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CNN Wolf Blitzer Reports

Letourneau, Fualaau Allowed to See Each Other; Rick James Dies; Why Is Stock Market Sliding?

Aired August 06, 2004 - 17:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JEANNE MESERVE, CNN ANCHOR: Happening now, can they rekindle their forbidden romance? Mary Kay Letourneau, a registered sex offender, learns if she can see her ex-student.
Also happening now, the music industry mourns a well-known singer.

And new low for 2004, why is the stock market sliding?

Standby for hard news on WOLF BLITZER REPORTS.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): Terror ties. Do the alerts and the arrests lead back to a familiar foe?

Urban warfare. A rebel militia battles U.S. troops and pays a terrible price.

Job jolt. Shockingly poor payroll growth, is the economy on the skids?

"Open Water". As moviegoers get summertime chills, we'll go behind the story of divers left behind.

(BEGIN VIDEOTAPE)

ANNOUNCER: This is WOLF BLITZER REPORTS for Friday, August 6, 2004.

MESERVE: Hello. I'm Jeanne Meserve in Washington. Wolf Blitzer is off today.

We begin with all-out warfare in the streets of a holy city and a bloody uprising that's spread to the Iraqi capital. There may be hundreds dead. We have dramatic pictures from behind the insurgents' line.

CNN's Matthew Chance reports from Baghdad.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN SR. INTERNATIONAL CORRESPONDENT (voice-over): The holy city of Najaf, now the scene of pitched battles and bloodshed. Fighters of the Mehdi Army, loyal to the firebrand cleric Muqtada al-Sadr, have taken positions in the heart of the ancient city. U.S. Marines are fighting street-to-street, near the shrine of Imam Ali, one of the holiest sites in Shia Islam.

And casualties are high. The Mehdi Army denies it, but the Marines say they've killed 300 of the militia in just two days.

LT. GARY JOHNSTON, U.S. MARINE CORPS: There is no end state or end -- really, end time that we'll place on this one. I think at this point in time, it will be effects based when in fact we believe that those attacking Iraqis and Iraqi civilians are no longer capable of doing that.

And so we'll continue to press, continue to address these anti- Iraqi forces until we feel that they're no longer capable of these type of attacks in the future.

CHANCE: Fighting has flared elsewhere, too. Overnight, violence engulfed the mainly Shiite Sadr City district of Baghdad. Health ministry officials say at least 20 Iraqis have been killed in the clashes. Amara and Basra in the south have also seen confrontations involving the Mehdi Army and British forces.

Now Muqtada al-Sadr is again the center of growing Shia unrest. U.S. officials say his militia overtly violated a cease-fire agreed in June. His own spokesman, Sheikh Mahmoud al-Soudani, insists they're ready for a truce.

"Najaf has strong relations with other cities," he warns. "The tension in Najaf will be reflected there. But our people are willing to establish stability," he says.

It's what the Iraqi government and the U.S.-led coalition say they want, too. A general uprising among Iraq's majority Shia could spell disaster.

(on camera): To make matters worse, one powerful voice of moderation among Iraqi Shias has left the country. Grand Ayatollah Ali al-Sistani is in London being treated for a suspected heart condition. His advisers insist he will return. But in his absence there are concerns that those with a more violent agenda will come to the fore.

Matthew Chance, CNN, Baghdad.

(END VIDEOTAPE)

MESERVE: Authorities half a world apart have captured key al Qaeda suspects and investigators are peeling away a plot layer by layer. But the more they reveal, the more alarming it becomes, and Americans left on alert wondering what to expect.

To step back and assess what we know and what we have yet to learn about the terror threat we're facing, let's turn to our justice correspondent, Kelli Arena -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Jeanne, investigators believe that they are making some progress. They're chasing down thousands of leads as they try to figure out if al Qaeda is ready to strike.

(COMMERCIAL BREAK)

ARENA (voice-over): Security remains tight and in some cases it's getting tighter. In the nation's capital, for example, police are now inspecting some cars and trucks in nearby Virginia and Maryland before they enter the District.

It all follows warnings that financial buildings are being targeted by al Qaeda. The president, speaking to reporters, defended his decision to alert the public to the threat.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Imagine what would happen if we didn't share that information with the people in those buildings and something were to happen, then what would you write?

ARENA: Arrests in Pakistan led investigators to very detailed surveillance notes of potential targets found in computers and documents. While most of the surveillance was done before September 11 attacks, officials say some of the information was updated as recently as January.

BUSH: The threats we're dealing with are real. And therefore we must do everything we can to ferret out the truth and follow leads.

ARENA: Operations in Pakistan and Britain also resulted in the nabbing of two alleged senior members of al Qaeda. One, Esa al-Hindi, has been identified as the man who was sent to the U.S. in early 2001 by Osama bin Laden to personally case potential targets, according to sources.

The other, Muhammad Naeem Noor Khan, is said to have recently contacted individuals in the United States. Interrogations of both continue.

Officials say their arrests generated thousands of leads in the United States, including a series of phone numbers and e-mail addresses. The main objective, to track down any al Qaeda operatives in the U.S.

GEORGE BAURIES, FMR. FBI COUNTERTERROR AGENT: For every thousand leads that go out, you're probably going to get a good percentage that come back and warrant much deeper investigation.

ARENA: In the midst of all of this, sources say the level of chatter or intercepted communications between suspected terrorists has dropped off. It could mean nothing. But that's exactly what happened before the September 11 attacks.

BAURIES: What it indicates is that the individuals associated with al Qaeda have potentially been given information or orders on how to execute missions.

(END VIDEOTAPE)

ARENA: Still, officials offer no definitive evidence that al Qaeda is ready to execute an attack, no evidence on exactly when this could occur, and no evidence on the method that terrorists would use -- Jeanne.

MESERVE: Kelli, going back to chatter for just a minute, do authorities think that another possible explanation is that members of al Qaeda know that officials have this treasure trove of information and may be trying to find them? Could they just be keeping a low profile?

ARENA: That's always an option. And as you know, Jeanne, the level of chatter goes up and down quite a bit. But whenever it does drop off after they have gotten a flurry, it is a cause for concern.

MESERVE: Kelli Arena, thank you.

A man accused of trying raise money for terrorists on the World Wide Web was denied bail in a British court, but he's wanted in Connecticut.

Let's go live to CNN's Alina Cho. And Alina, what's the story?

ALINA CHO, CNN CORRESPONDENT: Well, Jeanne, some of the Web sites were based here in Connecticut which is why the arrest warrant was issued here. 30-year-old Babar Ahmad is facing a host of charges, he is being held without bail in London.

(COMMERCIAL BREAK)

CHO (voice-over): By police escort, Babar Ahmad arrived at a London court for an extradition hearing Friday. The British citizen is charged with operating several U.S.-based Web sites that asked for donations and supplies for terrorists groups.

KEVIN O'CONNOR, U.S. ATTORNEY: The main purpose of all of these sites was to solicit financial support for terrorist organizations including the Taliban and the Chechen Mujahedeen.

CHO: The criminal complaint said one of the Web sites in question published Osama bin Laden's 1996 declaration of war against Americans. Authorities say they also recovered a floppy disc that contained classified blueprints, including planned movements of a U.S. battleship group conducting operations against al Qaeda and enforcing sanctions against Iraq.

O'CONNOR: Most important, the documents specifically described the battle groups' vulnerability to terrorist attack.

CHO: The complaint detailed alleged e-mail exchanges between Ahmad and a then-active duty American sailor. CNN has learned the unidentified sailor has knowledge of classified ship movement plans.

JEFFREY ROBINSON, MONEY LAUNDERING & FRAUD EXPERT: Terrorist group, al Qaeda or any other, is a business. Their product is blowing something up. Like any business it needs cash flow and reinvestment. You've got to keep the money going through the business to keep it alive .

CHO: British authorities arrested Ahmad Thursday night following a raid on his London home. He is allegedly linked to a Chechen group that took hundreds of hostages at a Moscow movie theater two years ago. In court Friday, Ahmad said he was confused by the charges.

MUDDASSAR ARANI, DEFENSE ATTORNEY: It appears that anybody who is arrested in this country in relation to terrorism offenses and -- there is not sufficient evidence to prosecute those individuals, that those individuals' extraditions are being (UNINTELLIGIBLE) by America.

(END VIDEOTAPE)

CHO: Ahmad told the judge he would not voluntarily go to the United States. The U.S. attorney here in New Haven admitted it could take years to extradite him.

Meanwhile, it is important to note that the U.S.-based Internet service providers are not under investigation, but, Jeanne, the U.S. attorney here says that at least two U.S. citizens donated money on these Web sites. And they are part of an ongoing investigation -- Jeanne.

MESERVE: Alina, this investigation had been going on for some time and yet they just made this arrest. Are authorities saying anything about whether this has a link to the other recent arrests in the U.K. or in Pakistan?

CHO: They are not at all. In fact, Jeanne, when asked this question, they would only say that this investigation has been ongoing for more than two years and that it was the result of what they call a post-9/11 tip -- Jeanne?

MESERVE: Alina Cho, thank you so much.

Great expectations, but poor jobs numbers. The impact on you and the upcoming presidential election.

Plus, a new development in the story of Mary Kay Letourneau. The registered sex offender learns if she can see her ex-student.

Also ahead...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I just want help them, any doctors -- I know there's some doctors out there.

(END VIDEO CLIP)

MESERVE: Life after the battle and after severe injury: The harsh realities for one wounded soldier and his family.

And this.. (BEGIN VIDEO CLIP)

BLANCHARD RYAN, ACTRESS, "OPEN WATER": My God, there were boats all around us and you refused. Now look -- look around us. We're stuck in the middle of the ocean with nobody!

(END VIDEO CLIP)

MESERVE: Just when you thought it was safe to go back into the water, a new ocean thriller based on a true story. A reality check ahead.

(COMMERCIAL BREAK)

MESERVE: The federal government announced the monthly jobs report figures today, and they are not good news for the Bush administration. The economy added only 32,000 jobs last month. That's far fewer than the 200,000-plus jobs economists had forecast.

CNN's Kathleen Hays has that story.

(BEGIN VIDEOTAPE)

KATHLEEN HAYS, CNN CORRESPONDENT (voice-over): Shock, disbelief, and a swift sell-off in the stock market: The reaction to a stunningly small increase in new jobs in July. Just 32,000 when an increase of more than 200, 000 was widely expected.

PHIL FLYNN, ALARON TRADING: It was unbelievable. It was like somebody ran a truck through here.

JARED BERNSTEIN, ECONOMIC POLICY INSTITUTE: Well, if June was a disappointment, July is downright depressing.

HAYS: The job market, which looked bright last spring, has suddenly run out of steam. As for the past four months, the jobs increases have been getting smaller.

JAMES WHITE, EXCELSIOR CAPITAL MANAGEMENT: It's going to be pretty hard to put a smiley face on this one.

HAYS: The president's top advisors insisted the economy is moving in the right direction.

JOHN SNOW, TREASURY SECRETARY: As we've seen for the last year, 11 straight months of job creation, the highest GDP growth rates in 20 years. So, the American economy remains strong and sound and on a good path.

HAYS: The unemployment rate, which is calculated separately from the numbers on jobs creation, inched down to 5.5 percent.

ELAINE CHAO, LABOR SECRETARY: This is lower than the average unemployment rate in the decade of the 1970s, 1980s, and 1990s.

HAYS: But even the Labor Department says the number of new jobs is a better barometer of where the economy is heading. And with hourly wages growing less than two percent over the past year and soaring energy prices eating away at people's paychecks, some speculate the lack of jobs may be George Bush's Achilles' Heel come November.

BERNSTEIN: With these wage trends, with these price trends, with these oil trends, with these job trends, this makes it a tough argument for the incumbent.

(END VIDEOTAPE)

MESERVE: That was Kathleen Hays in New York.

It was a brutal day on Wall Street, reacting to that surprisingly weak jobs report, as well as record-high oil prices. Investors sent stocks tumbling. The Dow Jones Industrial Average was down about one- and-a-half percent, while the Nasdaq was off nearly two-and-a-half percent. All of the major indexes closed at new lows for the year.

Here's your turn to weigh in on this story. Our Web question of the day is this: Will the job market be a major factor in deciding which candidate you pick for president? You can vote right now at cnn.com/wolf. We'll have the results later in this broadcast.

And while you're there, we'd like to hear directly from you. Sent us your comments anytime, and we might read some of them on the air at the end of this program each day.

Unemployment was one topic today on the presidential campaign trail. Let's take a quick look.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): John Kerry and John Edwards visited a farm outside Kansas City to promote alternative fuels made from corn, soybeans, and other crops. Kerry proposed spending billions of dollars over the next decade to develop alternatives to foreign oil and to help automakers to produce more fuel-efficient cars. He also brought up today's report showing weaker than expected job growth.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: My friends, in the last few days, you've heard people in positions of leadership on the other side saying America has turned the corner. Well, it must have been a U-turn.

MESERVE: Campaigning in New Hampshire today, President Bush had a distinctly different view of the jobs statistics.

BUSH: In the last year, we have added about 1.5 million new jobs. The unemployment rate is down to 5.5%.

MESERVE: Earlier, the president spoke to a minority journalist conference when he was briefly interrupted by a heckler.

UNIDENTIFIED MALE: Shame on you for (UNINTELLIGIBLE) and deceiving the public. Shame on you. BUSH: I think it's very important...

MESERVE: The president continued his speech without responding, and the heckler was escorted out of the room.

Vice President Dick Cheney campaigned in East Grand Forks, Minnesota. He spoke for about 45 minutes to hundreds of people packed into a sporting goods store.

(END VIDEOTAPE)

MESERVE: And Illinois Republicans finally may have a Senate candidate. Chicago newspapers are reporting that conservative talk show host Alan Keyes has agreed to run, even though he lives in Maryland. An official announcement is expected Sunday.

The original GOP candidate withdrew because of a sex scandal. Keyes would run against Democrat Barack Obama for the seat being vacated by Republican Senator Peter Fitzgerald.

This programming note: President George W. Bush and First Lady Laura Bush will give an exclusive joint interview to LARRY KING LIVE Thursday. That's 9:00 p.m. Eastern, 6:00 Pacific.

Police say she committed a violent double murder with her girlfriend with the evidence inscribed on her body.

(BEGIN VIDEO CLIP)

LT. COL. BRUCE JORDAN, FAYETTE COUNTY SHERIFF'S OFFICE: Holly had written four notes on her arm of things she wanted to remember to do. The first word was kill.

(END VIDEO CLIP)

MESERVE: The victims? Her own grandparents. Now police say they know the motive.

A new development in the story of a teacher convicted of statutory rape. Mary Kay Letourneau learns if she can see her ex- student.

And...

(BEGIN VIDEO CLIP)

RICK JAMES, FUNK MUSICIAN: Somebody scream.

(END VIDEO CLIP)

MESERVE: A notable passing: A musical icon of the '80s -- more on the life and death of singer Rick James.

(COMMERCIAL BREAK)

MESERVE: There's a group often overlooked when we talk about fighting in Iraq: The U.S. military personnel who have been injured. CNN Pentagon correspondent Barbara Starr has been looking into their stories. Today, we follow-up on a soldier from Virginia who was wounded last year.

(BEGIN VIDEOTAPE)

JANE ARRAF, CNN CORRESPONDENT: Witnesses clearly say one American soldier was shot in the head this morning while on patrol in Baghdad.

BARBARA STARR, CNN CORRESPONDENT (voice-over): In Manassas, Virginia, an army officer gave Jay Briseno's father the news...

JOSEPH BRISENO, FATHER OF WOUNDED SOLDIER: I asked him if Jay was OK. And he said, as we speak, he was in the operating room during that time.

STARR: Jay wanted to join the FBI someday. Now, 13 months later, a family in heartbreak. Jay is paralyzed from the neck down, blind and suffering massive brain injury. He is 21 years old. His parents now telling his story, but protecting his privacy, asking his face not be shown.

Joseph Briseno was determined to bring his wounded son home. But then a fight to get the Department of Veterans Affairs to pay $13,000 for a special bed.

BRISENO: One day I get this phone call from the Army, thank you, Mr. John Radke. Then, he said he offer us help.

STARR: John Radke is part of a new Army effort to ensure wounded soldiers get the help they need for years to come, long after they take off the uniform. Radke went to the Briseno's house where Joseph took him down to the basement.

JOHN RADKE, CHIEF ARMY RETIREMENT SERVICES: Where he had his son staying and talked about a bed that -- his hope was that he would get a better bed that his son could lay in.

STARR: Working with Veterans Affairs which overseas Jay's care, Radke got the bed. The army will now track Iraq war vets for years.

RADKE: We do not want them to become forgotten.

STARR: For Jay and his parents, the war may never end.

BRISENO: I just want help from any doctors. I know there's doctors out there.

STARR: Barbara Starr, CNN, the Pentagon.

(END VIDEOTAPE)

MESERVE: A dramatic development in the Mary Kay Letourneau case. A judge rules on whether she can be reunited with the former student with whom she had two children. A doctor may be under scrutiny in the ongoing investigation into the 2001 anthrax investigation.

Also...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Other people go on vacations and spend their days just laying around. This is a story we're going to be telling for the rest of our lives.

(END VIDEO CLIP)

MESERVE: There's a new movie about a sea diver's worst nightmare. Could it happen to you?

(COMMERCIAL BREAK

MESERVE: Welcome back. A developing story out of Washington State, Mary Kay Letourneau, a registered sex offender, learns if she can see her ex-student. We'll have a live report.

But first, a quick check of stories now in the news. Law enforcement sources have identified a doctor with a background in bioterror response planning as the common thread to three properties searched yesterday. Residences in New York and New Jersey were searched in connection with the investigation into the deadly anthrax- laced letters of 2001.

Attorneys representing Private First Class Lynndie England are asking for permission to call senior military officers to testify on the Abu Ghraib prison abuse scandal. The judge presiding over England's preliminary hearing says she'll decide tomorrow whether Lieutenant General Ricardo Sanchez, the former commander of U.S. troops in Iraq and others will be called.

A Walt Disney World employee acquitted of fondling a teenage girl while dressed as Tigger the Tiger has been reinstated to his job. A union official says the worker was given other employment options, but opted to continue playing costumed characters.

1980's pop music icon Rick James has been found dead in his Hollywood home. James helped pioneer of the punk, funk style of that decade. And his "Signature Street Songs" album sold more than 3 million copies. There is no official on the cause of death. Rick James was 56-years-old.

Keeping you informed CNN, the most trusted name in news.

There is a new development in the case of Mary Kay Letourneau and her young lover Vili Fualaau. Letourneau was recently released from prison after serving 7 years for rape. CNN's Kimberly Osias joins us by phone from Seattle. Kimberly, fill us in.

KIMBERLY OSIAS, CNN CORRESPONDENT: Hell, Jane. Well, Mary Kay Letourneau has done her time, more than seven years, in fact, behind bars convicted of raping then sixth grader Vili Fualaau. Now, the same judge who sentenced the former teacher, says the two can be together again, without violating the law.

At 21, Vili Fualaau is still working on his GED, and was treated for deep depression while Letourneau was behind bars. But he says his feelings about her haven't changed. He says he still loves her. * feelings about her hasn't changed and he still loves her.

The court ruling today from King County Superior Judge Linda Lau lifted the lifetime no-contact ban between the former teacher and her former student, this, of course, at Fualaau's request through his attorney. The district attorney didn't challenge his motion since, at 21, Fualaau is now a consenting adult. The Corrections Department also declined to object.

Her former jail companions say Letourneau is interested in a future with her former student and may seek custody of their two daughters, Alexis and Audrey, now 5 and 7. No word yet as to when the couple will get together -- Jeanne.

MESERVE: Kimberly Osias, thank you for the latest.

When the judge lifted the order barring contact between Letourneau and Vili Fualaau, she in effect gave the star-crossed lovers legal permission to be together.

With me now from Miami Beach is former federal prosecutor Kendall Coffey.

Mr. Coffey, did the judge have any other option here? Wasn't this sort of the common sense thing to do, given the fact they're both now adults?

KENDALL COFFEY, ATTORNEY: Well, that's exactly it, Jeanne. No other option. It couldn't have made the judge happy. It certainly couldn't have made the prosecutor happy. But he's 21. He asked for it. He got it. They'll be together again, to be sure.

MESERVE: What about the children? There are these two children. Apparently, Vili Fualaau's parents have been looking out for them. If these two stay together, is there a custody issue at stake here?

COFFEY: Certainly, this is an issue that can get looked at legally in a couple different ways. Obviously, if in some fashion, Mary Kay Letourneau petitions to have a greater degree of custody, then a lot of these issues are going to get replayed again. Meanwhile, if there's any abuse or harm to the children, with or without either of the parents getting involved, obviously, child welfare agencies can step in.

But, frankly, up to now, there's no evidence that Mary Kay has done anything abusive to any of her own children. As a teacher, as a child molester, that's a different story.

MESERVE: Well, she is a registered sex offender. How does that come into play here. Can she have contact with her own children, given that fact?

COFFEY: The court addressed that issue during her appeal and said very specifically, whatever she's done, there's no evidence that she is a pedophile and while we're going to keep her away from other minor children, she can have access to her own children and has regular -- has had regular visitation during the course of her time in jail.

MESERVE: OK, here's a what-if question for you. What if the roles had been reversed? What if the teacher had been a male, having an affair with a younger female student? Do you think that the court would have ruled the same way?

COFFEY: Well, apparently, there is a case in Washington involving that role reversal. A male teacher served his time, got out, and wound up after some legal hurdles with getting reunited with the victim.

The frustrating thing about all this, Jeanne, is, it's a perverse way of saying, crime and pay. She molested this child. Now, with his life turned upside down, she may be getting back to him. If this were a bank robber who served seven years and walked in and was able to then enjoy his $5 million, everyone would be outraged. Somehow this is playing out in a way that's very frustrating.

But everyone's hands are tied and it's up to these two people to see what happens next with their lives.

MESERVE: Is this precedent-setting or this really -- this case just an oddity?

COFFEY: Well, I'm happy to say I think this is freaky rather than trendy. But the reality is that it does point to some limitations that the criminal justice system is going to have after somebody serves their sentence. As the appeals court said when they liked at it, the rest of this chapter, if there needs to be intervention, is going to come from the child welfare agencies or perhaps from the family courts.

MESERVE: Does the law have to be reevaluated in this case, do you think?

COFFEY: I don't think so. I think that it's so aberrational that there isn't a need to go and do any kind of significant reform. What we would hope would happen is that the child welfare agencies is going to keep a very close look on these two children. And, frankly, we have to wonder if whether there was a failure after this broke out, while in fact the young child victim was still young, still impressionable, could have had his life turned around, whether there was enough intervention at that time.

Maybe there was. Maybe there wasn't. But it's certainly strange and tragic in some ways the way this is playing out now that he's 21.

MESERVE: We've addressed some of the limitations on registered sex offenders. What are some of the rights a registered sex offender would have?

COFFEY: Well, at some point, they can petition the court to release them from the requirement of registering as a sex offender if under the laws of Washington it's seen that the purposes are not served.

In the meantime, everywhere that Mary Kay goes, with or without her child victim by her side, she will have to register with the sheriff's office, give some specific information. The media, public, will be able to follow her around in effect. And if she doesn't do that, it's a crime and ultimately she could be charged for failing to register and wind up back in jail.

MESERVE: But would it put her back in jail? Are the penalties that severe?

COFFEY: Well, it depends on the crime. It depends on the extent of the violation. But the reality is that I think that's one part of the law she's going to adhere to. What happens next is anyone's guess. Is there going to be another book attempt, made-for-TV movie? We should stay posted.

MESERVE: If she wants to have this status reviewed, and I can imagine she would, how long a period of time has to pass?

COFFEY: Well, she can actually proceed sooner rather than later on, rather than wait for the full term of the requirement of sexual offense registration.

The key thing is she would have to show that she is no way any kind of a threat of being a predator again. And, frankly, what is so strange about this case is, the court reviewed it. And she didn't have any of the indicia of a pedophile. This was simply sort of this one-time freakish, obsessive, ultimately criminal transaction that as we know continues until this day. But there's no real evidence from any source that she's a harm or a threat to anyone else.

MESERVE: OK, Kendall Coffey, thanks so much for your insight on this. Appreciate it.

COFFEY: Thanks, Jeanne.

MESERVE: Police describe her as stone-cold and a manipulator. She is suspected of orchestrating the murders of her grandparents with the help of her girlfriend. And she's just 15 years old.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): Holly Harvey and her 16-year-old alleged lesbian lover, Sandy Ketchum, wept during their first court appearance facing charges many find hard to fathom. Police say the pair stabbed Harvey's grandparents to death in their suburban Atlanta home Monday, stealing jewelry and a truck, then fleeing to the coast.

LT. COL. BRUCE JORDAN, FAYETTE COUNTY SHERIFF'S DEPARTMENT: The motive was to gain freedom and to be able to stay together forever. MESERVE: Relatives say Harvey's mother is in prison on drug charges and the teen had been living with her grandparents. Police say the elderly couple had ordered Harvey to stop seeing Ketchum and to stop using drugs. Harvey's uncle, the victim's son, says his father had alerted him there was trouble.

UNIDENTIFIED MALE: We were talking about things at work and he came up and said that she had threatened to kill him. And I could see a little concern in his face.

MESERVE: The girls were arrested Tuesday on Georgia's Tybee Island, where 22-year-old Brian Clayton had befriended them, not knowing of the killings.

BRIAN CLAYTON, BEFRIENDED SUSPECTS: They didn't have nowhere to go. And I figured, since we just moved here, my mom might be nice enough to let them stay. They had jewelry and they were trying to get me to go pawn it. And I was like, why do you want to pawn your grandma's jewelry?

MESERVE: Police describe Harvey as callous and headstrong as she was arrested. They say they found bloodstained knives and clothes and, more chillingly, a to-do list they Harvey had inscribed on herself.

JORDAN: Holly had written four notes on her arm of things she wanted to remember to do. The first word was kill.

(END VIDEOTAPE)

MESERVE: Police say the other words Harvey wrote on her arm were keys, money and jewelry. She and Ketchum are being held in separate facilities. Both are on suicide watch. A preliminary hearing is scheduled for August 31.

Also in our justice report, police in central Florida say a mass murderer may be on the loose. The bodies of four men and two women were found in a house in an Orlando suburb. Police aren't confirming how they died, but say they believe the deaths were not accidental or suicide.

Down on the farm. Kerry curries favor in the heartland, but who will carry these key states? Carlos Watson will have "The Inside Edge."

Also ahead:

(BEGIN VIDEO CLIP, "OPEN WATER")

DANIEL TRAVIS, ACTOR: Do you honestly, seriously, honey, do you honestly think that we got left behind because we were late?

(END VIDEO CLIP)

MESERVE: Alone in the ocean with sharks for company. It happened. But could it happen to you? And the X Games. The trick of the day is our picture of the day.

But, first, a quick look at some other news making headlines around the world.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): Israel has reopened the Rafah border crossing, the only crossing between Gaza and Egypt. When Israel closed the crossing for security reasons three weeks ago, thousands of Palestinians were stranded away from home.

Cemetery vandalized. For the second time in three weeks, Jewish graves in New Zealand have been desecrated. Almost 100 headstones were pulled out and smashed near Wellington, and the chapel there was burned down.

Plague of locusts. West Africa is fighting its worst locust invasion in more than a decade. The swarms can devastate entire fields in minutes and there are fears of food shortages.

Somber anniversary. Thousands gathered in Hiroshima, Japan, to mark the 59th anniversary of the first atomic bomb attack. The mayor of Hiroshima called for a global ban on nuclear arms by 2020.

And that's our look around the world.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

MESERVE: The Republican and Democratic presidential campaigns are fighting it out down in the trenches now. Most Americans have already decide who they plan to support this November. So both parties are struggling to find and convince every uncommitted voter out there.

Here now with "The Inside Edge" is CNN political analyst Carlos Watson.

He's in Mountain View, California.

Hey, Carlos. Good to see you.

CARLOS WATSON, CNN POLITICAL ANALYST: Hey, Jeanne. How are you?

MESERVE: Let me ask you first about this bounce. It didn't really materialize. But the Kerry campaign doesn't seem very concerned. What's your assessment of the race right now?

WATSON: Not super concerned.

With a little over 90 days left, they still seem to feel good. Certainly, the money is there, not only the public financing, which each campaign will get, but also money from these 527s in support of their effort. I think, on the message, that's interesting, too, Jeanne. What I'm seeing is a much more aggressive Kerry campaign postconvention.

You see them talking about issues you never would have seen Democrats talk about in past, namely issues like the environment and even energy. Today, Kerry floated a new $30 billion proposal on energy independence. And years ago, Democrats would have been afraid to have done something like that. They would have been thought of as tree-huggers or pessimists. And so I think that's interesting.

And last but not least, in some of these individual state polls, you're starting to see some progress for John Kerry. You're seeing it in the far West. You're seeing it in New England. And maybe the place that interests me most, though, nowadays is the Southwest. States like Colorado, Nevada, and Arizona, all states that the president won in 2000, John Kerry is close or, in one case, according to a poll, actually is ahead. So interesting news in the Southwest for John Kerry.

MESERVE: One of the things the Kerry campaign very much wanted to talk about today, the new jobs numbers, which were disappointing. How does the Bush campaign deal with that?

WATSON: It's tough for the president, because, certainly, three or four months ago, they thought they were finally starting to get their sea legs. They had created about 1.5 million jobs over the last nine months and it was something that they were talking about a lot. I think the president will ultimately have to do a couple of things, which is to continue to point out that while the unemployment rate is not what he wants it to be, it certainly is not 9 percent or 10 percent, which we saw in past recessions. It's about 5.5 percent right now.

But also I think you'll see the president try and shift the conversation not only using, if you will, the campaign, but also in many ways using the Congress. Next month, when Congress comes back in session, expect the Congress to start raising additional values issues, if you will, issues like gay marriage, issues like flag burning, as well as a more central economic issue, which is tax cuts. So I don't expect the president to back down on the economic issue, although this is not news that certainly he had hoped for.

MESERVE: You had previously predicted that we would see mudslinging in this campaign. And there's an add on the air now from some Vietnam veterans against John Kerry. Is this just the beginning?

WATSON: It is, Jeanne.

And just like everything in this campaign, 2004 has brought us a lot of change, as we have seen more money spent. This will probably be the first $1 billion presidential campaign. We have seen the Internet play a major role. We have movies and books play a major role. And I think, additionally, we will start to see more mudslinging. It will happen earlier in a lot of different ways.

I just mentioned to you that, when the Congress comes back in session in September, there will be some heated fights. I think part of what you'll see there will ultimately be called mudslinging. I think you'll see more in terms of TV ads. But I think you will also start to see more of it in terms of the grassroots efforts.

So, as people make phone calls, you'll actually start to see what will be considered mudslinging, certainly some of the radio ads and, last but not least, good old-fashioned e-mail. We'll see literally tens of millions of e-mails between now and November 2, which can be characterized as no other way other than mudslinging.

MESERVE: And now it looks like Alan Keyes may be the Republican candidate for the Senate race in Illinois against Barack Obama. Keyes doesn't even live in the state of Illinois. He lives in Maryland. What do you make of this race?

(LAUGHTER)

WATSON: To be fair, with all due respect to Alan Keyes, who is a former ambassador and a trained economist and well regarded in some circles, this is a fairly desperate move.

It's clear that not only is Obama likely to win, but that he's considered such a superstar, that they're not sacrificing even, if you will, a hometown hero in the case of the Illinois Republicans.

But, Jeanne, what I find more interesting is that you're starting to hear more and more about state races. Remember, for the last several months, all we've heard about is the presidential campaign. But now in Missouri, we had a sitting governor who lost the nomination for his party's bid in a primary fight. Don't see that very often.

You're starting to see not only interesting individual state races, but also ballot initiatives, not just on gay marriage, which we saw in Missouri, but also on the minimum wage, on health care and on a variety of other issues. So start paying attention to state races. I think they could also have a reverse coattail effect on the presidential campaign.

MESERVE: The issue that's been front and center this week is terror. Is the Bush administration benefiting from that or not?

WATSON: You know, it's not clear.

One of the most interesting numbers, Jeanne, when you search through all of the polls that came out of the convention is a look at John Kerry's numbers on the issue of handling terrorism and on whether or not he's a strong and decisive leader. On the issue of whether or not he's a strong and decisive leader, preconvention, he lost out on that issue to the president by some 17 points.

Now the gap is 10 points. And the question is, with John Kerry going on the offensive on 9/11 and potentially with some backlash to some of these negative ads, will John Kerry close that gap even further? If so, that would be a really difficult sign for the president, whose strongest numbers remain on keeping the homeland safe over the last 3 1/2 years.

MESERVE: Of course, the big wild card here is whether or not there will be another terrorist attack before the November election. WATSON: That, too.

But one of the interesting things that the president and the Republicans did this week is, in response to Democratic calls to move quickly, not only did the president say -- a week ago, rather -- that I may sign some of these things on executive order, but also there are almost 15 different hearings going on during this recess month in Congress. So while most of Congress is away, some Republicans and Democrats and others are being called into some hearings, maybe 15 hearings in total, on 9/11 issue. So certainly they are not being only reactive. They're also trying to be proactive the issue of figuring out how to make the homeland safer.

MESERVE: Carlos Watson, thanks a lot for joining us from California. Good to talk with you.

WATSON: Good to see you. Have a good weekend.

MESERVE: You, too.

And you can turn to Carlos' online column for the latest political news at CNN.com/Carlos.

A movie with buzz based on a real mystery.

(BEGIN VIDEO CLIP, "OPEN WATER")

BLANCHARD RYAN, ACTRESS: Daniel, where's the boat?

TRAVIS: That's a good question. I guess it's one of those.

(END VIDEO CLIP)

MESERVE: What do divers say about the film "Open Water"? An inside look at this adventure sport just ahead.

(COMMERCIAL BREAK)

MESERVE: A new movie about ocean diving and its dangers is opening in selected theaters today. "Open Water" tells the story of a young married couple stranded in the middle of the ocean.

CNN's Brian Todd joins us with a look at the film and some of the questions it raises, too.

(CROSSTALK)

BRIAN TODD, CNN CORRESPONDENT: Lots of questions, Jeanne.

There is a lot of buzz around this movie. It was the subject of a bidding war at the Sundance Film Festival this year. It is based on a true story. But for divers and instructors, it does create a debate on where fiction ends and reality begins.

(BEGIN VIDEOTAPE)

TODD (voice-over): The scenes are spectacular.

(BEGIN VIDEO CLIP, "OPEN WATER")

RYAN: Oh, God!

TRAVIS: They're gone. They're gone.

(END VIDEO CLIP)

TODD: The story, captivating.

(BEGIN VIDEO CLIP, "OPEN WATER")

RYAN: Look around us. We are stuck in the middle of the ocean with nobody!

(END VIDEO CLIP)

TODD: The movie "Open Water" is based on the true story in 1988 of a couple who were stranded off Australia's Great Barrier Reef when their diving boat mistakenly left them behind. The film has gotten positive reviews. And part of the attraction is its mystery. The couple was never found. And after various clues were discovered, there's been unproven speculation that they might have staged their disappearance.

(BEGIN VIDEO CLIP, "OPEN WATER")

RYAN: Did you get us lost?

TRAVIS: No.

(END VIDEO CLIP)

TODD: But after the buzz, does "Open Water" hold water with divers? We spoke to officials at dive training schools and to Joe Schittone, a Marine ecologist with the National Oceanic and Atmospheric Administration, certified diving instructor and co-owner of a Louisiana dive shop where he say he once dealt with the couple who later went missing.

JOE SCHITTONE, DIVING INSTRUCTOR: They were not terribly experienced but they were not rookies.

TODD: Schittone and other diving instructors say this sport is incredibly safe. The Divers Alert Network says of the two million to three million people estimated to dive in a given year around the world, less than 100 fatalities are reported. As for cases of divers being left behind:

SCHITTONE: That is an exceedingly rare event. Almost never occurs, fortunately.,

TODD: Schittone and other diving instructors say there are supposed to be, and often are, extensive procedures to keep track of divers. SCHITTONE: Do they have follow safety procedures? Do they safety equipment on board? Be comfortable with your dive operation. Make sure that they know you're on board. Don't be a wallflower.

TODD: But the system isn't foolproof. And instructors say if you're stranded, immediately drop your weight belt or extra items like cameras, keep your mask, snorkel and fins, but don't swim unless you see land or a platform. You'll only exhaust yourself. And although it's not required, it helps to a so-called safety sausage, a bright inflatable tube that sticks several feet out of the water.

SCHITTONE: So it provides a highly visible target for a boat or a land-based operation to see a diver in the water.

TODD: Predictably, sharks are prominent characters in "Open Water." And the filmmakers make no secret of the fact that they purposely attracted sharks by throwing bait into the water before shooting scenes.

UNIDENTIFIED MALE: This is how you make a movie.

UNIDENTIFIED FEMALE: Absolutely. We were controlling their behavior.

TODD: Experts say sharks that are not accustomed to being fed stay away from divers.

SCHITTONE: It's a very fortunate thing to be able to see sharks in their natural habitat. They are very skittish. They skedaddle. They leave the scene when divers enter the water.

(END VIDEOTAPE)

TODD: The bottom line, one expert tells us, making sure all the divers are back on the boat is the No. 2 priority on these excursions. No. 1, making sure the boat doesn't sink -- Jeanne.

(LAUGHTER)

(CROSSTALK)

MESERVE: Brian, what do people in the dive industry say? Do they think the movie is going to drive people away from the sport?

TODD: Interesting enough, a lot of them believe it will actually draw people to the sport, because the people who like adventure sports will come to diving. The people who are afraid of this movie and afraid of the water wouldn't go near the sport anyway.

MESERVE: Now, you mentioned in the piece that some people think this couple may have staged their disappearance.

TODD: Right.

MESERVE: If they didn't and they died, what do experts think they died of? TODD: Well, a range of possibilities. It could be hypothermia, even though they believe they had wet suits on. It could have been that they died of exhaustion.

Despite the experts' rhetoric about sharks, there was one tiger shark expert quoted as saying that tiger sharks are very aggressive. They could have stalked these people in the water, circled them and then gotten them -- so really a range of possibilities there.

MESERVE: OK, Brian, thanks so much. Enjoy the movie.

TODD: Thanks.

MESERVE: And results of our Web question of the day ahead. Plus, no fear. A daring stunt at this year's X Games makes our picture of the day.

(COMMERCIAL BREAK)

MESERVE: And here are the results of our Web question of the day. Will the job market be a major factor in deciding which candidate you pick for president? Fifty-five percent of you say yes; 45 percent say no. Remember, this is not a scientific poll.

Our picture of the day is a death-defying feat. This is a look at a motorcycle stunt from the X Games, an extreme sports championship that is celebrating its 10th anniversary. Watch this. The bike goes up on the ramp. The rider goes off the bike, does a complete turn, lands back on the bike, and ends his trip safe and sound. As they always say, do not try this at home or anywhere else.

A reminder, you can catch WOLF BLITZER REPORTS weekday at 5:00 Eastern. And tune into "LATE EDITION," the last word in Sunday talk. Among Wolf's guests, National Security Adviser Condoleezza Rice and former New York Mayor Rudy Giuliani. That's Sunday at noon Eastern.

"LOU DOBBS TONIGHT" starts right now.

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 August 6, 2004 - 17:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JEANNE MESERVE, CNN ANCHOR: Happening now, can they rekindle their forbidden romance? Mary Kay Letourneau, a registered sex offender, learns if she can see her ex-student.
Also happening now, the music industry mourns a well-known singer.

And new low for 2004, why is the stock market sliding?

Standby for hard news on WOLF BLITZER REPORTS.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): Terror ties. Do the alerts and the arrests lead back to a familiar foe?

Urban warfare. A rebel militia battles U.S. troops and pays a terrible price.

Job jolt. Shockingly poor payroll growth, is the economy on the skids?

"Open Water". As moviegoers get summertime chills, we'll go behind the story of divers left behind.

(BEGIN VIDEOTAPE)

ANNOUNCER: This is WOLF BLITZER REPORTS for Friday, August 6, 2004.

MESERVE: Hello. I'm Jeanne Meserve in Washington. Wolf Blitzer is off today.

We begin with all-out warfare in the streets of a holy city and a bloody uprising that's spread to the Iraqi capital. There may be hundreds dead. We have dramatic pictures from behind the insurgents' line.

CNN's Matthew Chance reports from Baghdad.

(BEGIN VIDEOTAPE)

MATTHEW CHANCE, CNN SR. INTERNATIONAL CORRESPONDENT (voice-over): The holy city of Najaf, now the scene of pitched battles and bloodshed. Fighters of the Mehdi Army, loyal to the firebrand cleric Muqtada al-Sadr, have taken positions in the heart of the ancient city. U.S. Marines are fighting street-to-street, near the shrine of Imam Ali, one of the holiest sites in Shia Islam.

And casualties are high. The Mehdi Army denies it, but the Marines say they've killed 300 of the militia in just two days.

LT. GARY JOHNSTON, U.S. MARINE CORPS: There is no end state or end -- really, end time that we'll place on this one. I think at this point in time, it will be effects based when in fact we believe that those attacking Iraqis and Iraqi civilians are no longer capable of doing that.

And so we'll continue to press, continue to address these anti- Iraqi forces until we feel that they're no longer capable of these type of attacks in the future.

CHANCE: Fighting has flared elsewhere, too. Overnight, violence engulfed the mainly Shiite Sadr City district of Baghdad. Health ministry officials say at least 20 Iraqis have been killed in the clashes. Amara and Basra in the south have also seen confrontations involving the Mehdi Army and British forces.

Now Muqtada al-Sadr is again the center of growing Shia unrest. U.S. officials say his militia overtly violated a cease-fire agreed in June. His own spokesman, Sheikh Mahmoud al-Soudani, insists they're ready for a truce.

"Najaf has strong relations with other cities," he warns. "The tension in Najaf will be reflected there. But our people are willing to establish stability," he says.

It's what the Iraqi government and the U.S.-led coalition say they want, too. A general uprising among Iraq's majority Shia could spell disaster.

(on camera): To make matters worse, one powerful voice of moderation among Iraqi Shias has left the country. Grand Ayatollah Ali al-Sistani is in London being treated for a suspected heart condition. His advisers insist he will return. But in his absence there are concerns that those with a more violent agenda will come to the fore.

Matthew Chance, CNN, Baghdad.

(END VIDEOTAPE)

MESERVE: Authorities half a world apart have captured key al Qaeda suspects and investigators are peeling away a plot layer by layer. But the more they reveal, the more alarming it becomes, and Americans left on alert wondering what to expect.

To step back and assess what we know and what we have yet to learn about the terror threat we're facing, let's turn to our justice correspondent, Kelli Arena -- Kelli.

KELLI ARENA, CNN JUSTICE CORRESPONDENT: Jeanne, investigators believe that they are making some progress. They're chasing down thousands of leads as they try to figure out if al Qaeda is ready to strike.

(COMMERCIAL BREAK)

ARENA (voice-over): Security remains tight and in some cases it's getting tighter. In the nation's capital, for example, police are now inspecting some cars and trucks in nearby Virginia and Maryland before they enter the District.

It all follows warnings that financial buildings are being targeted by al Qaeda. The president, speaking to reporters, defended his decision to alert the public to the threat.

GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Imagine what would happen if we didn't share that information with the people in those buildings and something were to happen, then what would you write?

ARENA: Arrests in Pakistan led investigators to very detailed surveillance notes of potential targets found in computers and documents. While most of the surveillance was done before September 11 attacks, officials say some of the information was updated as recently as January.

BUSH: The threats we're dealing with are real. And therefore we must do everything we can to ferret out the truth and follow leads.

ARENA: Operations in Pakistan and Britain also resulted in the nabbing of two alleged senior members of al Qaeda. One, Esa al-Hindi, has been identified as the man who was sent to the U.S. in early 2001 by Osama bin Laden to personally case potential targets, according to sources.

The other, Muhammad Naeem Noor Khan, is said to have recently contacted individuals in the United States. Interrogations of both continue.

Officials say their arrests generated thousands of leads in the United States, including a series of phone numbers and e-mail addresses. The main objective, to track down any al Qaeda operatives in the U.S.

GEORGE BAURIES, FMR. FBI COUNTERTERROR AGENT: For every thousand leads that go out, you're probably going to get a good percentage that come back and warrant much deeper investigation.

ARENA: In the midst of all of this, sources say the level of chatter or intercepted communications between suspected terrorists has dropped off. It could mean nothing. But that's exactly what happened before the September 11 attacks.

BAURIES: What it indicates is that the individuals associated with al Qaeda have potentially been given information or orders on how to execute missions.

(END VIDEOTAPE)

ARENA: Still, officials offer no definitive evidence that al Qaeda is ready to execute an attack, no evidence on exactly when this could occur, and no evidence on the method that terrorists would use -- Jeanne.

MESERVE: Kelli, going back to chatter for just a minute, do authorities think that another possible explanation is that members of al Qaeda know that officials have this treasure trove of information and may be trying to find them? Could they just be keeping a low profile?

ARENA: That's always an option. And as you know, Jeanne, the level of chatter goes up and down quite a bit. But whenever it does drop off after they have gotten a flurry, it is a cause for concern.

MESERVE: Kelli Arena, thank you.

A man accused of trying raise money for terrorists on the World Wide Web was denied bail in a British court, but he's wanted in Connecticut.

Let's go live to CNN's Alina Cho. And Alina, what's the story?

ALINA CHO, CNN CORRESPONDENT: Well, Jeanne, some of the Web sites were based here in Connecticut which is why the arrest warrant was issued here. 30-year-old Babar Ahmad is facing a host of charges, he is being held without bail in London.

(COMMERCIAL BREAK)

CHO (voice-over): By police escort, Babar Ahmad arrived at a London court for an extradition hearing Friday. The British citizen is charged with operating several U.S.-based Web sites that asked for donations and supplies for terrorists groups.

KEVIN O'CONNOR, U.S. ATTORNEY: The main purpose of all of these sites was to solicit financial support for terrorist organizations including the Taliban and the Chechen Mujahedeen.

CHO: The criminal complaint said one of the Web sites in question published Osama bin Laden's 1996 declaration of war against Americans. Authorities say they also recovered a floppy disc that contained classified blueprints, including planned movements of a U.S. battleship group conducting operations against al Qaeda and enforcing sanctions against Iraq.

O'CONNOR: Most important, the documents specifically described the battle groups' vulnerability to terrorist attack.

CHO: The complaint detailed alleged e-mail exchanges between Ahmad and a then-active duty American sailor. CNN has learned the unidentified sailor has knowledge of classified ship movement plans.

JEFFREY ROBINSON, MONEY LAUNDERING & FRAUD EXPERT: Terrorist group, al Qaeda or any other, is a business. Their product is blowing something up. Like any business it needs cash flow and reinvestment. You've got to keep the money going through the business to keep it alive .

CHO: British authorities arrested Ahmad Thursday night following a raid on his London home. He is allegedly linked to a Chechen group that took hundreds of hostages at a Moscow movie theater two years ago. In court Friday, Ahmad said he was confused by the charges.

MUDDASSAR ARANI, DEFENSE ATTORNEY: It appears that anybody who is arrested in this country in relation to terrorism offenses and -- there is not sufficient evidence to prosecute those individuals, that those individuals' extraditions are being (UNINTELLIGIBLE) by America.

(END VIDEOTAPE)

CHO: Ahmad told the judge he would not voluntarily go to the United States. The U.S. attorney here in New Haven admitted it could take years to extradite him.

Meanwhile, it is important to note that the U.S.-based Internet service providers are not under investigation, but, Jeanne, the U.S. attorney here says that at least two U.S. citizens donated money on these Web sites. And they are part of an ongoing investigation -- Jeanne.

MESERVE: Alina, this investigation had been going on for some time and yet they just made this arrest. Are authorities saying anything about whether this has a link to the other recent arrests in the U.K. or in Pakistan?

CHO: They are not at all. In fact, Jeanne, when asked this question, they would only say that this investigation has been ongoing for more than two years and that it was the result of what they call a post-9/11 tip -- Jeanne?

MESERVE: Alina Cho, thank you so much.

Great expectations, but poor jobs numbers. The impact on you and the upcoming presidential election.

Plus, a new development in the story of Mary Kay Letourneau. The registered sex offender learns if she can see her ex-student.

Also ahead...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I just want help them, any doctors -- I know there's some doctors out there.

(END VIDEO CLIP)

MESERVE: Life after the battle and after severe injury: The harsh realities for one wounded soldier and his family.

And this.. (BEGIN VIDEO CLIP)

BLANCHARD RYAN, ACTRESS, "OPEN WATER": My God, there were boats all around us and you refused. Now look -- look around us. We're stuck in the middle of the ocean with nobody!

(END VIDEO CLIP)

MESERVE: Just when you thought it was safe to go back into the water, a new ocean thriller based on a true story. A reality check ahead.

(COMMERCIAL BREAK)

MESERVE: The federal government announced the monthly jobs report figures today, and they are not good news for the Bush administration. The economy added only 32,000 jobs last month. That's far fewer than the 200,000-plus jobs economists had forecast.

CNN's Kathleen Hays has that story.

(BEGIN VIDEOTAPE)

KATHLEEN HAYS, CNN CORRESPONDENT (voice-over): Shock, disbelief, and a swift sell-off in the stock market: The reaction to a stunningly small increase in new jobs in July. Just 32,000 when an increase of more than 200, 000 was widely expected.

PHIL FLYNN, ALARON TRADING: It was unbelievable. It was like somebody ran a truck through here.

JARED BERNSTEIN, ECONOMIC POLICY INSTITUTE: Well, if June was a disappointment, July is downright depressing.

HAYS: The job market, which looked bright last spring, has suddenly run out of steam. As for the past four months, the jobs increases have been getting smaller.

JAMES WHITE, EXCELSIOR CAPITAL MANAGEMENT: It's going to be pretty hard to put a smiley face on this one.

HAYS: The president's top advisors insisted the economy is moving in the right direction.

JOHN SNOW, TREASURY SECRETARY: As we've seen for the last year, 11 straight months of job creation, the highest GDP growth rates in 20 years. So, the American economy remains strong and sound and on a good path.

HAYS: The unemployment rate, which is calculated separately from the numbers on jobs creation, inched down to 5.5 percent.

ELAINE CHAO, LABOR SECRETARY: This is lower than the average unemployment rate in the decade of the 1970s, 1980s, and 1990s.

HAYS: But even the Labor Department says the number of new jobs is a better barometer of where the economy is heading. And with hourly wages growing less than two percent over the past year and soaring energy prices eating away at people's paychecks, some speculate the lack of jobs may be George Bush's Achilles' Heel come November.

BERNSTEIN: With these wage trends, with these price trends, with these oil trends, with these job trends, this makes it a tough argument for the incumbent.

(END VIDEOTAPE)

MESERVE: That was Kathleen Hays in New York.

It was a brutal day on Wall Street, reacting to that surprisingly weak jobs report, as well as record-high oil prices. Investors sent stocks tumbling. The Dow Jones Industrial Average was down about one- and-a-half percent, while the Nasdaq was off nearly two-and-a-half percent. All of the major indexes closed at new lows for the year.

Here's your turn to weigh in on this story. Our Web question of the day is this: Will the job market be a major factor in deciding which candidate you pick for president? You can vote right now at cnn.com/wolf. We'll have the results later in this broadcast.

And while you're there, we'd like to hear directly from you. Sent us your comments anytime, and we might read some of them on the air at the end of this program each day.

Unemployment was one topic today on the presidential campaign trail. Let's take a quick look.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): John Kerry and John Edwards visited a farm outside Kansas City to promote alternative fuels made from corn, soybeans, and other crops. Kerry proposed spending billions of dollars over the next decade to develop alternatives to foreign oil and to help automakers to produce more fuel-efficient cars. He also brought up today's report showing weaker than expected job growth.

SEN. JOHN KERRY (D-MA), PRESIDENTIAL CANDIDATE: My friends, in the last few days, you've heard people in positions of leadership on the other side saying America has turned the corner. Well, it must have been a U-turn.

MESERVE: Campaigning in New Hampshire today, President Bush had a distinctly different view of the jobs statistics.

BUSH: In the last year, we have added about 1.5 million new jobs. The unemployment rate is down to 5.5%.

MESERVE: Earlier, the president spoke to a minority journalist conference when he was briefly interrupted by a heckler.

UNIDENTIFIED MALE: Shame on you for (UNINTELLIGIBLE) and deceiving the public. Shame on you. BUSH: I think it's very important...

MESERVE: The president continued his speech without responding, and the heckler was escorted out of the room.

Vice President Dick Cheney campaigned in East Grand Forks, Minnesota. He spoke for about 45 minutes to hundreds of people packed into a sporting goods store.

(END VIDEOTAPE)

MESERVE: And Illinois Republicans finally may have a Senate candidate. Chicago newspapers are reporting that conservative talk show host Alan Keyes has agreed to run, even though he lives in Maryland. An official announcement is expected Sunday.

The original GOP candidate withdrew because of a sex scandal. Keyes would run against Democrat Barack Obama for the seat being vacated by Republican Senator Peter Fitzgerald.

This programming note: President George W. Bush and First Lady Laura Bush will give an exclusive joint interview to LARRY KING LIVE Thursday. That's 9:00 p.m. Eastern, 6:00 Pacific.

Police say she committed a violent double murder with her girlfriend with the evidence inscribed on her body.

(BEGIN VIDEO CLIP)

LT. COL. BRUCE JORDAN, FAYETTE COUNTY SHERIFF'S OFFICE: Holly had written four notes on her arm of things she wanted to remember to do. The first word was kill.

(END VIDEO CLIP)

MESERVE: The victims? Her own grandparents. Now police say they know the motive.

A new development in the story of a teacher convicted of statutory rape. Mary Kay Letourneau learns if she can see her ex- student.

And...

(BEGIN VIDEO CLIP)

RICK JAMES, FUNK MUSICIAN: Somebody scream.

(END VIDEO CLIP)

MESERVE: A notable passing: A musical icon of the '80s -- more on the life and death of singer Rick James.

(COMMERCIAL BREAK)

MESERVE: There's a group often overlooked when we talk about fighting in Iraq: The U.S. military personnel who have been injured. CNN Pentagon correspondent Barbara Starr has been looking into their stories. Today, we follow-up on a soldier from Virginia who was wounded last year.

(BEGIN VIDEOTAPE)

JANE ARRAF, CNN CORRESPONDENT: Witnesses clearly say one American soldier was shot in the head this morning while on patrol in Baghdad.

BARBARA STARR, CNN CORRESPONDENT (voice-over): In Manassas, Virginia, an army officer gave Jay Briseno's father the news...

JOSEPH BRISENO, FATHER OF WOUNDED SOLDIER: I asked him if Jay was OK. And he said, as we speak, he was in the operating room during that time.

STARR: Jay wanted to join the FBI someday. Now, 13 months later, a family in heartbreak. Jay is paralyzed from the neck down, blind and suffering massive brain injury. He is 21 years old. His parents now telling his story, but protecting his privacy, asking his face not be shown.

Joseph Briseno was determined to bring his wounded son home. But then a fight to get the Department of Veterans Affairs to pay $13,000 for a special bed.

BRISENO: One day I get this phone call from the Army, thank you, Mr. John Radke. Then, he said he offer us help.

STARR: John Radke is part of a new Army effort to ensure wounded soldiers get the help they need for years to come, long after they take off the uniform. Radke went to the Briseno's house where Joseph took him down to the basement.

JOHN RADKE, CHIEF ARMY RETIREMENT SERVICES: Where he had his son staying and talked about a bed that -- his hope was that he would get a better bed that his son could lay in.

STARR: Working with Veterans Affairs which overseas Jay's care, Radke got the bed. The army will now track Iraq war vets for years.

RADKE: We do not want them to become forgotten.

STARR: For Jay and his parents, the war may never end.

BRISENO: I just want help from any doctors. I know there's doctors out there.

STARR: Barbara Starr, CNN, the Pentagon.

(END VIDEOTAPE)

MESERVE: A dramatic development in the Mary Kay Letourneau case. A judge rules on whether she can be reunited with the former student with whom she had two children. A doctor may be under scrutiny in the ongoing investigation into the 2001 anthrax investigation.

Also...

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Other people go on vacations and spend their days just laying around. This is a story we're going to be telling for the rest of our lives.

(END VIDEO CLIP)

MESERVE: There's a new movie about a sea diver's worst nightmare. Could it happen to you?

(COMMERCIAL BREAK

MESERVE: Welcome back. A developing story out of Washington State, Mary Kay Letourneau, a registered sex offender, learns if she can see her ex-student. We'll have a live report.

But first, a quick check of stories now in the news. Law enforcement sources have identified a doctor with a background in bioterror response planning as the common thread to three properties searched yesterday. Residences in New York and New Jersey were searched in connection with the investigation into the deadly anthrax- laced letters of 2001.

Attorneys representing Private First Class Lynndie England are asking for permission to call senior military officers to testify on the Abu Ghraib prison abuse scandal. The judge presiding over England's preliminary hearing says she'll decide tomorrow whether Lieutenant General Ricardo Sanchez, the former commander of U.S. troops in Iraq and others will be called.

A Walt Disney World employee acquitted of fondling a teenage girl while dressed as Tigger the Tiger has been reinstated to his job. A union official says the worker was given other employment options, but opted to continue playing costumed characters.

1980's pop music icon Rick James has been found dead in his Hollywood home. James helped pioneer of the punk, funk style of that decade. And his "Signature Street Songs" album sold more than 3 million copies. There is no official on the cause of death. Rick James was 56-years-old.

Keeping you informed CNN, the most trusted name in news.

There is a new development in the case of Mary Kay Letourneau and her young lover Vili Fualaau. Letourneau was recently released from prison after serving 7 years for rape. CNN's Kimberly Osias joins us by phone from Seattle. Kimberly, fill us in.

KIMBERLY OSIAS, CNN CORRESPONDENT: Hell, Jane. Well, Mary Kay Letourneau has done her time, more than seven years, in fact, behind bars convicted of raping then sixth grader Vili Fualaau. Now, the same judge who sentenced the former teacher, says the two can be together again, without violating the law.

At 21, Vili Fualaau is still working on his GED, and was treated for deep depression while Letourneau was behind bars. But he says his feelings about her haven't changed. He says he still loves her. * feelings about her hasn't changed and he still loves her.

The court ruling today from King County Superior Judge Linda Lau lifted the lifetime no-contact ban between the former teacher and her former student, this, of course, at Fualaau's request through his attorney. The district attorney didn't challenge his motion since, at 21, Fualaau is now a consenting adult. The Corrections Department also declined to object.

Her former jail companions say Letourneau is interested in a future with her former student and may seek custody of their two daughters, Alexis and Audrey, now 5 and 7. No word yet as to when the couple will get together -- Jeanne.

MESERVE: Kimberly Osias, thank you for the latest.

When the judge lifted the order barring contact between Letourneau and Vili Fualaau, she in effect gave the star-crossed lovers legal permission to be together.

With me now from Miami Beach is former federal prosecutor Kendall Coffey.

Mr. Coffey, did the judge have any other option here? Wasn't this sort of the common sense thing to do, given the fact they're both now adults?

KENDALL COFFEY, ATTORNEY: Well, that's exactly it, Jeanne. No other option. It couldn't have made the judge happy. It certainly couldn't have made the prosecutor happy. But he's 21. He asked for it. He got it. They'll be together again, to be sure.

MESERVE: What about the children? There are these two children. Apparently, Vili Fualaau's parents have been looking out for them. If these two stay together, is there a custody issue at stake here?

COFFEY: Certainly, this is an issue that can get looked at legally in a couple different ways. Obviously, if in some fashion, Mary Kay Letourneau petitions to have a greater degree of custody, then a lot of these issues are going to get replayed again. Meanwhile, if there's any abuse or harm to the children, with or without either of the parents getting involved, obviously, child welfare agencies can step in.

But, frankly, up to now, there's no evidence that Mary Kay has done anything abusive to any of her own children. As a teacher, as a child molester, that's a different story.

MESERVE: Well, she is a registered sex offender. How does that come into play here. Can she have contact with her own children, given that fact?

COFFEY: The court addressed that issue during her appeal and said very specifically, whatever she's done, there's no evidence that she is a pedophile and while we're going to keep her away from other minor children, she can have access to her own children and has regular -- has had regular visitation during the course of her time in jail.

MESERVE: OK, here's a what-if question for you. What if the roles had been reversed? What if the teacher had been a male, having an affair with a younger female student? Do you think that the court would have ruled the same way?

COFFEY: Well, apparently, there is a case in Washington involving that role reversal. A male teacher served his time, got out, and wound up after some legal hurdles with getting reunited with the victim.

The frustrating thing about all this, Jeanne, is, it's a perverse way of saying, crime and pay. She molested this child. Now, with his life turned upside down, she may be getting back to him. If this were a bank robber who served seven years and walked in and was able to then enjoy his $5 million, everyone would be outraged. Somehow this is playing out in a way that's very frustrating.

But everyone's hands are tied and it's up to these two people to see what happens next with their lives.

MESERVE: Is this precedent-setting or this really -- this case just an oddity?

COFFEY: Well, I'm happy to say I think this is freaky rather than trendy. But the reality is that it does point to some limitations that the criminal justice system is going to have after somebody serves their sentence. As the appeals court said when they liked at it, the rest of this chapter, if there needs to be intervention, is going to come from the child welfare agencies or perhaps from the family courts.

MESERVE: Does the law have to be reevaluated in this case, do you think?

COFFEY: I don't think so. I think that it's so aberrational that there isn't a need to go and do any kind of significant reform. What we would hope would happen is that the child welfare agencies is going to keep a very close look on these two children. And, frankly, we have to wonder if whether there was a failure after this broke out, while in fact the young child victim was still young, still impressionable, could have had his life turned around, whether there was enough intervention at that time.

Maybe there was. Maybe there wasn't. But it's certainly strange and tragic in some ways the way this is playing out now that he's 21.

MESERVE: We've addressed some of the limitations on registered sex offenders. What are some of the rights a registered sex offender would have?

COFFEY: Well, at some point, they can petition the court to release them from the requirement of registering as a sex offender if under the laws of Washington it's seen that the purposes are not served.

In the meantime, everywhere that Mary Kay goes, with or without her child victim by her side, she will have to register with the sheriff's office, give some specific information. The media, public, will be able to follow her around in effect. And if she doesn't do that, it's a crime and ultimately she could be charged for failing to register and wind up back in jail.

MESERVE: But would it put her back in jail? Are the penalties that severe?

COFFEY: Well, it depends on the crime. It depends on the extent of the violation. But the reality is that I think that's one part of the law she's going to adhere to. What happens next is anyone's guess. Is there going to be another book attempt, made-for-TV movie? We should stay posted.

MESERVE: If she wants to have this status reviewed, and I can imagine she would, how long a period of time has to pass?

COFFEY: Well, she can actually proceed sooner rather than later on, rather than wait for the full term of the requirement of sexual offense registration.

The key thing is she would have to show that she is no way any kind of a threat of being a predator again. And, frankly, what is so strange about this case is, the court reviewed it. And she didn't have any of the indicia of a pedophile. This was simply sort of this one-time freakish, obsessive, ultimately criminal transaction that as we know continues until this day. But there's no real evidence from any source that she's a harm or a threat to anyone else.

MESERVE: OK, Kendall Coffey, thanks so much for your insight on this. Appreciate it.

COFFEY: Thanks, Jeanne.

MESERVE: Police describe her as stone-cold and a manipulator. She is suspected of orchestrating the murders of her grandparents with the help of her girlfriend. And she's just 15 years old.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): Holly Harvey and her 16-year-old alleged lesbian lover, Sandy Ketchum, wept during their first court appearance facing charges many find hard to fathom. Police say the pair stabbed Harvey's grandparents to death in their suburban Atlanta home Monday, stealing jewelry and a truck, then fleeing to the coast.

LT. COL. BRUCE JORDAN, FAYETTE COUNTY SHERIFF'S DEPARTMENT: The motive was to gain freedom and to be able to stay together forever. MESERVE: Relatives say Harvey's mother is in prison on drug charges and the teen had been living with her grandparents. Police say the elderly couple had ordered Harvey to stop seeing Ketchum and to stop using drugs. Harvey's uncle, the victim's son, says his father had alerted him there was trouble.

UNIDENTIFIED MALE: We were talking about things at work and he came up and said that she had threatened to kill him. And I could see a little concern in his face.

MESERVE: The girls were arrested Tuesday on Georgia's Tybee Island, where 22-year-old Brian Clayton had befriended them, not knowing of the killings.

BRIAN CLAYTON, BEFRIENDED SUSPECTS: They didn't have nowhere to go. And I figured, since we just moved here, my mom might be nice enough to let them stay. They had jewelry and they were trying to get me to go pawn it. And I was like, why do you want to pawn your grandma's jewelry?

MESERVE: Police describe Harvey as callous and headstrong as she was arrested. They say they found bloodstained knives and clothes and, more chillingly, a to-do list they Harvey had inscribed on herself.

JORDAN: Holly had written four notes on her arm of things she wanted to remember to do. The first word was kill.

(END VIDEOTAPE)

MESERVE: Police say the other words Harvey wrote on her arm were keys, money and jewelry. She and Ketchum are being held in separate facilities. Both are on suicide watch. A preliminary hearing is scheduled for August 31.

Also in our justice report, police in central Florida say a mass murderer may be on the loose. The bodies of four men and two women were found in a house in an Orlando suburb. Police aren't confirming how they died, but say they believe the deaths were not accidental or suicide.

Down on the farm. Kerry curries favor in the heartland, but who will carry these key states? Carlos Watson will have "The Inside Edge."

Also ahead:

(BEGIN VIDEO CLIP, "OPEN WATER")

DANIEL TRAVIS, ACTOR: Do you honestly, seriously, honey, do you honestly think that we got left behind because we were late?

(END VIDEO CLIP)

MESERVE: Alone in the ocean with sharks for company. It happened. But could it happen to you? And the X Games. The trick of the day is our picture of the day.

But, first, a quick look at some other news making headlines around the world.

(BEGIN VIDEOTAPE)

MESERVE (voice-over): Israel has reopened the Rafah border crossing, the only crossing between Gaza and Egypt. When Israel closed the crossing for security reasons three weeks ago, thousands of Palestinians were stranded away from home.

Cemetery vandalized. For the second time in three weeks, Jewish graves in New Zealand have been desecrated. Almost 100 headstones were pulled out and smashed near Wellington, and the chapel there was burned down.

Plague of locusts. West Africa is fighting its worst locust invasion in more than a decade. The swarms can devastate entire fields in minutes and there are fears of food shortages.

Somber anniversary. Thousands gathered in Hiroshima, Japan, to mark the 59th anniversary of the first atomic bomb attack. The mayor of Hiroshima called for a global ban on nuclear arms by 2020.

And that's our look around the world.

(END VIDEOTAPE)

(COMMERCIAL BREAK)

MESERVE: The Republican and Democratic presidential campaigns are fighting it out down in the trenches now. Most Americans have already decide who they plan to support this November. So both parties are struggling to find and convince every uncommitted voter out there.

Here now with "The Inside Edge" is CNN political analyst Carlos Watson.

He's in Mountain View, California.

Hey, Carlos. Good to see you.

CARLOS WATSON, CNN POLITICAL ANALYST: Hey, Jeanne. How are you?

MESERVE: Let me ask you first about this bounce. It didn't really materialize. But the Kerry campaign doesn't seem very concerned. What's your assessment of the race right now?

WATSON: Not super concerned.

With a little over 90 days left, they still seem to feel good. Certainly, the money is there, not only the public financing, which each campaign will get, but also money from these 527s in support of their effort. I think, on the message, that's interesting, too, Jeanne. What I'm seeing is a much more aggressive Kerry campaign postconvention.

You see them talking about issues you never would have seen Democrats talk about in past, namely issues like the environment and even energy. Today, Kerry floated a new $30 billion proposal on energy independence. And years ago, Democrats would have been afraid to have done something like that. They would have been thought of as tree-huggers or pessimists. And so I think that's interesting.

And last but not least, in some of these individual state polls, you're starting to see some progress for John Kerry. You're seeing it in the far West. You're seeing it in New England. And maybe the place that interests me most, though, nowadays is the Southwest. States like Colorado, Nevada, and Arizona, all states that the president won in 2000, John Kerry is close or, in one case, according to a poll, actually is ahead. So interesting news in the Southwest for John Kerry.

MESERVE: One of the things the Kerry campaign very much wanted to talk about today, the new jobs numbers, which were disappointing. How does the Bush campaign deal with that?

WATSON: It's tough for the president, because, certainly, three or four months ago, they thought they were finally starting to get their sea legs. They had created about 1.5 million jobs over the last nine months and it was something that they were talking about a lot. I think the president will ultimately have to do a couple of things, which is to continue to point out that while the unemployment rate is not what he wants it to be, it certainly is not 9 percent or 10 percent, which we saw in past recessions. It's about 5.5 percent right now.

But also I think you'll see the president try and shift the conversation not only using, if you will, the campaign, but also in many ways using the Congress. Next month, when Congress comes back in session, expect the Congress to start raising additional values issues, if you will, issues like gay marriage, issues like flag burning, as well as a more central economic issue, which is tax cuts. So I don't expect the president to back down on the economic issue, although this is not news that certainly he had hoped for.

MESERVE: You had previously predicted that we would see mudslinging in this campaign. And there's an add on the air now from some Vietnam veterans against John Kerry. Is this just the beginning?

WATSON: It is, Jeanne.

And just like everything in this campaign, 2004 has brought us a lot of change, as we have seen more money spent. This will probably be the first $1 billion presidential campaign. We have seen the Internet play a major role. We have movies and books play a major role. And I think, additionally, we will start to see more mudslinging. It will happen earlier in a lot of different ways.

I just mentioned to you that, when the Congress comes back in session in September, there will be some heated fights. I think part of what you'll see there will ultimately be called mudslinging. I think you'll see more in terms of TV ads. But I think you will also start to see more of it in terms of the grassroots efforts.

So, as people make phone calls, you'll actually start to see what will be considered mudslinging, certainly some of the radio ads and, last but not least, good old-fashioned e-mail. We'll see literally tens of millions of e-mails between now and November 2, which can be characterized as no other way other than mudslinging.

MESERVE: And now it looks like Alan Keyes may be the Republican candidate for the Senate race in Illinois against Barack Obama. Keyes doesn't even live in the state of Illinois. He lives in Maryland. What do you make of this race?

(LAUGHTER)

WATSON: To be fair, with all due respect to Alan Keyes, who is a former ambassador and a trained economist and well regarded in some circles, this is a fairly desperate move.

It's clear that not only is Obama likely to win, but that he's considered such a superstar, that they're not sacrificing even, if you will, a hometown hero in the case of the Illinois Republicans.

But, Jeanne, what I find more interesting is that you're starting to hear more and more about state races. Remember, for the last several months, all we've heard about is the presidential campaign. But now in Missouri, we had a sitting governor who lost the nomination for his party's bid in a primary fight. Don't see that very often.

You're starting to see not only interesting individual state races, but also ballot initiatives, not just on gay marriage, which we saw in Missouri, but also on the minimum wage, on health care and on a variety of other issues. So start paying attention to state races. I think they could also have a reverse coattail effect on the presidential campaign.

MESERVE: The issue that's been front and center this week is terror. Is the Bush administration benefiting from that or not?

WATSON: You know, it's not clear.

One of the most interesting numbers, Jeanne, when you search through all of the polls that came out of the convention is a look at John Kerry's numbers on the issue of handling terrorism and on whether or not he's a strong and decisive leader. On the issue of whether or not he's a strong and decisive leader, preconvention, he lost out on that issue to the president by some 17 points.

Now the gap is 10 points. And the question is, with John Kerry going on the offensive on 9/11 and potentially with some backlash to some of these negative ads, will John Kerry close that gap even further? If so, that would be a really difficult sign for the president, whose strongest numbers remain on keeping the homeland safe over the last 3 1/2 years.

MESERVE: Of course, the big wild card here is whether or not there will be another terrorist attack before the November election. WATSON: That, too.

But one of the interesting things that the president and the Republicans did this week is, in response to Democratic calls to move quickly, not only did the president say -- a week ago, rather -- that I may sign some of these things on executive order, but also there are almost 15 different hearings going on during this recess month in Congress. So while most of Congress is away, some Republicans and Democrats and others are being called into some hearings, maybe 15 hearings in total, on 9/11 issue. So certainly they are not being only reactive. They're also trying to be proactive the issue of figuring out how to make the homeland safer.

MESERVE: Carlos Watson, thanks a lot for joining us from California. Good to talk with you.

WATSON: Good to see you. Have a good weekend.

MESERVE: You, too.

And you can turn to Carlos' online column for the latest political news at CNN.com/Carlos.

A movie with buzz based on a real mystery.

(BEGIN VIDEO CLIP, "OPEN WATER")

BLANCHARD RYAN, ACTRESS: Daniel, where's the boat?

TRAVIS: That's a good question. I guess it's one of those.

(END VIDEO CLIP)

MESERVE: What do divers say about the film "Open Water"? An inside look at this adventure sport just ahead.

(COMMERCIAL BREAK)

MESERVE: A new movie about ocean diving and its dangers is opening in selected theaters today. "Open Water" tells the story of a young married couple stranded in the middle of the ocean.

CNN's Brian Todd joins us with a look at the film and some of the questions it raises, too.

(CROSSTALK)

BRIAN TODD, CNN CORRESPONDENT: Lots of questions, Jeanne.

There is a lot of buzz around this movie. It was the subject of a bidding war at the Sundance Film Festival this year. It is based on a true story. But for divers and instructors, it does create a debate on where fiction ends and reality begins.

(BEGIN VIDEOTAPE)

TODD (voice-over): The scenes are spectacular.

(BEGIN VIDEO CLIP, "OPEN WATER")

RYAN: Oh, God!

TRAVIS: They're gone. They're gone.

(END VIDEO CLIP)

TODD: The story, captivating.

(BEGIN VIDEO CLIP, "OPEN WATER")

RYAN: Look around us. We are stuck in the middle of the ocean with nobody!

(END VIDEO CLIP)

TODD: The movie "Open Water" is based on the true story in 1988 of a couple who were stranded off Australia's Great Barrier Reef when their diving boat mistakenly left them behind. The film has gotten positive reviews. And part of the attraction is its mystery. The couple was never found. And after various clues were discovered, there's been unproven speculation that they might have staged their disappearance.

(BEGIN VIDEO CLIP, "OPEN WATER")

RYAN: Did you get us lost?

TRAVIS: No.

(END VIDEO CLIP)

TODD: But after the buzz, does "Open Water" hold water with divers? We spoke to officials at dive training schools and to Joe Schittone, a Marine ecologist with the National Oceanic and Atmospheric Administration, certified diving instructor and co-owner of a Louisiana dive shop where he say he once dealt with the couple who later went missing.

JOE SCHITTONE, DIVING INSTRUCTOR: They were not terribly experienced but they were not rookies.

TODD: Schittone and other diving instructors say this sport is incredibly safe. The Divers Alert Network says of the two million to three million people estimated to dive in a given year around the world, less than 100 fatalities are reported. As for cases of divers being left behind:

SCHITTONE: That is an exceedingly rare event. Almost never occurs, fortunately.,

TODD: Schittone and other diving instructors say there are supposed to be, and often are, extensive procedures to keep track of divers. SCHITTONE: Do they have follow safety procedures? Do they safety equipment on board? Be comfortable with your dive operation. Make sure that they know you're on board. Don't be a wallflower.

TODD: But the system isn't foolproof. And instructors say if you're stranded, immediately drop your weight belt or extra items like cameras, keep your mask, snorkel and fins, but don't swim unless you see land or a platform. You'll only exhaust yourself. And although it's not required, it helps to a so-called safety sausage, a bright inflatable tube that sticks several feet out of the water.

SCHITTONE: So it provides a highly visible target for a boat or a land-based operation to see a diver in the water.

TODD: Predictably, sharks are prominent characters in "Open Water." And the filmmakers make no secret of the fact that they purposely attracted sharks by throwing bait into the water before shooting scenes.

UNIDENTIFIED MALE: This is how you make a movie.

UNIDENTIFIED FEMALE: Absolutely. We were controlling their behavior.

TODD: Experts say sharks that are not accustomed to being fed stay away from divers.

SCHITTONE: It's a very fortunate thing to be able to see sharks in their natural habitat. They are very skittish. They skedaddle. They leave the scene when divers enter the water.

(END VIDEOTAPE)

TODD: The bottom line, one expert tells us, making sure all the divers are back on the boat is the No. 2 priority on these excursions. No. 1, making sure the boat doesn't sink -- Jeanne.

(LAUGHTER)

(CROSSTALK)

MESERVE: Brian, what do people in the dive industry say? Do they think the movie is going to drive people away from the sport?

TODD: Interesting enough, a lot of them believe it will actually draw people to the sport, because the people who like adventure sports will come to diving. The people who are afraid of this movie and afraid of the water wouldn't go near the sport anyway.

MESERVE: Now, you mentioned in the piece that some people think this couple may have staged their disappearance.

TODD: Right.

MESERVE: If they didn't and they died, what do experts think they died of? TODD: Well, a range of possibilities. It could be hypothermia, even though they believe they had wet suits on. It could have been that they died of exhaustion.

Despite the experts' rhetoric about sharks, there was one tiger shark expert quoted as saying that tiger sharks are very aggressive. They could have stalked these people in the water, circled them and then gotten them -- so really a range of possibilities there.

MESERVE: OK, Brian, thanks so much. Enjoy the movie.

TODD: Thanks.

MESERVE: And results of our Web question of the day ahead. Plus, no fear. A daring stunt at this year's X Games makes our picture of the day.

(COMMERCIAL BREAK)

MESERVE: And here are the results of our Web question of the day. Will the job market be a major factor in deciding which candidate you pick for president? Fifty-five percent of you say yes; 45 percent say no. Remember, this is not a scientific poll.

Our picture of the day is a death-defying feat. This is a look at a motorcycle stunt from the X Games, an extreme sports championship that is celebrating its 10th anniversary. Watch this. The bike goes up on the ramp. The rider goes off the bike, does a complete turn, lands back on the bike, and ends his trip safe and sound. As they always say, do not try this at home or anywhere else.

A reminder, you can catch WOLF BLITZER REPORTS weekday at 5:00 Eastern. And tune into "LATE EDITION," the last word in Sunday talk. Among Wolf's guests, National Security Adviser Condoleezza Rice and former New York Mayor Rudy Giuliani. That's Sunday at noon Eastern.

"LOU DOBBS TONIGHT" starts right now.

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