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Lou Dobbs Moneyline
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Aired December 20, 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 MONEYLINE for Thursday, December 20th. Here now, Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening, everyone.
Argentina tonight is a nation in crisis. The government is on the verge of collapse; so is its economy. The president is resigning and will address the nation within the hour. We will be carrying that live here. And earlier today, the economic minister of Argentina resigned his post. Local television reports in Buenos Aires say the entire cabinet has offered to resign. This is, of course, a political story but fundamentally economic.
Argentina has suffered through two days of rioting, weeks of economic decline after four years of recession. Food prices are skyrocketing. Back withdrawals have been limited by the government. And tonight, Argentina does not have offers of help from either the International Monetary Fund nor from the United States. A senior Treasury official tells CNN, quote, "We are not going to sweep in and take their debt away," end quote. We will have extensive coverage of this developing story tonight, including a live report from Buenos Aires. We'll tell you what this crisis means for both the economy and markets of the United States and around the world.
Now turning to the war in Afghanistan, the Pentagon faces a difficult decision tonight in the war against terrorism. The Pentagon is deciding whether or not to send hundreds of U.S. Marines searching cave to cave for Osama bin Laden and his fighters in the mountains of Tora Bora.
Small numbers of U.S. forces along with anti-Taliban soldiers are already on the ground involved at this stage in a limited mission. But a greater U.S. force could help speed the process as well as help uncover caves blocked by U.S. bombs. Military sources tell CNN that as many as 500 Marines could be ready to go as soon as this weekend should the Pentagon decide to follow that course.
Meanwhile, 70 British Marines are already on the ground in Afghanistan arriving today on a very different mission, one of peacekeeping. The British Marines landed at Bagram air base. They'll be part of a much larger multi-national force deployed to keep the peace in the capital of Kabul. About 1,500 troops are expected to be in Kabul by New Year's and will likely remain there for at least three months.
The Pentagon is trying to learn more about al Qaeda and Taliban activities by interrogating prisoners. Three additional prisoners were flown to the U.S. Pelelieu where they will be questioned. The Pentagon says the detainees came from Mazar-e-Sharif where a prisoner revolt resulted in the death of CIA operative, Michael Spann. Now there are a total of 23 prisoners in U.S. custody, including 15 being held at a detention center at Kandahar airports. CIA, FBI agents among those helping to question them.
Pakistani troops say they've now recaptured most of the prisoners who took over a bus that crashed near Pakistan's border with Afghanistan yesterday. One al Qaeda prisoner was shot dead. Today, another 12 were captured. Pakistani officials say several prisoners remain at large tonight. They are surrounded and have little food and ammunition.
This week, Pakistan has captured hundreds of al Qaeda and Taliban fighters trying to cross its border.
Defense Secretary Donald Rumsfeld has cautioned against declaring victory in Afghanistan too soon. Donald Rumsfeld says a lot of dirty, dangerous work lies ahead. For more now on the U.S. military strategy to wipe out the remaining pockets of al Qaeda and Taliban fighters, I'm joined by CNN military analyst, General David Grange.
General, good to have you with us.
Good evening, Lou.
DOBBS: These developments with the Pakistanis arresting the al Qaeda suggests that there must be a larger number certainly remaining in Afghanistan and roaming, if you will, at will. Is that the way you see it?
RETIRED GENERAL DAVID GRANGE, CNN MILITARY ANALYST: I believe so. You know, they had it seems like an attachment left in contact. In other words, a rear guard operation around the Tora Bora area fighting the Eastern Alliance anti-Taliban forces. And the rest of them, of course, tried to break out from this encirclement and exfiltrate into Pakistan or further south in Afghanistan itself. And so we're picking up, I believe, with the Pakistani army the remnants that went through probably well known routes across the mountain ranges, and then they're picking up some others that are hiding out in these pockets. And now it is December. Unless they have some kind of local support from villagers, this is probably a tough thing for them to sustain themselves in this winter.
DOBBS: You and I have been discussing over the past week or so the need for more U.S. forces on the ground in Afghanistan. You have been recommending and suggesting that they would be added. The Pentagon now talking about the prospect of 500 more military being added. Is that sufficient in your view?
GRANGE: You know, the exact numbers are hard to determine, Lou, but it just appears that the anti-Taliban really don't have a lot of oomph to continue the pursuit. And it seems that more allied forces -- American, British and that -- need to be involved in trying to mop up the rest of these forces before they exfiltrate deeper, let's say, into Pakistan or get into Pakistan, get deep into the country and disappear. And that's going to take probably some American troops -- Marine or Army or whatever it may take.
DOBBS: And the Pentagon deciding tonight -- apparently will decide tonight but certainly deliberating tonight on whether to move ahead with a more intensive search of the cave complexes adding more Marines to that search, presumably, more special forces as well. What do you think the appropriate decision is here?
GRANGE: Well, you know, the special forces elements there are small in number. They give you a lot of benefit for just a few soldiers involved, but they're stretched pretty thin. And I think you're going to need Marines or they're going to need 10th Mountain Division soldiers -- both would be appropriate -- to work a lot of those routes, natural lines of drift, they call it, through the terrain that they can interdict these people and mop up. Plus, searching these caves and removing any that may be sealed from rubble and that is going to take some time. Then you have the mind booby trap issues so you can't rush it. And it takes some time. And we -- I'm sure that the international community wants to get as much as evidence as they can as well as find any bodies that may be buried, identify who they may be, if they're leaders of al Qaeda, et cetera. So I would think they need to get those Marines or soldiers in there as soon as possible.
DOBBS: General, as you know, the provisional government takes over Saturday on the 22nd. Already with the arrival of the first contingent of British Marines who are there as part of the international peacekeeping force, we have seen considerable dispute between the Afghans and at least the British view of their role. The Afghans already saying if only a third of those ultimately 3,000 members of the peacekeeping force will be there for security, the British who are leading that effort say they're all there for security and assistance. What do you make of this?
GRANGE: Yeah, this is -- like we talked the other night, this is going to be a very difficult mission. And I say that because of the perception of Afghan people, these tribal units looking at this as an occupation force or Westerners trying to force their will onto the future of Afghanistan. So it's a very delicate multi-national security force. And what is going to be the parameters of their security? What can they really enforce? And the Brits are very good at this mission as is the United States of America. And it's just going to take constant coordination with not just a government, but a multitude of Afghan tribal leaders in different areas throughout Afghanistan to make this thing work as well as an information campaign. And that's a constant campaign to get the word out that this is truly in support of the wishes of the Afghan government. And it's just a tough one. It's going to take constant, face-to-face coordination.
DOBBS: General, thanks very much. General David Grange.
GRANGE: Thank you, Lou.
DOBBS: For a third straight day, the mountains of Tora Bora have been relatively quiet. U.S. warplanes are patrolling the skies above Tora Bora, but so far, they've been doing more watching than waging war.
On the ground, U.S. special forces are continuing, as we said, to come those caves and cave complexes where the al Qaeda and Taliban have been hiding out. For more on that, we're joined now by Nic Robertson in Jalalabad -- Nic.
NIC ROBERTSON, CNN CORRESPONDENT: Well, Lou, in the last few nights, we have heard helicopters flying low over the Tora Bora mountains appearing to come in, drop off somebody, something, and then take off again, an indication of the activity of the U.S. special forces perhaps that has been picked up in the last few nights.
Certainly, a few U.S. special forces personnel have been seen on the mountains by journalists. However, for the most part, they are out of the areas we're able to travel to. The local Eastern Alliance commandos have been told to keep journalists away from the special forces, and often, special forces working up much higher in the mountains. What they are doing is going cave to cave to cave. And indeed, two days ago when we were going up to one cave area, as we were going up, we passed some special forces who were coming back down the mountainside from that cave. That cave full of munitions.
In that area as well, another cave that local Eastern Alliance fighters thought had been -- a tunnel they thought had been covered over by rubble after bombing that they were going to try and open up. So it does appear as if the special forces have a very long job on their hands. They're going higher into the mountains, perhaps above the snow line. Some areas will also demand a lot of special equipment as well just to get into those areas. So it does appear as if what we're looking at now is the beginning of a very, very long task in the Tora Bora mountains -- Lou.
DOBBS: Nic, thank you very much. Nic Robertson reporting tonight from Jalalabad.
Well, starting new claims tonight that Iraq is pressing on with its program to build weapons of mass destruction, principally, biological and nuclear weapons. This new charge comes from an Iraqi defector who says he worked in at least 20 secret weapons sites, one of which he claims is located underneath the largest hospital in Baghdad.
This report from the "New York Times" comes as no surprise to Richard Butler. He led the U.N.'s inspection effort in Iraq before Saddam Hussein threw them out. And clear evidence that in the war against terrorism, Iraq may well be the next target. Richard Butler joins us now.
Richard, good to have you here.
RICHARD BUTLER, COUNCIL ON FOREIGN RELATIONS: Good to see you, Lou. Actually, we broke that story yesterday morning on CNN, but the "New York Times" has written it out in detail and it's authentic.
DOBBS: This doesn't come as a surprise to you, but in point of fact, what will the international community do with it should it be, in point of fact, interpreted as valid?
BUTLER: Well, certainly. As I said, the report is authentic. I've seen many such reports from my time in dealing with Iraq, you know, the place names, the weapons at issue, the concealment tactics. It's all there. What should we do about it? There are two ways to do it, Lou. One is to go back to the Security Council and take this new evidence there and insist that the international community make one more shot at saying to Iraq, "You have inspectors back there. Let us go under that hospital. Let us go into the basement of that hospital and see or else."
The other way, of course, is what we hear is being discussed in Washington. That is that we forget about that and just simply go and take direct action.
DOBBS: It's pretty clear, if we've learned nothing over the course of 11 years, that is that Saddam Hussein is not going to invite anyone to come in and inspect his nation for chemical and weapons of mass destruction. So at this point, what do you think the appropriate course of is? Let me change the question. Rather than appropriate, likely course.
BUTLER: Well, I think the likely course is that the United States will continue to build up its forces in the area, will speak with coalition partners about the need to get Saddam Hussein out of Iraq, out of their life. There are reports that the third army is being built up in Qatar and Kuwait and that is being...
DOBBS: Which is being confirmed reports?
BUTLER: Absolutely. But I think it is true that we're moving in that direction. And that would be, you know, another way to go.
DOBBS: Another way to go. Can you think of a way in which indeed these reports are valid that the United Nations can be moved to take action itself?
BUTLER: Well, I'll go back to what I said a moment ago, Lou. Iraq is an outlaw in the sense that it's facing resolutions of the Security Council right now that say it should be divested of its weapons of mass destruction and it must be inspected. Now those resolutions are international law. It's refusing to obey them. The Security Council could take one more decision and say, "Look, you know, this is real, this is serious. You do this now or else." The or else would be a coalition as it was in the Gulf War, to go in and enforce the law.
DOBBS: The coalition was led by the United States not by the United Nations.
BUTLER: That's right. But it was under the U.N. flag. DOBBS: Of course, it was. But you said the United Nations could make this decision. Do you think that the United Nations, as an important international body, has the stomach to make that kind of effectively an ultimatum?
BUTLER: If the Russians join with us, yes. You see, the point is, Lou, for the last three years, the Russians have not agreed with us about making Saddam obey the law. We're now in a new situation after September 11th where the Russians are with us. If the Russians join with us on this one, we could give Saddam one last U.N.-based ultimatum. Now you could rightly say, yeah, as you did a moment ago. He will reject it. Well, if he does, that in a sense would make it easier for us to take direct action or we could decide not to go through that step, because there's enough law on the books now, and just go immediately to direct action.
DOBBS: I think most people now, most reasonable people would say this is no longer really a question of law. It's pretty clear what that is. It's now a question of law enforcement, and there hasn't been the appetite, the stomach or the will, if you will, on the part of the international community to confront it. And with this clear and present threat again, with these charges being validated, what is to be done?
BUTLER: Well, you know very well, Lou, that there's a vigorous debate taking place in Washington right now about whether the U.S. should take direct action. I expect that this latest defector report, which is valid, will simply help bring that debate to a conclusion.
Will the United States have to do it alone? I'm not sure. Turkey is a key country, and last week, it said, "We wouldn't mind if you went ahead." For the previous nine months or 12 months, it was expressing reservations. There are really interesting reports that some senior Arab leaders have started to say to us, "You know, you think you'll have a problem with the Arab world if you go ahead and seek to remove Saddam." It's not quite like that. They've been saying to us that they know that it would be better if he were to go.
What I see, Lou, is a situation emerging where the case is clear. This latest report just adds fuel to it. The U.S. is thinking hard about it. Some of those who would have had a problem with us taking action are now saying, "Well, we have less of a problem now." So I see a situation developing where, in fact, there may be action against Iraq.
DOBBS: And how soon do you think it could come?
BUTLER: February, March, you know, early in the year. Not for a while yet. But we've got to get through the Afghan period, then we do something about al Qaeda.
DOBBS: That's an interesting thing, because you and a number of others whose opinions I respect in this keep talking about the Afghan phase or this phase. This is an extraordinary super power, this country. And in combination with the coalition partners here, it's sort of strange to me, at least, that we talk in terms of sequence rather than in terms of an overall effort as if this country and this coalition is capable of only one front at a time. And that strikes me as, frankly, bizarre.
BUTLER: I think you've overstated that, with all respect.
DOBBS: You can be disrespectful as well as disagree.
BUTLER: No, no, no, no. I mean, yes, the United States is a super power, but if you're going to be successful in any operation, you have to plan it. You have to put people in place. You have to ask yourself the question: Where do we begin? What are the subsequent steps and how do we get out? I mean...
DOBBS: I'm talking about the issue of executing the strategy that you do devise. It seems this country has fought the Cold War. It's fought World War II, on an extraordinary number of fronts quite successfully.
BUTLER: Indeed. But what we've learned since September 11th is that this great super power does best if it's accompanied by others. We also know that you can't do things overnight. You have to put troops in place. You have to know where you're going, what you're going to do and we will get out. You know, I mean...
DOBBS: I guess what I'm saying to you, Richard, is it's curious to me that there can't be a broader range of (UNINTELLIGIBLE).
BUTLER: Well, how many fronts do you need to fight a war? How many fronts do you want to fight a war.
DOBBS: I don't want to fight any fronts necessarily, but in every case where I find terrorism or those who would oppose democracy, I'd like to see them engaged as quickly and effectively as possible.
BUTLER: Of course.
DOBBS: And with that, I get the last word. And Richard, you come back tomorrow night.
BUTLER: OK.
DOBBS: And I'll give you the last word, but we're out of time.
BUTLER: Good to be with you again. It's a pinstripe night.
DOBBS: It is, at least in this part of New York.
BUTLER: OK.
DOBBS: Still ahead here, we'll bring you the latest on the crisis in Argentina. It is a political crisis as well as economic crisis tonight. The president has reportedly resigned this afternoon in writing, about to resign to his nation.
The White House targets more groups believed to be funneling money to the al Qaeda and other terrorist groups. And the House has passed an economic stimulus package. But despite an 11th hour push, the chances the president will have a bill to sign by the end of the year appear tonight to be slim to none. Stay with us.
(COMMERCIAL BREAK)
DOBBS: The White House today took another step in the financial war against terrorism marking the hundredth day since the September 11th terrorist attacks. President Bush, along with Treasury secretary Paul O'Neill and Secretary of State Colin Powell targeted more groups linked to the al Qaeda terrorist network.
Major Garrett joins us now from the White House and has the story -- Major.
MAJOR GARRETT, CNN WHITE HOUSE CORRESPONDENT: Good evening, Lou. Two very important steps by the Bush White House, because they address two underlying problems that the Bush administration knows it's going to confront as the campaign against global terrorism continues.
Number one, any information about the weapons of mass destruction that might fall into the hands of al Qaeda. Well, what happened today? The president blocked the assets of an organization that operates under the initials UTN out of Pakistan. Why? Well, because the administration charges that is essentially a front charity that beguiles people by telling them it provides hunger relief to Afghans when, in fact, the Bush administration contends it has provided valuable information about biological, chemical and nuclear weapons to Osama bin Laden and al Qaeda. And for that reason, the Bush administration blocked all assets and urged other coalition partners to do the same.
Secondly, what's the other problem the Bush administration knows it's going to have to deal with? India and Pakistan, the potential of a shooting war between those two nuclear-armed powers. Well, today, the Bush administration blocked the assets of an organization that operates under the initials LET, which the president said is a terrorist organization that operates out of Pakistan to undermine the government of India and Pakistan. The president underscored that LET is without state sponsorship. He did not allege that it was anyway aligned with the Pakistani government, wasn't trying to undermine both India and Pakistan.
And interestingly, Lou, this puts the United States basically in the war on terrorism at a place where LET does not pose an immediate threat to the United States, opposes one to two coalition partners -- India and Pakistan. And as a result, the United States is intervening again, expanding the definitions of a credible target in the war on terrorism. Overall, as the president marked this 100th day since the atrocities of 9-11, he said, many accomplishments have been carried out, many things have gone well for the coalition and the United States, but much work needs to be done.
(BEGIN VIDEO CLIP)
GEORGE WALKER BUSH, PRESIDENT OF THE UNITED STATES: I'm optimistic about the future of our struggle against terror. I know we've accomplished a lot so far, and we've got a lot more to do.
Over the past 100 days, we and our British allies and others in the coalition have destroyed at least 11 terrorist training camps inside Afghanistan. Terrorist factories have produced thousands of trained operatives. We've also destroyed 39 Taliban command-and- control sites. Senior al Qaeda and Taliban officials have been captured or killed.
(END VIDEO CLIP)
GARRETT: Lou, the president also mentioned that in that financial war against terrorism, some $66 million in assets have been blocked. Also, the president said the coalition is engaged in an unprecedented humanitarian effort in Afghanistan. He also pointed out that a stabilization force will be arriving soon backed by international coalition to provide security for Afghanistan as its new government takes shape -- Lou.
DOBBS: Garrett, thank you very much. We appreciate that report.
And turning to President Bush on legislative matters, he tonight is putting last-minute pressure on Senate Democrats to pass an economic stimulus package before the Christmas break. The House approved its own version of the package earlier this morning, but the Senate will not debate that measure until the new year.
Kate Snow, of course, has been reporting on these developments on Capitol Hill throughout the day, joins us now with the story -- Kate.
KATE SNOW, CNN CONGRESSIONAL CORRESPONDENT: Lou, the pressure from the president was really yesterday and sort of fizzled out as of today, because the Republicans realize that they simply were not going to have the votes to get this through the Senate. The House and the Senate now leaving town. The House is already gone; the Senate is about to leave. And both sides of the Capitol today and both sides of the aisle, it was a sense of frustration that they can't get this done. Republicans talked about trying to put it up in the Senate today. They tried to push it onto the floor, but they simply didn't have the vote to even bring this up for a vote on the floor. They don't have the 60 senators they need to do that procedurally.
One Republican voice after the next blamed one person for the failure to get something done here: Senate Majority Leader Tom Daschle.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I don't know where Senator Daschle's going to spend his holidays, but I'd hate to be in South Dakota and face the unemployed workers and those people that don't have health insurance because they're unemployed, and try to enjoy Christmas when you're saying no to the people who are unemployed.
(END VIDEO CLIP)
SNOW: Senator Daschle and Democrats say that they only said no to this bill because they felt it was imperfect. They say broadly they have philosophical differences. They don't want to spend too much money and deplete the Social Security surplus in order to provide tax breaks, they say, to corporations. The Democrats tried this afternoon to push through their own measure, just simply the unemployment benefits for unemployed workers. That, too, failed.
(BEGIN VIDEO CLIP)
SEN. TED KENNEDY (D), MASSACHUSETTS: If there's any lesson from the tragedy of September 11th, it is this: We are one American community, and the backbone of that community consists of average Americans. Today, eight million Americans are hurting because they have lost their jobs, and it is a disgrace that Congress refuses to help provide the help they need and deserve.
(END VIDEO CLIP)
SNOW: And Democratic leader Daschle says he'll try to take this up again, Lou, when they come back from the holiday recess. But a lot of voices here on Capitol Hill saying that prospect is rather unlikely. Republicans saying that they couldn't make a deal now, this week with the deadline looming with them all leaving for the holidays, they probably won't ever get a deal -- Lou.
DOBBS: Did you find it interesting that Senator Kennedy said that -- referred to Congress not being able to do this rather than the Senate?
SNOW: Well, it's true, but you hear that from both sides, Lou. I mean, actually, the word "frustration" doesn't even do it justice today. Every voice up here -- Republican, Democrat, Senate, House -- all saying, "Why couldn't the Congress get this done?" Nobody wanted to take the blame, but all saying, "We should have been able to do this." That's the interesting part.
DOBBS: The last I looked, the House did get it done.
SNOW: Well, that depends on what your definition of done is. Republicans will say they didn't get it done twice, and Democrats will argue that point, Lou.
DOBBS: With that, I'm going to say I'm going to leave you parsing on Capitol Hill tonight where it's an art form. But I thank you very much. Kate Snow from Capitol Hill.
Coming up next, U.S. Marines await the final go ahead deciding whether or not to start searching caves in Tora Bora. We'll have the latest for you on the war against terrorism. The federal government trying to put a price tag on the pain and suffering of September 11th. Ahead, the details of the Federal Victims Compensation Fund. We'll also have a live report for you from Buenos Aires where that nation tonight, an economic crisis and its government collapsing.
(COMMERCIAL BREAK)
DOBBS: Tonight in the war against terror, the first peacekeeping forces have arrived in Afghanistan. Seventy British Marines will help lead a larger multinational force. That force will provide security in Kabul and the surrounding area initially. And for the first time since September 11th, Liberty Island, home to the Statue of Liberty, reopened to the public today. Visitors required to pass through metal detectors before boarding ferries going to the island. The statue itself remains closed at least until next year. And we'll have much more for you on the war against terrorism in just moments.
The Justice Department today announced how it plans to distribute the Federal Victims Compensation money. The Department of Justice says that fund is trying to avoid disparity in awards and to move the money to victims and their families as quickly as possible. At the same time, it's protecting the airlines from massive lawsuits. Peter Viles has the report.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: ... making $10,000 a year will get $356,000.
PETER VILES, CNN CORRESPONDENT (voice-over): A conversation no one ever wanted to have: How much is a human life worth?
KENNETH FEINBERG, 9/11 VICTIMS COMPENSATION FUND: Whatever we do is of small comfort, and I realize that. We do, however, aim to provide some appropriate compensation, some limited measure of comfort.
VILES: The government's offer works like this: It is open only to survivors of those killed or injured on September 11. Enter the program, you give up your right to sue the airlines. The government estimates your family's economic and emotional losses, then subtracts from that whatever life insurance or pension money you will receive, then promises a check within 120 days.
How big will the checks be depends in large part on life insurance and pensions. Two examples: The victim was 25 and single, making $10,000 a year, the government will pay roughly $300,000, less any insurance or pension; 41, married, with two children, earning $80,000, $1.5 million, less any insurance and pension.
ABBIE HAWKINS, OHRENSTEIN & BROWN: What the government is giving here is a guaranteed amount of money. It may not be as much money as somebody would get in court, but it avoids the chance of losing in court.
VILES: Reaction to the rules was mixed. New York state attorney general Elliot Spitzer criticized them as too restrictive. Patrick Cartier lost his brother on September 11.
PATRICK CARTER, BROTHER DIED SEPT 11: My misgivings is the timing of it. Why are they doing it now when there are people still suffering? Why are they doing it now that there is still an open grave in ground zero and at fresh kill?
VILES: But the American Bar Association praised Feinberg for his fairness. ROB CLIFFORD, AMERICAN BAR ASSOCIATION: When all is said and done, this fund will benefit the vast majority of the victims of September 11.
(END VIDEOTAPE)
VILES: A reminder today that victims' families do have another option, they can sue. That is exactly what a widow in New Hampshire did today, filing suit against United Airlines, arguing the airline failed to protect its passengers on September 11, UAL, the parent of United, had no comment on that lawsuit -- Lou.
DOBBS: As you point out, this fund is designed to stop the lawsuits? VILES: Right.
DOBBS: It is probably with that motivation it is probably difficult, as we also saw in your report for the families and the victims of that day to deal with it right now?
VILES: Yes. They are trying to strike a balance. They have to get the money in a hurry because that's the advantage over a lawsuit where you don't know what you get or when you get it.
DOBBS: It will be interesting to see how this proceeds?
VILES: Yes. It will be interesting to watch.
DOBBS: Peter, thank you very much. Peter Viles.
Just ahead here we will be going to Argentina for the very latest in that country's economic and political crisis. A big deal in the cable television business tonight. We will hear from the deal makers on a mission to deliver more service and to more cable homes. It's all about consolidation, convergence and that story is coming right up.
(COMMERCIAL BREAK)
DOBBS: The largest cable business in the country will be a company called AT&T-Comcast. Comcast buying AT&T broadband. Its cable assets paying $72 billion in stock and debt. Steve Young has the report.
(BEGIN VIDEOTAPE)
STEVE YOUNG, CNN CORRESPONDENT (voice-over): For a family that started in the belt business, it was a triumph to win AT&T broadband, hoping to weld it to Comcast and make the world's biggest cable company.
BRIAN ROBERTS, PRESIDENT, COMCAST: This is a dream come true for my father and myself.
YOUNG: FOR AT&T CEO, who paid dearly for Mediaone and TCI Cable so he could sell bundles of AT&T services, it was a reversal of strategy. But he didn't see it that way.
MICHAEL ARMSTRONG, CHAIRMAN AND CEO, AT&T: What today does is actually accelerate that strategy.
YOUNG: Armstrong will be chairman of the new company if the deal passes antitrust review. Roberts will be CEO. At $4,500 per AT&T customer, Roberts paid too much for about 21 million subscribers, said one analyst who downgraded Comcast stock.
FREDERICK MORAN, JERFFERIES & COMPANY: Comcast is paying fairly full price for properties that have badly under performed in the last few years. UNIDENTIFIED MALE: I actually disagree with my esteemed colleague about downgrading the stock. I actually think what's created here is something we've never seen before that has got tremendous upside.
YOUNG: Microsoft chipped in $5 billion to Comcast trying to block a bid AOL-TIME WARNER. That's likely to ratchet up the longstanding Microsoft AOL-TIME WARNER rivalry.
(END VIDEOTAPE)
Both companies, as well as AT&T Comcast and others want to have the biggest broadband pipeline to sell you everything from music to computer software -- Lou.
DOBBS: Steve, thank you very much.
Earlier I talked with Michael Armstrong and Brian Roberts about their deal. First I asked Armstrong why he chose Comcast over other bidders.
(BEGIN VIDEOTAPE)
(voice-over): Congratulation to you both on the deal. I know it's a tough deal. You had three parties in front of you. Why did you choose Comcast?
MICHAEL ARMSTRONG, CHARMAND & CEO, AT&T: We had three judgments that we made on the situation. We had multiple bidders: Value, what we were going to create in value, and what we were going to receive in value. The second thing, is that where we were strategically lined, is that we were bringing incredible assets together that were going to have reach, they were going to have a competitive nature to them, and we had to be sure they were in the same platform strategically, and then finally a governance that would represent all the shareholders fairly and Brian and his team worked very hard.
And in the end I told him after it was all over, hours before, I concluded they indeed had the best combination of value and strategy alignment, and governance and I recommended them to our board.
DOBBS: Brian, let me ask you, raised the bid considerably from what you were talking about this summer. Why did you move so high so fast? BRIAN ROBERTS, PRESIDENT, COMCAST: It's -- I don't know, it's about 15 percent from where we originally made the proposals, around 4,100, 4,000 a customer, it went to about 4,500. And so I don't think that was totally unexpected. But what has happened since July is the margins went from 16 percent in AT&T broadband to 25 percent. That's a huge improvement.
DOBBS: Pretty good job.
ROBERTS: They brought in Bill Schleir (ph) and Mike has recruited some other executives who we know well from the cable industry. And we just think a year from now, when this deal closes, this company will be much better than what we had first thought, and when we went in and did due diligence, we got convinced that this strategy was a once in a lifetime opportunity to create a company with a national presence. We just decided that this is something worth trying to make happen.
DOBBS: That power, that significance is something you were both, in your various -- in your two separate strategies -- were working toward with your two respective companies, when you and I talked this summer, Brian, you said you thought would take you somewhere around two years to move this to an acreda (ph) deal at that price. You're saying here that Mike's folks have been doing a pretty good jobs for these margins in cable, does that mean you can do it in a year?
ROBERTS: Well, we did pay a little bit more, as you said. But I think -- we think it's in the first year or two, there's no question. But as you know, Lou, we've been in Comcast for 29 years as a public company. And our principle focus is long-term value. So we've had 24 percent return on the stock for 29 years compounded, that's double the S&P 500. So you're going to measure things in five and ten year periods, in long term, to have this footprint in 41 states, to have three different business, voice, video, and data -- with broadband. This really accelerates broadband throughout the country, and we're -- we think that's going to create value to shareholders, here, in the short term and in the long term.
DOBBS: Mike just mentioned governance, you're the CEO, you're the chairman. You're used to pulling the trigger, yourself, Mike, how will this governance structure going to work?
ARMSTRONG: Lou, it occurred to me that we're all getting older together. And next year in, '03 I'll be 65. And I always intend and promised my family that I would retire. And I'm going to step down as being a CEO, I've been that for a while. We've worked hard to bring the AT&T company, to the four AT&T companies that by this year end, '02 that we'll present. And so when Brian and I were talking about the leadership and the governance, I wanted him to be the CEO. I think he'll be a terrific CEO, and I will do everything I can as a chairman to compliment him.
DOBBS: And you as chairman, you as CEO, Brian, you have a new partner through your acquisition of the AT&T interest in TWE, AOL-Time Warner. What are you going to do with that? A lot of speculation in the Street that AOL-Time Warner is prepared to buy out that interest...
ROBERTS: Well, we --
DOBBS: ... and support your deal.
ROBERTS: We haven't been able to talk to them because the process, they were one of the parties at interest, but we've had a wonderful relationship with Time Warner that goes back a lot of years, really since the inception of Home Box Office, their cable company. At the same time we've both have said AT&T and Comcast, that's it not a strategic asset for us to remain a minority investor in Time Warner, we have to find the suitable and right way to monitize that, but that is something that's consistent with what we said before, that -- we've taken it as part of the deal, but we would like to now find the best way to exit.
DOBBS: The next phase, if you will. Microsoft, turned out to be a pretty good supporter of the deal. What role is going forward in your strategy will Microsoft have, in addition to their interest in your convertible debt?
ARMSTRONG: There's really no business dealings that would suggest, oh Microsoft will have an advantage. What they've done is made a $5 billion investment previously in AT&T that was only earning 5 percent. It was a bond. And this company, one of the ways we could improve our bid was to convert that to equities. So we could say to AT&T, we'll take $5 billion extra debt and immediately convert that to Comcast or ATT-Comcast stock. And then they can do as -- last time they invested in our stock, they quadrupled their money. But it's really not a significant part of the transaction, except that it allowed AT&T to deliver and allow Comcast not to be too levered.
DOBBS: The quadrupling the equity interest -- that in the investment, does that sound pretty good to you in this deal, Mike?
ARMSTRONG: This sounds terrific. And I hope that together we can do some of that stuff going forward.
DOBBS: Well, congratulation to you both Michael Armstrong, Brian Roberts, on the deal. Thanks for being with us.
(END VIDEOTAPE)
And we will continue here in just moments. Argentina, that nation of waiting a televised address by its president. President de la Rua expected to announce shortly his resignation to the nation, as the economic collapse of Argentina continues. And a complete collapse of the government appears to be at hand. We'll have a live report for you from Buenos Aires, next.
As well as, of course, a full wrap up of the day on Wall Street. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Facing the worse economic crisis in Argentina's history, President Fernando de la Rua (ph) stepped down today after four days of nationwide rioting.
Lucia Newman in Buenos Aires with the very latest for us -- lucia.
LUCIA NEWMAN, CNN CORRESPONDENT: Good evening, Lou. Well, indeed, this is a dark hour for Argentina. Behind me you could see the castle, Rosada, this is Argentina's presidential palace, a palace which is now empty, it no longer has a president sitting inside.
The president tended his resignation to the national assembly, he said he was making this personal sacrifice in the hopes that it would bring peace and harmony finally to his country and save its institutions, he said. The president shortly after left the palace in a helicopter to the presidential residence, and we assume that's where he is right now.
At this moment there are a group of demonstrators clapping in front of the presidential palace, you can see them right behind me. These were the same people that just last night were here en masse, demanding the resignation of the president and his economic minister, Domingo Cavallo. They got what they wanted. But in other parts of the city, just a few blocks from here, there is still violence and commotion, looting going on. A McDonald's has been set on fire, just near the obelisk -- one of this country's most famous symbols. And there are people still looting and battling with riot police, who are throwing tear gas, they're horseback, they are armed with water cannon. But so far they've been unable to establish order here, Lou.
DOBBS: Lucia, the economic minister, Domingo Cavallo also resigning, the cabinet -- we've had reports, is I understand it that the entire cabinet is set to resign. What can you tell us about that?
NEWMAN: Well, what's expected to happen next, is that the national assembly has to formally accept the president's resignation. And then the president of the Senate, Mr. Puerta (ph), will take over as the interim leader, the national assembly will then have to ratify him or someone else to be an interim president and call for new elections within 90 to 100 days time. That obviously, leaves a power vacuum in this country, Lou, a power vacuum which will have to be filled very, very quickly if the economic demise of this nation is to be stopped -- Lou.
DOBBS: Lucia, thank you very much. Lucia Newman from Buenos Aires.
Well, financial markets all around the world have been bracing for sometime for the default of Argentina's $130 billion dollars of debt.
Nevertheless, as this crisis as intensified, world markets are questioning whether that preparation is sufficient. Even the most informed analysts are shocked by the social turmoil and violence that this crisis has generated. Kitty Pilgrim reports.
(BEGIN VIDEOTAPE) KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Argentina in chaos. It's been coming for a long time. Last month, fearing a full- blown run on the banks, the country put limits of cash withdrawals of more than $1,000 a month. Not just the citizens of Argentina, but also the international and financial community have lost confidence in the country's ability to come to a solution.
The United States today offering verbal support for financial reform, but cold words of comfort without cold hard cash.
PAUL O'NEILL, TREASURY SECRETARY: That initiative has to come from the leadership of the country. It's not something -- not something to be imposed from the outside.
PILGRIM: Argentina owes about half of its GDP in debt. Not outrageous by Latin American standards, but Argentina must come up with a reasonable budget. That's shy the International Monetary Fund so far refused to release a $1.3 billion loan payment.
JIM BARRINFAU, ALLIANCE CAPITAL: I don't think people really expected to see people out in the streets. That kind of disorder, I think has really taken people back. It can still surprise people by how messy it gets. That is likely to spill over into other markets.
PILGRIM: There was a partial sell-off in Latin American markets today. Brazil fell heavily, Chile and Mexico basically flat, Argentina actually rose in anticipation of an end to the crisis.
European markets stayed jittery. European banks, mostly in Spain, have made adequate provisions for eventual default. A handful of U.S. banks, including Citigroup and Fleet, have limited exposure but are well insulated.
KEITH STOCK, CAP GEMINI EARNST & YOUNG: For the most part they're pretty comfortable. Any exposure that they had, they saw this coming, unlike the '98 Asia crisis that we had. That came much more suddenly without the -- without the sort of advance notice in terms of what was going to happen.
(END VIDEOTAPE)
PILGRIM: That's probably the saving grace of the financial situation. The one thing markets really hate are unexpected events. This was, to some extent, expected. It is only the social situation that has the potential to become a lot more serious -- Lou.
DOBBS: Kitty, thank you very much. Kitty Pilgrim.
Stocks sharply lower on Wall Street today. The Blue-Chips ended a four day winning streak. The Dow down 85 points. The Nasdaq down another 64 points, the S&P 500 off 9 on the day, almost 10 points.
Christine Romans is at the New York Stock Exchange, and Greg Clarkin at the Nasdaq marketsite -- Christine.
CHRISTINE ROMANS, CNN CORRESPONDENT: Lou, a whiff of that Argentina worry here in the market today, but really all eyes on the cable deal. Look at the cable stocks. AT&T the only Dow component to move up at least a dollar. It was also very actively traded here today. Other cable stocks as well that were moving, Cox actually ending higher, but AOL-TIME WARNER, the parent of this network, actually slipping on the session. It had been up a little bit before, but ending up lower on the day, down about 25 cents.
Meanwhile, take a look at the Big Board losers here on Wall Street. J.P. Morgan said its exposure to Enron was more than the market first thought. The brokerage earnings tumbling in the quarter, so all of those stocks losing today. Jabil Circuit, it is an electronics manufacturer, it was down $3.50 after a gloomy forecast for its recovery.
And Mirant, this is a power producer. It was downgraded to junk status. Its credit was by Moodys, and so that one getting some negative commentary from the brokerage community today, Lou, so remember, tomorrow we get GDP, also it is triple-witching, so some folks are staying ahead of the Christmas time exodus. It could get interesting tomorrow -- Lou.
DOBBS: Absolutely. Christine, thank you.
The Nasdaq dropping three percent with sharp selling in every sector. Greg Clarkin tells us all about it -- Greg.
GREG CLARKIN, CNN CORRESPONDENT: Lou, second straight day of profit warnings from tech companies, second straight day of sharp selling for the Nasdaq. Let's begin with Juniper Networks, the networking giant came out and said profits would about half of what Wall Street was expecting. That stock was off better than $4. That's almost an 18 percent loss. It took out the entire networking group. Look at Cisco, Ciena, Extreme Networks, all losing on the day. Other movers included shares of Microsoft. About mid-afternoon or so, word that Windows XP has a security flaw in it.
Microsoft shares, which are already lower, sold off to a greater degree. That stock losing 2.73. Intel, the chips were weak today. Intel was down better than a buck. We had Plexus shares losing a great deal of money after the company said the profits would be well below expectations. That is an electronics part manufacturer.
Finally, we want to leave you on an up-note, Palm up 14 cents today. The company lost six cents a share for the quarter. They were expected to lose 7. Lou, back to you.
DOBBS: If you are going to Leave us on an up-note you could do better than that. Greg. Thanks.
CLARKIN: It was tough today.
DOBBS: Greg Clarkin, thanks.
"WOLF BLITZER REPORTS" begins in just a few minutes. Let's go to Wolf to find out what he has for us -- Wolf.
(PREVIEW, "WOLF BLITZER REPORTS")
DOBBS: Thank you. Coming up next here, we'll take a look at part of what could be moving the markets tomorrow. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Tomorrow we will have the final look at third quarter gross domestic product. That report (UNINTELLIGIBLE) expecting to show little revision if any at all, showing the economy contracted at a rate of 1.1 percent in the third quarter.
Also tomorrow, a revised look at the University of Michigan Consumer Sentiment Report for December. And personal income and spending for November will also be released.
And updating our breaking story tonight, Argentina, the president of Argentina Fernando de la Rua, expected to address the nation this evening, that's been expected for the past hour. He has turned in his resignation to the cabinet, the national assembly will accept that resignation within the next 24 hours we're told.
Also, the economic minister, the respected economic minister, Domingo Cavallo, turning his resignation. And rioting continues in the streets there, police trying to maintain order under a presidential state of siege.
That's the latest for this hour. That's MONEYLINE for this Thursday evening. We thank you for being with us. I'm Lou Dobbs. Good night from New York City. "WOLF BLITZER REPORTS" begins right now.
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