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Lou Dobbs Moneyline
2001: Dow Down Over 7 Percent; Nasdaq Down 21 Percent; S&P 500 Drops 13 Percent
Aired December 31, 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.
JAN HOPKINS, HOST: There are more than half a million people gathered in Times Square tonight. Some of them began arriving before dawn. They are praising freezing temperatures. Security is tight and nearly 7,000 city policemen and women are on hand. The bell ringing has begun. Let's listen.
(BELLS RINGING)
HOPKINS: Bells are ringing from a church on 27th and 5th Avenues, this just the beginning of bells being rung throughout the city. Manhattan is pausing for this special ceremony. Thousands of churches and synagogues around the city will begin ringing bells shortly. The city's first simultaneous bell-ringing ever. It's a solid memorial for the victims of the September 11th attack and a chance, organizers say, to pray for peace.
Mosques and synagogues in the city that do not have bells will be offering symbols and prayers of their choice. Even non-religious institutions like the Intrepid's Sea-Air Space Museum, and historic bells weighing more than a ton will participate.
Also tonight, the Waterford Crystal Ball that drops in Times Square each year will memorialize the victims of the attacks as well. 504 triangular panels on the ball are engraved with the names of each police precinct, firehouse, airline and nation that suffered losses September 11th.
New Year's celebrations have been going on around the world. In Paris, the clocks just now striking midnight, French welcoming 2002 and a new currency to Europe making its official debut in Europe tonight. Now you're looking at live pictures of Frankfort, which is also striking midnight, the New Year.
A dozen European countries are switching to the euro as of midnight, replacing all of the other currencies, including Germany's deutchmark. We'll have more on that from Frankfurt later in the program.
Now let's take a look at live pictures in Berlin, Germany. Actually, we do not have those. Brandonburg Gate, site of some spectacular fireworks, though, this evening.
For more on the preparations that are going on for tonight's celebrations in Times Square in New York, we are joined by Deborah Feyerick. She is in Times Square, a very chilly Times Square, right Deborah?
DEBORAH FEYERICK: Absolutely. It is definitely cold here, Jan. You can hear some of the music that is beginning here in Times Square, as some of the bells remaining, all of those bells ringing across the city in memory of the people who died on September 11th. As the bells rang, the ball was hoisted up into position.
There is a big crowd here, as you can see, behind me. Organizers are expecting about a half a million people. However, one woman told me that certainly, compared to last year, not as many people here at this time as there was last year. This is sort of a time of reflection now as people take into account everything that has gone on.
The Waterford crystals that adorn that ball, as you mentioned, are engraved with the countries, the names of firehouses and police precincts that mark all of the victims who died on September 11. And while it is cold out here, the mood is definitely one of celebration.
There are people who are waving the flags, people wearing party hats, everybody really waiting for a good time here. The security is very, very tight. All the people have been separated into barricaded pens, and police are on one side of them; a lot of police, about 7,000 of them, and some are in uniform, some are undercover.
We've also seen some bomb-sniffing dogs that are patrolling the area. There are radioactive detectors, so in case something does happen, officials will know of it pretty quickly. But again, you can hear the music. Times Square is a massive Broadway stage. This is a big production. Cameras will be switching from the rooftops of all different buildings and this will be the place to be. Jan?
HOPKINS: Thanks, Deborah Feyerick. I think that's Enya singing "Only Time Will Tell." Thank you.
President Bush says 2002 will be a great year for the United States. Mr. Bush says he expects the US economy to rebound and he predicts progress in the war against terrorism, including the capture of Osama bin Laden and Taliban leader, Mullah Mohammed Omar. For more on the hunt for Mohammed Omar, we're joined now by Barbara Starr. She's at the Pentagon. Barbara?
BARBARA STARR, CNN CORRESPONDENT: Yes Jan. The hunt for Mullah Omar is on at full speed this evening. Anti-Taliban forces, led by some local warlords, are moving into the area known as Baghran. This is about 100 miles or so northwest of Kandahar.
And importantly, they are accompanied by US Commandos on the ground. Those Commandos are doing what they've been doing throughout this conflict. They are providing intelligence and targeting information, to call in possible air strikes overhead if the anti- Taliban forces get a good fix on where Omar is.
It's been the last several days that there has been growing intelligence that Omar might be in this area northwest of Kandahar under the protection of Taliban forces who fled the city of Kandahar when it fell several weeks ago. Jan?
HOPKINS: Thanks. Barbara Starr at the Pentagon.
And in Afghanistan, preparations are under way at Kandahar Airport for the transfer of control from the US Marines to the US Army. The 101st Airborne Division, known as the Screaming Eagles, are expected to take over sometime in January. The 101st conducted the deep assaults into Iraq during the Persian Gulf war. Sixty-three additional al-Qaida and Taliban prisoners were brought to the detention center at Kandahar Airport over the weekend. The facility now is about one-third full.
India and Pakistan appear to be taking small steps away from the brink of war. India's foreign minister called Pakistan's recent arrest of militant leaders a positive sign. And today, President Bush said he was encouraged by Pakistan's actions.
(BEGIN VIDEOCLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: He has apprehended the head of what they call LET. That's after he apprehended the head of GEM, so he's cracking down hard. And I appreciate his efforts.
(END VIDEOCLIP)
HOPKINS: Tensions appear to spiral out of control after militants attacked India's Parliament December 13th, killing 14 people. India blames Pakistan for not clamping down on terrorists. President Bush welcomed the move by Pakistan. The President is at his ranch in Crawford, Texas and Kelly Wallace is there with him. Kelly?
KELLY WALLACE, CNN WHITE HOUSE CORRESPONDENT: Hello Jan. Well, tensions in southeast Asia, one of the many issues President Bush addressed during a brief question and answer session this afternoon with reporters at the only coffee shop here in this small town of Crawford, Texas. The President, using his brief New Year's Eve appearance, also to sound an upbeat note about the coming year.
He said the United States would continue to remain on alert in 2002, but he sounded very optimistic about how the country and his administration could handle the upcoming challenges. Those challenges include the continued fight against terrorism and dealing with a sagging economy.
(BEGIN VIDEOCLIP)
PRESIDENT BUSH: 2002 is going to be a great year for America and we will continue to pursue our mission in fighting terror. We'll work hard to make sure our economy rebounds, but most of all, the nation will continue to embrace the culture of compassion, which really flourished right after September the 11th.
(END VIDEOCLIP)
WALLACE: Now the President did express some concern about another international situation, the current crisis in Argentina after the interim President, Aldolfo Rodriguez Saa announced his resignation yesterday. Mr. Bush, though, sounding confident the country could weather this crisis and said that Argentina would eventually elect a new president.
He did say though the country must come up with a plan to sustain economic growth and he seemed to rule out any direct US assistance for now, again saying the country must do what it can to get its own fiscal house in order.
And Jan, on a much, much lighter note, President Bush telling reporters today he has no glamourous plans for this New Year's Eve. He said he and the First Lady would be enjoying time at the ranch with a couple of other couples, friends of theirs from Texas, and then he was going to hit the sack early, 9: 00 or 10: 00, Jan. The President not even staying up to bring in the New Year. Jan, back to you.
HOPKINS: But maybe eastern time he'll see it's the new year. Argentina. The President ...
WALLACE: Maybe. Good point.
HOPKINS: Maybe. The President did say he was worried about Argentina, right?
WALLACE: He did. He did say he was worried about the situation. Definitely expressing some concern, but again, definitely voicing confidence that it is a democracy, that the country would in some time in the future have elections, elect a new president. He said he would talk to that new president, whoever it might be.
And Jan, he did say, he spoke with then President Saa on Saturday, when in fact he was still President. But he also made it clear that the country must do what it can to get through this economic crisis, that the U.S. would work with other international financial institutions to help, but clearly seemed to put the onus on the country to try and weather this economic storm. Jan?
HOPKINS: And as for the US economy? He's quite optimistic that things will turn next year, is that right?
WALLACE: That is. Definitely an optimistic note from the President. He said he was going to work hard to make sure the economy rebounds. He also said that next year would be a great year because he said, more Americans would be finding work. We do expect in the days and weeks ahead to talk about the pressure on Congress to go ahead and pass a measure to help laid off workers and give a boost to the sagging economy. And Jan, he's also expected to talk a great deal about the economy in his upcoming State of the Union address later this month. Jan.
HOPKINS: Thanks very much. Kelly Wallace in Texas. And still to come tonight as people welcome in the New Year, fewer of them are doing it with champagne. We'll tell you why.
The euro is now officially the currency of Europe. At least most of Europe. We'll have a live report from Germany. And then a tense standoff between India and Pakistan, the ongoing war against terrorism from a defense secretary, handicaps the global outlook for 2002 when MONEY LINE continues.
ANNOUNCER: Next, Jan speaks with former Defense Secretary, William Cohen.
(COMMERCIAL BREAK)
HOPKINS: 2001 is ending with the world in chaos. The war against terrorism continues, tension between two nuclear countries, India and Pakistan are still running high. More rioting in Argentina as another president resigns. Former Defense Secretary, William Cohen joins us now with a global outlook for 2002. Happy New Year to you.
WILLIAM COHEN, FORMER DEFENSE SECRETARY, CHAIRMAN AND CEO, COHEN GROUP: Same to you, Jan.
HOPKINS: And so what of these events bear watching in 2002? Which will be the most important events of 2002?
COHEN: Well they all bear watching. But certainly what will bear watching is the role the United States. One of the things that we've learned this past year is that we can't walk away from the world because the world would not walk away from us. The United States must remain actively, progressively involved, engaged if you will, in world affairs. Helping to shape world events in ways that are advantageous to the United States and to our friends and allies rather than responding to world events shaping our responses.
And so much of these crisis as we see them also will -- how they resolve will depend on the role the United States will play. And it is my hope -- fervent hope that the administration will deeply engage itself in helping to resolve these issues.
HOPKINS: We have news tonight that there is a search for Mullah Omar going on in Afghanistan now and of course the search for Osama bin Laden continues. When we get into the year 2002 do you have any predictions about whether we'll find either of these Taliban leaders?
COHEN: Well my predictions are perhaps no more valid than anyone else's but I would suspect that both gentlemen, if I can use that phrase very loosely, will be found, captured or killed. And I expect that that will take place during 2002 because of the intensity of the manhunt underway and because there's a price tag on certainly on Osama bin Laden's head at this point. So I think a combination of those factors will result in either the capture or the killing of both individuals.
HOPKINS: India and Pakistan, the tension seems to have lessened a bit today but what do we look forward to in 2002?
COHEN: I think we can look forward to a greater international involvement in helping to bring some resolution to the conflict in the region. It has been a long-standing point of dispute and potential conflict certainly in recent years between Pakistan and India over Kashmir. The Pakistanis want international intervention to help resolve the issue, India is very much opposed to that. But it's going to require the involvement if not the intervention, the involvement of the United States and other members of the United Nations to help reduce the tensions and persuade both countries that backing away from the abyss is the responsible thing to do for these two powers. And the opposite of that, of course, could lead to catastrophe for both countries and for many countries throughout the region.
HOPKINS: Do you think that in the year 2001, the United States learned about taking a leadership role as well as working with coalitions. Is that right?
COHEN: Indeed. I think what we have learned, what we have to continue to express is that we want -- we don't want to go from being what Richard Haus of the State Department once called the reluctant sheriff. We don't want to move from being the reluctant sheriff into being perceived as Robocop.
So we have to exercise leadership but we should do in conjunction with many other countries, our friends. Always being willing to act with others whenever we can, reserving the right to act alone whenever we must. That should be the mantra of this administration and every other administration that has preceded it and we'll follow it.
And so I think that looking for coalitions, partners before we take action is very important and I think this administration has been quite successful in building that kind of a coalition and we've got to do that again and again in the future.
HOPKINS: And it will take more money for defense spending, right, in 2002 and beyond?
COHEN: It will take more money and again, one thing that we have learned -- several things. Number one, we don't have a hollow military that some have charged. We have the most powerful military in the world. Number two; I think that we have been paying a tribute to heroes who are not the real heroes of this country.
They're not on stage, they're not on screen, they are the citizen patriots of this country, they are the firemen, the policemen, the men and women who wear a uniform, the nurses, the doctors, the paramedics, the postal workers, the teachers, we have to get back to the fundamentals that have made this country the great country that it is and stop feeding on the under belly of society.
And I think September 11 has forced us to go back to fundamentals. And so going back to a strong national defense, building early on those kind of technologies, investing in technology that will prove affective 10 and 12 and 15 years from now, much of the same take place today. Those technologies were developed 10 or more years ago and they're being used to grade the affect and impact today.
We have to continue doing more of that. And remember, the axiomatic expression that eternal vigilance is the price of freedom and we have gotten a little bit too self confident, a little bit too, I think, indifferent to the kind of threats that have been out there and have been growing and we have to now recognize that if we're going to protect our great country and the freedoms that we cherish, it's going to require sacrifice, it's going to require some inconvenience and it's going to require more spending for national security.
HOPKINS: And does it mean missile defense shield?
COHEN: It does mean a missile defense shield one, I think, that should be limited in scope. A limited national shield protected against a limited type of an attack. I think that's in our country's overall interest something I strongly supported.
HOPKINS: Thank you. William Cohen, former Defense Secretary and Chairman and CEO of the Cohen Group. Happy New Year to you.
COHEN: Happy New Year, Jan.
HOPKINS: Even though we are just about to begin the year 2002 in the next couple of months some automakers will begin rolling out 2003 models into their showrooms in California. Some of those cars will be pollution free. But the big question is, will consumers buy them?
Casey Wian reports.
(BEGIN VIDEOTAPE)
CASEY WIAN, CNN CORRESPONDENT (voice-over): For decades, California has led the way in forcing automakers to reduce air pollution. Soon the state's boldest clean air effort yet will take effect and automakers are squirming. With the 2003 model year, 10 percent of new cars sold in this state must emit no pollutants. For now, the only vehicles that meet that requirement are battery powered. And automakers haven't found a way to make money selling electric cars.
THAD MALESH, J.D. POWER & ASSOC.: Well we've done a number of studies that show consumers are essentially not interesting in electric vehicles as a substitute for their conventional passenger cars. They point to the high price of the vehicle, they point to the very limited range of these expensive vehicles.
WIAN: But state officials dispute that.
RICH VARENCHIK, CALIFORNIA AIR RESOURCES BOARD: I don't understand the automakers constant argument that people don't like these cars when every single one, I'm not exaggerating, every single one that the automakers offered to the public were snatched up, and people were on waiting lists to get more.
WIAN: The most popular clean air cars so far are so-called hybrid vehicles. With a combination gas and electric motor they drive much like a regular car while spewing a fraction of the pollutants. Toyota has a four-month waiting list for its hybrid Prias. But it and most others aren't clean enough. For now with the combination gas and electric motor they drive much like a regular car while spewing a fraction of the pollutants. Toyota has a four-month waiting list for it's hybrid Prius. But it, and most others, aren't clean enough. For now automakers are preparing to loose money complying with California's new law.
ERNEST BASTIEN, TOYOTA: It's an investment in the market place similar to advertising. There's a capital investment here. I can't stand here and tell you that this is going to be a windfall for us. It'll be challenging.
WIAN: Automakers are allowed to use credits from zero emission vehicles sold in previous years to meet the 10 percent threshold. If they don't, they pay stiff financial penalties.
(on camera): Massachusetts and New York had planned to join California in imposing the zero emission requirement for the 2003 model year, but those plans have been put on hold because of some concerns about consumer acceptance.
Casey Wian, CNN Financial News, Los Angeles.
(END VIDEOTAPE)
HOPKINS: Coming up next we'll take a look at how the rest of the world welcomes in the New Year. We'll also tell you how Europeans welcomed the official debut of the new currency, the euro. And a special report on champagne, sales of the bubbly this year are falling flat.
(COMMERCIAL BREAK)
HOPKINS: In the war against terrorism U.S. officials tell CNN they have received credible reports that Taliban leader Mullah Mohammed Omar maybe hiding in the Baghran area of Southern Afghanistan. Anti-Taliban forces are reportedly moving towards that area. About 50 additional British soldiers arrived in the capital of Kabul today. They'll help keep the peace.
Today, British and local Afghan officials signed off on a role of the multi-national security force. One British official says the agreement allows for peacekeepers to have, "a very robust rule of engagement". We'll have more on the war against terrorism is just a moment.
U.S. forces in Afghanistan welcomed the New Year there by continuing their hunt for Osama bin Laden and Mullah Omar.
But the celebrations around the world were a little more traditional. In Moscow, Russians celebrated at the Kremlin. The Japanese, in Tokyo welcomed 2002 with fireworks, music and dancing. The Chinese said goodbye to the year that saw the country win the 2008 Olympics and gain entry into the World Trade Organization.
In Australia more than a million people gathered around the harbor in Sydney there above the famed opera house. They watched what was billed as one the largest fireworks displays in the world. That fireworks show taking place despite raging brush fires outside of Sydney. More than 100 fires have been burning in Sydney's suburbs more than a week, blanketing the city in a thick haze, forcing officials to issue a total fire ban. Arson is suspected in more than half of those fires.
In Peru, police comb through the ruins of the deadly weekend fire in Lima. Nearly 300 people died in a massive fire that roared through a historic section of town. The blaze, which began in a fireworks warehouse, devoured four blocks of decrepit buildings and shopping galleries. Officials say that crowded street conditions and safety violations contributed to that tragedy. Police have been confiscating tons of fireworks hoping to avoid another disaster.
In Argentina a different crisis. This one is economic and political. But President Bush said today he is confident the country will stay together until a new leader is selected. Just yesterday, interim President, Saldolfo Rodriguez Saa suddenly quite saying he lost the support of his party. He is the second Argentinean president to resign in just over a week. Next in line, the Senate Chief also resigned putting the head of the Lower House of Congress in charge for 48 hours until a new interim leader is chosen. During his short term in office, Rodriguez Saa managed to stop payments on debts owed to banks and individuals outside of Argentina.
The European Union has been using euros for business and banking transactions for a couple of years now. And now, consumers are using euros as well.
Kitty Pilgrim looks at what the change means to Americans.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN FINANCIAL CORRESPONDENT (voice-over): During a tour of Europe used to be a nightmare of impromptu math calculations at the cash register, as Americand figures out just what the exchange rate was on Deutsche marks, Franks or Lira. Relax, no matter which of the European countries you're in, after January 1, the math will be the same. All prices and currency will be euros. Europeans all ready have starter kits to get them used to the look and feel of the coins.
LAURA RHAME, BROWN BROTHERS HARRIMAN: Right now you have very big disparities between the cost of having dinner in Paris versus the cost of having dinner in Spain for example. Americans traveling across Europe will probably see it now in a much more clear way, the real difference between the prices and I think that will help equalize to some extent, the prices across Europe.
PILGRIM: Twelve to fifteen billion dollars worth of euro notes will go into circulation. But a lot of cookie jar money in Franks or Lira for example, money perhaps that was earned outside the tax system, is being spent before the conversion. Economists point out that they are seeing a spurt of buying in everything from appliances to houses just before conversion. Some of those American goods.
KEITH STOCK, OPPENHEIMER: We're in the throes of a recession in the United States right now and it's in our interest, not just to focus on domestic economic policy and stimulus, but to also see a strong Europe. Because that will increase the demand for American made goods and services, which has actually been a shrinking in recent months.
PILGRIM: Many U.S. banks have been educating their customers about conversion to the euro, putting notices on the ATM screen. All in the effort to keep the flow of information about conversion current on both sides of the Atlantic.
Kitty Pilgrim, CNN Financial News, New York.
(END VIDEOTAPE)
HOPKINS: Now for more on Argentina, the euro and the state of the U.S. economy, Robert Hormats, Vice Chairman of Goldman Sachs International joins us. Welcome.
ROBERT HORMATS, CHAIRMAN, GOLDMAN SACHS INTERNATIONAL: Good to be here again.
HOPKINS: So the euro, Argentina, the war against terrorism, what's going on in the U.S. economy. What will be important six months from now?
HORMATS: I think the war against terrorism will be very important to the extent we can be successful in catching Mullah Omar and Osama bin Laden and wiping out these people. We get an added measure of security at home that will help in our own economic recovery. The recovery seems to be moving in the right direction. We're still in a recession but it looks like spring will see a recovery if there's no additional act of terrorism. That would be critical.
HOPKINS: The new euro in Europe, does this spell the beginning of a very strong Europe and a strong competitor to the U.S.?
HORMATS: Well it could. The Europeans really need to do a lot of restructuring of their labor markets, rules and regulations that tend to deter investment or dissuade people from investing. There are a lot of European money still comes here because returns on capital have been more robust. If they can do the internal things that's necessary to make themselves more competitive then the euro actually can strengthen. The euro constitutes today about 14, 15 percent of global reserves. The dollar about 68 percent. If the euro becomes more prominent, countries will put it in their reserves, more transactions will be done in euros and it will become stronger.
HOPKINS: Has there been a lot of resistance to getting rid of the French frank and the Deutsche mark?
HORMATS: Well there's sort of sentimental support in some parts of Europe for the legacy currencies as they call them, the frank and the Deutsche mark and the lira but they'll all have to do it over the next couple of months. There'll be some bumps in the road. They're worried about, rounding up in shops so they pay a little bit more in euros. They're worried about some sort of fraud taking place, counterfeiting, of that sort. ATMs might not have as much money in euros as they need, but they'll work it through and if they do the right things, the euro transition should be a smooth one.
HOPKINS: Argentina, a situation that goes from bad to worse to worse.
HORMATS: It's a real tragedy. What it shows you, I think, is countries need to have strong domestic institutions if they're going to have strong and sustainable economies. The problems here is the politics have unraveled in Argentina, economic policy unraveled. They were living beyond their means for a long time -- higher standards of living by basing it on borrowing from abroad and from their own people.
So they now have to come to grips with a politic crisis to restore some confidence in the political stability and an economic crisis as well.
HOPKINS: But can Argentina do that alone or does the U.S. have to help?
HORMATS: They really have to take primary responsibility themselves. The U.S. can help with the margin if they come up with a strong economic plan. But there doesn't seem to be a consensus internally on an economic plan and without that it's awfully hard for foreigners to put money in and have the money be effective.
HOPKINS: Thanks very much -- Bob Hormats, Goldman Sachs International.
And for reaction to Europe's new currency, the Euro, we head to Frankfurt, Germany where Richard Quest is standing by. So, Richard, have you gotten your Euros from the ATM machine? I think we cannot hear him at this point. Well, go back when we have the audio for Mr. Quest.
Coming up on "MONEYLINE" -- it's the biggest night of the year for champagne drinkers but it's not just the bubbles that are in danger of going flat this year. And traders on the floor of the New York Stock Exchange rang out a less than successful year -- at least if you make those judgments by looking at the major averages.
We'll be taking a look at the outlook for the economy and the markets when we return.
(COMMERCIAL BREAK)
HOPKINS: Let's go back to Frankfurt, Germany where I understand Richard Quest is standing by who can tell us about the new Euro and how it's going so far. So, Richard, are there long lines at ATM machines?
RICHARD QUEST, CNN CORRESPONDENT: Yes -- indeed there are, Jan. Sorry about a moment or two ago. The cold in Frankfurt -- it's the middle of the night. The fireworks are going off and it all seems to be effecting our equipment.
This is what it looks like, Jan. This is the 15th Euro note. The new notes that we've just had to queue up for at the ATM machine. A 50 and a 10. It's got the new security features on -- the holograms, the iridescent strips, the metal foils. This is worth roughly $43 -- $4 dollars depending on the rate of exchange.
Here in Frankfurt they have now lit the official Euro sign. The crowds are here out and about in an extraordinary display. Fireworks have been going off across. People are celebrating. Clearly enjoying their new Euros, Jan.
The new currency will be across 12 countries of the Euro zone. Only Britain, Denmark and Sweden are not part of the Euro. And there have been over 15 billion notes -- have been printed and over 60 billion coins have now been distributed. From now the Euro is the currency of the Euro zone, Jan.
HOPKINS: Thanks, Richard Quest -- in Frankfurt, Germany. Happy New Year to you.
In the war against terrorism a Special Operations soldier was shot and wounded near Jalalabad, Afghanistan today. It happened when a vehicle carrying Special Ops forces came under heavy enemy fire. The soldier received a non-life threatening wound to the leg. The Pentagon says U.S. Special Forces are also on the ground assisting anti-Taliban fighters looking for Taliban's Supreme Leader Mullah Mohammed Omar. He is believed to be in the Baghran area of southern Afghanistan.
India -- Pakistan relations could be easing a bit. Today India's foreign minister said that Pakistan's arrest of a militant leader yesterday was a step in the right direction. Both countries have recently beefed up their forces along the disputed border of Kashmir and issued sanctions against each other.
New York Mayor Rudy Giuliani will officially leave his post in less than six hours. Earlier he received enthusiastic applause as he left city hall in lower Manhattan.
Mayor Giuliani said his proudest accomplishment was quote "restoring the spirit of the city."
The markets finished lower for the last day of 2001. And for the year in 2001 the Dow lost more than seven percent -- the NASDAQ down 21 percent -- the S&P 500 dropping 13 percent for the year. The Russell 2000 managed to finish higher by one percent.
Among the top Dow performers in the year 2001 -- Microsoft -- it gained 53 percent -- AT&T and IBM up more than 40 percent. Among the biggest Dow losers in the year -- Boeing dropped more than 40 percent -- Merck, Hewlett Packard, American Express lost more than 35 percent.
Among the winners on the NASDAQ -- Dell Computer gained more than 55 percent. Apple Computer climbed more than 47 percent. Intel climbed well over four percent.
Among the NASDAQ big cap losers -- Sun Microsystems, Cisco and Oracle all losing more than 50 percent. Joining me now to wrap up the year and to look ahead to the year 2002 -- Christine Romans and Amanda Lang. And also we have with us an economist, Lakshman Achuthan. But maybe we'll talk to Christine and Amanda first.
So this was the second year in a row that these indexes fell, right, Christine?
CHRISTINE ROMANS, CNN CORRESPONDENT: And the first time that's happened since the 1970s. It's been a long time since we've put back to back losses annual losses together. So on the year it was tough for Wall Street.
In fact, one trader today was telling me it was tough for a lot of reasons on Wall Street. They can handle a seven percent decline, they can handle two back to back declines but the confidence of Wall Street was really shaken by everything that happened on downtown Manhattan. So it's a very bitter sweet close to the year. And looking ahead to the next one they're hoping for an economic recovery but point out these markets have come very far in the last few months. We're down on the year but the Dow is up some 20 percent since the worst levels in September.
HOPKINS: To bring in Amanda -- the NASDAQ down a lot for the year second year in a row in a decline.
AMANDA LANG, CNN CORRESPONDENT: Yeah -- it's tough not to look at it in that large of a context. The NASDAQ down 20 percent on the year -- terrible obviously. But in a longer term context, of course, for many of us that's nothing. The losses have been steeper if you go back a year or two. However, off the lows -- recent lows -- it's a nice jump. So it sort of depends on your perspective. If you're trading into the markets on the lows you're doing well. If you bought five years ago you're still suffering.
HOPKINS: Well -- and if you bought Cisco at the peak you are -- you may never get out of that hole.
ROMANS: But if you bought at the beginning and you held on and got out at a reasonable of time it was a great . . .
LANG: Although I looked at the numbers today -- just to put it into context we saw Microsoft up 56 percent last year helping both Dow and NASDAQ. But if you put $10,000 in Microsoft three years ago you've got about $8,000 today. So one year was good -- three years no good.
ROMANS: Very interesting -- thanks. Lots of important things to look at in the beginning part of next year as well. Does January effect the January barometer? How will that go?
HOPKINS: If we haven't already.
ROMANS: Right. Will there be new money and new optimism in the markets? And I love to talk about these (UNINTELLIGIBLE) moving averages. But technically there's a lot of tough territory above right where we are in all the major indexes. HOPKINS: Ten thousand for the Dow -- below 2000 for the NASDAQ. That's the end of 2001. Thank you both -- Christine Romans and Amanda Lang.
So let's being in economist Lakshman Achuthan and also Robert Hormats of Goldman Sachs.
Lakshman, you first. The economy -- you watch what's gong on in the stock market and what's going on in the economy. Are you starting to see some positive signs?
LAKSHMAN ACHUTHAN, ECONOMIC CYCLE RESEARCH INSTITUTE: Yes -- we are starting to see some positive signs -- particularly in the most frequently available leading indicators -- the weekly leading indicators. And there for about I'd say almost two and a half months now we've seen them advancing. And this is getting close -- closer and closer to not a tentative call but a real call of an upturn in the economy.
HOPKINS: Are you ready to make that call yet?
ACHUTHAN: Getting close -- we're getting pretty close. It would be hard for us not to make that call in a week or so because these indicators have persisted in their rise, it's been a pervasive rise and it's been a relatively pronounced rise.
Now an upturn in the economy in 2002 is just that -- it's an upturn from a decline. So it may be awhile until we feel like the economy has actually gotten better.
HOPKINS: And awhile before we feel the same kind of feeling we had before we went into the recession, right?
ACHUTHAN: Oh, certainly. I wouldn't -- saying that there's a cyclical upturn in the economy in 2002 is not saying that we're returning to the economy that we had in the late 90s. I think that that is a long way off.
HOPKINS: Bob Hormats -- you look at the global situation. Is the U.S. going to bring the rest of the world out of recession?
HORMATS: Well, that's certainly what the rest of the world is hoping. One thing is clear -- we're not going to export our way out of this recession because all of the other major areas of the world are in recession. Japan's in recession, a number of countries in Europe are in recession, a number of countries in Latin America are in recession.
HOPKINS: So we can't sell things to them.
HORMATS: We can't sell a lot of goods, which particularly hurts the manufacturing sector of the economy. So they're counting on us to boost our growth rate and some of these countries are hoping to export themselves out of the current recession. But so much depends on the United States at this point. I don't think our recovery is going to be robust enough to help these countries get out of recession without their own stimulative efforts to a great degree than they've done already.
HOPKINS: But you do think that the year 2002 will bring a recovery in the economy? It may be weak but . . .
HORMATS: I do. I think there will be a recovery by spring. Energy prices are down, a lot of refinancing of mortgages, monetary stimulus, fiscal stimulus. Inventories have been liquidated at a very rapid rate. That all helps but we have a lot of debt on the household books, a lot of corporate debt -- still over capacity. And we still have concerns about terrorism. All of them are negatives for the economy. So tough head winds but a recovery nonetheless.
HOPKINS: Lakshman, what things do you look at for the year 2002 that we should be paying particular attention to?
ACHUTHAN: Well, I think the leading indicators are telling you we will have an upturn in the economy. And I think one of the things that you can count on is that inflation will remain low because, as Bob mentions, we are in a synchronous global recession. And while we may rise first, abroad they're still contracting. So we an import dis- inflation continuing forward even though we're recovering.
And so I think that's something you can certainly count on even during a weak recovery.
HOPKINS: Thank you both -- Bob Hormats and Lakshman Achuthan.
Even before the tragic events of September 11th 2001 was shaping up to be a very tough year for business. The economy had slipped into recession months before -- prompting layoffs by the thousands and quarter after quarter of disappointing earnings.
Chris Huntington takes a look at the big stories of 2001 -- the ups and downs of corporate America.
(BEGIN VIDEO TAPE)
ANDREW FASTOW, FORMER CFO, ENRON: And I wish you all a happy holiday season and thank you for coming.
CHRIS HUNTINGTON, CNN CORRESPONDENT: That's Andrew Fastow. He used to be the chief financial officer at Enron. Sitting next to him -- his new defense attorney -- one of the best lawyers in America -- David Boyce.
When the year started, Enron executives like Fastow and Chairman Kenneth Lay would never have predicted that by December they'd be dodging creditors, congressional hearings, federal investigations and shareholder lawsuits.
Enron's collapse from being the seventh largest company in America to the biggest bankruptcy in U.S. history capped a year notable for failures and feuds.
UNIDENTIFIED MALE: And do you swear that the testimony you're about to give is the truth and the whole truth and nothing but the truth?
HUNTINGTON: Ford and Firestone played out a bitter blame game, but there were no winners. Both companies lost money, and CEO Jacques Nasser lost his job to Henry Ford's grandson.
Family ties between the Hewletts and the Packards tied up Carly Fiorina's plan to merge with Compaq. And she didn't have a book deal like GE's Jack Welsh did to soothe the pain.
JACK WELSH, FORMER CEO OF GENERAL ELECTRIC: We're here to make this transition perfect.
HUNTINGTON: The General Electric-Honeywell merger was supposed to be the grand finale to Welsh's brilliant career. But the deal was squashed by a European anti-trust bureaucrat named Mario Monty.
In 2001 we waved good bye to the XFL -- a mix of wrestling hype and second rate football, to Napster -- the breakthrough online music sharing system and to medical Web site drkoop.com, Web portal Excite@Home and TWA.
UNIDENTIFIED FEMALE: Sold for 27,000.
HUNTINGTON: Sotheby's and Christie's cooked up the business scandal of the year -- top executives guilty of price fixing. And JDS Uniphase set a low mark for the troubles in high tech -- losing a world record $44 billion in a single quarter.
Over capacity and lack of visibility were more than just buzzwords as corporate profits declined every quarter for the first time in a decade and American companies from Silicon Valley to the Rust Belt announced record layoffs.
The terrorist attacks of September 11th deepened the recession that officially started in March. But the year closed with several breakthroughs.
BILL GATES, MICROSOFT: We're very pleased that this ruling reverses the lower court ruling and sets a much higher standard for these issues than the lower court applied.
HUNTINGTON: Microsoft and the Justice Department settled their long running feud. Veventi Universal stormed the American media stage buying USA Networks and putting Barry Dillard back at the helm of a major studio. And Comcast snagged AT&T's cable TV business in the biggest deal of the year.
The biggest business stories of the year were the terrorist attacks, the end of the economic boom and the collapse of Enron. But the legacy of 2001 may be the challenges that those events pose to investor and consumer confidence.
Chris Huntington, CNN Financial News, New York
(END VIDEO TAPE) HOPKINS: What a year it was -- 2001. Coming up on "MONEYLINE" -- champagne is usually the drink of choice on New Year's Eve. This year it may be different. We'll tell you why.
"The Lord of the Rings" tops the charts for the second weekend in a row. A look at the weekend box office figures when we come back.
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HOPKINS: Champagne sales are fizzling. This New Year's Eve many Americans are passing up the traditional holiday drink. Lisa Leiter reports on why bubbly sales are falling flat.
(BEGIN VIDEO TAPE)
LISA LEITER, CNN CORRESPONDENT: It's the drink that defines celebration.
UNIDENTIFIED FEMALE: Happy New Year.
LEITER: With fewer people feeling festive the champagne business has been anything but bubbly at a critical time. The holiday season accounts for about a third of annual champagne sales.
JEAN-LOUIS CARBONNIER, CARBONNIER COMMUNICATIONS: Marketing conditions are generally are fairly difficult because of the difficult economic situation that we have, because of the uncertainty that the attacks on September 11th have created.
LEITER: But the champagne slowdown started well before September 11th. Shipments are down 40 percent this year partly because of weaker demand but also because so many importers overstocked for millennium celebrations.
This year rising unemployment and falling stock prices have especially hurt sales of high end vintages.
MIREILLE GUILIANO, PRESIDENT AND CEO, VEUVE CLICQUOT: The top of the market -- the prestige (UNINTELLIGIBLE) -- the very high priced bottles of champagne are showing a decrease. And that's mostly because many corporations are cutting down on their corporate gifts.
WILLIAM TERLATO, PATERNO IMPORTS: Businesses were changing. People were focusing more on value type products. And so I think that 2001 was a challenging year.
LEITER: Challenging for importers like Paterno because hotels and restaurants are not stocking their cellars. People are not eating out as much and when they do they're spending less. This Chicago restaurant cut the price of its New Year's dinner from $250 to $195.
CHRISTINE TULLY, GENERAL MANAGER, SPIAGGIA: I think everyone's being a little bit more cautious and just really looking to get value.
LEITER: This popular $120 bottle of cabernet would normally be sold out by now here at Sam's Wines & Spirits in Chicago, the nation's largest liquor retailer. But this year there's still a few bottles left on the shelves.
Sam's is selling a lot of its low and mid priced wines to people who feel they do have something to celebrate this year and those who feel guilty about splurging.
UNIDENTIFIED MALE: I feel guilty. I do -- I feel awful. But we've had a great year.
LEITER: Lisa Leiter, CNN Financial News, Chicago.
(END VIDEO TAPE)
HOPKINS: A solid weekend at the box office. Moviegoers taking advantage of the holidays to head to the theater. The big winner -- "The Lord of the Rings" for the second weekend. The New Line cinema film -- a unit of CNN's parent company, AOL Time Warner -- pulled in more than $37 million over the December 28th weekend.
For the third week in a row Oceans Eleven held the number two spot -- the Warner Brothers picture -- also a unit of AOL time Warner -- brought in more than 17 million.
Rounding out the top five -- Columbia Pictures Film "Ali" -- number four -- the children's cartoon -- "Jimmy Neutron, Boy Genius." Two films at number five -- "Vanilla Sky" and "Harry Potter" -- both bringing in more than $11 1/2 million over the weekend.
Coming up next a look at your e-mail and some of what to expect this week.
(COMMERCIAL BREAK)
HOPKINS: A scene from Times Square in New York where revelers are gathering for the New Year. Tomorrow all U.S. markets are closed as are banks, post offices in observance of the New Year's holiday. For the rest of the week investors can look forward to this information -- auto sales. The National Association of Purchasing Managers index, construction spending and the employment report.
Now for a look at some of your thoughts. Robert Shea of Stuart, Florida suggests how the government should handle the current tensions between Pakistan and India. He writes -- quote -- "[E]ncourage Vice President Cheney to go to Pakistan and then to India and then to the UN. This is an ideal task for the United Nations, a multi-national military force, to act as a barrier between the two countries to defuse a possible atomic war (sic)."
Tom Austin of Cleveland, Ohio had a comment about the newest members of the Securities and Exchange Commission. Tom wrote, "I recently read that President Bush recently named two officials of major accounting firms as member of the SEC. In view of the SEC's investigation of the Enron fiasco these nominations seem suspiciously fortuitous. The American public expects justice to be served."
And a viewer commented on a recent report filed by Fred Cotiama. The story focused on a city in Alabama on the cutting edge of technology. The viewer says, "Fred felt compelled to end his report by stating the biggest problems CEO's have with Huntsville is its last name -- Alabama. It gave the impression that overall Alabama is still a backward state."
The viewer writes that the city of Birmingham has elected a black mayor for the past 30 years, black police chief for the past 10. Bottom line, get over it! We no longer live in the 1950s."
We love to hear from you. E-mail us at moneyline@cnn.com. Please do include your name and address.
And now before we leave you tonight we take you live to London where the New Year is about to begin. There is Big Ben -- probably the most famous clock in the world -- about to strike midnight to ring in the year 2002. Crowds of revelers are cheering on. Many Londoners defying a police request to avoid gathering in Trafalgar Square -- that's what you're seeing there. Police have had trouble controlling crowds. And there is Big Ben.
It's now 2002 in London. You see the crowds in Trafalgar Square celebrating that fact. England is also perhaps celebrating its independence. Britain, Denmark and Sweden are the only three countries in the European Union that have chosen not to adopt the Euro as a single currency at its launch.
Now, you're looking at pictures from Edinboro, Scotland, fireworks in that city. That's Moneyline for this Monday evening. Happy New Year. Thanks for joining us. I'm Jan Hopkins in for Lou Dobbs. Good night from New York. "WOLF BLITZER REPORTS" begins right now.
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