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CNN Live At Daybreak
Interview with Mahmoud Abbas; Viagra for Sex Offenders
Aired May 26, 2005 - 06:00 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.
CAROL COSTELLO, CNN ANCHOR: They're the lifeline of the nation's economy. But are America's ports sitting ducks for terrorists?
Buyers, sellers and those who wait -- when will the bubble burst on the housing market anyway?
Plus, the little blue pill in the hands of convicted sex offenders. Do you want your money picking up the tab? We have an update for you.
It is Thursday, May 26.
You are watching DAYBREAK.
And good morning to you.
From the Time Warner Center in New York, I'm Carol Costello, along with Chad Myers.
Thank you for joining us this morning.
Now in the news, a historic meeting in just a few hours. Palestinian leader Mahmoud Abbas and President Bush will meet in Washington. The president will pledge tens of millions of dollars in direct aid to the Palestinian Authority.
After four days of demonstrations in Indonesia, the U.S. Embassy in Jakarta has closed until further notice. Staged marches by thousands of Indonesian Muslims have protested the alleged U.S. desecration of the Koran.
An explosion of violence in Iraq leaves eight dead and 11 injured this morning. The attacks, which played out in just over an hour, included a suicide car bombing and a roadside bomb.
And it's anything but a nice spring day in the Northeast. A nor'easter is hitting with up to 50 mile per hour wind gusts, whipping up heavy surf and flooding some roads along the Massachusetts coast.
It is just nasty -- Chad.
It's almost June, Chad.
What's up with that, Chad?
CHAD MYERS, CNN METEOROLOGIST: It's wet. The wind chill factor was 34 there yesterday in Boston for a time. And even here, the coastal flooding from the waves coming over the break walls and over the shores and onto people's yards. It's a coastal low. It's a typical nor'easter. It's one that we'd be standing here talking about every school in the Northeast being shut down if this was three months ago. A low, there was one. It moved through here a couple of days ago.
What it means is that another low came from the west and it rotated around the other low and it actually just made this low pressure system stop and it sat right over there. And it's still sitting over the Northeast, from Portland to Boston, right on into New York. Your temperatures not warming up much today. Highs, 52, Boston; 59, New York. Better than yesterday, but still not where you'll be for the weekend.
So the good news is that this is all happening when you're going to work and by the time you're off for Memorial Day, it gets better from here.
(WEATHER REPORT)
COSTELLO: Our top story this morning, new momentum on the rocky road to Middle East peace. President Bush meets today with Palestinian leader Mahmoud Abbas. It's the first time the leaders have met since the collapse of peace talks five years ago.
Our chief national correspondent John King interviewed Mr. Abbas earlier.
He asked him about reports President Bush will offer tens of millions of dollars to the Palestinian Authority and if that money will be paid directly to Palestinian officials.
(BEGIN VIDEO CLIP)
MAHMOUD ABBAS, PRESIDENT, PALESTINIAN AUTHORITY (THROUGH TRANSLATOR): We don't know exactly the answer to this. We don't know if the president has decided this or not. But today, throughout the various meetings that we had with members of the Congress, as well as the meeting with the vice president, we gave them a specific message that we are asking that the American financial aid to be sent to the Palestinian Ministry of Finance.
The Ministry of Finance now enjoys a great deal of transparency and accountability. And we are asking that the American aid and American money to go to the Ministry of Finance.
We will listen to the president tomorrow when we meet with him and we don't know yet about the amount.
JOHN KING, CNN CORRESPONDENT: Another thing, we understand that your delegation and you personally have been seeking is a letter from the president including some assurances for the Palestinians. As you know, Prime Minister Sharon is very fond of quoting the letter he received from President Bush. And we understand that you would like a letter that has very strong language from the U.S. administration, raising concerns about Israeli settlements and also committing the United States government to a permanent Palestine with contiguous borders.
Will you get that letter, sir?
ABBAS (THROUGH TRANSLATOR): All these issues that you refer to is a part and parcel of the road map. The president expressed that through his vision of two states and the existence and the establishment of a Palestinian state that is viable and that is independent. The president and Secretary Rice, both of them talked about the necessity to stop settlement activities.
I do not believe that there are difficulties in achieving those assurances and getting those assurances that you have referred to.
The issue, also, that it is related to Gaza withdrawal. We do not want the Gaza withdrawal to be first and last. We would like the Gaza withdrawal to lead into additional steps. We would like to go straight after the Gaza withdrawal to the road map and to the issues of the permanent status phase and the permanent status agreement.
We will be asking the administration about these issues and we believe that we would receive various assurances.
(END VIDEO CLIP)
COSTELLO: The two leaders will hold a White House news conference later today.
We will bring that to you live at 11:25 a.m. Eastern.
Expect more tough talk today as John Bolton is expected to be confirmed later today. Senators are debating Bolton for ambassador to the United Nations. And while many support President Bush's nominee, others have some very harsh words. Like Republican Senator George Voinovich. He's -- well, this is what he had to say.
(BEGIN VIDEO CLIP)
SEN. GEORGE VOINOVICH (R), OHIO: My objections to what we've been talking about here, that is, him being our ambassador at the U.N., stem from two basic things. One, I think he's a lousy leader.
(END VIDEO CLIP)
COSTELLO: Delaware Democrat Joe Biden says the president should choose his father to fill the ambassador post.
Tennessee Democrat Harold Ford says he wants to join the Senate. The representative is joining the run to replace Republican Majority Leader Bill Frist. Frist has said he doesn't plan to run for the Senate again.
And some newly released FBI documents include interviews in which prisoners at Guantanamo Bay accuse guards of mistreating the Koran. The previously undisclosed documents were released by the ACLU after a Freedom of Information request. Prisoners at Guantanamo Bay reported widespread abuse of the Koran as early as April of 2002.
Shifting focus now to the investigation of those missing children in Idaho, the sheriff of Coeur d'Alene says he has no leads, no motive and no suspects. But he still has hope that 9-year-old Dylan Groene and his 8-year-old sister will be found alive.
A memorial was held for the children's mother and big brother, who were killed a week-and-a-half ago, along with the mother's boyfriend. Police say the children were abducted after the killing.
In the meantime, the children's aunt is begging the public to remember.
(BEGIN VIDEO CLIP)
WENDY GROENE, CHILDREN'S AUNT: Please don't forget the children are still missing. We need everybody's prayers. We need everybody to stay on the lookout. We need those pictures to stay out there. Somebody's, somebody's bound to recognize one of them eventually. Please, don't let that stop.
(END VIDEO CLIP)
COSTELLO: Police say the search for the missing children may shift to a landfill near their home as early as today.
In other "News Across America" now, two women are seriously injured by a knife-wielding attacker at a mall in Bethesda, Maryland. An off duty police officer witnessed the second stabbing and was able to capture the attacker.
Convicted sniper Lee Boyd Malvo has been transferred from Virginia to Maryland. Malvo and co-defendant John Allen Muhammad are scheduled to be tried there on six counts of first degree murder.
An arrest warrant will be issued in the next few days for the so- called runaway bride. Jennifer Wilbanks faces charges of making false statements and falsely reporting a crime. She could face up to five years in prison.
And this week we've heard the outrage that some sex offenders were getting federally funded Viagra. Several states are already banning the practice and federal legislation has already been proposed.
CNN's Jason Carroll takes a closer look at the issue.
(BEGIN VIDEO CLIP)
JASON CARROLL, CNN CORRESPONDENT (voice-over): He prefers to keep his identity secret for his own safety. He is a convicted sex offender who served a 25-year sentence for sexually assaulting a woman and a 4-year-old girl. He says maintaining control of his life is a constant struggle. UNIDENTIFIED MALE: Because I have control over it, you know, to that extent. It doesn't make me a eunuch, you know? I still get sexually aroused. I still have sex. I still look at magazines, I still look at tapes. Twenty-five years hasn't stopped that. What it's stopped doing is making me live, because I'm afraid.
CARROLL (on camera): Afraid?
UNIDENTIFIED MALE: I'm afraid. I don't know what's going to happen from one day to another.
CARROLL (voice-over): Knowing firsthand the problems a sex offender deals with, he's got very strong opinions about allowing other sex offenders to use Medicaid to buy sex enhancing drugs like Viagra.
UNIDENTIFIED MALE: If somebody had a problem keeping it in their pants, why do you want to give somebody a zipper? Can you understand what I'm saying?
CARROLL: On Tuesday, New York's governor temporarily banned all publicly funded health care programs from paying for sex enhancing drugs for anyone. This until legislation can be passed prohibiting sex offenders from using those health plans to pay for drugs like Viagra.
The move comes after the federal Department of Health and Human Services found thousands of sex offenders had been benefiting from the system. The Department sent letters Monday to state Medicaid directors, urging them to "restrict the coverage of such drugs in the case of individuals convicted of a sex offense."
Now, at least eight states are moving to do just that, like Texas, where an investigation revealed 200 registered sex offenders received sex enhancing drugs through Medicaid.
GREG ABBOTT, TEXAS ATTORNEY GENERAL: That is the same as handing a can of gasoline to an arsonist and providing the match to start the fire. This unconscionable use of taxpayer dollars must stop.
CARROLL: But there are some doctors who say it may actually be safer to give offenders drugs like Viagra, under certain conditions.
DR. FRED BERLIN, JOHNS HOPKINS: There may be men out there who, if the can channel their sexual needs into a healthy, mature, loving relationship, will be better off for doing so. If Viagra helps them, that may be in the best interests of all of us.
CARROLL: This convicted sex offender says that reasoning is unrealistic.
UNIDENTIFIED MALE: You give somebody that's got a sexual problem Viagra, you might just as well give him a rubdown. Yes. The same thing. No different. Stupidity.
CARROLL: Jason Carroll, CNN, New York. (END VIDEO TAPE)
COSTELLO: And New York is actually trying to take it one step farther. Lawmakers have proposed an all out ban on sex offenders getting any penile implants, no matter who pays for it.
Still to come on DAYBREAK, the calendar may say May, but do not tell that to your friends in the Northeast. Boston could be heading for the record books. We'll see what all the fuss is about.
And if you're thinking of buying a new home or selling one, you'll want to hear what the experts predict will happen to the housing market.
And before you make the family pose for pictures this holiday weekend, hear what's happening to the price of those prints.
But first, here's a look at what else is making news this Thursday.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP FROM "AMERICAN IDOL," COURTESY FOX TV)
UNIDENTIFIED MALE: The winner of "American Idol" 2005 is Carrie Underwood.
(END VIDEO CLIP)
COSTELLO: Oh, Chad, it went to the cute girl.
MYERS: It did. From Oklahoma.
COSTELLO: Carrie Underwood is her name. She has beaten Bo Bice to become the next American idol. You know, I only watched the show once this season and I heard her sing. And it wasn't pretty, Chad.
MYERS: She was not as good of a singer as Bo. There's no question about that. But she has a new record contract. She has the use of a jet plane and she's going to have a new single coming out pretty soon, Carol.
COSTELLO: That's right. And, you know, Clay Aiken came in second.
MYERS: Yes.
COSTELLO: So, who knows, Bo Bice may be like more popular than anybody could guess right now.
MYERS: Oh, I make predictions for a living and I absolutely guarantee you Bo will out-earn Carrie over the long run, long, long. Bo is really a great performer. He has all of that going for him. He was the whole package. He sang some songs over the "Idol" months that a lot of people didn't know and maybe that turned some people off. But, you know, here's a fun fact, Carrie Underwood -- although some people voted more than once -- got more votes than the president.
COSTELLO: What was it, something crazy like...
MYERS: Carrie for president.
COSTELLO: ... 500 million phone calls went into "American Idol?"
MYERS: Over the entire length of the season, 500 million votes.
COSTELLO: That's crazy.
MYERS: I know.
COSTELLO: I guess some weird stuff happened during the show, too. They had little skits. They had like a former "Idol" winner with the first lady of Oklahoma. And he was like hitting on her or something.
MYERS: Oh, I didn't see that.
COSTELLO: See, did you TiVo it?
MYERS: I TiVoed it for last night, yes, absolutely. I did. Because I -- obviously I didn't watch it last night. But there's was a lot of things -- there was the Paula Abdul thing, where she was, you know, accused of doing some things here. Ryan Seacrest went to flip the coin to get who was going to sing first and it fell in the sewer grate and it was like they had to go digging for the coin. It was a good season. It was a lot of fun.
COSTELLO: It was really wacky.
MYERS: It was a little pitchy.
COSTELLO: Yes, it was, a little pitchy, a little wacky, kind of like the weather in Boston.
It is miserable there. In fact, we have a correspondent over there, a reporter standing there in the horrible, horrible weather.
Lauren Przybyl, oh my goodness.
What's the temperature out there, Lauren?
LAUREN PRZYBYL, WHDH CORRESPONDENT: It's about -- we're in the 40s right now. We're about 20 degrees below average for this time of year. You know, a lot of people in New England are now calling this month miserable May. We've been dealing with rain basically all month. And now, as you can see, we have got some very strong winds with this nor'easter, gusts up to 50 miles an hour. And the beach here is pretty much a wreck. There is driftwood everywhere you look.
And here's something you don't see all too often, a boat that hasn't been beached. Yesterday, the high tide brought this boat up onto shore and it was anchored way out in the ocean just the day before, but that high tide was so powerful, the waves said to be about 18 feet high, it just beached is right here. And the ocean has calmed down quite a bit this morning. But now it is time for cleanup. There are downed trees all over this area and about 17,000 people are without power.
But right now the wind and the rain continue this morning. And this month, we've only seen, here in New England, six sunny days. But a lot of us are just trying to be optimistic and we're all saying well, at least it's not snow.
We're in Quincy, Massachusetts, I'm Lauren Przybyl.
Back to you guys.
COSTELLO: Lauren, we have a meteorologist that you can yell at right now, though.
Go ahead.
Yell at Chad.
MYERS: You have a wind chill factor out there of 37. I can't believe your mouth is still moving. It's like trying to eat a Slurpie and talk at the same time out there.
PRZYBYL: Yes, I have about four layers of clothes on, so I try to keep warm.
COSTELLO: And it's almost Memorial Day and June.
MYERS: Yes.
COSTELLO: Go figure.
Thank you, Lauren, for standing in the cold and the rain for us this morning.
MYERS: Thank you, Lauren.
COSTELLO: And what do you say, Chad, on Friday it's supposed to get better?
MYERS: It does get better. The storm, this nor'easter, as we call it, the big low pressure center that's just been sitting there moves away so the north wind and the northeast wind actually stops. You'll get a west wind, which is kind of out of the Pacific Ocean, not the cold Atlantic or the North Atlantic. So it gets better.
COSTELLO: All right.
MYERS: Seventy by Saturday.
COSTELLO: OK, we're going to take you at your word.
MYERS: OK.
COSTELLO: Thanks, Chad. MYERS: You're welcome.
COSTELLO: Three words that make Americans' mouths water -- get rich quick.
Still to come on DAYBREAK, is there a way to be responsible and get rich in today's real estate market? We'll take a look at the bubble hanging over the market and find out if it may burst soon or if there's a bubble at all.
That's when DAYBREAK continues.
(COMMERCIAL BREAK)
COSTELLO: Now for some "Business Buzz."
Oil prices back up. The price per barrel jumped a $1 above $50, to just over $51 a barrel. The spike caused by news that U.S. crude oil stockpiles have unexpectedly declined.
How much would you pay to have Michael Jordan in your very house? How about his chair? Well, your big chance is coming tonight. This chair was specially designed for Jordan. It will be up for auction on eBay starting tonight. But before you start picking out a place for it in your living room, be advised, the minimum bid, $200,000.
Also in our "Business Buzz" this morning, when companies compete, you usually win. The price wars breaking out in digital photos -- I think we're over here.
Carrie Lee has all the details -- good morning, Carrie.
CARRIE LEE, CNN CORRESPONDENT: Hi.
This is good news for people. Digital photo printing gets cheaper and so that's a good thing.
Snapfish is the latest online site to cut prices for digital prints, lowering its price to $0.12 from $0.19 for a 4x6 picture. And this price undercuts the competition. So the price was is really heating up.
Hewlett-Packard bought this company, Snapfish, in late March.
Talking about some other sites, Wal-Mart cut its price to $0.19 earlier this year and Kodak EasyShare, former known as Ofoto, charges $0.26. Shutterfly charges $0.29.
And, by the way, all of these prices are for one print. If you buy a prepaid plan, then the prices are lower.
The bottom line, Snapfish says it can afford the cheaper price because it's more efficient as it gains subscribers. They have 13 million registered users to date and they're adding about half a million per month. Obviously, the strategy a departure for H.P., which previously wanted customers to print photos themselves using H.P. printers and H.P. ink. But obviously, Carol, this new strategy benefits the consumer. We like lower prices.
COSTELLO: Oh, we certainly do.
A quick look at the futures?
LEE: Talking about higher prices. Futures looking up a bit for today's session. You talked about crude oil yesterday going up. Well, that put a damper on stocks. The Nasdaq broke an eight day winning streak, but it looks like we could see a reversal, at least in the early going this morning.
COSTELLO: I know you'll keep watching for us.
LEE: I will.
COSTELLO: Thank you, Carrie.
LEE: Sure.
COSTELLO: The home market is defying yet another round of predictions. Mortgage rates are still low, jobs are growing and the number of existing home sales jumped last month.
So, is the housing market a bubble waiting to burst?
CNN senior correspondent Allan Chernoff take a look at the numbers for you.
(BEGIN VIDEO TAPE)
ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): Twenty-five miles west of the nation's capital, there is a Mecca for home builders and buyers. In Ashburn, Virginia, hundreds of homes under construction, thousands more planned.
STEVEN ALLOY, PRESIDENT, STANLEY MARTIN: If you can get the permits, if you can get pavement, then you're going to sell houses.
CHERNOFF: That kind of demand pushed new home sales up again in April. The median price nationwide for a new home now at $230,800, the second-highest level ever.
In markets like Las Vegas Phoenix, and Miami, speculation is fueling price gains. Investors putting down just 5 percent and taking out interest-only mortgages to defer principal payments. Their plan, flip the house. Sell it quickly for a profit.
DEBBIE SMITH, LAS VEGAS INVESTOR: You could buy a house for $130,000, and by the time you close, it could have been worth $200,000 or more. Some people made $50,000 to $100,000, even $150,000, off a single family home.
CHERNOFF: "Fortune" magazine is calling it the real estate gold rush. But housing experts say it can be dangerous.
MICHAEL CARLINER, NATIONAL ASSOCIATION OF HOME BUILDERS: If they think they're going to make a quick buck, it's not as easy to sell houses as it is to buy them. In a soft market, at least, it's not as easy to sell them. Right now, it's pretty easy. And so that's a risky proposition.
CHERNOFF: Federal Reserve officials are worried, as well. One central banker Wednesday warned buyers are going to get burned. And Fed Chairman Alan Greenspan says some hot markets could easily cool off.
ALAN GREENSPAN, FEDERAL RESERVE CHAIRMAN: But it's hard not to see, one, that there are a lot of local bubbles; and, indeed, even without calling the overall national issue a bubble, it's pretty clear that it's an unsustainable underlying pattern.
CHERNOFF (on camera): The key to housing is mortgage rates. As long as they remain relatively low, experts say the nation's housing market should be able to avoid a bust. But in certain over heated markets, they warn, supply could soon outstrip demand, leading to lower prices.
Allan Chernoff, CNN, New York.
(END VIDEO TAPE)
COSTELLO: Oh, but we want to simplify it further. So if you just bought a house for a price you never thought you would pay, did you make a dreadful mistake? That depends.
Joining us now from "Money" magazine, Eric Schurenberg.
You're here to help, Eric?
ERIC SCHURENBERG, "MONEY" MAGAZINE: Well, I'd like to help, sure.
COSTELLO: So let's talk bubble.
First, what must converge for there to be a bubble?
SCHURENBERG: Well, higher interest rates, for one thing. Right now, the biggest problem with the market is that it's at the very edge of being unaffordable to most people. In places like Los Angeles, only about 5 percent of the homes sold are affordable by the average person.
COSTELLO: Oh, you're not kidding.
SCHURENBERG: Now, if interest rates rise, affordability starts to creep away even farther, and that is one thing that you'll really have to keep an eye on.
COSTELLO: OK, well, let's take a look at the interest rates, because they're still fairly low. In fact, some are really low. For a 30-year fixed mortgage, it's 5.21 percent; a 15-year fixed, 4.75; for a 1-year arm, 3.6 percent. Still pretty good. These numbers we got yesterday. SCHURENBERG: Right. And that's what's supporting this market. People who never thought they could afford a house at the prices they're going for can because of these interest rates.
COSTELLO: Wow!
OK, so in many places, as you said, the cost of a home is just incredible. In fact, in Washington, D.C., you will pay over the asking price by as much as $100,000.
So when do you know -- because, you know, if you have to have a house you have to have a house, right? So maybe you'll pay over the asking price. But how much do you pay and how do you know when you've paid too much?
SCHURENBERG: You don't know. You don't know. Every house I've ever bought, Carol, I've always felt like I got in right at the peak, and it turned out I didn't. I made money. I've lived in a hot market for the last 10 years, as most people have on the coasts.
I think that the way to look at it is this. The more you think of a house as a home, the less you have to worry about bubble talk. The more you think of it as an investment that you can flip, that's when you need to worry.
COSTELLO: OK, so let's talk about that for a second.
So how much should you pay over the asking price if you're only considering owning that home, "owning that home," for two years, and then you want to make money? It's just a guess like the stock market?
SCHURENBERG: Right. Well, if that's what your goal is, I wouldn't do it. That's a risk. That's a risk. And this -- in some of these hot markets on the coast or places like Las Vegas or the southeast end of Florida, those markets are very hot. And there are a lot of investors there, a lot of speculation there. Those are the markets that are most vulnerable.
COSTELLO: OK, we've heard people are renting now. Some people are renting, waiting for the housing market to cool off.
Smart?
SCHURENBERG: It hasn't been for the past few years. If you've rented, you've let a lot of appreciation go, you know, untaken care of.
Again, I go back to if you're going to buy a house to live in, it's probably a very sound investment. If you're going to buy a house for speculation, you pay your money and you take your chances.
COSTELLO: I know.
OK, so maybe the smartest thing to do is to go to a market where the housing market isn't quite as hot, like the middle of the country. SCHURENBERG: Right. Right. I mean you think about, people in the Midwest think all this talk about a housing bubble is completely foreign to them, and, in fact, it is. Housing prices have appreciated throughout the middle of the country, but at a very measured pace.
COSTELLO: Thank you for joining us this morning.
SCHURENBERG: My pleasure.
You've simplified it at least a little bit for us. I guess you take your chances, though, however you look at it.
SCHURENBERG: You take your chances.
COSTELLO: All right, thank you, Eric.
You're watching DAYBREAK.
We'll be right back.
(COMMERCIAL BREAK)
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Aired May 26, 2005 - 06:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: They're the lifeline of the nation's economy. But are America's ports sitting ducks for terrorists?
Buyers, sellers and those who wait -- when will the bubble burst on the housing market anyway?
Plus, the little blue pill in the hands of convicted sex offenders. Do you want your money picking up the tab? We have an update for you.
It is Thursday, May 26.
You are watching DAYBREAK.
And good morning to you.
From the Time Warner Center in New York, I'm Carol Costello, along with Chad Myers.
Thank you for joining us this morning.
Now in the news, a historic meeting in just a few hours. Palestinian leader Mahmoud Abbas and President Bush will meet in Washington. The president will pledge tens of millions of dollars in direct aid to the Palestinian Authority.
After four days of demonstrations in Indonesia, the U.S. Embassy in Jakarta has closed until further notice. Staged marches by thousands of Indonesian Muslims have protested the alleged U.S. desecration of the Koran.
An explosion of violence in Iraq leaves eight dead and 11 injured this morning. The attacks, which played out in just over an hour, included a suicide car bombing and a roadside bomb.
And it's anything but a nice spring day in the Northeast. A nor'easter is hitting with up to 50 mile per hour wind gusts, whipping up heavy surf and flooding some roads along the Massachusetts coast.
It is just nasty -- Chad.
It's almost June, Chad.
What's up with that, Chad?
CHAD MYERS, CNN METEOROLOGIST: It's wet. The wind chill factor was 34 there yesterday in Boston for a time. And even here, the coastal flooding from the waves coming over the break walls and over the shores and onto people's yards. It's a coastal low. It's a typical nor'easter. It's one that we'd be standing here talking about every school in the Northeast being shut down if this was three months ago. A low, there was one. It moved through here a couple of days ago.
What it means is that another low came from the west and it rotated around the other low and it actually just made this low pressure system stop and it sat right over there. And it's still sitting over the Northeast, from Portland to Boston, right on into New York. Your temperatures not warming up much today. Highs, 52, Boston; 59, New York. Better than yesterday, but still not where you'll be for the weekend.
So the good news is that this is all happening when you're going to work and by the time you're off for Memorial Day, it gets better from here.
(WEATHER REPORT)
COSTELLO: Our top story this morning, new momentum on the rocky road to Middle East peace. President Bush meets today with Palestinian leader Mahmoud Abbas. It's the first time the leaders have met since the collapse of peace talks five years ago.
Our chief national correspondent John King interviewed Mr. Abbas earlier.
He asked him about reports President Bush will offer tens of millions of dollars to the Palestinian Authority and if that money will be paid directly to Palestinian officials.
(BEGIN VIDEO CLIP)
MAHMOUD ABBAS, PRESIDENT, PALESTINIAN AUTHORITY (THROUGH TRANSLATOR): We don't know exactly the answer to this. We don't know if the president has decided this or not. But today, throughout the various meetings that we had with members of the Congress, as well as the meeting with the vice president, we gave them a specific message that we are asking that the American financial aid to be sent to the Palestinian Ministry of Finance.
The Ministry of Finance now enjoys a great deal of transparency and accountability. And we are asking that the American aid and American money to go to the Ministry of Finance.
We will listen to the president tomorrow when we meet with him and we don't know yet about the amount.
JOHN KING, CNN CORRESPONDENT: Another thing, we understand that your delegation and you personally have been seeking is a letter from the president including some assurances for the Palestinians. As you know, Prime Minister Sharon is very fond of quoting the letter he received from President Bush. And we understand that you would like a letter that has very strong language from the U.S. administration, raising concerns about Israeli settlements and also committing the United States government to a permanent Palestine with contiguous borders.
Will you get that letter, sir?
ABBAS (THROUGH TRANSLATOR): All these issues that you refer to is a part and parcel of the road map. The president expressed that through his vision of two states and the existence and the establishment of a Palestinian state that is viable and that is independent. The president and Secretary Rice, both of them talked about the necessity to stop settlement activities.
I do not believe that there are difficulties in achieving those assurances and getting those assurances that you have referred to.
The issue, also, that it is related to Gaza withdrawal. We do not want the Gaza withdrawal to be first and last. We would like the Gaza withdrawal to lead into additional steps. We would like to go straight after the Gaza withdrawal to the road map and to the issues of the permanent status phase and the permanent status agreement.
We will be asking the administration about these issues and we believe that we would receive various assurances.
(END VIDEO CLIP)
COSTELLO: The two leaders will hold a White House news conference later today.
We will bring that to you live at 11:25 a.m. Eastern.
Expect more tough talk today as John Bolton is expected to be confirmed later today. Senators are debating Bolton for ambassador to the United Nations. And while many support President Bush's nominee, others have some very harsh words. Like Republican Senator George Voinovich. He's -- well, this is what he had to say.
(BEGIN VIDEO CLIP)
SEN. GEORGE VOINOVICH (R), OHIO: My objections to what we've been talking about here, that is, him being our ambassador at the U.N., stem from two basic things. One, I think he's a lousy leader.
(END VIDEO CLIP)
COSTELLO: Delaware Democrat Joe Biden says the president should choose his father to fill the ambassador post.
Tennessee Democrat Harold Ford says he wants to join the Senate. The representative is joining the run to replace Republican Majority Leader Bill Frist. Frist has said he doesn't plan to run for the Senate again.
And some newly released FBI documents include interviews in which prisoners at Guantanamo Bay accuse guards of mistreating the Koran. The previously undisclosed documents were released by the ACLU after a Freedom of Information request. Prisoners at Guantanamo Bay reported widespread abuse of the Koran as early as April of 2002.
Shifting focus now to the investigation of those missing children in Idaho, the sheriff of Coeur d'Alene says he has no leads, no motive and no suspects. But he still has hope that 9-year-old Dylan Groene and his 8-year-old sister will be found alive.
A memorial was held for the children's mother and big brother, who were killed a week-and-a-half ago, along with the mother's boyfriend. Police say the children were abducted after the killing.
In the meantime, the children's aunt is begging the public to remember.
(BEGIN VIDEO CLIP)
WENDY GROENE, CHILDREN'S AUNT: Please don't forget the children are still missing. We need everybody's prayers. We need everybody to stay on the lookout. We need those pictures to stay out there. Somebody's, somebody's bound to recognize one of them eventually. Please, don't let that stop.
(END VIDEO CLIP)
COSTELLO: Police say the search for the missing children may shift to a landfill near their home as early as today.
In other "News Across America" now, two women are seriously injured by a knife-wielding attacker at a mall in Bethesda, Maryland. An off duty police officer witnessed the second stabbing and was able to capture the attacker.
Convicted sniper Lee Boyd Malvo has been transferred from Virginia to Maryland. Malvo and co-defendant John Allen Muhammad are scheduled to be tried there on six counts of first degree murder.
An arrest warrant will be issued in the next few days for the so- called runaway bride. Jennifer Wilbanks faces charges of making false statements and falsely reporting a crime. She could face up to five years in prison.
And this week we've heard the outrage that some sex offenders were getting federally funded Viagra. Several states are already banning the practice and federal legislation has already been proposed.
CNN's Jason Carroll takes a closer look at the issue.
(BEGIN VIDEO CLIP)
JASON CARROLL, CNN CORRESPONDENT (voice-over): He prefers to keep his identity secret for his own safety. He is a convicted sex offender who served a 25-year sentence for sexually assaulting a woman and a 4-year-old girl. He says maintaining control of his life is a constant struggle. UNIDENTIFIED MALE: Because I have control over it, you know, to that extent. It doesn't make me a eunuch, you know? I still get sexually aroused. I still have sex. I still look at magazines, I still look at tapes. Twenty-five years hasn't stopped that. What it's stopped doing is making me live, because I'm afraid.
CARROLL (on camera): Afraid?
UNIDENTIFIED MALE: I'm afraid. I don't know what's going to happen from one day to another.
CARROLL (voice-over): Knowing firsthand the problems a sex offender deals with, he's got very strong opinions about allowing other sex offenders to use Medicaid to buy sex enhancing drugs like Viagra.
UNIDENTIFIED MALE: If somebody had a problem keeping it in their pants, why do you want to give somebody a zipper? Can you understand what I'm saying?
CARROLL: On Tuesday, New York's governor temporarily banned all publicly funded health care programs from paying for sex enhancing drugs for anyone. This until legislation can be passed prohibiting sex offenders from using those health plans to pay for drugs like Viagra.
The move comes after the federal Department of Health and Human Services found thousands of sex offenders had been benefiting from the system. The Department sent letters Monday to state Medicaid directors, urging them to "restrict the coverage of such drugs in the case of individuals convicted of a sex offense."
Now, at least eight states are moving to do just that, like Texas, where an investigation revealed 200 registered sex offenders received sex enhancing drugs through Medicaid.
GREG ABBOTT, TEXAS ATTORNEY GENERAL: That is the same as handing a can of gasoline to an arsonist and providing the match to start the fire. This unconscionable use of taxpayer dollars must stop.
CARROLL: But there are some doctors who say it may actually be safer to give offenders drugs like Viagra, under certain conditions.
DR. FRED BERLIN, JOHNS HOPKINS: There may be men out there who, if the can channel their sexual needs into a healthy, mature, loving relationship, will be better off for doing so. If Viagra helps them, that may be in the best interests of all of us.
CARROLL: This convicted sex offender says that reasoning is unrealistic.
UNIDENTIFIED MALE: You give somebody that's got a sexual problem Viagra, you might just as well give him a rubdown. Yes. The same thing. No different. Stupidity.
CARROLL: Jason Carroll, CNN, New York. (END VIDEO TAPE)
COSTELLO: And New York is actually trying to take it one step farther. Lawmakers have proposed an all out ban on sex offenders getting any penile implants, no matter who pays for it.
Still to come on DAYBREAK, the calendar may say May, but do not tell that to your friends in the Northeast. Boston could be heading for the record books. We'll see what all the fuss is about.
And if you're thinking of buying a new home or selling one, you'll want to hear what the experts predict will happen to the housing market.
And before you make the family pose for pictures this holiday weekend, hear what's happening to the price of those prints.
But first, here's a look at what else is making news this Thursday.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP FROM "AMERICAN IDOL," COURTESY FOX TV)
UNIDENTIFIED MALE: The winner of "American Idol" 2005 is Carrie Underwood.
(END VIDEO CLIP)
COSTELLO: Oh, Chad, it went to the cute girl.
MYERS: It did. From Oklahoma.
COSTELLO: Carrie Underwood is her name. She has beaten Bo Bice to become the next American idol. You know, I only watched the show once this season and I heard her sing. And it wasn't pretty, Chad.
MYERS: She was not as good of a singer as Bo. There's no question about that. But she has a new record contract. She has the use of a jet plane and she's going to have a new single coming out pretty soon, Carol.
COSTELLO: That's right. And, you know, Clay Aiken came in second.
MYERS: Yes.
COSTELLO: So, who knows, Bo Bice may be like more popular than anybody could guess right now.
MYERS: Oh, I make predictions for a living and I absolutely guarantee you Bo will out-earn Carrie over the long run, long, long. Bo is really a great performer. He has all of that going for him. He was the whole package. He sang some songs over the "Idol" months that a lot of people didn't know and maybe that turned some people off. But, you know, here's a fun fact, Carrie Underwood -- although some people voted more than once -- got more votes than the president.
COSTELLO: What was it, something crazy like...
MYERS: Carrie for president.
COSTELLO: ... 500 million phone calls went into "American Idol?"
MYERS: Over the entire length of the season, 500 million votes.
COSTELLO: That's crazy.
MYERS: I know.
COSTELLO: I guess some weird stuff happened during the show, too. They had little skits. They had like a former "Idol" winner with the first lady of Oklahoma. And he was like hitting on her or something.
MYERS: Oh, I didn't see that.
COSTELLO: See, did you TiVo it?
MYERS: I TiVoed it for last night, yes, absolutely. I did. Because I -- obviously I didn't watch it last night. But there's was a lot of things -- there was the Paula Abdul thing, where she was, you know, accused of doing some things here. Ryan Seacrest went to flip the coin to get who was going to sing first and it fell in the sewer grate and it was like they had to go digging for the coin. It was a good season. It was a lot of fun.
COSTELLO: It was really wacky.
MYERS: It was a little pitchy.
COSTELLO: Yes, it was, a little pitchy, a little wacky, kind of like the weather in Boston.
It is miserable there. In fact, we have a correspondent over there, a reporter standing there in the horrible, horrible weather.
Lauren Przybyl, oh my goodness.
What's the temperature out there, Lauren?
LAUREN PRZYBYL, WHDH CORRESPONDENT: It's about -- we're in the 40s right now. We're about 20 degrees below average for this time of year. You know, a lot of people in New England are now calling this month miserable May. We've been dealing with rain basically all month. And now, as you can see, we have got some very strong winds with this nor'easter, gusts up to 50 miles an hour. And the beach here is pretty much a wreck. There is driftwood everywhere you look.
And here's something you don't see all too often, a boat that hasn't been beached. Yesterday, the high tide brought this boat up onto shore and it was anchored way out in the ocean just the day before, but that high tide was so powerful, the waves said to be about 18 feet high, it just beached is right here. And the ocean has calmed down quite a bit this morning. But now it is time for cleanup. There are downed trees all over this area and about 17,000 people are without power.
But right now the wind and the rain continue this morning. And this month, we've only seen, here in New England, six sunny days. But a lot of us are just trying to be optimistic and we're all saying well, at least it's not snow.
We're in Quincy, Massachusetts, I'm Lauren Przybyl.
Back to you guys.
COSTELLO: Lauren, we have a meteorologist that you can yell at right now, though.
Go ahead.
Yell at Chad.
MYERS: You have a wind chill factor out there of 37. I can't believe your mouth is still moving. It's like trying to eat a Slurpie and talk at the same time out there.
PRZYBYL: Yes, I have about four layers of clothes on, so I try to keep warm.
COSTELLO: And it's almost Memorial Day and June.
MYERS: Yes.
COSTELLO: Go figure.
Thank you, Lauren, for standing in the cold and the rain for us this morning.
MYERS: Thank you, Lauren.
COSTELLO: And what do you say, Chad, on Friday it's supposed to get better?
MYERS: It does get better. The storm, this nor'easter, as we call it, the big low pressure center that's just been sitting there moves away so the north wind and the northeast wind actually stops. You'll get a west wind, which is kind of out of the Pacific Ocean, not the cold Atlantic or the North Atlantic. So it gets better.
COSTELLO: All right.
MYERS: Seventy by Saturday.
COSTELLO: OK, we're going to take you at your word.
MYERS: OK.
COSTELLO: Thanks, Chad. MYERS: You're welcome.
COSTELLO: Three words that make Americans' mouths water -- get rich quick.
Still to come on DAYBREAK, is there a way to be responsible and get rich in today's real estate market? We'll take a look at the bubble hanging over the market and find out if it may burst soon or if there's a bubble at all.
That's when DAYBREAK continues.
(COMMERCIAL BREAK)
COSTELLO: Now for some "Business Buzz."
Oil prices back up. The price per barrel jumped a $1 above $50, to just over $51 a barrel. The spike caused by news that U.S. crude oil stockpiles have unexpectedly declined.
How much would you pay to have Michael Jordan in your very house? How about his chair? Well, your big chance is coming tonight. This chair was specially designed for Jordan. It will be up for auction on eBay starting tonight. But before you start picking out a place for it in your living room, be advised, the minimum bid, $200,000.
Also in our "Business Buzz" this morning, when companies compete, you usually win. The price wars breaking out in digital photos -- I think we're over here.
Carrie Lee has all the details -- good morning, Carrie.
CARRIE LEE, CNN CORRESPONDENT: Hi.
This is good news for people. Digital photo printing gets cheaper and so that's a good thing.
Snapfish is the latest online site to cut prices for digital prints, lowering its price to $0.12 from $0.19 for a 4x6 picture. And this price undercuts the competition. So the price was is really heating up.
Hewlett-Packard bought this company, Snapfish, in late March.
Talking about some other sites, Wal-Mart cut its price to $0.19 earlier this year and Kodak EasyShare, former known as Ofoto, charges $0.26. Shutterfly charges $0.29.
And, by the way, all of these prices are for one print. If you buy a prepaid plan, then the prices are lower.
The bottom line, Snapfish says it can afford the cheaper price because it's more efficient as it gains subscribers. They have 13 million registered users to date and they're adding about half a million per month. Obviously, the strategy a departure for H.P., which previously wanted customers to print photos themselves using H.P. printers and H.P. ink. But obviously, Carol, this new strategy benefits the consumer. We like lower prices.
COSTELLO: Oh, we certainly do.
A quick look at the futures?
LEE: Talking about higher prices. Futures looking up a bit for today's session. You talked about crude oil yesterday going up. Well, that put a damper on stocks. The Nasdaq broke an eight day winning streak, but it looks like we could see a reversal, at least in the early going this morning.
COSTELLO: I know you'll keep watching for us.
LEE: I will.
COSTELLO: Thank you, Carrie.
LEE: Sure.
COSTELLO: The home market is defying yet another round of predictions. Mortgage rates are still low, jobs are growing and the number of existing home sales jumped last month.
So, is the housing market a bubble waiting to burst?
CNN senior correspondent Allan Chernoff take a look at the numbers for you.
(BEGIN VIDEO TAPE)
ALLAN CHERNOFF, CNN CORRESPONDENT (voice-over): Twenty-five miles west of the nation's capital, there is a Mecca for home builders and buyers. In Ashburn, Virginia, hundreds of homes under construction, thousands more planned.
STEVEN ALLOY, PRESIDENT, STANLEY MARTIN: If you can get the permits, if you can get pavement, then you're going to sell houses.
CHERNOFF: That kind of demand pushed new home sales up again in April. The median price nationwide for a new home now at $230,800, the second-highest level ever.
In markets like Las Vegas Phoenix, and Miami, speculation is fueling price gains. Investors putting down just 5 percent and taking out interest-only mortgages to defer principal payments. Their plan, flip the house. Sell it quickly for a profit.
DEBBIE SMITH, LAS VEGAS INVESTOR: You could buy a house for $130,000, and by the time you close, it could have been worth $200,000 or more. Some people made $50,000 to $100,000, even $150,000, off a single family home.
CHERNOFF: "Fortune" magazine is calling it the real estate gold rush. But housing experts say it can be dangerous.
MICHAEL CARLINER, NATIONAL ASSOCIATION OF HOME BUILDERS: If they think they're going to make a quick buck, it's not as easy to sell houses as it is to buy them. In a soft market, at least, it's not as easy to sell them. Right now, it's pretty easy. And so that's a risky proposition.
CHERNOFF: Federal Reserve officials are worried, as well. One central banker Wednesday warned buyers are going to get burned. And Fed Chairman Alan Greenspan says some hot markets could easily cool off.
ALAN GREENSPAN, FEDERAL RESERVE CHAIRMAN: But it's hard not to see, one, that there are a lot of local bubbles; and, indeed, even without calling the overall national issue a bubble, it's pretty clear that it's an unsustainable underlying pattern.
CHERNOFF (on camera): The key to housing is mortgage rates. As long as they remain relatively low, experts say the nation's housing market should be able to avoid a bust. But in certain over heated markets, they warn, supply could soon outstrip demand, leading to lower prices.
Allan Chernoff, CNN, New York.
(END VIDEO TAPE)
COSTELLO: Oh, but we want to simplify it further. So if you just bought a house for a price you never thought you would pay, did you make a dreadful mistake? That depends.
Joining us now from "Money" magazine, Eric Schurenberg.
You're here to help, Eric?
ERIC SCHURENBERG, "MONEY" MAGAZINE: Well, I'd like to help, sure.
COSTELLO: So let's talk bubble.
First, what must converge for there to be a bubble?
SCHURENBERG: Well, higher interest rates, for one thing. Right now, the biggest problem with the market is that it's at the very edge of being unaffordable to most people. In places like Los Angeles, only about 5 percent of the homes sold are affordable by the average person.
COSTELLO: Oh, you're not kidding.
SCHURENBERG: Now, if interest rates rise, affordability starts to creep away even farther, and that is one thing that you'll really have to keep an eye on.
COSTELLO: OK, well, let's take a look at the interest rates, because they're still fairly low. In fact, some are really low. For a 30-year fixed mortgage, it's 5.21 percent; a 15-year fixed, 4.75; for a 1-year arm, 3.6 percent. Still pretty good. These numbers we got yesterday. SCHURENBERG: Right. And that's what's supporting this market. People who never thought they could afford a house at the prices they're going for can because of these interest rates.
COSTELLO: Wow!
OK, so in many places, as you said, the cost of a home is just incredible. In fact, in Washington, D.C., you will pay over the asking price by as much as $100,000.
So when do you know -- because, you know, if you have to have a house you have to have a house, right? So maybe you'll pay over the asking price. But how much do you pay and how do you know when you've paid too much?
SCHURENBERG: You don't know. You don't know. Every house I've ever bought, Carol, I've always felt like I got in right at the peak, and it turned out I didn't. I made money. I've lived in a hot market for the last 10 years, as most people have on the coasts.
I think that the way to look at it is this. The more you think of a house as a home, the less you have to worry about bubble talk. The more you think of it as an investment that you can flip, that's when you need to worry.
COSTELLO: OK, so let's talk about that for a second.
So how much should you pay over the asking price if you're only considering owning that home, "owning that home," for two years, and then you want to make money? It's just a guess like the stock market?
SCHURENBERG: Right. Well, if that's what your goal is, I wouldn't do it. That's a risk. That's a risk. And this -- in some of these hot markets on the coast or places like Las Vegas or the southeast end of Florida, those markets are very hot. And there are a lot of investors there, a lot of speculation there. Those are the markets that are most vulnerable.
COSTELLO: OK, we've heard people are renting now. Some people are renting, waiting for the housing market to cool off.
Smart?
SCHURENBERG: It hasn't been for the past few years. If you've rented, you've let a lot of appreciation go, you know, untaken care of.
Again, I go back to if you're going to buy a house to live in, it's probably a very sound investment. If you're going to buy a house for speculation, you pay your money and you take your chances.
COSTELLO: I know.
OK, so maybe the smartest thing to do is to go to a market where the housing market isn't quite as hot, like the middle of the country. SCHURENBERG: Right. Right. I mean you think about, people in the Midwest think all this talk about a housing bubble is completely foreign to them, and, in fact, it is. Housing prices have appreciated throughout the middle of the country, but at a very measured pace.
COSTELLO: Thank you for joining us this morning.
SCHURENBERG: My pleasure.
You've simplified it at least a little bit for us. I guess you take your chances, though, however you look at it.
SCHURENBERG: You take your chances.
COSTELLO: All right, thank you, Eric.
You're watching DAYBREAK.
We'll be right back.
(COMMERCIAL BREAK)
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