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Lou Dobbs Moneyline
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Aired December 11, 2001 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: This is LOU DOBBS MONEYLINE for Tuesday, December 11. Here now, Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening everyone.
Today, America and the world remembered the attacks of September 11 and those who were killed. Tonight, one man has been charged in connection with those murders. And in Washington, a promise from President Bush.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Our cause is necessary. Our cause is just. And no matter how long it takes, we will defeat the enemies of freedom.
(APPLAUSE)
(END VIDEO CLIP)
DOBBS: As early as tomorrow, that mission could well be completed. We'll have a live report from Afghanistan where al Qaeda fighters are being driven from their hideouts. We'll also be joined for his analysis by General David Grange.
In Washington, Zacarias Moussaoui has been charged with conspiracy to kill thousands of Americans. We'll be hearing from security expert Kelly McCann on what this means for homeland security and the war against terrorism.
Also in Washington today, Congress may be moving closer to an agreement on an economic stimulus package. We'll have a live report for you from Washington.
And as expected, the Federal Reserve today cut interest rates by a quarter point. But a profit warning from Merck killed the Wall Street rate-cut rally. Only the Nasdaq ended the day higher.
Tonight, in the war against terrorism, three months after the attack against the United States that killed more than 3,000 people, the first criminal indictment handed down in connection with those attacks. Zacarias Moussaoui, a French citizen, is accused of conspiring to kill thousands of Americans. Attorney General John Ashcroft says Moussaoui engaged in the same preparation for murder as the 19 hijackers who commandeered then crashed the four jetliners.
Meanwhile, anti-Taliban forces telling al Qaeda fighters in the Tora Bora region to lay down their weapons by tonight at 10:30 P.M. Eastern time, or die. CNN correspondent Brent Sadler reports an al Qaeda base in Tora Bora now lies in ruins as a result of heavy U.S. bombing and that the bodies of al Qaeda fighters have been scattered across the base. The Pentagon says a 15,000 pound bomb, like the one shown here, appears to have hit its mark on Sunday.
(BEGIN VIDEO CLIP)
GENERAL RICHARD MYERS, CHAIRMAN, JOINT CHIEFS OF STAFF: The desired effect was to kill al Qaeda.
QUESTION: What sort of results are you aware? What did your people on the ground see?
MYERS: Dead al Qaeda.
(END VIDEO CLIP)
DOBBS: In southern Afghanistan, U.S. Marines beefed up their presence outside Kandahar. They're sending attack vehicles to seal escape routes for Taliban and al Qaeda fighters now on the run.
As we reported, a French Moroccan named Zacarias Moussaoui has been charged with conspiracy to kill Americans on September 11. This is the first criminal indictment handed down since those attacks. Susan Candiotti joins us from Washington with the story -- Susan.
SUSAN CANDIOTTI, CNN CORRESPONDENT: Good evening, Lou.
In the words of the attorney general, al Qaeda will now meet the justice it abhors and the judgment it fears.
(BEGIN VIDEO CLIP)
JOHN ASHCROFT, ATTORNEY GENERAL: This morning, a grand jury in the eastern district of Virginia charged Zacarias Moussaoui, a native of France, of Moroccan ancestry, with conspiring with Osama bin Laden and al Qaeda to murder thousands of innocent people in New York, Virginia, and Pennsylvania on September the 11th.
(END VIDEO CLIP)
CANDIOTTI: Zacarias Moussaoui faces six counts, four of them carry a possible death penalty. The conspiracy charges include aircraft piracy, use of a weapon of mass destruction and the murder of U.S. employees. Osama bin Laden, a top lieutenant and the 19 identified as the September 11 hijackers are also named as unindicted co-conspirators in the 30-page indictment.
In that same category, Ramzi Binal-Shibh, who tried and failed four times to get U.S. visas. The indictment charges him with funneling money to Moussaoui and other terrorists.
And these new details: When Moussaoui came to the U.S. and attended two flight schools, he acknowledged $35,000 in cash on his U.S. Customs declaration, another example how well the suspects appear to know U.S. law and tried, Lou, to avoid raising eyebrows. And remember, Moussaoui was already in custody on immigration charges in mid August. The FBI says it interrogated him at the time, but Moussaoui didn't cooperate. He makes his first court appearance January 2 -- Lou.
DOBBS: And that court, will Moussaoui be tried in a regular court or is he to face one the military tribunals?
CANDIOTTI: At this time, he face these charges in a U.S. federal court in Virginia, although he certainly would qualify as a non-U.S. citizen for one of the military tribunals.
However, according to senior White House correspondent John King, senior administration officials say that because of all the debate and controversy surrounding military tribunals, it was decided that this first major case would take place in a federal courtroom. However, administration officials are leaving open the possibility that at least some of the evidence might be presented before a military tribunal in this very case -- Lou.
DOBBS: OK, Susan, thank you. Susan Candiotti reporting from Washington.
In Afghanistan, al Qaeda fighters being driven from their cave hideouts at Tora Bora. Christiane Amanpour is in Afghanistan. Christiane, are the al Qaeda fighters now surrendering?
CHRISTIANE AMANPOUR, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, apparently not quite yet. What we're hearing from Jalalabad area and the Tora Bora area is that the anti-Taliban forces known as the Eastern Alliance there, who have been launching an assault on the Tora Bora base camps there, the caves in those mountains. They apparently had a face-to-face meeting with what they describe as representatives of al Qaeda.
And they, we're told, issued an ultimatum that at 8:00 a.m. our time, in just about two hours from now, they must lay down their weapons or face a continued U.S. air assault. Now, the U.S. Pentagon is saying they have no confirmation of that surrender terms and that they will continue their operations in that area. But, of course, there was a successful drive back, if you like, of some of the al Qaeda people in those caves, and journalists and others got to see some of those base camps and caves. There were, what we've been told, has ammunition strewn around. There was weights indicating a weight room for people there, an assault training course, we're told, as well as an old Soviet tank. So that's the situation there as that campaign is pressed.
Here in the Kandahar area where, you know, U.S. Marines have set up a base at Camp Rhino somewhat south of the Kandahar area, there has been some video released by the Pentagon shot at night on a nightscope video. This was on the 6th of December. It apparently, we're told, shows a road block manned by the U.S. Marines. They had asked one car to stop. The car didn't stop. It's tires were punctured as it breached that road block. It stopped. People leapt out, apparently started to shoot. And we're told the Marines fired back. Seven people were killed. This, again, apparently on December the 6th, according to the Pentagon, who released that video.
Here in Kandahar, the situation getting more stable by the day. The authorities in control of this city have now made up eight new police stations. They've now set out their security and operations around the city and it is getting more stable. The leader of the new Afghan interim government, Hamid Karzai, sets out later today, our time, for Kabul, where he will hold discussions about the future of the interim government for Afghanistan with officials there in the capital -- Lou.
DOBBS: OK. Christiane, thank you very much. Christiane Amanpour reporting from Kandahar.
The anti-Taliban forces in Afghanistan continue to surprise almost everyone with the speed of their military successes. General David Grange, CNN military analyst and regular here on MONEYLINE, joins us now. General, good to have you with us.
RETIRED GENERAL DAVID GRANGE, CNN MILITARY ANALYST: Good evening.
DOBBS: The situation -- let's turn first to Tora Bora and this surrender. Give us your assessment of the situation there.
GRANGE: Well, I don't think they'll surrender. I may be totally wrong on this, but I think they're going to -- they have no future. So I think they are going to fight it out. I don't think that surrender is imminent. I think it is going to take a little bit longer. And remember that Tora Bora is one complex. There's other complexes in the area, one called the wolf's hole. And we talked about that before where the Soviets had some very tough fighting against the Mujahedeen in the past. So I think it's a little bit off.
DOBBS: Moving the Marines in around Kandahar to stop the exit, if you will, the flight of Taliban and al Qaeda from Kandahar, moved into position apparently with some energy and resolve yesterday. But coming it seems to the uninitiated somewhat late in the stage of the war to stop them. What would be your assessment of that?
GRANGE: You mean moving the Marines closer to Kandahar?
DOBBS: Right. And as attempting, specifically, to stop the flight of people who have been exiting there for the better part of a week?
GRANGE: There may have been a reason for the negotiations between the Southern Alliance, Pashtun Southern Alliance, and the Taliban themselves in Kandahar. There may have been some deals worked. And, you know, identifying friend and foe is a tough thing with the kind of garb that these warriors wear, these bands. And it may have been something to that. But then it takes a while to build up a force, to have a capability of a combined arms team, air and ground, to do this type of interdiction mission properly by destroying the enemy and then keeping your people alive. So it takes a while to build that up.
DOBBS: And that's obviously been the role, not only of the Marines, but other special operations force, specifically the special forces people there, who we now learn have also been negotiating with Hamid Karzai, a unique role for special operations people.
GRANGE: Yes, that's a wonderful story. We had a special forces team from our United States Army, was inserted at night by parachute or helicopter, after about three weeks of intense planning. And these are soldiers who knew some of the languages, well, they knew Farci and Arabic. They were inserted the in the area to meet this leader, the future prime minister of Afghanistan, to assess the situation, help him organize a force that was being recruited -- being recruited -- for a future fight, resupplying it at night, by parachute, by helicopter and other means, and then moving with this force for almost two months, fighting Taliban forces throughout Afghanistan. Twelve guys, and quite well.
Now they had a tragic last mission with the stray bomb. But -- this is what -- the power that 12 soldiers trained this way could provide the United States of America is exceptional.
DOBBS: It's extraordinary to me to watch what's been accomplished obviously with tremendous firepower from a number of branches of the service, but to see what's been accomplished with a very small group of people, whether Marines or soldiers, operating both as the Marines around Kandahar, but also in the special forces contingent, we're talking about no more than 16-1700 people across a country the size of Texas. These are remarkable results.
GRANGE: They are remarkable results, but we have to be very careful about future missions. Future mission, let's say, for instance if we have to go into Iraq, or a mission that is similar to that. These are indigenous forces, they are bands of different force that negotiated the changeover of sides. We didn't take on armies with the international coalition; Americans, Brits, et cetera.
So, if we had to do a fight like that, it would have taken a substantial number of soldiers Marines, air men, sailors to do that fight. So, this is a little different situation. We have to be very careful that we don't pattern all fights in the future off this one.
DOBBS: General, I hope you don't take this the wrong way, but generals are often accused of having, when they fight, fighting the last war. It's pretty obvious that you are not about to be guilty of that.
GRANGE: That's right.
DOBBS: And it appears that this Pentagon is learning on the fly, and learning very well, this is not the operation that I think any of us anticipated, perhaps you did, but we civilians anticipated at the beginning of this engagement?
GRANGE: I was quite surprised myself. But I think the idea of taking indigenous groups like this, used in unconventional warfare means against someone who uses unconventional warfare in their backyard, in their pea patch, really pays off big time. And then use the power when you need to use it. You know, just gauge it depending on what your foe is.
We did that, I think, the United States, very cleverly, tied in with our coalition.
DOBBS: And very successfully.
GRANGE: Right.
DOBBS: General, thanks,
GRANGE: Thank you.
DOBBS: As always.
Coming up next here, we'll tell you what protection is being proposed should your checks and your bill payments been delayed in the mail by anthrax attacks. And while the fed today made history with its 11th interest rate cut this year, Congress is not making history, continuing to struggle with an economic stimulus package three months after September 11. We will tell you what progress has been made.
We'll also hear from international security expert on what today's indictment of Zacarias Moussoui means to homeland security in the war on terrorism.
ANNOUNCER: After the break, Lou talks with Kelly McCann, former Marine special operations, and CEO of Crucible Security.
(COMMERCIAL BREAK)
DOBBS: CNN has learned that President Bush is expected to inform Russia that the United States plans to withdraw from the Anti- Ballistic Missile Treaty. Top advisers to former Russian president Boris Yeltsin say Secretary of State Colin Powell informed the Russians of that decision during meetings in Moscow earlier this week.
The White House will not confirm nor deny the report. But during a speech today at the Citadel Military Academy, the president told cadets that the ABM treaty was written in a different era for a different enemy. Today, the Justice Department handed down the first criminal indictment in connection with the September 11 attacks against America. What will this mean for homeland security, the war against terrorism?
Kelly McCann joins me now. He is the CEO of Crucible, an international security company. He is also a former U.S. Marine special operations officer.
Kelly, good to have you here.
J. KELLY MCCANN, CEO, CRUCIBLE SECURITY: Thanks, Lou.
DOBBS: This indictment today, it's importance in your judgment?
MCCANN: It's important because it shows a coordination, an ongoing coordination, between nations to share intelligence outside strategic information that they need to keep to themselves. But there is a hands across the table, if you will, to share this. Now, the big question is, is it too little too late? Or are we moving in the right direction?
I think Tom Ridge and the guys that are empowered right now are working to coordinate that.
DOBBS: And what would be your best judgment? Is it happening soon enough and will it happen in sufficient and profound dimension to really make a difference?
MCCANN: Well, nothing that happens in a crisis is the system that you are going to keep for a long period of time. These are kind of patchwork things that we have done to make a difference, but yes, it's making a difference. It's not enough yet. The indications from our company with companies like Citigroup, and some of our clients, Raytheon, is that people generally have woken up and they are trying to make inroads into new security thinking. And I think that's what the United States has to do as well.
DOBBS: Companies spending more money?
MCCANN: Not right now. Fourth quarter, I mean, MONEYLINE, the show, you know, fourth quarter is tight. What they've done is, they've earmarked money for the first quarter, and I think those CEOs are going to task us with things that they normally wouldn't.
DOBBS: What are your greatest concerns in terms of corporate security given this war on terrorism, and obviously the likely threat of terrorism? MCCANN: It's the new mold of what is a security director and what are security people. We're long past the PC of hiring someone who might be well be intended, can't even make a 911 call in clear enough English to responded to.
(LAUGHTER)
I mean, let's face it. Another thing is, is that the standard mold of the security director as someone who could make sure that CEOs aren't inconvenienced or that investigations are passed seamlessly to local law enforcement. That's all broken the mold now. It is not within their common body of knowledge to be aware of pre-incident indicators of target value, pre-incident indicators of imminent attack and that's where it has to go. It's a new mold.
DOBBS: To broaden it a bit in terms of homeland security, you're obviously assessing what's being done in the communication between and among nations, their intelligence and law enforcement services and agencies, but within this country, has communication amongst agencies, federal, state and local law enforcement and, if you will, the FBI, has it risen to a level that gives you comfort?
MCCANN: Yes. A long time ago, several years ago, they started the answer system, which is the FBI's way of notifying corporations of threatening material in a high state of readiness. We have expanded on that and it's unfortunate to see Tom Ridge take so much heat, because remember, he's just the security -- he's the security manager.
He is the guy that is going to manage security expertise. It doesn't mean that he's the expert. He's going to manage those things. I think he's doing it, so we're in for some good things to happen.
DOBBS: Tom Ridge, the director of homeland security, taking a lot of heat, as we now, three months to the day since the September 11 attacks, we don't know much about whoever is responsible for the anthrax attacks, we have one indictment in the conspiracy of September 11, we have a number of strong suspicions and obviously are pursuing the al Qaeda, Osama bin Laden. Would you have expected greater progress both in the anthrax investigation and the prosecution here?
MCCANN: Here's the key. A lot of times people don't know what they don't know. And you have to assess the value of not intervening and not arresting but continued surveillance to see where people are going, who they're talking to, how they are communicating.
So, unless you have the whole picture in front of you, which the American people don't, they want an answer right now, we can't be sure of anything other than there have been no other attacks.
DOBBS: And that -- if there is any knowledge to have, that is priceless.
MCCANN: Absolutely.
DOBBS: Have you been surprised by the patience of the American people? Because I can recall within 30 days, people talking about the media. Let's be real clear here, we are not talking about the average citizen, if you will, on Main Street, but the national media was calling for General Tommy Franks' head because we hadn't successfully concluded the war against the Taliban in Afghanistan. Tom Ridge has been under incredible criticism because he hadn't resolved all of these investigations.
MCCANN: Right.
DOBBS: It appears the American people are being far more patient than many savants in the national media would have given them credit for being.
MCCANN: People responding well to results. General Franks, the fabulous four, we have Condoleezza Rice, I mean, these people have really crystallized an effort, and the results are tangible, you could touch them. So, I think when you show results like that people are more patient and they realize something is going on. I don't necessarily have to know the whole picture. Same thing with this videotape, about releasing that. You can't understand it, it's in a foreign language. If the government, this government, tells me that it proves that bin Laden is guilty of having -- that's good enough for me and I think for a lot of people.
DOBBS: I think for most people. Thank you for being here. Kelly McCann.
Even if the al Qaeda are driven from the region around Tora Bora, Defense Secretary Donald Rumsfeld says America's war is far from over, and that the focus remains the same: to hunt down, to capture, and to kill the enemy.
Jamie McIntyre is at the Pentagon with the story -- Jamie.
JAMIE MCINTYRE, CNN CORRESPONDENT: Lou, the U.S. has now gotten a closer look at the affects of that 15,000 pound bomb that was dropped on Sunday near a concentration of forces near Tora Bora. And the U.S. forces on the ground report that it had a devastating effect over an area of several hundred meters.
The chairman of the joint chiefs, General Richard Myers today said that the evidence was that, in his words, "a lot of dead al Qaeda in that area." And the U.S. is reporting tonight some more battlefield gains with two separate opposition groups pushing back al Qaeda forces in two different in some fierce fighting.
Meanwhile, the Pentagon is now concerned about senior Taliban and al Qaeda leaders, including Osama bin Laden possibly slipping out of Afghanistan. The U.S. has deployed AC-130 gunships along the border with Afghanistan, who, along with the aid of predator unmanned spy vehicles, are trying to keep an eye on the border. Pakistan has moved troops up next to the border as well. The U.S. also has reports tonight that there are some Taliban fighters in Kandahar who are trying to bribe their way to freedom.
Defense Secretary Rumsfeld said this is going to be a tough job. He said it is a porous border, it's not possible, he said, to put a perfect cork in it -- Lou.
DOBBS: OK, Jamie McIntyre thank you very much. Jamie McIntyre, military affairs correspondent from the Pentagon.
Just ahead here, the latest from the front lines in Afghanistan. Anti-Taliban forces are making large gains in Tora Bora. Al Qaeda fighters under siege tonight and facing an ultimatum.
And the check or checks in the mail. But what if mail delivery is disrupted? We'll tell you about a solution tonight protecting you from late payments.
Enron's meltdown: High profile, but unfortunately hardly unique. Tonignt we take a look at why so many companies, and so many people are going bust. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Three months ago today, 19 terrorists hijacked four passenger jetliners, and crashed them into the Pentagon, a field in Pennsylvania and the World Trade Center Towers killing more than three thousand people.
Today the Justice Department filed its first criminal charges against a person linked to the attacks; 33-year-old Zacarias Moussaoui, a French citizen accused of conspiring to kill thousands of Americans. That indictment also accused Moussaoui of undergoing the same training and receiving the same funding as the 19 hijackers.
Meanwhile, in the Tora Bora region of Afghanistan, anti-Taliban forces tell al Qaeda fighters to lay down their weapons by 10:30 Eastern time tonight or face relentless attacks from both the air and the ground.
In a speech today at the South Carolina's Citadel Military Academy, President Bush said the terrorists underestimated America's resolve.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: And no cave is deep enough to escape the patient justice of the United States of America.
(END VIDEO CLIP)
DOBBS: In the Afghan capital of Kabul today, a fire raged out of control on one of the city's largest outdoor markets. Efforts to put it out were slowed by the fact that Kabul has no fire hydrants and only a few fire trucks. There were no reports of any injuries. The cause of the blaze is not yet known.
Senator Tom Daschle, Democrat of South Dakota sounded hopeful this morning. He said a proposal suggested by the House of Representatives to modify its economic stimulus package could lead to an agreement.
The White House even sent Treasury Secretary Paul O'Neill to help broker a deal. But as of now, there is still no package. Kelly Wallace is at the White House.
Kelly, has there been any progress in these talks?
KELLY WALLACE, CNN CORRESPONDENT: Well, Lou, there does appear to be some progress. In fact, President Bush just wrapped up a meeting a short time ago with moderate Republican and Democratic Senators. The president, we are told, was pleased by the meeting. In the words of his spokesman, Ari Fleischer, the president already hears the sound of the log jam breaking.
Now, earlier today, the White House floated a compromise proposal. Mr. Bush moving a bit when it comes to unemployment benefits and tax relief and health care coverage for laid off workers. His views now very much in sync with these moderate senators and following their meeting, Senate Republican Olympia Snowe saying she very much believes that, this framework that these senators have put forward could provide the basis for compromise.
(BEGIN VIDEO CLIP)
SEN. OLYMPIA SNOWE (R), MAINE: This is the basis for a compromise. The president will have discussions tomorrow with leadership to see where they can break this log jam to get this process so that we can enact a stimulus package. We are not that far apart. So we don't really understand the reluctance and hesitation to negotiate the differences so that we can move forward.
(END VIDEO CLIP)
WALLACE: And in this proposal any laid off workers since March would allow, gets an extension of unemployment benefits by 13 weeks, also tax credits to help laid off workers obtain health care coverage. And also when it comes to accelerating tax cuts, those would only be accelerated for those in the 25 percent tax bracket.
Still some things to be worked out when it comes to business tax breaks. And Lou, as for whether or not this, again, is going to be the basis for compromise, there's a breakfast meeting between President Bush and the House and Republican Senate leaders tomorrow morning. We will see if any deal comes out of that. Lou, back to you.
DOBBS: Sounds hopeful at least, Kelly. Thank you. Kelly Wallace from the White House,
Well, the Federal Reserve today injected its own stimulus into this economy. For the eleventh time this year the Federal Reserve cut interest rates trying to lift the economy out of recession. Today's interest rate cuts is one of the most aggressive series of rate cuts in the Fed's history. Taking inflation into account, in fact, the country's key interest rate tonight stands below zero.
Kathleen Hays is here with a closer look at the Fed's move, and will tell us whether there's more to come. But we can count on one thing, this is the last one this year, right?
KATHLEEN HAYS, CNN CORRESPONDENT: Yes, I think we can safely say that, Lou. Yes, indeed. Well, the Fed cut its key short-term rate, the Federal Funds rate. Think of it as a very short-term bank lending rate. It now stands at 1.75 percent. That's the lowest level since 1961.
At the beginning of the year, that rate was up at 6.5 percent, 4.75 percentage points of rate cuts. That is a lot of Fed easing. The question now, will it be enough? Is there more to come?
One thing we can look at, the Fed also cut the discount rate. This is an emergency bank lending rate seldom used, but important. It now stands at 1.25 percent. Conversely, had they not cut that rate, it might be a signal they were getting to stop these rate cutting moves. Very important, maybe even important, the Fed's policy statement. In this statement, they noted that the economy is still soft.
And look at this, to be sure, weakness in demand, consumer demand, shows signs of abating, but those signs are preliminary and tentative. A former vice chairman of the Federal Reserve says the Fed does leave -- left the door open at least a crack to more interest rate cuts.
(BEGIN VIDEO CLIP)
ALAN RUNDER, FMR. VICE CHAIRMAN, FEDERAL RESERVE: Well, obviously, the statement left the door open for further rate cuts. And we should certainly think they're possibilities. The optimists are declaring it over already, which I think, and obviously the Fed thinks is way premature. I hope they're right, but I think there's a good chance that they're wrong. And the Fed obviously is predicating policy on the basis that they are wrong.
(END VIDEO CLIP)
HAYS: So what is the Fed going to be watching? Mr. Blinder, in fact, said that they are going to be very focused on consumer data. So what kind of consumer data? What kind of economic data are they going be watching?
Let's start with retail sales, chain store sales every week, the monthly chain stores, and then the big retail sales from the government every month. Auto sales, in particular, they have been so strong with this zero rate incentive financing, but were they robbing sales from the future? If they hold up, that may be a very positive sign.
New claims for unemployment benefits, they have to keep falling or go to lower levels, at least. Industrial production, that's another one that has to really start turning around, in order for people to say the recovery is really here and the Fed is done, Lou.
DOBBS: OK, quite a year in terms of interest rate cuts.
HAYS: Wow.
DOBBS: A record for that as well in a calendar year, any 12 month period, I believe.
HAYS: It sure beats '90-'91.
DOBBS: 40-year low, all right, Kathleen Hays, thank you, as always.
My next guest says the Fed may have gone too far already. And certainly with today's cut, stocks already pricing in a strong recovery. One of Wall Street's very economists, Ed Yardeni joins us.
Ed, good to have you here.
ED YARDENI, DEUTSCHE BANK SECURITIES: Thank you, Lou.
DOBBS: You think the Fed went too far?
YARDENI: Well, you know, we've got to leave a little margin here for crisis. I mean, if we have any sort of problems, we don't want the Fed to run out of basis points, because now we only have 175 points between the Fed Funds rate and zero.
I think it also sends a message almost of a policy failure. I think once you got it under 2 percent, it almost starts to be reminiscent of Japan. And I think it's a wrong message to send.
DOBBS: Well, it's interesting. As you look at the bar graph of those 11 cuts those year...
YARDENI: Right.
DOBBS: That decline, the first thought that comes to my mind is this is a reaction to a policy that was wrong in the first place, too aggressive an increase in rates. Is there anything to that?
YARDENI: Well, I don't want to blame the Fed for everything. We had one heck of a party in the late 1990's. And the hangover's just awful. And we have to realize that there's a price to pay for so many excesses of the recent past.
DOBBS: Right, I see no reason why the party can't go on forever, do you?
YARDENI: Well, you know, I don't know of any party that goes on forever.
[laughter]
DOBBS: Well, the fact is that this interest rate cut brings us into the negative area in terms of real...
YARDENI: Absolutely.
DOBBS: ... in real interest rates with -- against inflation.
YARDENI: Yes.
DOBBS: What is your judgment as to when this stimulus, monetary stimulus will kick in, and we'll see some significant impact?
YARDENI: I think the variable that's key here is now time. I mean, the Fed just has to leave rates and let time works its magic. The bond market's already tightened actually. We've seen bond yields go up and mortgage market go up. So in some ways, the Fed's easing has been counterproductive. They're trying to make credit. And if the bond market says maybe that's going too far looking at the future.
DOBBS: And you look at that 10-year note, rising above 5 percent.
YARDENI: That's a pretty good signal that the Fed probably has done enough and should just leave things be. That might let the bond yield come down, mortgage rates come down.
DOBBS: Economic stimulus?
YARDENI: Well, so far, the proposal seems to be a lot of nickels and dimes that might add up to $1.00. I'd like to have a good solid dollar, something nice, clean, simple, aimed at the consumer. I like the idea of just accelerating tax cuts, but it's politically charged and it's probably not going to happen. I'd rather that they do nothing, quite honestly, let time work its magic. I think by the middle of next year, we'll be looking at a good recovery.
DOBBS: The recovery will come. It's the nature of economic cycles or cycles as you had suggested.
YARDENI: Sure.
DOBBS: The party can't go on forever and neither can the removal of that punch bowl forever. What do you expect to happen in terms of these markets and GDP growth?
YARDENI: Well, you know, the stock market has had a tremendous recovery from the September 21 low. And panic selling often does make a major cyclical low. And I think we've already anticipated one heck of a recovery next year. So I wouldn't be surprised if we're kind of stuck at 10,000 through at least the first quarter of next year.
DOBBS: OK, and in terms of employment, how bad is it?
YARDENI: Well, employment, I think, is going to get worse. The unemployment rate's probably going to jump over 6 percent, maybe as high as 6.5 percent. So the recession isn't quiet over yet, certainly not for people who are going to be affected by this kind of unemployment situation.
DOBBS: OK, but encouraging that all parties in Washington are talking about extending those unemployment benefits.
YARDENI: Yes, I mean, Congress does have a role to play in giving a cushion to those who are being harmed the most.
DOBBS: OK, Ed Yardeni, as always, good to have you here.
YARDENI: Thank you, Lou.
DOBBS: Still ahead, the steps the postal service and credit card companies are taking to help with your bills. And from Enron's $63 billion bankruptcy, to individuals drowning in debt, we'll tell you why the list of bankruptcies, both corporate and personal, is growing.
And the markets rally after the Fed rate cut, but it is a very short-lived rally. That story and more still ahead.
(COMMERCIAL BREAK)
DOBBS: On Wall Street today, the markets rallied immediately following the Fed's decision to cut rates, only to falter at the closing bell. The Dow down 33 points, helped along by some disappointment from Merck. The Nasdaq adding 9 points, almost 10 points. The S&P slipping just over 3 points.
Christine Romans is at the New York Stock Exchange, Greg Clarkin is at the Nasdaq marketsite. Let's begin with the winner, Greg?
GREG CLARKIN, CNN CORRESPONDENT: All right, Lou. I tell you, this was one of those days where, you know, the markets waited around for that Fed decision. They finally get, they begin to rise a little bit, and then Merck knocks the wind right out of the sails. Obviously, an NYSE stock, but the impact on the Nasdaq was felt with the biotechnology stocks, some of the big names there, the big cap biotech stocks turned around. They finished lower on the day. And that drove the Nasdaq down from its session highs.
It does end with a 9 point gain though. Big group on the upside, though, the wireless stocks. Nokia comes out and says that their holiday sales are strong. They may top earnings estimates for the quarter. Their competitor Ericsson rose nicely. RF Microdevices, they make chips that go into those phones, as does Triquent. Both of those stocks rose nicely, as did Powerwave, which makes mobile phone equipment.
As for the big caps, we saw most of them finishing higher, with the exception of Oracle. That was down 31 cents. They will report their earnings on Thursday. It had a heck of a week last week. Dell, Intel, and Sun Microsystems gained modest amounts today, as did the overall composite, up 9 points, right above 2000, 2001.
Lou, back to you.
DOBBS: Greg, thank you. Great work today.
We're going to turn to Christine Romans, who well, frankly her market disappointed today. Tell us all about it, Christine.
CHRISTINE ROMANS: Well, let me tell you the good news first. Procter & Gamble, a Dow component, after the bell coming out and raising its prior guidance for this current quarter. Good sales in health and beauty care and it's comfortable with guidance for next year. The stock up more than a point in after-hours. So that might help tomorrow.
Meantime today, well it was a profit warning from another Dow component that really hurt things. Greg mentioned it, Merck. This one down $6.00. If it hadn't been for Merck, Lou, the Dow would have been higher on the day. But it came out with a surprise warning. It called 2002 a transition year with virtually no profit growth for this year. Lowered the top range of its forecast for all of 2001. It's patent expirations, Lou, most notably Prilosec (ph) is going to crimp growth next year. Meanwhile, other big board movers include Kroger. The supermarket chain the most active stock here today. It's cutting 1500 jobs, warning on the fourth quarter and '02. GM was hammered by a convertible bond offering from Fiat. Fiat issuing $2.2 billion in debt that can be exchanged for GM shares after three years. Nokia gives positive guidance on Q4. That helped that one and that whole group.
Mortons, the high end steakhouse chain, down sharply. Might even lose money in the fourth quarter and reiterates it is interested in finding a buyer for itself. Viacom rallying a bit, after some big disappointment yesterday. Remember, it was asbestos worries about litigation potential there. Well, today, analysts and traders took a look at that UPN/CBS deal and said well, maybe that's going to help with cost savings next year. We're not too worried about asbestos litigation today.
Lou?
DOBBS: Or maybe not.
ROMANS: Or maybe not.
DOBBS: Christine, you were right. Greg did mention Merck, but I mentioned it first even before Greg.
ROMANS: OK.
DOBBS: Thanks, Christine Romans at the New York Exchange.
The Fed today worried publicly that consumer demand may not continue to hold up. Some economists say consumer demand, in fact, is being stimulated by artificially low prices. Is it a case of stealing from the future?
Kitty Pilgrim takes a look.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Want a new car? With financing at zero percent, for many Americans, now was the time to buy. Auto sales jumped 2.9 percent in October, as customers were lured into showrooms by sweetheart deals. All across the malls of America, the hallmark of the season is the markdown, just to keep the consumer buying. The question is, if people are buying now rather than later, what happens later?
UNIDENTIFIED FEMALE: You know, we're effectively robbing for the future. You know, one of problems that we have is that in terms of demand rebounding, it can't rebound until it goes down. And businesses have just been unwilling to sort of back away from the marketplace and allow demand to go wherever it may. And they have been insisting upon buying -- essentially buying sales.
PILGRIM: Businesses cannot continue to sell goods at steeply discounted prices. But they may have to for a while longer. Personal income has dropped in recent months. With economic recovery not predicted until mid next year at the earliest, might the consumer finally have to stop consuming for a while?
But economists say by that time, the business climate may improve.
UNIDENTIFIED FEMALE: In its own perverse way, it's not the best way to do things, but the bottom line is when you drain inventories to such bare covered levels, you do a get a balance in production. And that's what you need to see a comeback in employment. And that ultimately is what determines consumer spending decisions going forward.
(END VIDEOTAPE)
PILGRIM: Now the good news is many economists say this breather may be all the economy needs to get back on track. The inventory overhang has been on the worry list for a long time. And if the shelves are bare after Christmas, then producing new goods will generate jobs.
Lou?
DOBBS: And then we'll have to get them sold all over again.
PILGRIM: That's the way it works.
DOBBS: Kitty, thanks a lot.
Well this year is turning out to be the year of the big bankruptcy, and it is also a record year for the number of personal bankruptcies.
(BEGIN VIDEOTAPE)
(voice-over): Enron, the biggest bankruptcy ever filed earlier this month $63 billion in assets. Pacific Gas and Electric filed back in April. And Panova Group in March. And in June, Reliance Group Holdings turning itself over to the government with $12 billion in assets.
This year will be a record for companies going bankrupt. 230 publicly traded companies filing Chapter 11 so far. Last year's total was 176. The situation no better for the consumer. More than 1.4 million people so far this have filed for bankruptcy, a record pace. Filings this year may well surpass the previous record set in 1998.
JAMES CHESSEN, CHIEF ECONOMIST, ABA: There's financial stress due to layoffs and the economic situation. We've also seen healthcare costs jump up considerably, up in double digit increases in healthcare costs. Any kind of shock is going to push people to a crisis perhaps, if they've already carried on too much debt, if they're having difficulty meeting their obligations already.
DOBBS: Critics of the bankruptcy laws are concerned it's simply too easy for individuals to file for bankruptcy and walk away from thousands of dollars in debt. The debate over tightening bankruptcy laws continues on Capitol Hill. And so does the slowdown in the economy and the rising number of layoffs.
(END VIDEOTAPE)
(on camera): Coming up next, after a 10-year decline, auto theft is on the rise again. We'll take a look at the cars thieves wanted most. And the steps, most powerful institutions are taking to protect your credit. Those stories, a lot more still ahead. Stay with us.
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DOBBS: NASA today approved a second space tourist to go into space and be aboard the international space station. 28-year-old Mark Shuttleworth, a native South African, who made his fortune on the Internet is hoping to be the second person to pay for a ride in space. Shuttleworth is undergoing training now in Russia. He's expected to blast off in a Soyuz space capsule in April next year. That would be almost exactly a year after the first space tourist, Dennis Tito, paid an estimated $20 million for his ride in space. NASA opposed that trip. And as far as we know, the name Shuttleworth played no part in his approval.
In an unusual show of cooperation today on Capitol Hill, Congress, the Postal Service and financial institutions agreeing to provide some credit relief to many consumers, if their mail service was disrupted by the anthrax scares.
Allan Dodds Frank reports.
(BEGIN VIDEOTAPE)
ALLAN DODDS FRANK, CNN CORRESPONDENT (voice-over): Especially in New Jersey and the Washington, D.C. area, hundreds of thousands of pieces of mail still await decontamination from anthrax. Contaminated bills, as well as checks from consumers for payments on mortgages, cars, and credit cards may never get through. Many banks already are working with the Postal Service to help consumers.
JOE BELEW, PRESIDENT, CONSUMER BANKERS ASSN.: We're proactively working with customers, waiving fees caused by terrorism and also promoting alternative payment mechanisms where they could.
UNIDENTIFIED MALE: The institutions, the credit card issuers have told us that what we have reduced to writing here as best practices are the fair thing to do. They are using that in their day- to-day dealings with customers whose mail was interrupted.
(END VIDEOTAPE)
FRANK: The bankers say they already have waived millions of dollars in late fees, but are still willing to try to help any customer retroactively. But the bankers say, it's up to the customers to call them for help.
Lou?
DOBBS: OK, Allan, thanks.
Well, crime on the streets is growing. For the first time in a decade, auto theft is on the rise. Today, the National Insurance Crime Bureau identified the most commonly stolen cars. The Toyota Camry tops the list. Thieves target certain vehicles, of course, because of their profit potential, not for the car itself, but its parts, which are stripped and sold on the black market.
Also, organized theft rings illegally export stolen cars. And rounding out the top five on the list of the most popular cars to steal, the Honda Accord, Oldsmobile Cutlass, Honda Civic and Jeep Cherokee.
The number of executions in this country declined last year. 13 fewer prisoners were put to death in 2000 than in 1999. While the number of executions shrinks, the length of time condemned prisoners are spend on death row is lengthening. The average span, from sentencing to death, is nearly 11.5 years. Texas leads the country in executions, putting to death almost as many prisoners as all the other states combined. 3,593 individuals remain on death row as of the end of 2000.
(PREVIEW "WOLF BLITZER REPORTS")
DOBBS: Wolf, thanks, looking forward to it.
And coming up next here, we'll take a look at your thoughts. Also, we'll take a look of some of tomorrow's events, particularly on Capitol Hill. Stay with us.
ANNOUNCER: Tomorrow on Lou Dobb's MONEYLINE, promoting patriotism. How Hollywood is helping the White House cover the world in stars in stripes and win the war against terrorism. Tomorrow on Lou Dobb's MONEYLINE.
(COMMERCIAL BREAK)
DOBBS: Now your thoughts. As economists put in their two cents on the state of the economy, viewer Herb Kretler writes in to suggest his own economic model. You've heard the unconventional tools, such as tracking sales of corrugated boxes. Herb writes in to suggest tracking garbage.
"If the amount of trash hauled goes up," he says, "the economy's expanding. If the amount of trash goes down, the economy is going down. What do you think?"
Well, the Environmental Protection Agency has long concluded the amount of garbage generated is tied to the health of the economy. But over the past 10 years, the amount of trash hauled has increased at a much slower rate. And the reason, we're recycling more, but it's still a very good idea.
Last night's story on the number of bankrupt companies with their names on sports stadiums prompted L. Critzer in Orlando, Florida to write to say, "Companies that have the audacity to rename stadiums after themselves should go bankrupt. It shows absolutely no respect to the games or to the fans."
There are, of course, exceptions to that. Wrigley Stadium comes to mind, for example, Wrigley Field. Still with sports and college football's bowl of championship series ahead of us, it's generated a lot of controversy and a lot of money. Morgan Myers in Sunnyvale, California writes in to say, "Lou, BCS stands for bowl confusion system." Well, it's not close to perfect. I better end it there.
Send it us your thoughts anytime, moneyline@cnn.com. Please include your name and address. Tomorrow the Senate Judiciary Committee holds a hearing on the Microsoft settlement. Harun Amin, special representative of the Northern Alliance will join me here tomorrow night to assess the Alliance's position as al Qaeda responds to the surrender ultimatum near Tora Bora.
Also tomorrow, a House hearing on the impact of Enron's bankruptcy on investors. Andersen's CEO Joe Barradino (ph), amongst those who will be testifying and joining us here on MONEYLINE. Please join us.
For tonight, that is MONEYLINE. I'm Lou Dobbs. And tonight, we leave you with a look at how America and the world remembered the September 11 attacks against the United States and the thousands who died three months ago today.
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