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American Morning

Two Suicide Bombers Kill at Least 27 People in Hilla; U.S. Troops in Iraq Observing Memorial Day

Aired May 30, 2005 - 07:00   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.


ALI VELSHI, CNN ANCHOR: I'm Ali Velshi, in for Bill Hemmer. Americans are making huge profits in real estate by buying and quickly selling homes. This morning, we look at the risks to flipping.
SOLEDAD O'BRIEN, CNN ANCHOR: And it wasn't a win, but it was one for the record books. Indy 500 sensation Danica Patrick doing what no woman has done before, on this AMERICAN MORNING.

Good morning. Welcome on this Memorial Day. Bill Hemmer has got the day off, but Ali Velshi has been kind enough to help us out.

Good morning.

VELSHI: And I would have thought it was kind enough -- good morning, Soledad -- if it were yesterday, when it was a bright sunny day, but I'm not really feeling so bad about being inside in the rain.

O'BRIEN: Well, Jack's got the day off as well, but Toure's going to be around in just a little bit to answer the question of the day.

Let's get right to the news this morning. We begin with the latest developments out of Iraq. Two suicide bombers killed at least 27 people in Hilla, which is south of Baghdad. That makes at least eight bombings since Sunday, and at least 46 deaths. Ryan Chilcote in Baghdad for us this morning.

Ryan, good morning to you.

What was the target?

RYAN CHILCOTE, CNN CORRESPONDENT: Well, the Iraqi police are telling us that the target in those twin attacks in the city of Hilla was Iraq's security forces. We've seen this before. These two suicide bombers were operating about one minute from one another. The first one walked up to a crowd of police recruits. They were standing in line waiting for the last medical tests, the last medical tests they need to clear before they could become police. That's when the suicide bomber, with one of these so-called suicide vests packed with explosives, walked up to the crowd of police recruits and blew himself up.

Then just about 50 yards from there, and as I said, within a minute's time, a second suicide bomber walked up to a group of former policemen, who were staging a demonstration of protest against the fact that they'd just been removed from the local police force, the Iraqi police are telling us that at least 27 Iraqis were killed in those attacks, at least 118 wounded -- Soledad.

O'BRIEN: Well, Ryan, we've heard about Operation Lightning. What's its status at this point?

CHILCOTE: We expect it to begin any time now. The U.S. military says shaping operations for Operation Lightning are already under way. It will be the largest operation that the Iraqi security forces have ever carried out since the fall of Saddam Hussein, some 40,000 members of Iraq's security forces, backed up by 10,000 U.S. troops who won't be celebrating or reflecting too much on this Memorial Day, will be going out, fanning out into almost all of the streets of the Iraqi capital. Keep in mind, this is a city of more than seven million people. They're going to be conducting door-to-door searches, searching all vehicles, setting up more than 600 checkpoints. Of course the whole idea of this operation is to try to bring a stop to the violence that we have seen in the Iraqi capital over the last month.

From all the indications we have at this point, the insurgents are not getting out of the Iraqi capital since this operation was announced on Thursday. All indications are that they appear to be planning on keeping their ground here and planning on fighting U.S. and Iraqi forces in the Iraqi capital -- Soledad.

O'BRIEN: Ryan Chilcote, in Baghdad for us this morning. Ryan, thanks.

VELSHI: Well, U.S. troops in Iraq are observing Memorial Day even as the death toll there keeps rising. It's been a little over 800 days since the U.S.-led coalition launched the war, and in that time, more than 1,650 Americans have been killed. More than 1,830 coalition troops have died. Now more than 70 U.S. military personnel were killed in May alone. That's the highest death toll in five months.

Our Baghdad bureau chief Jane Arraf joins us live via phone from Camp Victory, where Memorial Day is being observed shortly.

Jane, how is the troop morale there at Camp Victory?

JANE ARRAF, CNN CORRESPONDENT: Ari, it's -- troop morale, we've got to understand this is two years into this war, but we're seeing a new series of troops. Now some of them have come back for their second deployment. But Memorial Day, as you might imagine, on a main military base, in a war zone, is -- ceremonies like this, quite somber.

Now we're at the main palace. It's the main military headquarters in Iraq, part an extraordinary series of Saddam's palaces. And starting in just a few minutes is a service that will remember the 701 U.S. service people who have been killed here over the past year. Those names are going to take almost five minutes to read.

One of the things, though, is, while Memorial Day in the states, obviously, is a time of barbecues, the unofficial start of summer and a lot of other things, here it's a working day for soldiers and Marines, but in a sense almost every day here is Memorial Day. They do not forget their colleagues, their comrades who have full fallen in battle -- Ari.

VELSHI: Those numbers that we were just talking about when we introduced you, Jane, they're kind of staggering, and I guess in some case the soldiers at Camp Victory would like to celebrate Memorial Day as the beginning of something else, a new time for them. At some point, though, after five minutes of reading the names of their fallen comrades, does it start to sort of seep out, the frustration, the idea that some of them would just like to be home?

ARRAF: Oh, everybody would like to be home. There's absolutely no doubt about it. There are a few people who hate this war more than the people fighting it. And just think of it, I mean, a year away from your family, a year in oftentimes a very dangerous situation, not watching your children grow up, being away from your husband or wife.

It's, again, the -- almost the beginning of summer here, but it's already 110 degrees, and that's in the shade. It is not easy here. So they very much would like to be back.

And you're right, there is some soul-searching going on these days about perhaps whether it's worth it.

But overall, the main theme when you talk to the soldiers and Marines, that they've been sent out to do a job, and they're going to do that job -- Ali.

VELSHI: Jane Arraf, our Baghdad bureau chief. Thank you, Jane.

O'BRIEN: Back in this country now, federal authorities are announcing new terrorism arrests. Rafiq Abdu (ph) Sabir, also known as "The Doctor," was arrested over the weekend in Florida. Authorities say he promised to provide medical help to wounded terrorists.

And in New York, FBI agents picked up a man named Tarik Shah (ph). Authorities say he is an expert in martial arts who offered to train Al Qaeda members in hand-to-hand combat.

Investigators say both men were recorded pledging their loyalty to Osama Bin Laden.

As legal proceedings begin in these latest terror arrests, behind the scenes, the Bush administration is considering some key adjustments in how it fights the war on terror.

Let's get right to Bob Franken. He's at the White House this morning with that.

Good morning, Bob.

BOB FRANKEN, CNN CORRESPONDENT: Good morning.

And there's an ongoing spirited debate within the administration about the constant efforts to define exactly what the war on terrorism is.

(BEGIN VIDEOTAPE)

BOB FRANKEN, CNN NATIONAL CORRESPONDENT (voice-over): As President Bush devotes part of his Memorial Day to commemorating the nation's war dead, his advisers are engaged in a significant review of today's war, the global war on terrorism.

GEN. RICHARD MYERS, JOINT CHIEFS CHAIRMAN: What they're trying to do, and what we're trying to do is look at our strategy and ensure that we use the right words, the right vocabulary and focus all interest of national power, just the refinement of what our current strategy is.

FRANKEN: That strategy since the September 11 attacks has included an intense emphasis on breaking the back of al Qaeda. But even though efforts to kill or capture Osama bin Laden have been unsuccessful, several other leaders have been removed.

Still, others have moved in. As the president's chief terrorism adviser told the "Washington Post," "Nature abhors a vacuum."

So officials in and out of the administration believe the time has come to expand the focus. And the co-chairman of the 9/11 Commission agrees.

LEE HAMILTON, 9/11 COMMISSION: The threat remains still very formidable, but it's much more diffuse than it was in a single little al Qaeda cell.

FRANKEN: Critics charge this review is long overdue.

SEN. CHRIS DODD, (D) CONNECTICUT: This is a debate they should have been having months ago, not just more recently, about whether or not there is a broader problem out there than just al Qaeda.

FRANKEN: In fact, the debate has been going on for some time, hampered by a delay in filling key positions in the anti-terrorism hierarchy.

(on camera): Critics say that the delay is causing a drift in policy, but the administration contends the need for change grows out of success. All agree that the war on terror is far from over.

Bob Franken, CNN, the White House.

(END VIDEOTAPE)

FRANKEN: And that delay, critics say, has caused a drift in the war against terror, but the administration says that the need to change things is a symbol of success. All agree, Soledad, that this war on terror is far from over.

O'BRIEN: Bob Franken for us this morning at the White House.

Bob, thanks for that update. Well, later this morning, the president will honor America's war dead during memorial day observances at Arlington National Cemetery. You want to stay tuned to CNN for live coverage. of that.

(WEATHER REPORT)

O'BRIEN: Well, ahead this morning, the housing market is booming. Investors are making some big bucks buying homes and selling them quickly. We're going to take a look, though, this morning at the risks of flipping.

VELSHI: Also tension mounting between Australia and Indonesia after a controversial smuggling trial. Can the Aussie government head off a crisis?

O'BRIEN: And Iraq's new military prepares for its biggest operation yet. Joint Chiefs Chairman General Richard Myers tells about Operation Lightning, up next on AMERICAN MORNING.

(BEGIN VIDEO CLIP)

PFC JASON MENNING: I'm PFC Jason Menning. I'm from St. Louis, Missouri. I have a mother, father back home in St. Louis, my wife, Susan, my daughter, Alexandra, who is 15 weeks old now, a brother at the Naval Academy. I'd like to say hello to all of them and thanks for all the support.

(COMMERCIAL BREAK)

VELSHI: Well, the outlook at the pump is getting a bit brighter as we enter the summer driving season. Industry analysts are predicting that the trend toward lower gas price will continue. The average price of gas in the United States this holiday weekend is now $2.11 a gallon. That's according to AAA, and that's down four cents from last week. It's a drop of 18 cents from last month's peak.

Not only is gas expensive, houses continue to be expensive, and some home owners are in it for the long hall, so it doesn't matter as much of them. But some of them put some work into the house, hoping that the place is worth more than it was when they bought it when they get ready to sell it, and then there are those speculators for whom all of that work and time is too much to ask. So in this, a booming housing market, the name of their game is flipping.

Our personal finance editor Gerri Willis joins me now to explain flipping, who is doing it, what it's all about.

Hello, Gerri.

GERRI WILLIS, CNN ANCHOR: Hey, Ali. Reunion here. Good to see you.

VELSHI: Good to see you.

WILLIS: Let's talk about flipping here for a minute, because a lot of people out there are really interested in this. Listen up, you know the old-fashion flipping. Let's tell you about that first, that's when somebody takes a rundown house and fixes it up in three to six months, and then sells it and makes a profit.

But the new flipping is something entirely different. It's truly speculative. People only hold onto their homes for a day, a few weeks, and turn it over very quickly.

VELSHI: These are the speculators that work in any market that's hot really, and they've decided that the place that you can do this, despite all of the expenses of buying a house, and the commissions and the legal fees, it's so worth it so buy a house and turn it around. Who are these people? Are these regular folk?

WILLIS: Well, there's a lot of regular folk doing this right now. In fact, the National Association of Realtors says that some 23 percent of people out there who are home buying are speculators, really investors.

And what I was talking about earlier, the really speculative part of this and turning over houses so quickly, these are people who live in red hot markets, Miami, Vegas, you name it, Ali.

And what they're doing is they're buying these with the idea they'll turn them over so quickly, housing prices going up so far, so fast, they'll be able to make money.

Now when I was in the Miami area this winter, what I found is that people were selling rights to buy these condos on the ocean front and making a ton of money doing this. Now the problem can be, what if prices go down?

VELSHI: Right. And a lot of the speculators, a lot of these flippers are highly leveraged; they're not paying capital down, they're not putting much of a down payment down, so if prices go down, you're now left with this full debt and exposure to your property.

WILLIS: Well, a lot of people, too, never expected to hold onto these mortgages. So they're really not prepared to pay for them.

VELSHI: Speaking of mortgages, how is it different from my going to the bank to get a mortgage on the home that I live in?

WILLIS: Right. Well, a lot of people are using for these speculative mortgages as well. Interest-only mortgages, you may be familiar with those. Those are the ones where you pay interest only, not the principle. A lot of people are using them for their primary homes. They can be a little dangerous if you never pay down the principle on your mortgage, but it does allow to you stretch your dollars if you're getting into highly speculative real estate.

VELSHI: And like stock trading, there's a line here between those people who kind of do on it the side for fun. Maybe they'll get another house, fix it up, or maybe they'll sell it sooner, and people who are now putting all of their net worth really into the business of being in property, and that's just dangerous because you're not spread out enough; you're not diversified. WILLIS: Well, possibly, and also this is really the day trading of the 2005s is what's going on here. When the music stops, when the market goes down, these people could be in a lot of trouble. In the meantime, they're having a heck of a good time, and having a lot of fun and making a lot of money. But it's going to be interesting to see how long this can go on for.

VELSHI: History says these things are often signs of a market top, when everyone's getting into it.

WILLIS: You bet. It could be a bubble.

VELSHI: Good to see you.

WILLIS: Good to you see, Ali.

VELSHI: Gerri Willis, our personal finance editor.

O'BRIEN: Ahead this morning, with a little help from the U.S., Iraq's rebuilt military gets ready for its biggest operation yet. We're going talk to Joint Chiefs Chairman General Richard Myers. That's up next on AMERICAN MORNING. Stay with us.

(COMMERCIAL BREAK)

O'BRIEN: A familiar sight in Washington D.C. this Memorial Day weekend, Rolling Thunder, the annual motorcycle tribute to veterans, POWs and those who are missing in action roared into the nation's Capitol.

General Richard Myers, the chairman of the Joint Chiefs of Staff, addressed a Rolling Thunder rally earlier. He left his stars at home, though, dressed instead in the red, white and blue.

General Myers, in fact, is right there. He's joining us live from Washington, where he is monitoring the latest developments from Iraq in front of the World War II memorial at the nation's capital, in fact.

Nice to see you, general. Thank you for being with us this morning.

GEN. RICHARD MYERS, JOINT CHIEFS CHAIRMAN: Nice to see you, Soledad.

O'BRIEN: Thank you very much.

When does Operation thunder -- Operation Lightning, rather, get under way?

MYERS: It got under way in the last several days. The good news about it, is it's cooperation between the Iraqi Ministry of Interior, Ministry of Defense. It's important they cooperate. That's the police and the army, of course. It's important they cooperate given the security situation they have, so that's all very, very encouraging. O'BRIEN: It's operating in the wake, really, of a terrible week of violence. Some in the military say that the violence shows an increased sophistication on the part of the insurgents. Others say it's a sign of increased desperation. What do you think?

MYERS: Well, it's -- I think it's a pattern that we've seen. You know, a couple of years ago, they started going after coalition forces, hoping to drive them out of Iraq. That didn't work. Then they went after Iraqi security forces, hoping to keep them from signing up, and yet they're signing up in record numbers, both police and their army. And then they went after Iraqi civilians, and that's pretty much where they are today. And yet Iraqis voted in the elections and January, and they say by a margin of 85 percent, they're going to vote in the constitutional referendum.

So they keep going after what we in the military call these centers of gravity. They're not successful. And they're using a very lethal means now with these vehicle-borne explosive devices. And they don't care who they kill. I mean it's men, women and children, average Iraqi citizens. They simply don't care.

O'BRIEN: There's a military intelligence officer, in fact, who says that five percent of the insurgents are foreign fighters, but they're the cause of the greater percentage of all the damage. How do you ever stop what you call incredibly destructive,those suicide attacks? What's the plan?

MYERS: Well, the plan is that the Iraqi security forces, as they get stronger, will take on more and more of this responsibility, and then we need a little help from the neighbors as well. We think most of the foreign fighters come in through Syria, so Syria needs to get a lot more serious about stopping that flow of fighters into the country, and then those neighbors of Iraq that are Sunni in nature, majority, need to encourage Sunnis in Iraq to become part of the political process, because in the end, since there is no political base in Iraq for the fighters causing all of this havoc, that in the end, the political process will be the way we'll win this.

O'BRIEN: There's a reporter out of "The Sunday Times of London" that says that Al Zarqawi has been treated in Iran for a shrapnel wound to the chest. Any evidence that these reports are true, that he's wounded?

MYERS: Soledad, what we believe is that the reports posted on their own Web site saying that he's been wounded, we believe those reports are true. We do not know the severity, though, of those wounds.

O'BRIEN: You are retiring in September, which makes this your last Memorial Day officially in uniform. Is it frustrating to leave the job before the work is done in Iraq?

MYERS: Well, I think there's been a lot of great work done overall in the -- our struggle against violent extremism, yet as you mentioned, there is a lot to do. It's not frustrating, and I'll tell you why it's not frustrating. We've got lots of folks ready to step in, certainly to replace me. General Pete Pace is going to be the new chairman of the joint chiefs of staff, if he's confirmed by the Senate. He's a terrific officer. So there's always somebody taking a step forward.

And on Saturday, I wasn't too far from New York City when we commissioned 911 new second lieutenants in the United States Army, graduating from West Point, and as you shake their hands, look into their eyes, wow, what a group of -- great group of young men and women, and they are absolutely ready. They call them the class of 9/11, because they came in before 9/11, 9/11 happened, the nation went to war, and they're going to take their place and they're going to do great things for this nation, as did the folks that are memorialized by this World War II Memorial in the background.

O'BRIEN: What would you like Americans to be thinking about today on this Memorial Day?

MYERS: Thinking probably about what they think about on every Memorial Day, that in America, one thing that's maybe not unique to our spirit, but very important to the American spirit, and that is that there are a few things worth fighting for, and one of them of course is our freedom, our way of life, and that's what we ought to think about, those that have gone before, that have paid the ultimate sacrifice for our freedoms that we enjoy today, and those that are currently fighting for those very same freedoms.

O'BRIEN: General Richard Myers is the chairman of the Joint Chiefs of Staff. Nice to see you, sir. Thank you very much for being with us.

MYERS: Soledad, nice to see you again.

O'BRIEN: Thank you.

And AMERICAN MORNING is back in just a moment.

(COMMERCIAL BREAK)

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Aired May 30, 2005 - 07:00   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALI VELSHI, CNN ANCHOR: I'm Ali Velshi, in for Bill Hemmer. Americans are making huge profits in real estate by buying and quickly selling homes. This morning, we look at the risks to flipping.
SOLEDAD O'BRIEN, CNN ANCHOR: And it wasn't a win, but it was one for the record books. Indy 500 sensation Danica Patrick doing what no woman has done before, on this AMERICAN MORNING.

Good morning. Welcome on this Memorial Day. Bill Hemmer has got the day off, but Ali Velshi has been kind enough to help us out.

Good morning.

VELSHI: And I would have thought it was kind enough -- good morning, Soledad -- if it were yesterday, when it was a bright sunny day, but I'm not really feeling so bad about being inside in the rain.

O'BRIEN: Well, Jack's got the day off as well, but Toure's going to be around in just a little bit to answer the question of the day.

Let's get right to the news this morning. We begin with the latest developments out of Iraq. Two suicide bombers killed at least 27 people in Hilla, which is south of Baghdad. That makes at least eight bombings since Sunday, and at least 46 deaths. Ryan Chilcote in Baghdad for us this morning.

Ryan, good morning to you.

What was the target?

RYAN CHILCOTE, CNN CORRESPONDENT: Well, the Iraqi police are telling us that the target in those twin attacks in the city of Hilla was Iraq's security forces. We've seen this before. These two suicide bombers were operating about one minute from one another. The first one walked up to a crowd of police recruits. They were standing in line waiting for the last medical tests, the last medical tests they need to clear before they could become police. That's when the suicide bomber, with one of these so-called suicide vests packed with explosives, walked up to the crowd of police recruits and blew himself up.

Then just about 50 yards from there, and as I said, within a minute's time, a second suicide bomber walked up to a group of former policemen, who were staging a demonstration of protest against the fact that they'd just been removed from the local police force, the Iraqi police are telling us that at least 27 Iraqis were killed in those attacks, at least 118 wounded -- Soledad.

O'BRIEN: Well, Ryan, we've heard about Operation Lightning. What's its status at this point?

CHILCOTE: We expect it to begin any time now. The U.S. military says shaping operations for Operation Lightning are already under way. It will be the largest operation that the Iraqi security forces have ever carried out since the fall of Saddam Hussein, some 40,000 members of Iraq's security forces, backed up by 10,000 U.S. troops who won't be celebrating or reflecting too much on this Memorial Day, will be going out, fanning out into almost all of the streets of the Iraqi capital. Keep in mind, this is a city of more than seven million people. They're going to be conducting door-to-door searches, searching all vehicles, setting up more than 600 checkpoints. Of course the whole idea of this operation is to try to bring a stop to the violence that we have seen in the Iraqi capital over the last month.

From all the indications we have at this point, the insurgents are not getting out of the Iraqi capital since this operation was announced on Thursday. All indications are that they appear to be planning on keeping their ground here and planning on fighting U.S. and Iraqi forces in the Iraqi capital -- Soledad.

O'BRIEN: Ryan Chilcote, in Baghdad for us this morning. Ryan, thanks.

VELSHI: Well, U.S. troops in Iraq are observing Memorial Day even as the death toll there keeps rising. It's been a little over 800 days since the U.S.-led coalition launched the war, and in that time, more than 1,650 Americans have been killed. More than 1,830 coalition troops have died. Now more than 70 U.S. military personnel were killed in May alone. That's the highest death toll in five months.

Our Baghdad bureau chief Jane Arraf joins us live via phone from Camp Victory, where Memorial Day is being observed shortly.

Jane, how is the troop morale there at Camp Victory?

JANE ARRAF, CNN CORRESPONDENT: Ari, it's -- troop morale, we've got to understand this is two years into this war, but we're seeing a new series of troops. Now some of them have come back for their second deployment. But Memorial Day, as you might imagine, on a main military base, in a war zone, is -- ceremonies like this, quite somber.

Now we're at the main palace. It's the main military headquarters in Iraq, part an extraordinary series of Saddam's palaces. And starting in just a few minutes is a service that will remember the 701 U.S. service people who have been killed here over the past year. Those names are going to take almost five minutes to read.

One of the things, though, is, while Memorial Day in the states, obviously, is a time of barbecues, the unofficial start of summer and a lot of other things, here it's a working day for soldiers and Marines, but in a sense almost every day here is Memorial Day. They do not forget their colleagues, their comrades who have full fallen in battle -- Ari.

VELSHI: Those numbers that we were just talking about when we introduced you, Jane, they're kind of staggering, and I guess in some case the soldiers at Camp Victory would like to celebrate Memorial Day as the beginning of something else, a new time for them. At some point, though, after five minutes of reading the names of their fallen comrades, does it start to sort of seep out, the frustration, the idea that some of them would just like to be home?

ARRAF: Oh, everybody would like to be home. There's absolutely no doubt about it. There are a few people who hate this war more than the people fighting it. And just think of it, I mean, a year away from your family, a year in oftentimes a very dangerous situation, not watching your children grow up, being away from your husband or wife.

It's, again, the -- almost the beginning of summer here, but it's already 110 degrees, and that's in the shade. It is not easy here. So they very much would like to be back.

And you're right, there is some soul-searching going on these days about perhaps whether it's worth it.

But overall, the main theme when you talk to the soldiers and Marines, that they've been sent out to do a job, and they're going to do that job -- Ali.

VELSHI: Jane Arraf, our Baghdad bureau chief. Thank you, Jane.

O'BRIEN: Back in this country now, federal authorities are announcing new terrorism arrests. Rafiq Abdu (ph) Sabir, also known as "The Doctor," was arrested over the weekend in Florida. Authorities say he promised to provide medical help to wounded terrorists.

And in New York, FBI agents picked up a man named Tarik Shah (ph). Authorities say he is an expert in martial arts who offered to train Al Qaeda members in hand-to-hand combat.

Investigators say both men were recorded pledging their loyalty to Osama Bin Laden.

As legal proceedings begin in these latest terror arrests, behind the scenes, the Bush administration is considering some key adjustments in how it fights the war on terror.

Let's get right to Bob Franken. He's at the White House this morning with that.

Good morning, Bob.

BOB FRANKEN, CNN CORRESPONDENT: Good morning.

And there's an ongoing spirited debate within the administration about the constant efforts to define exactly what the war on terrorism is.

(BEGIN VIDEOTAPE)

BOB FRANKEN, CNN NATIONAL CORRESPONDENT (voice-over): As President Bush devotes part of his Memorial Day to commemorating the nation's war dead, his advisers are engaged in a significant review of today's war, the global war on terrorism.

GEN. RICHARD MYERS, JOINT CHIEFS CHAIRMAN: What they're trying to do, and what we're trying to do is look at our strategy and ensure that we use the right words, the right vocabulary and focus all interest of national power, just the refinement of what our current strategy is.

FRANKEN: That strategy since the September 11 attacks has included an intense emphasis on breaking the back of al Qaeda. But even though efforts to kill or capture Osama bin Laden have been unsuccessful, several other leaders have been removed.

Still, others have moved in. As the president's chief terrorism adviser told the "Washington Post," "Nature abhors a vacuum."

So officials in and out of the administration believe the time has come to expand the focus. And the co-chairman of the 9/11 Commission agrees.

LEE HAMILTON, 9/11 COMMISSION: The threat remains still very formidable, but it's much more diffuse than it was in a single little al Qaeda cell.

FRANKEN: Critics charge this review is long overdue.

SEN. CHRIS DODD, (D) CONNECTICUT: This is a debate they should have been having months ago, not just more recently, about whether or not there is a broader problem out there than just al Qaeda.

FRANKEN: In fact, the debate has been going on for some time, hampered by a delay in filling key positions in the anti-terrorism hierarchy.

(on camera): Critics say that the delay is causing a drift in policy, but the administration contends the need for change grows out of success. All agree that the war on terror is far from over.

Bob Franken, CNN, the White House.

(END VIDEOTAPE)

FRANKEN: And that delay, critics say, has caused a drift in the war against terror, but the administration says that the need to change things is a symbol of success. All agree, Soledad, that this war on terror is far from over.

O'BRIEN: Bob Franken for us this morning at the White House.

Bob, thanks for that update. Well, later this morning, the president will honor America's war dead during memorial day observances at Arlington National Cemetery. You want to stay tuned to CNN for live coverage. of that.

(WEATHER REPORT)

O'BRIEN: Well, ahead this morning, the housing market is booming. Investors are making some big bucks buying homes and selling them quickly. We're going to take a look, though, this morning at the risks of flipping.

VELSHI: Also tension mounting between Australia and Indonesia after a controversial smuggling trial. Can the Aussie government head off a crisis?

O'BRIEN: And Iraq's new military prepares for its biggest operation yet. Joint Chiefs Chairman General Richard Myers tells about Operation Lightning, up next on AMERICAN MORNING.

(BEGIN VIDEO CLIP)

PFC JASON MENNING: I'm PFC Jason Menning. I'm from St. Louis, Missouri. I have a mother, father back home in St. Louis, my wife, Susan, my daughter, Alexandra, who is 15 weeks old now, a brother at the Naval Academy. I'd like to say hello to all of them and thanks for all the support.

(COMMERCIAL BREAK)

VELSHI: Well, the outlook at the pump is getting a bit brighter as we enter the summer driving season. Industry analysts are predicting that the trend toward lower gas price will continue. The average price of gas in the United States this holiday weekend is now $2.11 a gallon. That's according to AAA, and that's down four cents from last week. It's a drop of 18 cents from last month's peak.

Not only is gas expensive, houses continue to be expensive, and some home owners are in it for the long hall, so it doesn't matter as much of them. But some of them put some work into the house, hoping that the place is worth more than it was when they bought it when they get ready to sell it, and then there are those speculators for whom all of that work and time is too much to ask. So in this, a booming housing market, the name of their game is flipping.

Our personal finance editor Gerri Willis joins me now to explain flipping, who is doing it, what it's all about.

Hello, Gerri.

GERRI WILLIS, CNN ANCHOR: Hey, Ali. Reunion here. Good to see you.

VELSHI: Good to see you.

WILLIS: Let's talk about flipping here for a minute, because a lot of people out there are really interested in this. Listen up, you know the old-fashion flipping. Let's tell you about that first, that's when somebody takes a rundown house and fixes it up in three to six months, and then sells it and makes a profit.

But the new flipping is something entirely different. It's truly speculative. People only hold onto their homes for a day, a few weeks, and turn it over very quickly.

VELSHI: These are the speculators that work in any market that's hot really, and they've decided that the place that you can do this, despite all of the expenses of buying a house, and the commissions and the legal fees, it's so worth it so buy a house and turn it around. Who are these people? Are these regular folk?

WILLIS: Well, there's a lot of regular folk doing this right now. In fact, the National Association of Realtors says that some 23 percent of people out there who are home buying are speculators, really investors.

And what I was talking about earlier, the really speculative part of this and turning over houses so quickly, these are people who live in red hot markets, Miami, Vegas, you name it, Ali.

And what they're doing is they're buying these with the idea they'll turn them over so quickly, housing prices going up so far, so fast, they'll be able to make money.

Now when I was in the Miami area this winter, what I found is that people were selling rights to buy these condos on the ocean front and making a ton of money doing this. Now the problem can be, what if prices go down?

VELSHI: Right. And a lot of the speculators, a lot of these flippers are highly leveraged; they're not paying capital down, they're not putting much of a down payment down, so if prices go down, you're now left with this full debt and exposure to your property.

WILLIS: Well, a lot of people, too, never expected to hold onto these mortgages. So they're really not prepared to pay for them.

VELSHI: Speaking of mortgages, how is it different from my going to the bank to get a mortgage on the home that I live in?

WILLIS: Right. Well, a lot of people are using for these speculative mortgages as well. Interest-only mortgages, you may be familiar with those. Those are the ones where you pay interest only, not the principle. A lot of people are using them for their primary homes. They can be a little dangerous if you never pay down the principle on your mortgage, but it does allow to you stretch your dollars if you're getting into highly speculative real estate.

VELSHI: And like stock trading, there's a line here between those people who kind of do on it the side for fun. Maybe they'll get another house, fix it up, or maybe they'll sell it sooner, and people who are now putting all of their net worth really into the business of being in property, and that's just dangerous because you're not spread out enough; you're not diversified. WILLIS: Well, possibly, and also this is really the day trading of the 2005s is what's going on here. When the music stops, when the market goes down, these people could be in a lot of trouble. In the meantime, they're having a heck of a good time, and having a lot of fun and making a lot of money. But it's going to be interesting to see how long this can go on for.

VELSHI: History says these things are often signs of a market top, when everyone's getting into it.

WILLIS: You bet. It could be a bubble.

VELSHI: Good to see you.

WILLIS: Good to you see, Ali.

VELSHI: Gerri Willis, our personal finance editor.

O'BRIEN: Ahead this morning, with a little help from the U.S., Iraq's rebuilt military gets ready for its biggest operation yet. We're going talk to Joint Chiefs Chairman General Richard Myers. That's up next on AMERICAN MORNING. Stay with us.

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O'BRIEN: A familiar sight in Washington D.C. this Memorial Day weekend, Rolling Thunder, the annual motorcycle tribute to veterans, POWs and those who are missing in action roared into the nation's Capitol.

General Richard Myers, the chairman of the Joint Chiefs of Staff, addressed a Rolling Thunder rally earlier. He left his stars at home, though, dressed instead in the red, white and blue.

General Myers, in fact, is right there. He's joining us live from Washington, where he is monitoring the latest developments from Iraq in front of the World War II memorial at the nation's capital, in fact.

Nice to see you, general. Thank you for being with us this morning.

GEN. RICHARD MYERS, JOINT CHIEFS CHAIRMAN: Nice to see you, Soledad.

O'BRIEN: Thank you very much.

When does Operation thunder -- Operation Lightning, rather, get under way?

MYERS: It got under way in the last several days. The good news about it, is it's cooperation between the Iraqi Ministry of Interior, Ministry of Defense. It's important they cooperate. That's the police and the army, of course. It's important they cooperate given the security situation they have, so that's all very, very encouraging. O'BRIEN: It's operating in the wake, really, of a terrible week of violence. Some in the military say that the violence shows an increased sophistication on the part of the insurgents. Others say it's a sign of increased desperation. What do you think?

MYERS: Well, it's -- I think it's a pattern that we've seen. You know, a couple of years ago, they started going after coalition forces, hoping to drive them out of Iraq. That didn't work. Then they went after Iraqi security forces, hoping to keep them from signing up, and yet they're signing up in record numbers, both police and their army. And then they went after Iraqi civilians, and that's pretty much where they are today. And yet Iraqis voted in the elections and January, and they say by a margin of 85 percent, they're going to vote in the constitutional referendum.

So they keep going after what we in the military call these centers of gravity. They're not successful. And they're using a very lethal means now with these vehicle-borne explosive devices. And they don't care who they kill. I mean it's men, women and children, average Iraqi citizens. They simply don't care.

O'BRIEN: There's a military intelligence officer, in fact, who says that five percent of the insurgents are foreign fighters, but they're the cause of the greater percentage of all the damage. How do you ever stop what you call incredibly destructive,those suicide attacks? What's the plan?

MYERS: Well, the plan is that the Iraqi security forces, as they get stronger, will take on more and more of this responsibility, and then we need a little help from the neighbors as well. We think most of the foreign fighters come in through Syria, so Syria needs to get a lot more serious about stopping that flow of fighters into the country, and then those neighbors of Iraq that are Sunni in nature, majority, need to encourage Sunnis in Iraq to become part of the political process, because in the end, since there is no political base in Iraq for the fighters causing all of this havoc, that in the end, the political process will be the way we'll win this.

O'BRIEN: There's a reporter out of "The Sunday Times of London" that says that Al Zarqawi has been treated in Iran for a shrapnel wound to the chest. Any evidence that these reports are true, that he's wounded?

MYERS: Soledad, what we believe is that the reports posted on their own Web site saying that he's been wounded, we believe those reports are true. We do not know the severity, though, of those wounds.

O'BRIEN: You are retiring in September, which makes this your last Memorial Day officially in uniform. Is it frustrating to leave the job before the work is done in Iraq?

MYERS: Well, I think there's been a lot of great work done overall in the -- our struggle against violent extremism, yet as you mentioned, there is a lot to do. It's not frustrating, and I'll tell you why it's not frustrating. We've got lots of folks ready to step in, certainly to replace me. General Pete Pace is going to be the new chairman of the joint chiefs of staff, if he's confirmed by the Senate. He's a terrific officer. So there's always somebody taking a step forward.

And on Saturday, I wasn't too far from New York City when we commissioned 911 new second lieutenants in the United States Army, graduating from West Point, and as you shake their hands, look into their eyes, wow, what a group of -- great group of young men and women, and they are absolutely ready. They call them the class of 9/11, because they came in before 9/11, 9/11 happened, the nation went to war, and they're going to take their place and they're going to do great things for this nation, as did the folks that are memorialized by this World War II Memorial in the background.

O'BRIEN: What would you like Americans to be thinking about today on this Memorial Day?

MYERS: Thinking probably about what they think about on every Memorial Day, that in America, one thing that's maybe not unique to our spirit, but very important to the American spirit, and that is that there are a few things worth fighting for, and one of them of course is our freedom, our way of life, and that's what we ought to think about, those that have gone before, that have paid the ultimate sacrifice for our freedoms that we enjoy today, and those that are currently fighting for those very same freedoms.

O'BRIEN: General Richard Myers is the chairman of the Joint Chiefs of Staff. Nice to see you, sir. Thank you very much for being with us.

MYERS: Soledad, nice to see you again.

O'BRIEN: Thank you.

And AMERICAN MORNING is back in just a moment.

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