts. Bob Kautzmann in Danville, California writes in to support President Bush and the Justice Department's decision to use military tribunals to try terrorists. Bob writes, "Some commentators are claiming terrorists should have the protection of the very thing they're trying to destroy: our constitution."
For those on Capitol Hill opposed to the idea of military courts, George Lewis in Michigan writes in to say, "How many of these politicians who are concerned about the civil rights of these assassins lost a loved one at the World Trade Center, Pentagon or in Pennsylvania?"
Finally, Tom Austen in Cleveland, Ohio says he would apply his own military tribunal to the now bankrupt Enron. Tom writes in to say, "The chairman of Enron, senior officers, board members, accountants, and any securities analysts that knew Enron's books were cooked should all be brought by a -- before a military tribunal for trial and appropriate punishment."
Tom even asked if I would like to serve in judgment. The answer, Tom, is no, but there shouldn't be any shortage of volunteers among Enron's employees and investors.
Moneyline@cnn.com. That's the address. We'd love to hear from you.
For this Monday evening, that's MONEYLINE. Thanks for being with us. I'm Lou Dobbs. Good night from New York
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