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LOU DOBBS MONEYLINE
Israeli Prime Minister Arrives in Washington; Stocks Take Tumble
Aired May 6, 2002 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: This is LOU DOBBS MONEYLINE for Monday, May 6. Here now, Lou Dobbs.
LOU DOBBS, CNN ANCHOR: Good evening.
Israel's prime minister Ariel Sharon is in Washington. He says Yasser Arafat is a terrorist. Tonight, Sharon pushing harder for a new Palestinian leader than for peace. We'll go live to the White House.
Eight Palestinian gunmen could hold the key to resolving the deadly standoff at Bethlehem's Church of the Nativity. We'll go live to Bethlehem.
Twelve jurors will hold the key to the future of thousands of Andersen employees. Jury selection in the government's obstruction of justice case is still underway. We'll be going live to Houston for the latest.
And the new CEO of Enron has survived conflict of interest charges. Now he's charged with resurrecting the once mighty energy trading company. Stephen Cooper is our guest tonight and will tell us how he plans to do it.
"Spider-Man" leaps to a new movie high. Will "Star Wars" knock him back to earth? We'll take a look at the potential battle at the box office.
But first, Israel's prime minister is in Washington this evening on a smear campaign. Ariel Sharon says Yasser Arafat is inextricably linked to terrorism. Sharon says he has documents to prove it. Sharon plans to meet with the president tomorrow to talk about his plan for an interim Palestinian/Israeli peace deal. For more now, I'm joined by senior White House correspondent John King -- John.
JOHN KING, CNN SR. WHITE HOUSE CORRESPONDENT: Lou, good evening to you. On the one hand, we're told Prime Minister Sharon will have some details about an interim step toward at least calm, if not ultimately peace. We're told that involves more security checkpoints and buffer zones between the Israeli and the Palestinian lands.
However, in the other hand, Mr. Sharon carries 100 pages of documents, a new report from the Israeli government that he says shows without any doubt that Yasser Arafat and top aides have been directly linked to those suicide bombings against Israel in recent months, and because of that, Mr. Sharon says he should not be pressured by the United States government or anyone to deal directly with Yasser Arafat, a man he labels a terrorist.
So, a delicate diplomatic challenge for President Bush who, on the one hand, agrees with much of Mr. Sharon's case against Mr. Arafat, but on the other hand, wants to move this process forward. At this delicate moment, has the Arab nations onboard so far. King Abdullah of Jordan here at the White House today. He told Vice President Cheney point blank there's no way around dealing with Mr. Arafat, and like it not, we're told that will be one of the tough conversations between the president and the prime minister tomorrow.
Mr. Sharon making the rounds of other senior officials today. He was over at the Pentagon to meet with Secretary Donald Rumsfeld, some time with the secretary of state as well. Mr. Bush's goal, we are told, is to try to move this process forward. The Israelis want to go in incremental steps. Most senior administration officials agree with that strategy, but they are reluctant to talk about that in public because the Arabs, of course, want to go for it all. They want this president to push for an immediate resumption of Israeli/Palestinian peace talks. Again, a very difficult moment for the president. He was trying to lower expectations today saying a lot of conversation still to be had. Don't look for any major breakthroughs here tomorrow -- Lou.
DOBBS: John, thank you very much. John King reporting from the White House.
The deadly standoff around Bethlehem's Church of the Nativity shows some signs of a possible breakthrough. More than 160 people are inside the church. They are surrounded by Israeli sharpshooters and troops. Now negotiations to end that five-week-old standoff center on the possible extradition of at least eight Palestinian gunmen. Matthew Chance joins me now from Bethlehem -- Matthew.
MATTHEW CHANCE, CNN CORRESPONDENT: Lou, that's right, there's been a lot of anticipation over the past 24 hours or so, in fact, that this standoff was going to come to an end around the Church of the Nativity here in Bethlehem. Still, though, there is no clear word about the progress of negotiations. We're told that negotiators from both the Israeli and the Palestinian side, with American involvement as well, CIA involvement, are still hammering out the final details of an agreement, an agreement to shape that will see perhaps as many as 30 individuals, wanted Palestinians, holed up inside the church be transferred to the Gaza Strip where they're to be tried under a Palestinian court.
Another group of Palestinians, perhaps the most hardcore of the wanted men inside the Church of the Nativity, are to be cast into exile according to the plan. Exile in Italy, is the country being discussed now. But still, a long way to go at this point, it seems, before any final agreement is reached. Olivia Rafovitz is the spokesman here in Bethlehem for the Israeli army.
DOBBS: Matthew Chance, thank you very much, reporting from Bethlehem. Thank you.
Every year, the United States sends $3 billion of aid to Israel. That's more than $100 billion since 1973. It doesn't take into account money that flows into the country through other channels. Tim O'Brien will have that story for us later here in the broadcast.
Meanwhile, there is more news about the peace efforts in the Middle East tonight, including the view of a top Saudi Arabian official. In an Oval Office meeting with the president of the United States, Saudi Arabia's foreign minister said, quote, "your help to Israel is seen as hostile to the Arab world." That discussion, by the way, took place in 1973 with then President Richard Nixon.
News of that talk came today at more than 107,000 pages of Nixon- era papers were made public for the first time. Another echo from today's diplomacy from those papers, a talking point that was released from President Nixon. That talking point recommending, quote, "our position is that fighting should stop and that it should be followed by a serious diplomatic effort to reach a final peaceful solution" -- 1973.
Oil prices today fell after Iraq declared it will end its month- long embargo. The Iraqi ban protesting Israel's military action in the Palestinian territories. Iraq said that it will resume oil exports Wednesday. Oil prices are virtually unchanged, by the way over, the course of that Iraqi embargo over the past month, actually down nine cents a barrel. Today, light sweet crude fell another 50 cents settling at $26.12 a barrel.
Now, to Tim O'Brien's piece. Every year, the United States sending $3 billion of aid to Israel. Tim O'Brien tells us where the money is coming from and where it's going.
(BEGIN VIDEOTAPE)
TIM O'BRIEN, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): The USF-16 fighter jet is a key component of the Israeli Air Force. Israel buys them from the United States and a lot of other military hardware with U.S. dollars. Under the 1973 Camp David accord, the United States gives Israel $2.2 billion a year solely for the purchase of U.S. military equipment. It is the single most important aspect of U.S. aid to Israel.
UNIDENTIFIED MALE: The military assistance is very important to Israel because it comes with a commitment from the United States to maintaining Israel's qualitative edge over any potential adversary.
O'BRIEN: In addition to the $2.2 billion in military assistance, Israel also receives around $800 million a year in unrestricted grants from the U.S., and roughly $300 million in private donations. With a population of about 6.2 million, U.S. aid breaks down to about $128.30 per person.
Egypt, by comparison, receives about $2 billion a year in U.S. aid, but because its population is more than 10 times that of Israel, the per capita amount is $20.80. U.S. aid is equivalent to more than three percent of Israel's $100 billion economy. The U.S. is clearly Israel's closest and most reliable ally. Yet the country could probably survive economically without U.S. financial help.
PROFESSOR JOHN WILLOUGHBY, AMERICAN UNIVERSITY: It would definitely suffer a decline in living standards, a decline in income levels. But, yes, it could survive because it as dynamic economy with a lot of very skilled workers, which is its main asset.
O'BRIEN: The United States also does some $21 billion a year in trade with Israel. Europe however is Israel's largest trading partner.
(END VIDEOTAPE)
(on camera): Over the next six years, U.S. economic aid to Israel will be phased out, but military aid will increase to nearly $2.5 billion a year. The defense of the Israeli economy is not one of this country's highest priorities. It's the defense of Israel itself that would appear to be paramount -- Lou.
DOBBS: Tim, thank you very much. Tim O'Brien.
The end of the Iraqi embargo contributed to what was a steep selloff on Wall Street today. Stock prices tumbled. The Dow down nearly 200 points. The Nasdaq fell 35 points, closing below 1,600. The Nasdaq down 12 of the past 14 sessions. The S&P 500 down nearly 21 points. We'll have the complete wrap-up for you on Wall Street later in the broadcast.
Embattled Andersen today settled its legal problems with the Baptist Foundation of Arizona. Andersen agreeing to pay $217 million to the foundation without admitting or denying guilt. That settlement comes a week into the trial being held in Phoenix, Arizona. Andersen claimed it was unaware of accounting irregularities at the foundation prior to its collapse back in 1999.
As one legal battle ended for Andersen, another began, this one in Houston. Jury selection began today in the government's trial against Andersen. This is the first criminal trial arising from the collapse of Enron, an Andersen client. Andersen charged with obstructing the investigation into Enron's downfall by destroying Enron-related documents. Peter Viles has the report from Houston.
(BEGIN VIDEOTAPE)
QUESTION: So you think you can get a fair jury out of this pool?
RUSTY HARDIN, ANDERSEN DEFENSE ATTORNEY: Yes.
PETER VILES, CNN FINANCIAL NEWS CORRESPONDENT (voice-over): That jury will come from a pool of 106 Texans called to Houston for a chance to sit in judgment of Andersen and of the government's aggressive strategy to indict the entire firm for allegedly obstructing justice in the Enron investigation.
In questioning potential jurors, lawyers for both sides gave previews of their trial strategies. The government has a guilty plea in its pocket from fired Andersen auditor David Duncan and told the jury pool that Andersen itself is guilty if the government can prove two things: one that Duncan acted within the general scope of his job, and two, that he intended to help the company by shredding documents.
Said prosecutor Matt Frederick, quote: "Andersen can't say 'just a few people did this. We've got thousands of others who didn't do anything.' That's not a defense."
Andersen's defense attorney, Rusty Hardin, made clear he will argue that the guilty plea by Duncan doesn't necessarily mean a crime was committing. He asking the jury pool, quote: "How of many you are in businesses where you routinely destroyed documents?" When 30 or 40 hands up, he asked, "Well, are y'all committing a crime?"
He continued: "How many of you have e-mail that you routinely go through and delete?" Again, the hands went up. Hardin said, quote: "Are you felons?"
(END VIDEOTAPE)
(on camera): Now, the jury selection continues in the building behind me at this hour, Lou. They've gone past 5:00. There are hopes in the courtroom, we're told, that they will strike -- reach a jury tonight. That means opening arguments tomorrow morning, and that means, we're told by lawyers for David Duncan, that he could be called to testify, the government's star witness and key witness, called to testify as early as Wednesday of this week -- Lou.
DOBBS: And as we understand it, 36 jurors now in the pool. They will reduce that to 16, is that correct?
VILES: Sixteen in all, four will be alternates and 12 will be chosen from the jury. They started with 106. They immediately took out seven who flatly told the court that they didn't think they could be impartial in this case. Then they started working down from 99, Lou.
DOBBS: OK. Well, Pete, the good news, at least from your perspective, is the trial -- the judge, Judge Harman, said May 29, but today suggested, did she not, that it might go a little longer, should it be required?
VILES: She sure did. She has said in the past she has a vacation booked then. She's already booked the tickets, bought the tickets, and she doesn't want to be in court beyond that. But she said today if the trial lasts beyond that, certainly she'll postpone her vacation. And she also warned the jury this is not like television. We're not going to finish in time for the commercial breaks. These things take on a life of their own, so this could last awhile -- Lou.
DOBBS: Even on occasion interfering with a judge's vacation. All right, Pete. Thanks very much. Peter Viles from Houston.
A deadly tornado ripped through a western Texas town, ironically, the town of Happy, Texas. The twister killed at least two people, injured four others. That tornado one of at least six reported in Texas damaging 60 homes and buildings yesterday.
Outside of Denver, Colorado, a raging wildfire has forced 2,400 residents from five subdivisions to evacuate their homes. High winds there have grounded air tankers that were helping ground crews fight that fire. Officials estimate only 10 percent of the 400-acre fire has been contained.
Coming up next, Enron's interim CEO, Stephen Cooper, will be here to tell us whether the company's restructuring offers any hope for creditors and shareholders.
And Sony has good reason to celebrate the success of "Spider- Man." But its celebrations may be short-lived as other studios roll out their summer blockbusters. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Enron has faced no indictments either individually or corporately since the scandal broke. It's now in the process of reorganizing itself as a smaller pipeline and power company. That process is being led by the company's interim CEO, Stephen Cooper, who was appointed in February despite concerns about his contract, the size of it, and potential conflicts of interest. Stephen Cooper joins me now from Houston, Texas. Stephen, good to have you here.
STEPHEN COOPER, INTERIM CEO, ENRON: Thank you.
DOBBS: This idea, the plan and reorganization to break out, if you would, the basic assets and to move it out of reorganization, how hopeful are you that you can prevail in that desire?
COOPER: Well, what we've presented to the creditors is really a process to look at a variety of alternatives for maximizing their value. Hopefully, what we proposed will be the -- will be the winner by way of maximization. But we're going to be studying it with the creditors over the next several months.
DOBBS: And amongst those creditors also involved in this, JP Morgan Chase and Citigroup, in considerable discussion about their proper role in the -- both the role in the creditors' committee, their role in terms of claims against them, and the way to proceed. What is your best judgment of those issues?
COOPER: Well, those issues are going to be tackled by an examiner which is -- he or she has yet to be named -- but from my perspective, those are issues that are really dealing with the past whereas the process and the proposals that we put on the table deal with the future. From my perspective, the examiner will handle the past and my colleagues and I will handle the future.
DOBBS: Well, that future, could it not, Stephen, be determined in large measure about the role of those two banks and other large Wall Street firms as to whether they emerge as creditors, what the proper claims are, and their relationship to the events that led to the collapse of Enron?
COOPER: Well, I suppose...
DOBBS: I mean, I quite take your point about the issue of history and the future, but they seem inextricably intertwined in the case of millions of dollars here.
COOPER: Well, I suppose that could have an impact on the claims pool at the end of the day, Lou. But, you know, fortunately, that's going to be an effort which will run in parallel with what we're doing and won't detract us from moving forward with a process to evaluate OPCO.
DOBBS: OPCO, we should say, the name change, is this a final deal? Is it OPCO Energy Company?
COOPER: No, no. OPCO just stands for options that we're preserving for economic stakeholders. And I'm hopeful that the employees will come up with a new name for the emerging company.
DOBBS: Something a little -- with a little more pizzazz than OPCO?
COOPER: I hope so.
DOBBS: Amongst the OPCO issue, you talked about the employees. As I understand it, about half of the current level, something just above 21,000 employees would be let go in this?
COOPER: Well, no. That's roughly 12,000 to the extent that we're successful in the OPCO proposal. We'll go with OPCO. Most of the others will go with those other companies that we are selling. And the objective there is to ensure that those jobs go with the transfer of ownership. There will be some further reduction at our Houston headquarters as we begin to wind down those businesses. But we have informed the employees that there will be future contractions and that's frankly why we put our retention and severance programs in place.
DOBBS: With those programs in place, also the issue of the shareholders. Is there, in your judgment, any hope for common shareholders as a result of reorganization?
COOPER: I don't believe that there will be any residual value available for the common shareholders. I think that the value in the reorganization, when you look at the more senior claims, will prove that at the end of the day, the shareholders are without any residual value.
DOBBS: And without that residual value, part of the reorganization, the beneficiaries for that reorganization will obviously be the creditors. But I'm confused about something, Stephen. The P.G. & E, the Portland Gas and Electric company I thought had been sold to Northwest. And now I understand it's part of the reorganization company? OPCO? COOPER: We have a contract for the sale of Portland General Electric. However, there remains some open issues. We are attempting to work through that with Northwest Natural. But in our base case, we are assuming at least for the moment that that sale doesn't close.
DOBBS: OK. And how soon do you think you can get a decision on first OPCO, as an entity outside reorganization?
Can you hear me?
COOPER: Yes.
DOBBS: How soon do you expect to have a decision of whether or not you can create this OPCO, a good bank if you will vs. the bad bank that would remain in bankruptcy?
COOPER: Well, we hope to be well along with the process by the middle of the summer. And we hope to have the entity or entities out from under Enron's chapter 11 by the end of the calendar year.
DOBBS: OK. Stephen Cooper, we appreciate you being with us.
COOPER: Thanks so much, have a wonderful evening.
DOBBS: You too. Thank you.
Still ahead here, this wonderful evening will be interrupted by telling you about a grim day on the markets. We will be going live to the New York Exchange, the Nasdaq. Jan Hopkins will be here to tell us what was behind today's big sell-off.
And the federal reserve meeting tomorrow to set the direction of interest rates. Critics say it has run out of weapons in the battle to manage the financial economy. We'll have that story and a lot more coming up next. Stay with us.
(COMMERCIAL BREAK)
DOBBS: A major sell off on Wall Street. Both the Dow Jones Industrials and the Nasdaq fell 2 percent.
Jan Hopkins is here to tell us about the day's activity on Wall Street. Quiet a day.
JAN HOPKINS, CNN CORRESPONDENT: That sell-off was brutal. Lou.
The Dow lost all of last week's gain, plus 100 points. The Dow is down 200 points for the day, nearly. The Nasdaq dropped another 2 percent. And the Nasdaq is below 1,600. The S&P 500 also lower.
Let's go to the markets and see what stocks were responsible for the sell-off. Christine Romans is at the New York Stock Exchange, Greg Clarkin is at the Nasdaq market site -- Christine.
CHRISTINE ROMANS, CNN CORRESPONDENT: Well, Jan, the selling in the last half-hour was especially aggressive, and it shoved IBM to the lowest price since 1998. Oil stocks tumbled on news Iraq will not extend its embargo. Dow component Exxon-Mobil down 3 percent.
A recent defense rally stalled. Northrop-Grumman falling 2 percent on a signs a deal to buy TRW maybe nearer. Tyco, the most active big board name, down 11 percent, it is now down almost 70 percent from its 52 week high.
And a rare winner, Hewlett-Packard-Compaq rallied 4 percent on its first trading day after merger, and with a new ticker symbol: HPQ. Now to Greg Clarkin at the Nasdaq -- Greg.
GREG CLARKIN, CNN CORRESPONDENT: And Christine, every major technology sector lower today, in many cases sharply lower. Take a look at some of the movers on the day. Cisco Systems, its earnings are due out tomorrow, it fell ahead of that report today. Networking stocks lower on the day. Cisco down a quarter. Sun Micro Systems at one point trading below $6 a share, that represents a new 52-week low. It finishing at $6.08.
Peregrine Systems, the software company's bad news keeps coming. The auditor has uncovered potential accounting irregularities. That stock has gone from $33 to less than $1 in the last 11 months.
Biogen and Amgen, biotechs especially hard hit today, those stocks both setting new 52-week lows. Both trading sharply lower on the day. And again the composite at its lowest close in the last seven months.
Jan, back to you.
HOPKINS: Thanks, Greg. And let's put this decline in perspective; If you invested in the Dow Jones Industrial average three years ago, all of your gains have been wiped away. For the Nasdaq the decline is even more painful. Five years of gains in the Nasdaq have now been erased, but let me point out that this does not mean all stocks are moving lower. Even in the bloodbath today on the New York Stock Exchange there were nine times as many stocks making 52-week highs as 52-week lows.
The winners are the smaller stocks. The Russell 2000 which measures small cap stocks, was down today but it is up for the year. Today part of the culprit, lower oil prices. It didn't help, in fact it pushed oil stocks lower. Investor confidence is still shaken. Tomorrow we hear from the federal reserve and virtually no one on Wall Street expects any increase in rates until late in the summer, but that's factored into the market.
After the bell tomorrow we hear from Cisco Systems. Investors want to know about the future. When will technology orders come back -- Lou.
DOBBS: And lots of other orders as well.
HOPKINS: That's right.
DOBBS: This market is making some pretty clear statements. You talked about confidence being shaken. I wonder what's going to be required to bring it back?
HOPKINS: That's the real question. We have lower rates, we're not going to get any lower. They're going to go higher.
DOBBS: At some point.
HOPKINS: Maybe we'll start getting some good orders from Cisco and other companies. But that's what the market wants now. Now we're hearing signs that the economy is weakening, or at least that's what the companies seem to be telling us.
DOBBS: OK. As they say, fun to watch.
HOPKINS: Yes. Fun to watch.
DOBBS: Some days. Jan, thanks.
Well, now a few thoughts as is my custom in the "Dobbs Report." Want to talk tonight about Warren Buffet, he is, of course, the second richest man on the planet. But the reason I want to talk about him is because he's first and foremost the oracle of Omaha.
And this weekend he uttered truths that every investor should be listening to. And in my opinion acting upon. Buffet gave no quarter to corporate America declaring that Enron is simply the most disgusting example of a business culture gone wrong, saying Enron's acts were grotesque.
And Buffet insists that accountants on Wall Street are complicit in the business culture gone wrong. Business partner Charlie Munger (ph) put it this way -- quote -- "to say derivative accounting in America is in the sewer is an insult to sewage" -- end quote. Buffet said -- quote -- "Many of the crooks look like crooks, but Wall Street loves them as long as they're pushing out securities."
Well, Wall Street had better find a new way of doing business and soon. The chairman of the New York Stock Exchange, Dick Grasso, has now offered to work to settle the New York state attorney general's lawsuit against Merrill Lynch. I'd recommend that the chairman stay focused on cleaning up the mess in the markets right now. And leave the lawsuits and any settlements to the attorney general, the SEC and Merrill, which by the way, is quite capable of acting in its own behalf.
The hope is now that corporate America, the Wall Street firms, exchanges and the regulators will soon show signs of acting in behalf of the investing public.
Coming up next, we'll take a look at the latest headlines. Also, household expenses always seem to be going higher, but by some measures prices, some of them, are actually falling. We'll tell you why you may be griping about all the wrong things in all the wrong places. But I'll be right back.
(COMMERCIAL BREAK) DOBBS: These are the top stories we're following this evening. Tough talk from Israeli Prime Minister Ariel Sharon as he arrives in Washington today. Sharon wants Yasser Arafat to be replaced as the leader of the Palestinians.
Negotiations to end the Church of the Nativity siege in Bethlehem inching forward. The outcome may hinge on whether eight Palestinian gunmen should be exiled to Europe.
The trial of Andersen is officially under way in Houston. Attorneys have been selecting jurors as they are at this hour, trying to decide whether or not the accounting firm is guilty of an obstruction of justice charge.
And today, big losses in the stock market. Both the Dow Jones Industrials and the Nasdaq down 2 percent. All of that amid worries about the economy and corporate earnings.
Two more pipe bombs have been found in mailboxes in the Midwest today. One discovered in Salida, Colorado, the other in Hastings, Nebraska. Neither device went off. No one was hurt. The bombs are the latest in a string of devices that have been found in Midwestern mailboxes. Previous bombs were accompanied by anti-government notes.
In Europe, a controversial right wing politician was shot dead in the Netherlands. Pin Fortuyn was murdered in Hilversum, near Amsterdam, after giving a radio interview. The politician's death came nine days before a general election in Holland. His anti- immigration party was expected to make big gains in the Dutch parliament.
Israeli Prime Minister Ariel Sharon hopes to persuade the United States to freeze Yasser Arafat out of any Middle East peace process. But Sharon may be severely disappointed. President Bush has stopped short of saying that Arafat is irrelevant, even though he's strongly criticized the Palestinian leader.
I'm now joined by Youssef Ibrahim. He's a senior fellow at the Middle East studies at the council of foreign relations. It's good to have you here.
This is, to say the least, a strange set of signals coming from Ariel Sharon. At one, calling Yasser Arafat a terrorist. At the same time, being here to advance talks. What do you make of it?
YOUSSEF IBRAHIM, COUNCIL ON FOREIGN RELATIONS: Well, calling him a terrorist is an old story. Of course, he does import weapons. He is the head of the liberation movement. People who are heads of liberation movements do things like this. Mandela did things like that.
Arafat is also calling Sharon all kinds of names. But that is not the point. The point is us -- what are we going to do to resolve this issue?
DOBBS: Is there anything we can do? IBRAHIM: There's plenty we can do. The problem is, we seem to be sending different messages as well. We seem to have -- sometimes it seems to me we have three administrations. We have the Defense Department, which has one obsession. It's called Iraq, invading Iraq.
We have Condeleezza Rice in the White House, which wavers between making peace between Israelis and Palestinians and calling Arafat a person who should be replaced. And we have the State Department, which waffles and doesn't seem to have any policy.
DOBBS: That is not -- your analysis is not a sound foundation for optimism, if there can be room for optimism in any prospect for Middle East peace. What is, in your judgment, the way to resolve this conflict?
IBRAHIM: We have a lot of influence with Israelis and with Palestinians. And if you want me to put it bluntly, what you have to do is, boys, sit down. What's -- we have already the makings of a peace agreement. We almost were there in the previous administration.
The West Bank -- it is basically the Crown Prince Abdullah plan, which was, I will deliver for you the Arab world, and you deliver the West Bank and Gaza to the Palestinians. And you have an independent Palestinian state living next door to a Jewish independent, of course, and safe state. That is the plan.
Now, are we doing this? Do we have the influence to implement it? Yes. Are we doing it? I don't think so.
DOBBS: And at this point, the president, it seems, at least at this point -- and he has at various points asserted initiatives and had to withdraw, specifically the demand for Ariel Sharon to move troops out of the West Bank. But at this point it seems he's saying pretty clearly that he wants a conference, he wants the Arab states there, he wants Israel there -- the principle parties. Can that be accomplished?
DOBBS: I don't even know that it should be accomplished. We've had many conferences. The president has asked the Israelis to get out of the West Bank. And maybe this is the principal request. Because the issue here is that our relationship with Saudi Arabia and with an area that contains a lot of oil is at serious risk. And with this, our economy and the price of oil. I think we should focus our attention on what is our national interest.
DOBBS: Our national interest, as you know, is always difficult to define, and particularly in the confounding mess that is often the Middle East. Are you implying that the Saudis would use oil as a weapon, despite the fact that the crown prince said that he would not?
IBRAHIM: Yes. If an embargo is 10 -- and no embargo is zero -- there's plenty of room between the two. As you know, the Saudis have very been helpful to us in OPEC, in moderating the price mongers, so to speak, which include Algeria, Iran and now Chavez, back in power.
They have been very helpful in replacing the Iraqi oil that was taken out of the market, and in 1990 replacing Kuwaiti oil. There's a lot of things the Saudis can do or fail to do. And that could make a difference.
DOBBS: One of the things the Saudis have failed to do is apparently control the support of terrorism. The other thing they've failed to do is to provide humanitarian support and to muster the leadership for humanitarian support for the Palestinians in southern Lebanon, in Jordan, in the West Bank to a degree, that their quality of life for Palestinians is of a level that Palestinians have something to lose.
Is the Saudi Arabian government, in your judgment, ready to make significant economic -- take economic steps to support the Palestinians in that way?
IBRAHIM: I absolutely think -- of course there is a lot of things the Arab side has failed to do all along. We know these failures. And certainly, once we have a peace agreement, I'm absolutely sure they will do that, for a number of reasons. The economic development of the Arab world has been practically arrested since the 1990 war.
We need to get on with the problem of Palestine in order to get on to the problem of Iraq. And these are the two problems paralyzing the region. And we need to deal with them now. We don't need another peace conference.
DOBBS: Enough process.
IBRAHIM: We don't need process. We need a president who says -- I go back to what I said: Boys, sit down, solve it.
DOBBS: This president began the beginning of last month saying, enough is enough. He was right then. He's certainly more right now. Youssef Ibrahim, good to have you with us.
IBRAHIM: Thank you, Lou.
DOBBS: Still ahead here, just how useful is the Fed in helping control this economy? We'll take a look.
And "Spider-Man," we'll also take a look. "Spider-Man" breaking all of the box office records but facing some tough competition soon to come out of the projection room. Stay with us.
(COMMERCIAL BREAK)
DOBBS: We're all complaining about the high cost of living. We mutter about the rising prices of gasoline, food, occasionally clothing. But which prices really have risen in recent years and what should we really be griping about? Kitty Pilgrim has the story.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Have a beer and a burger at the corner joint and join the group griping about everything from the price of gas to the sticker price on the SUV. Things are too expensive.
Or are they? Well, how about that hamburger? Food prices have actually gone down in the last decade. Fifteen percent of disposable income was spent on food in 1990, now down to 13 percent.
OK, so what about gas? Certainly that has gone up. Just look at the hearings on Capitol Hill. The one issue drawing bipartisan outrage these days is the price of gas. Tell this to the Hill: Gas prices have actually gone down, from 3.7 to 3.4 percent of income since 1990.
BRUCE STEINBERG, MERRILL LYNCH: If you adjust gasoline prices for inflation, we're spending a lot less than we've spent over much of the last 25 years or so. Gasoline prices, even though they've gone up in the last couple of months again, are still you know, relative to income, relative to other prices, are still low.
PILGRIM: Clothing is also cheaper. In 1990 nearly 6 percent of the budget, now 5 percent. Americans are dressing down and buying cheap imports from overseas.
But if you think your car is more expensive, you are right. Vehicle purchases are 9 percent of disposable income, up from 7.5 percent a decade ago. Housing is also up, to nearly a third of all budgets. People have chosen to feather their nests with more glamour and gizmos, from designer paint to expensive electronics. Disposable income hit a record high two years ago.
ALLEN SINAI, DECISION ECONOMICS: Disposable income has gone up a lot over the last decade. So what we spend as a portion of income on clothing and food is down. And we've had more money to spend on the better things in life.
(END VIDEOTAPE)
PILGRIM: Perhaps it is comforting to find some of the necessities in life are less expensive than you thought. And perhaps it's a wake-up call to find out just how expensive your car really is. There's one comfort in all of this: complaining about the price of things is still free -- Lou.
DOBBS: And very American. Kitty, thanks.
The fear of lawsuits is also very American. It is all too common a concern for many people in this country. And it seems often attorneys are the only ones benefiting.
Professionals in many walks of life, from medicine to education, are adjusting their behavior to minimize risk, the risk of being sued. But attorney Philip Howard is challenging the need for such adjustments in our culture.
In fact, he's gone so far as to build an organization called Common Good. And one of his first targets is the medical profession. Philip, good to have you here.
PHILIP HOWARD, "COLLAPSE OF THE COMMON GOOD": Nice to be here.
DOBBS: Why the medical profession?
HOWARD: Well, it's in a death cycle. The reason is because nobody feels comfortable doing what's right anymore.
DOBBS: Now, when you say doing what's right, what do you mean?
HOWARD: Well, we did a national poll of doctors. And they so distrust the system of justice that they confess that they no longer do what they think is the right thing. They give medicines that aren't needed, they do invasive procedures. They take decisions at the end of life that are very aggressive and not humane, because they're fearing lawsuits.
DOBBS: Simply because they're fearing lawsuits, changing the way they're practicing medicine, to the detriment of patients?
HOWARD: To the detriment of many patients. And of course, the ultimate irony here, not only does this cost them more money, it costs probably now almost $100 billion, extrapolating a recent study, a year extra in unnecessary tests.
DOBBS: You're taking on the legal profession on behalf of the medical profession. You're an attorney. Doctors and lawyers are about as epithetically opposed in our workaday culture as any two groups. What do you think the prospects are for real reform?
HOWARD: I think the prospects are good, if we get the health care industry organized. Half the lawyers will be with us. Most respectable lawyers think it's a shame that people can't do what they know is right all day long.
DOBBS: You're talking about lawyers?
HOWARD: We're talking about lawyers. There are even some good lawyers.
DOBBS: Philip, we know one of them, and we appreciate him being here. Philip Howard, good to have you here.
HOWARD: Good to be here.
DOBBS: Thank you. We were going to continue our segment on the Common Good, fixing what is wrong with the American legal profession and the business world, in point of fact, as it relates. Philip Howard will be here every Monday from here until we get the job done. Right, Phil?
HOWARD: Right.
DOBBS: All right, thanks. The Federal Reserve meets tomorrow to decide what to do about interest rates and it has a big question: has the Fed lost its relevance as well as its control? Kathleen Hays has our report.
(BEGIN VIDEOTAPE)
KATHLEEN HAYS, CNN CORRESPONDENT (voice-over): He's been called a maestro, the second-most powerful man in America. And economists say Federal Reserve Chairman Alan Greenspan has run out of ways to make the economy dance to a faster tune.
JERRY JASINOWSKI, PRES., NAT'L ASSN. OF MANUF.: My sense is that the Federal Reserve can't through interest rate policy or increasing the money supply have a major effect at this point.
HAYS: The Fed already cut its key short-term rate to a 40-year low last year. This is one big reason why consumers keep buying cars and houses at near-record rates. Economists fear more rate cuts could turn the housing boom into a housing bubble, and probably won't make anyone buy more lawn furniture.
Lower rates also can't end the hangover of the high tech boom bust cycle of the late '90s. So much excess capacity and such high levels of debt, that most companies are unwilling or unable to start investing again.
JOHN LONSKI, MOODY'S INVESTORS SERVICE: I think that investors have to be patient and realize that there's not much the Fed can do near term in order to boost profitability or restart capital expenditures.
HAYS: Greenspan can't relieve the stock market's anxiety by ending the conflict in the Middle East, nor bring oil prices down to earth. Nor can he end Japan's recession. The Fed has done what it can for the domestic economy and now some say other tools are needed.
LAWRENCE MISHEL, V.P., ECONOMIC POLICY INST.: We're only going to get businesses to invest when they see profitability and they see customers. We're going to get customers if government starts putting some money into people's pockets.
(END VIDEOTAPE)
HAYS: So the idea is there's not much that they can do by cutting rates at this point. The economy's not strong enough for the Fed to raise interest rates. Bottom line, the Fed sits tight tomorrow and probably has its fingers crossed like a lot of other people -- Lou.
DOBBS: That's as good as they can do, cross their fingers?
HAYS: I guess it's better than nothing.
DOBBS: I think it sounds a little bit like that. Kathleen, thanks a lot, appreciate it.
"CROSSFIRE" begins in just a few minutes. Let's go to Paul Begala and Robert Novak in Washington. Gentlemen.
ROBERT NOVAK, "CROSSFIRE": Lou, we're going to have a talk about the Saudi peace plan with a Saudi adviser. And then we'll have a response from an Israeli diplomat.
PAUL BEGALA, "CROSSFIRE": Then, the political media world is rocked by this rumor, Lou, that George Stephanopoulos might actually take over the ABC Sunday morning public affairs show. And we'll have Dee Dee Myers, my old pal from the Clinton White House, debate Brent Bozell from the conservative media watchdog group, over whether that show is media biased. Guess which side Novak's going to be on, Lou.
NOVAK: Can you imagine Stephanopoulos as an (UNINTELLIGIBLE)? There's no liberal media bias, is there?
BEGALA: Hey, they gave Novak a chair. Why can't George have one?
DOBBS: I'm confused. Do you mean to tell me that ABC is actually going to put a former political operative on the air?
NOVAK: A former? I think he's a political operative now.
BEGALA: Of course, that's nothing that's happened in any other network, like, oh, say Diane Sawyer, who worked for Nixon, or any of the others.
DOBBS: I was actually thinking of someone closer to home, Paul.
BEGALA: No, you can be an anchor, not me. I like fighting with Novak.
DOBBS: OK, well...
BEGALA: I get lonely sitting by myself, Lou. Although I am right all the time. I hate to be alone.
DOBBS: I'll let you gentlemen resolve that. And of course, we enjoy watching you both as you maintain your partisan and nonobjective standards for all our benefit. Thank you, gentlemen. We look forward to it.
Coming up next here, "Spider-Man" hits the big time at the box office. And tough competition is on the way. That story is coming up. Stay with us.
(COMMERCIAL BREAK)
DOBBS: "Spider-Man" earned a superhero status this weekend certainly. The comic book legend set a box office record, grossing $115 million in just three days. That $115 million makes it the highest grossing screen debut in history. And "Spider-Man" also more than outdistanced last year's record setting performance of "Harry Potter."
"Spider-Man's" huge success this weekend raising the bar for the box office. The movie not only shattered records, it also set a new standard for the summer's blockbuster sequels and franchise films. Susan Lisovicz has the story.
(BEGIN VIDEOTAPE)
SUSAN LISOVICZ, CNN CORRESPONDENT (voice-over): "Spider-Man" scaled box office heights. But it will be tough to stay there, even for a nimble-footed web-slinging action hero who looks good in tights.
"Star Wars: Episode 2, the Attack Of the Clones," flies into theaters with such a built-in fan base that one labor consulting firm estimates its opening day could cost the U.S. economy $319 million in lost wages.
Tom Clancy's "The Sum of All Fears," Stephen Spielberg's "Minority Report" and sequels to "Men in Black," "Stuart Little," "Spy Kids," and "Austin Powers" are all gunning for something increasingly important in Hollywood: the colossal weekend open.
PAUL DERGARABEDIAN, EXHIBITOR RELATIONS: Ten, 15, 20 years ago, films would do like 10, 15, maybe 20 percent of their total gross in the opening weekend. They had legs. Today, and especially last summer we saw this with a lot of films, a third or more of their total final gross was gleaned in the opening weekend. So it's very, very important.
LISOVICZ: "Spider-Man" capitalized on its widespread appeal from both sexes and all ages. It also spent $50 million on its marketing campaign, more than 1/3 of the amount it cost to make the film.
(on camera): Some industry observers say the right campaign is critical to a film finding its audience, especially in the crowded summer season. More than 50 feature films are set to be released in the 15 weeks between Memorial Day and the Labor Day holiday.
(voice-over): Even if "Spider-Man" takes a fall at the hands of Obi Wan Kenobi, it has already set the box office standard.
MARTIN GROVE, HOLLYWOOD REPORTER: It isn't necessarily what you do week by week, it's what it adds up to. The bigger they open, it doesn't matter if they fall big, because they're falling from a greater height.
LISOVICZ: To reach that height begins with owning the right franchise, which is why so many familiar characters are returning to the big screen this summer.
Susan Lisovicz, CNN Financial News, New York.
(END VIDEOTAPE)
DOBBS: It's not another sequel to the movie "The Mummy," but archaeologists have discovered the 110th pyramid in Egypt. The 4,500- year-old tomb discovered accidentally by a Swiss team working outside Cairo. That area is only two miles away from the Great Pyramid.
To the average observer, the discovery may look just like a pile of rocks. That would be to the uninitiated. But there is a burial chamber inside nonetheless and that officially makes it a pyramid. Officials say the tomb belonged to a queen. Her identity remains unknown, however, and no mummy was found.
Still ahead here, "In Their Words." And tonight, the president as comedian. Stay with us.
(COMMERCIAL BREAK)
DOBBS: Now "In Their Words."
(BEGIN VIDEO CLIP)
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: What a fantastic audience we have tonight. Washington power brokers, celebrities, Hollywood stars, Ozzy Osbourne.
(APPLAUSE)
BUSH: The thing about Ozzy is he's made a lot of big hit recordings. "Party With the Animals," "Sabbath, Bloody Sabbath," Facing Hell," "Black Skies" and "Bloodbath in Paradise."
Ozzy, mom loves your stuff.
(LAUGHTER)
(END VIDEO CLIP)
(BEGIN VIDEO CLIP)
BUSH: We have two dogs. This is our dog Barney. I tell him with eyebrows like that he ought to be a senator.
(LAUGHTER)
(APPLAUSE)
BUSH: You can tell Barney's in trouble here. This is the day he chewed up the list of undisclosed locations and we couldn't find Dick.
(LAUGHTER)
(END VIDEO CLIP)
DOBBS: That's MONEYLINE for this Monday evening. Thanks for being with us. Good night from New York.
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