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Lou Dobbs Moneyline
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Aired December 28, 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 Friday, December 28th. Sitting in for Lou Dobbs, Jan Hopkins.
JAN HOPKINS, GUEST HOST: Good evening, everyone. The Taliban is out of power, al Qaeda terrorists are scattered, and Osama bin Laden is either dead or is hiding. But President Bush warns that the war in Afghanistan could continue for a long time and repeated his pledge that bin Laden will be caught.
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: I mean, this is a guy who three months ago, was in control of a country. Now he may be in control of a cave.
(END VIDEO CLIP)
HOPKINS: The president says politics will not play a role in the U.S.-led war in Afghanistan. He also said the mission will be over when General Tommy Franks says so. The president was briefed on the war at his ranch in Crawford, Texas today.
There could soon be a changing of the guard at the U.S.- controlled airport in Kandahar. Army -- American Army troops and supplies have begun arriving in newly opened runways. They'll oversee the arrival of humanitarian aid and possibly peacekeeping troops. The Marines stationed there could leave as early as mid-January.
Meanwhile, CNN crews in Tora Bora spotted American special forces heading in the direction of Jalalabad. The convoys were led by pickup trucks loaded with supplies and had all-terrain vehicles in tow.
An FBI agent says the man suspected of smuggling explosives inside his shoes could have blown a hole in the American Airlines fuselage. Twenty-eight-year-old Richard Reid was subdued by passengers after he allegedly tried to light his shoes in mid flight last Saturday. After today's hearing, a federal judge ordered Reid to remain in jail without bail. Reid is charged with intimidation of a flight crew. That carries a maximum of 20 years in prison.
Some signs of optimism today at a standoff between nuclear powers -- India and Pakistan. Pakistan's president says that he's willing to meet India's prime minister during an Asian summit in Nepal next week. Both countries are beefing up their respective forces along the Kashmir border. And yesterday, both imposed flight restrictions against each other.
Relations deteriorated earlier this month after militants stormed India's parliament killing 14 people. India blames Pakistan for not doing enough to clamp down on terrorists.
As reported earlier, U.S. special forces have been spotted moving away from Tora Bora, possibly heading towards Jalalabad. Nic Robertson is in Tora Bora tonight.
Nic, what can you tell us?
NIC ROBERTSON, CNN CORRESPONDENT: Well, Jan, difficult to say whether these special forces were leaving the area for good or relocating to another. But what we could see for sure was on the backs of the pickup trucks they had, and also loaded on the all- terrain vehicles, those four-wheel-type motorbikes, was a lot of equipment. It did appear as if they were picking up their camp at one location and moving it to another. They were on the road towards Jalalabad. They could have been headed back northwards toward that area or they could have headed north and then skirted back around the foot of the mountains and got into the mountains somewhere else.
Perhaps another interesting thing to note, through the whole of the day Friday, we'd heard and saw no U.S. aircraft flying over the Tora Bora area. This is unusual. In the past, we've always seen one or two aircraft or maybe even more flying over this area. And at night, we heard none of the helicopters that have become the usual signature of the U.S. special forces presence here at night. Normally, we've heard helicopters flying in here overnight in areas. We know where they've been staying. However, that didn't happen last night. So perhaps indeed they have pulled out of this area. However, we don't have good information as to where they've gone next.
We do know, however, that the Eastern Alliance commanders here are still guarding the hillside, so perhaps the U.S. special forces still plan to return -- Jan.
HOPKINS: Thanks, Nic Robertson, in Tora Bora.
President Bush reiterated today that the war against terrorism is far from over. Jonathan Aiken is at the Pentagon, and he has more -- Jonathan.
JONATHAN AIKEN, CNN CORRESPONDENT: Oh, indeed, Jan, it's far from over. It may take a different tact in the future, but definitely far from over. You can get a look at this different tactic. You take a look at what was going on in Kandahar airport today outside the city. Overnight, there were planes coming in, about 26 of them filled with personnel and supplies. All that material and people off loaded.
The basis of this is that this is to set the stage for Marines surrendering control of the airport to the U.S. Army. Elements of the 101st Airborne may be coming in as early as next month to assume control of the airport, and more importantly, help to assume control of the humanitarian effort to distribute humanitarian aid. They may also be in charge somewhat of the arrival and dispersal of international peacekeepers as they come in to Kandahar. This is more of a logistical item. The Army will maintain its defensive posture. It remains -- Kandahar airport, of course, remains in hostile territory.
The other item that took place today actually was down in Crawford, Texas. President Bush getting a briefing from General Tommy Franks, who is in charge of the U.S. forces in Afghanistan. He was just over there, talked to some people on the front lines. Said morale was high. And he also said that the U.S. will not be hurried into leaving the country before its objectives are met.
(BEGIN VIDEO CLIP)
GEN. TOMMY FRANKS, CMDR., U.S. CENTRAL COMMAND: It will take as long as it takes. Interesting to me the fact that these young people standing at Kandahar airport a few nights ago in the middle of the night watching the USO show showed me absolutely no desire to leave their mission at all. And so I think that it's best for all of us to recognize that we will not be hurried, we will not be pressed into doing something that does not represent our national objectives.
(END VIDEO CLIP)
AIKEN: I should pass on those national objectives remain the same: disrupt the al Qaeda and Taliban networks, make them no longer a threat to the United States, and also find ways to dispense justice both to Osama bin Laden and Mullah Mohammed Omar. The whereabouts of both men officially unknown.
One either item, Jan. There are more detainees at Kandahar, 25 more coming in today. So that brings to 62 the number of detainees, al Qaeda detainees, at Kandahar. Another eight on board the USS Pelelieu out in the Arabian Sea, including the American Taliban, John Walker. Total number of U.S. detainees in the area now at 70 -- Jan.
HOPKINS: Thanks, Jonathan Aiken at the Pentagon.
And President Bush vowed again today that the United States will hunt down Osama bin Laden no matter where he goes. The president is in Crawford, Texas tonight, and our Major Garrett is there with him -- Major.
MAJOR GARRETT, CNN CORRESPONDENT: Jan, the president said Osama bin Laden will be found eventually. He didn't really care whether it's dead or alive. And he said the main thing about Osama bin Laden is not where he is but what's become of him. The president made it clear that bin Laden ran a country, Afghanistan, and his al Qaeda network had free run of the country. He said that's not true anymore, and that's a key victory in the war on terrorism.
The president also said there's much work left to be done in Afghanistan, removing those final armed pockets of Taliban and al Qaeda resistance in the country; also, dealing with those detainees Jonathan Aiken just talked about. The president said they have to be interrogated, photographed, fingerprinted. All that's going to take a good, long while. And he said the world needs to understand that the United States and its coalition partners will stay in Afghanistan until the job is done.
(BEGIN VIDEO CLIP)
BUSH: This administration will not blink in the face of danger and will not tire when it comes to completing the missions that we said we would do. The world will learn that when the United States is harmed, we will follow through. The world will see that when we put a coalition together that says, "Join us," I mean it. And when I ask others to participate, I mean it. And in order to lead the coalition, we must show that we will complete the mission.
(END VIDEO CLIP)
GARRETT: The not-too-subtle message there, Jan, from the president is: To other nations who still harbor terrorists, look what's happening in Afghanistan. If you don't want the same fate to befall your country, get out of the terrorism business and get out of it quickly -- Jan.
HOPKINS: Thanks, Major Garrett, at Crawford, Texas.
And Afghanistan says that Osama bin Laden is in Pakistan. Pakistan says it can't rule out the possibility. Meanwhile, Pakistan and India are on the verge of war.
Joining us now is CNN analyst and Crucible Security CEO, Kelly McCann.
So, Kelly, the president is talking a lot about this isn't the end of the campaign. What's he really telling us?
KELLY MCCANN, CNN ANALYST: Well, I think what he's trying to state, Jan, is bring everyone back to the overall objective, which is the al Qaeda network and terrorism worldwide, basically taking them out of power, taking away the ability to hurt Americans domestically and abroad. It's a bigger objective than just bin Laden. He's kind of incidental at this point.
HOPKINS: And is he preparing for the campaign to move to other countries? We understand that he may be deciding about whether Iraq is the next target.
MCCANN: I think there's several indicators of that: Of course, the 10-person envoy mission that went to Somalia for an undisclosed reason. We've got advisers in the Philippines now ostensibly to work against the Abu Sayyaf with the Filipinos. And we just provided a conduit for the Yemenis to ask us to help them as they look for al Qaeda in their country. Those are indicators.
I also think that our government right now is trying to come up with definitive, evaluative criteria that will put Iraq at the very center of this thing. And they're not going to take that step very lightly, because there literally needs to be a smoking gun, I think. HOPKINS: What about the India-Pakistan situation? Is that something that we're likely to get pulled into?
MCCANN: Tough question. Yes and no. Obviously, Musharraf's responsibility is with his country, OK, and it would be foolish for us to think that he would fraction his attention to us because of, you know, the presumptive being that we are more important than them. So I think he has to kind of change his focus. However, he's probably assigned delegates as representatives to us so that they can continue to support us in our efforts to find bin Laden or whoever else may be in Pakistan and probably will seek some assistance as required in things that he wants to see done. The balancing act will be: Do we do that, and how do we do it in light of our relationship with India? So very, very tough diplomatic questions.
HOPKINS: Something that Colin Powell is right in the middle of now, trying to kind of diffuse the situation, right?
MCCANN: Exactly. And, you know, you've got a great guy in Colin Powell in that he understands tactical objectives, strategic objectives and is every bit a gentlemen and a true diplomat now. So I think that we've got a person there who is really shrewd in trying to figure out the right line and be truthful to the United States, of course, and loyal to what we need to get done and also help our allies.
HOPKINS: Let's talk a little bit about what's going on at home and airport security. Now at some airports, they are checking shoes in light of what happened last weekend. Is this enough?
MCCANN: Is it the right thing may be the better question. You see, the problem has been that it's always kind of a reaction. Security's been reactionary since September 11th, and that's not good security. Good security will always be unemotional and apolitical. It always comes down to a formula, and those formulas are time, distance and response, and you know, to detect and determine what the threat is, and then delay it, and all of those things -- very unemotional and expensive. And in a country that will pay millions and millions of dollars to guys who play games and then pay police officers $28,000 a year, I don't know whether the focus has changed enough for them to accept that.
The other issue, of course, is the business themselves. The airline business, the margins are very small. At the very time they're reducing prices to bring people back into flying, they're going to increase their overhead for added security. And the security industry is very similar. The margins are very small, high turnover rate because of low pay. At the very same time, we're trying to make them be more proficient, so it's a difficult situation. We have to think of it differently.
HOPKINS: But part of it might be to do things differently, sometimes have curbside check in and sometimes not, right?
MCCANN: Absolutely. Unpredictability is every attacker's nightmare, because they have to plan things based on what they see. And if they're unable to establish a pattern that they can exploit, then, you know, the likelihood of them going somewhere else is very much, you know, prevalent. The big thing is that that unpredictability affects the flying public because it looks like it could be amateurish. So there still has to be a public education effort along with all of these -- the infusion of all these kinds of techniques so that people understand that this is a logical, well- thought process. And we're not there yet.
HOPKINS: Richard Reid. Is it possible that he was really just a probe?
MCCANN: Yes, I believe that's very true. And the reason is is because no one's ever going to accuse him of being a boy genius. From everybody's description, he didn't have the sophistication to put that device together evidently by himself, and he didn't have the money to fly where he'd flown to and visit the countries yet. So if you look at from an attacker's standpoint, it would have made a lot of sense to put him on there as a throw away, make him look like a wannabe to see what the current state of airline security is.
We learned a couple of things. There was no U.S. air marshal. We were able to see that he was able to get explosives into the aircraft. So for anyone who wanted to know, they know more now than they did before he went on that flight.
HOPKINS: Thanks, Kelly McCann.
And still to come tonight, we'll continue to update the war against terrorism. We will also go live to Cairo, Egypt. OPEC agreed there to cut oil production. We'll head north to Buffalo. It's buried under more than six feet of snow, and it's expecting more. And 2001 was an extraordinary year for the world and Washington. We'll take a look back when MONEYLINE continues.
(COMMERCIAL BREAK)
HOPKINS: From the attacks on America to the recession to the collapse of Enron and Argentina, 2001 had more than its share of bad news. But for some in Washington, not all of the news was negative. Tim O'Brien has that story.
(BEGIN VIDEOTAPE)
TIM O'BRIEN, CNN CORRESPONDENT (voice-over): It was a year of twists, turns and contradictions. Take George Bush. He entered office January 20th with an uncertain mandate to lead, but buoyed by peace, prosperity and budget surpluses. Yet today, with war, recession and budget deficits, Mr. Bush enjoys an 86 percent job approval rating, the highest of any president since his father peaked at 89 percent during the Gulf War 10 years ago.
For official Washington as for just about everyone, 9-11 was a defining moment. The economy, which seemed poised for a recovery, tanked. The browmans (ph) assured the long-term economic impact would be negligible. ALAN GREENSPAN, FEDERAL RESERVE CHAIRMAN: The prospects for continued rapid technological advance and associated faster productivity growth are scarcely diminished.
O'BRIEN: President Bush fulfilled a number of campaign promises, including the first meaningful education overhaul since the 1960s, and that massive $1.35 trillion tax bill.
BUSH: I want to thank all those who voted "aye." And so do the taxpayers of America.
O'BRIEN: And in the aftermath of 9-11, the president had little difficulty pushing through a $32 billion increase in defense spending for fiscal 2002. Another pet project -- trade promotion authority -- cleared its biggest hurdle, the House of Representatives, earlier this month. It's all but certain to become law in the next session of Congress.
GREG VALLIERE, SCHWAB WASHINGTON RESEARCH: President Bush has had a remarkable year in getting some unity and getting the country behind him, and having successes internationally. But it is tentative. And if the economy stays real weak into the summer, into the fall, he could have political problems.
O'BRIEN: There were, to be sure, reversals for the administration. Mr. Bush lost significant ground in Congress with the defection of James Jeffords from Republican to independent, effectively giving control of the Senate to the Democrats and Tom Daschle.
SEN. THOMAS DASCHLE (D-SD), MAJORITY LEADER: We can make this closely divided Senate work for the American people.
O'BRIEN: Senate priorities wobbled from bankruptcy reform and government funding of religious groups to health care reform and raising the minimum wage with no meaningful progress on any front.
Perhaps the biggest defeat for the president was his failure to get Congress to pass an economic stimulus package. That will be a high priority when Congress returns next month. So, too, will be rewriting the country's energy policy. Democrats will press hard on health care and campaign finance reform.
Following the 9-11 attacks, Democrats and Republicans united in a way that has rarely been seen. That unity largely prevails in matters of terrorism and national defense.
(END VIDEOTAPE)
O'BRIEN: But when it comes to domestic policy, unity has all but evaporated. Expect some bitter policy disputes in the months ahead. And Jan, you can bet that those disputes will be colored by next November's off-year elections when both control of the House and the Senate would appear to be up for grabs -- Jan.
HOPKINS: The agenda for 2002. Thanks very much, Tim O'Brien, in Washington.
2001 has been a tough year for oil producers as an emergency meeting in Cairo, Egypt today. OPEC confirmed it will cut oil production to try to raise oil prices. OPEC controls about two-thirds of the world's oil supply, has now slashed production by about 20 percent this year.
In New York, crude oil prices fell 49 cents a barrel. They're at about $20 a barrel. That's, though, down from about 30 earlier in the year. James Martone is in Cairo and has more on OPEC's latest move -- James.
JAMES MARTONE, CNN CORRESPONDENT: Yes. Well, OPEC said it made that decision to reduce its crude oil output by 1.5 million barrels per day beginning January 1 for six months after receiving positive announcements from non-OPEC oil producing nations, namely Angola, Mexico, Norway and Oman and Russia -- sorry. Receiving pledges, OPEC said, from those countries that they would also reduce their total output for a total of 46,200 barrels per -- sorry, 462,000 barrels per day. Now this latest cut in OPEC's production represents six percent of its total current output of 25.5 million barrels per day.
Now OPEC has slashed its production unilaterally three times in the year 2001, withdrawing five million barrels per day from the market since last January, and a bid to maintain the price of a barrel between $22 and $28. Now in a closing statement, OPEC ministers emphasized what they said was the importance of adhering to pledges, pledges made by countries to reduce. And OPEC ministers said that there would be OPEC officials traveling to Russia next month in January to review what they said was OPEC's policy with regard to non- OPEC oil producing nations and also to review this latest decision to reduce -- for OPEC to reduce by 1.5 million barrels a day its output -- Jan.
HOPKINS: So, James, I guess OPEC is hoping that this is enough to raise oil prices.
MARTONE: That is the hope. And as I mentioned, they are saying that they -- not only do they hope that, they think it can happen, and that it only can happen if countries that have pledged to reduce actually do so. Now there were interestingly some debate this morning during discussions of the OPEC ministers as to whether these countries -- non-OPEC oil-producing countries -- would, in fact, adhere. And that for that reason, OPEC officials will be dispatched to Russia, for example, to make sure that these pledges to reduce output will take place, in which case, the OPEC does believe that the prices could rise.
HOPKINS: Thanks very much, James Martone, in Cairo.
And despite all of the challenges this year -- the attack against America, the recession, the vanishing surplus -- MONEYLINE contributor, Paul Krugman, says it could have been worse.
Paul, welcome.
PAUL KRUGMAN, "NEW YORK TIMES" COLUMNIST: Hi.
HOPKINS: So if it could have been worse, I guess we're doing some things right. What's that?
KRUGMAN: Well, I don't know if we're doing anything right, but there's just basically a lot of strength in the U.S. economy. You know, we turn out to be more robust than some of us feared, including me, you know, a few months ago.
HOPKINS: Also, you think that it's a good thing that we didn't get a stimulus package.
KRUGMAN: Well, you know, we weren't going to get a real stimulus package. We were going to get long-term business tax cuts under the guise of a stimulus package, and those things were not going to help much in the short run. And they were going to be a real problem in the long run. So, you know, considering the alternatives, considering what was actually on the table, I'm relieved that nothing happened.
HOPKINS: We do have deficits, though, for the federal government, and you think that next year, states will be having a big problem with deficits.
KRUGMAN: That's the big story that isn't out there. It's a crisis. We're looking at a really desperate situation for many state governments. It's a combination of the recession, medical costs, the tendency of the federal government to make policy by saying to states, "Here, you do this. It's a mandate." And we're really looking at very savage squeezes on state budgets with the most vulnerable people probably going to be hurt the most. It's the big story you aren't reading yet.
HOPKINS: One of the things that did go well this year was the fact that energy prices fell by about a third.
KRUGMAN: Yeah.
HOPKINS: OPEC cutting production, what's going to happen next year?
KRUGMAN: Well, it's probably not enough to cause a spike in oil prices, but it does mean that one of the things that's been going right is not going to keep on going right. I mean falling energy prices are probably the best single thing. You know, a lot better than the stimulus package. And, unfortunately, OPEC is getting its act together. Too bad they're not domestic. This would be illegal monopolization, but we can't, apparently, do very much about it.
HOPKINS: Gasoline last weekend, I paid less than a dollar a gallon. That's a real bargain.
KRUGMAN: Yeah. I mean, it's -- you know, in the long run, it's a terrible thing. You know, we're being encouraged to continue being gas hogs, oil hogs, energy hogs, and that's part of the vulnerability that we truly should be doing something about. But right now in a recession, cheap gas is, you know, a really nice Christmas present. And it's too bad we're not going to get more in the next month or two.
HOPKINS: Thanks, Paul Krugman, MONEYLINE contributing editor and also a columnist with the "New York Times," and a professor from Princeton. Thanks for joining us.
KRUGMAN: Thanks a lot.
HOPKINS: And coming up next, we'll update the war against terrorism, including another look at Rocket City, some of the weapons and technology that have come out of Huntsville, Alabama. Not much coming out of Buffalo, New York. More snow coming in, record amounts shutting down that city. And a record year for Hollywood, or was it? We'll take a look at the numbers when MONEYLINE continues.
(COMMERCIAL BREAK)
HOPKINS: In the war against terrorism, President Bush says U.S. troops could be in Afghanistan for as long as it takes to finish the job. Mr. Bush was briefed on the war's progress by General Tommy Franks at the president's ranch in Texas.
U.S. Army troops are beginning to make themselves at home at Kandahar airport. They will oversee the arrival of humanitarian and possibly peacekeeping forces. The Marines could move out in a couple of weeks.
The suspected shoe bomber was ordered to remain in jail without bail today. That after an FBI agent testified that initial tests found the presence of a highly explosive substance inside Richard Reid's shoes.
Some of the smartest weapons used in the war against terrorism come from Huntsville, Alabama. The city of 160,000 is a high tech citadel. Fred Katayama looks at some of the companies and the cutting-edge products that are fueling that city's economy.
(BEGIN VIDEOTAPE)
FRED KATAYAMA, CNN CORRESPONDENT (voice-over): The sensors that guide missiles, unmanned reconnaissance vehicles.
UNIDENTIFIED MALE: You can see here the counterstrikes going out with our artillery going after their launchers.
KATAYAMA: Simulation software to plan the attack. Some of the smartest weapons used in combat, including the war on terrorism, were developed by the tech titans of Huntsville, Alabama, nicknamed Rocket City.
The maker of that war game software, Teledyne Brown Engineering, is developing a portable robotic system for checking bombs. It sprays water and abrasives at speeds so fast, they slice metal.
JAMES LINK, TELEDYNE BROWN ENGINEERING: This technology allows us to keep people out of harm's way, to allow the robot to do the work of disarming a bomb or perhaps investigating a weapon of mass destruction.
KATAYAMA: The war and the anthrax scare have put fellow defense contractor Camber in overdrive.
WALTER BATSON, JR., CHAIRMAN & CEO, CAMBER: We were going to grow at about a 20 percent rate, and it looks like we're probably going to grow at about 30 percent right now post 9-11.
KATAYAMA: Camber's new device detects biological agents in the air. New York City security forces used it at Yankee Stadium during the World Series. After 9-11, sales of the unit rose from two to 50, and the company says that could skyrocket to as high as a thousand next year.
(on-camera): These air testing devices cost about $30,000 each, but Camber's plant can't turn them out fast enough, so the company has set up this makeshift production facility in its headquarters.
(voice-over): ADTRAN sells high-speed digital communication equipment to the baby bells. Despite the telecom spending meltdown, the company has only had to cut about five percent of its workers.
MARK SMITH, CHAIRMAN & CEO, ADTRAN: Due to this low turnover, we did not have to go out and spend lots of money hiring large numbers of people for fear of not being able to keep up with the business activity that was going on. Therefore, when that bubble bursts, we were not extended on the upside.
KATAYAMA: Providing the upside to Huntsville firms, the Redstone Arsenal. It has awarded $1 billion in contracts this year to local companies.
AL SULLIVAN, COLSA: The Arsenal is taking a look today at missiles that loiter. We can fire them, find the enemy, and then send it to where we want to go. TVs installed so that you can take a look at the target just before you finally hit it.
(END VIDEOTAPE)
KATAYAMA: And some of the government's defense and space technologies are spun off to private companies. Barron Services which provides weather forecasting data to 200 TV stations uses NASA's lighting detection technology developed in Huntsville -- Jan.
HOPKINS: You also found out something about ATM machines in the space program.
KATAYAMA: Right. A contractor called SCI licenses NASA's space shuttle technologies. They're used for ATMs. With ATMs, you have large amounts of data moving over a single link at high speed. NASA has a data bus that interconnects it with a central computer so it replaces the maze of wiring.
HOPKINS: So there are probably a lot of other ideas out there from NASA that companies can tap into, basically. KATAYAMA: A lot. In fact, NASA sort of boasts about it on its Web site. You can just put in a link to Huntsville and it lists all the civilian technologies that are currently used based on technology developed in Huntsville by NASA.
HOPKINS: Thanks, Fred Katayama.
And tonight, the National Guard is being ordered into Buffalo, New York. The city is buried under more than six feet of snow, its largest single-month snow fall ever, and to have in just a couple of days. Another foot is expected to fall this weekend.
This is the scene in Buffalo. Snow continues to fall. The city is under a state of emergency. Malls, stores, offices closed. Driving has been banned. And after opening briefly today, the airport shut down. Two deaths being blamed on the weather. We'll have a live report from Buffalo a little later in the program.
A flood of visitors this week are hitting New York City. They're sight-seeing old favorites like Times Square and Fifth Avenue. Tourists are also flocking to ground zero. Many telling us it's a show of support for the city. But of course, this year is different. New York's economy is still struggling. Peter Viles has that story.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: Birmingham, Alabama.
UNIDENTIFIED FEMALE: I'm from Richmond, Virginia.
UNIDENTIFIED MALE: Russia.
UNIDENTIFIED FEMALE: Louisville, Kentucky.
UNIDENTIFIED MALE: Toronto, Canada.
PETER VILES, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): All in New York for one of the world's greatest parties, New Year's Eve in Times Square. But this year is so different in so my ways. Tourists are greeted by this headline Thursday, "Happy Nuke Year," news that police will be on special alert for nuclear bombs.
This couple from Dallas didn't flinch. They booked their vacation this week.
UNIDENTIFIED FEMALE: We decided it would be really cool to come right now, because of everything that's been going on.
UNIDENTIFIED MALE: Everything's going on. We decided it would be a special year to come.
VILES: The city has worked hard to attract tourists with some success. The Marriott Marquis is booked solid for New Year's Eve, all 1,900 rooms, but rates are down 20 percent from last year.
DAREN KING, NEW YORK MARRIOTT MARQUIS: I think people really want to show their support for New York. And I think as they show support for New York, they feel they're showing support for America.
VILES: It's hard to see it on the streets, but tourism in New York is down sharply. The city estimates it will be off 14 percent this year, with visitor spending down 12 percent, or $2 billion. Broadway is suffering; 8 of the 28 shows now running expected to close next month.
JED BERNSTEIN, NYC & COMPANY: The overseas tourists are off by almost 75 percent. That's a trend that's continued all season long.
VILES (on camera): The truth is that September 11 changed tourism in New York in ways that we're only now beginning to understand. By far, the most popular place in New York for tourists right now are the streets around ground zero.
(voice-over): At this church, huge crowds jostling for a glimpse of history.
UNIDENTIFIED FEMALE: It's not to take pictures, you know. It's not to sight-see, it's just to mourn.
UNIDENTIFIED FEMALE: It's a historic place now, and I would feel the same, say, in visiting Auschwitz in Poland or visiting Pearl Harbor.
VILES: It's a terrible site, but Americans are drawn to it, and a weary city welcomes them.
Peter Viles, CNN Financial News, New York.
(END VIDEOTAPE)
HOPKINS: Just ahead tonight, stocks higher today, but investors are heading toward another losing year. We'll have our roundtable on the markets and a look at some hopeful signs for the new year.
It was a blockbuster year for Hollywood, but are the numbers just an illusion? We'll take a look at business with "Variety's" editor- in-chief Peter Bart.
And this is not special effects. Real-life blizzard still pounding Buffalo. We'll have a live report.
(COMMERCIAL BREAK)
HOPKINS: In the war against terrorism, another 25 al Qaeda prisoners were brought to the detention center at Kandahar Airport. Military sources say that some were willing to talk and all of them are scared to death.
FBI says that Richard Reid could have blown a hole in American Airlines flight 63 had he been successful in setting his shoes on fire. The judge ordered Reid held without bail.
Secretary of State Colin Powell spoke with Indian and Pakistani leaders today, urging for calm and restraint. Both countries have recently deployed extra troops to the disputed border of Kashmir.
Today, the markets finished up. For the week, the Dow adds 1 percent; the Nasdaq up 2 percent. The S&P gains nearly 1.5 percent. Joining me now to wrap up the week, Christine Romans and Greg Clarkin, they have been covering the markets all day and week.
So -- let's start with you, Greg, because the Nasdaq is up more, 2 percent for the week. But if you look at the whole year, the Nasdaq has lost more.
GREG CLARKIN, CNN FINANCIAL NEWS CORRESPONDENT: Still down. Still down about 19 percent and change. And you know, this week as expected a real quiet week in the markets, but we're heading into that really tricky couple of weeks. It's going to be the heart of pre- announcement season for the fourth quarter, and that one has a lot of people on edge, and we're seeing a lot of people not really wanting to make big moves in technology in these last couple of weeks.
HOPKINS: But this is the time where people are selling for taxes. That puts pressure on the markets, right?
CLARKIN: I think we saw a lot of that in September. I think that washed a lot of people out.
HOPKINS: So that's done. Then you have the January effect, where everybody comes back into the market.
CLARKIN: So they say.
CHRISTINE ROMANS, CNN FINANCIAL NEWS CORRESPONDENT: There are new seasonals that you can measure this year by. What I'm hearing is that people say, you know, it could be a Santa Claus rally, maybe some year-end buying. But for the most part, it's very difficult to compare this year to any other normal year. In fact, when you look at the Dow, I mean, we are on track for back-to-back losses for the Dow for the first time since 1977 and '78; for the S&P, since 1973 and '74, so it's been sometime since we've had a market of this ilk.
And it will be interesting to see how the beginning of the year shapes up.
HOPKINS: That's what you're hearing as well?
CLARKIN: Exactly. I think that's what a lot of people want to see. Once the first preannouncements come out, you know, if a big tech company comes out and warns, you know, how are people going to react? They bid up these stocks significantly since the September 24 lows on the Nasdaq.
HOPKINS: And so the question is, have we come too far too fast I guess, right?
CLARKIN: Exactly. At this point, you know, 2,000 or so on the Nasdaq is where it has been sitting for any number of weeks now, and people seem to be comfortable just to let it kind of hang there. ROMANS: Now, here's a piece of good news I guess going into the new year, but the Dow is above its 200-day moving average. That's good. I mean, a moving average is the blended price of the past 200 days. If you go above there, that means you're above the recent trend. The S&P, though, is not, and that is really the measure of stock market health.
So it will be interesting to see if we can continue this rally. Some of the technicians are saying, if you can get the S&P to start to perform a little bit better, then they will feel better about the market.
HOPKINS: Christine Romans and Greg Clarkin, thank you both.
A number of economic reports today supporting the theory of a rebound early next year in the economy. Particularly encouraging reports on jobless claims and consumer confidence. Kathleen Hays has that story.
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KATHLEEN HAYS, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): Consumer confidence surged in December, the first increase in six months, and the biggest one-month gain in four years. That's a sharp reversal from the steep decline suffered as the struggling economy was knocked deeper into recession by the September 11 attacks.
DELOS SMITH, THE CONFERENCE BOARD: The Afghanistan war looks better. The economy looks a little better. There's a sense of bottom. The equity market look better. So that 2002 looks better. I don't expect other big 15-point jumps anyway soon, but you just get back to a level that's more comfortable.
HAYS: Sales of new and existing homes continued to rise in November, another sign the consumers are confident enough in the future to make major purchases.
(on camera): What may hold the key to the budding economic recovery is the labor market. In a separate report, new claims for unemployment benefits rose for the first time in three weeks, but they are still down significantly from the peaks hit in late October.
LAWRENCE GOODMAN, GLOBALECON.COM: With jobless claims even edging down, I still think that we're going to continue to see the unemployment rate edging up, and the unemployment rate could readily hit 6.2 percent in the first or second quarter of the year, which would essentially be suggestive of the idea that the consumer is not going to lead this recovery; it's really going to be coming from business investment.
HAYS: New orders for big ticket, durable goods such as cars, computers and machinery, fell nearly 5 percent in November, after surging more than 12 percent in October on a big jump in government orders for fighter planes. But outside of Defense Department spending, orders in November rose for the second month in a row, an important sign manufacturing could be turning a corner. JOHN RYDING, BEAR STEARNS: It's particularly encouraging that technology orders and capital goods orders have been up for two straight months. So I'm hopeful that this is really a precursor to stabilization in the manufacturing sector, which is really necessary for recovery.
HAYS: Kathleen Hays, CNN Financial News, New York.
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HOPKINS: Still ahead tonight, six feet of snow and counting. That's since Christmas Eve, and it's not over yet. We'll go live to Buffalo, New York, where records are being buried daily.
And a record year for Hollywood in the box office. We'll take a look at the year that was and look forward to 2002.
ANNOUNCER: Coming up, Jan talks with Peter Bart, editor-in-chief of "Variety."
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HOPKINS: Hollywood is looking for another strong weekend at the box office. The last weekend of 2001 will cap off a record year. So far, movie theaters have sold more than $8 billion in tickets, and five films have taken in more than $200 million each.
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(BEGIN VIDEO CLIP, "HARRY POTTER AND THE SORCERER'S STONE")
UNIDENTIFIED MALE: Griffindor!
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HOPKINS (voice-over): It was a year when it all came together for the movie industry. Recession weary, and later in the year fearful of terrorism, Americans stayed close to home, looking to the multiplex for cheap entertainment. Hollywood was ready, with a succession of blockbusters, slick marketing, and something for everyone.
MGM's "Hannibal" and Dimension Films' "Spy Kids" were the year's strong starters, each grossing more than $100 million. But the summer brought a string of hits that doubled that: "Shrek," "The Mummy Returns" and "Rush Hour 2."
PAUL DERGARABEDIAN, PRESIDENT, EXHIBITOR RELATIONS CO: There seems to be a new benchmark in terms of what we call a blockbuster. This year, by the end of the year, we'll wind up with about 17 films over $100 million. But the key to this year's success is that we have five films that have gone beyond $200 million. That's never happened before.
HOPKINS: More people went to the movies this year, but they also paid more. Attendance was up 5.5 percent from last year, and ticker prices rose just under 4 percent, the combination pushing gross receipts to a record $8 billion by Christmas day.
A bonanza for studios, but not necessarily for the companies that own them.
STUART LINDE, LEHMAN BROTHERS: The studio business is not for the diversified media company is a business that investors really want to be focused on. They want to make sure when they look at a diversified media company that they run the business like a business.
HOPKINS: This year's Christmas hits, "Harry Potter," "Lord of the Rings" and "Ocean's 11" are expected to keep theaters busy well into next year.
(BEGIN VIDEO CLIP, "OCEAN'S 11")
GEORGE CLOONEY, ACTOR: This place has a security system that rivals most of nuclear silos.
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HOPKINS: And the industry believes the 2002 box office could be even stronger, driven by high-profile sequels to films like "Austin Powers" and "Men in Black."
For more on the year in Hollywood and what we can look forward to in 2002, we're joined by "Variety's" editor-in-chief, Peter Bart.
We get a lot of sequels. Is that kind of the secret to the box office success?
PETER BART, EDITOR IN CHIEF, "VARIETY": Well, it's the secret to risk-averse movie making anyway. Next year, with "Men in Black II" and others -- there will be another "Harry Potter," another "Lord of the Rings." There will be lots of sequels next year. But still, you know, it's a risky business, as one of your guests just said, and there's no way of eliminating the risk factor, just as is no way of eliminating the risk factor in television or music. Both industries had really messy years this year.
HOPKINS: Let's stay on film for a moment. In New York City, it costs $10 dollars to go to a movie. That means you have to be really committed to the movie that you're going to. Does that make a difference to the studios about how they make movies?
BART: Remember, the exhibition business has been in the doldrums for the past couple of years. Most of the circuits have gone into bankruptcy. So certainly as ticket prices increase, it bolsters the sad bottom line of the exhibition companies, plus hopefully they will be selling more popcorn.
And as far as the studios are concerned, listen, if the exhibitors are healthier, that helps the studios, it helps them collect. Remember, they still have to collect from the exhibition community. HOPKINS: And the way to make money in the studio business is to have a blockbuster, is that right? Or have a lot of good, you know, kind of a lot of average films.
BART: Here's the thing. Toward the end of the year, those pictures that were disappointments were Jim Carrey's picture, Tom Cruise picture. The big hits were the franchise pictures, like "Harry Potter" and earlier in the year, of course, "Shrek." So one wonders if we're beginning to reach that time where the star is the story, and not the personality.
HOPKINS: The story like "Lord of the Rings" et cetera, et cetera carrying it, rather than the actor, or the star.
BART: That's right, which was of course the way it was in the earlier days of the studio system. Of course, then the stars were effectively owned by the studios, so their talent costs could be kept under control. But what's happened in recent years is that the cost of talent in features, in television and in the music business, across the board in entertainment, the talent costs have become so extraordinary high that the industries themselves have become somewhat dis-economic.
HOPKINS: Very interesting. Peter Bart, editor in chief of "Variety." Thanks for joining us.
BART: You bet.
HOPKINS: And tonight, the city of Buffalo, New York, is under more than six feet of snow, and under a state of emergency. The National Guard has been called in to help.
Holly Firfer is just outside Buffalo tonight. Holly, what's the latest?
HOLLY FIRFER, CNN CORRESPONDENT: Well, it's really cold here, Jan. It's about 19 degrees, they say about 7 or 8 degrees with the wind chill. It feels a lot colder, but at least the snow has stopped for now. We understand, though, however, there's still is a driving ban in the city of Buffalo. Residents are told you can't go anywhere, only essential vehicles. They've got snow plows working, trying to clear the roads. The airport was supposed to open this evening, and they were hoping, if they could, by morning to get some of those roads in and out of the city.
Now the good thing is, say officials, is that this storm hit during a holiday week so schools were closed, a lot of businesses were shut. People are on vacation and really planning on staying home anyway, and also they said that this storm which started on Christmas started late on Christmas eve so folks were working a half a day, really didn't mess too much with business schedules.
The city commissioner tells us that they are pretty much blown their budget, as far as snow removal with snow plows and salt trucks. And they're hoping that with the state of emergency that they will be able to get some federal help in the form of dollars. Now also the biggest industry here that will be hit is the retail industry, because nobody can get to the malls for those after holiday sales, nobody can get to the malls return anything. So people are virtually stuck, nobody's shopping. It's a largely -- there's a lot of school students here. They are home for the holidays. So it's not really effecting them.
We checked in with the editor of the "Buffalo News" here, to ask him about how they think this might affect any future economic upswings here. We know that industry is not doing so well. They actually have a Ford stamping plant and Delphi automotive plant, they say they were supposed to be shut anyway this week, it's not really going to effect them too much -- Jan.
HOPKINS: And supermarkets are open so that people can, if they can get out of their driveways, they can get food, is that right?
FIRFER: Yes in an emergency, but what they are asking residents is to not leave their homes, because actually some of them can't even, because with the snow plows going by, trying to get the streets cleared for people like ambulances and police cars, they can't even get out of their driveways. But if they absolutely have to, yes they will try and make it to grocery stores.
They do say two restaurants are suffering, because nobody is going out to eat, everybody is staying at home.
HOPKINS: And there's more snow coming for the weekend right?
FIRFER: Yes, they say actually for the next eight days, they're expecting snow. Maybe even a foot more snow so hopefully they can get all of this cleared so that it won't be that much of a trouble. But they could have a driving ban for the next few days, they're hoping by the New Year, though things will get back to normal.
HOPKINS: All of this is because of the warm weather and the fact that the lake is still unfrozen, right?
FIRFER: Right, it's called a lake effect. And what they tell us is that when the lake doesn't freeze, the cold air that goes over the lake sort of siphons up some of that moisture, turns it into snow and dumps it on the shore. And that's why Buffalo usually always gets hit. We hear that there's always 3-4 feet in Buffalo. Not always in one day, though. They did hit a record here, 73 inches, more that six feet for the month of December. That's a lot of snow.
HOPKINS: Thanks. Holly Firfer, outside of Buffalo. Outgoing New York mayor Rudy Giuliani says that New York City will get 2 new baseball stadiums with retractable domes. The $1.6 billion cost would be divided between the city, the New York Yankees and the Mets. Giuliani says the governor backs the plan, but incoming mayor, Michael Bloomberg, will have the final word. Under the proposed deal, the Yankees would stay in the Bronx and the Mets would remain in Queens.
"WOLF BLITZER REPORTS" begins in a few minutes. For a preview, let's go to Wolf in Washington -- Wolf. WOLF BLITZER, HOST, "WOLF BLITZER REPORTS": Thank you very much, Jan. We're following the latest military tensions between two U.S. friends, India and Pakistan, both of which, of course, are nuclear powers. How will all this affect the U.S. war against terrorism?
We'll go live to our correspondents in Afghanistan and at the Bush ranch in Texas.
And our "War Room" panel will assess the fallout and take your e- mail questions. It's all at the top of the hour. Jan, have a great weekend and a happy New Year.
HOPKINS: Thank you and to you too. Thanks, Wolf. And coming up next a look at your e-mail and some of what to expect next week.
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HOPKINS: Next week, the employment report for December is due Friday. Leading up to that, expect the NAPM, construction spending and auto sales, Monday in New York City, New Year's eve festivities leading up to the ball drop, include a September 11 memorial. Also, Monday the European Union plans to unveil the new Euro in a public celebration in Brussels. Now for a look at some of your thoughts, John Tyson in Burbank, California writes: "Why does the fed think that lowering interest rates will stimulate the economy. It would be one thing if companies needed to expand and inventories were depleted, but they're now."
Ashley Tan writes with a question, very much on the mind of investors this time of year, that's tax lost selling. Ashley writes: "I own stocks in a public company which has just declared bankruptcy. Do I have to close out my position with my broker in order to take advantage of the tax loss?" Yes, you must realize the loss. In other words, sell the stock before taking the tax loss.
Let's use Enron as an example, in the eyes of the IRS this stock is still worth something, so you must sell the security and show the loss. But what if the stock doesn't trade, in that case, get a letter from your broker saying the stock is worthless. Marty Kaplan, a CPA with Geller and Marzano here in New York, says in most cases a letter from your broker will satisfy the IRS.
E-mail us moneyline@cnn.com. Please include your name and address. That's MONEYLINE for this Friday evening. Thanks for joining us. I'm Jan Hopkins sitting in for Lou Dobbs. Good night from New York.
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