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Lou Dobbs Tonight
Economic Growth News Spurs Stock Prices
Aired July 31, 2003 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, CNN ANCHOR: Tonight: A surge of economic growth spurs stock prices on Wall Street -- Christine Romans with the market.
Rumsfeld's military: lean and efficient or too few and overcommitted? General David Grange on point.
"Selling America," our special report on advertising. Tonight: product placement with Robert Riesenberg, the producer of NBC's new reality show "The Restaurant."
And Americans are no-shows in France. Foreign tourists have cut back their travel to America -- a special report.
ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday , July 31. Here now, Lou Dobbs.
DOBBS: Good evening.
The Pentagon for months has tried to minimize the resistance to U.S. forces in Iraq, describing those killing U.S. troops as dead- enders, onesies and twosies, and Saddam loyalists, among other terms. Now the military has identified a new enemy in Iraq, the al Qaeda. The U.S. commander, General Ricardo Sanchez, today said international terrorists are probably taking part in attacks on coalition forces.
Those attacks have now claimed the lives of two more soldiers over the past 24 hours; 51 American soldiers have been killed since the president declared the end of major combat operations on the 1st of May.
(BEGIN VIDEO CLIP)
LT. GEN. RICARDO SANCHEZ, COALITION GROUND TROOPS COMMANDER: As a commander, that there are terrorist groups here. Those terrorist groups that have clearly stated that they are going to conduct operations against the United States, this is the place to come. And I suspect that they probably are operating in here, along with others, like Ansar al-Islam and other extremist groups.
(END VIDEO CLIP)
DOBBS: The U.S. commander of U.S. forces in Iraq, General Ricardo Sanchez.
Former Rear Admiral John Poindexter is to resign from the Pentagon within the next few weeks, according to a senior defense official. Poindexter is the head of the agency behind the short-lived project to create a futures market to predict terrorist attacks. That project was canceled after protests from lawmakers on Capitol Hill. And most economists are now saying that such an idea had its merits. But, so far, no one has stepped up from the administration to defend Poindexter.
Senators today received a progress report on the hunt for Saddam Hussein's weapons of mass destruction. The head of the CIA search team, David Kay, said investigators are making what he called solid progress.
Congressional correspondent Jonathan Karl with the report -- Jonathan.
JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Well, Lou, David Kay and his Pentagon counterpart, General Keith Dayton, testified for more than six hours before two separate committees, all closed testimony.
And they said that, although they had not uncovered any strong proof that Iraq had actual weapons of mass destruction, they said the preliminary evidence is very solid evidence, bits, and new weapons that he had a weapons of mass destruction program, a program to develop biological and chemical weapons. He said that to the closed briefing and then came and briefly talked to reporters.
(BEGIN VIDEO CLIP)
DAVID KAY, FORMER UNSCOM NUCLEAR WEAPONS INSPECTOR: We have found new evidence of how they successfully misled inspections of the U.N. and hid stuff continuously from them. The active deception program is truly amazing once you get inside it. We have people who participated in deceiving U.N. inspectors now telling us how they did it.
(END VIDEO CLIP)
KARL: But Democrats who were at the briefing said that it's one thing to talk about a weapons of mass destruction program, but finding a program to create weapons is not the same as finding the weapons themselves.
(BEGIN VIDEO CLIP)
SEN. JOHN ROCKEFELLER (D), WEST VIRGINIA: Programs are -- don't do it. Programs cannot be fired. Programs don't get somewhere in 45 minutes. Programs are not weaponized. And it was weapons that we were told about. On the other hand, Dr. Kay and the general have been very forthright, both here and in Baghdad, about their determination that we will be successful in this area.
(END VIDEO CLIP)
KARL: Now, Senator Ted Kennedy, who, of course, was a leading opponent of the war, is also a member of the Armed Services Committee, participated in the first of the two briefings, afterwards, put out a short and very harsh statement saying -- quote -- "I heard nothing today to suggest we're any closer to finding any weapons of mass destruction. It looks more and more like a case of mass deception. There was no imminent danger, and we should never have gone to war" -- Lou.
DOBBS: Jonathan Karl, reporting from Capitol Hill, thank you.
The search for weapons of mass destruction, the search, of course, for Saddam Hussein himself -- we turn now to the Pentagon and Barbara Starr for the latest on the hunt for Saddam -- Barbara.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Lou, on that hunt, there's been a bit of a twist today.
CNN learned earlier today that the Central Intelligence Agency has now provided the troops in northern Iraq that are hunting for Saddam with about half-a-dozen computer-generated photographs, if you will, retouched photographs of Saddam, that show how he might now look after several weeks on the run. They're giving the troops, the 4th Infantry Division, Task Force 20, everybody that's looking for Saddam, they're giving them these pictures on a classified basis.
They're not being made public yet because the concern is that Saddam has changed his appearance, is on the run, and may be trying to slip through checkpoints. So they don't want to show their hand publicly about what they think Saddam may look like. But we have been told that these pictures show a very different Saddam, a Saddam with long hair in one case, with no mustache, with a long beard, similar to the beards that his sons had when they were found and killed, and Saddam with gray hair, because, of course, the pictures that the world has seen of Saddam Hussein for so many years have been an older man with jet-black hair.
And the working assumption by the CIA is that, probably, that black hair is enhanced with a little chemical assistance. So they think he probably has gray hair now to try and disguise his appearance. So the troops are on the lookout, but they don't have him yet.
DOBBS: Barbara, we have heard variously from the Pentagon that -- quote -- "the noose is tightening" -- quote -- "Saddam is running out of places to hide." Is there any indication that the U.S. military is any closer to detecting the whereabouts of Saddam Hussein?
STARR: Well, you know, Lou, General Sanchez was very clear on this point in Baghdad earlier today. Secretary Rumsfeld has been very clear on this point.
Their view is, they don't have him, so they don't have him. They are very cautious about it. They believe the trail is quite warm, that they have a lot of leads, a lot of intelligence coming in the door, but he is continuing to be on the move and they simply don't have him yet. They think the so-called tipping point when they get him will be because he slips up, he makes a mistake, he doesn't have his usual people around him, so he's having to rely on new people who may not be as loyal, who may be in the mood to turn him in for that big reward money -- Lou. DOBBS: Barbara, that's downright Rumsfeldian. They don't have him, so they don't have him.
STARR: Exactly.
DOBBS: Barbara, thank you very much -- Barbara Starr reporting from the Pentagon.
North Korea continues to develop nuclear weapons, in defiance of the world community. Today, Russia said a North Korean diplomat has proposed six-way talks. If the North Korean offer is genuine, that would be a breakthrough in the effort to get North Korea to the bargaining table.
Kitty Pilgrim has the report.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Momentum has been building for multilateral talks. Just yesterday, Secretary of State Powell called talks a -- quote -- "distinct possibility" this year. Today, Washington had kudos to China for chipping in.
SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: The president talked to President Hu of China yesterday. The president thanked him for his attempts to bring North Korea back to multilateral talks.
PILGRIM: The United States wants countries in the region, North Korea's neighborhood association, so to speak, to put pressure on North Korea. Six-way talks would presumably include South Korea, China, Japan, and Russia joining in with the United States in talks with North Korea.
That could be a complete reversal of North Korea's position, which has been extremely belligerent about its nuclear program and insistent on one-on-one talks.
RICHARD BOUCHER, STATE DEPARTMENT SPOKESMAN: We're encouraged, we're very encouraged by indications that North Korea is accepting our proposals for multilateral talks.
PILGRIM: Experts say all the wrangling over who's involved doesn't move the situation any closer to resolution. North Korea is processing plutonium, experts say enough for several nuclear weapons.
Many think the bottom line is, North Korea has to prove it's out of the bomb-making business and accept inspections before any incentives are offered. U.S. Undersecretary of State John Bolton today in Seoul dispensed with the diplomatic niceties and said the days of blackmail are over and called North Korean leader Kim Jong Il a tyrannical dictator.
JOHN BOLTON, UNDERSECRETARY OF STATE: While he lives like royalty in Pyongyang, he keeps hundreds of thousands of his people locked in prison camps, with millions more mired in abject poverty. For many in North Korea, life is a hellish nightmare. (END VIDEOTAPE)
PILGRIM: Even if these talks get off the ground, it's important to remember that talks last April in Beijing with North Korea ended in abject failure. Just getting to the table is a start, but by no means an end -- Lou.
DOBBS: Kitty, thank you very much -- Kitty Pilgrim.
Well, efforts to contain another international crisis today moved forward. West African leaders agreed to send their peacekeeping troops to Liberia by next week. About 2,000 U.S. Marines are also on their way to the region, but they have received no orders to land in Liberia. More than 1,000 civilians have been killed since rebels began a siege of the Liberian capital of Monrovia early last month.
The Senate Governmental Affairs Committee today heard testimony on the possible links between the Saudi Arabian government and terrorist groups. At issue, the funding of al Qaeda and other radical Islamist terrorist groups, such as Hamas.
Justice correspondent Kelli Arena with the story -- Kelli.
KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, Lou, as a matter of fact, officials from the FBI, State Department and Treasury are heading to Riyadh this Sunday to discuss just that with Saudi officials.
By all accounts, Lou, the Saudi track record is inconsistent at best, especially when it comes to cracking down on charities. Now, during today's hearing, there were new allegations that the Saudis continue to funnel millions of dollars to Islamic charities that end up funding organized terror groups. A former Israeli ambassador to the U.N. presented new evidence showing millions of dollars are still making their way into the coffers of the Palestinian group Hamas.
(BEGIN VIDEO CLIP)
DORI GOLD, FORMER ISRAELI AMBASSADOR: As we speak, approximately 50 percent to 70 percent of the Hamas budget comes from Saudi Arabia. And I would say that that portion, the Saudi portion of Hamas funding, is growing rather than declining.
(END VIDEO CLIP)
ARENA: U.S. officials say that some money also makes its way to the al Qaeda terror organization.
Now, no one from the Saudi contingent was there to defend the kingdom. Foreign policy adviser Adel al-Jubeir declined an invitation from Congress to testify. Now, what the Saudis are doing or not doing is just part of this equation. Members of Congress are also looking into whether some U.S. agencies are more interested in protecting the U.S.-Saudi relationship than fighting the war on terror. And they want to know why some charities have not been slapped with sanctions -- Lou, back to you. DOBBS: All good questions. Kelli, thank you very much -- Kelli Arena reporting from Washington.
Israel tonight is being accused of racism over a new law that would force Palestinians who marry Israeli Arabs to lead separate lives or move out of Israel. That law was passed today by the Israeli Parliament, despite protests by Israeli and international civil rights groups. Israel said the new law is necessary to prevent Palestinians in Israel carrying out terrorist attacks.
Still ahead here tonight: cheap foreign labor forcing U.S. companies out of business. Peter Viles will have the report on exporting America.
Also ahead: the case against Kobe Bryant. Josie Burke will have the latest for us from Eagle, Colorado.
And our series of special reports this week: "Selling America," blurring the line between programming and advertising, Greg Clarkin with that report.
And one of the executive producers of the new NBC reality show "The Restaurant" joins us.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: The biggest increase in defense spending in more than 50 years spurred the economy last quarter. The gross domestic product rose an unexpectedly strong 2.4 percent. That is the fastest rate this year. However, exports fell dramatically and imports rose, as we continue to export American jobs overseas.
Peter Viles reports.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: It's called a liquidating bankruptcy.
PETER VILES, CNN CORRESPONDENT (voice-over): Bad news on a conference call: death for by Pillowtex, the Carolina-based maker of Fieldcrest Cannon sheets and towels; 6,400 jobs are gone.
UNIDENTIFIED FEMALE: It's really devastating, because -- especially for the people who have put even five or 10 years, but for us that have been with the company for 25, 27, 30 years.
VILES: The cause of death? The CEO told employees in a letter -- quote -- "Cheap imports are flooding the U.S. market and driving down prices. We can no longer offer our customers the merchandise they need at prices that are profitable." It's the Achilles heel of the American economy, a manufacturing crisis as America feverishly exports manufacturing jobs and relies on cheaper foreign-made products. ALAN TONELSON, U.S. BUSINESS & INDUSTRY COUNCIL: If it was only home furnishings, we could indeed be much more relaxed about it. But this is happening in industry after industry, way up the high-tech food chain as well.
VILES: The administration is beginning to hear about the trade imbalance. Listen to this question put to the three economic Cabinet secretaries this week.
UNIDENTIFIED MALE: How can a tax return that's being distributed to everybody here, or most people, help our economy, when it's going to be spent in stores that are importing their content from mainly China?
VILES: The three secretaries spoke for 10 minutes in response, but none brought up the trade imbalance.
JOHN SNOW, TREASURY SECRETARY: While we're part of the global trading system, the great bulk of this economy is still driven by domestic forces.
(END VIDEOTAPE)
VILES: Continued crummy news on the trade imbalance in today's otherwise strong GDP report. Exports in the second quarter fell by 3 percent. Imports, however, shot up by 9 percent. So that gap continues to widen -- Lou.
DOBBS: Yes, this is becoming -- this is on the brink of a crisis. The experts, the economists talking about, this lower dollar was going to help drive U.S. exports. I think some of these experts forgot there are fewer American goods, manufactured goods in particular, to export.
VILES: Yes, the low dollar is in the first quarter. It's in the second quarter. It's in these numbers. And it didn't help.
DOBBS: Peter Viles, thank you very much.
That brings us to the subject of tonight's poll question. Would you pay more for American-made products than imports, yes, no, maybe? Cast your vote at CNN.com/Lou. We'll have the results for you later in the show.
The final results of yesterday's poll, the question: What do you think of the Hubble space telescope? Thirty-seven percent of you said out of this world; 49 percent said worthwhile; 6 percent said outdated; 8 percent said it's space junk. NASA, we hope you're listening. Keep Hubble where it belongs.
Still ahead here: the Kobe Bryant case. A crucial hearing is under way tonight. We'll have a live report for you from Eagle, Colorado. CNN legal analyst Jeffrey Toobin joins us.
Also ahead: "Grange On Point." Tonight, rotation blues: commanders rotated off the front lines, while enlisted troops are staying behind. That's concerning to all of us, particularly General David Grange.
And our series of special reports on "Selling America," tonight, product placement. One of the executive producers behind the new NBC reality show "The Restaurant" joins us.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: Still to come: Investors liked the economic news today, the economy growing at a much faster pace than economists had expected. Christine Romans will report on that good news and the market -- all of that, a great deal more, still ahead.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: A storm of controversy tonight over a jailhouse interview with Carlton Dotson, who is accused of killing Baylor basketball player Patrick Dennehy. "The Dallas Morning News" says Dotson made a statement to one of its interns that implied he killed Dennehy in self-defense. According to "The Morning News," Dotson said -- quote -- "If someone is pointing a gun at you and they start putting bullets into the gun, what would you do?" -- end quote.
The intern was alone with Dotson at the time. Dotson's attorneys are protesting to the newspaper. "The Dallas Morning News" stands by its report.
All parties in the Kobe Bryant sexual assault case are at a hearing this hour in Colorado. The judge is considering a request from the media to unseal all documents related in this case.
Josie Burke is live in Eagle, Colorado, and has the latest -- Josie.
JOSIE BURKE, CNN CORRESPONDENT: Well, Lou, that hearing lasted more than three hours. And it just ended moments ago.
Now the decision about whether to open up the court file in the Kobe Bryant sexual assault case rests in the hands of Judge Frederick Gannett. Now, Gannett did hear arguments from all three sides in this argument, defense, prosecution, and lawyers representing the media. Defense and prosecution are united. They want to keep this court file sealed, the media looking to unseal it.
And, basically, what the judge is going to decide is how much information the public will have access to in terms of the story of the alleged victim. That's because, in this court file would be transcripts of what the alleged victim would have told investigators about her version of what happened on the night of the alleged assault. We already know what Kobe Bryant believes happened on that night.
He held a press conference two weeks ago, where he came out and he said that he had consensual sex with the alleged victim, but he was guilty of adultery and not sexual assault. And an attorney representing the media earlier today, in the oral arguments, came out and said that, when Kobe Bryant held that press conference, he basically waived his right to privacy.
(BEGIN VIDEO CLIP)
CHRISTOPHER BEALL, MEDIA ATTORNEY: The defendant has asserted that the release of the arrest warrant and search warrant affidavits will harm his right to privacy. However, the defendant has made admissions on international television of a sexual relationship that he says is consensual with the victim. That statement is a waiver of his right of privacy with respect to those facts.
(END VIDEO CLIP)
BURKE: The main argument made by the defense and the prosecution is that too much publicity will taint the jury pool and that will compromise the defendant's right to a fair trial. And, in fact, today, a deputy district attorney came out and said it's already had an adverse effect.
(BEGIN VIDEO CLIP)
GREGORY CRITTENDEN, DEPUTY DISTRICT ATTORNEY: Now, after hearing it so many times on TV, what the arrest warrant said and what the search warrant said: Oh, yes, I clearly remember that now. Oh, yes, it totally didn't work that way. No, it wasn't like that.
This is what you could get now by releasing the arrest warrant and the search warrant, compromising the ongoing investigation. Plus, I would further submit that we've had to reinterview people based on statements they have made to the media already, taking away from what would be an investigation going towards the facts of what happened, allegedly, that night. But now we have to do reinterviews of people that are having fun getting in the spotlight.
(END VIDEO CLIP)
BURKE: Kobe Bryant is expected to make an appearance before the court on August the 6th here in Eagle County to have the charges against him formally read. But there's a very good chance, according to Judge Gannett, that he won't have a decision on whether to open up these court files even by then.
Lou, he came out and said today, definitely don't expect it today and there's a good chance you won't even have it next week -- Lou.
DOBBS: Josie, thank you very much -- Josie Burke reporting live from Eagle, Colorado.
Joining me now with his analysis of this case is CNN legal analyst Jeffrey Toobin.
Jeffrey, good to have you here.
JEFFREY TOOBIN, CNN LEGAL ANALYST: Hi, Lou.
DOBBS: The idea that these documents should not be unsealed, do you think that's appropriate?
TOOBIN: Well, this is a classic struggle in -- between two fundamental values that are very important in this -- in our legal system. One is the right to a fair trial -- right to freedom of the press, the public's right to know, on the other hand, right to a fair trial.
And the judge very obviously was struggling with the clear contradiction between those two ideas today.
DOBBS: A clear contradiction. There have been statements from the district attorney. There have been statements by Kobe Bryant, as Josie Burke just reported. What about the idea that he has waived his rights to privacy, such as such rights exist?
TOOBIN: That was not an argument that I'd ever really heard before. It's an interesting point, that somehow, by denying the charges, you waive your right to privacy. I don't think the judge was terribly impressed by that.
It's really a matter of, is this a case like any other case? Because if it were like any other case, the documents would be released. But, as the district attorney said, look around you. Look at how much press is here. Look at what would happen if this material went public. It wouldn't be treated like an ordinary case.
DOBBS: Let's look to cases that are not ordinary. And O.J. Simpson comes to mind, speaking of basketball and sports and professional athletics. That was one of the most reported media frenzies in the history of the country. Do you believe that the jury was tainted by that?
TOOBIN: Well, my experience, every judge who has tried a big case since the O.J. Simpson case has tried to do -- have his case not work out the way Simpson did. It was -- it's generally regarded as not a model for much of anything.
And I think the way this judge is handling it is, he's trying to comply with the free speech right and the free press rights, but he's going to keep it as narrow as possible.
DOBBS: Well, if we take his side, if we take away the idea of poisoning or polluting the jury pool.
TOOBIN: Right.
DOBBS: Which a number of attorneys with whom I've spoken think that is not a persuasive argument.
TOOBIN: Not a very good argument, I think.
DOBBS: What is the reason here? There is a public right to know what's going on. He's a public figure. The young lady whom he allegedly assaulted has, to this point, with the support of the judge, been absolutely protected in her identity. If you do unseal these documents, her identity presumably would be revealed.
TOOBIN: Well, it would not -- I don't think it would be any more revealing. The respectable press, everybody knows her name and no one is reporting it.
DOBBS: Right.
TOOBIN: And I don't think that would change.
(CROSSTALK)
DOBBS: ... the documents.
TOOBIN: They have said -- the press lawyer has said they would be happy with her name being excised out of anything that would be released. So I don't think that's the concern. And I think you're right.
DOBBS: How does it end?
TOOBIN: I think it probably doesn't get released. But there's going to be a preliminary hearing probably within a month or two. And it will all come out then anyway. So I think it's really only a question of when it comes out, not whether.
DOBBS: It's pretty clear, watching these machinations in the courtroom in Eagle, Colorado, and the publicity attendant, there is a little different standard in the justice system for people who are well-known celebrities.
TOOBIN: It is remarkable to me, as someone who covers this.
The level of attention changes everything. And the quality of defense changes anything. And that's really perhaps one of the most important lessons we learn over and over again in these high-profile cases.
DOBBS: And it's still troubling.
Thank you very much, Jeffrey Toobin, CNN legal analyst.
Still ahead here: "Selling America," new technology forcing advertisers to rethink the 30-second spot. Robert Riesenberg, one of the executive producers of the new NBC reality show "Restaurant," a blend of entertainment and what he calls integrated marketing, what others call blurring the line between content and advertising, joins us.
And "Grange on Point": rotation blues, morale down for U.S. troops who thought they'd be home months ago. Many of their commanders are. General David Grange joins us.
And Christine Romans will report on surprisingly good news on the economy. And, of course, she'll have the market when we continue. Stay with us.
(COMMERCIAL BREAK)
DOBBS: As of tonight, MCI is banned from receiving any new contracts from the federal government. The General Service Administration says it's been closely following fraud allegations against MCI, formerly known as World Com and that companies bankrupcy. The GSA now says MCI lacks the necessary internal controls and business ethics to work for the U.S. government.
MCI will, however, keep its current government contracts. The company says it's working with the GSA to strengthen its internal controls and ethics.
Rudolph Giuliani once locked horns with Wall Street as a prosecutor. Now he's joining a Wall Street firm. The former mayor of New York City teaming with Bear Stearns Invest House. Together they will launch a $300 million fund to invest in companies that help protect against terrorism. The private fund will be managed by Bear Stearns and a consulting firm set up by Giuliani.
As we reported, the economy surged 2.4 percent last quarter, that and other strong economic news lifting stock price today. The DOW up 34 points. The Nasdaq up 14. The S&P up 3 almost. Christine Romans here now with the market. Pretty strong economic news.
CHRISTINE ROMANS, CNN CORRESPONDENT: It really was. 2.4 percent GDP. There was a midwest manufacturing number that was strong. Jobless claims fell again. You know, everyone was extremely euphoric about this early. And the Dow reached the highest price in a year this morning, but Lou, when the ten-year note yield reached toward 5 1/2 percent, then stocks rolled off their highs in the last half hour, but what a month.
Overall the Dow rallied almost 3 percent this month. The S&P 500 had its first positive July since 1997. And the Nasdaq rallied almost 7 percent. Five months in a row higher for the Dow and the S&P. That's the best streak in four years.
Strong earnings today from Dow companies helped. Exxon Mobil profit up 58 percent. Procter & Gamble helped by a weak dollar. And Disney reported a 3 percent profit gain after the close.
And Lou, just as stock investors were cheering that strong economic news, it was a fierce sell-off in the bonds. The ten-year note yield finally settling today at 4.41 percent. It was the worst month for 10-year prices since may 1984.
DOBBS: That's quite a remarkable rally, but that's a remarkable one-month setback, isn't it?
ROMANS: It certainly is.
DOBBS: And with all of this good news on the economy, corporate America is still laying off people. ROMANS: Oh, absolutely. We heard from Reader's Digest cutting jobs this week, Verizon cutting jobs, Lord & Taylor cutting jobs and shutting businesses, some of its stores, Pep boys, I mean, the list goes on and on. Even as you're seeing the economic reports perk up, the companies are still wringing out those final excesses.
DOBBS: Maybe we'll see some improvement in the unemployment rate very quickly. Christine Romans, thank you.
ROMANS: Sure.
DOBBS: Tonight we continue our series of SPECIAL REPORTs this week, selling America. Advances in technology have forced many advertisers to find new ways to reach new audiences. One method that's growing in popularity is product placement. The not so subtle use of products as part of the story. Greg Clarken has the report.
(BEGIN VIDEOTAPE)
GREG CLARKIN, CNN CORRESPONDET: The Mini got maximum exposure in the "Italian Job." And it was hard to avoid Pepsi in "2 fast 2 furious."
SIMON COWELL, "AMERICAN IDOL" JUDGE: Vanessa and Kimberly.
CLARKIN: And check out the coke glasses on that desk. On the small screen coke was the thirst quencher for the idol makers of "American Idol." It's all product placement, and it's on the rise.
Reality shows have elevated it to an art form. The hit show "The Restaurant" may not have even happened without the support of its sponsors.
UNIDENTIFIED MALE: Kimberly, do not come back without Coors for all those people.
CLARKIN: In return, American Express, Coors, and others became part of the show. Continuing the trend started by "Survivor."
BECKY ESENKAMP, BRANKWEEK: Now when someone launches a reality show, it's just expected that there's going to be not only product placement but something that's even more integrated than that, it's product placement along with sponsorship and advertising. So it's this whole bundle where the brand is integrated in the show.
CLARKIN: And advertisers are more than eager to become part of some shows. They know the average viewer has 75 channels to choose from and is gladly bypassing their expensive commercials. And technology has dealt another blow. It's created Tivo, a device that records shows and allows you to skip the commercials.
UNIDENTIFIED MALE: Lucky you.
CLARKIN: So product placement has become critical, but equally so is designing a strategy that's not offensive. ROY SALTER, BRAND ADVISORS LLC.: The question for the producer is to what extent can they weave it in without becoming overbearing to the audience? From the advertiser's standpoint they have a similar motivation. Their motivation is also coupled with wanting to profile their brands in the best possible way.
UNIDENTIFIED MALE: A new car!
CLARKIN: This has led to an evolution, of sorts, by the old- fashioned product placement deals are still around, there's new emphasis on having the advertiser's creative team work with producers to seamlessly work their product into the storyline.
UNIDENTIFIED MALE: Lara, welcome back.
CLARKIN: The ideal -- make it so the viewer doesn't know where the story ends and the selling begins.
JOHN PARTILLA, YAR BRAND BUZZ: I think the Holy Grail is how do we work together, the creators on the side of the advertising business, as well as the creators on the side of the entertainment business, to organically weave in branding messages that help inform and sell in a way that continues to entertain?
CLARKIN: Methods to measure success of product placement deals are being developed. But there are already some examples of winners. Remember E.T. and Reese's Pieces? While sales of the candy shot up 65 percent after the movie was released.
Greg Clarkin, CNN financial news, New York.
(END VIDEOTAPE)
DOBBS: Joining us now to talk about product placement or, excuse me, integrated marketing, is Robert Riesenberg. He's the Executive Vice President of Magna Global Entertainment, also the executive producer of "The Restaurant," the new unscripted television reality series on NBC. It follows a chef's attempts to open his own business, to run the business. It's reality television. It's good to have you here, Robert.
ROBERT RIESENBERG, VP MAGNA GLOBAL ENTERTAINMENT: Nice to be here.
DOBBS: The idea, I mean, this is an interesting idea. How's it working so far? You've been up, what, two weeks now?
RIESENBERG: Two weeks this past Sunday. It's working great. The ratings have gone up significantly. And we're hoping for another bump on Wednesday night. It's gotten great press, a lot of buzz, and we're very optimistic.
DOBBS: The idea of product placement E.T., Reese's Pieces. You are in some quarters considered the king of integrated marketing. I know you prefer the term product placement. Is this a driver of the show? RIESENBERG: Not really. I work for a company called Magna Global Entertainment and what we are doing is producing television shows for our advertisers. And the primary purpose is to give them a marketing platform using television.
That's really what it's all about. They really operate in the world of diminishing returns. They spend more money, they're getting less bang for their buck and this is an opportunity for them to associate with the show on many levels.
DOBBS: In addition to the 30 or 60-second commercial on television?
RIESENBERG: Exactly. And the product integration becomes a by- product of that. It's an important element, but it's not the only element.
DOBBS: The idea of product placement has to appeal. We've seen Ford with the latest James Bond picture. What did they have, three cars in that thing? $30 million. Is that the wave of the future?
RIESENBERG: I think it's part of the wave of the future. I think that from an advertiser's perspective it's getting increasingly more difficult for them to have big impact when they advertise because audiences continue to fragment and get smaller and we've got this technology out there that threatens their very existence. So they're look for alternatives.
DOBBS: We're looking here right now at video of "The Italian Job" three Mini Coopers, a nice product placement as well. But you know, what many people are criticizing right now, anything new or taken to a certain level creates critics. But the fact thing is a lot of people are saying there's a blurring between creative content and the commercial interests of the advertiser. How do you respond to that?
RIESENBERG: Well, first and foremost, anything that we get involved with and our advertisers get involved with, the show has to stand on its own. It has to be something that the networks would otherwise buy. And then if we draw too much negative attention to our products, then we're not doing our job. So it's important that...
DOBBS: This is the ultimate product placement, I think. Lara Croft: Tomb Raider, as she alights in a Jeep in Africa. The fact of the matter is that these products that are being bolstered this way in some ways are more compelling. I will speak only for myself. It's far more compelling to see Jeep in the middle of that movie or the Mini Cooper than to see a straightforward commercial.
RIESENBERG: Well, it gives it context. It gives it credibility. I would agree with you. And I think what we're trying to do is the same thing. When you see "The Restaurant" and you see Coors or American Express integrated in a very natural way, I think it bolsters the image and the saleability of the products.
DOBBS: You think this is the future of television? RIESENBERG: I think, as I said before, I think it's part of the future. I think that advertisers are looking for ways to stand out, and this will certainly be a part of it. And it's certainly going back to the way television was back in the '50s in many respects.
DOBBS: With that big logo on the news desk.
RIESENBERG: Right.
DOBBS: Subtle integrated marketing. Robert Riesenberg, we thank you very much for being with us here.
RIESENBERG: Thank you.
DOBBS: Tomorrow on our series of SPECIAL REPORTs on selling America, the future of advertising, Joe Capa, the author of the book by that title he joins us to talk about what is the future of the advertising industry.
Former football coach Mike Ditka, for him the future is now. He has a new advertising deal. Ditka is the new pitch man for a new impotency drug called Lavitra, a rival to Viagra.
The makers of the drug, Glaxo Smithkline and Bayer, signed a three-year, $6 million marketing deal with the National Football League. You're going to see a lot of advertising beginning this fall.
Tonight's thought is about what makes a good ad, and Robert's sitting here, so we'll see if he reacts. "A good advertisement is one which sells the product without drawing attention to itself."
Do you agree with that?
RIESENBERG: I would agree with that. Absolutely.
DOBBS: Advertising legend David Ogilvy.
Coming up next, "Grange on Point." Tonight, rotation blues. Morale suffers as the troop rotation system is failing and it certainly isn't the fairest example of the relationship between the officer corps and the enlisted man and woman. General David Grange joins us. "On Point" next.
And staying home. American interest in traveling abroad is off, way off. And foreigners, some of them are staying home as well. Bill Tucker will have the story.
And your thoughts on the report we brought you last night on the low salaries of the FBI. We'll share your thoughts coming up.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: Tonight's "Grange on Point," rotation blues. The military system of rotating individual troops instead of units has been widely criticized. Critics say it hurts troop and unit morale as well as combat readiness.
Joining me now, our military analyst, General David Grange.
David, good to have you here. This just isn't fair, is it?
BRIG. GEN. DAVID GRANGE (RET.), U.S. ARMY: Well, it's the system's antiquated, Lou. It's -- the individual replacement system has been around really from World War I. And it really came about from a Frederick Taylor, who was a 19th Century industrialist...
DOBBS: Right.
GRANGE: ...who emphasized the training of the individual above the training of a team, or a unit. And that's really the way the Army has been manning its units and fighting its missions since World War I.
DOBBS: You just shocked me when you brought up Frederick Taylor. I haven't thought of him since college days. Economic historian, organizational management. That's fascinating that it starts with him.
The idea that some troops right now will be delayed until next April -- is it next April for the 4th Infantry to rotate out? Is that correct?
GRANGE: I think the 4th -- yes, the 4th Infantry, around April. Of course, the 3rd in September, replaced by the 82nd Airborne.
But part of that was the expectations when troops were told they were going to leave and hen it had to be changed. Now, it had to be changed for, I think, valid operational reasons, because of the transition to security and stability operations right after major combat operations ended.
But better planning would have had forces ready to go, and it would be better -- it's always better to tell the troops later on worst case and then surprise them with good news than tell them good news up front and then have to change it.
DOBBS: Well, there's a lot of bad news, too. I was interested to learn that Deputy Defense Secretary Paul Wolfowitz said -- quote unquote -- he was unhappy to learn that many national guardsmen had been called up two years ago and were still on active duty. I was unhappy to learn that a deputy defense secretary was only learning about that on a visit to Iraq.
What is going on there?
GRANGE: Well, that surprises me as well. I mean, that's a -- he works in DOD, Department of Defense.
The problem is the active force is too small to handle all the operations around the world, 120 countries right now. Half the United States Army is deployed. It's augmented by National Guard Reserve to handle some of the stripped out support functions and specialty functions that the active duty cannot fill the ranks with. And so that's why they've been activated time after time or for extended periods, which affects their public -- or the private sector job with their employees.
DOBBS: And right now in Iraq, some of the junior commanders are being pulled out, junior officers as well, from units that are on station. Those enlisted are remaining. How can the Pentagon rationalize this kind of approach?
GRANGE: This has been the approach since I served, since Vietnam.
It's wrong. Anytime you change a unit leader, especially in the lower ranks, sergeants, platoon leaders, you know, the lieutenants, company commander, captains, it has an effect on the unit. These are leaders that see their troops every day. They live with them, they eat with them, they fight with them, and when they move them out it causes a readiness issue, a morale issue, a cohesion issue. And it's totally wrong to move out a leader in the middle of an operation for career progression or staff jobs back in the United States or other areas.
DOBBS: General Grange, as always, thank you very much. General Grange, representing the interests in this broadcast of the enlisted man and woman in our U.S. military as well as our veterans. David, thank you very much.
Next week, "Grange on Point." General Grange will look at the unending battle. After the fighting ends, the real battle begins for those of our warriors who are wounded. That's next week, "Grange on Point."
A reminder now to vote in tonight's poll. The question, "Would you pay more for American-made products than imports? Yes, no, or maybe?" Cast your vote at cnn.com/lou. We'll have the results for you in just a few minutes here.
When we continue, American families are staying home this summer. They're leaving European vacations to Europeans. Bill tucker will report.
And gliding high above the English Channel. This man has flown into the history books in the most spectacular fashion. And even if you've seen this video somewhere on CNN, it did show once or twice today, I'm told, it's never been shown so well and never better than in just a few moments.
And swimming with sharks. A way for scientists to study sharks up close without facing danger. We'll have that story for you, a great deal more.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: A new shark has been introduced with the sand tiger sharks into the tanks of a British aquarium. This shark, however, is quite unique. Not at all like the others, although it's at first hard to tell. This shark in fact is the world world's only robotic swimming shark. Scientists designed robo-shark to aid in the study of shark behavior. This robo-shark will swim with the real things and study their mannerisms, communication, and intelligence.
An American in Paris is much less common than it was a year ago. Instead, American families are looking far closer to home for their summer vacations. European tourists are not coming to America in droves either.
Bill Tucker has the story.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN CORRESPONDENT: You can probably find most of the Americans in France this summer along the route for or in the Tour de France. American tourism to France is officially down 30 percent, according to the French Ministry of Tourism. But according to the president of a group representing France's travel agents, the drop is more like 80 percent. Tensions between the United States and France over perceived French support for Saddam Hussein are part of the reason for the decline but not all of the reason. 20,000 acres of forest in the southern part of France are on fire. The landscape dry from a crushing drought. The exchange rate has not been favorable, making the trip more expensive for Americans, putting all of Europe, not just France, off of Americans' travel agendas.
EINAR GUSTAVSSON, ICELANDIC TOURIST BOARD: The number one reason is the war in Iraq. That is basically the big reason for it. We were in a good recovery period with Americans coming to Europe up until the Iraqi war broke out. And after that the bottom kind of fell out.
TUCKER: It's been a rough summer for everyone, with the Germans not going to Italy, the Italians not going to Germany, and hardly anyone coming to the United States. Tourism from Europe has been falling for 12 years now, and it could be about to get a lot worse.
JONATHAN TISCH, PRESIDENT & CEO LOEWS HOTELS: If you have a passport and you're in a visa waiver country program, you have to have a machine readable passport. If you're not in one of those countries, you're then going to have to go to the consulate and get a visa. Go for a personal interview, wait in line. And these are signals that are mixed. They are difficult for the traveler who wants to come to this country, because it's just another barrier as to why they're not going to come here and spend their much-needed dollars.
TUCKER: In February Congress approved $50 million for a marketing campaign to encourage tourism to the United States.
(END VIDEOTAPE)
TUCKER: But the travel industry doubts that a marketing campaign can be effective if tourists are encouraged on the one hand to come and discouraged on the other -- Lou. DOBBS: In that visa program the gentleman Tisch was talking about, that goes into effect tomorrow. But a necessary component for national security.
TUCKER: Yes.
DOBBS: Bill Tucker, thank you.
When we continue the results of tonight's poll, and we'll take a look at a number of your thoughts and share them with you. We'll be right back stay with us.
(COMMERCIAL BREAK)
DOBBS: When we continue, flying high without the help of an aircraft or an engine. One man's historic trip across the English channel. Next.
(COMMERCIAL BREAK)
DOBBS: The results of our poll. The question, would you pay more for American-made products than imports?
71 percent of you say, yes, 18 percent, no, 12 percent, maybe.
Taking a look at some of your thoughts, many of you wrote in about our report last night about underpaid FBI agents.
Emily Norris of Dallas, Texas, said, "I think it is great that the government is concerned about the pay for FBI agents, but I'd like to point out that the pay for enlisted military members is beyond sub par."
Ann Smith, of North Carolina said, "I have for years been appalled at the salaries paid to our nation's educators, firefighters, police and other security forces who give so freely and tirelessly try to teach us and keep us safe. The gap between their salaries and the money given to top executives of most American corporations is sinful."
And we agree with you utterly and completely. Throughout this year, by the way we've been reporting on the most underpaid important occupations in this country, including firefighters, teachers, nurses, and policemen.
Many of you also wrote in about the debate over the Hubble Space Telescope and its future.
David Selib, of Greenwich, Connecticut, wrote, "The stream of information form Hubble will be valuable and worth it, right up to the point when the new space telescopes are fully tested and functional. Considering the chancy element of space installations and explorations, we really should let a good thing stay working until replaced."
We couldn't agree with you more. Hugh Gray of Madison, Alabama, said, "The Hubble has provided more information about the universe and deep space than has been available for the entire history of mankind."
We love hearing from you. Send us your thoughts. Loudobbs@cnn.com.
Finally tonight, history made over Europe today. An Austrian daredevil jumped from an aircraft 30,000 feet in the air. Then, wearing a six-foot wing made of carbon fiber, he flew across the English Channel without power. The first person to ever accomplish the feat. He made the 22-mile trip in only seven minutes, hitting a top speed of 220 miles an hour.
(BEGIN VIDEO CLIP)
FELIX BAUMGARTNER, EXTREME SPORTSMAN: It was brilliant. It was exactly like I expected. I just had a little accident in the plane. The cameraman, he had no oxygen, so he passed out. And I had a little problem on opening of lift with my legs into the parachute lines. So I had to cut some pieces off to come back. It's extremely cold up there. We've got 40 degrees minus. The whole area was covered by clouds. So I couldn't see the other side for the whole distance. But we got a leading plain, a PC-9 which was flying in front of me.
So I could see directly which direction I have to fly. And after I think 7,000 meters freefall I could see some lights right over there, so I knew exactly where I am. And I got a little signal in my helmet, and as soon as I hear that I could see the coast right over there. So I knew I'm going to make it. It is actually a feeling like the birds because you feel so far up you don't have a reference point. You don't -- you just see the forward speed but you don't see the speed down. So it feels like real flying.
Yes!
I like to be in the air. It's like my second home. I mean, I started skydiving when I was 17 years old. So I feel really calm there and I try to be there as much as I can and I like the challenge. I want to be the first one at things like this, and this is what gives me a good feeling.
(END VIDEO CLIP)
DOBBS: A remarkable accomplishment. Baumgartner has a reputation for these flights, a daredevil. He's jumped off the world's tallest building, that in Malaysia, threw himself off the statue of Christ in Brazil. You may have noticed, since we're talking about advertising this week in our special reports the product placement on the side of his special suit. We can't wait to see what he does next.
That's our show for tonight. Thanks for being with us. For all of here, good night from New York.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired July 31, 2003 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
LOU DOBBS, CNN ANCHOR: Tonight: A surge of economic growth spurs stock prices on Wall Street -- Christine Romans with the market.
Rumsfeld's military: lean and efficient or too few and overcommitted? General David Grange on point.
"Selling America," our special report on advertising. Tonight: product placement with Robert Riesenberg, the producer of NBC's new reality show "The Restaurant."
And Americans are no-shows in France. Foreign tourists have cut back their travel to America -- a special report.
ANNOUNCER: This is LOU DOBBS TONIGHT for Thursday , July 31. Here now, Lou Dobbs.
DOBBS: Good evening.
The Pentagon for months has tried to minimize the resistance to U.S. forces in Iraq, describing those killing U.S. troops as dead- enders, onesies and twosies, and Saddam loyalists, among other terms. Now the military has identified a new enemy in Iraq, the al Qaeda. The U.S. commander, General Ricardo Sanchez, today said international terrorists are probably taking part in attacks on coalition forces.
Those attacks have now claimed the lives of two more soldiers over the past 24 hours; 51 American soldiers have been killed since the president declared the end of major combat operations on the 1st of May.
(BEGIN VIDEO CLIP)
LT. GEN. RICARDO SANCHEZ, COALITION GROUND TROOPS COMMANDER: As a commander, that there are terrorist groups here. Those terrorist groups that have clearly stated that they are going to conduct operations against the United States, this is the place to come. And I suspect that they probably are operating in here, along with others, like Ansar al-Islam and other extremist groups.
(END VIDEO CLIP)
DOBBS: The U.S. commander of U.S. forces in Iraq, General Ricardo Sanchez.
Former Rear Admiral John Poindexter is to resign from the Pentagon within the next few weeks, according to a senior defense official. Poindexter is the head of the agency behind the short-lived project to create a futures market to predict terrorist attacks. That project was canceled after protests from lawmakers on Capitol Hill. And most economists are now saying that such an idea had its merits. But, so far, no one has stepped up from the administration to defend Poindexter.
Senators today received a progress report on the hunt for Saddam Hussein's weapons of mass destruction. The head of the CIA search team, David Kay, said investigators are making what he called solid progress.
Congressional correspondent Jonathan Karl with the report -- Jonathan.
JONATHAN KARL, CNN CONGRESSIONAL CORRESPONDENT: Well, Lou, David Kay and his Pentagon counterpart, General Keith Dayton, testified for more than six hours before two separate committees, all closed testimony.
And they said that, although they had not uncovered any strong proof that Iraq had actual weapons of mass destruction, they said the preliminary evidence is very solid evidence, bits, and new weapons that he had a weapons of mass destruction program, a program to develop biological and chemical weapons. He said that to the closed briefing and then came and briefly talked to reporters.
(BEGIN VIDEO CLIP)
DAVID KAY, FORMER UNSCOM NUCLEAR WEAPONS INSPECTOR: We have found new evidence of how they successfully misled inspections of the U.N. and hid stuff continuously from them. The active deception program is truly amazing once you get inside it. We have people who participated in deceiving U.N. inspectors now telling us how they did it.
(END VIDEO CLIP)
KARL: But Democrats who were at the briefing said that it's one thing to talk about a weapons of mass destruction program, but finding a program to create weapons is not the same as finding the weapons themselves.
(BEGIN VIDEO CLIP)
SEN. JOHN ROCKEFELLER (D), WEST VIRGINIA: Programs are -- don't do it. Programs cannot be fired. Programs don't get somewhere in 45 minutes. Programs are not weaponized. And it was weapons that we were told about. On the other hand, Dr. Kay and the general have been very forthright, both here and in Baghdad, about their determination that we will be successful in this area.
(END VIDEO CLIP)
KARL: Now, Senator Ted Kennedy, who, of course, was a leading opponent of the war, is also a member of the Armed Services Committee, participated in the first of the two briefings, afterwards, put out a short and very harsh statement saying -- quote -- "I heard nothing today to suggest we're any closer to finding any weapons of mass destruction. It looks more and more like a case of mass deception. There was no imminent danger, and we should never have gone to war" -- Lou.
DOBBS: Jonathan Karl, reporting from Capitol Hill, thank you.
The search for weapons of mass destruction, the search, of course, for Saddam Hussein himself -- we turn now to the Pentagon and Barbara Starr for the latest on the hunt for Saddam -- Barbara.
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Lou, on that hunt, there's been a bit of a twist today.
CNN learned earlier today that the Central Intelligence Agency has now provided the troops in northern Iraq that are hunting for Saddam with about half-a-dozen computer-generated photographs, if you will, retouched photographs of Saddam, that show how he might now look after several weeks on the run. They're giving the troops, the 4th Infantry Division, Task Force 20, everybody that's looking for Saddam, they're giving them these pictures on a classified basis.
They're not being made public yet because the concern is that Saddam has changed his appearance, is on the run, and may be trying to slip through checkpoints. So they don't want to show their hand publicly about what they think Saddam may look like. But we have been told that these pictures show a very different Saddam, a Saddam with long hair in one case, with no mustache, with a long beard, similar to the beards that his sons had when they were found and killed, and Saddam with gray hair, because, of course, the pictures that the world has seen of Saddam Hussein for so many years have been an older man with jet-black hair.
And the working assumption by the CIA is that, probably, that black hair is enhanced with a little chemical assistance. So they think he probably has gray hair now to try and disguise his appearance. So the troops are on the lookout, but they don't have him yet.
DOBBS: Barbara, we have heard variously from the Pentagon that -- quote -- "the noose is tightening" -- quote -- "Saddam is running out of places to hide." Is there any indication that the U.S. military is any closer to detecting the whereabouts of Saddam Hussein?
STARR: Well, you know, Lou, General Sanchez was very clear on this point in Baghdad earlier today. Secretary Rumsfeld has been very clear on this point.
Their view is, they don't have him, so they don't have him. They are very cautious about it. They believe the trail is quite warm, that they have a lot of leads, a lot of intelligence coming in the door, but he is continuing to be on the move and they simply don't have him yet. They think the so-called tipping point when they get him will be because he slips up, he makes a mistake, he doesn't have his usual people around him, so he's having to rely on new people who may not be as loyal, who may be in the mood to turn him in for that big reward money -- Lou. DOBBS: Barbara, that's downright Rumsfeldian. They don't have him, so they don't have him.
STARR: Exactly.
DOBBS: Barbara, thank you very much -- Barbara Starr reporting from the Pentagon.
North Korea continues to develop nuclear weapons, in defiance of the world community. Today, Russia said a North Korean diplomat has proposed six-way talks. If the North Korean offer is genuine, that would be a breakthrough in the effort to get North Korea to the bargaining table.
Kitty Pilgrim has the report.
(BEGIN VIDEOTAPE)
KITTY PILGRIM, CNN CORRESPONDENT (voice-over): Momentum has been building for multilateral talks. Just yesterday, Secretary of State Powell called talks a -- quote -- "distinct possibility" this year. Today, Washington had kudos to China for chipping in.
SCOTT MCCLELLAN, WHITE HOUSE PRESS SECRETARY: The president talked to President Hu of China yesterday. The president thanked him for his attempts to bring North Korea back to multilateral talks.
PILGRIM: The United States wants countries in the region, North Korea's neighborhood association, so to speak, to put pressure on North Korea. Six-way talks would presumably include South Korea, China, Japan, and Russia joining in with the United States in talks with North Korea.
That could be a complete reversal of North Korea's position, which has been extremely belligerent about its nuclear program and insistent on one-on-one talks.
RICHARD BOUCHER, STATE DEPARTMENT SPOKESMAN: We're encouraged, we're very encouraged by indications that North Korea is accepting our proposals for multilateral talks.
PILGRIM: Experts say all the wrangling over who's involved doesn't move the situation any closer to resolution. North Korea is processing plutonium, experts say enough for several nuclear weapons.
Many think the bottom line is, North Korea has to prove it's out of the bomb-making business and accept inspections before any incentives are offered. U.S. Undersecretary of State John Bolton today in Seoul dispensed with the diplomatic niceties and said the days of blackmail are over and called North Korean leader Kim Jong Il a tyrannical dictator.
JOHN BOLTON, UNDERSECRETARY OF STATE: While he lives like royalty in Pyongyang, he keeps hundreds of thousands of his people locked in prison camps, with millions more mired in abject poverty. For many in North Korea, life is a hellish nightmare. (END VIDEOTAPE)
PILGRIM: Even if these talks get off the ground, it's important to remember that talks last April in Beijing with North Korea ended in abject failure. Just getting to the table is a start, but by no means an end -- Lou.
DOBBS: Kitty, thank you very much -- Kitty Pilgrim.
Well, efforts to contain another international crisis today moved forward. West African leaders agreed to send their peacekeeping troops to Liberia by next week. About 2,000 U.S. Marines are also on their way to the region, but they have received no orders to land in Liberia. More than 1,000 civilians have been killed since rebels began a siege of the Liberian capital of Monrovia early last month.
The Senate Governmental Affairs Committee today heard testimony on the possible links between the Saudi Arabian government and terrorist groups. At issue, the funding of al Qaeda and other radical Islamist terrorist groups, such as Hamas.
Justice correspondent Kelli Arena with the story -- Kelli.
KELLI ARENA, CNN JUSTICE CORRESPONDENT: Well, Lou, as a matter of fact, officials from the FBI, State Department and Treasury are heading to Riyadh this Sunday to discuss just that with Saudi officials.
By all accounts, Lou, the Saudi track record is inconsistent at best, especially when it comes to cracking down on charities. Now, during today's hearing, there were new allegations that the Saudis continue to funnel millions of dollars to Islamic charities that end up funding organized terror groups. A former Israeli ambassador to the U.N. presented new evidence showing millions of dollars are still making their way into the coffers of the Palestinian group Hamas.
(BEGIN VIDEO CLIP)
DORI GOLD, FORMER ISRAELI AMBASSADOR: As we speak, approximately 50 percent to 70 percent of the Hamas budget comes from Saudi Arabia. And I would say that that portion, the Saudi portion of Hamas funding, is growing rather than declining.
(END VIDEO CLIP)
ARENA: U.S. officials say that some money also makes its way to the al Qaeda terror organization.
Now, no one from the Saudi contingent was there to defend the kingdom. Foreign policy adviser Adel al-Jubeir declined an invitation from Congress to testify. Now, what the Saudis are doing or not doing is just part of this equation. Members of Congress are also looking into whether some U.S. agencies are more interested in protecting the U.S.-Saudi relationship than fighting the war on terror. And they want to know why some charities have not been slapped with sanctions -- Lou, back to you. DOBBS: All good questions. Kelli, thank you very much -- Kelli Arena reporting from Washington.
Israel tonight is being accused of racism over a new law that would force Palestinians who marry Israeli Arabs to lead separate lives or move out of Israel. That law was passed today by the Israeli Parliament, despite protests by Israeli and international civil rights groups. Israel said the new law is necessary to prevent Palestinians in Israel carrying out terrorist attacks.
Still ahead here tonight: cheap foreign labor forcing U.S. companies out of business. Peter Viles will have the report on exporting America.
Also ahead: the case against Kobe Bryant. Josie Burke will have the latest for us from Eagle, Colorado.
And our series of special reports this week: "Selling America," blurring the line between programming and advertising, Greg Clarkin with that report.
And one of the executive producers of the new NBC reality show "The Restaurant" joins us.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: The biggest increase in defense spending in more than 50 years spurred the economy last quarter. The gross domestic product rose an unexpectedly strong 2.4 percent. That is the fastest rate this year. However, exports fell dramatically and imports rose, as we continue to export American jobs overseas.
Peter Viles reports.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: It's called a liquidating bankruptcy.
PETER VILES, CNN CORRESPONDENT (voice-over): Bad news on a conference call: death for by Pillowtex, the Carolina-based maker of Fieldcrest Cannon sheets and towels; 6,400 jobs are gone.
UNIDENTIFIED FEMALE: It's really devastating, because -- especially for the people who have put even five or 10 years, but for us that have been with the company for 25, 27, 30 years.
VILES: The cause of death? The CEO told employees in a letter -- quote -- "Cheap imports are flooding the U.S. market and driving down prices. We can no longer offer our customers the merchandise they need at prices that are profitable." It's the Achilles heel of the American economy, a manufacturing crisis as America feverishly exports manufacturing jobs and relies on cheaper foreign-made products. ALAN TONELSON, U.S. BUSINESS & INDUSTRY COUNCIL: If it was only home furnishings, we could indeed be much more relaxed about it. But this is happening in industry after industry, way up the high-tech food chain as well.
VILES: The administration is beginning to hear about the trade imbalance. Listen to this question put to the three economic Cabinet secretaries this week.
UNIDENTIFIED MALE: How can a tax return that's being distributed to everybody here, or most people, help our economy, when it's going to be spent in stores that are importing their content from mainly China?
VILES: The three secretaries spoke for 10 minutes in response, but none brought up the trade imbalance.
JOHN SNOW, TREASURY SECRETARY: While we're part of the global trading system, the great bulk of this economy is still driven by domestic forces.
(END VIDEOTAPE)
VILES: Continued crummy news on the trade imbalance in today's otherwise strong GDP report. Exports in the second quarter fell by 3 percent. Imports, however, shot up by 9 percent. So that gap continues to widen -- Lou.
DOBBS: Yes, this is becoming -- this is on the brink of a crisis. The experts, the economists talking about, this lower dollar was going to help drive U.S. exports. I think some of these experts forgot there are fewer American goods, manufactured goods in particular, to export.
VILES: Yes, the low dollar is in the first quarter. It's in the second quarter. It's in these numbers. And it didn't help.
DOBBS: Peter Viles, thank you very much.
That brings us to the subject of tonight's poll question. Would you pay more for American-made products than imports, yes, no, maybe? Cast your vote at CNN.com/Lou. We'll have the results for you later in the show.
The final results of yesterday's poll, the question: What do you think of the Hubble space telescope? Thirty-seven percent of you said out of this world; 49 percent said worthwhile; 6 percent said outdated; 8 percent said it's space junk. NASA, we hope you're listening. Keep Hubble where it belongs.
Still ahead here: the Kobe Bryant case. A crucial hearing is under way tonight. We'll have a live report for you from Eagle, Colorado. CNN legal analyst Jeffrey Toobin joins us.
Also ahead: "Grange On Point." Tonight, rotation blues: commanders rotated off the front lines, while enlisted troops are staying behind. That's concerning to all of us, particularly General David Grange.
And our series of special reports on "Selling America," tonight, product placement. One of the executive producers behind the new NBC reality show "The Restaurant" joins us.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: Still to come: Investors liked the economic news today, the economy growing at a much faster pace than economists had expected. Christine Romans will report on that good news and the market -- all of that, a great deal more, still ahead.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: A storm of controversy tonight over a jailhouse interview with Carlton Dotson, who is accused of killing Baylor basketball player Patrick Dennehy. "The Dallas Morning News" says Dotson made a statement to one of its interns that implied he killed Dennehy in self-defense. According to "The Morning News," Dotson said -- quote -- "If someone is pointing a gun at you and they start putting bullets into the gun, what would you do?" -- end quote.
The intern was alone with Dotson at the time. Dotson's attorneys are protesting to the newspaper. "The Dallas Morning News" stands by its report.
All parties in the Kobe Bryant sexual assault case are at a hearing this hour in Colorado. The judge is considering a request from the media to unseal all documents related in this case.
Josie Burke is live in Eagle, Colorado, and has the latest -- Josie.
JOSIE BURKE, CNN CORRESPONDENT: Well, Lou, that hearing lasted more than three hours. And it just ended moments ago.
Now the decision about whether to open up the court file in the Kobe Bryant sexual assault case rests in the hands of Judge Frederick Gannett. Now, Gannett did hear arguments from all three sides in this argument, defense, prosecution, and lawyers representing the media. Defense and prosecution are united. They want to keep this court file sealed, the media looking to unseal it.
And, basically, what the judge is going to decide is how much information the public will have access to in terms of the story of the alleged victim. That's because, in this court file would be transcripts of what the alleged victim would have told investigators about her version of what happened on the night of the alleged assault. We already know what Kobe Bryant believes happened on that night.
He held a press conference two weeks ago, where he came out and he said that he had consensual sex with the alleged victim, but he was guilty of adultery and not sexual assault. And an attorney representing the media earlier today, in the oral arguments, came out and said that, when Kobe Bryant held that press conference, he basically waived his right to privacy.
(BEGIN VIDEO CLIP)
CHRISTOPHER BEALL, MEDIA ATTORNEY: The defendant has asserted that the release of the arrest warrant and search warrant affidavits will harm his right to privacy. However, the defendant has made admissions on international television of a sexual relationship that he says is consensual with the victim. That statement is a waiver of his right of privacy with respect to those facts.
(END VIDEO CLIP)
BURKE: The main argument made by the defense and the prosecution is that too much publicity will taint the jury pool and that will compromise the defendant's right to a fair trial. And, in fact, today, a deputy district attorney came out and said it's already had an adverse effect.
(BEGIN VIDEO CLIP)
GREGORY CRITTENDEN, DEPUTY DISTRICT ATTORNEY: Now, after hearing it so many times on TV, what the arrest warrant said and what the search warrant said: Oh, yes, I clearly remember that now. Oh, yes, it totally didn't work that way. No, it wasn't like that.
This is what you could get now by releasing the arrest warrant and the search warrant, compromising the ongoing investigation. Plus, I would further submit that we've had to reinterview people based on statements they have made to the media already, taking away from what would be an investigation going towards the facts of what happened, allegedly, that night. But now we have to do reinterviews of people that are having fun getting in the spotlight.
(END VIDEO CLIP)
BURKE: Kobe Bryant is expected to make an appearance before the court on August the 6th here in Eagle County to have the charges against him formally read. But there's a very good chance, according to Judge Gannett, that he won't have a decision on whether to open up these court files even by then.
Lou, he came out and said today, definitely don't expect it today and there's a good chance you won't even have it next week -- Lou.
DOBBS: Josie, thank you very much -- Josie Burke reporting live from Eagle, Colorado.
Joining me now with his analysis of this case is CNN legal analyst Jeffrey Toobin.
Jeffrey, good to have you here.
JEFFREY TOOBIN, CNN LEGAL ANALYST: Hi, Lou.
DOBBS: The idea that these documents should not be unsealed, do you think that's appropriate?
TOOBIN: Well, this is a classic struggle in -- between two fundamental values that are very important in this -- in our legal system. One is the right to a fair trial -- right to freedom of the press, the public's right to know, on the other hand, right to a fair trial.
And the judge very obviously was struggling with the clear contradiction between those two ideas today.
DOBBS: A clear contradiction. There have been statements from the district attorney. There have been statements by Kobe Bryant, as Josie Burke just reported. What about the idea that he has waived his rights to privacy, such as such rights exist?
TOOBIN: That was not an argument that I'd ever really heard before. It's an interesting point, that somehow, by denying the charges, you waive your right to privacy. I don't think the judge was terribly impressed by that.
It's really a matter of, is this a case like any other case? Because if it were like any other case, the documents would be released. But, as the district attorney said, look around you. Look at how much press is here. Look at what would happen if this material went public. It wouldn't be treated like an ordinary case.
DOBBS: Let's look to cases that are not ordinary. And O.J. Simpson comes to mind, speaking of basketball and sports and professional athletics. That was one of the most reported media frenzies in the history of the country. Do you believe that the jury was tainted by that?
TOOBIN: Well, my experience, every judge who has tried a big case since the O.J. Simpson case has tried to do -- have his case not work out the way Simpson did. It was -- it's generally regarded as not a model for much of anything.
And I think the way this judge is handling it is, he's trying to comply with the free speech right and the free press rights, but he's going to keep it as narrow as possible.
DOBBS: Well, if we take his side, if we take away the idea of poisoning or polluting the jury pool.
TOOBIN: Right.
DOBBS: Which a number of attorneys with whom I've spoken think that is not a persuasive argument.
TOOBIN: Not a very good argument, I think.
DOBBS: What is the reason here? There is a public right to know what's going on. He's a public figure. The young lady whom he allegedly assaulted has, to this point, with the support of the judge, been absolutely protected in her identity. If you do unseal these documents, her identity presumably would be revealed.
TOOBIN: Well, it would not -- I don't think it would be any more revealing. The respectable press, everybody knows her name and no one is reporting it.
DOBBS: Right.
TOOBIN: And I don't think that would change.
(CROSSTALK)
DOBBS: ... the documents.
TOOBIN: They have said -- the press lawyer has said they would be happy with her name being excised out of anything that would be released. So I don't think that's the concern. And I think you're right.
DOBBS: How does it end?
TOOBIN: I think it probably doesn't get released. But there's going to be a preliminary hearing probably within a month or two. And it will all come out then anyway. So I think it's really only a question of when it comes out, not whether.
DOBBS: It's pretty clear, watching these machinations in the courtroom in Eagle, Colorado, and the publicity attendant, there is a little different standard in the justice system for people who are well-known celebrities.
TOOBIN: It is remarkable to me, as someone who covers this.
The level of attention changes everything. And the quality of defense changes anything. And that's really perhaps one of the most important lessons we learn over and over again in these high-profile cases.
DOBBS: And it's still troubling.
Thank you very much, Jeffrey Toobin, CNN legal analyst.
Still ahead here: "Selling America," new technology forcing advertisers to rethink the 30-second spot. Robert Riesenberg, one of the executive producers of the new NBC reality show "Restaurant," a blend of entertainment and what he calls integrated marketing, what others call blurring the line between content and advertising, joins us.
And "Grange on Point": rotation blues, morale down for U.S. troops who thought they'd be home months ago. Many of their commanders are. General David Grange joins us.
And Christine Romans will report on surprisingly good news on the economy. And, of course, she'll have the market when we continue. Stay with us.
(COMMERCIAL BREAK)
DOBBS: As of tonight, MCI is banned from receiving any new contracts from the federal government. The General Service Administration says it's been closely following fraud allegations against MCI, formerly known as World Com and that companies bankrupcy. The GSA now says MCI lacks the necessary internal controls and business ethics to work for the U.S. government.
MCI will, however, keep its current government contracts. The company says it's working with the GSA to strengthen its internal controls and ethics.
Rudolph Giuliani once locked horns with Wall Street as a prosecutor. Now he's joining a Wall Street firm. The former mayor of New York City teaming with Bear Stearns Invest House. Together they will launch a $300 million fund to invest in companies that help protect against terrorism. The private fund will be managed by Bear Stearns and a consulting firm set up by Giuliani.
As we reported, the economy surged 2.4 percent last quarter, that and other strong economic news lifting stock price today. The DOW up 34 points. The Nasdaq up 14. The S&P up 3 almost. Christine Romans here now with the market. Pretty strong economic news.
CHRISTINE ROMANS, CNN CORRESPONDENT: It really was. 2.4 percent GDP. There was a midwest manufacturing number that was strong. Jobless claims fell again. You know, everyone was extremely euphoric about this early. And the Dow reached the highest price in a year this morning, but Lou, when the ten-year note yield reached toward 5 1/2 percent, then stocks rolled off their highs in the last half hour, but what a month.
Overall the Dow rallied almost 3 percent this month. The S&P 500 had its first positive July since 1997. And the Nasdaq rallied almost 7 percent. Five months in a row higher for the Dow and the S&P. That's the best streak in four years.
Strong earnings today from Dow companies helped. Exxon Mobil profit up 58 percent. Procter & Gamble helped by a weak dollar. And Disney reported a 3 percent profit gain after the close.
And Lou, just as stock investors were cheering that strong economic news, it was a fierce sell-off in the bonds. The ten-year note yield finally settling today at 4.41 percent. It was the worst month for 10-year prices since may 1984.
DOBBS: That's quite a remarkable rally, but that's a remarkable one-month setback, isn't it?
ROMANS: It certainly is.
DOBBS: And with all of this good news on the economy, corporate America is still laying off people. ROMANS: Oh, absolutely. We heard from Reader's Digest cutting jobs this week, Verizon cutting jobs, Lord & Taylor cutting jobs and shutting businesses, some of its stores, Pep boys, I mean, the list goes on and on. Even as you're seeing the economic reports perk up, the companies are still wringing out those final excesses.
DOBBS: Maybe we'll see some improvement in the unemployment rate very quickly. Christine Romans, thank you.
ROMANS: Sure.
DOBBS: Tonight we continue our series of SPECIAL REPORTs this week, selling America. Advances in technology have forced many advertisers to find new ways to reach new audiences. One method that's growing in popularity is product placement. The not so subtle use of products as part of the story. Greg Clarken has the report.
(BEGIN VIDEOTAPE)
GREG CLARKIN, CNN CORRESPONDET: The Mini got maximum exposure in the "Italian Job." And it was hard to avoid Pepsi in "2 fast 2 furious."
SIMON COWELL, "AMERICAN IDOL" JUDGE: Vanessa and Kimberly.
CLARKIN: And check out the coke glasses on that desk. On the small screen coke was the thirst quencher for the idol makers of "American Idol." It's all product placement, and it's on the rise.
Reality shows have elevated it to an art form. The hit show "The Restaurant" may not have even happened without the support of its sponsors.
UNIDENTIFIED MALE: Kimberly, do not come back without Coors for all those people.
CLARKIN: In return, American Express, Coors, and others became part of the show. Continuing the trend started by "Survivor."
BECKY ESENKAMP, BRANKWEEK: Now when someone launches a reality show, it's just expected that there's going to be not only product placement but something that's even more integrated than that, it's product placement along with sponsorship and advertising. So it's this whole bundle where the brand is integrated in the show.
CLARKIN: And advertisers are more than eager to become part of some shows. They know the average viewer has 75 channels to choose from and is gladly bypassing their expensive commercials. And technology has dealt another blow. It's created Tivo, a device that records shows and allows you to skip the commercials.
UNIDENTIFIED MALE: Lucky you.
CLARKIN: So product placement has become critical, but equally so is designing a strategy that's not offensive. ROY SALTER, BRAND ADVISORS LLC.: The question for the producer is to what extent can they weave it in without becoming overbearing to the audience? From the advertiser's standpoint they have a similar motivation. Their motivation is also coupled with wanting to profile their brands in the best possible way.
UNIDENTIFIED MALE: A new car!
CLARKIN: This has led to an evolution, of sorts, by the old- fashioned product placement deals are still around, there's new emphasis on having the advertiser's creative team work with producers to seamlessly work their product into the storyline.
UNIDENTIFIED MALE: Lara, welcome back.
CLARKIN: The ideal -- make it so the viewer doesn't know where the story ends and the selling begins.
JOHN PARTILLA, YAR BRAND BUZZ: I think the Holy Grail is how do we work together, the creators on the side of the advertising business, as well as the creators on the side of the entertainment business, to organically weave in branding messages that help inform and sell in a way that continues to entertain?
CLARKIN: Methods to measure success of product placement deals are being developed. But there are already some examples of winners. Remember E.T. and Reese's Pieces? While sales of the candy shot up 65 percent after the movie was released.
Greg Clarkin, CNN financial news, New York.
(END VIDEOTAPE)
DOBBS: Joining us now to talk about product placement or, excuse me, integrated marketing, is Robert Riesenberg. He's the Executive Vice President of Magna Global Entertainment, also the executive producer of "The Restaurant," the new unscripted television reality series on NBC. It follows a chef's attempts to open his own business, to run the business. It's reality television. It's good to have you here, Robert.
ROBERT RIESENBERG, VP MAGNA GLOBAL ENTERTAINMENT: Nice to be here.
DOBBS: The idea, I mean, this is an interesting idea. How's it working so far? You've been up, what, two weeks now?
RIESENBERG: Two weeks this past Sunday. It's working great. The ratings have gone up significantly. And we're hoping for another bump on Wednesday night. It's gotten great press, a lot of buzz, and we're very optimistic.
DOBBS: The idea of product placement E.T., Reese's Pieces. You are in some quarters considered the king of integrated marketing. I know you prefer the term product placement. Is this a driver of the show? RIESENBERG: Not really. I work for a company called Magna Global Entertainment and what we are doing is producing television shows for our advertisers. And the primary purpose is to give them a marketing platform using television.
That's really what it's all about. They really operate in the world of diminishing returns. They spend more money, they're getting less bang for their buck and this is an opportunity for them to associate with the show on many levels.
DOBBS: In addition to the 30 or 60-second commercial on television?
RIESENBERG: Exactly. And the product integration becomes a by- product of that. It's an important element, but it's not the only element.
DOBBS: The idea of product placement has to appeal. We've seen Ford with the latest James Bond picture. What did they have, three cars in that thing? $30 million. Is that the wave of the future?
RIESENBERG: I think it's part of the wave of the future. I think that from an advertiser's perspective it's getting increasingly more difficult for them to have big impact when they advertise because audiences continue to fragment and get smaller and we've got this technology out there that threatens their very existence. So they're look for alternatives.
DOBBS: We're looking here right now at video of "The Italian Job" three Mini Coopers, a nice product placement as well. But you know, what many people are criticizing right now, anything new or taken to a certain level creates critics. But the fact thing is a lot of people are saying there's a blurring between creative content and the commercial interests of the advertiser. How do you respond to that?
RIESENBERG: Well, first and foremost, anything that we get involved with and our advertisers get involved with, the show has to stand on its own. It has to be something that the networks would otherwise buy. And then if we draw too much negative attention to our products, then we're not doing our job. So it's important that...
DOBBS: This is the ultimate product placement, I think. Lara Croft: Tomb Raider, as she alights in a Jeep in Africa. The fact of the matter is that these products that are being bolstered this way in some ways are more compelling. I will speak only for myself. It's far more compelling to see Jeep in the middle of that movie or the Mini Cooper than to see a straightforward commercial.
RIESENBERG: Well, it gives it context. It gives it credibility. I would agree with you. And I think what we're trying to do is the same thing. When you see "The Restaurant" and you see Coors or American Express integrated in a very natural way, I think it bolsters the image and the saleability of the products.
DOBBS: You think this is the future of television? RIESENBERG: I think, as I said before, I think it's part of the future. I think that advertisers are looking for ways to stand out, and this will certainly be a part of it. And it's certainly going back to the way television was back in the '50s in many respects.
DOBBS: With that big logo on the news desk.
RIESENBERG: Right.
DOBBS: Subtle integrated marketing. Robert Riesenberg, we thank you very much for being with us here.
RIESENBERG: Thank you.
DOBBS: Tomorrow on our series of SPECIAL REPORTs on selling America, the future of advertising, Joe Capa, the author of the book by that title he joins us to talk about what is the future of the advertising industry.
Former football coach Mike Ditka, for him the future is now. He has a new advertising deal. Ditka is the new pitch man for a new impotency drug called Lavitra, a rival to Viagra.
The makers of the drug, Glaxo Smithkline and Bayer, signed a three-year, $6 million marketing deal with the National Football League. You're going to see a lot of advertising beginning this fall.
Tonight's thought is about what makes a good ad, and Robert's sitting here, so we'll see if he reacts. "A good advertisement is one which sells the product without drawing attention to itself."
Do you agree with that?
RIESENBERG: I would agree with that. Absolutely.
DOBBS: Advertising legend David Ogilvy.
Coming up next, "Grange on Point." Tonight, rotation blues. Morale suffers as the troop rotation system is failing and it certainly isn't the fairest example of the relationship between the officer corps and the enlisted man and woman. General David Grange joins us. "On Point" next.
And staying home. American interest in traveling abroad is off, way off. And foreigners, some of them are staying home as well. Bill Tucker will have the story.
And your thoughts on the report we brought you last night on the low salaries of the FBI. We'll share your thoughts coming up.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: Tonight's "Grange on Point," rotation blues. The military system of rotating individual troops instead of units has been widely criticized. Critics say it hurts troop and unit morale as well as combat readiness.
Joining me now, our military analyst, General David Grange.
David, good to have you here. This just isn't fair, is it?
BRIG. GEN. DAVID GRANGE (RET.), U.S. ARMY: Well, it's the system's antiquated, Lou. It's -- the individual replacement system has been around really from World War I. And it really came about from a Frederick Taylor, who was a 19th Century industrialist...
DOBBS: Right.
GRANGE: ...who emphasized the training of the individual above the training of a team, or a unit. And that's really the way the Army has been manning its units and fighting its missions since World War I.
DOBBS: You just shocked me when you brought up Frederick Taylor. I haven't thought of him since college days. Economic historian, organizational management. That's fascinating that it starts with him.
The idea that some troops right now will be delayed until next April -- is it next April for the 4th Infantry to rotate out? Is that correct?
GRANGE: I think the 4th -- yes, the 4th Infantry, around April. Of course, the 3rd in September, replaced by the 82nd Airborne.
But part of that was the expectations when troops were told they were going to leave and hen it had to be changed. Now, it had to be changed for, I think, valid operational reasons, because of the transition to security and stability operations right after major combat operations ended.
But better planning would have had forces ready to go, and it would be better -- it's always better to tell the troops later on worst case and then surprise them with good news than tell them good news up front and then have to change it.
DOBBS: Well, there's a lot of bad news, too. I was interested to learn that Deputy Defense Secretary Paul Wolfowitz said -- quote unquote -- he was unhappy to learn that many national guardsmen had been called up two years ago and were still on active duty. I was unhappy to learn that a deputy defense secretary was only learning about that on a visit to Iraq.
What is going on there?
GRANGE: Well, that surprises me as well. I mean, that's a -- he works in DOD, Department of Defense.
The problem is the active force is too small to handle all the operations around the world, 120 countries right now. Half the United States Army is deployed. It's augmented by National Guard Reserve to handle some of the stripped out support functions and specialty functions that the active duty cannot fill the ranks with. And so that's why they've been activated time after time or for extended periods, which affects their public -- or the private sector job with their employees.
DOBBS: And right now in Iraq, some of the junior commanders are being pulled out, junior officers as well, from units that are on station. Those enlisted are remaining. How can the Pentagon rationalize this kind of approach?
GRANGE: This has been the approach since I served, since Vietnam.
It's wrong. Anytime you change a unit leader, especially in the lower ranks, sergeants, platoon leaders, you know, the lieutenants, company commander, captains, it has an effect on the unit. These are leaders that see their troops every day. They live with them, they eat with them, they fight with them, and when they move them out it causes a readiness issue, a morale issue, a cohesion issue. And it's totally wrong to move out a leader in the middle of an operation for career progression or staff jobs back in the United States or other areas.
DOBBS: General Grange, as always, thank you very much. General Grange, representing the interests in this broadcast of the enlisted man and woman in our U.S. military as well as our veterans. David, thank you very much.
Next week, "Grange on Point." General Grange will look at the unending battle. After the fighting ends, the real battle begins for those of our warriors who are wounded. That's next week, "Grange on Point."
A reminder now to vote in tonight's poll. The question, "Would you pay more for American-made products than imports? Yes, no, or maybe?" Cast your vote at cnn.com/lou. We'll have the results for you in just a few minutes here.
When we continue, American families are staying home this summer. They're leaving European vacations to Europeans. Bill tucker will report.
And gliding high above the English Channel. This man has flown into the history books in the most spectacular fashion. And even if you've seen this video somewhere on CNN, it did show once or twice today, I'm told, it's never been shown so well and never better than in just a few moments.
And swimming with sharks. A way for scientists to study sharks up close without facing danger. We'll have that story for you, a great deal more.
Stay with us.
(COMMERCIAL BREAK)
DOBBS: A new shark has been introduced with the sand tiger sharks into the tanks of a British aquarium. This shark, however, is quite unique. Not at all like the others, although it's at first hard to tell. This shark in fact is the world world's only robotic swimming shark. Scientists designed robo-shark to aid in the study of shark behavior. This robo-shark will swim with the real things and study their mannerisms, communication, and intelligence.
An American in Paris is much less common than it was a year ago. Instead, American families are looking far closer to home for their summer vacations. European tourists are not coming to America in droves either.
Bill Tucker has the story.
(BEGIN VIDEOTAPE)
BILL TUCKER, CNN CORRESPONDENT: You can probably find most of the Americans in France this summer along the route for or in the Tour de France. American tourism to France is officially down 30 percent, according to the French Ministry of Tourism. But according to the president of a group representing France's travel agents, the drop is more like 80 percent. Tensions between the United States and France over perceived French support for Saddam Hussein are part of the reason for the decline but not all of the reason. 20,000 acres of forest in the southern part of France are on fire. The landscape dry from a crushing drought. The exchange rate has not been favorable, making the trip more expensive for Americans, putting all of Europe, not just France, off of Americans' travel agendas.
EINAR GUSTAVSSON, ICELANDIC TOURIST BOARD: The number one reason is the war in Iraq. That is basically the big reason for it. We were in a good recovery period with Americans coming to Europe up until the Iraqi war broke out. And after that the bottom kind of fell out.
TUCKER: It's been a rough summer for everyone, with the Germans not going to Italy, the Italians not going to Germany, and hardly anyone coming to the United States. Tourism from Europe has been falling for 12 years now, and it could be about to get a lot worse.
JONATHAN TISCH, PRESIDENT & CEO LOEWS HOTELS: If you have a passport and you're in a visa waiver country program, you have to have a machine readable passport. If you're not in one of those countries, you're then going to have to go to the consulate and get a visa. Go for a personal interview, wait in line. And these are signals that are mixed. They are difficult for the traveler who wants to come to this country, because it's just another barrier as to why they're not going to come here and spend their much-needed dollars.
TUCKER: In February Congress approved $50 million for a marketing campaign to encourage tourism to the United States.
(END VIDEOTAPE)
TUCKER: But the travel industry doubts that a marketing campaign can be effective if tourists are encouraged on the one hand to come and discouraged on the other -- Lou. DOBBS: In that visa program the gentleman Tisch was talking about, that goes into effect tomorrow. But a necessary component for national security.
TUCKER: Yes.
DOBBS: Bill Tucker, thank you.
When we continue the results of tonight's poll, and we'll take a look at a number of your thoughts and share them with you. We'll be right back stay with us.
(COMMERCIAL BREAK)
DOBBS: When we continue, flying high without the help of an aircraft or an engine. One man's historic trip across the English channel. Next.
(COMMERCIAL BREAK)
DOBBS: The results of our poll. The question, would you pay more for American-made products than imports?
71 percent of you say, yes, 18 percent, no, 12 percent, maybe.
Taking a look at some of your thoughts, many of you wrote in about our report last night about underpaid FBI agents.
Emily Norris of Dallas, Texas, said, "I think it is great that the government is concerned about the pay for FBI agents, but I'd like to point out that the pay for enlisted military members is beyond sub par."
Ann Smith, of North Carolina said, "I have for years been appalled at the salaries paid to our nation's educators, firefighters, police and other security forces who give so freely and tirelessly try to teach us and keep us safe. The gap between their salaries and the money given to top executives of most American corporations is sinful."
And we agree with you utterly and completely. Throughout this year, by the way we've been reporting on the most underpaid important occupations in this country, including firefighters, teachers, nurses, and policemen.
Many of you also wrote in about the debate over the Hubble Space Telescope and its future.
David Selib, of Greenwich, Connecticut, wrote, "The stream of information form Hubble will be valuable and worth it, right up to the point when the new space telescopes are fully tested and functional. Considering the chancy element of space installations and explorations, we really should let a good thing stay working until replaced."
We couldn't agree with you more. Hugh Gray of Madison, Alabama, said, "The Hubble has provided more information about the universe and deep space than has been available for the entire history of mankind."
We love hearing from you. Send us your thoughts. Loudobbs@cnn.com.
Finally tonight, history made over Europe today. An Austrian daredevil jumped from an aircraft 30,000 feet in the air. Then, wearing a six-foot wing made of carbon fiber, he flew across the English Channel without power. The first person to ever accomplish the feat. He made the 22-mile trip in only seven minutes, hitting a top speed of 220 miles an hour.
(BEGIN VIDEO CLIP)
FELIX BAUMGARTNER, EXTREME SPORTSMAN: It was brilliant. It was exactly like I expected. I just had a little accident in the plane. The cameraman, he had no oxygen, so he passed out. And I had a little problem on opening of lift with my legs into the parachute lines. So I had to cut some pieces off to come back. It's extremely cold up there. We've got 40 degrees minus. The whole area was covered by clouds. So I couldn't see the other side for the whole distance. But we got a leading plain, a PC-9 which was flying in front of me.
So I could see directly which direction I have to fly. And after I think 7,000 meters freefall I could see some lights right over there, so I knew exactly where I am. And I got a little signal in my helmet, and as soon as I hear that I could see the coast right over there. So I knew I'm going to make it. It is actually a feeling like the birds because you feel so far up you don't have a reference point. You don't -- you just see the forward speed but you don't see the speed down. So it feels like real flying.
Yes!
I like to be in the air. It's like my second home. I mean, I started skydiving when I was 17 years old. So I feel really calm there and I try to be there as much as I can and I like the challenge. I want to be the first one at things like this, and this is what gives me a good feeling.
(END VIDEO CLIP)
DOBBS: A remarkable accomplishment. Baumgartner has a reputation for these flights, a daredevil. He's jumped off the world's tallest building, that in Malaysia, threw himself off the statue of Christ in Brazil. You may have noticed, since we're talking about advertising this week in our special reports the product placement on the side of his special suit. We can't wait to see what he does next.
That's our show for tonight. Thanks for being with us. For all of here, good night from New York.
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