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CNN Wolf Blitzer Reports

FBI Manhunt Photo's May Be Falsified

Aired January 01, 2003 - 17:00   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.


MILES O'BRIEN, GUEST HOST: Thanks very much, Candy. Some of the many stories we're following this New Year's Day, a surprising twist to the manhunt in America. Is one of them really hiding? Also, the fireworks on New Year's that turned deadly for dozens, and the monster storm that caused so much damage they had to send a plane to find out what happened, but first our CNN news alert.
(NEWSBREAK)

O'BRIEN: That's a look at our CNN news alert. WOLF BLITZER REPORTS starts right now.

(BEGIN VIDEOTAPE)

O'BRIEN (voice over): Bordering on confusion, the nationwide manhunt for the five border busters takes an odd turn all the way to Pakistan and a jeweler who says the FBI needs to get the right picture. Missing for more than a week, police draw conclusions about Laci Peterson.

UNIDENTIFIED MALE: It becomes more apparent that her disappearance is a result of foul play.

O'BRIEN: Louisiana lookout, new sketch in a serial killer case, but did he do it? Emergency in the OR, do you know where your surgeon is? And crystal ball 200; what you need to know about Iraq, North Korea, terrorism, and your pocketbook.

(END VIDEOTAPE)

O'BRIEN (on camera): It is Wednesday, January 01, 2003. I'm Miles O'Brien at CNN Center, Wolf Blitzer off today, Happy New Year to you. The murky tale of the five wanted men who apparently snuck across the U.S. border on Christmas Eve took an odd turn today. A Pakistani jeweler in Pakistan found an interesting gem in his morning paper. It was his own image staring back at him. Here is CNN's Jeanne Meserve.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN CORRESPONDENT (voice over): Is this man sought by the FBI illegally in the United States or is he, in fact, this man, a jeweler still at home in Pakistan photographed by the Associated Press? The photo on the FBI website is captioned with Mustafa Khan Owasi's name. From the beginning, the FBI said the name might be falsified but could the photo too?

Mohammad Asqar (ph) a jeweler in Lahore says the picture on the FBI website is of him and the resemblance is striking. Asqar acknowledges to the Associated Press having once used forged documents and he suggests the forgers might have recycled his picture. The administration says the matter is being looked into. One official said it was "not inconceivable that the FBI's photo is bogus." The FBI has not said where or how it obtained the picture.

UNIDENTIFIED MALE: To Canadian and American authorities this changes a lot and it changes nothing at the same time because we know that when we're in the realm of the illicit transportation smuggling, we're dealing with a dark miasma often of confusion, some of it by design.

MESERVE: As the possible photo fraud is checked out, administration officials tell CNN all five of the men for whom the FBI is searching are believed to have traveled from Pakistan to Britain and then onto Canada and the U.S.

UNIDENTIFIED MALE: We have lots of crossing points between Maine and the state of Washington but there's also a lot of un-patrolled territory so that adds to the difficulty of controlling that perimeter.

MESERVE: Indeed, administration sources say the prevalent U.S. government theory is that the men were smuggled into the U.S. because a check of records at U.S.-Canadian border crossings has turned up no trace of them and because their names were gleaned from the interrogation of a smuggler of illegal aliens in Canada.

(END VIDEOTAPE)

MESERVE (on camera): A law enforcement source says raids were conducted in and around New York City and New Haven, Connecticut Monday night. Authorities believed individuals at those locations might have information about the five men. Although an undisclosed number of men of Middle Eastern and Pakistani descent were picked up for questioning, all have been released by Tuesday afternoon and the five men are still at large.

And, Miles, this late note from CNN Producer Terry Freedan (ph), he says that the FBI will be questioning Mohammad Asqar in Pakistan just as soon as they can to try to get to the bottom of this question of whose photograph that is on their website - Miles, back to you.

O'BRIEN: CNN's Jeanne Meserve working a long day in Washington thank you very much. Investigators in Modesto, California are saying it's apparent the disappearance of a pregnant woman on Christmas Eve was the result of foul play and now police have expanded their search for Laci Peterson. CNN's Rusty Dornin joining us now live from Modesto on this New Year's Day, any traces or clues to report, Rusty?

RUSTY DORNIN, CNN CORRESPONDENT: Well, Miles, you know it's not any strong lead that is causing police to say that the foul play is a possibility. It's just the fact Laci Peterson, she disappeared on Christmas Eve. She was eight months pregnant and she was also very close to her family and so that leads police to think that it was foul play. Unfortunately, there are no strong leads at this point.

Meantime in a park near her house, the LaLoma (ph) Dry Creek Park, you can see the giant reward sign, her flashing smile on the picture there, and a little shrine that people have made. All morning long we've been watching people come along here and light candles and just are very - this is a community that has been very concerned about the disappearance of Laci Peterson.

Now, this is the park where she supposedly was going to take her dog for a walk that morning. Her husband said that was the last time that he ever saw her but the bloodhounds in the case (AUDIO GAP).

O'BRIEN: Well, clearly we have some transmission problems from Rusty. We'll try to get back with her a little bit later in the broadcast and get the rest of that report.

Let's turn now our attention to Louisiana where investigators are hoping some new information will open new doors in their search for a serial killer. A witness has come forward after seeing a man near one of the crime scenes.

(BEGIN VIDEOTAPE)

O'BRIEN (voice over): Could this be the face that gives police in Louisiana the break they're looking for? Investigators call this composite sketch and the so-called person of interest shown in it a substantial development in a serial killer case that's had them rattled.

SHERIFF MIKE NEUSTROM, LAFAYETTE PARISH, LA: The person was observed on Thursday, November 21st during the middle of the day. He is described as having an intense and intimidating stare.

O'BRIEN: November 21st is the day the fourth and latest victim, Treineisha Columb was reported missing. Police base this sketch on a witness account which described a man possibly between 30 and 40 seen a few hundred feet from where Columb's body was discovered.

The body was found November 24th in a wooded area in the town of Scott, Louisiana and the man was seen sitting in a white early '90s pickup truck, which fits the description of a vehicle that police had been looking for. Putting it all together, why is this man not being called a suspect?

NEUSTROM: There may be legitimate reasons for this person to be in that area so we're not classifying him as a suspect at this time. If this individual is identified and comes forward there may be some explanation he could offer to us that would justify his presence there.

O'BRIEN: After 16 months, four murders of young women all linked by DNA and little to show for the investigation, police in Lafayette and Baton Rouge have most fast this week. They say they have a psychiatric profile of the killer describing him as a man who knows the area between Baton Rouge and Lafayette very well and "lives a fairly normal life."

(END VIDEOTAPE)

O'BRIEN (on camera): In addition, authorities tell us this week they have begun taking voluntary DNA samples of dozens of men in the area to rule them in or out as suspects. They were identified as a result of calls to the tip line there.

Shuttle diplomacy Korean style; coming up why a South Korean diplomat is now in Beijing. We'll get the latest from Seoul. The surgical strike, Pennsylvania may have a prescription for a cure but the ailment is spreading across state lines.

And, the fortune tellers, what 2003 will bring on the economy, the prospects for war, even what's coming up on the big screen, but first if you missed some of the parties last night, as I did, a look at New Year's celebrations all around the country.

(BEGIN VIDEO CLIP)

LEBANON, PENNSYLVANIA

UNIDENTIFIED FEMALE: Nine minutes to go until we see the big old bologna drop.

(END VIDEO CLIP)

VIDEO CLIPS OF FIRST NIGHT, BOSTON, MASSACHUSETTS, PEACH DROP IN ATLANTA, GEORGIA, SAN FRANCISCO, CALIFORNIA, SAN ANTONIO, TEXAS, SAN DIEGO, CALIFORNIA, LAS VEGAS, NEVADA, SEATTLE, WASHINGTON, AND TIMES SQUARE, NEW YORK CITY

(COMMERCIAL BREAK)

O'BRIEN: President Bush is spending New Year's Day at his ranch near Crawford, Texas. The president who will spend a few more days on vacation before returning to the White House spoke with reporters yesterday. He says his New Year's resolutions include doing his utmost to avoid going to war with Iraq or North Korea.

Details are emerging today about a recent incident along the Afghanistan-Pakistan border involving U.S. forces. Military officials in Bagram say a Pakistani border guard opened fire on a U.S. patrol, wounding one American who is reported in stable condition. The U.S. patrol called in air support. Pakistan claims that an American bomb hit an unoccupied school building. The U.S. and Pakistan are investigating. The border guard is in Pakistani custody.

It was business as usual today for the U.N. Weapons inspectors in Iraq. CNN's Rym Brahimi is in Baghdad.

(BEGIN VIDEOTAPE)

RYM BRAHIMI, CNN CORRESPONDENT: No respite for U.N. weapons inspectors on this New Year's Day. Four teams were out.

BRAHIMI (voice over): One team of missile experts went up north, 40 kilometers north of the Iraqi capital to the huge El Taji (ph) complex to check in on a facility involved in missile engines. A team of chemical experts went inside Baghdad to a warehouse that stores electronic equipment and two biological teams went out, one of them to a brewery, another one to a factory that bottles soft drinks.

Now, in the middle of this stepped up inspection regime a lot of tension, particularly in the southern no-fly zone where the state run Iraqi News Agency says one person was killed in a U.S.-British air raid.

BRAHIMI (on camera): So, this may be the beginning of New Year, which for many Iraqis a lot of the problems are the same as in the old year. Rym Brahimi CNN, Baghdad.

(END VIDEOTAPE)

O'BRIEN: Meanwhile, the New Year has brought no reassurance to the Korean Peninsula. Diplomats continue to look for ways to diffuse tensions over North Korea's nuclear program. CNN's Rebecca MacKinnon has the latest from Seoul.

(BEGIN VIDEOTAPE)

REBECCA MACKINNON, CNN CORRESPONDENT: South Korea's deputy foreign minister is now in Beijing. He's scheduled to meet Thursday with China's vice foreign minister. South Korea's goal in this meeting is to try and convince China to take a more active role in ratcheting down tensions here on the Korean Peninsula with North Korea having kicked out nuclear inspectors from its nuclear facilities.

Now, South Korea's new President-elect Roh Moo-hyun takes office in February, gave a New Year's message today in which he made it clear his team is working very hard to find a diplomatic solution.

ROH MOO-HYUN, KOREAN PRESIDENT-ELECT (through translator): We have examined and debated the nuclear issues. The conclusion is that we can solve this matter with dialog and compromise if our people and politicians gather their strength. I am confident I will resolve this problem without fail.

MACKINNON: Meanwhile, more bellicose rhetoric coming from North Korea today. The state run news agency in an editorial accusing the United States of targeting North Korea for an invasion and calling on the people of North Korea to strengthen the military to protect North Korea's dignity and sovereignty. Rebecca MacKinnon CNN, Seoul.

(END VIDEOTAPE)

O'BRIEN: And that bring us to our web question of the day. What are you most concerned about in 2003, Iraq, North Korea, terrorism, or the economy? We'll have the results later in the broadcast. Vote at cnn.com/wolf. While you're there we'd like to hear from you. Send your comments and we'll try to read some of them at the end of the program and that's also where you can find my daily online column, cnn.com/wolf.

High malpractice costs, a threatened surgeon walkout, one state's dilemma may be cured but the problem could be contagious. Is your state next? And, the state of your bank account in 2003, we'll get predictions for the year ahead just ahead also, first some stories making news around the world.

(BEGIN VIDEOTAPE)

O'BRIEN (voice over): Fast-moving fire, fire broke out at an illegal fireworks stand at an outdoor marketplace in Vera Cruz, Mexico. It spread quickly through the other market stalls killing dozens of people.

There was also a deadly fireworks explosion in the Philippines and police say this one was the result of a deliberate act. They say someone tossed a grenade into a roadside fireworks stall killing at least ten people, including a 14-year-old boy.

Solomon Cyclone, a powerful storm that hit the Solomon Islands in the South Pacific has done considerable damage. Communications have been wiped out but pictures taken from a plane flying over the island shows trees shredded, buildings damaged, and villages flooded, no word on possible casualties.

Detainee disturbance, immigrants at an Australian detention camp in Sydney set fires and some of them allegedly attempted a mass breakout using a stolen staff car as a battering ram. It was the latest in a series of disturbances at Australian detention camps. Critics are calling on the government to reconsider its hard line policy of locking up asylum seekers.

Peaceful pope, Pope John Paul II turned his attention to the Middle East as the Roman Catholic Church celebrated its world day of peace. In his New Year's Day homily at St. Peter's Basilica the pope called the Mid East conflict fratricidal and senseless.

Starting 2003 off on the right foot, billed as the greatest annual street parade in Europe the London New Year's Day parade featured more than 125 marching groups, 40 bands, street performers, clowns, jugglers, stilt walkers, and acrobats, and with that we wish you Happy New Year. That's our look around the world.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

O'BRIEN: Surgery patients in parts of West Virginia are having to go out of their way for treatment. Dozens of surgeons began the New Year with a 30-day walkout. Four hospitals affected, the doctors are protesting the high cost of malpractice insurance and they are calling on lawmakers to pass reforms. Pennsylvania avoided a similar strike yesterday. CNN's Whitney Casey has our story.

(BEGIN VIDEOTAPE)

WHITNEY CASEY, CNN CORRESPONDENT (voice over): A flat-lined ER but in West Virginia it's the doctors pulling the plug. A slew of surgeons walked out of work Wednesday afternoon in protest to what they call skyrocketing medical malpractice insurance rates, a scenario that was averted in Eastern Pennsylvania when earlier Wednesday morning nearly 50 surgeons planned a walkout of the emergency room.

CASEY (on camera): So there would have been sort of an emergency in the emergency room?

UNIDENTIFIED MALE: Yes, exactly.

CASEY (voice over): But in the 11th hour, physicians in Pennsylvania were resuscitated by Governor Elect Ed Rendell who promised $220 million of insurance aid but doctors said the quid pro quo is not a panacea just a band-aid. What caused this crisis?

DR. JERRY GILBERT, UROLOGIST: Well, I think in Pennsylvania it's fairly clear that the payouts for medical malpractice have skyrocketed in the last six years and if you're going to pay out increasing claims then you're going to have to be increasing insurance premiums. With that we've lost a lot of insurance companies in Pennsylvania who can not afford to do business in Pennsylvania anymore.

CASEY: So how does this impact the patients?

GILBERT: If this continues, we will not have insurance and if we don't have insurance we will no longer be in the state of Pennsylvania and then they will not get appropriate medical care.

CASEY (on camera): The doctors point their finger at the lawyers and the legal system where the lawyers then put the owness back on the doctors saying that if they only weeded out the bad doctors in their own medical community that their insurance premiums would be sure to go down, claiming that over half of the medical malpractice payments come from only five percent of U.S. physicians.

CASEY (voice over): And the American Medical Association says 80 percent of the medical malpractice claims filed are without merit and close with no payment, but even the paperwork on this meritless claims cost upwards of $22,000 per case in legal fees. Doctors in high premium states, like Pennsylvania, are pushing for new laws that would put a cap on the amount of malpractice payouts, a move medical malpractice attorneys say is a sham.

THOMAS FOLEY, ATTORNEY: The idea of insurance is to make the victim as whole as possible and if you put caps on that's going to amount to immunity with respect to these doctors.

CASEY: And as the debate intensifies so too does the community support for the doctors. Whitney Casey CNN, Scranton, Pennsylvania.

(END VIDEOTAPE)

O'BRIEN: Now, the problem is not limited to Pennsylvania and West Virginia. The American Medical Association cites 12 states facing runaway malpractice insurance costs. Some doctors are calling the state of malpractice insurance an acute crisis, so what are the options? Pennsylvania's Governor-elect Ed Rendell joins us now live from Philadelphia to lay things out for us. Even before you're sworn in you got a big problem on your hands, don't you?

ED RENDELL (D), PA GOV-ELECT: No question about it and it was a problem that we had to take action on because we were going - we've already had four other states' 26 trauma centers close and a lot of doctors in southeastern and northeastern Pennsylvania were just going to stop treating patients on January 1st.

So, we took action to solve the short-run problem. I agree with the physicians who say it's a band-aid not a cure but by eliminating the doctors' requirements in the most challenged specialties to pay into our catastrophic loss fund, we reduce their bills by 25 to 30 percent, and that was a message to them to hang in there and we've promised that by July 1st we will have some long-term changes in place, and it's a complex issue.

O'BRIEN: Well, it's a complex issue. We probably don't have time to lay out every last little detail but what is your sense of the long range solution?

RENDELL: Well, tort reform is important and over the last year, Governor Schweiker and the legislature have taken some important steps. We have one more to go in my judgment and that's requiring a certificate of merit, a medically certified doctor to take an affidavit that malpractice has occurred before a suit is filed.

I think we're going to get that in February from our Supreme Court Rules Committee and I think that sets the stage for us to take action getting rid of this Catastrophic Loss Fund, reducing coverage.

Before last year, Pennsylvania doctors had to have a $1.25 million of coverage. In California, for example, they're only required to have $100,000 in coverage reducing covering that's the single most important thing.

We also have to look at the insurance industry though because it's interesting. In the '90s, Pennsylvania had no tort reform and yet insurance companies were low-balling each other to try to sign up doctors because the insurance industry, the market was doing well and everything was going fine for insurance companies. They made some real mistakes. We have to have better oversight of the insurance industry.

O'BRIEN: All right but tort reform is a nice way of saying lowering the amount of money that plaintiffs who have been wronged by doctors might ultimately receive. These are people who have been injured or scarred or lost the wrong limb for life. You put it in that perspective, you've got to wonder if that is the right way to go about this problem. You're going after the victim.

RENDELL: Well, it's a balancing (AUDIO GAP).

O'BRIEN: (AUDIO GAP) Babylonia, the American Colonies, China, or Africa, the answer coming up.

(COMMERCIAL BREAK)

O'BRIEN: Welcome back to WOLF BLITZER REPORTS. I'm Miles O'Brien sitting in for the man. Coming up why it might be scary to look into the crystal ball for 2003, but first let's look at some other stories making news in our news alert.

(NEWSBREAK)

O'BRIEN: Americans begin the New Year facing twin uncertainties -- one, a possible war with Iraq, at the same time, a troubled economy. First, let's look at Iraq.

Most Americans favor an invasion to destroy Iraq's weapons or to overthrow its leader, according to CNN polls. To consider these questions and much more, we turn to our guest, international affairs analyst, Mansoor Ijaz in New York.

Good to have you with us, Mansoor.

MANSOOR IJAZ, INTERNATIONAL AFFAIRS ANALYST: Thank you, Miles. Happy New Year.

O'BRIEN: Happy New Year to you. Let's get the crystal ball out. Saddam Hussein, in or out in 2003?

IJAZ: He'll be out and I think the way it'll happen will be unorthodox. There's still a good chance that we will not have to use military force in the final analysis that the threat of it will be enough, that there may be a premacove (ph) type solution.

As you remember, at the beginning of the Gulf War, the Russians went in to try and offer Saddam a final way out by taking him into exile. I think this time, the solution like that will be on the table. Arab leaders will support it as well. And I think there's a chance he may in fact take it this time.

O'BRIEN: Exile, interesting. OK. Osama bin Laden, will he be found? Al Qaeda, will it grow in strength?

IJAZ: Al Qaeda will no -- without question, it will grow in strength. And I don't think that bin Laden will be found. It is my understanding that the area in the northwest frontier province of Pakistan where he's hiding out, he is not allowed to move even within a 50-yard radius very much. And all of his movements are kept under ground.

So everything al Qaeda is doing today is being done by human chains, essentially having one man give a message to another to a third. And that's how they're getting their messages around. They're very patient, very calibrated in the way that they operate. And I think they're only going to grow in strength and we have to uncover their sleeper cells here in the U.S.

O'BRIEN: All right. Let's get into North Korea. Will that be a persistent threat or will that tension abate?

IJAZ: This will depend a lot on whether the Bush Administration is prepared to come up with a creative, new way of dealing with it. I -- all these other policy paradigms that they've tried before are not going to work. I think there's a new way that they have to look at this and that's called preemptive containment. What I mean by that is that we need to bring China and Pakistan, these two nations, onboard in helping us -- China to give public agreement to the world that they will not provide North Korea with bomb designs or with bomb containment capabilities and Pakistan to tell us where they have given them centrifuge facilities and how much uranium they can actually enrich.

If we can stop these two things -- if we can stop them from getting the chemicals to separate plutonium and things of that nature, then we have a real chance at being able to talk to them diplomatically. But before that, there's no diplomacy that can work with this kind of a regime.

O'BRIEN: All right. You mentioned Pakistan. What about the tension between Pakistan and India over the issue of Kashmir?

IJAZ: Well, there is a big problem. I think that Pakistan is on a very steady slope down in terms of fundamentalists taking control over the key organs of government. Again, I want to be very clear that Islamists are very patient people.

And what we've seen now is that they've taken control of the northwest frontier province and Balujastan, which is the two provinces of budding Afghanistan. And I think that the Islamist fundamentalists are going to take greater and greater control over the affairs of the army and that is going to only set up a confrontation with the headliners of India. I think you'll see India and Pakistan have another crisis that will look like a nuclear crisis again this year.

O'BRIEN: All right. As time expires, lots of ground to cover here. The FBI, the CIA, will they succeed in their efforts to thwart further terrorist attacks?

IJAZ: The CIA is doing a pretty good job overseas already. I think the FBI has to do a better job here at home in working with the Arab-American and Muslim-American communities because the only way we are ever going to be able to find out where the sleeper cells are is to have that kind of a collaboration. And I think the president needs to stand up and publicly call out for help to these communities and get them enlisted in the war on terror effort here in the United States.

O'BRIEN: Mansoor Ijaz, thank you for your look ahead. We appreciate it. Have a good New Year.

IJAZ: Happy New Year to you.

O'BRIEN: All right. Let's now turn to other major concerns that many Americans are thinking about today, the still sputtering economy, the sagging stock market and for the third year in a row, the Dow Jones Industrial lost ground. Americans lost millions, probably billions. Joining us with some predictions on the economic year ahead, Rajeev Dahwan, who is with the Economic Forecasting Group here at Georgia State University in Atlanta.

Good to have you with us, Rajeev.

RAJEEV DAHWAN, GEORGIA STATE UNIVERSITY: Good to be hear. Happy New Year.

O'BRIEN: All right. Happy New Year. Everybody wants to know, markets up or down?

DAHWAN: I wish I had a great answer for that, but as long as the geopolitical risks are there, this market will be down. More war should resolve that. It would start going up. So sometime in the middle of the year, I expect it to go up.

O'BRIEN: So war is linked to markets as always?

DAHWAN: Right, because war is linked to oil prices. Oil prices determine the economic health. And there you have the market.

O'BRIEN: All right. But in the past, it has been the prelude to war that has brought the markets down, the actual declaration of war, the actual bombs flying. The markets tend to rally. Do you see that happening?

DAHWAN: Because once you resolve the uncertainty, the war begins and you're winning it, then the markets are happy. So that's instantaneous. The issue is this time we don't know when the war is beginning.

O'BRIEN: All right. Unemployment, we're seeing increasing numbers on the unemployment front, a lot of jobless Americans out there. Any bleak prospects there?

DAHWAN: Actually, it's the same thing with the war. I think the moment the CEOs realize that the uncertainty is resolved, then we start hiring people. And the unemployment rate will start coming down.

O'BRIEN: OK. Mortgage rates, all-time historic lows, incredible numbers out there. I would assume that once again you're going to tell me the war has something to do with it.

DAHWAN: No, in this one, the war doesn't.

O'BRIEN: OK.

DAHWAN: In this one, they're solo that the chances of them going down is so low that I think they're going to be on the upward side down the road.

O'BRIEN: They have only one place to go...

DAHWAN: Go up. O'BRIEN: ... quite literally. All right, let's talk about corporate scandals. That has certainly been a hallmark of 2002 whether it's Enron or WorldCom, whatever the case. Do you see more of this happening in 2003?

DAHWAN: Not much. I think the main wave in 2002. People are more cautious now. Everybody is watching their behavior. So the chances of having another Enron, WorldCom are much lower now.

O'BRIEN: Really? I mean don't you think that the underlying cause of all this, greed essentially, is still there?

DAHWAN: It will never go away. And the greed is what makes the system too because if you're not hungry, you're not going to make the profits. The issue is are you making it the right way or the wrong way.

O'BRIEN: You sounded like Gecko. Greed is good, right? All right, let's talk about Martha Stewart. She -- as we've been talking about impending possibilities of charges for so long now and the possibility that somebody -- that a few of these people might be talking and building a case against her, what do you see happening?

DAHWAN: I think -- in the case of Martha Stewart, I think her star is on the way down because there's so many investigations going on. They're going to find something sooner or later and unfortunately, it's not too good.

O'BRIEN: Is it a company without her?

DAHWAN: It's going to be tough without her because she's what makes the show and the other stuff and that sells the goods. So if you don't have your main marketing spokesman, you're going to be having a tough time in the market.

O'BRIEN: All right. Very interesting. Rajeev Dahwan, thank you for coming in and offering your prognostications for 2003.

DAHWAN: Thank you, Miles.

O'BRIEN: All right. Moving on from worries over war and the economy, let's turn now to the world of medical science. Here with a survey for recent advances that should make a big impact in 2003 is a contributing health correspondent for us, Liz Weiss, who checks in from Boston.

Liz, good to see you.

LIZ WEISS, CNN CONTRIBUTING MEDICAL CORRESPONDENT: Great to see you. Happy New Year.

O'BRIEN: All right. I can't hear her. Can you hear her at home? Do we have...

WEISS: I can hear myself. O'BRIEN: In the control room, Ken. I can't hear Liz. Can you hear Liz? Tell you what, we're going to take a break and try to sort this out. We'll be back in just a minute.

(COMMERCIAL BREAK)

O'BRIEN: Earlier we asked -- where did the tradition of New Year's Resolutions come from? The answer, Babylonia. The early Babylonians didn't promise to lose weight or stop drinking. They vowed to give back farm equipment they borrowed.

All right. Operator error on my part. I'm sorry about that, Liz. Everybody else could hear you but me.

WEISS: It's OK. I forgive you.

O'BRIEN: Yes, sometimes I feel like I could use a new drug every now and again. Let's talk about new drugs, shall we?

WEISS: OK.

O'BRIEN: All right.

WEISS: You bet. Well, there's...

O'BRIEN: Hepatitis C, this is -- is this a growing problem?

WEISS: It's a growing problem (UNINTELLIGIBLE). Only it affects many millions of people around the world and up until now, there's been a standard therapy of two drugs, Rizophiron (ph), Interferon. Now, this has been a good therapy, but only about 40 percent effective. Now, there is a great new combination right here, not even on the horizon. People are receiving it right now. Rizophiron (ph) and a new type of Interferon called Peg Interferon or Pegolated Interferon. It's more effective because it lasts in the blood stream for up to week. Standard Interferon lasted for about a day. So people undergoing the therapy, well, about 60 percent are reaping the benefits.

This is a great combination because this new interferon will last for a week in the blood stream. You only have to have injections once a week not three times a week. It actually has been shown to reverse some of the liver damage caused by Hepatitis C. And what's really important is that people who already have psoriasis of the liver are also responding to this new therapy.

O'BRIEN: All right, let's move along. I understand there's a new ovarian cancer test, which might hold some promise.

WEISS: You bet. You know ovarian cancer is very deadly. About 14,000 women a year die from it because it's typically diagnosed in a more advanced stage and that's because the current therapy or treatment for diagnosing it is a blood test called CA-125. It only detects about 50 percent of women with early stage ovarian cancer, about 80 percent with advanced stage. So it's not that effective. Well, there's a new blood test, which the FDA and the National Cancer Institute have looked into and tested. And it has proven to be 100 percent effective in detecting woman with early stage ovarian cancer. Now, there's a little bit of a catch here, because they've only done one study. So more studies do need to be done.

Women, who are at high risk, are they've got a family history of ovarian cancer, could potentially be eligible for studies. And so, I would suggest people in that situation call the National Cancer Institute. But it could soon or one day prove to be even more effective than say mammograms for breast cancer, so very promising.

O'BRIEN: Wow! That's saying a lot other. In our bionic file, some bone proteins out there that might aid in the production of bones to replace those that have gone away for various reasons.

WEISS: Yes, this is pretty cool. About 200,000 Americans a year undergo something called spinal fusion surgery. And this is a surgery to alleviate the debilitating back pain that they might be experiencing.

Now, typically, when you go in for this surgery, you have more than one surgery that day. You have two. The first surgery is to remove the disc that has been causing you that pain. Now, you've got a gap there and to fill in the gap, the surgeon does a second surgery and that is to harvest some of the patient's own bone and then, use that bone to fill in that space or that gap.

What we're seeing now is something called BMP, Bone Morphogenic Protein. This is something that we all produce in our bodies, but now it's being genetically engineered so they can produce it in bulk. So the surgeon goes in, removes the disc, and then in that gap puts a wire mesh. And inside the wire mesh is a sponge-like substance and some of this bone morphogenic protein. Within three months, the body starts to produce new bone right there in that cage and so; it alleviates the need for that second surgery. Less time in the O.R., less recovery time.

O'BRIEN: All right. And quickly before we run out of time here, I understand there's a new detection scheme for cancer. Tell us about that.

WEISS: Yes, you know people may have heard of the PET Scan, which is a scan that detects tumors or hot spots in the body. And they have heard of a CT scan, which the doctor uses to identify the patient's internal anatomy. Now, there's a new 3-D imaging system, which combines both of these, the PTM or the PET rather and the CT scan.

So by combining both of these images into one, the physician can then get a 3-D image of what's going on inside that patient's body. They can detect cancer earlier and more accurately. It can actually help to differentiate between a malignant tumor and a benign tumor, thereby reducing the need for unnecessary biopsies. It can even identify what stage the cancer might be at. So it's very effective. It's also being used for heart disease and brain disorders. So this is yet another really interesting and innovative technique for physicians to use to diagnose patients much more accurately.

O'BRIEN: All right. Liz Weiss out of Boston, thanks very much. Happy New Year to you.

WEISS: Thank you.

O'BRIEN: Right now, millions of sports fans are enjoying the annual ritual of the college football bowl games, but they may not provide the biggest sports choice of 2003. Like last year, it could be the Super Bowl or the baseball strike fizzles or something else that takes us all by surprise. Here with his prognostications in sports, Chris Cotter of radio station 790 The Zone right here in Atlanta.

Chris, how are you?

CHRIS COTTER, 790 THE ZONE: Good to see you, Miles. Happy New Year to you.

O'BRIEN: All right. I guess the logical place to start is the Super Bowl.

COTTER: Oh yes, it is. And I mean the way things are going right now, I've actually made my predictions here on CNN before and they haven't really turned out too well. So this is a dirty business, but why not. You know I mean I'm not going to...

O'BRIEN: We did hold you to that, didn't we? Yes.

COTTER: Not at all. But Philadelphia, I think, is going to come out of the NFC and I think that the Raiders are going to come out of the AFC. Philadelphia has been able to do it without Donovan McNabb the whole second half of the season. That's been very, very impressive for them and their defense. So I think they get it done. And I think the Raiders will win. It will be just like 22 years ago, in 1980.

O'BRIEN: All right. How about Bill Parcells? What do you -- what's going to happen to him?

COTTER: Well, Bill Parcells, you know, going to Dallas -- he and Jerry Jones, they say they've got it all worked out in terms of how they're going to, you know, coexist down there in Dallas. I think they'll be fine for the short term, but then, I think things will start to creep up and start affecting them. Now, he has a three-year deal and Bill Parcells is never one to stay around for very long. That'll be the most he ever stays in Dallas. And the problem with that is you got a young team in Dallas who are trying to rebuild from the start, you know, the ground up and he tends to be very good in the short term and then, he leaves. And he kind of leaves the cover a little bit bare and leaves the team picking up the pieces when he takes off.

O'BRIEN: He kind of flames out. Yes, that is a class of personalities. I'd like to be a fly on the wall.

COTTER: But it's going to be a nice soap opera. It'll be fun to cover, that's for sure.

O'BRIEN: Yes. L.A. Lakers, you're very bullish on them.

COTTER: Well, I think that they actually -- when you look at what they've done, they've dug themselves a really big hole right now, but...

O'BRIEN: To say the least.

COTTER: ... they are a team that can get to the play-offs. They have to play about 700 percentage basketball from here on out and that's really, really tough. If any team can do it, the Lakers can. And if they can get to the playoffs, they'll be playing hot getting there, I think they can advance and get all the way back to the championship game if they can get there. They've dug themselves a pretty big hole right now.

O'BRIEN: Speaking of big holes, let's talk about Augusta. Augusta National, will they allow women in? Will the Masters recover from this mess?

COTTER: Well, Miles, you obviously have talked about this here many times and I have until I'm blue in the face. We're beating this dead horse. I don't think it's that big of a story anymore. Sure, when the Masters get here, it'll become a big story again, but it won't affect the tournament one way or another. It won't affect the people at Augusta National, I don't think. I think the tournament will go off without a hitch.

I do think that they will allow women maybe by the end of this year, certainly, by the end of next year at Augusta National. It'll be sooner rather than later.

O'BRIEN: All right. Is it finally Pete Rose's year to get into the Hall of Fame?

COTTER: I don't think. I think Pete Rose, right now; he's going to have to admit that he did everything that he did. I think they're going to hold him to it. You know they've had recent meetings. They've had recent meetings cancelled. I don't think that he's going to get in. I think it's eventually going to come out that either he did too much in terms of betting for the Reds, against the Reds, whatever in baseball, or he's not going not to admit to enough to get himself in.

O'BRIEN: Where do you come down on that?

COTTER: I don't think he should be in.

O'BRIEN: Yes.

COTTER: It's a close call. I think he's one of the greatest baseball players ever, but if he did bet on the Reds or against the Reds, that to me is different than just betting on baseball...

O'BRIEN: Sure.

COTTER: ... because that affects the outcome of that game.

O'BRIEN: All right. How about Lance Armstrong? Apparently, he's talking about retirement.

COTTER: He has.

O'BRIEN: One more yellow jersey for him?

COTTER: He has talked about it the last couple of years. And cycling's an interesting sport. You know you get into your early 30's where you're in your prime in a lot of the other sports that are familiar to people in this country, and then, you suddenly start to teeter off a little bit in international cycling. And a lot of people see their prime years between 27, 28 years old and 32, 33, which is where Lance is.

I think he'll go for one more this year. He'll get it and then, he'll retire. Although if he doesn't retire, he could win number six and number five -- five tours right now is the record. Six would be the all-time record for him to hold alone and he certainly would be one of the greats of all time. He is already.

O'BRIEN: Well, given what he's been through, it's truly astounding. All right, Chris Cotter, always a pleasure to see you. Thank you for your predictions and we will be holding you to those.

COTTER: Sure. We'll talk next year.

O'BRIEN: We'll talk to you -- see you a little later. Have a good year.

COTTER: You too.

O'BRIEN: The envelopes are not even printed yet, but the buzz has begun -- what will be the top movies of 2003. Could it be "The Pianist" or what about "The Hulk?" We'll talk about some of the contenders when we return.

(COMMERCIAL BREAK)

O'BRIEN: The first month of this year could be a treat for moviegoers, some of the year's most anticipated films coming out in January. With us now from New York to talk more about 2003 and the big screen, "Premier" magazine's senior editor, Jill Bernstein.

Jill, good to have you with us.

JILL BERNSTEIN, SENIOR EDITOR, "PREMIER" MAGAZINE: Hi there.

O'BRIEN: All right, a couple of things opening wide that people want to watch out for, stuff like "The Pianist." BERNSTEIN: Yes. "The Pianist" is a movie. It is director, Roland Polanski's latest. It's a movie that's very close to his heart. It's about the Holocaust and Polanski, himself, escaped from the Krakow Ghetto as a seven-year-old boy. And this is a movie -- it's a true story about a man who survives the Warsaw Ghetto because he is an expert pianist and he won over a German soldier who helped protect him.

O'BRIEN: Sounds like tough sledding for moviegoers.

BERNSTEIN: Yes, you know, it could be. But you know this is the time of year where people are pretty much ready for this stuff. And you know it's got good Oscar potential. A lot of these movies are opening for a week or so, limited, at the end of December for Oscar consideration and then, they'll go wide throughout the country in January.

O'BRIEN: All right.

BERNSTEIN: Several movies doing that right now.

O'BRIEN: Of course, the movie that comes to mind is "Schindler's List," similar subject matter. Is it of the same vein, do you think?

BERNSTEIN: It's a different sort of a movie. It may be a little less Hollywood, but it's a similar theme.

O'BRIEN: And that's considered a compliment, right, more or less?

BERNSTEIN: Oh, in my mind, yes.

O'BRIEN: Yes, all right. Now another one opening wide, Jack Nicholson back, "About Schmidt"

BERNSTEIN: Yes.

O'BRIEN: Is he as off beat as ever?

BERNSTEIN: Well, despite all the commercials that you're seeing, this is not a zany comedy. I don't -- yes, they're marketing it as a real comedy and it's a dark comedy at best. He'll do some really serious, sad themes. He plays a new retiree who, you know, has just lost his wife and he goes on this long journey of, you know, potential self-discovery, yet never really comes to any conclusions. It's an interesting movie and it does definitely have some comedic moments. But I wouldn't expect "As Good As It Gets."

O'BRIEN: It doesn't sound uplifting?

BERNSTEIN: Not -- well, you know, it's not.

O'BRIEN: There you have it. It's kind of -- you said it was dark. Let's live with it, right?

BERNSTEIN: Right. O'BRIEN: All right, let's move on. "The Hulk" is coming out.

BERNSTEIN: Yes, but not for a while. There are some big films to look for. A lot of big superhero movies starting with "Daredevil" in February. Ben Affleck plays a superhero who's a blind guy who has all these other heightened senses. "The Hulk" is coming out this summer. Eric Bana, who was in "Blackhawk Down," plays the title role. There's also "X-Men 2." Lots of superheroes.

O'BRIEN: So do you think this is an improvement on Lou Ferrigno?

BERNSTEIN: I believe so. You got Ang Lee directing, you know, "Crouching Tiger" and "Sense and Sensibility." And yes, this could be one definitely to watch.

O'BRIEN: All right. And as I understand it, they're actually going to bring out two "Matrix" sequels...

BERNSTEIN: That is...

O'BRIEN: ... in this calendar year. That's a...

BERNSTEIN: That is correct. I know. I think it's the first time this has have ever been done. "Matrix II Reloaded" comes out in May and they shot these next two back-to-back. Then, the third one will come out in November. So it's going to be a lot of Keanu out there.

O'BRIEN: Is this a trend? I mean...

BERNSTEIN: Shooting sequels all in a row, yes, it is. Sequels are very bankable these days. I mean it's one of those things that studios really hang a lot on because they do deliver. So they're willing to get them shot all at once just betting that there will be viewers.

O'BRIEN: Any other ones to watch out for?

BERNSTEIN: Oh, there are so many. "Cold Mountain," the Civil War drama. "Sea Biscuit" based on the best seller. Tobey Maguire's in that one. "Legally Blonde II" will be out. I personally am looking forward to that.

O'BRIEN: I was going to say...

BERNSTEIN: It's going to be a good year. It's shaping up well.

O'BRIEN: All right, Jill Bernstein, "Premier" magazine, thanks for giving us a preview. We'll see you at the movies.

BERNSTEIN: Thank you.

O'BRIEN: Time is running out for your turn to weigh in on our "Question of The Day." What are you most concerned about in 2003? Our choices are Iraq, North Korea, terrorism or the economy. Log onto CNN.com/Wolf to vote. We'll have the results when we come back. (COMMERCIAL BREAK)

O'BRIEN: In our "Picture of The Day," an ice cold plunge into the North Atlantic. The Cooney Island Polar Bear Club kept its annual tradition in tact today. For the 100th time, club members took their New Year's Day swim. The popularity of the event showing no signs of shrinkage. With the water temperature in the 40's, they braved the cold conditions for several minutes. As one swimmer put it, the plunge signifies life and doing crazy stuff.

Now, here's how you're weighing in our "Web Question of The Day." Remember, we've been asking you this -- what are you most concerned about in 2003, terrorism or the economy? Six percent of you said Iraq. Fifteen percent of you said North Korea. Sixteen percent said terrorism and 63 percent, by far the winner, said the economy. You can keep checking the tally on our website at CNN.com/Wolf. This is not, of course, a scientific poll.

Time to hear from you and read some of your New Year's Resolutions. Elaine writes this -- "My New Year's Resolution is to read the bible everyday." That's a good one.

Dirk writes -- "In 2003, I resolve to buy my wife all new clothes." A very good one, Dirk.

Zack writes -- "I resolve not to e-mail my resolution to other people and to become a better skier." Whatever.

And Peter writes this -- "My New Year's Resolution is to become a trained literacy tutor, and help at least one illiterate adult learn to read. Literacy," he suggests, "is the silver bullet." A tip of the hat to Peter.

That's all the time we have for today. Please join us tomorrow at 5:00 p.m. Eastern and don't forget "SHOWDOWN IRAQ" weekdays noon Eastern. Until then, thanks very much for watching. I'm Miles O'Brien on behalf of the vacationing Wolf Blitzer. "LOU DOBBS MONEYLINE" coming up right after this news alert with Charles Molineaux.

TO ORDER A COPY OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR ONLINE ORDER FORM LOCATED AT www.fdch.com.







Aired January 1, 2003 - 17:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, GUEST HOST: Thanks very much, Candy. Some of the many stories we're following this New Year's Day, a surprising twist to the manhunt in America. Is one of them really hiding? Also, the fireworks on New Year's that turned deadly for dozens, and the monster storm that caused so much damage they had to send a plane to find out what happened, but first our CNN news alert.
(NEWSBREAK)

O'BRIEN: That's a look at our CNN news alert. WOLF BLITZER REPORTS starts right now.

(BEGIN VIDEOTAPE)

O'BRIEN (voice over): Bordering on confusion, the nationwide manhunt for the five border busters takes an odd turn all the way to Pakistan and a jeweler who says the FBI needs to get the right picture. Missing for more than a week, police draw conclusions about Laci Peterson.

UNIDENTIFIED MALE: It becomes more apparent that her disappearance is a result of foul play.

O'BRIEN: Louisiana lookout, new sketch in a serial killer case, but did he do it? Emergency in the OR, do you know where your surgeon is? And crystal ball 200; what you need to know about Iraq, North Korea, terrorism, and your pocketbook.

(END VIDEOTAPE)

O'BRIEN (on camera): It is Wednesday, January 01, 2003. I'm Miles O'Brien at CNN Center, Wolf Blitzer off today, Happy New Year to you. The murky tale of the five wanted men who apparently snuck across the U.S. border on Christmas Eve took an odd turn today. A Pakistani jeweler in Pakistan found an interesting gem in his morning paper. It was his own image staring back at him. Here is CNN's Jeanne Meserve.

(BEGIN VIDEOTAPE)

JEANNE MESERVE, CNN CORRESPONDENT (voice over): Is this man sought by the FBI illegally in the United States or is he, in fact, this man, a jeweler still at home in Pakistan photographed by the Associated Press? The photo on the FBI website is captioned with Mustafa Khan Owasi's name. From the beginning, the FBI said the name might be falsified but could the photo too?

Mohammad Asqar (ph) a jeweler in Lahore says the picture on the FBI website is of him and the resemblance is striking. Asqar acknowledges to the Associated Press having once used forged documents and he suggests the forgers might have recycled his picture. The administration says the matter is being looked into. One official said it was "not inconceivable that the FBI's photo is bogus." The FBI has not said where or how it obtained the picture.

UNIDENTIFIED MALE: To Canadian and American authorities this changes a lot and it changes nothing at the same time because we know that when we're in the realm of the illicit transportation smuggling, we're dealing with a dark miasma often of confusion, some of it by design.

MESERVE: As the possible photo fraud is checked out, administration officials tell CNN all five of the men for whom the FBI is searching are believed to have traveled from Pakistan to Britain and then onto Canada and the U.S.

UNIDENTIFIED MALE: We have lots of crossing points between Maine and the state of Washington but there's also a lot of un-patrolled territory so that adds to the difficulty of controlling that perimeter.

MESERVE: Indeed, administration sources say the prevalent U.S. government theory is that the men were smuggled into the U.S. because a check of records at U.S.-Canadian border crossings has turned up no trace of them and because their names were gleaned from the interrogation of a smuggler of illegal aliens in Canada.

(END VIDEOTAPE)

MESERVE (on camera): A law enforcement source says raids were conducted in and around New York City and New Haven, Connecticut Monday night. Authorities believed individuals at those locations might have information about the five men. Although an undisclosed number of men of Middle Eastern and Pakistani descent were picked up for questioning, all have been released by Tuesday afternoon and the five men are still at large.

And, Miles, this late note from CNN Producer Terry Freedan (ph), he says that the FBI will be questioning Mohammad Asqar in Pakistan just as soon as they can to try to get to the bottom of this question of whose photograph that is on their website - Miles, back to you.

O'BRIEN: CNN's Jeanne Meserve working a long day in Washington thank you very much. Investigators in Modesto, California are saying it's apparent the disappearance of a pregnant woman on Christmas Eve was the result of foul play and now police have expanded their search for Laci Peterson. CNN's Rusty Dornin joining us now live from Modesto on this New Year's Day, any traces or clues to report, Rusty?

RUSTY DORNIN, CNN CORRESPONDENT: Well, Miles, you know it's not any strong lead that is causing police to say that the foul play is a possibility. It's just the fact Laci Peterson, she disappeared on Christmas Eve. She was eight months pregnant and she was also very close to her family and so that leads police to think that it was foul play. Unfortunately, there are no strong leads at this point.

Meantime in a park near her house, the LaLoma (ph) Dry Creek Park, you can see the giant reward sign, her flashing smile on the picture there, and a little shrine that people have made. All morning long we've been watching people come along here and light candles and just are very - this is a community that has been very concerned about the disappearance of Laci Peterson.

Now, this is the park where she supposedly was going to take her dog for a walk that morning. Her husband said that was the last time that he ever saw her but the bloodhounds in the case (AUDIO GAP).

O'BRIEN: Well, clearly we have some transmission problems from Rusty. We'll try to get back with her a little bit later in the broadcast and get the rest of that report.

Let's turn now our attention to Louisiana where investigators are hoping some new information will open new doors in their search for a serial killer. A witness has come forward after seeing a man near one of the crime scenes.

(BEGIN VIDEOTAPE)

O'BRIEN (voice over): Could this be the face that gives police in Louisiana the break they're looking for? Investigators call this composite sketch and the so-called person of interest shown in it a substantial development in a serial killer case that's had them rattled.

SHERIFF MIKE NEUSTROM, LAFAYETTE PARISH, LA: The person was observed on Thursday, November 21st during the middle of the day. He is described as having an intense and intimidating stare.

O'BRIEN: November 21st is the day the fourth and latest victim, Treineisha Columb was reported missing. Police base this sketch on a witness account which described a man possibly between 30 and 40 seen a few hundred feet from where Columb's body was discovered.

The body was found November 24th in a wooded area in the town of Scott, Louisiana and the man was seen sitting in a white early '90s pickup truck, which fits the description of a vehicle that police had been looking for. Putting it all together, why is this man not being called a suspect?

NEUSTROM: There may be legitimate reasons for this person to be in that area so we're not classifying him as a suspect at this time. If this individual is identified and comes forward there may be some explanation he could offer to us that would justify his presence there.

O'BRIEN: After 16 months, four murders of young women all linked by DNA and little to show for the investigation, police in Lafayette and Baton Rouge have most fast this week. They say they have a psychiatric profile of the killer describing him as a man who knows the area between Baton Rouge and Lafayette very well and "lives a fairly normal life."

(END VIDEOTAPE)

O'BRIEN (on camera): In addition, authorities tell us this week they have begun taking voluntary DNA samples of dozens of men in the area to rule them in or out as suspects. They were identified as a result of calls to the tip line there.

Shuttle diplomacy Korean style; coming up why a South Korean diplomat is now in Beijing. We'll get the latest from Seoul. The surgical strike, Pennsylvania may have a prescription for a cure but the ailment is spreading across state lines.

And, the fortune tellers, what 2003 will bring on the economy, the prospects for war, even what's coming up on the big screen, but first if you missed some of the parties last night, as I did, a look at New Year's celebrations all around the country.

(BEGIN VIDEO CLIP)

LEBANON, PENNSYLVANIA

UNIDENTIFIED FEMALE: Nine minutes to go until we see the big old bologna drop.

(END VIDEO CLIP)

VIDEO CLIPS OF FIRST NIGHT, BOSTON, MASSACHUSETTS, PEACH DROP IN ATLANTA, GEORGIA, SAN FRANCISCO, CALIFORNIA, SAN ANTONIO, TEXAS, SAN DIEGO, CALIFORNIA, LAS VEGAS, NEVADA, SEATTLE, WASHINGTON, AND TIMES SQUARE, NEW YORK CITY

(COMMERCIAL BREAK)

O'BRIEN: President Bush is spending New Year's Day at his ranch near Crawford, Texas. The president who will spend a few more days on vacation before returning to the White House spoke with reporters yesterday. He says his New Year's resolutions include doing his utmost to avoid going to war with Iraq or North Korea.

Details are emerging today about a recent incident along the Afghanistan-Pakistan border involving U.S. forces. Military officials in Bagram say a Pakistani border guard opened fire on a U.S. patrol, wounding one American who is reported in stable condition. The U.S. patrol called in air support. Pakistan claims that an American bomb hit an unoccupied school building. The U.S. and Pakistan are investigating. The border guard is in Pakistani custody.

It was business as usual today for the U.N. Weapons inspectors in Iraq. CNN's Rym Brahimi is in Baghdad.

(BEGIN VIDEOTAPE)

RYM BRAHIMI, CNN CORRESPONDENT: No respite for U.N. weapons inspectors on this New Year's Day. Four teams were out.

BRAHIMI (voice over): One team of missile experts went up north, 40 kilometers north of the Iraqi capital to the huge El Taji (ph) complex to check in on a facility involved in missile engines. A team of chemical experts went inside Baghdad to a warehouse that stores electronic equipment and two biological teams went out, one of them to a brewery, another one to a factory that bottles soft drinks.

Now, in the middle of this stepped up inspection regime a lot of tension, particularly in the southern no-fly zone where the state run Iraqi News Agency says one person was killed in a U.S.-British air raid.

BRAHIMI (on camera): So, this may be the beginning of New Year, which for many Iraqis a lot of the problems are the same as in the old year. Rym Brahimi CNN, Baghdad.

(END VIDEOTAPE)

O'BRIEN: Meanwhile, the New Year has brought no reassurance to the Korean Peninsula. Diplomats continue to look for ways to diffuse tensions over North Korea's nuclear program. CNN's Rebecca MacKinnon has the latest from Seoul.

(BEGIN VIDEOTAPE)

REBECCA MACKINNON, CNN CORRESPONDENT: South Korea's deputy foreign minister is now in Beijing. He's scheduled to meet Thursday with China's vice foreign minister. South Korea's goal in this meeting is to try and convince China to take a more active role in ratcheting down tensions here on the Korean Peninsula with North Korea having kicked out nuclear inspectors from its nuclear facilities.

Now, South Korea's new President-elect Roh Moo-hyun takes office in February, gave a New Year's message today in which he made it clear his team is working very hard to find a diplomatic solution.

ROH MOO-HYUN, KOREAN PRESIDENT-ELECT (through translator): We have examined and debated the nuclear issues. The conclusion is that we can solve this matter with dialog and compromise if our people and politicians gather their strength. I am confident I will resolve this problem without fail.

MACKINNON: Meanwhile, more bellicose rhetoric coming from North Korea today. The state run news agency in an editorial accusing the United States of targeting North Korea for an invasion and calling on the people of North Korea to strengthen the military to protect North Korea's dignity and sovereignty. Rebecca MacKinnon CNN, Seoul.

(END VIDEOTAPE)

O'BRIEN: And that bring us to our web question of the day. What are you most concerned about in 2003, Iraq, North Korea, terrorism, or the economy? We'll have the results later in the broadcast. Vote at cnn.com/wolf. While you're there we'd like to hear from you. Send your comments and we'll try to read some of them at the end of the program and that's also where you can find my daily online column, cnn.com/wolf.

High malpractice costs, a threatened surgeon walkout, one state's dilemma may be cured but the problem could be contagious. Is your state next? And, the state of your bank account in 2003, we'll get predictions for the year ahead just ahead also, first some stories making news around the world.

(BEGIN VIDEOTAPE)

O'BRIEN (voice over): Fast-moving fire, fire broke out at an illegal fireworks stand at an outdoor marketplace in Vera Cruz, Mexico. It spread quickly through the other market stalls killing dozens of people.

There was also a deadly fireworks explosion in the Philippines and police say this one was the result of a deliberate act. They say someone tossed a grenade into a roadside fireworks stall killing at least ten people, including a 14-year-old boy.

Solomon Cyclone, a powerful storm that hit the Solomon Islands in the South Pacific has done considerable damage. Communications have been wiped out but pictures taken from a plane flying over the island shows trees shredded, buildings damaged, and villages flooded, no word on possible casualties.

Detainee disturbance, immigrants at an Australian detention camp in Sydney set fires and some of them allegedly attempted a mass breakout using a stolen staff car as a battering ram. It was the latest in a series of disturbances at Australian detention camps. Critics are calling on the government to reconsider its hard line policy of locking up asylum seekers.

Peaceful pope, Pope John Paul II turned his attention to the Middle East as the Roman Catholic Church celebrated its world day of peace. In his New Year's Day homily at St. Peter's Basilica the pope called the Mid East conflict fratricidal and senseless.

Starting 2003 off on the right foot, billed as the greatest annual street parade in Europe the London New Year's Day parade featured more than 125 marching groups, 40 bands, street performers, clowns, jugglers, stilt walkers, and acrobats, and with that we wish you Happy New Year. That's our look around the world.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

O'BRIEN: Surgery patients in parts of West Virginia are having to go out of their way for treatment. Dozens of surgeons began the New Year with a 30-day walkout. Four hospitals affected, the doctors are protesting the high cost of malpractice insurance and they are calling on lawmakers to pass reforms. Pennsylvania avoided a similar strike yesterday. CNN's Whitney Casey has our story.

(BEGIN VIDEOTAPE)

WHITNEY CASEY, CNN CORRESPONDENT (voice over): A flat-lined ER but in West Virginia it's the doctors pulling the plug. A slew of surgeons walked out of work Wednesday afternoon in protest to what they call skyrocketing medical malpractice insurance rates, a scenario that was averted in Eastern Pennsylvania when earlier Wednesday morning nearly 50 surgeons planned a walkout of the emergency room.

CASEY (on camera): So there would have been sort of an emergency in the emergency room?

UNIDENTIFIED MALE: Yes, exactly.

CASEY (voice over): But in the 11th hour, physicians in Pennsylvania were resuscitated by Governor Elect Ed Rendell who promised $220 million of insurance aid but doctors said the quid pro quo is not a panacea just a band-aid. What caused this crisis?

DR. JERRY GILBERT, UROLOGIST: Well, I think in Pennsylvania it's fairly clear that the payouts for medical malpractice have skyrocketed in the last six years and if you're going to pay out increasing claims then you're going to have to be increasing insurance premiums. With that we've lost a lot of insurance companies in Pennsylvania who can not afford to do business in Pennsylvania anymore.

CASEY: So how does this impact the patients?

GILBERT: If this continues, we will not have insurance and if we don't have insurance we will no longer be in the state of Pennsylvania and then they will not get appropriate medical care.

CASEY (on camera): The doctors point their finger at the lawyers and the legal system where the lawyers then put the owness back on the doctors saying that if they only weeded out the bad doctors in their own medical community that their insurance premiums would be sure to go down, claiming that over half of the medical malpractice payments come from only five percent of U.S. physicians.

CASEY (voice over): And the American Medical Association says 80 percent of the medical malpractice claims filed are without merit and close with no payment, but even the paperwork on this meritless claims cost upwards of $22,000 per case in legal fees. Doctors in high premium states, like Pennsylvania, are pushing for new laws that would put a cap on the amount of malpractice payouts, a move medical malpractice attorneys say is a sham.

THOMAS FOLEY, ATTORNEY: The idea of insurance is to make the victim as whole as possible and if you put caps on that's going to amount to immunity with respect to these doctors.

CASEY: And as the debate intensifies so too does the community support for the doctors. Whitney Casey CNN, Scranton, Pennsylvania.

(END VIDEOTAPE)

O'BRIEN: Now, the problem is not limited to Pennsylvania and West Virginia. The American Medical Association cites 12 states facing runaway malpractice insurance costs. Some doctors are calling the state of malpractice insurance an acute crisis, so what are the options? Pennsylvania's Governor-elect Ed Rendell joins us now live from Philadelphia to lay things out for us. Even before you're sworn in you got a big problem on your hands, don't you?

ED RENDELL (D), PA GOV-ELECT: No question about it and it was a problem that we had to take action on because we were going - we've already had four other states' 26 trauma centers close and a lot of doctors in southeastern and northeastern Pennsylvania were just going to stop treating patients on January 1st.

So, we took action to solve the short-run problem. I agree with the physicians who say it's a band-aid not a cure but by eliminating the doctors' requirements in the most challenged specialties to pay into our catastrophic loss fund, we reduce their bills by 25 to 30 percent, and that was a message to them to hang in there and we've promised that by July 1st we will have some long-term changes in place, and it's a complex issue.

O'BRIEN: Well, it's a complex issue. We probably don't have time to lay out every last little detail but what is your sense of the long range solution?

RENDELL: Well, tort reform is important and over the last year, Governor Schweiker and the legislature have taken some important steps. We have one more to go in my judgment and that's requiring a certificate of merit, a medically certified doctor to take an affidavit that malpractice has occurred before a suit is filed.

I think we're going to get that in February from our Supreme Court Rules Committee and I think that sets the stage for us to take action getting rid of this Catastrophic Loss Fund, reducing coverage.

Before last year, Pennsylvania doctors had to have a $1.25 million of coverage. In California, for example, they're only required to have $100,000 in coverage reducing covering that's the single most important thing.

We also have to look at the insurance industry though because it's interesting. In the '90s, Pennsylvania had no tort reform and yet insurance companies were low-balling each other to try to sign up doctors because the insurance industry, the market was doing well and everything was going fine for insurance companies. They made some real mistakes. We have to have better oversight of the insurance industry.

O'BRIEN: All right but tort reform is a nice way of saying lowering the amount of money that plaintiffs who have been wronged by doctors might ultimately receive. These are people who have been injured or scarred or lost the wrong limb for life. You put it in that perspective, you've got to wonder if that is the right way to go about this problem. You're going after the victim.

RENDELL: Well, it's a balancing (AUDIO GAP).

O'BRIEN: (AUDIO GAP) Babylonia, the American Colonies, China, or Africa, the answer coming up.

(COMMERCIAL BREAK)

O'BRIEN: Welcome back to WOLF BLITZER REPORTS. I'm Miles O'Brien sitting in for the man. Coming up why it might be scary to look into the crystal ball for 2003, but first let's look at some other stories making news in our news alert.

(NEWSBREAK)

O'BRIEN: Americans begin the New Year facing twin uncertainties -- one, a possible war with Iraq, at the same time, a troubled economy. First, let's look at Iraq.

Most Americans favor an invasion to destroy Iraq's weapons or to overthrow its leader, according to CNN polls. To consider these questions and much more, we turn to our guest, international affairs analyst, Mansoor Ijaz in New York.

Good to have you with us, Mansoor.

MANSOOR IJAZ, INTERNATIONAL AFFAIRS ANALYST: Thank you, Miles. Happy New Year.

O'BRIEN: Happy New Year to you. Let's get the crystal ball out. Saddam Hussein, in or out in 2003?

IJAZ: He'll be out and I think the way it'll happen will be unorthodox. There's still a good chance that we will not have to use military force in the final analysis that the threat of it will be enough, that there may be a premacove (ph) type solution.

As you remember, at the beginning of the Gulf War, the Russians went in to try and offer Saddam a final way out by taking him into exile. I think this time, the solution like that will be on the table. Arab leaders will support it as well. And I think there's a chance he may in fact take it this time.

O'BRIEN: Exile, interesting. OK. Osama bin Laden, will he be found? Al Qaeda, will it grow in strength?

IJAZ: Al Qaeda will no -- without question, it will grow in strength. And I don't think that bin Laden will be found. It is my understanding that the area in the northwest frontier province of Pakistan where he's hiding out, he is not allowed to move even within a 50-yard radius very much. And all of his movements are kept under ground.

So everything al Qaeda is doing today is being done by human chains, essentially having one man give a message to another to a third. And that's how they're getting their messages around. They're very patient, very calibrated in the way that they operate. And I think they're only going to grow in strength and we have to uncover their sleeper cells here in the U.S.

O'BRIEN: All right. Let's get into North Korea. Will that be a persistent threat or will that tension abate?

IJAZ: This will depend a lot on whether the Bush Administration is prepared to come up with a creative, new way of dealing with it. I -- all these other policy paradigms that they've tried before are not going to work. I think there's a new way that they have to look at this and that's called preemptive containment. What I mean by that is that we need to bring China and Pakistan, these two nations, onboard in helping us -- China to give public agreement to the world that they will not provide North Korea with bomb designs or with bomb containment capabilities and Pakistan to tell us where they have given them centrifuge facilities and how much uranium they can actually enrich.

If we can stop these two things -- if we can stop them from getting the chemicals to separate plutonium and things of that nature, then we have a real chance at being able to talk to them diplomatically. But before that, there's no diplomacy that can work with this kind of a regime.

O'BRIEN: All right. You mentioned Pakistan. What about the tension between Pakistan and India over the issue of Kashmir?

IJAZ: Well, there is a big problem. I think that Pakistan is on a very steady slope down in terms of fundamentalists taking control over the key organs of government. Again, I want to be very clear that Islamists are very patient people.

And what we've seen now is that they've taken control of the northwest frontier province and Balujastan, which is the two provinces of budding Afghanistan. And I think that the Islamist fundamentalists are going to take greater and greater control over the affairs of the army and that is going to only set up a confrontation with the headliners of India. I think you'll see India and Pakistan have another crisis that will look like a nuclear crisis again this year.

O'BRIEN: All right. As time expires, lots of ground to cover here. The FBI, the CIA, will they succeed in their efforts to thwart further terrorist attacks?

IJAZ: The CIA is doing a pretty good job overseas already. I think the FBI has to do a better job here at home in working with the Arab-American and Muslim-American communities because the only way we are ever going to be able to find out where the sleeper cells are is to have that kind of a collaboration. And I think the president needs to stand up and publicly call out for help to these communities and get them enlisted in the war on terror effort here in the United States.

O'BRIEN: Mansoor Ijaz, thank you for your look ahead. We appreciate it. Have a good New Year.

IJAZ: Happy New Year to you.

O'BRIEN: All right. Let's now turn to other major concerns that many Americans are thinking about today, the still sputtering economy, the sagging stock market and for the third year in a row, the Dow Jones Industrial lost ground. Americans lost millions, probably billions. Joining us with some predictions on the economic year ahead, Rajeev Dahwan, who is with the Economic Forecasting Group here at Georgia State University in Atlanta.

Good to have you with us, Rajeev.

RAJEEV DAHWAN, GEORGIA STATE UNIVERSITY: Good to be hear. Happy New Year.

O'BRIEN: All right. Happy New Year. Everybody wants to know, markets up or down?

DAHWAN: I wish I had a great answer for that, but as long as the geopolitical risks are there, this market will be down. More war should resolve that. It would start going up. So sometime in the middle of the year, I expect it to go up.

O'BRIEN: So war is linked to markets as always?

DAHWAN: Right, because war is linked to oil prices. Oil prices determine the economic health. And there you have the market.

O'BRIEN: All right. But in the past, it has been the prelude to war that has brought the markets down, the actual declaration of war, the actual bombs flying. The markets tend to rally. Do you see that happening?

DAHWAN: Because once you resolve the uncertainty, the war begins and you're winning it, then the markets are happy. So that's instantaneous. The issue is this time we don't know when the war is beginning.

O'BRIEN: All right. Unemployment, we're seeing increasing numbers on the unemployment front, a lot of jobless Americans out there. Any bleak prospects there?

DAHWAN: Actually, it's the same thing with the war. I think the moment the CEOs realize that the uncertainty is resolved, then we start hiring people. And the unemployment rate will start coming down.

O'BRIEN: OK. Mortgage rates, all-time historic lows, incredible numbers out there. I would assume that once again you're going to tell me the war has something to do with it.

DAHWAN: No, in this one, the war doesn't.

O'BRIEN: OK.

DAHWAN: In this one, they're solo that the chances of them going down is so low that I think they're going to be on the upward side down the road.

O'BRIEN: They have only one place to go...

DAHWAN: Go up. O'BRIEN: ... quite literally. All right, let's talk about corporate scandals. That has certainly been a hallmark of 2002 whether it's Enron or WorldCom, whatever the case. Do you see more of this happening in 2003?

DAHWAN: Not much. I think the main wave in 2002. People are more cautious now. Everybody is watching their behavior. So the chances of having another Enron, WorldCom are much lower now.

O'BRIEN: Really? I mean don't you think that the underlying cause of all this, greed essentially, is still there?

DAHWAN: It will never go away. And the greed is what makes the system too because if you're not hungry, you're not going to make the profits. The issue is are you making it the right way or the wrong way.

O'BRIEN: You sounded like Gecko. Greed is good, right? All right, let's talk about Martha Stewart. She -- as we've been talking about impending possibilities of charges for so long now and the possibility that somebody -- that a few of these people might be talking and building a case against her, what do you see happening?

DAHWAN: I think -- in the case of Martha Stewart, I think her star is on the way down because there's so many investigations going on. They're going to find something sooner or later and unfortunately, it's not too good.

O'BRIEN: Is it a company without her?

DAHWAN: It's going to be tough without her because she's what makes the show and the other stuff and that sells the goods. So if you don't have your main marketing spokesman, you're going to be having a tough time in the market.

O'BRIEN: All right. Very interesting. Rajeev Dahwan, thank you for coming in and offering your prognostications for 2003.

DAHWAN: Thank you, Miles.

O'BRIEN: All right. Moving on from worries over war and the economy, let's turn now to the world of medical science. Here with a survey for recent advances that should make a big impact in 2003 is a contributing health correspondent for us, Liz Weiss, who checks in from Boston.

Liz, good to see you.

LIZ WEISS, CNN CONTRIBUTING MEDICAL CORRESPONDENT: Great to see you. Happy New Year.

O'BRIEN: All right. I can't hear her. Can you hear her at home? Do we have...

WEISS: I can hear myself. O'BRIEN: In the control room, Ken. I can't hear Liz. Can you hear Liz? Tell you what, we're going to take a break and try to sort this out. We'll be back in just a minute.

(COMMERCIAL BREAK)

O'BRIEN: Earlier we asked -- where did the tradition of New Year's Resolutions come from? The answer, Babylonia. The early Babylonians didn't promise to lose weight or stop drinking. They vowed to give back farm equipment they borrowed.

All right. Operator error on my part. I'm sorry about that, Liz. Everybody else could hear you but me.

WEISS: It's OK. I forgive you.

O'BRIEN: Yes, sometimes I feel like I could use a new drug every now and again. Let's talk about new drugs, shall we?

WEISS: OK.

O'BRIEN: All right.

WEISS: You bet. Well, there's...

O'BRIEN: Hepatitis C, this is -- is this a growing problem?

WEISS: It's a growing problem (UNINTELLIGIBLE). Only it affects many millions of people around the world and up until now, there's been a standard therapy of two drugs, Rizophiron (ph), Interferon. Now, this has been a good therapy, but only about 40 percent effective. Now, there is a great new combination right here, not even on the horizon. People are receiving it right now. Rizophiron (ph) and a new type of Interferon called Peg Interferon or Pegolated Interferon. It's more effective because it lasts in the blood stream for up to week. Standard Interferon lasted for about a day. So people undergoing the therapy, well, about 60 percent are reaping the benefits.

This is a great combination because this new interferon will last for a week in the blood stream. You only have to have injections once a week not three times a week. It actually has been shown to reverse some of the liver damage caused by Hepatitis C. And what's really important is that people who already have psoriasis of the liver are also responding to this new therapy.

O'BRIEN: All right, let's move along. I understand there's a new ovarian cancer test, which might hold some promise.

WEISS: You bet. You know ovarian cancer is very deadly. About 14,000 women a year die from it because it's typically diagnosed in a more advanced stage and that's because the current therapy or treatment for diagnosing it is a blood test called CA-125. It only detects about 50 percent of women with early stage ovarian cancer, about 80 percent with advanced stage. So it's not that effective. Well, there's a new blood test, which the FDA and the National Cancer Institute have looked into and tested. And it has proven to be 100 percent effective in detecting woman with early stage ovarian cancer. Now, there's a little bit of a catch here, because they've only done one study. So more studies do need to be done.

Women, who are at high risk, are they've got a family history of ovarian cancer, could potentially be eligible for studies. And so, I would suggest people in that situation call the National Cancer Institute. But it could soon or one day prove to be even more effective than say mammograms for breast cancer, so very promising.

O'BRIEN: Wow! That's saying a lot other. In our bionic file, some bone proteins out there that might aid in the production of bones to replace those that have gone away for various reasons.

WEISS: Yes, this is pretty cool. About 200,000 Americans a year undergo something called spinal fusion surgery. And this is a surgery to alleviate the debilitating back pain that they might be experiencing.

Now, typically, when you go in for this surgery, you have more than one surgery that day. You have two. The first surgery is to remove the disc that has been causing you that pain. Now, you've got a gap there and to fill in the gap, the surgeon does a second surgery and that is to harvest some of the patient's own bone and then, use that bone to fill in that space or that gap.

What we're seeing now is something called BMP, Bone Morphogenic Protein. This is something that we all produce in our bodies, but now it's being genetically engineered so they can produce it in bulk. So the surgeon goes in, removes the disc, and then in that gap puts a wire mesh. And inside the wire mesh is a sponge-like substance and some of this bone morphogenic protein. Within three months, the body starts to produce new bone right there in that cage and so; it alleviates the need for that second surgery. Less time in the O.R., less recovery time.

O'BRIEN: All right. And quickly before we run out of time here, I understand there's a new detection scheme for cancer. Tell us about that.

WEISS: Yes, you know people may have heard of the PET Scan, which is a scan that detects tumors or hot spots in the body. And they have heard of a CT scan, which the doctor uses to identify the patient's internal anatomy. Now, there's a new 3-D imaging system, which combines both of these, the PTM or the PET rather and the CT scan.

So by combining both of these images into one, the physician can then get a 3-D image of what's going on inside that patient's body. They can detect cancer earlier and more accurately. It can actually help to differentiate between a malignant tumor and a benign tumor, thereby reducing the need for unnecessary biopsies. It can even identify what stage the cancer might be at. So it's very effective. It's also being used for heart disease and brain disorders. So this is yet another really interesting and innovative technique for physicians to use to diagnose patients much more accurately.

O'BRIEN: All right. Liz Weiss out of Boston, thanks very much. Happy New Year to you.

WEISS: Thank you.

O'BRIEN: Right now, millions of sports fans are enjoying the annual ritual of the college football bowl games, but they may not provide the biggest sports choice of 2003. Like last year, it could be the Super Bowl or the baseball strike fizzles or something else that takes us all by surprise. Here with his prognostications in sports, Chris Cotter of radio station 790 The Zone right here in Atlanta.

Chris, how are you?

CHRIS COTTER, 790 THE ZONE: Good to see you, Miles. Happy New Year to you.

O'BRIEN: All right. I guess the logical place to start is the Super Bowl.

COTTER: Oh yes, it is. And I mean the way things are going right now, I've actually made my predictions here on CNN before and they haven't really turned out too well. So this is a dirty business, but why not. You know I mean I'm not going to...

O'BRIEN: We did hold you to that, didn't we? Yes.

COTTER: Not at all. But Philadelphia, I think, is going to come out of the NFC and I think that the Raiders are going to come out of the AFC. Philadelphia has been able to do it without Donovan McNabb the whole second half of the season. That's been very, very impressive for them and their defense. So I think they get it done. And I think the Raiders will win. It will be just like 22 years ago, in 1980.

O'BRIEN: All right. How about Bill Parcells? What do you -- what's going to happen to him?

COTTER: Well, Bill Parcells, you know, going to Dallas -- he and Jerry Jones, they say they've got it all worked out in terms of how they're going to, you know, coexist down there in Dallas. I think they'll be fine for the short term, but then, I think things will start to creep up and start affecting them. Now, he has a three-year deal and Bill Parcells is never one to stay around for very long. That'll be the most he ever stays in Dallas. And the problem with that is you got a young team in Dallas who are trying to rebuild from the start, you know, the ground up and he tends to be very good in the short term and then, he leaves. And he kind of leaves the cover a little bit bare and leaves the team picking up the pieces when he takes off.

O'BRIEN: He kind of flames out. Yes, that is a class of personalities. I'd like to be a fly on the wall.

COTTER: But it's going to be a nice soap opera. It'll be fun to cover, that's for sure.

O'BRIEN: Yes. L.A. Lakers, you're very bullish on them.

COTTER: Well, I think that they actually -- when you look at what they've done, they've dug themselves a really big hole right now, but...

O'BRIEN: To say the least.

COTTER: ... they are a team that can get to the play-offs. They have to play about 700 percentage basketball from here on out and that's really, really tough. If any team can do it, the Lakers can. And if they can get to the playoffs, they'll be playing hot getting there, I think they can advance and get all the way back to the championship game if they can get there. They've dug themselves a pretty big hole right now.

O'BRIEN: Speaking of big holes, let's talk about Augusta. Augusta National, will they allow women in? Will the Masters recover from this mess?

COTTER: Well, Miles, you obviously have talked about this here many times and I have until I'm blue in the face. We're beating this dead horse. I don't think it's that big of a story anymore. Sure, when the Masters get here, it'll become a big story again, but it won't affect the tournament one way or another. It won't affect the people at Augusta National, I don't think. I think the tournament will go off without a hitch.

I do think that they will allow women maybe by the end of this year, certainly, by the end of next year at Augusta National. It'll be sooner rather than later.

O'BRIEN: All right. Is it finally Pete Rose's year to get into the Hall of Fame?

COTTER: I don't think. I think Pete Rose, right now; he's going to have to admit that he did everything that he did. I think they're going to hold him to it. You know they've had recent meetings. They've had recent meetings cancelled. I don't think that he's going to get in. I think it's eventually going to come out that either he did too much in terms of betting for the Reds, against the Reds, whatever in baseball, or he's not going not to admit to enough to get himself in.

O'BRIEN: Where do you come down on that?

COTTER: I don't think he should be in.

O'BRIEN: Yes.

COTTER: It's a close call. I think he's one of the greatest baseball players ever, but if he did bet on the Reds or against the Reds, that to me is different than just betting on baseball...

O'BRIEN: Sure.

COTTER: ... because that affects the outcome of that game.

O'BRIEN: All right. How about Lance Armstrong? Apparently, he's talking about retirement.

COTTER: He has.

O'BRIEN: One more yellow jersey for him?

COTTER: He has talked about it the last couple of years. And cycling's an interesting sport. You know you get into your early 30's where you're in your prime in a lot of the other sports that are familiar to people in this country, and then, you suddenly start to teeter off a little bit in international cycling. And a lot of people see their prime years between 27, 28 years old and 32, 33, which is where Lance is.

I think he'll go for one more this year. He'll get it and then, he'll retire. Although if he doesn't retire, he could win number six and number five -- five tours right now is the record. Six would be the all-time record for him to hold alone and he certainly would be one of the greats of all time. He is already.

O'BRIEN: Well, given what he's been through, it's truly astounding. All right, Chris Cotter, always a pleasure to see you. Thank you for your predictions and we will be holding you to those.

COTTER: Sure. We'll talk next year.

O'BRIEN: We'll talk to you -- see you a little later. Have a good year.

COTTER: You too.

O'BRIEN: The envelopes are not even printed yet, but the buzz has begun -- what will be the top movies of 2003. Could it be "The Pianist" or what about "The Hulk?" We'll talk about some of the contenders when we return.

(COMMERCIAL BREAK)

O'BRIEN: The first month of this year could be a treat for moviegoers, some of the year's most anticipated films coming out in January. With us now from New York to talk more about 2003 and the big screen, "Premier" magazine's senior editor, Jill Bernstein.

Jill, good to have you with us.

JILL BERNSTEIN, SENIOR EDITOR, "PREMIER" MAGAZINE: Hi there.

O'BRIEN: All right, a couple of things opening wide that people want to watch out for, stuff like "The Pianist." BERNSTEIN: Yes. "The Pianist" is a movie. It is director, Roland Polanski's latest. It's a movie that's very close to his heart. It's about the Holocaust and Polanski, himself, escaped from the Krakow Ghetto as a seven-year-old boy. And this is a movie -- it's a true story about a man who survives the Warsaw Ghetto because he is an expert pianist and he won over a German soldier who helped protect him.

O'BRIEN: Sounds like tough sledding for moviegoers.

BERNSTEIN: Yes, you know, it could be. But you know this is the time of year where people are pretty much ready for this stuff. And you know it's got good Oscar potential. A lot of these movies are opening for a week or so, limited, at the end of December for Oscar consideration and then, they'll go wide throughout the country in January.

O'BRIEN: All right.

BERNSTEIN: Several movies doing that right now.

O'BRIEN: Of course, the movie that comes to mind is "Schindler's List," similar subject matter. Is it of the same vein, do you think?

BERNSTEIN: It's a different sort of a movie. It may be a little less Hollywood, but it's a similar theme.

O'BRIEN: And that's considered a compliment, right, more or less?

BERNSTEIN: Oh, in my mind, yes.

O'BRIEN: Yes, all right. Now another one opening wide, Jack Nicholson back, "About Schmidt"

BERNSTEIN: Yes.

O'BRIEN: Is he as off beat as ever?

BERNSTEIN: Well, despite all the commercials that you're seeing, this is not a zany comedy. I don't -- yes, they're marketing it as a real comedy and it's a dark comedy at best. He'll do some really serious, sad themes. He plays a new retiree who, you know, has just lost his wife and he goes on this long journey of, you know, potential self-discovery, yet never really comes to any conclusions. It's an interesting movie and it does definitely have some comedic moments. But I wouldn't expect "As Good As It Gets."

O'BRIEN: It doesn't sound uplifting?

BERNSTEIN: Not -- well, you know, it's not.

O'BRIEN: There you have it. It's kind of -- you said it was dark. Let's live with it, right?

BERNSTEIN: Right. O'BRIEN: All right, let's move on. "The Hulk" is coming out.

BERNSTEIN: Yes, but not for a while. There are some big films to look for. A lot of big superhero movies starting with "Daredevil" in February. Ben Affleck plays a superhero who's a blind guy who has all these other heightened senses. "The Hulk" is coming out this summer. Eric Bana, who was in "Blackhawk Down," plays the title role. There's also "X-Men 2." Lots of superheroes.

O'BRIEN: So do you think this is an improvement on Lou Ferrigno?

BERNSTEIN: I believe so. You got Ang Lee directing, you know, "Crouching Tiger" and "Sense and Sensibility." And yes, this could be one definitely to watch.

O'BRIEN: All right. And as I understand it, they're actually going to bring out two "Matrix" sequels...

BERNSTEIN: That is...

O'BRIEN: ... in this calendar year. That's a...

BERNSTEIN: That is correct. I know. I think it's the first time this has have ever been done. "Matrix II Reloaded" comes out in May and they shot these next two back-to-back. Then, the third one will come out in November. So it's going to be a lot of Keanu out there.

O'BRIEN: Is this a trend? I mean...

BERNSTEIN: Shooting sequels all in a row, yes, it is. Sequels are very bankable these days. I mean it's one of those things that studios really hang a lot on because they do deliver. So they're willing to get them shot all at once just betting that there will be viewers.

O'BRIEN: Any other ones to watch out for?

BERNSTEIN: Oh, there are so many. "Cold Mountain," the Civil War drama. "Sea Biscuit" based on the best seller. Tobey Maguire's in that one. "Legally Blonde II" will be out. I personally am looking forward to that.

O'BRIEN: I was going to say...

BERNSTEIN: It's going to be a good year. It's shaping up well.

O'BRIEN: All right, Jill Bernstein, "Premier" magazine, thanks for giving us a preview. We'll see you at the movies.

BERNSTEIN: Thank you.

O'BRIEN: Time is running out for your turn to weigh in on our "Question of The Day." What are you most concerned about in 2003? Our choices are Iraq, North Korea, terrorism or the economy. Log onto CNN.com/Wolf to vote. We'll have the results when we come back. (COMMERCIAL BREAK)

O'BRIEN: In our "Picture of The Day," an ice cold plunge into the North Atlantic. The Cooney Island Polar Bear Club kept its annual tradition in tact today. For the 100th time, club members took their New Year's Day swim. The popularity of the event showing no signs of shrinkage. With the water temperature in the 40's, they braved the cold conditions for several minutes. As one swimmer put it, the plunge signifies life and doing crazy stuff.

Now, here's how you're weighing in our "Web Question of The Day." Remember, we've been asking you this -- what are you most concerned about in 2003, terrorism or the economy? Six percent of you said Iraq. Fifteen percent of you said North Korea. Sixteen percent said terrorism and 63 percent, by far the winner, said the economy. You can keep checking the tally on our website at CNN.com/Wolf. This is not, of course, a scientific poll.

Time to hear from you and read some of your New Year's Resolutions. Elaine writes this -- "My New Year's Resolution is to read the bible everyday." That's a good one.

Dirk writes -- "In 2003, I resolve to buy my wife all new clothes." A very good one, Dirk.

Zack writes -- "I resolve not to e-mail my resolution to other people and to become a better skier." Whatever.

And Peter writes this -- "My New Year's Resolution is to become a trained literacy tutor, and help at least one illiterate adult learn to read. Literacy," he suggests, "is the silver bullet." A tip of the hat to Peter.

That's all the time we have for today. Please join us tomorrow at 5:00 p.m. Eastern and don't forget "SHOWDOWN IRAQ" weekdays noon Eastern. Until then, thanks very much for watching. I'm Miles O'Brien on behalf of the vacationing Wolf Blitzer. "LOU DOBBS MONEYLINE" coming up right after this news alert with Charles Molineaux.

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