Return to Transcripts main page
American Morning
Rice In Asia; North Korea Threat; More Marine Charges; Stadium Bomb Threats; Foley Investigation
Aired October 19, 2006 - 07:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, CNN ANCHOR: Also happening this AMERICAN MORNING, today could be a key day in the ethics probe into the Mark Foley page scandal. The former House clerk, Jeff Trandahl's testimony, could answer some critical questions.
SOLEDAD O'BRIEN, CNN ANCHOR: Three more Marines will face courts-martial on murder and kidnapping charges in the death of an Iraqi man who was allegedly grabbed from his home in April.
M. O'BRIEN: A message posted on a website claims a spectacular attack will take place this Sunday at National Football League games. The Department of Homeland Security says, though, it's not credible.
Let's check the weather. Chad Myers in the Weather Center with that.
Hello, Chad.
(WEATHER REPOT)
S. O'BRIEN: Let's get right back to the nuclear crisis in North Korea. Secretary of State Condoleezza Rice is in South Korea right now. She's pressing Seoul to fully enforce sanctions against North Korea. At a news conference just over an hour ago, the secretary was asked about a high-level meeting between a Chinese envoy and North Korea's leader, Kim Jong-il. Listen.
(BEGIN VIDEO CLIP)
CONDOLEEZZA RICE, SECRETARY OF STATE: On China and -- I've -- we've not received a readout from State Councilor Tang's visit. I hope it has been successful in saying to North Korea that there is really only one path, which is denuclearization and dismantlement of its programs. That is China's position and has been China's position ever since it's been playing a key role in the six-party talks.
(END VIDEO CLIP)
S. O'BRIEN: Zain Verjee is the only television correspondent traveling with the Secretary of State on her trip to Asia. She joins us by phone from Seoul.
Zain, good morning.
ZAIN VERJEE, CNN CORRESPONDENT: Good morning to you, Soledad. It's Secretary of State Condoleezza Rice's second stop in Asia. South Korea is likely to be more challenging than Japan. The U.S. wants South Korea to take action to inspect North Korean cargo that could be suspicious. The idea here is to prevent the transfer of fissile material, or nuclear material. And she also said that all countries are obliged to do those inspections because they signed on to the U.N. Security Council resolution that slapped sanctions on North Korea. She wants the regional powers to do that.
She also said that she was sharing ideas on exactly how to go about inspecting that cargo. She also emphasized in a press conference just moments ago that North Korea's got to return unconditionally to six-party talks and ultimately dismantle its nuclear program. Secretary Rice also wanted to reassure South Koreans that the U.S./South Korea strategic security alliance is still strong. That the U.S. will live up to its commitment. And if it comes down to it, defend South Korea.
Soledad.
S. O'BRIEN: Zain Verjee, the only television journalist who's traveling with Secretary Rice. Thanks, Zain.
More now on that special Chinese envoy who, as we mentioned, delivered a message from Beijing directly to North Korea's Kim Jung- il. CNN's Jaime Florcruz has that from Beijing.
(BEGIN VIDEOTAPE)
JAIME FLORCRUZ, CNN CORRESPONDENT: North Korean Leader Kim Jung- il is keeping the door open to dialog, or so it seems. The Chinese today confirming that Special Envoy Tang Jiaxuan had a meeting with North Korean Leader Kim Jung-il in Pyongyang Thursday. It is the first known meeting between Kim Jung-il and a visiting foreign diplomat since North Korea conducted its first nuclear test last week.
Tang is the same special envoy of Chinese President Hu Jintao, who visited Moscow and Washington last week. So, obviously, he's carrying messages to the various important capitals.
Tang's meeting with Kim also comes on the eve of Secretary Condoleezza Rice's visit to Beijing. She's expected to lean on Beijing, to use its leverage on North Korea, its traditional ally, and to entice it back to the negotiation table without any pre-conditions.
Jaime Florcruz, CNN, Beijing.
(END VIDEOTAPE)
M. O'BRIEN: The violence in Iraq is spiraling toward a grim record. Just this morning, another car bomb, a dozen dead, twice that number wounded in Mosul. Iraqi civilians are now dying at a rate of 43 a day.
Meanwhile, another American soldier was killed in Anbar province west of Baghdad. And October is likely to be the deadliest month since the siege of Fallujah two years ago.
Coming up at the half hour, an unprecedented exclusive glimpse inside the insurgency. We've obtained some chilling videotape made by insurgents. It shows, among other things, snipers targeting and killing U.S. troops on patrol in Iraq. CNN's Michael Ware will have that report. That's at the bottom of the hour, 7:30 Eastern, on AMERICAN MORNING.
Nearly a dozen U.S. troops facing murder charges this morning, all stemming from incidents involving Iraqi citizens. CNN's Pentagon correspondent Barbara Starr here to explain the cases and the charges.
Barbara.
BARBARA STARR, CNN CORRESPONDENT: Miles, good morning to you.
Against the backdrop of all this violence in Iraq, still more disturbing news. As you say, 11 U.S. service members now facing military trials in three separate cases involving the very disturbing deaths of Iraqi civilians. The first cases, one of the most disturbing, four soldiers from the 101st Airborne Division now will go on trial in the brutal murder and rape of a young girl in Iraq and the murder of her family in a town called Mahmoudiya. Two of those soldiers in that case, which is said to involve, alleged to involve premeditated murder. Two of them will face death penalty charges. Another man who has left the Army is facing trial in civilian court in the United States.
Second case. Another four soldiers, four different soldiers, from the 101st Airborne Division will face trial now for the murder of three Iraqi men during a raid on a suspected insurgent area in a place called Tharthar Lake. In that case, there has been a lot of talk about whether commanders may have ordered the soldiers going in to kill all Iraqi men they came across. That's one of the allegations. All of that will be sorted out at their trial.
And finally, in another case still, three U.S. Marines will go on trial for murder in the -- charged in the death of an Iraqi man taken from his house in a place called Hamandiyah. They are said to have tried to make it look like this man was an insurgent.
Still pending, of course, is yet another case called Haditha where a number of Marines may face charges, may, in the death of 24 Iraqis. All of this on these three cases being announced just yesterday that these 11 U.S. service members will now go to trial.
Miles.
M. O'BRIEN: Barbara, to what extent are these investigations, including on up the chain of command? And what orders might have been given down to the people who actually are alleged to have committed these atrocities?
STARR: Well, you know, a lot of this now will be sorted out in a more public venue when they face their military trials. All of these matters have been under investigation for some months. What you generally find in these cases is soldiers facing trial if they say they are innocent, if they plead not guilty, they usually talk about what they believe they've been told to do. It's up to a jury, of course.
Miles.
M. O'BRIEN: Barbara Starr at the Pentagon. Thank you.
Soledad.
S. O'BRIEN: Homeland Security officials say they are skeptical about an Internet threat to explode dirty bombs at NFL stadiums on Sunday. But they're erring on the side of extreme caution. CNN's Jeanne Meserve has our report.
(BEGIN VIDEOTAPE)
JEANNE MESERVE, CNN CORRESPONDENT, (voice over): A message posted on a website claims a spectacular attack will take place this Sunday at National Football League games. Dirty bombs, packed with radioactive material, delivered by truck and detonated almost simultaneously at stadiums in Miami, New York, Atlanta, Seattle, Houston, Oakland and Cleveland. Potentially affecting hundreds of thousands of sports fans.
The Department of Homeland Security says the threat is not credible, citing a lack of corroborating intelligence. But out of an abundance of caution, the department warned the NFL and state and local authorities.
STEVE POMERANTZ, FORMER FBI COUNTERTERRORISM OFFICIAL: In a post-9/11 world, the very worst outcome would be if the government had some sort of threat information, failed to pass that information on and something were to occur. I mean that's just the worst nightmare possible.
MESERVE: The NFL issued a statement saying its "stadiums are very well protected" with security procedures, including pat-downs and bag searches. But team representatives were meeting with the FBI and DHS and some stadiums said they would be taking extra, unspecified security precautions.
The owner of the website where the message was posted told CNN he had not been contacted by law enforcement and was unaware of the threat.
BRIAN MARCUS, ANTI-DEFAMATION LEAGUE: The site that this particular message was posted on is not one that's been used for Jihadist threats before. It's not one that we consider a credible source.
MESERVE: Large sporting events have long been considered potential terror targets. Security around the Super Bowl, for instance, is always extensive. And there was a threat against the NCAA basketball tournament last spring, but no attack materialized. One former CIA official says this threat does not sound like al Qaeda. MICHAEL SCHEUER, FORMER CIA COUNTERTERRORISM OFFICIAL: If they were going to go to the trouble of staging a seven-part operation on the same day, I think they would devote it to areas that are more crucial to the American economy.
MESERVE: The Department of Homeland Security is urging Americans to be vigilant, but is also telling them to go about their business. And that includes going to NFL football games on Sunday.
Jeanne Meserve, CNN, Spring Lake, Michigan.
(END VIDEOTAPE)
S. O'BRIEN: You want to stay tuned to CNN day and night for the most reliable news about your security.
Miles.
M. O'BRIEN: In America this morning.
In Kentucky, the search continuing for nine-month-old Sage Terrell (ph) who police believe is with her mother and her boyfriend. Sage has been missing now since Monday. He was in state custody and had come home with a social worker who was found beaten to death at that home.
In Florida, right now, the search on for another missing baby. Fort Lauderdale police looking for four-month-old Miki Brown (ph). Officers think she's with her mother's teenage friend, Kanisha Black (ph). Black reportedly persuaded the babysitter to take her take Miki out of daycare yesterday.
In Maryland, a hostage standoff at a fast food restaurant now over. Police used chemical spray to force a suspect out of the building this morning. A second suspect was taken into custody last night. The man accused of holding the restaurant's husband and wife owners, their two children and two customers at gun point. The hostages were eventually released and everyone is OK this morning.
Five people are dead after a small plane crash north of Phoenix. The victims were taking photos of a fighter jet when the plane they were in went down. Investigators say the planes apparently did not collide. Mechanical problems could be to blame. Controllers apparently saw vapors coming out of one of the plane's engines before it crashed. That's obviously the fighter jet they were taking pictures of there.
In Houston, an 84-year-old woman is missing following an intense blaze at a housing complex. The woman's relatives fear she was trapped and couldn't escape. These two people were injured in the fire. The cause under investigation.
More to come on the stories we're following this morning. Key testimony in the Mark Foley investigation today from former House Clerk Jeff Trandahl. And a new poll says half of all Americans think most members of Congress are corrupt. We'll have more on that ahead. (COMMERCIAL BREAK)
S. O'BRIEN: A look at the day's top stories we're following for you.
Secretary of State Condoleezza Rice in Seoul to discuss the North Korean nuclear threat.
And Nissan recalling 130,000 vehicles that have a defective ignition key.
It's 14 minutes past the hour. If you're heading out the door, let's get a quick check of the traveler's forecast for you. Chad Myers is at the CNN Weather Center.
Hey, Chad, Good morning.
(WEATHER REPORT)
M. O'BRIEN: Today the House Ethics Committee will hear from a central figure in the Mark Foley e-mail scandal. There are reports former House Clerk Jeff Trandahl was aware Foley was preying on teenage pages years ago.
Dana Bash live on Capitol Hill with more.
Dana.
DANA BASH, CNN CORRESPONDENT: Good morning, Miles.
Well, Jeff Trandahl could be one of the most important witnesses that the ethics committee hears from because as House clerk he had day-to-day authority over pages. Now he has said nothing public by about what he knew, but he could hold a key to what GOP leaders knew and didn't know about Mark Foley's conduct towards pages here on Capitol Hill.
(BEGIN VIDEOTAPE)
BASH, (voice over): Last year, former House Clerk Jeff Trandahl confronted Mark Foley about an e-mail with a former male page. But sources familiar with Trandahl's version of events say he repeatedly raised red flags about Foley years earlier, long before GOP leaders say they knew about Foley's inappropriate conduct with pages.
Two sources close to Trandahl tell CNN that he had observed and was told about Mark Foley's troubling behavior in the House cloakroom and elsewhere and was actively monitoring Foley's interaction with pages. CNN is told Trandahl took his concerns to Kirk Fordham, Foley's former chief of staff, many times. Fordham testified under oath last week that he warned the House speaker's chief of staff three or four years ago about Foley's conduct, according to a source familiar with his version of events.
Among the many questions for Trandahl, what did he do about the early warnings? For example, Arizona Congressman Him Kolbe says he told Trandahl five or six years ago that Foley sent a former page an e-mail that made the young man uncomfortable. Several former colleagues describe Trandahl as a by-the-book guy who took his job overseeing 16-year-old pages very seriously. One source saying he watched the teenagers closely and had "zero tolerance for problems." Expelling pages for drinking and smoking pot, no matter how senior a lawmaker the page's sponsor was.
Craig Shniderman is a long-time friend of Jeff Trandahl and says he's confident if Trandahl was aware of something improper, he would have reported it.
CRAIG SHNIDERMAN, FRIEND OF JEFF TRANDAHL: Jeff is a guy who always does the right thing. He lives by the truth. He lives by one truth. He's not a man that tells different stories to different people. He's not probably what some people think of as the ultimate Washington guy.
(END VIDEOTAPE)
BASH: Now, Trandahl's testimony will also help sort out a main mission of the Ethics Committee, and that is what the House speaker's office knew about Mark Foley's conduct. Now the speaker has said he did not know anything until this story broke just a few weeks ago. But one of the Republicans who contradicts that, the number two Republican in the House, John Boehner, he will also be testifying this afternoon for the House Ethics Committee.
Miles.
M. O'BRIEN: Dana Bash on Capitol Hill. Thank you.
The latest CNN poll suggests a credibility gap in Congress is growing. Half of all Americans surveyed believe most members of Congress are corrupt. That's up from 38 percent at the beginning of the year. And a majority of people disapprove of how both parties in Congress are doing their jobs. Just 42 percent like what Democrats are doing, 36 percent for Republicans.
Stay tuned to CNN tonight for Jack Cafferty's election special "Broken Government." That's at 7:00 p.m. Eastern right here on CNN.
This story and all the day's political news available on the cnn.com Political Ticker. Any time, day or night, there it is for you. Click on cnn.com/ticker and it will be taken away.
Soledad.
S. O'BRIEN: Some of the stories we're following for you this morning.
A virus takes a bite out of some of Apple's iPods.
And we'll tell you why all that great news about falling oil prices could actually hurt your retirement fund.
That and much more ahead. Stay with us. (COMMERCIAL BREAK)
M. O'BRIEN: We're following for you this morning a suicide bomber strike in Afghanistan wounding three NATO soldiers, killing two children.
The Department of Homeland Security says threats of dirty bombs in NFL stadiums this weekend are not credible.
Soledad.
S. O'BRIEN: There could be a virus in your iPod. Apple says that some iPods were accidentally shipped last month infected with a computer virus. Now the virus isn't going to hurt the iPod, but could infect the Windows computers. And Apple says, if your anti-virus software is up to date, it should be able to detect the virus and kill it too.
Some news this morning about some big cuts coming at NBC. Andy Serwer's "Minding Your Business.
Good morning.
ANDY SERWER, CNN CORRESPONDENT: Good morning, Soledad.
And this is about the changing face of television and the way we're getting our news and entertainment. NBC responding, embarking on a major cost-cutting program that will change the look of the peacock network and its sister networks, MSNBC and NBC. It's a cost- cutting campaign to the tune of $750 million towards the end of next year and it includes a 5 percent reduction in its work force, which will be about 700 jobs.
The biggest change that you will notice as a viewer of NBC is that between 8:00 and 9:00, they will stop airing expensive dramas and comedies, going to more reality television. And the numbers are very simple here, folks. Say they put in "Deal or No Deal," that program, that costs $1.1 million per episode, as opposed to "Friday Night Lights," which costs $2.6 million per episode. So you can see, $1.5 million a week right there like that.
Now, as far as the layoffs go, Soledad, most of those are going to be in the news division. At MSNBC, for instance, they're going to be shutting the facilities in Secaucus, where MSNBC is headquartered, moving them to Rockefeller Center. And at CNBC over in New Jersey as well. Now this is a big move for Bob Wright, who is the head of that division. Maybe turning the reins over to Jeff Zucker. So there's a lot of drama there in terms of the executives.
And the other thing, getting back to this prime time thing. You know, a couple of the networks like Fox and CW only have two hours of prime time programming coming from the network. They've cut back to two from three. And you can see, this might be in the cards for NBC as well. So expensive, advertisers are going elsewhere and we keep talking about this every day, how this business is changing.
S. O'BRIEN: Yes, it's bleeding on a lot of fronts.
SERWER: It is.
S. O'BRIEN: All right, Andy, thanks.
SERWER: Thanks.
S. O'BRIEN: Miles.
M. O'BRIEN: In Iran this morning, the Internet is running a lot slower than normal and that's on purpose. The government has ordered Internet providers to slow down services to homes and cafes. The web is running so sluggishly it's difficult to download just about anything. Critics say it's just the latest attempt by the regime to clamp down on the media and isolate Iranian citizens from the outside world.
Some of the stories we're following for you right now.
A top Chinese envoy meets with Kim Jong-il for talks on North Korea's nuclear program.
Plus, a CNN exclusive. Chilling insurgent videotape of deadly sniper attacks on U.S. troops. That's ahead.
(COMMERCIAL BREAK)
S. O'BRIEN: Welcome back, everybody. I'm Soledad O'Brien.
M. O'BRIEN: And I'm Miles O'Brien. Good morning.
Let's got to the news wall right away for some of the stories we're following.
S. O'BRIEN: Secretary of State Condoleezza Rice in South Korea this morning. She's seeking a strong response to the North Korean nuclear threat.
M. O'BRIEN: A car bomb attack targeting a police station in Mosul killed at least seven, wounded 20 others. An exclusive look at attacks on U.S. troops in Iraq just ahead.
S. O'BRIEN: Half past the hour almost. Time to get a check of the weather with Chad.
Good morning.
(WEATHER REPORT)
M. O'BRIEN: Some tough news for some Marine families this morning. The Pentagon announcing some Marine reserve combat battalions that have already been to Iraq once will return in 2008. This is the first time the Marines have issued such orders for reservists. The hope is it will reduce the strain on active duty units. And President Bush not rejecting parallels between Iraq and Vietnam. Responding to a "New York Times" op ed piece. He told ABC News that we might be seeing in Iraq the equivalent to the 1968 Ted Offensive in Vietnam.
(BEGIN VIDEO CLIP)
GEORGE STEPHANOPOULOS, ABC WORLD NEWS: Tom Friedman (ph) wrote in "The New York Times" this morning that what we might be seeing now is the Iraqi equivalent of the Ted Offensive in Vietnam in 1968.
GEORGE W. BUSH, PRESIDENT OF THE UNITED STATES: Yes.
STEPHANOPOULOS: Tony Snow this morning said he may be right. Do you agree?
BUSH: He could be right. There's certainly a stepped-up level of violence and we're heading into an election.
STEPHANOPOULOS: But what's your gut tell you?
BUSH: George, my gut tells me that they have all along been trying to inflict enough damage that we leave.
(END VIDEO CLIP)
S. O'BRIEN: And 2,784 Americans have been killed so far in Iraq. And to many, at times, it feels like they're indistinguishable. They're statistics. But not to their buddies, their commanding officers and their loved ones. Each person who is killed has his or her own story, each one is up against some kind of a terrible, terrible enemy.
This morning we have some difficult videotape to watch. We're going to show you just how some Americans have been killed while fighting in Iraq. The incidents that you're going to see were actually videotaped by insurgents. And then that videotape was made available to CNN. It is tough to watch. And the decision to run the images was not taken lightly. But we think it's a story that needs to be told. Michael Ware has our report.
(BEGIN VIDEOTAPE)
MICHAEL WARE, CNN CORRESPONDENT, AMERICAN MORNING (voice over): A sniper is watching these American soldiers. You're looking at the unobstructed view from the sniper team's vehicle. And they are waiting for their moment, as the soldiers mingle with Iraqi citizens.
"People are around them," warns the sniper's spotter, who seems to be operating the video camera. "Want me to find another place?"
"No, no," comes the reply, "give me a moment." And then -- the soldier falls forward. You hear the sniper's vehicle start, and they slip away.
Ground commanders say it is a growing and deadly tactic, insurgent sniper teams. U.S. military intelligence tells CNN it suspects some of these teams are trained abroad. They make an intimidating weapon.
UNIDENTIFIED MALE: Am I next? What about my buddy? You're looking constantly, your head's on a swivel, they say, you know, in windows, doors, looking in cars, rooftops. It's a very effective weapon, and that's why our own military uses them extensively. Best counter of a sniper is another sniper team on your own side.
WARE: CNN obtained the graphic tape through intermediaries from the Islamic army of Iraq, one of the most active insurgent organizations in the country. It is titled "Latest Sniper Operations in Baghdad." Accents, license plates and street signs seem to indicate the sniper attacks, in fact, occurred here in the capital.
A careful review of the entire video by CNN technicians found no evidence the images have been electronically manipulated. The tape documents 10 incidents, all which appear recent. But there's no way to confirm precisely where or when the attacks took place, or which U.S. units were involved, or what happened to the targeted soldiers.
Here, the spotter warns the shooter he only sees Iraqis. Until he's sure he's identified an American. I'll read you his name.
We wanted to ask the U.S. military about the insurgent sniper tactics, but no one was made available to CNN in Washington or Baghdad. Officials refuse to discuss the sniper operations, and related casualties, citing the safety of U.S. troops. Though they acknowledge the menace is real.
UNIDENTIFIED MALE: It's always a real threat, no matter where you go, any kind of combat operation you're going to be on, you're always looking for IEDs, you're looking for B-BIDS (ph), you're looking for snipers.
WARE: As to a recent increase of the threat:
UNIDENTIFIED MALE: I would not talk about that for operational reasons.
WARE: The insurgents' methods vary. The Islamic army video follows a team firing from a vehicle. Precisely the kind of team Lieutenant Richardson's men encountered in the city of Ramadi.
UNIDENTIFIED MALE: One of the attacks, you know, the locals, they talk to us about what they see. They said they saw a car pull up, a guy get out of the back seat -- get out of the front seat, climb into the back seat, and remove a panel from off his car. And aim from the car to our rooftop position, which unfortunately resulted in the death of one Marine, who was on the rooftop.
WARE: The implication in this insurgent video is that the deaths will continue.
UNIDENTIFIED MALE: There are only a few guys who have a tremendous effect, just like the improvised explosive devices, same thing, or suicide bomber. You get a lot of payback for just deploying a few resources. It's very effective.
WARE: "Wait, wait, he fell down. God is great," says one of the team as they disappear, until it's time for the next strike in Iraq's sniper war. Michael Ware, CNN, Baghdad.
(END VIDEOTAPE)
S. O'BRIEN: That exclusive report first aired on "Anderson Cooper 360," that you can catch weeknights at 10:00 Eastern right here on CNN.
M. O'BRIEN: Some of the stories we're following for you this morning. Secretary of State Condoleezza Rice in South Korea, for talks on North Korea.
Plus, we'll tell you why falling oil prices could mean bad news for your retirement fund. Stay with us.
(COMMERCIAL BREAK)
S. O'BRIEN: Some of the day's top stories we're following for you. The feds arrest 125 people in a nationwide child porn sweep. Among those arrested, a Bible camp counselor, and Boy Scout leader.
A defective ignition key forces Nissan to recall 130,000 cars and SUVs.
M. O'BRIEN: After taking this summer -- taking off this summer, oil and gas prices have been on a steady decline. Just why that is might surprise you. AMERICAN MORNING's Ali Velshi is here with this morning's edition of "Vested Interest."
Hello, Ali.
ALI VELSHI, CNN CORRESPONDENT, AMERICAN MORNING: Miles, good to see you.
You know, we talked a little while ago about how some people thought it was Republicans dropping oil prices to boost their chances in the election. Well, there are a lot of other people who, even though they're happy with the drop in oil prices, blame the hedge funds or thank the hedge funds.
The problem is that a lot of hedge funds invested heavily in oil and your pension fund might have been invested in those hedge funds.
(BEGIN VIDEOTAPE)
VELSHI (voice over): Oil going up to $100 a barrel. Admit it, you thought it was coming. The problem is, so did they.
"They" in this case are the hedge funds, the investment choice of the very rich. Hedge funds, like mutual funds, are large pools of investment money. But unlike mutual funds they don't have as many rules. They often make riskier investments with the potential of earning higher returns for their investors. Back in early summer, the smart money was on oil going higher, based largely on forecasts for another devastating hurricane season. Israel and Hezbollah were fighting, and tensions with Iraq were mounting. How could oil prices drop? Some hedge funds went on a multi- billion-dollar buying spree, pushing oil prices even higher. They bet really big. And they bet really wrong.
Doomsday never arrived, not in the Gulf of Mexico, not in the Middle East. So the hedge funds started selling their oil, 40 million barrels of it. Whether the hedge funds actually triggered the drop in oil prices, or just helped push them lower is a chicken or the egg question. But with more a trillion dollars to trade, when the hedge funds sell, we all feel it.
It wasn't just oil. One bet on natural gas and lost $6.5 billion. That fund had to shut down, taking more than just rich folks' money with it. Investors included the Massachusetts Pension Reserves Investment Management Fund, the New Jersey State Employees' Deferred Compensation Plan, the Pennsylvania State Employees' Retirement System, and the San Diego County Employees' Retirement Association, which lost up to $90 million in that hedge fund.
(END VIDEOTAPE)
VELSHI: Those pension funds told us that they are diversified, so the hedge funds were only a small part of their total investment portfolio. In fact, Miles, hedge funds aren't inherently risky, some of them are actually more than mutual funds. The issue is that hedge funds are not regulated so it's not that easy to find out about what kind of risks they're taking and what they're investing in.
M. O'BRIEN: All right, Ali. For those of us who don't have pensions, 401(k)s and the like, should we be worried?
VELSHI: No, if you've got a 401(k), you're typically invested in stocks or mutual funds, you can't get into this kind of risky trading. It's not against the law, but typically mutual funds don't get into that. It's the pension funds. If you have a pension fund and want to find out if it's at risk call them and ask them what they're invested in. You may find out what you don't want to know. If they are invested in hedge funds you can't really control what your pension fund invests in. So, a bit of a problem.
M. O'BRIEN: Yeah, there's really nothing you can do about it, right?
VELSHI: No, you can't do anything about it. With your 401(k), you can do something about it.
M. O'BRIEN: Right. All right, Ali Velshi, "Vested Interests". Thanks very much -- Soledad.
S. O'BRIEN: Some of the stories we're following for you this morning, three more Marines are going to face courts-martial in the April killing of an Iraqi man. Plus, you may have heard of that drink "Cocaine", very controversial. It is aimed at young people. Are they going to buy it? We'll take a look ahead on AMERICAN MORNING.
(COMMERCIAL BREAK)
M. O'BRIEN: Top stories we're following this morning for you. Secretary of State Rice in Seoul, trying to ease tensions following that North Korean nuclear test.
Former House Clerk Jeff Trandahl to give key testimony in the Mark Foley investigation.
It's about a quarter above the hour, let's get a quick check of the "Traveler's Forecast."
(WEATHER REPORT)
S. O'BRIEN: Let me ask you a question. Have you heard about this new drink, a soft drink, it's called "Cocaine," Chad?
CHAD MYERS, CNN METEOROLOGIST, AMERICAN MORNING: That's not the one that's making you lose weight?
S. O'BRIEN: I don't know if that's a side effect. It doesn't have actual cocaine in it. But weirdly enough, it's an energy drink. And it's named, of course, for the narcotic, packed with caffeine. CNN's Greg Hunter has more on the marketing and making of "Cocaine". Yuck, this just sounds like a bad, bad idea.
GREG HUNTER, CNN CORRESPONDENT, AMERICAN MORNING: Here's the question -- so, is selling a drink, called Cocaine, akin to selling candy cigarettes to kids? The company that produces the drink says, no. Critics say, yeah, it is. Here's the story. You decide.
(BEGIN VIDEOTAPE)
HUNTER (voice over): They call it "Cocaine."
UNIDENTIFIED MALE: Everybody come over here, he asking -- I need Cocaine drink. I need Cocaine drink. I need Cocaine drink. That's why I'm over there selling it.
HUNTER: Selling at about $2.50 a piece, in New York, L.A., and parts of Florida, Cocaine packs 8 ounces of fiery red-flavored liquid in a can. A major concern? Cocaine's target demographic seems to be young adults. Their clever marketing campaign is capitalizing on youth-driven websites like YouTube and Myspace to generate big buzz.
UNIDENTIFIED FEMALE: Stop! Stop! Stop!
UNIDENTIFIED MALE: Stop!
(LAUGHTER)
HUNTER: Naming a drink after an illegal drug is a growing trend. MAYOR MICHAEL BLOOMBERG, NEW YORK: I think the bottlers ought to have their heads examined. Given we have a drug problem, particularly among kids.
GEN. ARTHUR DEAN, CMTY. ANTI-DRUG COALITION OF AMERICA: It will be causing kids to reduce their perception of harm associated with the illicit drug cocaine.
HUNTER: Redux Beverages declined CNN's repeated requests for an interview.
So, what do young people think of the controversial name? We took to the streets of New York to find out.
(on camera): Is it clever or clueless?
UNIDENTIFIED MALE: I think it's somewhere in between. I have a feeling it's going to attract a lot of people, just by -- they want to see what it's like.
UNIDENTIFIED MALE: I think that's a very interesting name. I would probably try the drink because of it.
HUNTER: But what's inside the drink with the provocative name is plain old caffeine. Lots of it. One eight-ounce can has as much caffeine as 24 ounces of strong, black coffee, or two large cups, much more than any of its competitors. To put it into perspective, that's nearly four times the amount of caffeine found in the popular energy drink Red Bull.
MARION NESTLE, NYU NUTRITIONIST: It's sugar water. How can it be good? It's extra calories that nobody needs. And does it really give you extra energy in a short period of time? Sure, as soon as the caffeine wears off, you'll feel just the way you did before.
HUNTER: Cocaine energy drink has no illegal drugs in it. But on its own website the company claims that the beverage, quote, "numbs the throat to add an oral sensation much like cocaine does." "The legal alternative."
Redux Beverages says it does not advocate drug use. And assumes that consumers, quote, "understand the difference between an energy drink and controlled substance."
But not everyone is convinced young people will know the distinction.
(END VIDEOTAPE)
HUNTER: Recently students from the Cleveland Marshall School of Law filed a complaint under the guidance of their professor. They argue that the trademark name Cocaine violates United States Patent & Trademark Office statutes, which forbids immoral or scandalous trademarks, but that action, if successful, could take months.
S. O'BRIEN: Huh, that's very interesting. It sounds like it's all obviously over the name. Do you think that the company will get enough negative feedback that they might just change the name on their own?
HUNTER: Well, the anti-drug --
S. O'BRIEN: Or is it just they're getting a lot of PR now -- and it's great?
HUNTER: We're talking about it on AMERICAN MORNING, right?
But the anti-drug coalitions says, hey, listen, they're going ask the company to do just that, change the name. They've been successful doing that. If this product was called, "Hey, stay awake all night!", we wouldn't be having this conversation.
S. O'BRIEN: No, we wouldn't. So, my guess is they're not going to change the name? Unless those law students, that whatever university that was, law school?
HUNTER: Yes, or they quite selling the product, who knows?
S. O'BRIEN: Who knows. All right, expect an answer.
Of course, you can see more of Greg's reports on "Paula Zahn Now" which airs weeknights at 8:00 p.m. Eastern.
Thank you, Greg.
Miles.
M. O'BRIEN: Some top stories we're following at the moment. Key testimony in the Mark Foley investigation today, from former House Clerk Jeff Trandahl.
Plus, a look at the controversy over a so-called virtual school in Chicago. Stay with us.
And it's Thursday. Cue the music, that means it's "Milescam Day." E-mail me now. Milescam@cnn.com, is the place for the questions. The answers, new time, folks, 10:00 a.m. Eastern Time on the Pipeline Product, that's CNN.com/pipleline.
AMERICAN MORNING back in a moment.
(COMMERCIAL BREAK)
S. O'BRIEN: Here's a look at some of the stories we're following for you this morning. President Bush warns North Korea of grave consequences if their nuclear weapons wind up in the hands of terrorists.
And Department of Homeland Security is downplaying the dirty bomb threats against NFL stadiums.
There are about 200 students who attend a one-of-a-kind virtual charter school in Chicago. It lets children between kindergarten and 8th grade do course work at home at their own pace. It might sound wonderful, but the program is not without controversy. Here's CNN's Jonathan Freed.
(BEGIN VIDEOTAPE)
JONATHAN FREED, CNN CORRESPONDENT, AMERICAN MORNING (voice over): Angeliq Berry has a short walk to school, from her bedroom to her dining room.
LILLIE HINTON, ANGELIQ's AUNT: On Tuesday she did ten, on Tuesday.
FREED: The fourth grader had trouble in a conventional school setting.
HINTON: They were calling me, two and three times a day. We can't get Angeliq to pay attention. Aneliq is bored and disrupting.
FREED: So, her family decided to try a new charter school in Chicago, a virtual school. About a quarter of the curriculum is done online. The rest is book based. It's all laid out for a supervising adult to work with the child.
She's reading more. She's paying attention. She wants to get things right.
ANGELIQ BERRY, VIRTUAL SCHOOL STUDENT: Spelling, vocabulary, art.
FREED: Angeliq says she loves them all now. The Chicago Virtual Charter School uses its funding, in part, to provide every family with a computer. Funding, though, is controversial. A local teacher's union is suing to shut the program down, saying it shouldn't qualify for public money.
MARILYN STEWART, PRES., CHICAGO'S TEACHERS UNION: This is a home-based school. And it violates the school code that says it cannot be home-based.
FREED: Similar suits have been filed against virtual schools in at least three other states, but none successfully.
UNIDENTIFIED FEMALE: That's pretty good.
FREED: Chicago Virtual says it's not traditional home learning because its program is highly structured and children attend a weekly two-hour science class.
SHARON HAYES, PRINCIPAL, CHICAGO VIRTUAL SCHOOL: They have a teacher that guides their instruction, daily. Maybe not sitting in front of them face-to-face guiding them, but she's guiding their instruction.
FREED (on camera): How many of you already feel that your children are making better progress in this system than they were before? (Voice over): Parents say it's also a solution for overcrowding.
FREED: Did you think you could do this well in school?
BERRY: No. Thought I was going to do as bad as I was in the other schools.
FREED: So, is this like, wow, I'm actually getting this stuff?
BERRY: Yeah.
FREED: Jonathan Freed, CNN, Chicago.
(END VIDEOTAPE)
M. O'BRIEN: She's cute. She's cute. Maybe we can do this show online. Let's try that.
How does a 150-year-old company stay relevant in the Internet age? Andy Serwer is here to tell us the story of Rand McNally.
ANDY SERWER, CNN CORRESPONDENT, AMERICAN MORNING: Good morning, Miles.
It is a challenge for the venerable -- very venerable -- mapmaker Rand McNally, which began in 1856 -- I believe that's --
M. O'BRIEN: That might have been before the Internet.
SERWER: Yes, that's right. Way back in Chicago way.
As you can imagine, some very, very challenging times, because, of course, so many people map online. Use online maps, Maps.com, Mapquest. In fact, they have fallen way, way behind in that part of the business. You can see here maps.com, Mapquest, Googlemaps -- and then and way down there is Randmcnally.
M. O'BRIEN: I've got to be honest, I didn't even know Rand McNally had an online capability.
SERWER: Right.
M. O'BRIEN: So, there you have it.
SERWER: So there you have it. That's kind of the problem.
But -- so the company went through all kinds of problems, went bankrupt in 2003. Closed the all those specialty stores. Remember the Rand McNally stores?
M. O'BRIEN: Oh, yeah. Boy, that's dating ourselves.
SERWER: But you know what, the company's actually come back. And that's what's so interesting here. That they changed ownership, reorganized. The interesting thing is, maps are still selling. It's sort of like newspapers. The business is obviously not growing like crazy, but they're saying more maps have been sold this year than any other year so far, because the population grows, so more people need them. Even with all that stuff online, the business is still out there.
M. O'BRIEN: Even if you have, you know, a GPS navigation device in your car, you still need a paper map every now and then, to kind of connect the dots, and get a big picture. So there's room, at least for one player, in that realm.
SERWER: Right, exactly. And speaking of GPS systems, Rand McNally has gotten into that business as well. So that's interesting. They have a GPS system that you can take with you. There it is right there.
You're right. You couple the GPS with the paper map and sometimes you print stuff out. If you do maps.com, it tells you how to go somewhere. And then how often have you discovered that it's not the best route.
M. O'BRIEN: Yes. Some of those Mapquest directions are a little, well, they'll take you on a scenic tour, sometimes not so scenic.
SERWER: Yeah, that's right, the slow ride. Interesting watching a company like that.
M. O'BRIEN: Yeah. Interesting. Good to watch. What's next?
SERWER: We're going to be talking about Hooters. And what role kids have there. Should kids go to Hooters? What do you think?
M. O'BRIEN: They're there for the wings. There for the wings.
SERWER: That's right.
M. O'BRIEN: All right. Not the breasts, so to speak.
SERWER: No.
M. O'BRIEN: Soledad.
S. O'BRIEN: Here are some of the top stories on cnn.com.
A federal judge in Ohio is delaying the scheduled execution of Jeffrey Lundgren. He's a cult leader convicted of killing a family of five back in 1989. The temporary order means that Lundgren can challenge the state's use of lethal injection to kill him. Lundgren claims he's too obese for execution. He says because he's overweight and diabetic, lethal injection will cause him pain and suffering.
And 125 people arrested and charged with subscribing to a child porn website. The site apparently warned customers that it is illegal to subscribe. Among those arrested, a long-time Boy Scout leader and a middle school coach. And the woman who got a face transplant goes public a year after the surgery. Isabel Denwier (ph) says she's regained feeling in her face and sees herself when she looks in the mirror.
For more on these stories, log on to our website at cnn.com. The next hour of AMERICAN MORNING begins right now.
M. O'BRIEN: Good morning to you, Thursday October 19. I'm Miles O'Brien.
S. O'BRIEN: And I'm Soledad O'Brien. Lot's happening. Let's get right to the news wall for you
Secretary of State Condoleezza Rice in South Korea this morning. She's hoping to keep the pressure on North Korea. China is also showing signs of taking a tougher stance against Pyongyang.
M. O'BRIEN: Also happening this AMERICAN MORNING in Washington, a pivotal day in the Mark Foley e-mail investigation. The former House Clerk Jeff Trandahl to testify before the Ethics Committee. Trandahl reportedly knew Foley was preying on pages years ago.
S. O'BRIEN: Three more Marines will face courts-martial on murder and kidnapping charges in the death of an Iraqi man who was allegedly grabbed from his home back in April.
M. O'BRIEN: A message posted on a web site claiming a spectacular attack will take place this Sunday at National Football League games, but the Department of Homeland Security says the threat is not credible.
(WEATHER REPORT)
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
