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AMERICAN MORNING

Hits, Misses in Michael Jackson Trial; Risky Real Estate; New 'Idol'

Aired May 26, 2005 - 07:30   ET

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


BILL HEMMER, CNN ANCHOR: Welcome back, everybody. It is not raining in New York City, and that is a headline actually.
SOLEDAD O'BRIEN, CNN ANCHOR: Yes, it is, considering all we've been dealing with.

HEMMER: I'm telling you. They're lined up in two's outside. Welcome back, everyone. It's 7:30 here. A lot of news out of Iraq already today. So, we are watching that quite closely again today.

O'BRIEN: In fact, let's get right to it. Carol is tackling that this morning in the headlines.

Hey, Carol, good morning.

CAROL COSTELLO, CNN ANCHOR: Good morning. It broke, what, just about, oh, a half-hour ago.

"Now in the News."

Iraq is now saying it has credible information that terror leader Abu Musab al-Zarqawi is indeed wounded, the announcement coming just within the past half-hour. Iraq's interior minister says it's not clear how serious the injuries are and that they're not even sure if Zarqawi is alive or dead. But none of this information is confirmed, keep in mind. Islamic Web sites have been reporting a message that Zarqawi has been wounded and that his followers should pray for him.

Major plans are in the works to beef up security in Baghdad. It's being called Operation Thunder. Iraqi officials say more than 40,000 security forces will start patrolling Baghdad beginning next week. In the meantime, more violence there this morning. A roadside bomb exploded near a U.S. military convoy, just one of a series of attacks this morning. Also, an Iraqi police patrol was targeted by a suicide bomber. A total of eight people killed in today's attacks.

President Bush is expected to offer tens of millions of dollars in direct aid to Palestinian leader Mahmoud Abbas. That is according to administration sources. The two are holding talks later this morning. It will be the first meeting for U.S. and Palestinian leaders since Mideast peace talks broke down in 2000. CNN will have coverage for you beginning at 11:25 Eastern.

Iran wants to join the World Trade Organization, and it's willing to freeze its nuclear program to do so. This morning, the WTO is now agreeing to start entry talks with Iran just one day after Iran said it would suspend nuclear activities. It was part of a deal between Iran and the European Union.

And authorities are keeping up the search for two missing children from Idaho. Eight-year-old Shasta Groene and her 9-year-old brother, Dylan, were last seen a week-and-a-half ago. A public memorial held for the slain mother and brother. Hundreds of people were there. A smaller service was held for close friends and family. But still no word on where those kids are. Now, they're asking, what, hikers and campers, Soledad, to keep an eye out for these kids?

O'BRIEN: Yes. Really, it's terrible that there's no resolution to this case. And, of course, we'll update it if there is any resolution.

By this time next week, though, in another case, Michael Jackson's fate could be in the hands of the jury. The defense rested its case on Wednesday in his molestation trial. Prosecutors are now presenting rebuttal witnesses.

CNN's senior legal analyst Jeff Toobin talks about the biggest hits and misses in the trial so far.

Good morning.

JEFFERY TOOBIN, CNN SENIOR LEGAL ANALYST: Good morning.

O'BRIEN: Clearly for the prosecution, the most important witness, I think it's fair to say, was the accuser himself, right?

TOOBIN: Absolutely. I mean, there have been so many witnesses in this case, we sometimes forgot to rank them in the importance that they deserve. And, look, this is a kid, a 16-year-old now, a cancer survivor who went in front of the jury and said, Michael Jackson molested me. If the jury believes him, everything else in the case is totally irrelevant. Michael Jackson is going to get convicted. And he was sometimes a problematic witness, but he was also sometimes a strong witness.

O'BRIEN: So overall for the prosecution?

TOOBIN: Absolutely a hit for the prosecution.

O'BRIEN: Then there's the conspiracy charge, which is another big part of the prosecution's case. And that was difficult, I think, for them, too, in the case.

TOOBIN: I would say it was wall to wall disaster for the prosecution. The idea that Michael Jackson and his entourage tried to kidnap, control the alleged victim's family caused nothing but grief. The accuser's mother, a central figure in this case, was a disastrous witness herself. Later witnesses showed that she lied in another lawsuit; that she cheated on her welfare. That was definitely a miss for the prosecution. I would be shocked if Jackson is convicted of that count.

O'BRIEN: Defense now, let's take a look at what their perspective was in all of this. Their goal really was to present this family as scam artists, right?

TOOBIN: And they had a lot of success in that area. As I said, the mother's testimony was very bad. There was a lot of testimony showing how they really were trying to get money throughout this process. The J.C. Penney lawsuit seemed like a fraud that the mother was involved in, that the accuser participated in that fraud. So, that was definitely a hit for the prosecution.

O'BRIEN: For the defense. But...

TOOBIN: I'm sorry. A hit for the defense, yes.

O'BRIEN: A hit for the defense. I'm not following you completely. OK. But for the prosecution, they had to establish that there was more than one accuser.

TOOBIN: Right.

O'BRIEN: I mean, we were talking about more than the one case that they were really specifically talking about. And the defense's job there was to tackle that, the idea of was there a pattern.

TOOBIN: A pattern, right. California's famous Section 1108, which allows prosecutors to put in evidence of uncharged prior misconduct by the defendant. They brought forth evidence regarding five boys. Three of those boys testified for the defense and said it didn't happen. But I think when you add up all of that evidence, it's very likely, or certainly possible, that the jury will say, where there's smoke, there is fire. There can't be all these people just lying in the same way. So, I think that's a miss for the defense. And if Jackson is convicted, I think that prior evidence will be very important.

O'BRIEN: We are ranking it right now, but the case is not over. The trial is not over.

TOOBIN: Not quite, but it's pretty close. I mean, we're down to the rebuttal case, and it looks like this will not be a very extensive rebuttal case for the prosecution. So, it looks like summations in the middle of next week.

O'BRIEN: And it is almost over. It didn't go as long as you had originally thought.

TOOBIN: You know what? It didn't. I think the judge deserves a lot of credit for keeping this thing moving. I mean, it was not a short trial, but it didn't go into the summer.

O'BRIEN: We'll see how it ends.

TOOBIN: All right.

O'BRIEN: Jeffrey Toobin, thanks as always -- Bill.

HEMMER: Well, the real estate market is red hot. We know that and have known that for years now. More Americans than ever own homes, encouraged by these consistently low mortgage rates. But is that bubble about to burst?

Allan Chernoff went looking for an answer this morning. Here's Alan.

(BEGIN VIDEOTAPE)

ALLAN CHERNOFF, CNN SENIOR 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 home 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 is now at $230,800, the second-highest level ever.

In markets like Las Vegas, Phoenix and Miami, speculation is fueling price gains. Investors are 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, and by the time you close it could have been worth 200 or more. Some people made 50 to 100, even 150,000 off a single-family home.

CHERNOFF: "Fortune" magazine is calling it the real estate gold rush, but housing expert say it could be dangerous.

MICHAEL CARLINER, NATIONAL ASSOCIATION OF HOME BUILDERS: They think they are 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 overheated markets, they warn, supply could soon outstrip demand, leading to lower prices.

Allan Chernoff, CNN, New York.

(END VIDEOTAPE) HEMMER: Also, some economists say they expect the rate for a 30- year mortgage to stay below 7 percent through next year. That will help to keep housing sales and prices strong, they say, and we will see -- Soledad.

O'BRIEN: It is Fleet Week here in New York City. The 18th annual celebration kicked off Wednesday with a parade of ships on the Hudson River. Quite a sight there. During the next few days, the public can visit the ships and watch military demonstrations at the USS Intrepid Sea, Air and Space Museum. Fleet Week -- excuse me -- runs through Memorial Day. In fact, here is a live look, if we can get it right there, of the USS John F. Kennedy. It's docked along the Hudson River.

Be sure to tune in tomorrow morning, because I'm going to be reporting live on board the USS Kennedy. It is the biggest ship in this year's event. Hopefully the weather will hold up for our outdoor live shots.

(WEATHER REPORT)

O'BRIEN: And the final "Jeopardy!" answer is: he won the ultimate tournament of champions. The question is this: Who is Brad Rutter? He beat Ken Jennings and Jerome Vered in the final showdown of the trivia champs. Last night's show, in fact, paid the biggest prize of any game show. Two million bucks went to the winner, $500,00 was for the second place finisher, $250,000 for the third place finisher.

So, Bill, want to hear the question?

HEMMER: Yes. Jennings didn't win.

O'BRIEN: No, can you believe it?

HEMMER: Do you know what? He was talking -- didn't you think there was just a little bit of glow gone when he was here in our studio?

O'BRIEN: He seemed a little bit bummed out, yes, I thought maybe. And it was -- the show had been pre-taped.

HEMMER: All right, ask away.

O'BRIEN: That was my guess. All right, here it is. These names of two original Mercury astronauts who orbited Earth in May 1962 and May 1963 are also occupations. You have 30 seconds. I'm not going to really give you 30 seconds. I'll give you two seconds.

HEMMER: What are politicians?

O'BRIEN: No. Here's the winning answer.

HEMMER: John Glenn?

O'BRIEN: The answer is Carpenter and Cooper. Of course, we're having audio problems.

HEMMER: How do you know that's the answer?

O'BRIEN: Because I just read it.

HEMMER: Oh.

O'BRIEN: And that was Brad who won the final question.

HEMMER: I didn't hear it, though.

O'BRIEN: We had audio problems at the critical moment.

HEMMER: Imagine that.

O'BRIEN: That's all right. That's all right. I was able to fill in. Anyway, Jennings, as you know, won those 74 games in a row. He beat Rutter's record overall. But under the old rules, Rutter actually was telling us how he had to quit after five wins. That was the old rules. And they changed the rules after that. So Jennings was actually allowed to go on and on and on. So maybe Brad Rutter and...

HEMMER: They're all just darned smart.

O'BRIEN: Yes, they know a lot of trivia.

HEMMER: All three of them, too.

O'BRIEN: Congratulations to all of them. They all walked away with a lot of money.

HEMMER: Might want a second shot next time. Play the music next time.

Thousands of former Enron employees are about to get a big payday. Ex-CEO Ken Lay is apparently not happy about it. Andy explains that in a moment.

O'BRIEN: Plus, America's favorite talent show has a new champion, and Bill Hemmer called it. Toure is going to give us his spin on the newest "American Idol" coming up next on AMERICAN MORNING.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

RYAN SEACREST, HOST, "AMERICAN IDOL": The winner of "American Idol" 2005 is Carrie Underwood!

(END VIDEO CLIP)

HEMMER: Now the question begs: Can Carrie carry a tune? "American Idol" crowned its fourth champ last night, country crooner Carrie Underwood, defeating the southern rocker out of Alabama, Bo Bice, with his long hair at last night's finale. Toure is back with us with a morning-after reaction.

I want to quote you from last night. "I totally hate Carrie." Boy, that's strong.

TOURE, CNN POP CULTURE CORRESPONDENT: I'm talking boring, insipid. This is what happens when the masses pick art. That's why -- you know, you have a record company, you've got one guy, one A&R (ph) guy that says that's the one.

HEMMER: So, you're saying America is wrong. Look at you checking on the country.

TOURE: Well, I do this every day, you know how I do. But Simon Cowell said, thank you to America for finally getting it right. No, you got it totally wrong. Carrie is way, way beneath Bo. And let me tell you, the proof will come a year from now when we look back and we say you know what? Bo is...

HEMMER: Is the next Clay Aiken.

TOURE: ... the real winner. Yes, I mean, like Clay, co-winner sort of thing. But I think Bo's album will be way more interesting than Carrie's and will do way better.

HEMMER: You know, I think I'm supposed to defend Carrie in this segment.

TOURE: If you like her.

HEMMER: Twenty-four hours ago, I said Bo is better. That means Carrie wins.

TOURE: OK.

HEMMER: Because it always goes that way.

TOURE: Does it?

HEMMER: Yes, sure it does.

TOURE: Does it? I think Ruben was better than Clay.

HEMMER: You thought so?

TOURE: But Clay had all of that sympathy for having lost.

HEMMER: I can't believe we're debating this on national television.

Listen, "Idol" did huge numbers again this year. Fox is saying 500 million votes were cast throughout this series. That doesn't mean 500 million people voted.

TOURE: Right.

HEMMER: You know, a lot of people voted a number of times. That's extraordinary.

TOURE: I guess. You know what's extraordinary to me is that "American Idol" continues on. "Who Wants to be a Millionaire" was this level of success, millions of viewers multiple times a week, but it petered out somehow.

HEMMER: All these shows do, except for this one.

TOURE: Yes. "Idol" just keeps on going.

HEMMER: Do you know why?

TOURE: Why?

HEMMER: I'll tell you why.

TOURE: You tell me. You be the pop culture correspondent.

HEMMER: Because today, when families have kids and they're looking for harmless entertainment at night, when they're looking for a place to put the kids in front of the TV and do not have to worry about the content...

TOURE: Right.

HEMMER: ... "American Idol" is there for them.

TOURE: Well, you know, last night's show was way too long. But they gave you Lynyrd Skynyrd, George Benson...

HEMMER: Sure.

TOURE: ... Babyface.

HEMMER: Sure.

TOURE: I mean, it was variety show at the end of the day. America loves a variety show. But now, now that they are pros, now we're going to see who's really an artist and who is a faker.

HEMMER: Now...

TOURE: With a songwriter. Can you write a song? That's the thing, right? If you can't write a song -- if you're a musician and you can't write a song, you're like a basketball player who can't dribble. So, Bo and Carrie, can you write and make yourself a star?

HEMMER: So, in your next life, you're a producer. How do you make this show better?

TOURE: You know...

HEMMER: How do you get more than 30 million viewers? Because that right now is enormous.

TOURE: If I was a producer on this show, I wouldn't touch the show, except perhaps I would allow them to have flaws, to, you know, have a little bit of a past? What's so wrong with that? Isn't America the land of second chances? You know, you had an arrest five years ago, you're out of the contest. Like, what is that?

HEMMER: I think the point you make, though, is that when you get toward the end, write your own song.

TOURE: Yes, yes.

HEMMER: And see what kind of talent there is.

TOURE: I would like to see in the final three, you have to write one song, and then, you know, you do some covers. I understand the need to do covers. But write a song, take the wheel.

HEMMER: "I totally hate Carrie?"

TOURE: Totally.

HEMMER: Do you want to pull back on that?

TOURE: No.

HEMMER: Now is your chance.

TOURE: No.

(CROSSTALK)

HEMMER: You have a ladybug on your collar for crying out loud. It's great to see you.

TOURE: Thank you.

HEMMER: See you tomorrow.

TOURE: All right.

HEMMER: Carrie Underwood is not the only country singer making headlines last night. Garth Brooks got down on one knee, proposed to a girlfriend, fellow country music star Tricia Yearwood. She said yes. The crowd went crazy. The occasion was the Legends in Bronze event at the Buck Owens Crystal Palace in California. Brooks has been on stage for a couple of years now, too. For him it's a second marriage, for her it's her third. And they shall live happily ever after, for at least 12 months.

Thanks, Toure. Here is Soledad.

O'BRIEN: That's so cute. Other news ahead this morning, thousands of former Enron employees are finally getting their due. So, why are two former executives upset about that? Andy is "Minding Your Business" up next on AMERICAN MORNING.

(COMMERCIAL BREAK)

O'BRIEN: Welcome back.

One more paycheck for former Enron workers. Not everybody happy about that. Plus a preview of the markets this morning. Andy Serwer is "Minding Your Business."

Want to start with the markets?

ANDY SERWER, "FORTUNE" MAGAZINE: No. I think we're going to start with the Enron people, if that's OK.

O'BRIEN: OK, sure.

SERWER: Let's talk about this situation. Obviously, thousands of Enron employees lost their pensions, their profit sharing plans when this energy company went bankrupt several years ago. A judge is now ruling that 20,000 of them will share an $85 million insurance payout. That works out to be about $4,250 per employee. They were looking for a $1.5 billion payment. Obviously way short of that. And it will be paid proportionate to the amount of their losses.

Now here's the wrinkle, Soledad. Jeff Skilling, the former CEO, and Ken Lay, the former chairman, fought this ruling, saying that the $85 million shouldn't go to employees; it should go to them. It should go to them to pay for their legal costs. At long last, sirs, have you no sense of shame, no sense of decency? I think that was Joseph Welch during the McCarthy hearings. I think it's very applicable.

O'BRIEN: And the answer is apparently not.

SERWER: Apparently not. It's really unbelievable.

Let's talk about the markets yesterday, a bit of a downer for investors across the board, here you can see. Interest rates ticked up a little bit. So did the oil prices, up $1.31 to nearly $51 a barrel. Obvious that's not good news. A bit of a breather here. Futures are up smartly though this morning. We get a second look at GDP at 8:30 Eastern for the first quarter, and obviously there is some optimism there.

O'BRIEN: All right, we'll check in a little bit later as the markets open, too.

SERWER: Right.

O'BRIEN: Thanks, Andy.

HEMMER: To the wish list and the "Question of the Day."

JACK CAFFERTY, CNN ANCHOR: Optimism here, too. Things are looking up. The State Treasury is raking it in for the first time in several years. Tax collections rose to a record 600 billion last year. That's a 7 percent increase over 2003. And the money is coming in even faster this year.

"USA Today" reports the April surprise has put nearly every state at or above expectations. Tax cuts, major new spending programs under discussion all around the question.

The question is this: How should your state spend its extra money?

Pamela in Michigan writes: "You must be joking. Extra money, where? Not in Michigan. With unemployment over 7 percent, the state government has already raised the cigarette tax to help pay for Medicaid, raised property taxes to help pay for their budget and have cut everything else."

Dean in New Jersey writes: "I think my state should consider spending its extra revenue on a boarder patrol. New Jersey is already way overpopulated and gets more so every day. We need to start forcing all newcomers to turn around."

SERWER: Yes, New Jersey.

HEMMER: Did they write that, or did you have that?

CAFFERTY: No, no, no. I live in New Jersey. And you're all welcome at my house.

SERWER: They're turning away people from New Jersey, huh?

CAFFERTY: No, this guy thinks they should.

SERWER: Yes, OK.

CAFFERTY: He writes every day. He's not well.

Tom in Minnesota: "Here in Minnesota, we don't know what extra money is all about. Our politicians spend it faster than they can tax it. Our politicians can't seem to get their work done on time, so then we pay them in addition for a special session."

John in Mississippi: "The answer is always education, both public school and higher education. In the South, salaries for teachers and professors have been continuously lagging behind significantly the national average. It's time they got their due."

And Sandy in South Carolina writes: "Spend it? Why is everybody in such a hurry to spend it? My grandma used to ask if the money was burning a hole in our pocket. Put the money up for a rainy day."

HEMMER: We've had plenty of those lately, haven't we?

O'BRIEN: You know...

HEMMER: We've had rainy days.

O'BRIEN: We need to spend it, because if you don't spend it somebody else spends it before you get to spend it.

SERWER: Right.

O'BRIEN: So you might as well get to spend it on what you want. SERWER: Well, teacher salary is a good idea, right?

O'BRIEN: Yes.

SERWER: It's an evergreen, but it's true.

O'BRIEN: I think there are lots of things. Good answers. All right, Jack, thanks.

CAFFERTY: You're most welcome.

O'BRIEN: Coming up in just a moment, new developments on the condition of Iraq's most-wanted terrorist. Iraqi officials make a major announcement about Abu Musab al-Zarqawi. That's ahead on AMERICAN MORNING.

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